20th Parliament · 1st Session
The President (Senator the Hon. Edward Mattner) took the chair at 3 p.m., and read prayers.
– Will the Minister for National Development state what proposed sale of coal-mining machinery stage has been reached in respect of the and equipment owned by the Commonwealth? Is it proposed to sell the machinery and equipment by tender or by auction? Has an inventory been prepared of the whole of the machinery and equipment, and has each item been valued by the Department of the Treasury? Is it intended to effect sales at prices below current market values, as was the case with the shares held by the Commonwealth in Amalgamated Wireless (Australasia) Limited?
SenatorSPOONER.- The Leader of the Opposition in the House of Representatives asked a question on this matter yesterday and the Prime Minister proposes to make a short statement on it which I have prepared for him. With the concurrence of the Senate I shall read that statement in reply to the honorable senator’s questions. The PRESIDENT. - Is leave granted?
Honorable Senators. - Yes.
- by leave- The provision of plant and equipment for the coal-mining industry is primarily a responsibility of the industry itself. The Joint Coal Board has always encouraged mine owners and operators to provide their own plant. It has assisted them to do so by sponsoring currency exchange arrangements, securing priority in manufacture and priority in shipment from the United States of America, and in whatever other ways have been possible. However, to induce colliery proprietors and contractors to provide the plant required, proved a difficult task. Overseas contractors were not prepared to do so, on the ground that they had not sufficient knowledge of Australian conditions. In addition, some contractors could not find the capital to purchase the expensive plant required. The board therefore found it necessary to purchase plant extensively, and to avoid delays purchases had to be made ahead of the time at which open-cut mines were planned to commence operations. That plant has all been purchased from funds advanced by the Commonwealth to the board. Of the plant originally ordered, some has already been 8old. The plant now owned or proposed to be purchased by the board is as follows : -
The plant has now been operating for some time, and the board is meeting a fresh set of problems due to the need to collect rentals for it from hirers, and in connexion with repair and maintenance work. The responsibility to purchase plant and then to keep it in good repair should not lie with the board. There is always the risk that unsuitable plant will be purchased and that when the board accepts responsibility for repair and maintenance disputes will arise over the rental payable. Undoubtedly an owner of plant will maintain and operate it more efficiently and economically than will a hirer of plant. Consequently, production will be greater.
Moreover, although the board has made a substantial investment in plant, much more is required. The board estimates that £40,000,000 is required for equipment and developmental work in the coalmining industry in New South Wales. Therefore, unless the correct policy is adopted, there is danger that the Commonwealth and the board may drift into a position in which the hoard will own a substantial proportion of the plant and equipment. The Commonwealth realizes that whatever plant is necessary to provide the coal required, must bc obtained, and that accordingly, it may foe necessary to provide additional funds for that purpose in the future; but it is not willing to provide funds unnecessarily. Indeed the position in States other than New South Wales has to be considered. Most of those States are developing their own coal resources so far as is practicable, in order that they may he as independent of New South Wales as is possible. The Commonwealth does not desire to establish in New South Wales a precedent which would involve the provision of substantial sums in other States. It is not hard to imagine therefore, why the board came to the conclusion that it would be advis able to make strenuous efforts to sell plant rather than to continue to own it and hire it out with all the attendant heavy responsibility for spare parts and servicing over wide areas. The board therefore entered into negotiations with the Commonwealth Bank and the trading banks. Finally, arrangements were evolved under which the banks will provide hire purchase facilities for operators to purchase plant from the board. The board will guarantee payment of liabilities to the banks where the circumstances so justify. The arrangements contain adequate provision to ensure that the plant and equipment shall be retained in the coal-mining industry. In view of the large total of contingent financial liabilities involved, the board submitted the proposal to the Commonwealth Government with the request that it be authorized to complete such guarantees. I strongly recommended the adoption of the arrangements, and they were approved by the Government, subject to certain details being agreed upon between the Joint Coal Board and the Commonwealth Treasury.
The proposal that I have outlined was not discussed with the Now South Wales Government.
– I shall come to that if the honorable senator will possess himself in patience. As I have already indicated, since the inception of the board in 1947, plant and equipment has been sold at various times by the board and no consultation has taken place with, nor has objection been raised >y, the New South Wales Government.
– It could hardly be expected that that Government would object if it was not consulted.
– In order to do the job which the New South Wales Government should have done, but has failed to do consistently over the years, plant had to he purchased. The New South Wales Government has not said anything about the Commonwealth investing millions of pounds in the purchase of plant.
– What about the sale of the Commonwealth’s shares in Amalgamated Wireless (Australasia) Limited?
– I hope that the sale of this plant will be as successful, from the point of view of the Commonwealth, as was the sale of its shares in Amalgamated Wireless (Ausralasia) Limited. The provision of funds for the purchase of plant and equipment is, of course, entirely a matter for the Commonwealth in terms of the Coal Industry Act. It has never been customary to discuss such matters with the New South Wales Government. Indeed, it was not customary when Senator Ashley was a Minister in the former Government. Honorable senators will remember that the legislation constituting the Joint Coal Board provides that it should be independent of the two governments, except where the Prime Minister, in agreement with the Premier of New South Wales, issued a direction to the board on a matter of policy. In this particular matter the Commonwealth has not issued any direction to the Joint Coal Board. It has accepted the recommendation on financial matters made to it by the board. The net result of the proposal is as follows : -
I believe that the recommendation containing the arrangements which are proposed contain a prudent and sensible course for the board to follow in the interests of all concerned, including the taxpayers of Australia.
– The Minister for National Development has said that there has been no change in the policy of the Commonwealth in relation to the Joint Coal Board. Is it not a fact that, when the Joint Coal Board was established by the Commonwealth and New South Wales, it was agreed that all matters of policy relating to the activities of the board should be determined by the Prime Minister and the Premier of New South Wales? Does the Minister not agree that the sale or disposal of this open-cut mining machinery by the Joint Coal Board goes far beyond the sale of a piece of machinery to an individual contractor, and involves a major point of policy? If so, will he say why the New South Wales Government was not consulted upon the matter?
– The honorable senator has stated that I have said that there has been no change in the Commonwealth’s policy in relation to the Joint Coal Board. He has put a wrong statement into my mouth. There has been a great change of policy. The Joint Coal Board is now conducted efficiently. The honorable senator has also said that there is an agreement that the Commonwealth and the State of New South Wales shall confer upon matters of policy affecting the board. I am not certain that that is so. I think the arrangement is that the Joint Coal Board shall be an independent body, and that it shall make its own decisions. It is not a matter of the two governments conferring. The board does what it considers to be best, the protection of the governments being that, if they agree, they may give a direction to the board. I do not think one can go so far as to say that the two governments confer. The whole spirit of the matter is that the board does what it thinks best. Only when its decisions cross the wishes of both governments can they instruct it to do otherwise than it proposes to do. The next question which the honorable senator has asked indicates that he is apparently not au fait with the transaction, because he stated that he regards the disposal of open-cut mines as being a matter of great importance.
This matter does not relate at all to the disposal of open-cut mines. It is a proposed transaction relating only to plant that is employed at open-cut mines and which, indeed, may be employed in underground mines. It may be plant that is being used by a private coal company which has leased the plant from the Joint Coal Board. It may perhaps be plant that is used at an open-cut mine which is operated by a private operator, or it may be plant that is used at an open-cut mine which is being operated by a contractor on behalf of the board. The matter relates entirely to plant and not to ownership of either underground or open-cut mines.
– In addressing a question to the Minister representing the Treasurer, I inform him at the outset that in doing so I have no desire to force upon him the interests of the Australian Labour party. Since the recent increase of the basic wage by 14s. a week there have been many increases of prices of commodities that are included in the “ 0 “ series index, especially in New South Wales. It is obvious that there will be a further great increase of the basic wage during the next two or three months, with concomitant rises in prices and a lowering of the standards of living of people on fixed incomes. It is also obvious that there will be a great surge of applicants for social services benefits. It cannot be denied that the inflationary wheel will continue to turn rapidly. Will the Minister, even at this late hour, call a meeting of representatives of the various State governments with a view to ensuring that a uniform system of prices control shall be instituted ? If that is not possible, will the Minister undertake to examine other methods by which the inflationary condition which is in existence at present might be controlled? I remind him that control of prices by State governments is totally inefficient.
– The honorable senator is singing his old theme song. According to him, there is no cure for inflation unless it includes the ingredient of prices control. I have previously pointed out how prices control has driven off the market some of the principal foodstuffs and basic materials. The fact that potatoes are practically unobtainable in New South Wales to-day is due to prices control, and we have saved our butter production only because the exponents of prices control have been willing to abandon their principles. I fully endorse the statement of Mr. Cochrane, chairman of the Joint Coal Board, who said yesterday that one of the reasons for the shortage of coal was that the price of coal was fixed at a figure that left little room for profit. I believe that one of the reasons for industrial unrest on the coal-fields is that the industry has been for so long a struggling and unprofitable one. Therefore, I do not think that the Government would be prepared to call a conference of State Ministers to consider price control measures. However, it is not for me to decide the matter, nor is it usual to make statements on government policy in answer to questions. I remind honorable senators of what I said before, and what has not been controverted, that with the exception of the United States of America, Australia provides the highest standard of living for its citizens of any country in the world. Government statistics show that wages have increased in Australia to a greater degree than has the cost of living. It would be better for the honorable member to be more patriotic, and to make the best of things in Australia, rather than for him to be knocking Australia all the time.
– I ask that the Minister be required to withdraw the statement that I am unpatriotic.
– I ask Senator Grant to resume his seat.
– I rise to a point of order. I asked a question in a gentlemanly way on what I believed to be a matter of importance, and I was told by the Minister for National Development that I was unpatriotic because I asked it. The Minister’s remark was offensive to me, and I ask that it be withdrawn.
– I voluntarily withdraw the aspersion, if the honorable senator takes exception to it. It was not my intention to suggest that he is personally unpatriotic. I merely suggested that the way in which he continually decries conditions in Australia is not calculated to do Australia any good.
– I preface a question to the Minister representing the Minister for Commerce and Agriculture by pointing out that it has been announced that the Australian Wheat Board and the Government have refused to pay anything towards the cost of the shipment of wheat to Tasmania. Therefore, the purchasers of wheat in Tasmania will be at a disadvantage compared with those in other States, in that their wheat will cost them 4s. 4d. a bushel more. Will the Government consider subsidizing Tasmanian purchasers of wheat to the amount of the freight involved?
– I shall be happy to communicate the honorable senator’s request to my colleague and suggest that he take up the matter with the Minister for Commerce and Agriculture. Of my own knowledge, this matter has not escaped attention.
– By way of explanation of a question that I address to the Minister for National Development, I point out that a substantial proportion of the 100,000,000 dollar loan that was obtained from the United States of America was allocated for the purchase of tractors and agricultural equipment to assist the primary producers, particularly wheat-farmers. Will the Minister inform the Senate what has been the method of distribution of the money so allocated? Was a large quantity of the agricultural machinery allocated to the owners of well-equipped farms, who had the ready cash to purchase, but had no immediate need for, further equipment, especially as many of them have reduced their sowings of wheat? Is it a fact that much of this equipment was sold at a time when the purchasers were able to claim 40 per cent, plus 15 per cent, of the purchase price as a deduction for taxation purposes, although they still retained their old mechanical equipment?
– The matter that has been raised by the honorable senator concerns the Department of Trade and Customs more than it does the Depart- ment of National Development. The system of distribution that is at present in force is much the same as, if it is not identical with, that which was in force when the Chifley Government was in office. Import licences in respect of agricultural equipment that is in short supply are not granted to individuals. This Government has decided to continue the excellent arrangement that was instituted by the Chifley Government, under which the equipment is distributed by distributing agents or by the holders of franchises in respect of machinery of various types. This Government does not interfere in any way with the distribution of the equipment. It feels that that is really the function of expert distributors and franchise holders.
– I address a question to the Minister representing the Minister for Supply. I have been informed that because of the acute shortage of tinplate in Australia, and in answer to criticism which has been made concerning the allocation of the supplies’ of tinplate that are available, the Minister for Supply recently caused an investigation to be made of the allocation methods that have been adopted. That investigation was carried out by a senior officer of the Department of the Treasury, who reported upon it in due course. However, the information contained in the report has not yet been made available to persons who are directly interested in such allocations. Will the Minister undertake to ensure that the report will be made available to the people in the tinplate trade who desire to be assured that allocations are made on a proper basis? Better still, will the Minister undertake to lay the report on the table of the Senate?
– I have not personally seen the report which the honorable senator has mentioned. However, I shall be pleased to bring to the notice of my colleague, the Minister for Supply, the question that has been asked, and obtain a .reply concerning the action that it is proposed to take in connexion with the report.
– I direct a question to the Minister for Trade and Customs who will have noticed that, due to the coercive action taken by the New South Wales Potato Board within the last fortnight, the Minister in charge if prices in New South Wales has been forced to raise the price of potatoes from 4£d. per lb. to 6d. per lb. It is significant that this action was taken at a time which coincides with the conclusion of the potato season in Tasmania and the beginning of the new potato season in New South Wales. This method of price manipulation by the Prices Minister in New South Wales can be used with disastrous effect to prejudice the market in New South Wales for Tasmanian potatoes. Will the Minister for Trade and Customs see that all the agencies available to the Commonwealth Government focus their attention on this manipulation of prices by the Minister in charge of prices in New South Wales so that potato producers in Tasmania will not be adversely affected in their interstate trade?
– In the absence of the Minister for Shipping and Transport I am unable to answer the honorable senator’s question. I shall, however, take it up with my colleague, who, in turn, will, I am sure, discuss it with the Minister for Commerce and Agriculture and furnish a reply to the honorable senator in due course.
– When the Minister is discussing the subject of potatoes with the New South Wales Minister will he ascertain whether it is not a fact that on the west coast of Tasmania potatogrowers are now charging ls. 6d. per lb. for their product?
– I do not think that the Senate is the proper forum in which to conduct a debate between Senator Ashley, on behalf of New South Wales, and mv colleague, Senator Wright, on behalf of Tasmania, on this subject. I suggest that that debate might well be adjourned until a later time.
– Tn the absence of the Minister for Shipping and Transport I address a question to the Minister for Trade and Customs. Owing to the approach of the jammaking season in South Australia will the Minister take steps to ensure that adequate supplies of sugar shall be made available to householders?
– I shall be very happy indeed to look into the matter raised by the honorable senator.
– Will the Minister representing the Minister for Supply discuss with his colleague the possibility of ensuring that shipments of scarce raw materials purchased by the Department of Supply and designed for storage at Portland, in western Victoria, shall be shipped direct to that port so that the Treasury will be saved the cost of rail haulage over 300 miles from Melbourne to Portland and double handling of the cargo on the already congested Melbourne wharfs may be avoided?
– I shall be pleased to bring the honorable senator’s question to the notice of the Minister for Supply.
– Early in the present sessional period the Minister for Repatriation promised to furnish a reply, before the Senate rose, to a question that I asked concerning the treatment of ex-servicemen suffering’ from war neurosis. Can the Minister indicate to the Senate the probable date upon which that information will be available, having due regard to its importance tomany ex-servicemen who are suffering from that complaint?
– It is true that 1 gave the honorable senator an assurance that I would deal with the matter later. The greatest factor responsible for delaying the construction of hospitals, not only for my department but also for other authorities, is the demand on labour and materials for other services, chiefly the defence services. I regret that my department is not able to proceed with the construction of hospitals for the treatment of sufferers from war neurosis as quickly as it expected to be able to do so when this matter was raised earlier. I can see no chance of a high priority being extended to the construction of these very essential institutions until the lag in the construction of higher priority defence works has been overtaken.
– I preface my question to the Minister representing the Minister for Supply by stating that, during the week-end, I had the privilege of visiting the guided weapons testing range at Woomera in company with a number of my colleagues from this chamber and from another place. I should like to add that we were given an excellent opportunity to view the work being done at the range, and I pay a tribute to the courtesy and efficiency of the staff employed on the project. In view of the conditions under which those employees are working, and the importance of the work they are doing their food requirements should be given very high priority. At present there is a great shortage of potatoes at Woomera. Will the Minister consult with his colleague with a view to giving the highest priority to foodstuffs of all kinds required at Woomera, particularly to potatoes ? Will he make representations through the Department of Supply to the potato authorities of Tasmania or Victoria with a view to ensuring that this very vital commodity is included on the diet of the employees at the range?
– From contacts I have had with other members of the Parliament who visited the Woomera project I understand that the food supply for the staffs is on an excellent basis. However, I shall bring the honorable senator’s question in regard to the supply of potatoes to the notice of the Minister for Supply.
– Will the Minister for Trade and Customs state whether it is not a fact that the items that are taken into account in the “ C “ series index for the purpose of assessing variations of the basic wage are essential and are not luxuries? Is it not a fact that twenty items that are taken into account in computing the “ C “ series index figure have been subjected to recent increases of sales tax? If that is so, is it not a fact that the increase of sales tax on such items will have a tendency further to increase inflation and result in an increase of the basic wage by legislative enactment?
– I think the honorable senator is proceeding along the right lines.
– I address a series of questions to the Minister for Trade and Customs. Has the attention of the Government been directed to statements made by the leading rabbis of the Hebrew Church in Australia indicating that they were not invited to join in signing the call .to the nation? Is the Government yet in a position to indicate whether it has received reports from its security officers regarding the recent activities of Mr. Paul McGuire, who it is now admitted organized the call? Has it been disclosed that there were no representatives of either the churches or the judiciary, apart from Sir Edmund Herring, at the secret meetings held in Australian capital cities and addressed by Mr. McGuire? Has the Government secured a list of the prominent young business executives and former naval and military officers who were present at those meetings ? Is the Government aware that Mr. McGuire is a close associate of the well known anti-Semitic author, Mr. Douglass Reed? Will the Government ascertain whether the slight to the Jewish rabbis was due in any way to anti-semitic views held by the organizer of the call? Will the Government ensure that all necessary precautions shall be taken to see that political adventurers are not permitted to use the good names and good intentions of leading citizens in organizing secret bodies with fascist objectives?
– The honorable senator’s knowledge of topical matters is to be highly commended, and I trust that should honorable senators on this side of the chamber have occasion to consult him about those matters, he will give them the benefit of that knowledge.
asked the Minister representing the Treasurer, upon notice -
– The Treasurer has supplied the following answers: -
asked the Minister representing the Minister for Defence Production, upon notice -
– The Minister foi Defence Production has supplied the following answers : -
Senator HENTY (through Senator
Wright) asked the Minister representing the Minister for Air, upon notice -
Is it a fact that national service trainees entering the Air Force lose their life insurance cover while engaged on training flights, as such policies cover the right of air travel as passengers only?
