20th Parliament · 1st Session
ThePresident (Senator the Hon. Edward Mattner) took the chair at 3 p.m., and read prayers.
Assent to the following hills reported : -
Loan (War Service Laud Settlement) Bill 1952.
National Welfare Fund Bill 1952.
States Grants Bill 1952.
– Is the Minister representing the Minister for Civil Aviation aware that Trans-Australia Airlines intends to withdraw itsConvair aircraft from the Tasmanian service during the coming summer tourist season? Will the Minister consult the Australian Airlines Commission with a view to having at least one daily Convair service to Tasmania maintained during December, January and February? Will the Minister inform me whether the withdrawal of the pressurized Convair aircraft is a part of the air rationalization plan of the Government? Why is Tasmania to be deprived of the service that can be provided to its tourists by Convair aircraft and which is not available from other aircraft companies?
– The honorable senator may rest assured that the Menzies Government will do everything possible to ensure that Tasmanians shall be provided with a good air service. However, I ask him to place his question on the notice-paper.
– Has the Minister representing the Minister for Air read the recent statement by a high executive of the Rolls-Royce Company of England that the Royal Air Force has passed all its maintenance and repair work over to private enterprise, and that the system is functioning successfully and with a substantial saving of money? Will the Minister consider taking similar action in Australia?
– I have not seen the report to which the honorable senator has referred, but I thank him for bringing the matter to my attention. I shall be pleased to place the honorable senator’s suggestion before the Minister for Air.
– Can the Minister representing the Minister for Immigration say whether it is a fact that British immigrants pay higher tariffs than do foreign immigrants in immigrant hostels?
– I do not think that the honorable senator has been correctly informed, but I am not in a position to give him a definite answer at the moment. If he will place his question on notice I shall obtain the information that he has sought.
asked the Minister representing the Minister for Immigration, upon notice -
– The Minister for Immigration has supplied the following answers : -
asked the Minister representing the Minister for Immigration, upon notice -
– The Minister for Immigration has supplied the following answers : -
– Can the Minister representing the Minister for Health say what advances have been made in the production of a poliomyelitis vaccine? Has any such vaccine been brought into Australia?
– I shall direct the attention of the Minister for Health to the honorable senator’s question and obtain a reply as soon as possible.
– My question to the Minister representing the Minister for Health arises from a communication which I have received from the Friendly Societies Medical Association Incorporated, of South Australia. In connexion with the formation of State committees to be appointed by regulations issued under the Pharmaceutical Benefits Act, have assurances been given to the friendly societies’ dispensaries that they will be granted representation on these committees? As the Minister for Health has issued’ notices inviting the submission of the names of two pharmacists as the nominees of the friendly, societies? dispensaries, and in view of the contention; of the Friendly Societies Medical Association Incorporated, of South Australia that such representation would not adequately cover the interests of its members, will the Minister consider the appointment of at least one executive officer of the association to the State committees?
– I cannot say offhand the manner in which the members of the committees will be appointed. I shall bring the honorable senator’s question to the notice of the Minister for Health and ask that a reply be furnished as soon as possible.
– About twelve months ago in the Senate I asked a question of, and later I had a conversation with, the Minister for Trade and Customs regarding the alarming increase of the smuggling of narcotic drugs into Australia. Has the attention of the Minister been drawn to the fact that an alarming increase of the smuggling of narcotic drugs into Australia was reported this week by the Victorian Chief Commissioner of Police, Mr. Duncan, at the conference of Australian police held at Canberra ? Will the Minister take immediate action to ensure that adequate precautions shall be taken at all airports to prevent the smuggling of narcotic drugs into Australia, and thereby assist the police to combat the drug traffic?
– -My attention has not been drawn specifically to the matter but I can assure the honorable senator that from my own experience since I have been the Minister for Trade and Customs, I know that preventive officers of that department are very vigilant in their search for persons who are bringing drugs into Australia illegally. Reports that I receive from time to time have established that the officers are successful to a high degree in seizing drugs which are forfeited and, subsequently, in prosecuting those who were attempting to smuggle them. Unfortunately, it is true, as the honorable senator has said, that, ^notwithstanding the vigilance of the preventive officers and the police, drugs are being smuggled into Australia in far too large a quantity. I shall have further details prepared for the honorable senator and inform her of the steps that are being taken by the preventive officers to combat this illicit traffic.
– Has the attention of the Minister for Trade and Customs been drawn to the fact that the auction sales of tobacco that were recently held in Brisbane proved disastrous to tobacco-growers? Is the Minister aware that there is widespread discontent in the tobacco-growing industry because of the unsatisfactory arrangement that exists between the large tobacco-manufacturers and the tobacco-growers for the disposal of the crop? If the Minister is aware of this situation, will he inform the Senate of the steps that the Government proposes to take to resolve the difficulty?