If so, will the Minister approach the life insurance companies and request that, as a national contribution, they bear this additional risk while trainees are undergoing service?
– In the absence of the Minister representing the Minister for Air, I supply the following answer that has been received : -
Some insurance companies have followed the practice of restricting the amount payable under life assurance policies if death results from flying, other than normal passenger flying, to a refund of contributions unless an additional premium is paid. In view of the effect on national service trainees and other members of the services, the matter was taken up with the insurance companies through their association some months ago. Advice was recently received to the effect that some companies have agreed to waive such clauses on policies issued prior to the 1st January, 1951, insofar as they apply to flying risks incurred in the course of duties with the Australian Navy, the Australian Army and the Australian Air Force. The full extent of the concessions granted by each life insurance company is not yet known, however, and further inquiries are being made. In the meantime, the insurance companies have suggested that members of the services holding policies effected prior to the 1st January, 1951, should make inquiries through their companies as to the extent they are affected by the recent decisions. In view of the interest displayed by members in both Houses a statement will be made as soon as full particulars of the concessions are available.
Senator TANGNEY (through Senator
Critchley) asked the Minister representing the Prime Minister, upon notice -
How many ex-servicemen aged 50 years or over have been retrenched from the Commonwealth Public Service in Western Australia?
From which departments have they been retrenched ?
Has any attempt been made to place these men in other positions suitable to their years, physical condition due to war service, and domestic circumstances?
As these men arc not easily absorbed in industry, how do their dismissals assist in the Government’s policy of releasing men for essential industry?
– The Prime Minister has supplied the following answers to the honorable senator’s questions : -
asked the Minister representing the Prime Minister, upon notice -
– The Prime Minister has supplied the following answers : -
asked the Minister representing the Prime Minister, upon notice -
– The Prime Minister has supplied the following answer : -
The Countess of Limerick had unfortunately to restrict her visit to Australia owing to prior engagements entered into in the United Kingdom before her visit was suggested. In view of the short period of her stay and the fact that it was most essential to her to be present at the Jubilee Women’s Convention in Canberra, it was not possible for her to visit Western Australia.
– On the 31st
October, Senator Ashley asked the Minister representing the PostmasterGeneral -
Is it true that insufficient staff has been engaged for the Sydney mail branch of the Postmaster-General’s Department to meet the needs of the public during the busy Christmas period? Is it a fact that only 200 operatives are being trained for sorting duties although 350 are required, and that the deficiency is attributable to the suspension of advertising for staff in newspapers and over radio stations? Does the Minister not consider that the dismissal of 10.000 public servants has discouraged the recruitment of additional staff to meet the Christmas rush? What steps does the Government propose to take to ensure that the public shall receive Christmas mail on time? Is the Minister aware that industrial trouble is likely to occur if female labour is employed in the mail branches at Melbourne and Sydney, at 75 per cent. of the male rate? Why have no steps been taken that male labour shall be recruited? Is it a fact that schools for the training of postal clerks have been interrupted and the trainees drafted into mail branch at Sydney to meet the staff deficiency there with the result that suburban and country post offices will be short staffed at Christmas time?
The Postmaster-General has supplied me with the following answers : -
As a result of press and radio advertisements the department has obtained more applicants for employment in the Sydney mail branch than the 350 who are immediately required. Three hundred and fifty of the applicants were engaged, and although as the result of wastage the numbers in training are somewhat fewer - 247 to-day. The losses are being replaced quickly as possible: if there is need for more applicants to replace further wastage, the advertising campaign will be resumed. Additional staff will be needed to meet the Christmas rush but the department does not expect that there will be any greater difficulty this year than in previous years in obtaining the necessary labour. Female labour is used only when suitable male labour is not available. In accordance with the decision of the Public Service Board which is based upon the ruling of the main Court of Conciliation and Arbitration, females receive 75 per cent. of the male basic wage, but males and females are paid the same marginal rates for skill. Some nearly qualified trainees have been withdrawn from the postal clerks’ training school and employed in post offices on duties appropriate to their qualifications They are being given the opportunity to complete their training through the medium of evening classes; it is the normal practice to suspend the training courses during the Christmas period in order to allow the trainee and instructional staffs to assist in coping with the additional work. This incidentally gives trainees valuable practical experience
– On 1st November. Senator Tangney asked the Minister representing the Minister for Health the following question : -
Recently I asked whether the Commonwealth Department of Health would investigate the Kenny method of treating poliomyelitis, with a view to establishing in Australia a clinic similar to those already operating successfully in other countries. I was told that this was primarily a matter for the States, one of which was about to establish such a clinic. I now ask the Minister representing the Minister for Health whether the Government will reconsider the matter in view of the fact that the Department of Health has at its service so many skilled scientific workers with all necessary research facilities, and that the results of research might be of inestimable value to the people of Australia as a whole? In the event of such research proving the value of the Kenny method, will the Minister consider the establishment of a clinic in Canberra to which sufferers from all States could be brought for treatment? If that is not practicable, will the Government consider subsidizing those States that are willing to estab lish Kenny clinics?
The Minister for Health has furnished the following reply: -
My department is keening abreast of all developments in the treatment of poliomyelitis. It is not considered that any action in the directions suggested by the honorable senator is justified at present.
– On the 24th October, Senator Courtice asked the following questions : -
Will the Minister for Trade and Customs, at hia convenience, inform the Senate of the allocation and use of dollars during 1950-51? Will he also statu what was the dollar expenditure for the purchase of petrol for Australia during the last financial year and, if possible, the estimated dollar expenditure for petrol for this country this financial year? 1 have already given a partial reply to the honorable senator’s question. I now submit a list of the principal types of goods, and the respective value thereof, that were imported from the dollar area during the year 1950-51 -
Bill received from the House of Representatives.
Standing Orders suspended.
Motion (by Senator Spooner) proposed -
That the bill bc now read a first time.
Debate (on motion by Senator McKenna) adjourned.
Bill received from the House of Representatives.
Standing Orders suspended.
Bill presented by Senator Spooner, and read a first time.
– I move -
That the bill be now read a second time.
The provision in the 1951-52 Estimates for expenditure on capital works and services is £101,64S,000, made up of £9S,S48.000 from annual votes and £2,S00,000 from special appropriations. This measure, which should be read in conjunction with the Supply (Works and Services) Act (No. 1) 1951-52 and the Supply (Works and Services) Act (No. 2) 1951-52, makes provision for the necessary parliamentary appropriation for the expenditure .under annual votes, which may be summarized as follows: -
Details of the proposed expenditure will be found on pages 211-224 of the printed Estimates, and in the schedule to this bill.
This year, as part of the all-round reduction of public works programmes, the Commonwealth reduced substantially its civil works programme. Consequently, the works included in this bill are those which, in the view of the Government, are of an especially urgent and essential nature and should be undertaken with the least possible delay.
Provision is made for the appropriation of a sum of £25,000,000 for expenditure upon war service homes. This expenditure was provided from Loan Fund in 1950-51. Provision is made also for the appropriation of £7.405,000 for capital expenditure required to implement the Government’s immigration plan.
The Estimates include an item of £9,000,000 to cover expenditure during this financial year on the Snowy Mountains hydro-electric power scheme, and an item of £2,900,000 for capital expenditure by the Joint Coal Board in connexion with its plans to increase coal production. The sum of £6,750,000 for the Department of Civil Aviation includes £3,987,000 for the acquisition and construction of aerodromes, as well as £2,7G3,000 for the purchase of modern technical equipment. The sum of £27,S00,000 is required for post office, telephone and telegraph works. Capital expenditure upon Commonwealth railways is expected to be £3,1S0,000, mainly for the conversion of the service from steam to diesel traction and for new improved rolling-stock.
Anticipated expenditure of £4,450,000 by the Department of Shipping and Transport includes £1,250,000 for the standardization of railway gauges, and £2,000,000 for the purchase overseas of merchant ships that will be used on the Australian coast.
The continued development of the Northern Territory and the Australian Capital Territory is estimated to cost £1,224,000 and £3,691,000 respectively in this financial year, mainly for the construction of cottages and hostels and for associated engineering works. Any further details which may be desired regarding specific works will be supplied by the Ministers concerned during the committee stage.
Debate (on motion by Senator McKENNA) adjourned.
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner) read a first time.
– I move-
That the bill be now read a second time.
The purpose of this bill is to authorize the payment to the States of a grant which, together with the taxreimbursement grant payable in 1951-52 under the existing legislation, will bring the total payment to the States this year to £120,000,000. The precise amount that will be payable to the States in 1951-52 under the tax reimbursement formula embodied in existing legislation will not be known until later this year. It is estimated, however, that the formula grant will be approximately £86,443,000. On- that basis it is estimated that the grant now proposed, by way of special financial assistance to the States, will amount to £33,557,000.
Last year an amount of £70,398,000 was paid to the States under the tax reimbursement formula. In addition, however, the States received two supplementary grants aggregating £20,000,000 which brought the total payment last year to £90,39S,000. The first supplementary grant of £5,000,000 was decided upon following discussions with the Premiers in August, 1950, whilst the second supplementary grant, amounting to £15,000,000, was’ paid to the States later in the financial year under the States Grants (Special Financial Assistance) Act 1951. This later grant was paid because of the effect of certain special factors on the State budgets, especially the increase of the basic wage by approximately £1 a week which was made by the Commonwealth Court of Conciliation and Arbitration.
At the conference of Commonwealth and State Ministers which was held last August, all States emphasized the deterioration of their budgetary position resulting from rapidly rising wages and prices. It was obvious that the grant of approximately £86,443,000 payable to the States under the present formula would fall considerably short of meeting their reasonable needs. Accordingly, after all the circumstances had been considered, the Premiers were informed that the Commonwealth would be prepared to supplement the formula grant by an amount sufficient to bring the total payment to £120,000,000 in 1951-52. This represents an increase of nearly £30,000,000 over the total payment made last year, and an increase of £33,557,000 over the amount which the tax reimbursement formula is expected to indicate this year.
The grant of £86,443,000 payable to the States this year under the tax reimbursement formula will, of course, be distributed among the States in accordance with the provisions of existing legislation. The Premiers discussed at some length the manner in which the additional amount should be distributed among the States. Some Premiers favoured distribution of the additional amount according to the formula laid down in the existing tax reimbursement legislation, whilst others favoured distribution on a population basis. The method of distribution suggested by Commonwealth representatives, and incorporated in the present bill, represents a compromise between the two methods advocated by the Premiers.
The total payments which will be made to each State in 1951-52 as a result of the legislation now proposed, compared with the total payment made to each State last year, are as follows : -
I commend the bill to honorable senators.
Debate (on motion by Senator McKenna) adjourned.
Bill received from House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner) read a first time.
.- I move -
That thebill be now read a second time.
This bill provides for the payment during the current financial year of special grants as follows: -
The payment of these grants has been recommended by the Commonwealth Grants Commission in its eighteenth report which has been tabled in the Senate. In arriving at the grants recommended for payment this year the commission has adhered to the general principle and methods followed in previous years. For many years the commission has based its recommendations on the principle of financial needs. This principle has been expressed by the commission in the following terms : -
Special grants are justified when a State through financial stress from any cause is unable efficiently to discharge its functions as a member of the federation, and should be determined by the amount of help found necessary to make it possible for that State by reasonable effort to function at a standard not appreciably below that of the other States.
In applying this general principle to the calculation of the grants, the commission has, as in previous years, made a thorough analysis of the finances of all the States, and has compared the budgets of the claimant States with the budgets of the three non-claimant States. In making this comparison the commission has taken account of any significant differences in the form and content of the States’ budgets, and has also made adjustments to the assessed grants to allow for differences in the standards of revenue and expenditure of the claimant and non-claimant States. As in recent years, the commission has adopted a balanced budget standard as the startingpoint for its assessment of the grants.
In its assessment of the grants the commission has always relied on the audited budget results of the States. As these audited results are not available until some time after the close of each year there is a time-lag of two years between the year on which the grants are assessed and the year in which the grants are paid. Thus in the commission’s eighteenth report the detailed assessment of the grants is based on tha States’ budget results in 1949-50. To meet this time-lag difficulty the grants recommended by the commission in recent years have been divided into two parts. The first part of the grants is an adjusting payment, which relates to the budget results of the States in the year on which the grants are assessed, whilst the second part of the grants relates to the States’ prospective needs for the year in which the grants are paid.
In the commission’s latest report, th” first part of the grants recommended for payment this year represents the difference between the grants now assessed for 1949-50 and the advance payments made in that year. The first part of the grants amounts this year to £522,000.
The second part of the grants recommended by the commission for payment in 1951-52 is based on an estimate of what the assessed grants may prove to be when the audited results for 1951-52 become available. This portion of the grants is treated by the commission a3 an advance payment which will be adjusted two years bence when the assessed grants for 1951-52 are calculated finally. The second part of the grants amounts this year to £10,000,000. The aggregate grant recommended by the commission for payment this year is, therefore, £10,522,000, or £1,653,000 less than last year.
It is important to remember that, in arriving at the special grants recommended for payment this year, the commission has taken account of the increased payments which the States expect to receive this year under the existing tax reimbursement legislation and the new legislation to provide the States with special financial assistance amounting to approximately £33,557,000. The shares of the claimant States in these increased payments in 1951-52 amount to £6j545,000. The total net increase thin year in the payments to the claimant States on account of the tax reimbursement grants, special financial assistance grants, and special grants therefore amounts to £4.892,000. Of this amount, South Australia will receive an additional £2,157,000, “Western Australia an additional £1.472,000 and Tasmania an additional £1,263,000.
The special grants recommended by the Commonwealth Grants Commission each year have always been adopted by successive governments, and the present Government can sec no reason why the recommendations contained in the eighteenth report should not be adopted this year.
Debate (on motion by Senator McKenna) adjourned.
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner,1 read a first time.
‘4.25]. - I move -
That the bill be now read a second time.
The purpose of this bill is to continue during 195.1.-52 the arrangement for threimbursement to the States of the costs incurred by them in administering controls over prices and rents. The Commonwealth agreed to reimburse the States for the costs of administering controls over prices, rents and land sales when the States assumed responsibility for those controls in 194S. The arrangement has been continued each year. All the States have since relinquished control over land sales, but maintain controls over prices and rents. The States have requested the Commonwealth to extend the arrangement for reimbursement for a further year. The Commonwealth has agreed to do so in order that administration of the controls will not be hampered by financial considerations.
During 1950-51, the Commonwealth expended £703,596 in payments to the States for this purpose, and expenditure for 1951-52 is estimated at £819,000. As in previous years, the bill provides for the making of periodical advances to the States. These will be adjusted on the submission of audited statements of expenditure after the close of the year.
Debate (on motion by Senator McKenna) adjourned.
Debate resumed from the 1st November (vide page 1447), on motion by Senator Spoon er -
That the bill be now read a second time.
– It is a remarkable thing that this bill should provide for increased taxation, notwithstanding the fact that the parties which now comprise the Government fought the election of . 1949 on the slogan that taxation should be reduced. They made all sorts of promises to the people that if they were returned to office they would reduce taxes and restore our economy to an even keel. They claimed that the Chifley Government had virtually taxed the people into poverty and had thus destroyed all incentive to increase production. It was a common catch-cry of the parties in opposition to the Chifley Government that the only result of increased production would be to increase the money in the hands of Mr. Chifley. Now that they have assumed office they have increased taxes. When the Labour Government left office in 1949, taxes were being gradually reduced. If the Chifley Government had remained in office taxes would have been reduced progressively. What is the record of this Government in the taxation field? Last year, under the provisions of the income tax and social services contribution legislation, income tax and social services contribution were lumped together, and as a result those who formerly paid social services contribution but were exempt from income tax were made liable to increased imposts at any time for the purpose of providing the revenue of the Government.When that legislation was introduced I described it as a snide way of imposing additional imposts on persons who previously had been liable only for the payment of social services contribution. This bill does precisely what I suggested the Government would do when I attacked the parent legislation twelve months ago. I am not at all sure whether the supercharge of 10 per cent. is to be applied to gross or net incomes of taxpayers, because some phrases in the clauses of the bill are capable of either interpretation.I trust that the Minister for National Development (Senator Spooner) will state precisely, either during his reply to the second-reading debate or at the committee stage, whether the additional 10 per cent. will apply to gross or net incomes.
When the Minister introduced the bill he described its purpose as primarily to assist in the fight against inflation by drawing off spending power from both individuals and companies. A similar statement was made by the Treasurer (Sir Arthur Fadden) when he introduced the bill in another place. Let us recall what a prominent member of the Government had to say upon this subject in 1949. The Minister for Repatriation (Senator Cooper), who was then sitting in Opposition, is reported in Hansard, volume 204, at page 862, to have said -
The extraction by a government of an enormous amount of money from the national income is a well-known cause of inflation.
The Treasurer and the Minister for National Development have contended that increased income tax will assist the Government in its fight against inflation, but their colleague who now occupies ministerial rank and is presumed to speak for his party, has said that the extraction by the Government of an enormous amount of money from the national income is a well-known cause of inflation. I do not know how those gentlemen propose to reconcile their differences of opinion. When members of the Government parties faced the electors on the hustings, they were guilty of grave insincerity. I do not contend that a person who makes a promise and subsequently finds that, through circumstances beyond his control, it. is impossible for him to honour it, is dishonest, but the members of the Government parties cannot claim that means of escape. When they faced the electors they said in unequivocal terms that if they were elected to office they would reduce taxes, but they have now thrown that promise overboard and in this bill they propose to extract from all taxpayers including companies and the owners of properties an additional levy of 10 per cent.
Under this proposal a citizen who first begins to work* for his living and earns £104 a year will be subjected to tax. In that respect we have regressed at least 30 years. In 1949, a taxpayer, whether single or otherwise, who earned £500 a year or less, paid not one penny in income tax. Those who derived their incomes from property were also exempt up to an amount of £350 a year. Those exemptions have been completely wiped out by this measure. A taxpayer with a wife and four or five children whom we exempted from payment of tax, notwithstanding the receipt of a fairly large income, will now not only pay income tax but will also be .called upon to pay an additional impost of 10 per cent. Collections of income tax and social services contributions will bc commonly paid into the coffers of the Treasury. No provision has been made in the bill for social services contributions to be paid to the credit of the National “Welfare Fund.