– I am sadly aware that the tobacco sales that were recently held in Brisbane were far from satisfactory, although the actual sale of tobacco is a matter that comes rather within the jurisdiction of the Department of Commerce and Agriculture. I know that, at the instigation of the Minister for Commerce and Agriculture, an inquiry on this matter has been held this month in conjunction with conferences throughout Queensland between representatives of the Department of Commerce and Agriculture, independent advisers from Victoria, and also, I believe, an adviser from another department that is interested in the tobacco industry. The report resulting from these inquiries and conferences was received only within the past few days and is being examined. It is hoped that, as a result of further conferences, more satisfactory results will be obtained from future auction sales. The manner in which the tobacco 13 sold is a matter entirely for the growers. They must decide whether they would prefer to sell tobacco by auction or negotiate the sale by private treaty. However, just as growers are free to fix a price so also are the buyers free to pay that price or not to do so. The Department of Trade and Customs hopes, by the good offices of its officers and independent advisers, to bridge the difference between the rate that the growers consider to be a fair price and what the manufacturers are prepared to pay. If those hopes are realized and a satisfactory basis of trade in tobacco results from the negotiations, it will be of lasting benefit to the tobacco industry throughout Australia, and in Queensland in particular.
– I direct a question to the Minister for Trade and Customs with regard to the income qualification of the parent of a student who is entitled to a Commonwealth scholarship. I refer particularly to the case of parents whose salary is above the stipulated figure but who, by reason of dependent family, have income tax concessions as a result of which their taxable income is far below the stated qualifying figure. I wish to know whether or not the qualification for a scholarship, so far as it concerns the income of the parent, is dependent upon his actual salary or his taxable income? If it is not the latter, will the Government consider making it possible for a student whose parents’ taxable income is below the figure for which a scholarship is available to he granted a scholarship ?
– I understand that the matter that has been raised by the honorable senator is administered by the Prime Minister’s Department. I am not personally aware of the circumstances that have been mentioned, but if the honorable senator will place his question upon the notice-paper I shall be happy to obtain an answer for him.
– I preface a question to the Minister for Trade and Customs by pointing out that there is widespread unemployment in many Australian manufacturing industries. As there is a possibility, in view of the unemployment position in the United Kingdom, that British manufacturers will dump their products on the Australian market, does the Government intend to include representatives of workers in Australian secondary industries in the Australian delegation to the Economic Conference that is to be held in London next month?
-,! have not been consulted on the composition of the proposed delegation that will attend the Economic Conference in London next month. Doubtless the honorable senator is well aware that my department frequently exercises the powers that were conferred upon it by the Australian Industries Preservation Act. Whenever there has been any evidence of dumping of goods in this country - from time to time such evidence has been produced - the Government has taken appropriate action under that legislation. That policy will be continued. If the honorable senator has in mind any particular trade, or industry, and can can produce to the Department of Trade and Customs satisfactory evidence of dumping, appropriate action will be taken.
– Will the Minister representing ‘ the Prime Minister inform the Senate whether the Australian Government and the governments of other member-nations of the International Monetary Fund and the International Bank for Reconstruction and Development, have been requested by those institutions to consider a proposal that the American dollar be adopted as world-wide currency, in place of gold, as a medium for international payments? I point out that if such a suggestion were adopted, the currencies of other nations would be tied to the dollar. They would then have to maintain currency reserves, not in gold, but in dollars which would be credited to their accounts in American banks. If the Australian Government has been asked to consider such a proposal, will the Minister undertake that the matter will be submitted to the Parliament for consideration before any action is taken along those lines ?
– I am not aware that the Australian Government has received any communication on the subject raised by the honorable senator.
– Will the Minister representing the Minister for Commerce and Agriculture inform the Senate whether it is a fact that unanimity has not been reached by the various governments concerned on a proposal that emanated from the Australian Agricultural Council that the existing wheat marketing legislation, with some alteration, be continued for a further period of one year? If this is a fact, can the Minister indicate the steps that are likely to be taken to overcome the position that has now arisen?
– The question of fixing a home-consumption price for wheat and passing complementary legislation in order to enable the wheat stabilization scheme to carry on for another year is now a matter for the various State governments. Present indications are that the South Australian Government is not prepared, at this stage, to pass such legislation.
– How is the Victorian Government getting on?
– I suggest that the Victorian people will get on much better if they are able to keep the Australian Labour party out of office. As far as the future is concerned, my colleague, the Minister for Commerce and Agriculture, on behalf of the Australian Government, has made it clear that the Commonwealth is prepared to continue the stabilization scheme after the current year. I understand that the result of a world conference, which is to be held in January, will help considerably to bring to finality the two matters to which the honorable senator has referred. I assure him that the Government is watching these matters with great interest. I again remind him, however, that responsibility to fix a homeconsumption price for wheat and to pass complementary legislation is now purely a matter for the six State governments.
– Can the Minister for National Development inform me whether a recent press statement, that open-cut coal is to be sold at a reduction of 8s. a ton, is correct? Is it a fact that the curtailed production of open-cut coal represents only 12 per cent, of our total coal production? Are any steps being taken to bring about a general reduction of the price of coal mined underground, which has such an im portant influence on the cost of living and the inflationary tendencies in this country?