I have noticed recently that the press, which used to give me such an awful time but has now decided to leave me alone, has attacked these proposals, and has castigated the Government for its failure to halt inflation. In articles concerning the rise of the basic wage recently published in the press we have been forcibly reminded that on every occasion on which the basic wage is increased, greater amounts of income tax become due and payable to the Government. Every increase of the basic wage brings many taxpayers into higher categories for income tax purposes, which means that they make appropriate additional contributions to the revenue. That process is continuing all the time. Recently the basic wage was increased in some States by 14s. a week and it has been suggested that the next increase will be approximately £1 a week. Those increases result in larger sums of money being paid into the coffers of the Treasury by way of income tax. The Government wins every time. Before the latest tax increase a single man on £10 a week paid in income tax 15s. 6d. a week, or £40 6s. per annum. When basic wage increases sent his pay to £11 a week he had to pay 188. 6d. a week or £4S 2s. a year. Similar increases have been made in the tax payable by all taxpayers who received the benefit of basic wage increases. Under the provisions of this bill a taxpayer in receipt of £11 a week or £570 a year will pay increased income tax, not 10 per cent, but 32 per cent, higher than that paid by him last year. The Government has said that income tax is not a discriminating tax and that its incidence is spread evenly over those on both high and low income ranges. I should like to learn the reaction of graziers to this proposal. The Minister glossed over the 10 per cent, increase of income tax. Only two paragraphs of his second-reading speech were devoted to that subject.
On the second page of his speech, the Minister started to deal with the averaging system and its effect on the incomes of primary producers. Then followed a three-page apology for abolishing the averaging system in respect of certain income earners, while proposing to collect from primary producer? generally, many more millions of pounds in taxes. This is the Government that claimed to be the protector of the primary producers! This is the Government that claimed to believe in reducing taxes ! This is the Government that has consistently repudiated its election promises .’ The primary producers are to be asked to contribute £32,000,000 more to the national revenue this year than they contributed last year. The Government arbitrarily decided that it should budget for a surplus, and that the additional money should come mainly from the primary producers. This action, I believe, is a spiteful retaliation for the protests that wool-growers made last year against the wool deduction scheme. That scheme has now been abandoned. The Government realized that the woolgrowers simply did not have enough money to carry the scheme for a second year. Therefore, the incidence of taxation has been shifted from the woolgrowers in particular to primary producers generally. This year, primary producers will pay in income tax more than they have ever paid before. The averaging system is to be continued in respect of primary producers whose taxable and average incomes do not exceed £4,000, and next year - not this year - they are to be given an opportunity to withdraw from the averaging plan.
The primary producers have had something to say about the differentiation that will occur under the new tax proposals. The following statement was printed in Muster, a graziers’ publication -
Resolution No. 15, which has now been introduced by the Treasurer, repeals the rate already enacted under the Income Tax and Social Services Contribution Act 1050, and substitutes fresh rates. This is a retrospective increase in rates.
The Government is not satisfied with imposing additional taxes from this year on. The increases are retrospective. And this is the Government that promised to reduce taxes ! The article continues -
An examination of eight typical cases, where incomes for 1950-51 range from £5,000 to £100,000, shows that the heaviest comparative burden is borne by thosewith incomes between £5,000 and £15,000. Big incomes of £50,000 and over aresuffering taxation increases of only 8 per cent. or less, while incomes of £5,000 are suffering an increase of 31 per cent.
As I have already shown, a taxpayer who earns only £570 a year will pay an additional 32 per cent. this year. For those reasons I oppose the bill andI move as an amendment -
That all the wordsafter, “ Bill “, be left out with a view to insert in lieu thereof the following words: - “be returned to the House of Representatives requesting that -
the provision for ten per centum increase in tax be deleted;
provision be made to enable primary producers to elect to continue under the five years income averaging plan in respect of the income year 1951-52.
As this is a money bill the Senate cannot amend it. It can merely request that an amendment be made. In view of the substantial surplus for which the Treasurer is budgeting, I believe that the proposed tax increase of 10 per cent. should be at least reduced. According to the Minister’s second-reading speech, income tax rates this year will be the same as they were last year but, under clause 9, taxpayers will be required to contribute an additional10 per cent. I am not quite sure that that does not mean an increase of 10 per cent., assessable on gross income. Notwithstanding the Minister’s statements, primary producers believe that they should be permitted, if they so desire, to remain within the provisions of the averaging system this year. If this measure be passed in its present form, the Government will have the benefit of an increase of 10 per cent. in income tax. In addition, tax revenue will be higher because of the abolition of the averaging system in respect of certain primary producers. On top of all that will be the tax contribution made under the provisional tax scheme. I realize that the Minister dealt particularly in his secondreading speech with wool-growers, but the wool-grower is not the only primary producer. Mixed farmers who engage not only in wool-growing but also in other avenues of primary production will be badly stung by this legislation. I know that last year, because of the wool deduction scheme, many small farmers had to secure accommodation from the banks to tide them over until they could collect money that was owing to them. That is still happening, and the position will become worse under this legislation. Government spokesmen have spent hour.? apologizing for increased taxes levied by an administration which was elected on a promise to reduce taxes.
– Will the honorable senator be good enough to table, or hand to me the copy of Muster from which he quoted, so that the figures may be examined ?
– I have not the magazine itself, but I have the extract that I quoted from it, and I shall be pleased to comply with the Minister’s request.
– This bill provides, inter alia, for a change in the system of averaging incomes of primary producers. I find myself in the rather extraordinary position of having to agree with what Senator O’Flaherty has said about the provisions of this bill relating to the averaging system. The Treasurer (Sir Arthur Fadden) soft pedalled the alteration by referring to it in his budget speech as a. “ modification of the averaging provisions “, but the word “ modification “ does not express what is involved in the proposal. It is not modification, but straight out abolition of the averaging system of taxation that has been applicable to primary producers in receipt of incomes in excess of £4,000 per annum. The Treasurer has stated that the abolition will affect in all only 2S,000 of the 300,000 primary producer taxpayers. The bill proposes that this minority group of taxpayers, mostly wool-growers, shall be called upon to provide additional revenue of £47,1)00,000. That is far too drastic. I think it was Herrick who, about 300 years ago, said that ‘ kings ought to shear their subjects, not skin them “, and I think that those words aptly sum up the position to-day. The proximity of the amount of additional revenue sought to the sum of £45,000,000 that the Government has promised to refund to the wool-growers at the end of this month, being the aggregation of the 7^ per cent, deduction that was made from their gross incomes in the financial year 1950-51 to provide the nucleus of a stabilization fund, has driven many graziers to the cynical conclusion that they are to be taxed retrospectively to finance the repayment of their own money. Whether that is being done with Machiavellian intent is not for me to determine. But it is certain that no spokesman of the Government would be able to persuade the wool-growers that that was not the true position. What is the genesis of the averaging system as applied to the incomes of primary producers? In the early ‘thirties a royal commission was appointed under the chairmanship of Mr. Justice Ferguson to make recommendations to the Commonwealth about the income tax laws generally. The royal commission subsequently recommended that the principle of averaging income should be confined to primary producers, and a provision to that effect was inserted in the Commonwealth income tax laws in 193S. lt was continued when the Commonwealth adopted the uniform taxation system in 1942. The averaging system has stood the tests of time and change, and it is supported by primary producers throughout Australia. Paragraph 639 of the second report of the royal commission, published in 1934, reads -
The primary producer, however, is in a different position. His income is affected by seasonal conditions that cannot be predicted or controlled. If he sustains a loss he will, of course, have the right to carry it forward in common with other taxpayers.
But if his income fluctuates considerably without resulting in a loss he would, if averaging were abolished, pay considerably more tax than a taxpayer who received the same aggregate income during the same period in reasonably even instalments. This case is not met by the right to carry forward losses, and for that reason we think that the income of the primary producer should be assessed at an average rate as it is at present.
The averaging system has been especially helpful to the graziers in the woolgrowing areas of north-western Queensland. Probably only men who know and understand the vicissitudes of sheepgrazing and wool-growing in that part of Australia will appreciate the correctness of what I am about to say. Droughts are a source of constant worry in that vast territory. The grazing properties are remotely situated from railways, and are entirely dependent on the summer rainfall for water. No one knows better than does the Minister for Repatriation (Senator Cooper), as a result of his experiences on a station property that he owned for a number of years at Winton, that when drought begins to fasten down the stock-routes become destitute of feed and water. The sheep must be sold, while there is still time to move them away by rail to agistment areas in the south, where people are willing to purchase them. They must be moved while they still have sufficient strength left to travel, otherwise they would die on the property.
T shall explain one of the difficulties that may confront a grazier. He may have to sell his sheep to meet the vicissitudes of a drought, which does not break until the next taxation year. Obviously he derives income from wool plus the income from the sale of his sheep, that is, double income in one year of taxation. The following year, after the drought breaks, he has to buy more sheep at higher prices than he received from the sale of his sheep, because there is keen competition once the season has broken. The averaging provisions were introduced to meet such cases, because it levels out his income over two years instead of giving him a sharply rising income in one year, on which he would pay a high rate of tax. Men in that position will be very severely affected by the abolition of the averaging system of taxation.
Present conditions in Queensland provide the strongest possible case for the retention of the averaging system, without limitation as to income, over the whole field of primary production. Drought conditions exist in every part of the State, and there will be heavy losses of sheep and cattle. Summer heat, also, has resulted in some of the worst bush fires in the history of the State. I have before me clippings from the Courier-Mail, the Sunday Mail, and the Sydney Morning Herald, setting out the effects of bush fires in north-western New South Wales, and in the western and central western districts of Queensland. Hundreds of thousands of acres of sheep country have been burnt out. One report from Clermont was to the effect that the local sergeant of police had stated that the graziers in that area were fighting bush fires on a 50-mile front. Vast tracts of country are being devastated by the bush fires. The resultant losses of sheep, cattle, and fencing are only some of the difficulties that beset the men who are endeavouring to wrest a livelihood from the land in those areas. As a result of these losses, and the modification of averaging, they will be almost bankrupt in the next financial year. That is why I claim that this action by the Government could not have been taken at a more inappropriate time. It will deliver a knock-out blow to worthy men who are striving and struggling against bush fires and droughts and other difficulties associated with life on the land.
I think I am entitled to ask why the Government has moved away from the recommendations of the royal commission that I have mentioned. In reply to an inquiry that was made by telegram b.v Mr. W. A. Gunn, federal president of the Graziers Association, the Treasurer replied by telegram -
The averaging system was designed to achieve equality amongst taxpayers, and not to confer discriminatory advantages on sections of taxpayers.
But the royal commission made it clear that primary producers, because of income fluctuations, were entitled to have the benefits of averaging. In his budget speech, the Treasurer stated -
It has always been recognized that the system has faults. For example, it operates to the advantage of the taxpayer in a year of high income when he is best able to pay and to his disadvantage in a year of low income when he is least able to pay.
The primary producers know full well that the averaging system works to their benefit in years of high income, and to their disadvantage in years of low income, but they are prepared to accept that position. They know that they cannot have it both ways. As the word “ averaging “ implies, the bad years are merged into the good years, and that is where the balance comes in. My complaint is that the Government has not been prepared to wait until the wheel of averaging had turned a full circle. The value of wool has declined by 50 per cent, this year compared with last year. If this decline persisted the Treasurer would pick up most of what he had lost in years of rising incomes. The wool-growers could face the disadvantage of higher taxes on lower incomes, spread out over the next few years, much better than they could face the system that the Government now proposes, because the payment would be much more gradual and the effects on the wool-growers less severe. In his budget speech the Treasurer stated that in the five-year period ended 1949-50 primary producers benefited from the averaging of incomes to the tune of £77,000,000, and that if modification were not effected a further benefit of £62,000,000 would accrue in respect of the 1950-51 year. It is rather difficult to get a right focus on these figures. The Treasurer has dealt with the benefits that would accrue to the primary producers as a whole, that is 300,000 primary producers. However, it is clear that the modification of averaging will affect only those primary producers, mostly wool-growers, in receipt of incomes exceeding £4,000 per annum. The Treasurer has presented only one side of the picture. He has referred to the benefits which have accrued during the five-year period of rising incomes and has presented figures which show the disproportion that exists between the taxes payable by the primary producers on the one hand, and those payable by the general taxpayers on the other hand. The Treasurer, in claiming that primary producers are deriving from the averaging system disproportionate advantages in comparison with other taxpayers, has, if I may say so with great respect, distorted the picture. The right honorable gentleman’s figures are correct only because the Government has decided to “ break the circuit “ of averaging. Even then, they are only partially correct, because they show the advantages that 300,000 primary producers have derived from the system. Whatever those advantages may be, they will continue to be enjoyed by all but 28,000 of the 300,000 primary producers in this country. The great majority of primary producers will continue to pay their income tax under the averaging system, and I am certain that during the next five years a reasonable balance will be established between them and the Treasury. As the incomes of primary producers decline, the Treasury will derive benefit from the system.
I am concerned about the 28,000 primary producers who are to be excluded from the averaging provisions. In my opinion, this section of the community, which consists mainly of wool-growers, is being discriminated against, because the Government proposes that the averaging system shall continue to apply to primary producers whose annual taxable income does not exceed £4,000. It is logical to assume that the opinion of the Government is that the averaging system is good and sound when applied to taxable incomes which do not exceed £4,000 a year, but that it loses its virtues when applied to larger incomes. I sum up by asserting that the averaging system was designed, not to give to primary producers, whatever their incomes, an advantage over other taxpayers, but to level out their taxation liabilities and to enable them to be treated for taxation purposes as if their incomes were as constant as those of other taxpayers. If the averaging system were allowed to complete a full circle, and if the good years were taken with the lean years, the Treasury would lose nothing. It is only because the circuit has been broken at this stage by the decision of the Government that the primary producers appear to have been deriving disproportionate advantages from the system, at the expense of other sections of the community. I protest strongly against the exclusion from the averaging provisions of primary producers whose annual taxable income exceeds £4.000. If it is a good system to apply to primary producers whose taxable income does not exceed £4,000, it must also be a good system to apply to those whose income exceeds that figure.
Now, I come to the real scene of the crime. The loss of the principle of averaging is bad enough, but, to make matters worse, the Government has strayed from the path of equity and sound taxation principles by taking retrospectively from a minority group of primary producers a sum of £22,500,000, plus £24,500,000 provisional income tax, in this current year, making £47,000,000 in all. This group consists of primary producers whose taxable incomes for the peak year, 1950-51, exceeded £4,000. According to the Treasurer, 28,000 persons will be affected. No amount of argument will alter the belief of the wool-growers that the averaging system developed faults in relation to taxable incomes in excess of £4,000 a year only when the Government made up its mind to obtain that sum of £47,000,000 by hook or by crook. This bill will enable the Commissioner of Taxation to go back to a year that has passed. It will authorize him to go back to 1950-51, a year in respect of which most income tax returns have already been submitted, and to require the members of this minority group to pay income tax upon incomes for that year, in addition to provisional income tax for the year 1951-52 plus a levy of 10 per cent.
I shall be frank with the Senate. I confess that I did not expect the day would come when a Liberal -Country party . government would put the hallmark of its approval on the principle of retrospective taxation. This is nothing more or less than that. At this moment, the law of this country entitles this group of 28.000 taxpayers to have their income tax liability for 1950-51 assessed in accordance with the averaging system. They have submitted their income tax returns to the Commissioner on that basis. If the modification, as it is called, were designed to operate in respect of income for the .current financial year, the same degree of exception could not. be taken to it, because reasonable notice of the alteration would be given, and, in addition, the taxpayers concerned would not be forced to pa.v from their incomes for this year, which have been greatly reduced, the huge sum in direct and provisional income tax that they will be required to pay as a result of their assessments being based on a record income for the year ended the 30th June, 1951. The Senate is now being asked to approve of this “ modification,” which will increase greatly the income tax that a minority group will be required to pay in respect of their income for a year which has passed away and which now belongs to “ yesterday’s 7,000 years “. The proposal has given me a severe jolt. No member of the Government parties will be able to complain or object if on some future occasion some other government decides to follow the precedent that has been established by this Government. Should that come to pass, the other government’s actions might affect not only a few wool-growers. With the leave of the Senate, I shall incorporate in Hansard a statement which proves that the “ modification “ of the averaging system will hit the small wool-grower harder than it will hit the big woolgrower. The statement, which cites an actual case, is as follows: -
The average from 1047 to 1051 inclusive would amount to £5,330, and his total assessment, where the averaging system applied, would amount to £12,702, as follows: -
Under the Treasurer’s scheme for the abolition of averaging the comparative position is as follows: -
From this it will he seen that a “ small “ grazier with only 2.250 sheep will be penalized by the “ modification “ by an increase in taxation of £2,505 and an increase in his assessment of £5,380.
It will thus be seen that the increase in this “ small “ stock-owner’s taxation assessment will amount to £5,3S(i, or £2 8s. per head of his sheep more than would have been the case had the averaging system not been abolished.
In effect, it means that his net taxable income for the tax year ended 30th June, 1951, was £14,028. The passage of this amending bill will mean that this primary producer taxpayer will have to provide more money in taxation than the full amount of his net taxable income as above shown - £14,02S.
This- means, of course, that he must approach his banker for overdraft accommodation to meet his assessment. If the banker should refuse, under instructions that money must not be advanced to meet taxation, then this man has only one course left, viz. to make a forced sale of sheep to meet the tax.
We can, for our purpose, double the income figures which I have just quoted. His taxable income would be £28,050. Working it out in the same way, it means that the increased tax payable under the non-averaging system would be £3,135 and the increased assessment would be £0,430.
The direct result of this “modification” in the averaging system as affecting the man with 4,500 sheep represents an increase of £1 Ss. (id. per sheep as against the man with 2,250 sheep at £2 8s. per head.
Anybody with any knowledge of the great wool industry knows that prior to the peak income year of 1950-51 a grazier who was running only 2,000 sheep was regarded as being a battler or a struggler. He was a very small man in the industry. Frequently, such men had to take droving contracts or to work upon neighbouring stations in order to keep the pot boiling on their own properties. Many woolgrowers in that category were fortunate enough to receive very high prices for their wool in 1950-51. By one splendid turn of the wheel of fortune, they were elevated to a position in which they had. for the first time in their lives, and, I venture to say, also for the last time, a taxable income in excess of £4.000 a year. To them the wool prices of 1950-51 were a bonanza. They needed extra money to enable them to increase the productivity of their small properties by providing supplies of water, and to undertake ring barking, scrub-felling and the repair of fences. They wanted it also to provide some amenities in their neglected homesteads. During that year of peak prices, the labour and materials that they needed for such work were not available. Consequently they could not claim income tax deductions in respect of any such expenditure.