– It is correct that the price of open-cut coal has been reduced in accordance with the statement that I have made. That reduction has been made possible because of more economical working of open-cut ventures, and also by reason of the fact that the Joint Coal Board has now recouped the losses that were made by its undertakings during the time that Senator Ashley was the Minister in charge of it. I am not aware of the percentage by which open-cut production has been reduced-
– What happened when I was the responsible Minister? The honorable senator should know that.
– I know that I have reduced the price of coal and have also obtained coal. When Senator Ashley was the responsible Minister, not only could he not get coal, but he also lost a lot of money trying to get it. I hold the view that one of the principal needs of the coal-mining industry, in order to place it on a satisfactory profit-earning basis, is more efficient conduct of underground mines. I hope to see a reduction of coal prices generally, and I also hope to see such a reduction come from more efficient underground mining methods, in the same way as it has come from the more efficient conduct of open-cut mines.
– Is the Minister representing the Minister for External Affairs aware that the Canadian Government has made arrangements for members of the Canadian Parliament, drawn from all parties, to attend sessions of the United Nations and meetings of committees of that organization? Will the Minister recommend to the Government that small delegations of Australian parliamentarians, drawn from all parties, should also attend the sessions of the United Nations, in order that they may understand fully the workings of that organization and hear matters being discussed by it?
– I shall bring the suggestion of the honorable senator to the notice of the Minister.
asked the Minister for Shipping and Transport, upon notice -
– I have obtained the following information in reply to the honorable senator’s questions : -
asked the Minister representing the Treasurer, upon notice -
– The Treasurer has supplied the following answer to the honorable senator’s questions : -
The information sought by Senator Morrow was furnished by the Treasurer on the 9th September last in response to a similar request by the honorable member for Melbourne Ports (Mr. Crean) in the House of Representatives. The information may be found on page 1157 of Ronsard.
asked the Minister representing the Minister for the Army, upon notice -
In view of the fact that the normal bushfire hazards of Australia are not only an ever-present threat to our economy in time of peace hut also render the country vulnerable to incendiary attack in war-time, will the Minister consider introducing regular training for parachute battalions of the Army in modern fire-fighting techniques and also use these troops as “ fire-jumpers “ in order to combat bush fires in remote areas?
– The Minister for the Army has furnished the following reply to the honorable senator’s question : -
The existing force of parachutists in the Regular Army is confined to one platoon, and an instructional establishment, which is conducted in conjunction with the Royal Australian Air Force at the School of Land/Air Warfare, New South Wales. This platoon is trained in fire-fighting and is available to aid the civil power in emergency. The effort necessary to raise, equip, train and maintain parachute battalions is beyond’ the present resources of the services concerned, when considered in conjunction with their other commitments.
asked the Minister representing the Minister for Commerce and Agriculture, upon notice -
– The Minister for Commerce and Agriculture has supplied the following information in reply to the question of the honorable senator - 1 and 2. I have never heard of any such understanding and I am sure it does not exist. At its last meeting the Australian Agricultural Council, which includes all State Ministers of Agriculture, unanimously recognized the necessity for the production of the maximum quantities of rice practicable in Australia under present conditions. Experiments are currently being carried out in Western Australia and the Northern Territory to determine whether rice-growing on a commercial scale in those areas is feasible. Thic year the rice crop was a partial failure and the harvest was not sufficient to meet essential export commitments, including supplies for Papua and New Guinea, and to service our full home-consumption requirements. There is no reason why a shortage should exist in a normal production year, even on present acreage.
asked the Minister representing the Treasurer, upon notice -
– I have received from the Treasurer the following reply to the honorable senator’s questions : -
asked the Minister representing the Treasurer, upon notice -
– The Treasurer has supplied the following information in reply to the honorable senator’s questions : - 1 and 2. The companies in which the Commonwealth has an interest are -
British Commonwealth Pacific Airlines Limited- G. P. N. Watt.
Qantas Empire Airways Limited - W. H. Fysh, W. C. Taylor, G. P. N. Watt, Sir Keith Smith, D. McVey.
National Oil Proprietary Limited (receiver appointed) - E. J. Kenny, L. J. Rogers, S. Christie.
Commonwealth Engineering Company Limited - G. H. Watson, Sir John Jensen, W. Scott, M. W. O’Donnell.
New Guinea Resources Prospecting Company Limited - G. H. Watson, H. A. Dodd, M. W. O’Donnell.