As the result of one stroke of good fortune these men have been placed in the category of rich men, and the government’s action in modifying the averaging system will administer a knockout blow to them. In my opinion, the majority of the graziers who will be injured by this legislation will be poor and struggling men, but they will be classed with the minority of wealthy graziers. Rich or noor, all will be seriously affected by the abolition of the averaging system and the retrospective taxation provisions.
The wool-growers and cattle men in my own State who will be affected by the legislation are selectors and graziers whose properties are situated in the. lower western, central western and north western pastoral districts of Queensland. In those districts, the rainfall is sparse and uncertain. Recurring droughts there have broken the hearts of thousands of splendid men from the earliest days of pioneering up to the present time. During the general election campaign of 1949, I spent some time touring a Queensland electorate with an Australian Country party candidate. He had a grazing property in the north-west of Queensland. It was reasonably close to a railway and to a town. The soil was good and the property had been improved. He told me that he had spent 40 years of his life on the property and that, during the whole of that period, he had never known what it was to have a credit balance at the bank. He said that he hoped that the upward trend of wool prices that was then in progress would enable him to have in 1950 a credit balance for the first time in his pastoral experience. He attributed the reason for his previous financial insecurity to constantly recurring droughts, with conse- quential loss of sheep, and low wool prices. His case is typical of many others in that belt of country, where graziers are dependent upon summer rains. If the monsoons fail, there may be twelve months without rain. If that happens, there are heavy losses of stock and men are thrown into debt. They have interest commitments to meet. Their life is one of continuous struggle. The Land Administration Board of Queensland negotiated, on behalf of the Government, with the financial houses, and agreement was finally reached on what caine to be known as the wool relief scheme. The members of the Land Administration Board, Mr. W. L. Payne and Mr. A. G. Melville, reported to the Queensland Parliament on the problems of the grazing industry. I wish to read to honorable senators the thirtyeighth paragraph, at page 513, of that report, as follows: -
But while jubilation is justified at the sudden favorable change in the market, it must not be forgotten that low wool prices have now ruled for such a long period that the Australian wool industry is virtually insolvent.
I wish to emphasize those words because they illustrate the fact that many woolgrowers had endured a lifetime of difficulty, debt, interest commitments and battling. When, for the first time in this generation, the price of wool afforded them rich returns, the Government has decided to deprive them of the benefits of that price. In order to show that conditions have not always been bright and shiny in the industry, I point out that in 1930-31 wool practically lost all value. Our best merino fleeces realized less than 8d. per lb., whilst sheep could be bought at prices ranging from ls. to 2s. 6d. a head. The Wool Relief Scheme, under which the Queensland Lands Department agreed to a 25 per cent, reduction of the rentals of crown leaseholds on condition that mortgage banks and companies also reduced interest rates by 25 per cent., was designed to assist in offsetting the extraordinarily low wool prices which then prevailed. It is only a matter of twenty years ago since that action was taken. Very low prices for wool have obtained since then, with the exception of the sudden fillip which has occurred during the past four years.
One hears much loose talk about “ wealthy wool-growers “. Such a term may have been justified during the last generation when taxes were low and graziers held large station properties. I assure honorable senators that in Queensland, at any rate, that old order has changed during the past 50 years. To-day, because of resumption of land for closer settlement and because of the expiration of pastoral leases, there has been a great redistribution of land; it has passed from the hands of large lessees and owners to the hands of smaller selectors. Smaller properties, in conjunction with the high taxes of recent times, have made the grazing industry a great deal less attractive than it was in years gone by. [t is true that there are still wealthy graziers here and there, but they are mostly to be found in the good rainfall areas, and for the most part they are men who have inherited money from their parents who conducted grazing operations when areas and stockholdings were large. To-day, the industry is mainly in the hands of . selectors who must surmount many hazards of drought, debt and difficulties before they become independent, let alone wealthy men.
The Australian wool-grower has never lost his sense of sturdy independence. Even when the price of wool fell to an average of 7$d. per lb. in 1931, he did not ask the government to pay subsidies. The wool-growing industry has taken all the slings and arrows of outrageous fortune whilst other industries, both primary and secondary, have requested and obtained subsidies and bounties which, over the years, must have involved the payment of tens of millions of pounds. I suggest to the Senate that the general community owes a great deal to the woolgrowers and cattle men who, by their unremitting toil in remote and isolated parts of Australia, far removed from the amenities of life that exist in our coastal cities, produce the real wealth which represents the strength and stability of our Commonwealth. Unfortunately, they are the people who are to be hit by this legislation. I consider that they do not deserve to be hit.
.- Senator Maher has revealed to us his feelings concerning the proposed abolition of the averaging system, of income tax. Some of the information that he has given to the Senate this afternoon is startling. I inform him, and other honorable senators opposite who may support his remarks, that his sincerity concerning this legislation will be tested when the amendment which the Opposition has submitted is being decided later in the proceedings. Should the honorable senator, and any one who is likely to support him, not support the amendment, it will mean that everything that they have said in condemnation of the averaging system will have gone for nought and will be meaningless. Senator Maher, apparently, is concerned only with the primary producers, whereas I am concerned, most necessarily, with all sections of the community. I shall deal with the welfare of primary producers equally with that of other members of the community.
Statements have been made recently by taxation authorities and economists about the incidence of taxation on single men. Those statements would lead us to believe that the single men in the community have untold wealth at their disposal and that that wealth represents a field for taxation. But what single man in the community is without some responsibility or other? 1 suggest that the average single man has family responsibilities. It may be that he contributes to the family exchequer or the family budget. Perhaps he has parents to support or other members of his family to assist. All other considerations aside, where do honorable senators suggest that we are to obtain our married men if we do not give to single men the opportunity to save money? 1 consider that they should not be taxed unnecessarily. Perhaps some of those who sponsor that false claim enjoyed a large income when they were single and have vivid memories of how they dissipated it. Perhaps they consider that the imposition of heavy taxes will act as a deterrent to dissipation.
The averaging system has been burning in my mind for some time, as its abolition will no doubt burn a hole in the pockets of some Australian primary producers within the next six months. However, the purpose of the bill now before the Senate is to increase rates of tax. That cannot be denied, so why should we whimper about it? The Government has stated as plainly as is possible its intention to increase rates of tax. I have no objection to that course, to which all of us must submit, but I recall the 1949 pre-election promise of the Government parties that taxation would be decreased.
– Do not be nasty with them.
– I do not propose to be nasty. On the contrary, I intend to let them down rather lightly. I remind honorable senators opposite, however, that the Government parties at that time promised to reduce taxation. Honorable senators have since heard a member of the Government state that the world has changed remarkably within twelve months and that what was promised in 1949 and the action that the Government then proposed to take cannot now bc taken. Because of that change, the Government believes that taxes should be increased. Senator Maher, who put the case for the primary producers, scathingly attacked and condemned his own Government because of its taxation proposals. That condemnation came from the heart of the honorable senator, as every one in this chamber appreciates. No honorable senator, therefore, should object if I adopt the position of the basic wageearner and endeavour to prove to honorable senators that the taxation proposals of the Government are inequitable as far as he is concerned. In order to prove my contention, I wish to refer to the position of a single man, although it should not be taken that I have any special bias in favour of single men. The rate of tax that will apply to a single man will apply also to married men with or without dependants. In December, 1949, when this Government was elected to office, the basic wage was £6 9s. a week. The basic wage earner who worked a full year would have earned the sum of £335 8s. On that sum a single man would have been required to pay a tax of £16 18s. If the basic wage had remained static at £6 9s. a week until the present time, and the reduction of taxation which the Government introduced in 1950 had operated, the income tax which that single man would have been required to pay would have been only £14 19s. However, the basic wage has increased progressively since 1949, until to-day ii averages £10 a week. In New South Wales it is £10 6s. 6d. a week, in Victoria £9 19s., in Queensland £9 6s., in South Australia £9 15s., in Western Australia £9 18s. and in Tasmania £9 19s. Therefore, the average basic wage for the six capital cities and 30 towns is £10 a week. It so happens that income tax is not one of the items included in the “ C “ series index, and is therefore not considered as a part of the statistical formula which is used when the cost of living is being decided. We have been told by economists over the years, that since the basic wage was first introduced the formula has not increased to any substantial degree. Recently, I read that since the first basic wage was fixed in 1907 until the present time, the total increase of real wages has been only 14s. a week. An increase of 14s. a week since 1907 does not represent a great deal. The fact is that variations of the basic wage from time to time do no more than cover cost of living increases. The basic wage does not fluctuate unless the cost of living fluctuates.
Now I come back to the point which 1 particularly wish to make. At the present time, a single man receives a basic wage of £10 a week. Before the present scale of tax becomes operative, such a man pays 15s. 6d. a week in taxation, or £40 6s. a year. Under the proposed rate he will pay 17s. a week, or £46 15s. a year, so that his taxation has been substantially increased. The point I am making is that the basic wage is related to the cos; of living, so that a man’s real wages remain practically static. In 1949 the basic wage was £6 9s. a week, but by 1950-51, it had increased to £8 17s., and the single man paid £40 6s. 6d. in tax. The basic wage is now £10 a week, and the single man this year will pay £46 15s. in tax. It is evident, therefore, that taxation has been increased for a section of the community which can ill afford to bear the extra burden. This process will continue, because the Treasurer (Sir Arthur Fadden) has assured us that the basic wage will continue to rise. Therefore, basic wageearners will be dragged by the hair of their heads into a higher tax range, notwithstanding the fact that their real earnings have not increased. As time goes on, their position will become worse.
Senator Maher discussed the averaging system as applied to primary producers, but he did not exhaust the subject. Some people may say that the Treasurer knows what he is doing, and that he has a right to vary the averaging system if he sees fit. The primary producers know whether the averaging system is of benefit to them or not. It has been claimed that the system has outlived its usefulness, and that it can now be discarded because the primary producers would be better off without it. In answer to that contention, I read the following telegram which I received recently from a body of graziers in the Longreach district: -
Our Executive Committee has unanimously voted that this Association strongly protests against alteration to averaging system, particularly its being made retrospective to cover 1950-1951 period.
– I did not think the honorable senator had any friends amongst those with incomes of £4,000 a year.
– The Minister for National Development (Senator Spooner) would be astonished to know some of those whom I number amongst my friends, just as I would be astonished to learn that he has ever championed the cause of basic wage-earners. In Queensland, many thousands of workers depend upon the pastoral industry for their livelihood, and it behoves me to do what I can to protect that industry. It would be absurd for me to say that “I represent only one section of the community. I know what a bad season means to the graziers, and I also know that many thousands of pastoral workers will be affected by the legislation that we are now considering. This is the reply that I sent to the telegram which I have just quoted -
Received telegram concerning averaging system. I believe graziers appreciate advantage of system more than Treasurer, whose apparent opinion is fluctuation of incomes duo solely to prices for primary produce. I will oppose alteration, knowing losses drought, fires, floods, flics, cause violent fluctuations incomes.
That reply covers pretty well what Senator Maher said in his speech thi? afternoon. One might think that the Government would always be solicitous for the welfare of the primary producer;whom it claims to represent, and I cannot understand why it should have brought down legislation like this. The Treasurer seems to believe that price is the only factor which regulates the income of primary producers, but that is not so. Price is only one of the factors, as is illustrated by the following quotation which I culled from the CourierMail:
Drought Hits Sugar Industry - One-third DROP for Cane Towns.
Queensland’s wealthy cane belt towns face a not-so- weal thy Christmas. Droughts will reduce the income of some towns by one-third.
The cane harvest now under way will average 20 per cent, below normal.
The drought is already hitting meat export? to the United Kingdom.
Sugar industry spokesmen in mill centre* last night said both cane-planters and seasonal employees had already begun to “ feel the pinch “.
The Australian Sugar Producers’ Association Mackay district secretary (Mr. H. R. Hart) said that in Mackay the “ £ 5 millionayear town,” spending had already tightened. “ Last season our crushing ended late in January” he said. “This season it will finish half-way through November “. “ This means a terriffic cut in income. People are getting careful in their spending”.
In Bundaberg, the Cane-growers’ Executive secretary (Mr. A. B. C. Anderson) said: “People are not buying as many new cars. Money is scarcer already. Business men say it looks like a dull Christmas “.
Gladstone meatworks are closing earlier than usual because not enough cattle are coming forward. They will kill on only about 10 days before the end of the year.
Killing at Lakes Creek (Rockhampton) will be intermittent, and will e.nd altogether early in December.
I have here another press clipping which throws light upon the matter under discussion
Staggering Tax for Queensland Grazier.
A Queensland grazier, who earned £28.000 in 1050-51, will receive a staggering taxation assessment of £40.000.
The assessment will be for income tax on that year and provisional tax for the current year.
This case waa cited yesterday by the United Graziers Association president (Mr. W. A. Sunn) in commenting on the Commonwealth’s decision to modify averaging provisions retrospectively to the income year ended June 30, 1051.
Mr. Gunn said the grazier would have to foot the bill “ from current income. It would he impossible to meet the assessment if there was a sudden fall in wool values.
Coming mi top of last 3’ear’s high wool prices modification of the averaging system would, in most cases, mean that primary producers affected would have to pay more than 20s. in the £1 and, in many cases, higher than 25s. “ Trading banks have been instructed not to advance money against taxation commitments, unless on substantial grounds,” Mr. Gunn said, “lt is a taxation burden which must restrict production and development”.
As was stated here this afternoon, the position next year will be worse for those primary producers who will be affected by this legislation.
I propose now to discuss the economic effect of high taxation. Tt is idle to argue that, because certain sections are singled out to bear increased taxation, the effect of the increase will not be reflected in a general rise of the cost of living. Every increase of taxation must affect the cost of living. The manufacturer, the wholesaler, the retailer and all other traders have efficient costing systems. They know what taxation they will be called upon to pay, and they see that the taxation is covered by the prices which they charge for their goods. Taxation is written into the prices of commodities before they leave the factory, the warehouse, and the retail shops. The proposed increases of taxation which we are now considering will be reflected in a higher ‘ cost of living next year. In thi3 connexion, it is interesting to quote the opinion of an economist whom the present Government holds in high regard. lie wrote -
If saving is not undertaken voluntarily, however, I am afraid high taxation is the only alternative, i,e., we must let the Government do the savins;. This is bad because high income taxation will tend to limit the incentive to work, and is thus itself an inflationary force indirectly.
– Who said that?
– .That was written by Professor Copland, and it appears at page 630 of his book entitled Inflation and Expansion. I agree with what he said, although he probably is not very much concerned whether I agree with him or not. High taxation is bad because it tends to destroy the incentive to work. I know some primary producers who have set a limit to production from their properties.
Sitting suspended from 6 to 8 p.m.
– There is one other matter with which I should like to deal before I conclude. An examination of the report of the Commissioner of Taxation reveals that SO per cent, or 90 per cent, of the persons who were unable to pay their income tax commitments, or who defaulted in their payment, fell within the middle-class group, which consists in the main of small traders, who are very honest persons. They failed to pay the full tax levied upon them, not because they were dishonest, but because they were unable to meet the demands of the taxgatherer. My sympathy goes out to them because, unlike the large wealthy traders, they were unable to pass on the tax to their customers. This afternoon the Government’s taxation proposals were very severely attacked by a Government supporter, Senator Maher. The honorable senator’s sincerity will be tested later when he will be asked to vote with honorable senators on this side of the chamber for the amendment that was moved by Senator O’Flaherty. An opportunity will also be afforded to other honorable senators opposite who think as Senator Maher does to vote for that amendment.
– I rise to support the bill and oppose the amendment moved by Senator O’flaherty. This bill is in line with the Government’s policy of demanding sacrifices from all members of the community and not merely from one or two sections of it. Subject to the Constitution, this Parliament has power to make laws for the peace, order and good government of the Commonwealth, and consequently, it is charged with enormous responsibilities. We are privileged to live in a glorious country situated in a troublous part of the world. We have enormous opportunities for development, but we also have grave responsibilities in connexion with the defence of the Pacific area. If we lived as the Australian aborigines lived here before the white man came to Australia we should not be concerning ourselves about taxation. Unlike the aborigines, we have great schemes for the development of our country. Having, as it were, an appetite for developmental schemes, wc mim be prepared to make sacrifices to finance them. Funds are needed for defence, national development, social services, wireless and radar communications, immigration and other national developmental projects. The first requisite of a just taxation law is that it should apply as fairly as possible to all sections of the community. As a means of combating inflation the Government is endeavouring to curtail excessive demand for goods. In other words it is endeavouring to draw off excessive spending power in the community. We must take care that such increased taxes as we have to impose to attain that end shall do the least possible harm to incentive.
At present approximately £1,300,000,000 is held by the banks of Australia either on current account or on short deposit. Three or four years ago the amount so held by the banks was only £600,000,000. The tremendous amount of money that is now available at short call is causing violent inflation in the community. We must face the fact that the Government, by increasing taxes, is endeavouring to draw off from the community a portion of what one might term its loose-spending power. We must realize that the existence of large amounts of money at call, on short deposit or in savings banks is having a tremendous inflationary effect. We are by no means short of money for our internal needs. If the people had voluntarily restricted their spending the necessity for such a drastic taxing measure as this would not have arisen. Unfortunately, there does not appear to be very much voluntary curtailment of spending by the members of the public. The age in which we are now living appears to bear some resemblance to the age of bread and circuses in the Roman Empire that preceded the fall of that great empire. When the Romans, because of their fondness for pleasure, had to rely on foreign hirelings to defend their empire, its decline was rapid and complete.
We should regard increased income tax as a necessary sacrifice. Let us examine the sacrifices demanded of us from the standpoint of an individual member of the community. The tax contribution of individuals, including wage and salary earners, and professional and businessmen, has been increased by 10 per cent, as from the 1st July of this year. Nevertheless, let us compare income tax rates in this country with those operating in the United Kingdom. In the United Kingdom, a taxpayer with a wife and two children, who is earning £500 a year, pays £24 19s. in tax. In New Zealand, such a taxpayer would contribute £37 10s., in Australia, in spite of what we have heard from the Opposition, he would pay only £9 lis. under the new scales. A similar taxpayer, who is in receipt of £1,000 a year, pay* £178 18s. in the United Kingdom and £163 2s. 6d. in New Zealand. Under new scales in Australia he will pay £91 10s. I come now to the income bracket which, in this coutnry, includes some of the graziers about whom we have heard so much this afternoon. A taxpayer with a wife and two children, who is in receipt of £5,000 a year, pays £2,496 in the United Kingdom, and £2,431 in New Zealand. Under the new scales he will pay only £2,134 in Australia. In other words, the Australian taxpayer has almost £3,000 left out of his income of £5,000. Therefore, although taxpayers in this country are being asked to make sacrifices, those sacrifices are not. nearly so great as the sacrifices being made by taxpayers in the Mother Country and in the sister dominion of New Zealand.