Commonwealth Hostels Limited - W. Funnel], R. S. Nesbitt, R. G. Baxter, T. H. E. Heyes, M. W. O’Donnell.
asked the Minister representing the Minister for Defence, upon notice -
In view of the newspaper reports that a unit of the Commonwealth Division of the United Nations forces in Korea, had been wiped out, and the subsequent denial of that fact by the Minister f ir the Army - (a) Is censorship applied te . war correspondents in Korea;
– The Minister for Defence has supplied the following answers: -
Yes. Operational censorship conducted by the Press Advisory Division of the United Nations Command covers all accredited war correspondents in the Korean theatre. This censorship covers all troop movements, designation of units and operations currently in progress. In its various forms it covers all news media, including press, radio and photographic material (still and cine). Such censorship, however, automatically lapses seven days after an operation unless a further directive is issued by the United Nations Command. Censorship is implemented through the Press Advisory Division Censorship Bureau, comprising officers of the United States Army, Navy and Air Force, and operating in three centres at (i) Pammunjom, (ii) Seoul, and ( iii > Tokyo. No censorship is carried out by the British Commonwealth Forces as all press and other publicity material must pass through the United Nations Command censor’s hands.
Australia has no censorship or accreditation authority in Korea. The same policy applies to all other United Nations members with forces serving in Korea.
asked the Minister representing the Minister for Commerce and Agriculture, upon notice -
– The Minister for Commerce and Agriculture has furnished the following answers: -
asked the Minister for Shipping and Transport, upon notice -
– The answers to the honorable senator’s questions are as follows : -
asked the Minister representing the Minister for Labour and National Service, upon notice -
– The Minister for Labour and National Service has supplied the following answers : -
asked the Minister representing the Minister for Labour and National Service, upon notice -
– The Minister for Labour and National Service has furnished the following reply: -
The Commonwealth Employees’ Compensation Act applies to members of the Citizen Forces who sustain injuries while serving iri those forces. National service trainees are members of the Citizen Forces and are, therefore, covered by the provisions of the act. When u trainee sustains an injury during the period of training, and due to the training, compensation may be payable to the trainee in accordance with the provisions of the Commonwealth Employees’ Compensation Act. In the event of death of the trainee arising out of the injury, compensation may be payable to the dependants. If the Commonwealth accepts responsibility for an injury suffered by a trainee during his training, compensation in accordance with the Compensation Act is payable in respect of any disability arising in later life attributable to that injury. Applications by national service trainees for compensation must be made through the ordinary service channels.
asked the Minister representing the Minister for Supply, upon notice -
– The Minister for Supply has furnished the following reply:-
As to the contract prices, there are about COO contracts involving a great variety of items and it is considered that the compilation of these details would involve too much time and clerical labour to be justified in the circumstances.
– I lay on the table the following paper: -
International Labour Organization - Thirtyfifth session, Geneva, June, 1952 - Reports of the Australian Government, Employers’ and Workers’ Delegates.
In the interests of economy I do not propose to move that the reports be printed. Duplicated copies will be made available to honorable senators who require them. At a later date, I shall inform the Senate of the action taken, or proposed to be taken, in respect of the recommendations adopted by the conference. This procedure is in conformity with the practice adopted in the Parliament of the United Kingdom, and it is believed that it should be followed here.
Bill returned from the House of Representatives with a message intimating that it had made the amendments requested by the Senate.
Bill (on motion by Senator O’Sullivan) read a third time.
Debate resumed from the 16th October (vide page 3251), on motion by Senator Spooner -
That the bill be now read a second time.
Declaration of Urgency.
– I declare that the Oil Agreement Bill 1952 is an urgent bill.
Motion (by SenatorSpooner) put -
That the bill he considered an urgent bill.
The Senate divided. (The President - Senator the Hon. Edward Mattner.)
Majority . . . . 8
Question so resolved in the affirmative;.
Allotment of Time.
Motion (by SenatorSpooner) proposed -
That the time allotted in connexion with the bill be as follows: -
For the second-reading stage, until 9 p.m. this day;
For the committee stage, until 9.15 p.m. this day;
For the remaining stages, until 9.20 p.m. this day.
Opposition senators interjecting,
SenatorSpooner. - The interjections would come with greater force if honorable senators studied the bill and understood that it consists of one clause only.
SenatorMcKENNA (Tasmania - Leader of the Opposition) [4.3]. - Speaking to the motion that has been moved by the Minister for National Development (Senator Spooner) for the allocation of time, I should like to point out to the Senate that for the second-reading stage of the bill there has been allotted one and three-quarter hours before the dinner adjournment and one hour thereafter. That is, in all, a period of exactly two and three-quarter hours to enable 60 honorable senators to express their opinions on this very controversial and highly important measure if they wish to do so. At the committee stage, we are to be allowed the generous time of a quarter of an hour in which 60 honorable senators may review the terms of the agreement of sale ! It is all very well for the Minister to say that the bill has only one clause. There are three clauses, and one of them incorporates the agreement. I do not propose to waste time now. I merely intend to put the viewpoint of the Opposition on this matter and I can well understand why honorable senators on the Government side do not wish to hear me. Further, I do not doubt that honorable senators on the Government side will have the effrontery to take a great deal of the limited time that will be available to the Opposition to discuss the measure. Members of the Government who are prepared to support this limited allocation of time to an important bill should be ashamed of themselves. This is the most flagrant denial of the rights and duties of an opposition that could be imagined. The bill has been in this chamber since the 16th October last. The Government now proposes to restrict the debate on this measure to a period of three hours, after allowing it to lie here for a fortnight and keeping it away from discussion. Why? Because it is a controversial measure -
– I fear that many of the ideas of honorable senators on the Government side have become crystallized, entirely fixed and, I might add, fossilized. In making this protest, I do not wish to occupy any more of the restricted time that has been allowed to honorable senators. I protest on behalf of every honorable senator on the Opposition side. I record a most emphatic protest against the limitations that are being inflicted upon them.