A feature of the Government’s income tax proposals that should be noted is that although a special levy of 10 per cent, is being imposed, the tax rates are not being altered. So, if the inflationary storm is successfully weathered this year and there is an improvement in the international situation, the Government will have an open invitation when framing its fiscal policy for 1952-53, to discontinue the 10 per cent, special levy. The Government had no hesitation in keeping its promise to repeal the wool sales deduction legislation, and I have no doubt that the 10 per cent, special levy will be abolished next year should the circumstances in which we then- find ourselves permit that course to be followed. We should approach the sacrifices that we are being asked to make in a spirit of reality and sober hope for the future.
The Government is to be commended for its recognition of the problems of aged people. Men over 65 years of age and women over 60 years of age will not be liable to pay income tax or social ser vices contribution if their incomes do not exceed £234. For a husband and wife living together, this exemption is, of course, doubled. This concession shows a true appreciation of the work of our pioneers. Most of the people in those age groups have battled on through two world wars and an economic depression. Many of them have reared families without the assistance of child endowment. They are what I may call the “ old Australians “, and I applaud the Government for its’ sympathy for them in their old age. They are nearing the end of their span of life. Eventually - and we hope that it will be in the distant future - the estates of many of them will be taxed. They are living quiet and unobtrusive lives and most of them have been paying taxes for many years. Again I compliment the Government upon its consideration for those people. However, I should like to see more liberal treatment accorded under our income tax laws to men over 65 years of age and women over 60 years of age who are helping our national effort by continuing in employment. Some of them are quite able to do valuable and responsible work, and I should like to see their income tax exemption placed at a higher figure than the £234 a year specified at present. Alternatively, I believe that a remission of 50 per cent, of their tax would not be too much. Among our aged people there is a vast reservoir of manpower and woman-power still available for employment, and I consider that an incentive to take jobs could be given by taxation concessions.
I come now to quite a controversial matter. I refer to the modification of the averaging system of assessing the tax liabilities of primary producers. Since 1937, only primary producers have been subject to the averaging system. Since that year, quite a number of businessmen and professional men, including doctors and dentists, have become primary producers. The country has benefited considerably from the decision of these men to plough some of their surplus income back into the land. Some of them have gone into under-developed parts of the Commonwealth, while others have taken up holdings not far from the capital cities. I have no doubt that they have been attracted to the land by the averaging system qf income tax assessment applicable to primary producers. The operation of that system has been a great boon to primary producers, as they are probably now realizing, because of the attraction that farming has had for people in other walks of life. That fact should be given full consideration by those who criticize the Government’s proposal to modify the averaging system. The Government is not taking away from all primary producers this concession that they have enjoyed for many years, but the system will no longer apply to farmers who, in 1950-51 had a net taxable income of more than £4,000 and who in the preceding five years had an average income of more than £4,000 a year. The number of primary producers who can comply with both those conditions is small, and they have been fortunate people indeed. Their monetary sacrifice this year will be greater than it would have been had the averaging system continued to apply to them, but such matters must be examined dispassionately. The incomes of these individuals over the last five years have been substantial. In 1938-39, rural incomes in Australia totalled £S4,000,000. By 1949-50, the total had risen to £485,000,000j and in the last financial year it was £809,000,000.
– What does that convey?
– Clearly there has been a substantial increase in rural incomes. Under the averaging system, primary producers have benefited considerably in the years of rising incomes. The most important feature of the averaging system is dealt with in a measure that will shortly be brought before this chamber, but it is well to remember that, from now on, certain primary producers will have the right to decide whether they wish to continue under the averaging system. It is true that their election will be irrevocable, but at least they are to have a say in the matter, and as a decline in rural incomes seems possible, this right of election will be of substantial advantage to a majority of primary producers.
We all deplore the disastrous Queensland droughts to which Senator Maher referred. He mentioned the case of men whom he called “ battlers “, who last year earned £4,000 or more for the first time for many years. I submit that their hardship will be lessened because even if they will not be able to average all of last year’s income, they will certainly not have to pay the full tax on whatever incomes they receive, for if they have made losses in the past they will be able to carry forward such losses. The first £4,000 of their income will be taxed at the average rate, and if their income for the preceding four years has been fairly low or, as Senator Maher said, not much above the remuneration of drovers, the average rate that they would pay would be the rate applicable to say £l,000 on the first £4,000. When the honorable senator gives this matter further consideration in his calmer moments he will find that the battlers that he mentioned will not be paying much more tax than do the attendants in this chamber, who have to pay tax at the full rate. Averaging does not apply to them.
The cases that have been cited in this chamber to-night have been somewhat exaggerated. Senator Benn read an article which was published in a Queensland newspaper, to the effect that a certain person would be required to pay tax at the rate of 28s. in the £1. The true position is that the author of the article had included provisional tax in his calculations. The writer failed to mention that the amount of provisional tax that that person had paid in the previous year would be deducted from the taxes for which he would be liable during this financial year.
– But he would be required to pay provisional tax in respect of next year’s income.
– There may be some extreme cases as a result of unusually high incomes that have just been earned, but they will be taken care of under this legislation. I have before me a very excellent publication entitled Commonwealth Income Tax Law and Practice by Gunn which deals exhaustively with our income tax procedure. It quotes section 265 of the act, which clearly shows that very wide power is given to the Commissioner of Taxation. In case of serious hardship, the Commissioner may release a taxpayer wholly or in part from his liability. In other cases, where complete release of liability is not warranted, the Commissioner may grant extension of time for payment, and approve of the payment of tax by instalments. Section 206 of the act reads -
The commissioner may in any case grant such extension of time for payment, or permit payment to be made by such instalments and within such time as he considers the circumstances warrant; and in such case the tax shall be due and payable accordingly.
The circumstances of a case in New South Wales in connexion with which the commissioner granted an extension of time for payment are then set out. If a case of great hardship occurs, such as a taxpayer being called upon to pay £40,000 in taxes on an income of only £25,000, an application can be made to the Commissioner of Taxation for relief. In this connexion the New South Wales Deputy Commissioner of Taxation has issued a memorandum to tax agents, part of which reads -
It would be appreciated if each application for extension of time on behalf of a client were made at least ten (10) days before the due date for payment, and contain:
the file number;
ii ) the assessment number ;
the year and amount of tax; and
the original due date of each unpaid assessment.
A concise statement of the reasons for the application and of the taxpayer’s financial position and, where the extension sought is for a period in excess of three (3) months, or for an amount of tax in excess of £1,000, a detailed statement of assets and liabilities.
A definite offer for payment of the tax by a date named, or by instalments to commence and be completed by stated dates.
Where a reply has not been received to a prior application, a summary of the details included in that application.
As a result of decisions that have been made on applications over the years, a definite procedure is now followed. I believe that if a taxpayer could show that he had incurred a grave loss during the financial year, and that his income would be very much less- than it was during the previous financial year an application by him for a reduction of provisional tax would receive very favorable consideration. The cases that were mentioned by Senator Maher could all be handled by a reasonable approach to the Deputy Commissioner of Taxation of the State in which the taxpayer was domiciled.
On the 7th November I asked the Minister representing the Treasurer the following question : -
The following answer was received: -
Securities of Commonwealth loans issued prior to the year 1934 carried the privilege of being acceptable at par by the Government in payment for Commonwealth estate duty. In October, 1934, the Loan Council, in pursuance of its general loan policy, decided that this concession should not be granted in respect of future Commonwealth loans and no loans issued by the Commonwealth since then have had this privilege attached to them. This question was further discussed by the Loan Council in November, 1939, and again in January, 1944, but on both occasions the Loan Council affirmed its previous decision. As securities subject to this arrangement have matured, they have become converted into new loans to which the concession does not apply, and there are not now any Commonwealth securities acceptable at par in payment for Commonwealth estate duty. [ submit that the Commonwealth Treasurer might very seriously consider reintroducing the concession, which previously applied only in relation to Commonwealth, estate duty. The present market price of Commonwealth £100 3$ per cent, bonds is £93 to £94. It would be fair and reasonable for the Commonwealth to permit taxpayers holding such bond3 to use them for the purpose of payment of taxes, and also to enable them to acquire on the open market additional bonds for which they could receive a taxation credit of their nominal value. The Commonwealth should be prepared at all times in cases such as this to accept Commonwealth bonds at face value.
Graziers and other people have loyally supported Commonwealth loans in season and out of season, and the reintroduction of this concession would give them an opportunity to meet their obligations, just as they expect that the Commonwealth will honour its obligations in connexion with the bonds on maturity. Furthermore, I believe that if this concession were re-introduced the market price of bonds would steadily increase. In 1931, the market value of £100 4 per cent. Commonwealth bond= fell to £70, but after the concession wau introduced the price steadily rose. In its wisdom, the Commonwealth had introduced the currency factor. I consider that the following words contained in the concluding paragraph of the Minister’s speech on the motion for the second reading of the bill were well chosen, and bear repetition : -
The variations in the incidence of taxation proposed by this bill have been spread as widely as possible so that the burden of finding the additional revenue will be shared by all classes of the community. Despite this sharing of the burden, it is inevitable that the additional imposts will entail some sacrifice on the part of all groups in the community. However, taxpayers can rest assured that through their sacrifices the fight against inflation is being reinforced and that, ultimately, we shall weather this storm and sail into the less troubled waters of a more stable economy.
– I support the amendment that has been moved on behalf of the Opposition, but before speaking to it I shall address myself to some of the amazing statements that were made by Senator Laught. His speech was one of the most, contradictory speeches that I have heard since I have been a member of this chamber. The honorable senator was at pains to illustrate that taxation was to be increased for the purpose of drawing off excessive spending power, that is, excessive money that people could do without.
He also stated that we all shall have to make sacrifices, and that if the public had restricted its spending, the 10 per cent. levy would not have become necessary.
– I did not say that.
– What I have said was what the honorable senator implied. Many people are listening to the broadcast of these proceedings. However, I shall concede the point that that was not what he meant. But I point out that no sacrifice would be made by anybody if only their excessive spending power were drawn off. If all of a person’s spending power were absorbed in meeting hia commitments, he would have no excess. The honorable senator has clearly admitted that there is no excessive spending power in the hands of the people, and that the 10 per cent, increase will have to come out of what the people have left for their general use for keeping themselves in ordinary comfort and keeping production going.
– The honorable senator appears to be getting a bit tied up.
– The Prime Minister (Mr. Menzies), and his supporters, gave a definite pledge to the people in 1949, and again early this year, that they would not increase taxation but would reduce it if they were returned to office. Now, however, every word of that pledge is being repudiated. Nothing more dishonest would be revealed if one were to search the annals of our parliamentary history back to the inception of federation. Senator Laught also stated that this excessive spending power must be removed, because it is causing inflation. He stated that there was £1,300,000,000 in the banks. If that money is deposited in the banks and is not being expended upon luxuries, how can it be a cause of inflation ? Is the Government jealous because some sections of the community have been thrifty and have been able to accumulate savings? If those savings were being used to buy all kinds of unnecessary articles, they would be a cause of inflation.
– Some people have invested their savings in gold mines.
– I ask the member of the legal fraternity who has just interjected whether he believes that money deposited in banks can accentuate inflation? If he believes that it can do so, his views upon economics are entirely different from those that are held generally.
The Government has claimed that increases of taxes are justified because, even after the increases have been made, taxes in this country will be lower than are taxes in the United Kingdom and New Zealand. Let me take honorable senators opposite back two or three years. At that time, taxes in Australia were lower than were taxes in any other country of the British Commonwealth, but members of the Government parties accused the Labour Government that was then in power of killing all incentive to produce. They said that production would not be increased until taxes imposed upon individuals and companies were decreased. During the general election campaign of 1949, the present Government parties told the people that if they were returned to power they would reduce taxes, but when this Government assumed office it repudiated those statements. The reason why two or three years ago taxes in this country were lower than in any other country of the British Commonwealth was that the Chifley Government kept the Australian economy more stable than that of any other British country. Consequently, it was able to reduce taxes until the Australian people were taxed at a lower rate than were the people of any other country of the British Commonwealth.
Since the defeat of the Labour party our economy has lost its stability. The present Government believed that it could maintain the stability of the economy, but when it found that it could not do so it repudiated its promises to reduce taxes. For the remainder of this year, the revenue from direct taxes upon individuals will be £25,000,000 greater than it was for the corresponding period of last year. For a whole year, it will be £38,000,000 greater. That money will come from the pockets of individuals who, in some instances, are now finding it difficult, because of the wholesale inflation that has been caused by the repudiation by the Government parties of the pledges that they gave to the people, to meet commitments into which they have entered. During the remainder of this year, individuals will be slugged to an additional amount of £25,000,000. Having regard to the promises that the Government parties made during the last two general election campaigns, could anything be more dishonest than that? As a result of the abolition of the averaging system, the Government will slug primary producers for an additional £47,000,000.
– What is a slug?
– If Senator Cormack were required to pay an additional £5,000 in income tax this year and, as a remit, had insufficient money to enable him to meet his commitments, ho would know what a slug was. He does not know anything about primary producers. He does not realize how the Government is acting the part of Ned Kelly to wards them.
– By comparison. Ned Kelly was a gentleman.
– Ned Kelly was outlawed because he did something illegally that was not nearly as bad as that which this Government is doing legally at the present time. The Government is going to take £47,000,000 from primary producers because one section of them had the good fortune to receive very high prices for wool in one year. All primary producers, irrespective of whether they are wool-growers, whose taxable income is in. excess of £4,000 a year will no longer receive the benefits of the averaging system. Because high prices were received for wool during one year, the Government is going to play a Ned Kelly trick and take another £47,000,000 from primary producers.
The Government’s excuse for that action is that we shall face very gloomy days in the near future. The Minister, in his second-reading speech, said -
To illustrate the burden which would fall upon primary producers in a time of declining incomes, typical cases of primary producers! whose taxable income and average income both exceed £4.000 have been examined. It has been assumed that 1951-52 incomes wi’l be one-third lower than 1950-51, and that 1952-53 incomes will be lower again, or at about the level of 1947-48 incomes. Thus, a taxpayer whose income in 1050-51 was £16,930 would derive an income of £3,686 in 1952-53 . . .
I ask honorable, senators to note the use of the word “ assumed “ -
Have honorable senators ever heard anything more amazing than that?
– Will the honorable senator finish reading the last sentence?
– I shall do so, but it will not reveal anything that will be to the Minister’s credit. The complete sentence reads as follows : -
Thus, a taxpayer whose income in 1950-51 was £’,(I30 would derive an income of £3,086. in 1952-53, with an average income of £8,082.
Does this Government intend to pursue a policy that will result in the prices of primary products declining to such a degree that a man who had an income of £16,930 in 1950-51 will have an income of only £3,6S6 in 1952-53?
– When was that said?
– If the Minister will read his second-reading speech, he will discover when it was said. In an attempt to justify the robbery that will occur as a result of the modification of the averaging system, the Minister has assumed that the incomes of primary producers will decrease steadily as the years go by.
– No such assumption has been made. Figures applicable to a changing set of circumstances were given.
– If the Minister is devoid of experience of primary producers, I am not devoid of common sense. Under the averaging system, the very high incomes that wool-growers received last vear would be spread over five years for income tax purposes. If the price of wool decreased, the Government would derive some benefit from the operation of the system, but apparently it believes that the present level of wool prices will be maintained, and, therefore, it intends to take from the wool-growers this year a sum of £47,000,000 that it would be unable to take from them if wool-growers’ incomes were averaged over five years.
I can see no justification for the assumption that next year and in subsequent years the primary producers of this country will receive lower prices for their products than they are receiving this year. If the Government believes that the prices of primary products will decline, it is making lying statements when it tells honorable senators that we ure in grave danger and that we must produce more food because we may be called upon to feed not only our own population but also the troops of allied nations who may be stationed here in a fight for a deserving cause. The present position of the world does not warrane the assumption that the prices of primary products will decline. Throughout the world, hundreds of millions of people are facing starvation. In the United Kingdom, all foodstuffs are rationed. The British people receive only ls. 6d. worth of meat a week. Britain is short of foodstuffs that this country can produce. Is it reasonable to assume that, while the world is short of food, the prices of our primary products will fall? During each of the two years that this Government has been in office, primary production in this country has decreased. It is still decreasing. Is it reasonable to assume that there will be a decline of the prices of primary products when we are not producing enough food in this country to feed even our own population? The price of potatoes has increased to ls. 6d. per lb. The prices of many other foodstuffs have risen. Nobody knows better than do honorable senators opposite that prices are high because production is insufficient to meet demand. When commodities are becoming scarcer each year, they will not become cheaper.
The Minister’s assumption must be based not upon facts but upon imagination, although it is difficult to see how, by any stretch of the imagination, such an assumption could reasonably be mads. But it has been made and is being used in an attempt to justify robbing the primary producers of £47,000,000 and the dishonest repudiation of everything that the present Government parties said at the recent general elections.
– The honorable senator is frightening the life out of me.
– I am not astonished at that. The Minister said that the taxes, that were imposed upon companies by the Chifley Government were stifling the incentive to produce. That Government reduced: all forms of taxes. This Government is increasing the taxes imposed upon public companies by an amount of £13,000,000 a year, or by £10,900,000 for the rest of this year, and upon private companies by an amount of £7,300,000 a year, or by £5,900,000 for the remainder of this year. That is another repudiation of the pledges given to the people by the Government parties and also a repudiation of the shareholders of the interests whom they represent. I go further and find that the advance payments of company tax will represent revenue of £11,200,000. If it is spread over the whole year, that revenue will amount to £14,100,000. Does the Minister desire to repudiate any of these figures ? He has repudiated the pledges that he made to the people, but I notice that he does not repudiate the cold facts which I have extracted from his second-reading speech.
Why does the Government wish to impose additional taxes? If we look back, we shall find that it was in financial difficulties at the time that it introduced its budget last year. It did not know where to obtain the money to meet its commitments. Accordingly, it took from the wool-growers more than £100,000,000 by way of advance payments of tax. Now it is obliged to repay to wool-growers the balance of the money owing to them. The Government has therefore decided that private individuals, companies, and primary producers shall be slugged for approximately £100,000,000 because of its excessive expenditure of last year.
– What was the excessive expenditure?
– The more than £100,000.000 which the Government spent and which it later took from the woolgrowers.