SenatorHendrickson. - It is Prussianism !
– I take up the interjection of Senator Hendrickson and assure this chamber that this Prussian jackboot performance of the Government will be placed very plainly and emphatically before the electors of Australia at the approaching Senate election, and that the name of every honorable senator on the Government side who supports it will be blazoned by the Opposition from one end of Australia to the other.
Question put -
That the motion be agreed to.
The Senate divided.
Ayes . . . . . . 31
Noes . . . . . . 23
Majority . . 8
Question so resolved in the affirmative.
Debate resumed (vide page 876S).
– The bill which is now being rushed through this chamber has two main purposes. First, the bill purports to cancel the oil agreement made between the Australian Government and the Anglo-Iranian Oil Company Limited in 1920, which was varied in 1924 and 1926. Although the capital of the company was increased, no alteration of substance was made to the original 1920 agreement. I point out that the agreement has stood for 32 years, under governments of every conceivable kind - both Labour and non-Labour - without objection by anybody, and certainly without any attack upon the constitutionality of Commonwealth Oil Refineries Limited and its legitimate establishment under the powers of the Commonwealth. That long-standing arrangement and partnership is to be cancelled. Secondly, the bill seeks to authorize ‘the sale of the Commonwealth’s 425,001 shares in the Commonwealth Oil Refineries Limited - being one more than half of the allotted shares - to the Anglo-Iranian Oil Company Limited for approximately £2,750,000, being a price of £6 10s. a share.
I want to comment at the outset upon the second-reading speech of the Minister for National Development (Senator Spooner) after he had introduced the measure about a fortnight ago. I have looked in vain for one word in the speech that would give any indication that either the Minister or the Government has any true appreciation of the important and vital part that oil plays in every phase of Australia’s economy and defence.
There was not one word upon that subject. I think that it behoves the Government to give some indication of its appreciation of the importance of oil to Australia, because oil is the very lifeblood of this community. It is important not only to defence, in its aspects of land transport, air transport, and sea transport, including the fleet air arm and oilburning naval craft, but is also of supreme importance in connexion with the internal communications of Australia. I say at once that if motor transport which, of course, is completely dependent upon oil, were to be halted through the absence of oil in this country, the populations of the big cities of Australia would undoubtedly starve. They are unquestionably dependent upon motor transport, based on oil, to even get their food supplies, apart from other divergent and very necessary commodities. I do not think that any one would contest the statement that the absence of oil from Australia is its greatest weakness in the scheme of things. As we do not produce oil in this country, we are completely dependent upon overseas shipping and overseas suppliers for this very necessary commodity. Of course it is axiomatic that if we lacked oil at any time, not only would our defences fall to tha ground but the whole of the economy of Australia would be brought instantly to a standstill. That is not an overstatement of the vast importance of oil to this country. The one life-line bringing that highly inflammable commodity to Australia is represented by shipping, which is vulnerable to attack by submarines and assailable very readily from the air. Taking a realistic view of the matter from Australia’s viewpoint, one would expect that any responsible government, instead of moving out of the field of oil and matters connected with the oil industry, would be moving apace, if possible, into its production overseas, and the transportation of oil, rather than surrendering the one lone, but very important interest and listening-post that it has in that industry. Let us contrast the position in Great Britain. Under the Asquith Government, and with Mr. Churchill’s acquiescence, the Government of the United Kingdom entered into a partnership with private enterprise to assure oil supplies to that island country, one that is placed in relation to oil very much as is Australia. The Asquith Government - which was not a Labour government - ‘pointed out that the fate of the British nation depended upon oil, and it established a company in conjunction with private interests which had what we now term the “ know-how “. The British Government not only provided the money, but also moved outside the United Kingdom into the fields of oil production, oil distribution, and the whole of the tanker situation.
– “Who controlled it?
– One-half was controlled by the United Kingdom Government and the other half by private interests.
– Where was the control ?