– That money was required for the purpose of meeting war gratuity payments.
– War gratuity payments had been provided for before the honorable senator became a member of this Senate. Apparently he does not even know about that. It is remarkable how little some of the new recruits to the Parliament know of politics or even of current events before they came here. Apparently Senator Cormack does not know that the Chifley Government had provided the money with which to meet war gratuity payments which were due to the soldiers who had fought for this country. The Government must pay back the money that it owes to the woolgrowers, and Johnny working in the factory is asked to produce more and to find the money. If anything more blatant and more dishonest than that can be found, I have yet to hear of it. I doubt if a more barefaced repudiation could be discovered if one searched through the records of the Parliament since federation.
The broken pledges to which I have already referred are not the only ‘ones. Indeed, this Government has broken every pledge which it made to the people. We are becoming used to broken promises now, because apparently they are part and parcel of the Government’s stock-in-trade. It would seem that the only honest supporter of the Government is Senator Maher. I go so far as to congratulate the honorable senator on his presentation of honest opinions. I believe that he was 100 per cent, sincere when he placed bis views before the Senate, in the course of which he indicated the kind of robbery that the Government proposes to perpetrate by abolishing the averaging system. If the Government would take notice of Senator Maher, who is evidently becoming sick and tired of the repudiation of promises which the Government parties made to the people, it might regain some of the confidence that it has lost.
Senator Laught suggested that the Government might consider permitting bondholders to pay their tax commitments with Commonwealth bonds. In my opinion his suggestion is a real gem. The Government claims that the budget proposals will skim off surplus spending power. Senator Laught tacitly admits that surplus spending power does not exist. I suggest that when an individual is obliged to call upon his reserves in order to pay his income tax he is in a very sorry state.
– Back to 1938 !
– As Senator Hendrickson has said, it would be “ back to 1938 “. In his second-reading speech, the Minister for National Development (Senator Spooner) stated that prices are returning to 1947-48 levels. I should like him to explain, when he is replying to the debate, how prices of primary produce can return to 1947-48 levels when inflated costs of production and material persist? Can the Minister inform the Senate how he proposes to correct the inflationary trend ?
– I did not say that. I would do so.
– I am merely using the Minister’s words.
– The honorable senator is not doing so at all.
– I am using the Minister’s words when I say that he said that prices are returning to 1947-48 levels.
– The honorable senator means that he is misusing them.
– Before the Minister replies to the debate, I suggest that he read his second-reading speech. From the nature of his interjections, it is evident that he made a speech which somebody else prepared for him and that he does not even know what is in it. If he did, he would not continue to make stupid interjections.
The ACTING DEPUTY PRESIDENT (Senator Mccallum).- Order ! The honorable senator will address himself to the bill.
– I submit that 1 am confining myself to the bill, Mr. Acting Deputy President, and to the words used by the Minister in his secondreading speech. They are there for all to see. I claim that while I confine myself to his remarks I am in order. I also contend that I am justified in asking the Minister to explain how he intends to restore prices to 1947-48 levels.
The Government parties went to the people with a pledge that if they were returned to office they would stabilize the economy of Australia. They have repudiated that pledge. They also promised that if they were elected they would reduce taxation. Not only has that promise been repudiated, but taxation has been increased by £400,000,000. They also pledged themselves to do many other things which are not relevant to the bill now before the Senate. I shall therefore not refer to them, but will content myself with saying that most of them have also been repudiated. Many years ago we heard something of repudiation, but I suggest that from now on we shall hear much more of it, and not only from honorable senators on this side of the chamber. Private individuals, company directors, business people, farmers, industrial workers and housewives all accuse the Government of repudiation. I consider that by introducing legislation of this nature the Government has proved not only that it is incompetent but ako that it is dishonest. For that reason I support Senator O’Flaherty’s amendment and suggest that the legislation be sent back to the House of Representatives and thrown overboard for all time.
– I should have thought that the proposal of the Government to amend the Income Tax and Social Services Contribution Act would evoke from some honorable senators opposite a genuine desire to speak from a national point of view. I urge that on an occasion such as this, when we, as members of a responsible National Parliament are met together to debate the financial issues of a country which is faced with two great and important public questions, one of an international character and the other of an internal character, it behoves us, for the welfare of the country, to give of our best in our parliamentary deliberations. Stooping to the gutter, as Senator Aylett did, does a great disservice to every section of the community. This Commonwealth is composed of many sections of a great community, and the Government would be misusing its position if it did not bring forward budgetary proposals which will confer justice upon each of those sections.
I am one of those for whom increases of taxes have no special attraction. I support a budget which will increase taxes upon the people only after most earnest consideration of the budget proposals. We are in the year 1951, and looking at the position, not from a party standpoint but from that of the welfare of the country, I accept advice that was tendered recently in this chamber to consider the situation of Old England. I ask my colleagues, honorable senators opposite, and also my countrymen, “ What is the position in Great Britain ? “. Speaking as recently as April last, the then British Chancellor of the Exchequer, Mr. Hugh Gaitskell, who is a Socialist by political persuasion, had occasion to speak certain words. I only wish that the Australian Socialists would echo his sentiments in this Parliament. Instead of cackling stupidly they could then proudly echo the words of Mr. Gaitskell when winding up the budget debate in the House of Commons -
And let us not altogether forget in the forthcoming debates the setting of this Budget. It is a setting physically remote from this Parliament of ours, but spiritually it is very close, for the sotting is the clash and conflict, between the two great forces in the world to-day - between Soviet imperialism on the one side and the Parliamentary democracies on the other. It is this clash and the particular episode in it - Korea - which has imposed upon us here in Britain the need to turn our industries to defence and to call up our young men from their jobs and their homes, lt is this clash, which, working through the huge demands of rearmament everywhere, has forced up the prices of materials and food throughout the world, and has also led to shortages of materials which hold back our rising production. In this we are not alone. Tn Europe and in the United States the same economic difficulties are to be found. Heavy as the new burdens might seem at times, how small even they are when set against the greater issues which lay behind them. If by these measures we can save peace - as we believe we can - if we can protect ourselves from the nightmare of the police state, so utterly destructive of all that we value most in human relationships, there is not one of us here - ; -
He could say with confidence, I interpose in parenthesis, whereas I can only say with hope - that would not cheerfully accept the burden, and far more too.
I underline those words because within the last fortnight honorable senators were shamed to hear the Leader of the Opposition (Senator McKenna) ask, “Where is there a war on ? “. He also suggested that, defence expenditure should be reduced. Therefore, I cite the attitude of a Socialist government which lived near the centre of the arena and which was responsible, not merely for the internal insurance of its people, but also for their international safeguarding. I cite sentiments that should evoke from every one of us the greatest heart-searching as to whether this contemptible, partisan, and stupid criticism should be further indulged in.
– I rise to a point of order. What is the connexion between Senator Wright’s remarks and the bill before the Senate?
The ACTING DEPUTY PRESIDENT (Senator Mccallum.). - In my opinion, what Senator Wright is saying is quite relevant.
– I do not think it is.
The ACTING DEPUTY PRESIDENT. Order! The honorable senator will remain silent while the occupant of the Chair is speaking.
– I pause to express my regret that some honorable senators cannot see the relevancy of what I have been saying. This legislation will increase income tax payments by 10 per cent. On page 6 of No. 28 of the publication Facts and Figures, there is a graph which illustrates very clearly the need for raising more Commonwealth revenue. The first great need for increased revenue is to meet expenditure on the defence programme to which the country is committed. The Government proposes to raise this revenue, not willingly, but out of a sense of responsibility because of national requirements. Among honorable senators opposite there is a disposition to stoop to the pretence that the defence expenditure this year is not as great as it was last year. How pathetic that is! In 1949-50, the year that preceded the coming of the Menzies Government to power, defence services cost £41,000,000. This year, defence services will cost £181,000,000. Those figures illustrate the degree to which revenue is required for defence purposes since the Labour Government went out of office and a government, sensible of the defence needs of the country, assumed power. Last year, an extra £104,000,000 was raised by collecting in advance taxation on the proceeds of the sales of wool, a principle which had for some years been applied to the taxing of the incomes of wage-earners. In respect of wool-growers it was a temporary expedient, and this year we must face the situation, and place our taxation system on a permanent basis. The graph to which I referred indicates the financial commitments of the nation in respect of the first and second world wars. It also shows the defence expenditure to which we are committed in order to meet the threat of a third world war, so that we may speak out of strength and, in the words of Mr. Hugh Gaitskell, help to safeguard the peace of the world, insofar as Australian wealth and manpower can contribute to that end.
The second reason for raising additional revenue is that the Commonwealth is committed to make certain payments to the States. Australia is a federation in which the Commonwealth and the six States are partners, and members of this chamber should be sensible in a special way of the rights and needs of the States. In 1947-4S, five years after the introduction of uniform income taxation, the Commonwealth returned to the States £89,000,000. This year, the Commonwealth will return to the States £190,000,000, an increase of over £100,000,000. Should we be niggardly in our dealings with our partners in the federation? Certainly not. There has been a general increase of prices, including prices for wool and other primary products, and the States must have more revenue so that those dependent upon the State Treasuries may be paid at current rates. It is my pride that I support a government which recognizes the need to give to the States sufficient revenue out of what the Commonwealth collects to enable them to maintain their positions as responsible partners in the federation. Another important factor affecting Commonwealth revenue is the enormous increase of social services.
– The honorable senator should have thought of that in 1949.
– This year, it is proposed to transfer to the National Welfare Fund no less than £185,000,000. The honorable senator said that we should have thought of these things in 1949. At that time, the unfortunate decision to devalue the £1 in relation to the dollar was only six months old. I endorse what was said in the British Parliament by the present Prime Minister of Great Britain in April last, when he declared that the country dwelt in the dark aftermath of devaluation.
– I rise to a point of order. In what way are the honorable senator’s remarks relevant to the bill? I recall that, a few weeks ago, when Senator Morrow wished to quote statements made by overseas personalities, you ruled that he was out of order.
– I am the President. You may believe that Senator Wright is out of order. In my opinion he is not, and I ask him to continue his speech.
– Not only did the present Government have to face the full effect of the unfortunate and shortsighted decision to devalue the £1, but it also had to deal with the effects of the unfortunate decision of the Commonwealth Arbitration Court last October to increase the basic wage by £1. Thus, the economy of the country was affected simultaneously by two stimuli to inflation, and the national budget has had to be adjusted accordingly. To-night, we are considering a measure to increase income tax levies in order to raise more revenue with which to meet the increased expenditure that has become inevitable.
The third factor which makes it necessary to raise more revenue is the growing commitment for social services. Having tried to make the relevance of my remarks plain even to the most unwilling and feeble intellect among honorable senators opposite, I now address myself briefly to three proposals in the bill for raising the extra revenue required. The first is to increase income tax by 10 per cent., by which in a full year it is expected to raise an extra £38,000,000. Because the increase will be operative for only a part of the year, the extra return this year is estimated to be £25,000,000. Those who criticize that proposal never concede that last year the budget provided for tax remissions amounting to £20.000,000. The extra income tax which it proposed to raise this year will, therefore, do little more than cancel out the remissions made last year.
However, if we compare the proposed tax rates with those in force during the last war we shall see that, in contributing to defence preparations against a third world war, taxpayers are still much better off than they were. For instance, a man with a dependent wife and two children paid during the war £285 tax on an income of £1,000. The present tax is £83, and the proposed tax will be £91. A man in the same category on an income of £2,000 a year paid during the war £862 tax, whereas at present he pays £375, and under the proposed rate he will pay £413, or only about 50 per cent, of the war-time tax. Some honorable senators opposite advance the specious argument that the Government’s taxation proposals are unfair to those in the lower income groups, but that is not so. A man on an income of £2,000 a year will, under the Government’s proposals, pay an additional £38 a year, whereas on an income of £20,000 a year the additional tax will amount to £1,300. Only irresponsible critics would object to the proposed increase of 10 per cent, for the purpose of raising revenue required for defence preparation, and for the accumulation of a surplus as a safeguard against inflation.
Let me pass to the second proposal that seems to excite the interest of the Opposition to some degree. I refer to the proposal to alter the system of averaging incomes under the existing income legislation. I remember a story that I read in my long since departed youth of how Ulysses escaped from Polyphemus by hiding under the bellies of giant sheep. I attribute to the wool-growing community of this country sufficient perspicacity to realize the motives of, and indeed the lack of strength of, the submissions that are paraded under the name of arguments by members of the Opposition. I suggest to this chamber and to the country that, judged by every consideration, the proposal to adjust the averaging provisions of the income tax legislation, as expressed in this bill, is completely justified. Anybody who denies that proposition denies it for reasons that are neither . national nor in the interests of a most worthy section of primary producers. The averaging provisions were introduced into our legislation in 1922. Taxpayers were simply asked to pay income tax upon the actual income they received in the year of payment but according -to a rate determined by the average of their incomes over the preceding five years. The change was a matter of some significance to primary producers in that year because until then they had not been able to carry forward losses of the previous year into their income tax assessments in the year of payment. In 1923, the provision was altered, and to-day the position is that any taxpayer is entitled to carry forward losses over the bracket of the previous six years. Arguments which are so benighted and indicative of the storm complex as to rely upon droughts and floods have no validity as justification for the continuance of the averaging system.
Opposition senators interjecting,
– In 1937 more learned men than those who are now so inanely interjecting considered this proposition. I refer to the members of the Royal Commission on Taxation. The royal commissioners made some comments in their report which it would not insult the intelligence of the Opposition to read and attempt to absorb. The commissioners said -
In theory, the assessment of tax at an average rate appears to be attractive, but it is not entirely satisfactory in its incidence. The taxpayer whose income is increasing pays less, and he whose income is decreasing pays more than he would if he were assessed at the rate applicable to his income of the year preceding the year of assessment. Assessment at an average rate therefore benefits the taxpayer who is in the better position to pay, and penalizes the taxpayer whose means to do so have been impaired.
Let me read the next paragraph of the report because it is most compelling to the thoughtful. It reads -
Witnesses representing primary producers were unanimous in expressing the opinion that averaging should be continued at least for the benefit of primary producers. A decisive majority of witnesses representing other classes of taxpayers were of the opinion that it should be abolished, though some admitted that it might be applied to the income of primary producers only. All the witnesses representing Commonwealth and State Taxation Departments were emphatic and unanimous in advocating its total abolition.
I remind honorable senators that those representatives were State and Federal taxation officers. In consequence of that report the averaging provisions were repealed in relation to all sections of tax payers other than primary producers. Let it be quite clear that my support will always be available for the development of primary production and the maintenance of fair prices for primary products. In the year when the averaging provisions were retained a$ an exception for the advantage of primary producers the total income of primary producers was £44,000,000. To-day, the comparative figure is £809,000,000. Not all primary producers, however, are affected by the alteration of the averaging provision. The alteration of the averaging provision affects only those who receive a net taxable income in excess of £4,000 per annum. It is left to the option and election of the great majority of primary producers to determine whether or not they shall pay income tax at the rate appropriate to the year of payment, or at a rate determined in accordance with the averaging provision. In all,- 362,000 primary producers will have the right to make their own decision on the matter. To the remaining 37,000 primary producers, whose net taxable incomes, after allowing for all deductions, exceed £4,000 a year, the Government says, “ Let us see whether or not this special advantage, which was granted to primary producers in 193S, should be retained having regard to the fact that it is inequitable when compared with the incidence of pay-as-you-earn income tax imposed upon the wage and salary earners and persons on fixed incomes “. Should we not indeed be irresponsible if we allowed that section of the community, the income of which increased from £286,000,000 in 1950 to £650,000,000 in 1951 to retain an advantage over the ordinary wage earner? That money belongs to the wool-growers and I have no desire to shear it from them. I do, however, take pride in supporting the decision of the Government which has said to them, “ Having enjoyed so abundantly the fruits of this country’s production we ask you gentlemen to yield justly and fairly, on parity with the wage-earners and the recipients of fixed incomes, your proper dues mainly for defence, social services and payments to the States”. When the grazing community of this country sees this proposal in its true perspective they will gladly accept it.
There is one other thought that I should like to leave in the mind of honorable senators. It is all very well to regard this matter as though we can expect expanding incomes for primary products to continue into eternity. Let us consider the case of a primary producer whose taxable income, this year is £25,000, who in each of the next three years receives £15,000 and then suffers from the effects of an unfortunate drought or fire and receives an income of only £5,000. Some misguided persons would have us retain in the interests of such a taxpayer the rate of tax applicable to an income of £5,000 that had been based on an average income of £15,000. In the interests of the nation and of the primary producers as a whole, and specifically and personally in the interests of the wool-growers, this adjustment of the averaging provisions is timely and just.
– Senator Wright has indulged in flights of fancy around the world, but he has not dealt with the bill that we are now discussing. He reminded me of Napoleon at the retreat from Moscow when he endeavoured to cover up his retreat from the promises that he and other members of the Government parties solemnly made to the people of this country. During the general election campaign the Treasurer (Sir Arthur Fadden) said that rates of taxation, both direct and indirect, could and would be steadily reduced.
– That statement was made by the right honorable gentleman in his policy speech prior to the general election of 1949.
– He repeated the statement in April 1951. Already within such a short time of its utterance that promise has been completely dishonoured. The argument advanced by Senator Wright was specious in many respects. It was based on the assumption that the greater part of the revenue that will be derived from income tax will be expended on defence. The crux of the matter is that during the short period in which this Government has been in occupation of the treasury bench it has allowed the economy of Australia to slip so greatly that the basic wage has had to be so increased to meet living costs that the ordinary basic wage earner is now called upon to pay income tax that is out of all proportion to what he should be asked to pay. High income earners and companies amassing tremendous profits are not being asked by the Treasurer to bear their fair share of the tax burden. The 10 per cent, increase of income tax is dishonest. In 1949 when the basic wage was approximately £6 a week, a basic wage earner without dependants paid about £9 a year in income tax. To-day, although the basic wage buys no more than it did in those days, he pays £39 9s. in tax, and will pay more as inflation continues. I have no doubt that, before the end of the present financial year, the basic wage earner will be paying income tax at the rate of £50 a year although his purchasing power will be no greater than it was when he had to pay only £9 or £10 a year. That is my answer to Senator Wright’s argument in support of the flat rate increase of 10 per cent.