– The control, of course, was in the company, with onehalf of the shares held by the United Kingdom Government. In other words, the United Kingdom was so concerned about its supply of a commodity upon which its very fate depended, that it moved as a government into the field of oil although, I remind honorable senators, that it was opposed under all its normal principles to intervention in private enterprise. Let me contrast the attitude of the Australian Government. Quite recently it wrecked the one plant in Australia that was capable of producing oil from shale. It was a small and expensive plant, when its cost of producing a gallon of oil was considered, but nevertheless it was om- one source of supply. As I have previously contended, that source should have been regarded as a research station, in view of our vulnerable position in relation to oil. The present Government has wrecked and stopped that project. It is little wonder that the Minister, speaking on behalf of the Government, had not one word to say about the importance of oil, and everything connected with it, to this country. Now, pursuant to this bill, it proceeds further to sabotage the best interests of Australia by proposing to sell out all of its holding in the one oil concern in which it has any say.
At this stage, in order to lay a foundation, I wish to refer to the original oil agreement of 1920, which made the Commonwealth and the Anglo-Iranian Oil Company Limited partners in the vastly important Commonwealth Oil Refineries Limited. The bill was assented to in May, 1920. It contained very important provisions, including the provision that the company and the Commonwealth should subscribe equally, apart from the fact that there should be two shares difference in favour of the Commonwealth. It provided that, on the capital being increased, the proportion should be preserved, so that the Commonwealth at all times would have a controlling say in the shareholding. It also contained the very important provision that the memorandum, which is the charter of the company, should include a clause providing that no action, question or decision relating to or affecting the policy of the Commonwealth in connexion with naval, military or external affairs, or any proposed change in the status, powers, business or constitution of the company, or any proposed sale of refined products to aliens or for export from the Commonwealth, should be taken, determined or made by the company without the consent of the Commonwealth, as expressed through its representatives on the board of directors. I suggest that those are very proper provisions to safeguard the interests of this country.
Under the original agreement, the memorandum was required to include the following provision: -
That the refinery shall not enter into, or be in any way concerned in or a party to, or act in concert with, any commercial trust or combine, but shall always be and remain an independent British business.
That was another vastly important provision of the legislation. It has stood for 32 years, to the great advantage of the oil users of this country. Now, with the scrapping of the agreement, the way is open for Commonwealth Oil Refineries Limited, having no Commonwealth interest embodied in it, to become part of a trust or combine, to throw overboard its independence, to become part of a great oil combine and to swim along with it, to the detriment of the Australian users of petrol, oil and the by-products of oil.
– Can the honorable senator explain where Commonwealth Oil Refineries Limited is now obtaining oil, since the Anglo-Iranian source of supply has disappeared?
– It comes from abroad, as all oil must come, whether through the Anglo-Iranian Oil Company Limited or otherwise. It comes from abroad, whether it is crude or refined oil.
The fourth point in the agreement to which I wish to refer is in the following terms : -
The refinery company shall forthwith, after registration; erect, equip and operate in Australia a modern refinery.
That has been done at Laverton. The refinery has stood since 1924 and is functioning to-day.
– How much oil does it produce?
– It produces approximately 100,000 tons per annum. Certainly, that is not a vast quantity, but I remind the honorable senator that the importance of Commonwealth Oil Refineries Limited, apart from the defence aspect, is that, through it, the Government has a listening post in this huge industry. It is thus able to understand the methods by which oil is brought to this country. From the moment oil is produced in Australia, the Government can check the cost of refining it. Because it has three directors on the board of directors, it knows all about the financial arrangements of the company. Agreements or arrangements cannot be made by the company without the knowledge of the Government. The whole basis of distribution of oil in this country is also known to the Government. “Who, on the Government side of the chamber, is prepared to say that it is not vitally important for the Government to have some say in the allocation of oil depots and distributing centres throughout Australia?
– What say has the Government now?
– Because it is in the industry, the Government knows what is going on.
– Practically all power is vested in the company, not in the Government.
– There are certain things which the company cannot do without the written consent of the Government. One of the most important is that the company is forbidden to enter into price arrangements with other companies in or outside Australia. It is required to be independent. In the matter of keeping prices down - I am not speaking of the period when prices control operated - the company has played a very important part. On that point I wish to refer honorable senators to some remarks of Viscount Bruce in 1926, when he was Prime Minister of Australia. According to Hansard of the 25th March, 1926, volume 113, pages 2018-19, the right honorable gentleman stated -
In 1921, the difference between prices in the United Kingdom and Australia was a little over 10d.; according to the latest figures it is only 4d. The reduction in price was not nearly so great in America as in other countries. Honorable members will notice that, whilst prices in Australia steadily declined, those in the United States of America fluctuated. The progressive reduction in Australia has been largely influenced by the competition of the Commonwealth Oil Refineries in the Australian market - competition which the oil trusts recognize as genuine, continuous and designed to prevent the exploitation of the Australian public. If the Commonwealth Oil Refineries were not in existence, and this Parliament were doing nothing to protect the Australian public against exploitation, would petrol consumers be as well off as they are to-day? The history of the last few months indicates that greater toll would, have been taken from them by other companies.