This afternoon, the Senate heard an informative and courageous speech by Senator Maher about the effect of the averaging system on wool-growers. His objection was that the Government proposals discriminated against a certain section of the community. I admire the honorable senator for standing up for what he believes to be right. Just as Senator Maher spoke on behalf of the bigger wool-growers, so I express the views of the average wage earner who is being hard hit by the Government’s taxation policy. The basic wage earner now finds himself in the £500 to £600 a year income group, whereas previously he was in the £250 to £300 a year group ; but the scale of income tax has not been altered. The basic wage earner is being asked to pay more tax than was paid in the days when an income of £500 or £600 a year was sufficient to provide a family with a comfortable living. To-day, a single man on the basic wage pays £39 a year in tax. A married man with a dependent wife pays between £24 and £30, and a married man with a wife and one child pays between £14 and £27. In one year, revenue from direct taxes has increased from £39 10s. 3d. a head to £74 lis. Hd. a head. As the community consists largely of wage earners, that increase bears most heavily upon them. The effect of the Government’s income tax proposals is very well shown in an article published in the Melbourne Herald of the 3rd November. The article shows that before the latest tax increase, a single man on £10 a week paid 15s. 6d. a week or £40 6s. a year in income tax. “When basic wage rises increased his pay to £11 a week, he had to pay 18s. 6d. a week or £48 2s. a year in tax. Of the extra £52 a year that he earned, the Government would take £7 16s. Under the latest income tax rates, a single man earning £10 a week will have to pay 17s. a week or £44 4s. a year in tax and when further basic wage rises increase his earnings to £11 a week, his tax commitment will rise to £1 0s. Gd. a week or £53 6s. a year. The unfair part of the 10 per cent, special levy is that although the basic wage to-day buys only the same commodities as it bought in 1949, the basic wage earner is taxed as if his £.11 or £12 a week bought the commodities that it bought in 1949.
Senator Wright sought to defend the Government’s failure to keep the promises upon which it was elected to office. la the last two months, honorable senators opposite have adopted every subterfuge to explain their reversal of policy. If they were honest and said, “ We made a mistake. We were wrong in promising those things “, the people of Australia would say, “ That is quite all right. Tell us the reasons for your change of policy and we shall be with you “. Instead of doing that however, the Government i3 maintaining a brazen attitude. Its spokesmen are saying, “ It is true that we made promises to the people and have not kept them; but we shall be reelected “. That, in effect, is what tha Minister for National Development (Senator Spooner) has said. Sydney business people with whom I discussed the Government’s taxation proposals recently said quite frankly that not only would they oppose the Government in future, but also that they would use tha forces with which they helped to elect the Government, to remove it from office a.t the next election. What is the position to-day in the business world? Retailers in particular are worried about the future. They cannot have confidence in the Government’s policy because the
Government does not have a policy. The purchasing power of the people is being depreciated by this and other taxing measures such as the sales tax bills that will come before us shortly. Buyer resistance is being encountered because of the uncertainty of the situation and the fact that, under this Administration, the people of Australia can see little hope for the future. Senator Wright said that the revenue to be raised by this legislation was necessary to enable the Government to meet its international responsibilities; but how can the people of Australia be expected to pay taxe willingly to a government that is so devoid of constructive thought? Th« morale of the Australian people is slipping instead of rising in the face of aninternational emergency. The appeal made by leading churchmen last week-end will fall on deaf ears because the moral fibre of the people is being destroyed through lack of leadership. The decline in morale is attributable also to the fact that, for the first time in our history, a government has blatantly disregarded the promises upon which it was elected, to office.
The proposal that a special tax should be placed on bachelors seems to be finding favour in some quarters. I have no doubt that the suggestion has been prompted by the apparently free and easy life of bachelors who have been the but* of criticism from time immemorial. As a bachelor, I sympathize with myself and with my fellows, including of course. Senator Wood. I deplore the suggestion that bachelors should be taxed more heavily and I venture the opinion that, the proposal has been prompted by jealousy. Many of the letters published in newspapers in favour of a bachelor tax appear to me to have a rather wistful, note. They describe the bachelor as a public menace and a gay Lothario who should be taxed into matrimony. At the risk of drawing a derisive laugh from some honorable senators, I venture the opinion that the bachelor is the hardest hit member of the community in these days of inflation and high taxes. Some people may say, “ It serves him right. Let him do the right thing, and then he will get an allowance for his wife and children “ ; but I am not much encouraged by the haggard looks that T have seen on the faces of some married men as a result of these taxation proposals. I am rather inclined to reconsider how quickly I should follow their example. I repeat that no one in the community has been harder hit by high taxes and inflation than has the single man. He has to maintain a certain prestige that is not expected of married men. He has to keep up his appearance because he hopes some day to meet the right young lady. A married man can take his wife to the pictures by tram, buy her an ice cream cone at the interval, and then walk home with her in the moonlight. He is applauded by his wife for his careful handling of the family funds. He makes his wife keep a budget, and that is a very difficult task in these days of high-living costs. If sh.3 manages to keep house within her budget, her husband applauds her and then, of course, he must make it up to her. Let us consider the position of a bachelor. He must maintain a certain prestige. Many people assume that he has plenty of money because of his state of singleness, and some of our legislators apply themselves to thinking out ways to extract it from him. Some consider that he should pay additional taxes. I remind honorable senators that when a bachelor steps out with a girl friend everything must be at the de luxe level, if he has hopes of matrimony. For instance, he must travel bv taxi instead of by tram, and, as honorable senators know, taxi fares have been increased considerably. He must buy the object of his affections a spray of flowers, which is much more expensive than perhaps a bunch of violets that a married man may buy his wife once a week. During bis courting days, a bachelor is expected to entertain the girl that may one day become his wife in the best seats at the theatre, whereas a married man is expected to provide only ordinary seats. A bachelor is a target for all subscription lists, and it is expected that he should become a patron, president, vice-president, or other office-holder of organizations in the district in which he lives.
– As with members of Parliament?
– Yes, particularly if the bachelor happens to be a member of Parliament. He is at the beck and call of every one, from boy scouts to alcoholics. People consider that, merely because he is a bachelor, he should be able to subscribe regularly to a number of organizations. It is not uncommon for a bachelor to be pitilessly criticized by his friends at dinner parties. They all delight in telling him that he should marry and settle down. I have before me a cartoon that was published in the Daily Telegraph. It depicts a bachelor looking at engagement rings marked “ £200 “ in the window of a jeweller’s shop. The caption reads, “ Why don’t you get married ? “ A bachelor is entitled to look forward to marriage and to save his surplus cash for that happy event. But the Treasurer (Sir Arthur Fadden), and other supporters of the Government, consider that bachelors should be a special target for taxation.
The Government’s taxation proposals have been a very severe blow to all wageearners, particularly family men. Senator Wright has stated that we should have a genuine desire to serve the national interest. I consider that the national interest would best be served by the Government requiring many public companies that are earning excessive profits to make a greater contribution to Government revenue. The former Labour Government has been criticized for providing only £41,000,000 for defence in 1949-50. However, I point out that the money proposed to be expended by this Government on defence probably would not now buy the same quantity of goods as did the smaller amount that was provided by the former Government. When Labour assumed office in 1941 the defences of this country were in a very bad state.
– John Curtin did not say that.
– Recently, I had the pleasure of seeing the results of some of the long-range policies that were laid down by the Chifley Government. Labour was able to lay the foundations of many projects by imposing much lower rates of taxation than are being levied by this Government. I consider that the flat rate levy of 10 per cent, will be unfair to the bulk of the Australian people. Many public companies and people who are earning big incomes should bear a greater proportion of the burden of national development and expenditure on defence. “When the Government parties were sitting in opposition, during the regime of the former Labour Government, they claimed that taxation should be reduced. However, there has been no attempt by Ministers to tell the people that they made a mistake and that they found on entering office that circumstances had changed since they were formerly in power, Instead, they endeavour to counter any suggestion from the Opposition by saying it has been made merely for political purposes.
The various provisions of the bill have already been canvassed freely. Both Senator Benn and Senator Maher dealt with the subject very well. Senator Wright stated that no attention need be paid to the alterations and fluctuations in seasons. That showed conclusively that the honorable senator knows little about the problems that confront the man on the land, who has to put up with all sorts of troubles, including drought, fire and flood. By modifying the application of the averaging system of taxation to primary producers, the Government has established an undesirable precedent. The budget delivered a stinging blow to the Australian people, and this legislation, of course, is complementary to the budget. Week by week, the people of this country will feel the impact of the Government’s proposals. Before the end of this year the margin between what a man’s wages will buy and what he needs to maintain a decent standard of living will grow wider. The confidence of the people will decline, and appeals relating to their morals and decency will fall on deaf ears. By repudiating its promises, this Government has done a grave disservice to the community and left a vacuum. Honorable senators opposite should make it quite clear to the Australian public that they thought that they would be able to reduce taxation ; that they thought they would be able to do a better job than Labour would, if returned to office; and that they thought that all the ills of the community at that time could be placed at the feet of Labour; but that they were quite wrong and that they found, on regaining the treasury bench, that they could not make any changes at all, other than a few pay-offs to their supporters. They lifted the control on capital issues, but discovered that they had made a mistake and had to reimpose that form of control. They also paid off to the Treasurer on the one hand, and to the shareholders in a particular industry on the other hand, by selling the Commonwealth shareholding in Amalgamated Wireless1 (Australasia) Limited.
– I rise to order! I take strong exception to the honorable senator’s accusation about the Treasurer, which was very thinly veiled. I ask thai the remarks be withdrawn.
– I think that common decency demands that they should be withdrawn.
The DEPUTY PRESIDENT (Senator George Rankin). - Order! Senator O’Byrne should withdraw the insinuation implied by the use of the term “ pay-off “.
– I did not imply that the granting of a knighthood to the Treasurer was a pay-off. I referred to the fact that the shareholders of some public companies have derived a great advantage by the lifting of capital issues control. That was a pay-off to them. The radio industry received a great payoff when the Government sold its shareholding in Amalgamated Wireless (Australasia) Limited, which was a very strong government-controlled competitor.
The DEPUTY PRESIDENT.Order! The honorable senator is evading the issue. I ask him to withdraw the insinuation.
– I did not make an insinuation. However, if you, Mr. Deputy President, consider that I made an insinuation, I withdraw it willingly because I did not make it. It is not my line to make such an insinuation, although there have been more recent cases than those that I have mentioned. The people are looking for a lead by the Government, in the present situation. The budget, to which this bill is complementary, gives them no hope for the future. Every measure that has been introduced into the Parliament since the budget was presented has indicated only the degree of inflation that exists in this country. The legislation that the Government introduced prior to the presentation of the budget was also of a negative character. Since the Government assumed office, it lias not. done anything constructive. The country is going downhill fast.
I hope that some of the anomalies to which the budget proposals will give rise will be rectified. One honorable senator opposite very ably directed attention to the anomaly that will exist as a result of the modification of the averaging system. If the Government wishes to save something from the wreck that it has made of this country, it should give careful consideration to legislation designed to rectify those anomalies.
When the Labour party was in power, the present Treasurer (Sir Arthur Fadden) and other Ministers of this Government stated that increased production could be achieved only by reducing taxes. They said repeatedly that high taxes were stirling incentive to produce.’ Yet this bill represents a complete reversal of the attitude that they adopted then. In order to make progress and increase production, we must strengthen our economy and develop our national resources to the greatest possible degree. If we do those things, we shall have established a solid foundation upon which to build our defensive forces and we shall have gone a long way towards giving the people the confidence that they lack at the present time. Inflation will not be checked by negative measures such as this. It is essential that the Australian people should regain their confidence in the future of their country, but they are being demoralized by increasing inflation and by a diminution of their purchasing power. There is a lack of confidence among manufacturers, wholesalers and retailers. The area of land under cultivation for wheat is decreasing. The production of potatoes and other essential commodities is declining. Increases of the price of wheat will cause the price of bread to rise. Those and other factors are daily weighing upon the minds of the people, but the Government has given them no cause to expect that the position will improve.
– I support the bill, and oppose the amendment that has been moved by Senator O’flaherty. Having regard to the Government’s duty to combat the inflation that now exists an this country, the proposed increases of income tax are reasonable and fair. I cannot understand the arguments of honorable senators opposite that the increases will impose a heavier burden upon persons in receipt of lower incomes than upon persons in the higher income group. The income tax system of this country is, and has been for a long time, based upon the principle that the highest tax shall be paid by those persons who are best able to pay it. The taxation scales have been calculated upon that basis. All that the Government proposes to do is to increase by 10 per cent, the amount of income tax that each taxpayer is paying now. That will not impose a heavier burden upon persons in the lower income group than upon persons in the higher income group. A man who now pays 2s. 6d. a week in income tax will be required in future to pay 2s. 9d. a week. A man who now pays 10s. a week will be required to pay lis. a week. The tax scales will not be affected by the 10 per cent, levy, which, having regard to what is happening to other countries, is very mild. In Canada, taxes have been increased by 20 per cent. Surely we in Australia, being aware of our responsibilities as a member of the British Commonwealth and of the United Nations, and wishing to play our part as a member of those bodies, will not object to an increase of income tax by only 10 per cent.
The charge that is constantly made by members of the Opposition that the present Government parties came into power as a result of deceiving the electors of Australia is not supported by the facts. The position that obtained at the time of the general election campaign of 1949 was entirely different from that which obtained during the ensuing twelve months. When this Government came into office, it believed that the coffers of the Treasury were overflowing. During the general election campaign, promises were made, not only by the present Government parties, but also by the Labour party. Unfortunately, the Government had not been in office for very long when it was faced with the necessity to prepare Australia to play its part in combating an aggressor that was threatening the liberty of the democratic world. Surely the Government cannot be blamed for the fact that the situation changed completely almost overnight and that, instead of being able to govern Australia in a period of peace, as it had hoped to do, it had to make preparations to enable us to stand side by side with other members of the United Nations in the fight for liberty in Korea.
– The previous Government was increasing our armed forces.
– As Senator Wright has pointed out, the Chifley Government budgeted for an expenditure of £44,000,000 upon defence in 1948-49. This Government is budgeting for an expenditure of £182,000,000 upon defence preparations during this financial year. The course of events has justified the Government’s actions. Since it assumed office, the international situation has not improved, and it would be recreant to its trust if it did not face up to the situation with which we are confronted.
Additional revenue is required to meet increased expenditure upon phases of activity other than defence. Provision must be made for increased expenditure upon social services. Approximately £1S0,000,000 will be transferred to the National Welfare Fund for expenditure upon social services during this financial year. Payments by the Commonwealth to the States have increased. This Government has discharged its obligations. We have now reached the stage when not only must we live within our income, but also we must budget for a surplus, with the object of reducing the spending power of the community and, to the degree that that objective is achieved, checking inflation. 1 shall deal briefly with the Government’s proposals relating to the averaging system. I speak as a primary producer who, over the years, has experienced the vicissitudes of primary production. There are differences of opinion about the Government’s proposals. Perhaps some primary producers will be adversely affected by the modification of the system, but I believe that the decision of the Government is a reasonable one. Between 1938 and 1951, the income of the primary producers of this country increased from £44,000,000 to £S09,000,000. For a period of years, the primary producers have enjoyed the benefits of the averaging system, which has been of considerable advantage to them, lt has been estimated that between 1945-46 and 1950-51 the advantage has been worth £139,000,000. It is proposed this year to take approximately £35,000,000 from primary producers whose annual taxable income is in excess of £4,000. That sum. together with provisional income tax payments, will make up the figure that has already been mentioned. I believe that, the advantages of the averaging system are of particular application during times of rising prices, but I point out that we are now reaching the stage of peak primary production incomes. From now on, and for a period of years at least, such incomes will decline each year to a stabilized point. If the averaging system were to be continued during the next four or five years, I have no doubt that at the end of the fifth year the primary producer would be required, in effect, to repay at a time of declining incomes and when he would probably not be in a financial position to do so, the advantage which he had received in previous years. Under the present Government proposals. £47,000,000 will be taken from primary producers. When the matter is fully understood, and when primary producers receive their income tax assessments for the next year or two, I am of the opinion that they will find that the advantages to be gained from the _ abolition of the averaging system outweigh its disadvantages.
Approximately 38,000 primary producers will be affected by the abolition of the system. Only a small percentage of that number will be substantially affected.
The bulk of them will not be called upon te make a contribution as disastrous as some people appear to think it will be. As Senator Wright has stated, the proposed moderation of the averaging system will apply to taxable incomes in excess of £4,000 a year. If one looks at the figures, it will be seen that a person with a taxable income of £4,000 a year will still be left with a considerable sum of money. I wish to cite to honorable senators some examples with which to prove my point. Under the old system, where the taxable income was approximately £5,000, the average income would be £2,500. At the present rate of tax a person in receipt of such an income would pay tax of £2,088 7s. if the averaging system did not operate, and £1,376 13s. if it did operate. When prices and incomes are falling, a person with a taxable income of £5,000, whose average income would be approximately £10,000, would pay tax of £2,088 7s. if the averaging system did not operate, and £2,810 16s. if it operated. The position is that, taken over the years, in spite of all that has been claimed to the contrary, the abolition of the averaging system will be of advantage to primary producers, and especially to those on the higher income levels. For instance, a man with a taxable income of £10,000 and an average income of £20,000, would pay £5,621 13s. if the averaging system did not operate and £6,560 16s. if it operated.
I believe that every man is entitled to his opinion and that if he considers that a proposed course of action is unfair he should be at liberty to say so. But it seems to me that when the real position concerning the averaging system is clarified and understood its abolition will be accepted in the same way as the 20 per cent, deduction was accepted after the reason for it was understood. Those who objected most strenuously to that deduction to-day appreciate that they are in a much happier position because of it. Specific instances are referred to from time to time, and it is common to hear people say that so-and-so will have nothing left after he has pa;d his provisional and other tax and will h° obliged to dig into his capital. It is pertinent to ask what length of time elapsed between the receipt by such a man of his income tax assessment and the earning of the income. It may well be that he has had the use of the income of two years with which to meet his tax liability in a year of lower income.
– A number of matters have been dealt with during the debate on this measure, and some interesting ideas have been presented to the Senate. I oppose the measure and support Senator O’Flaherty’s amendment. I consider that the Opposition may be pardoned if it comes to the conclusion that, having regard to the opinions that have been expressed in the Senate this afternoon, all is not well within the Government ranks. Whilst it is not surprising for expressions of opinion to be made during a budget debate, it seems to me that on this occasion expressions of opinion, especially those of some honorable senators opposite, have departed from the usual pattern. I have no doubt that Senator Maher’s remarks have created tense interest throughout Australia and have provided many people with food for thought. It is only fair to say that honorable senators on this side of the chamber expected some kind of outcry against the budget proposals, such as that of the honorable senator this afternoon. It was obvious that he was sincere in his contribution to the debate. It is also obvious that the budget proposals will provoke a great deal more criticism as their effect becomes more apparent.