Leaving aside considerations of defence, and forgetting about the complete dependence of this country upon oil for its economic stability, as well for its continued existence, I suggest that there is a duty upon this Parliament - which was recognized away back in 1920 - to prevent exploitation of the people by charging excessive prices. It is not surprising that the Menzies Government, which has set its face against any form of prices control, should wish to take away one of the few barriers against trusts, combines and monopolies, and to allow the people to be freely exploited. Having denied itself all possibility of influencing the trend of events-
– The company has no influence at the present time. ‘ I have already referred to that matter.
– Unquestionably it has an influence.
– The term of the bargain is that all commercial arrangements shall be left in the hands of the board, on which the Anglo-Iranian Oil Company Limited has a majority representation.
– Yes, but in making that statement, the Minister overlooks a matter to which he referred in his second-reading speech only a few moments ago - that the point for which Labour has negotiated since 1926 has at last been conceded by the Anglo-Iranian Oil Company Limited. According to the Minister, that company is now prepared to give equality to the Commonwealth on the directorate of Commonwealth Oil Refineries Limited. So what point has the Minister made? Although the Government has not a majority of directors in Commonwealth Oil Refineries Limited it is able to obtain exact information concerning everything that happens in that company. The Government has now proposed to destroy its one line of communication into the heart of the petroleum industry. Instead of moving further into the industry by using Commonwealth Oil Refineries Limited as a stepping stone it has turned its back upon that vital industry, showing a complete lack of appreciation of its importance. It has left the users of petrol to the whims and the devices of the major oil companies, not one major shareholder in which i3 an Australian. Their policies are controlled from outside this country. This position has been developed by a government which forced through another place, not long ago, a resolution denying any controlling interest to British companies in Australian broadcasting stations. Which is the more important - a commercial broadcasting station or a post in this vital industry? The Government has walked out on Australia in relation to the important industry although it intends to keep British interests out of commercial broadcasting stations. What kind of principles does the Government follow? It has no principles. It proposes to serve the interests of private oil companies to the detriment of the vital interests of Australia and the people who use and rely upon petrol.
Senator Cameron recently asked a question relating to the fact, which is completely notorious, that the major oil companies, including the Anglo-Iranian Oil Company Limited, constitute a world cartel and not only divide world markets between themselves but fix the price of their commodity. That circumstance is the subject of a charge which is pending in the Supreme Court of the United States of America at present. But nobody in Australia needs the Supreme Court of the United States of America to tell him what is known by every intelligent person in the world. This bill will destroy the complete independence of Commonwealth Oil Refineries Limited,, leaving it at the mercy of the major oil companies in this country. Up to date, this company has had to remain British and independent, but it will not have to do so if this measure is passed. Let us examine the type of company the shares of which the Government proposes to sell. Is it a failure financially and commercially? The Minister for National Development, in his secondreading speech, acknowledged it to be a. most brilliant, commercial and financial success. He stated that about ?800,000 had been paid in dividends and that infinitely more had been accumulated by the company in resources. The latest balancesheet of the company, dated the 30th June, 1951, indicated its vast strength and growth. The assets of the company were listed at ?9,289,422.
– What is the tangible asset value?
– I am leading directly to that subject. The liabilities of the company amounted to about ?6,466,S79. That left a net asset value of ?2,S22,603, which is equivalent to ?3 6s. a share. Those figures have been based upon values at cost. Freehold land, for instance, has been valued at cost price. I should like to know when it was purchased. It may have been purchased in 1920 or 1924, and since that date the value of land may have more than quadrupled. So the real value of the land might even be ten times the stated value of ?95,000. The stated value of the company’s refinery, installations, pipelines, buildings, &c, at cost price less depreciation is ?870,000. Quite obviously, that value has been grieviously understated. Again, the real value might be ten times as much.
– The items mentioned might even be worn out.
– Like the Government.
– They could be worn out. But the Government is to receive £6 10s. a share for shares the asset value of which, on the basis of this balance-sheet, is only £3 6s. “Would the Anglo-Iranian Oil Company Limited pay that amount for plant and equipment that was worn out? I think that the Minister for National Development, who has decided to curtain this debate so severely, might keep out of it at present. We shall probably find at 9 o’clock this evening, when the allotted time for the debate expires, that the Minister will have successfully gagged himself out of it and will not even give the Opposition the courtesy of a reply. I invite him to cease interrupting during the limited time available to the two Opposition speakers who will be able to address the Senate on this bill.
– fi shall do that if the Opposition will agree to my speaking for the last twenty minutes of the debate.
– Not content with permitting only three hours for 60 senators to debate this matter, and notwithstanding the fact that the Minister has already spent a considerable amount of time in delivering his second-reading speech, he now wants twenty minutes in which to speak at the end of the debate.
– The Leader of the Opposition (Senator McKenna) accused me of not wanting to reply to the debate.
– And I maintain that that statement was accurate.
– Then I invite the honorable senator to put it to the test. I am willing and eager to reply.