I also wish to refer to the remarks that were made by my genial colleague from South Australia, Senator Laught. Honorable senators on this side of the chamber could be forgiven for thinking that he was under the impression that he was on this side of the Senate. Senator Wright endeavoured to floor all and sundry. He seems to have taken upon himself the office of sole custodian of the vituperative language. He castigated the Opposition in words to which I could only reply in unparliamentary language. He set himself up as the sole adjudicator of the faults and sins of omission and commission of every one in this chamber. Honorable senators do not need to have very long memories to recall that recently when he ran out of ammunition while attacking the Opposition he turned on the Government because of its failure to delete a certain provision from legislation which was then before the Senate.
How this Government could salve it3 conscience in the light of its pre-election promises of .1949 is beyond my comprehension. I am the first to accede that there is in all of us a desire for fair play. I am aware of the devices and tactics that are adopted by all political parties, especially at election time, in their efforts to gain control of the treasury bench, but whether the Government parties were justified in adopting the tactics that were used during the 1949 election campaign, which resulted in the election to office of the present coalition Government is another matter. At that time the late lamented Mr. Chifley was chided everywhere for his continuance of existing levels of taxation. Yet it is on record that when he was Treasurer of this country Mr. Chifley reduced taxation when and where the conditions of the time would allow. I recall that the present Minister for Trade and Customs (Senator O’Sullivan) and my old friend, the Minister for Repatriation (Senator Cooper), time after time, when legislation affecting taxation or finance was being discussed in this chamber, accused the Chifley Government of continuing taxation at a higher level than was necessary for the successful prosecution of the affairs of state. They did so even though they were forced to admit that direct and indirect taxes were successively reduced by the Chifley Government. I recall the Minister for Trade and Customs referring repeatedly to “ this power-drunken and arrogant government “ , and saying “ From one end of the country to the other one can hear the words, ‘ Why work for Chifley?’”. If honorable senators opposite could coin such a phrase, without foundation, when they were in Opposition, is it not fair that the present members of the Opposition should be entitled to ask, “ Why work for Menzies?” Where would that get us? We of the Opposition are as much concerned as are his followers to see that the right thing is done, and that the people should realize the stern and difficult task that faces the Government. It was unfair of the anti-Labour parties to adopt such tactics. Indeed, to use the words of Senator Wright, their action was apparently inspired by wicked and diabolical political motives.
– Never did I use such words, and the honorable senator has no right to attribute them to me.
– Honorable senators opposite have compared the Government’s taxation proposals with the income tax rates that were in operation in the past, particularly during the war. That was unfair. In September of this year, when the Government brought down its budget, tables were circulated to honorable members in which income tax and social services contributions under the Government’s proposals were compared with the rates paid during the war. There was also a comparison with rates payable in the United Kingdom and in New Zealand on income earned by personal exertion. In, the notes explaining the tables it was pointed out how income tax proposals were to be implemented in the United Kingdom, New Zealand and in Australia, and it was explained that in Australia it was intended to impose a special levy of 10 per cent, on the amount of tax payable under existing legislation. The situation in Australia and abroad being what it i3, no government had the right to try to win the support of the people by promising to reduce taxation. Honorable senators opposite have claimed that, because of changed circumstances, the present measure is necessary. We do not deny that. We admit freely that, because of increased costs associated with every public and private undertaking, and because of the need to make adequate defence preparations, more revenue is needed. We realize also that the Government has been forced to curtail many undertakings of great importance, and unfinished developmental works are a dead loss to the community. AntiLabour candidates, had they been honest, would have told the people from the hustings that it was not proposed to interfere with taxation rates until it was clear how the economic situation would develop. Far from doing that, however, they said that, if an anti-Labour government were returned to power, it would reduce taxation. In short, they practised shady political tactics. The following table sets out the amount of tax now paid by persons in receipt of various incomes, and the amount they will pay when the Government’s proposals come into operation: -
The Government may take comfort from the fact that some of the increases are only a few shillings, but let us not forget that it, is also proposed to increase indirect taxation in such a way that the effect will be felt much more severely by those in receipt of small incomes than on those who receive large ones.
The Government should admit that it misled the people in 1949. During the election campaign this year, the Prime Minister asked the people to give him an opportunity to put into effect the policy which he had placed before them in 1949. The people of Australia, in their wisdom or otherwise, gave the Prime Minister the opportunity he asked for. Now that the Government is again in power, it is, instead of honouring the promises which were given the widest publicity from election platforms and over the radio, admitting that it is compelled to increase taxation. The Government has tried to comfort the people by telling them that income tax rates are lower in Australia than in the United Kingdom and New Zealand. It does not need much imagination to realize that conditions in this country and in the countries that I have mentioned are in no way comparable.
– Order ! In conformity with the sessional order relating to the adjournment of the Senate, I formally put the question : -
That the Senate do now adjourn.
– Last week I asked a question relating to a matter which I consider to be one of principle that affects the security of the Australian people. I refer to the entry into this country of known war criminals. I have not yet received a specific reply to my question from the Minister. I have before me copies of the West Australian, a newspaper that circulates in “Western Australia, and of the Melbourne Herald, of the 9th November, in which there appears in very prominent positions - on the front page of the West Australian - photographs of two displaced persons whom I named, Milarod Lukic and Mihailo Rajkovic, who have denied the statements that I made about them in the Senate. The West Australian did not pay me the courtesy of reproducing the statement that I have made in the Senate, nor did it do me the honour of referring to the fact that for three years and nine months I had been a prisoner of war in Germany and well knew what the Nazis and their collaborators were capable of doing at that time. Neither newspaper paid me the courtesy of stating my side of the question, but both of them gave great prominence to the photographs of the men who, I repeat, are war criminals.
– Does not the honorable senator think that the publication of the photographs was a reasonable measure adopted by the newspapers concerned to enable the men to be identified?
– If Senator Wright had read the articles that were published in the newspapers he would see that there was no need for them to be identified. One of the mcn publishes his own newspaper in Western Australia and is still disseminating the poisonous Nazi doctrine that caused so much suffering to the German people and the people of the world generally. I remind those persons who have short memories of war atrocities that the ghastly spectacle of the piles of bodies in German prison camps, the piles of bones of prisoners and the three-tiered decks of human skeletons will never be erased from my mind. As long as I am able to stand in this chamber or anywhere else I shall continue to denounce those who were directly responsible for the commission of grave and bestial crimes against humanity and to warn the people of their presence among us. I remind honorable senators that there were no fewer than 1,000,000 Nazi Germans and 3,000,000 Nazi collaborators throughout Europe, and that unless we institute an efficient screening system a big percentage of them will be admitted to this country under the Government’s immigration scheme. I look upon these Nazis, and the collaborators of the Nazis - the Hitler Jugend and the Volksdeutscher - as suffering from a disease of the mind that was nurtured by Bismark and Hitler and which, unfortunately, has not yet been eradicated.. It is well that we should take the same precautions against the introduction of diseased minds as we do to prevent the introduction of physical diseases. Mi hail(. Rajkovic and his friends not only brazenly disseminate their nefarious doctrine through the newspaper that he’ owns, but have also openly boasted that they were responsible for killing our allies during the war.
I want to make it clear that I have no. racial animosities. My attack upon these men is based upon the doctrines that they disseminate which have permeated the minds of many European people who came under the influence of the Hitler regime. Some of my closest friends are of German origin. They are magnificent Australian citizens who have done much for the development of this country. My remarks are directed not at them, but solely at those who have been guilty of the grossest crimes under the Hitler regime in Germany. My mind goes back to the methods adopted by the German* to extract information from our prisoners of war. A friend of mine who lives in Sydney is still carrying scar. on his face from what was called thesteam treatment applied to him in one of the Nazi interrogation centres. My own experiences did not equal those of many others, but they were bad enough. I witnessed many breaches of the Geneva Convention and I count myself fortunate to have escaped many of the extreme measures that were adopted by the Germans in order to extract information from prisoners of war.
What makes me feel so upset about the whole matter is the fact that the Australian press apparently prefers to accept the word of war criminals and to give publicity to their denials of what I have said about them than to give me an opportunity to prove the truth of my allegations. The Nazis adopted the selective policy of eliminating the scientists, artists and intellectuals, and of absorbing the workers into their productive machine. I should like to tell honorable senators what the Consul-General of Yugoslavia has told me about Lukic and Rajkovic since - and I emphasize the word “ since “ - I referred to them in the Senate. I also refer to the case of another displaced person named Kaufmann who arrived in Australia in November, 1950. Kaufmann, an Austrian jonker, was in the Auschwitz extermination camp, where he interrogated prisoners of war before they were gassed. He has been identified by prisoners who were incarcerated in that camp. In a note dated the 8th May, 1951, the Department of External Affairs was asked by the Consul-General of Yugoslavia whether any action had been taken to extradite Lukic and Rajkovic. The department stated that it had referred the matter to the competent authorities and that the Government of Yugoslavia would be duly advised of the result. The ConsulGeneral has since advised me that Milarod Lukic, a Serb whose wife was of German nationality, served the gestapo and fascist Germany during the war in a prisoner of war camp at Nuremburg. He spied on and denounced Yugoslav prisoners of war who were sympathetic to the struggle of the Allies and the Yugoslav people against Nazi-ism. As a confidant of the gestapo, Lukic went around the prisoner of war camps in Germany, gathered particulars against Yugoslav patriots and anti-fascists, agitated in support of Hitler Germany, organized fascist groups to oppose Allied war aims, advocated loyalty to the enemy and disseminated hate towards the Allies and their struggle. Many Yugoslav internees and supporters of the national liberation struggle of the Yugoslav people and the struggle of the anti-Hitlerite bloc, lost their lives because Lukic denounced them to the gestapo as Communists.
– Whose words is the honorable senator quoting?
– They are the words of the official representative of the Yugoslav Government. Because of these crimes, including espionage for the enemy, the denouncing of Yugoslav prisoners of war in Germany, particularly in the Nuremburg camp, which resulted in maltreatment and executions, political service to the German occupationist assisting the war aims of Hitlerite Germany, organization of fascist propaganda among Yugoslav internees, and national betrayal, the Federal Commission for the Establishment of War Crimes of the Occupationist and his Collaborators established that Milarod Lukic is a war criminal and traitor who should be brought before the people’s court of Yugoslavia.
– That is a Communist court.
– I am not interested in the court. Senator Gorton asked earlier whose words I was quoting. [ assure him that I am not interested to discover whether or not the men concerned were Communists. All I am concerned about is that they were responsible for the commission of crimes of a kind that had never previously been prepetrated in war-time. They are men whose minds are diseased and who should be excluded from the benefits of our way of life in this country.
Mihailo Rajkovic has already applied for Australian citizenship under the Nationality and Citizenship Act. It is all very well, six short years after the war has ended, to square off on behalf of those who have committed dreadful and bestial crimes against humanity. I should be recreant to my trust if I did not raise a matter of such vital importance as this and warn the people that war criminals of that calibre are in our midst. Only the other day in South Australia one of these Nazitrained immigrants was sentenced to six years’ imprisonment for insulting a Jewish rabbi and breaking down the door of his home. I am not concerned with the cries of racial superiority. Every man in this country has equal rights, but men who have committed crimes against the law or against humanity cannot be pardoned merely because some one alleges that they aro to be tried by a “ Commo.” court. I do not know what has happened since the war, but T do know that during the war the Yugoslavs were our allies, and contributed much in the Balkans to an allied victory. I am not pushing the barrow for thY Yugoslavs, or seeking to further their national or political aspirations. 1 aw merely placing the facts before the Senate. I am also voicing my disapproval of the attitude of the press in siding with the individuals whom I have mentioned and claiming that I have made unsubstantiated statements. Regardless of the attitude of the press, I am not prepared to allow this matter to rest. Seventeen confirmed Nazis are working on hydro-electric projects which are of vital national importance. It is clear that our screening of immigrants is not efficient. Apparently officials who are carrying out the screening in Europe are concerned only with getting immigrants to this country to work as technicians or labourers; but there is more to their job than that. Lukic is at present the editor of the newspaper Sloga, and is in a position to disseminate the thoughts of his distorted, contaminated mind. I hope that proper measures will be taken by the immigration authorities here to ensure that his activities will be kept in check, and that the agreement with the Yugoslav Government will be honoured by permitting hia extradition to Yugoslavia. The other man whom I have mentioned, Mihailo Rajkovic, is a Montenegrin by nationality and an ex-judge. He came to Australia two years ago and is now employed in a factory at West Perth. Statements by two witnesses, surviving victims of Rajkovic’s crimes - 1 can supply their names if the Government so desires - show that Rajkovic was interned in a prisoner-of-war camp called Klos in Albania during the war. There, together with Prelja Djolevic and other collaborators, Rajkovic drew up a list of 53 internees, among whom were the two witnesses that I have mentioned. This list was submitted to the camp commandants, with the result that the internees were persecuted and maltreated. When a so-called “ national commission “ visited the camp to recruit volunteers for the “ national movement “, Ra jkovic succeeded in having the food supply for the internees reduced by half as a method of forcing them to join the “national movement “ and serving the Germans. Thus, because Rajkovic as a prisoner of war denounced other prisoners, and because he participated with the fascist administration of the camp in their maltreatment and persecution, a commission of the republic of Montenegro has, by decision No. 2469 of 1945, declared Rajkovic to be a war criminal.
I bring these matters to the notice of the Senate because they are of national importance. The future of this young country may well be determined by the manner in which new Australians are assimilated into our way of life. Just as a bad apple in a case can contaminate those that surround it, so a bad citizen can contaminate his fellows. We shall be looking for trouble indeed if we permit diseased Nazi minds to work their evil designs on this country. Every time a report of this kind comes to my notice, I shall investigate it thoroughly, regardless of its source. My aim is to keep Australia for Australians. The crimes committed by people such as Rajkovic and Lukic should debar them forever from sharing the freedom that this land offers. If some honorable senators opposite who have been interjecting had had my experiences, their attitude to-night would have been different. We must be ready to examine carefully charges that are made against immigrants, to make certain that Australia is kept as free as possible from the Nazi doctrines that brought so much trouble, not only to Europe, but also to the rest of the world.
Senator PALTRIDGE (Western Australia) 1 11.22 J . - 1 rise, not to plead the case of Lukic or Rajkovic, but because I believe, in view of the charges that Senator O’Byrne has made, that some further facts should be placed before the Senate. The first point of importance seems to me to be the fact that when this matter was first publicized in Western Australia, Mr. Lukic sent the following telegram to the Minister for Immigration (Mr. Holt) :-
Senator O’Byrne’s vile accusation about me is entirely false. I have had twelve screenings and would welcome further public or secret investigation. Hope you agree my future requires public repudiation of charges made. Writing.
What Senator O’Byrne has said is based on what was stated about those two men by Mr. Cavrilovic, the Yugoslav ViceConsul .
– That is not true.
– What Mr. Cavrilovic said at the Hellenic Prince Club in Murray-street, Perth, on the 17th August was later published in Napradic the official organ of the Yugoslav people in Sydney. Subsequently, an article appeared in a Melbourne Jewish newspaper which was contradicted by Mr. Lukic through the newspaper Sloga. Apparently from those events this controversy has arisen. A report will be issued by the Minister for Immigration after an exhaustive inquiry has been made. I think it is fair to say that, as both Rajkovic and Lukic were members of the Royal Yugoslav army, they enjoy the privilege of belonging to an organization with which both Senator O’Byrne and I are very proud to be associated, the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia. Lukic is a member of the North Perth branch, and Rajkovic a member of the Osborne Park branch. I have in my hand a picture of Rajkovic taken at the last Anzac Day celebrations on the Perth Esplanade. In front of a small contingent of men Rajkovic, presumably an officer of high rank, is carrying the Royal Yugoslav flag of King Peter. On his way home from the ceremony, Rajkovic was stoned by the Communists.I have also before me a press pass issued by the American authorities in Berlin, where Lukic worked as a pressman for two years after the war. Incidentally, for five years prior to his arrival in this country, Rajkovic was attached to a British command in Egypt, Camp Staff 54. I mention those matters, not to plead the case of those men, because they can stand on their own merits, but because I think it is only fair that, as so much has been said on one side, pending an investigation and a report, the facts to which I have drawn attention should be made known to the Senate.
– On the 24th October, Senator Aylett asked the following questions: -
I ask the Minister for Trade and Customs whether it is not a fact that there are in Australia to-day thousands of bags of seed beans for which the growers cannot find a payable market? Will the Minister confer with the Minister for Commerce and Agriculture with a view to imposing a duty on imported seed so that local producers will not continue to be driven out of the industry?
The answers to the honorable senator’s questions are as follows: -
If the honorable senator can have evidence placed before me that these duties are inadequate for the protection of local growers of seed beans, I shall only be too pleased to give consideration to the question of referring the matter to the Tariff Board for inquiry and report.
Question resolved in the affirmative.
The following papers were presented : -
Commonwealth Bank Act - Appointment - R. J. Watson.
Customs Act and Commerce (Trade Descriptions) Act - Regulations - Statutory Rules 1951, Nos. 126, 127, 128, 129, 130, 131, 132, 134.
Dairy Produce Export Charges Act - RegulationsStatutory Rules 1951, No. 137.
Defence Act - Regulations - Statutory Rules 1951, Nos. 124, 125.
Defence (Transitional Provisions) ActNational Security (Industrial Property) Regulations - Orders - Inventions and designs (2).
Egg Export Control Act- RegulationsStatutory Rules 1951, No. 133.
Income Tax and Social Services Contribu tion Assessment Act - Regulations - Statutory Rules 1961, No. 136.
Lands Acquisition Act-Land acquired forDefence purposes -
Swanbourne, Western Australia.
Department of Civil Aviation purposes-
Postal purposes - Murchison,Victoria.
Norfolk Island Act-Ordinance - 1951 - No. 5 - Lunacy.
Overseas Telecommunications Act - Fifth Annual Report of the Overseas Telecommunications Commission (Australia) for the year ended 31st March, 1951, together with financial accounts.
Pharmaceutical Benefits Act- Regulations- Statutory Rules 1851, No. 135.
Public Service Act - Appointments - Department -
National Development - J. A. Brooks.
Repatriation - A. H. Penington. J. D
Shipping and Transport- H. M. Head. Treasury- J. C. Lloyd.
Senate adjourned at 11.28 p.m.
Cite as: Australia, Senate, Debates, 14 November 1951, viewed 22 October 2017, <http://historichansard.net/senate/1951/19511114_senate_20_215/>.