– Then I ask the Minister not to reply prematurely. If this sale were submitted to the people of Australia for their approval the result would be an overwhelming vote of censure on the Government. The result of the Flinders by-election indicates that that is so. The sale of this paying national asset - this one listening post of the Government in the oil industry - was resented by the people of Flinders. We can all put our own interpretations on that vote, but I venture to suggest that the fact that the people realized that the sale of the Government’s interest in Commonwealth Oil Refineries Limited would be to their detriment was one of the major factors that resulted in the resounding defeat of the Government in the Flinders electorate.
– Has Commonwealth Oil Refineries Limited ever sold motor spirit at a lower price than its rivals ?
– I refer Senator Maher to what Lord Bruce said in 1926 when he was Prime Minister. Commonwealth Oil Refineries Limited had then operated for only six years. The right honorable gentleman indicated that a substantial saving to the petrol users of Australia had resulted from its establishment. The ensuring of competition was one of the main purposes, if not the main purpose, of the establishment of Commonwealth Oil Refineries Limited. The Government desired to prevent the people of Australia from being exploited by overseas interests.
– Does the Leader of the Opposition suggest that that is happening now?
– I have no hesitation in saying that Commonwealth Oil Refineries Limited, particularly in view of its contemplated expansion, could play a vital part in regulating the price of petrol.
Let me review the negotiations of the Government with the Anglo-Iranian Oil Company Limited. That company put two proposals to the Government. It stated that it was about to establish in Western Australia a very large refinery in order to handle about 3,000,000 tons of oil a year. It had been estimated that the refinery would cost £40,000,000 and that it would be ready for operation in 1956. The company invited the Government to take equal shares with it in that proposition. It did not insist on having a majority of directors in control of the new enterprise, but agreed to have equality of directors with the Commonwealth. The Anglo-Iranian Oil Company Limited informed the Government that it wished to develop Commonwealth Oil Refineries Limited so that the latter company could handle the distribution of the products of its large refinery. For that purpose, the expenditure of another £12,000,000 would be necessary. The Anglo-Iranian Oil Company Limited suggested that the Commonwealth should join it in contributing equally to that expenditure, and although the Commonwealth was entitled to only three out of seven directors under the 1920 agreement, the Anglo-Iranian Oil Company Limited also suggested that, under the new arrangement, the Government should have an equal number of directors. That offer provided a priceless opportunity for this country to move into the field of oil production and distribution, but the Government turned it down.
Had the Government participated in the Western Australian project with the Anglo-Iranian Oil Company Limited, it would have become the partner of a company that is concerned with the production and distribution of petrol throughout the world. The Government declined to participate in the Western Australian project. In doing that it made a grave error. It agreed to spend £6,000,000 in the expansion of Commonwealth Oil Refineries Limited. The Minister for National Development made a very important announcement on that subject on the 16th January. He said -
Expansion of the distributing activities of Commonwealth Oil Refineries Limited, which will be concurrent with the building of the new refinery, will necessitate a large additional capital investment - estimated at about £12,000,000 - in that company. The Commonwealth Government will provide one-half of the additional capital required by Commonwealth Oil Refineries Limited and thus maintain the present position, under which it holds one share more than 50 per cent, of the subscribed capital of the company. It will probably take three to four years to complete the building of the refinery and the necessary development of Commonwealth Oil Refineries Limited as a distributing and selling company may take somewhat longer. In the meantime, and, indeed, perhaps during such time as the plant continues to be efficient, the refinery at present conducted by Commonwealth Oil Refineries Limited at Laverton will continue to operate.
– What changed the Minister’s mind?
– A legal opinion, according to what he has said. The Government was ready to contribute £6,000,000 in order to expand the distributing activities of Commonwealth Oil Refineries Limited and then, with its customary somersault, decided that it could not do so.
What is the reason for this change of front in a few months ? The Government now says, “ We have had legal opinions from our Crown Law officers, from the Attorney-General, and from Mr. Barwick, Q.C. We cannot continue our association with this company any longer. It is completely unconstitutional “. The Commonwealth’s participation in the oil industry through Commonwealth Oil Refineries Limited has never been challenged, and I demand, on behalf of the Opposition and of the people that we represent, that the legal opinions on which the Government has acted be tabled for our perusal. If the Government refuses to table them, I shall be obliged to draw the serious inference that the opinions are based on the false and hypothetical premise that Commonwealth Oil Refineries Limited will cease refining and will limit its activities to distribution. If that is so, the Government is guilty of fraud in claiming that it has no constitutional power to continue its association with Commonwealth Oil Refineries Limited. What reason can there be for the Government’s refusal to table the opinions upon which it is taking this vastly important action affecting a vital industry? There must bc some reason. If the Government will not table the legal opinions upon which it is acting, it must be prepared to allow me, on behalf of the Opposition, and .also the people of Australia to draw the inference that it does not dare to do so. I put it to the Minister that he has based his argument for the sale of Commonwealth Oil Refineries Limited on the assumption that, after 32 years of successful operation, a constitutional difficulty has suddenly emerged. If that is so, let the Opposition and the people of Australia have a look at the legal opinions that have guided the Government. Then, if we find, as I am sure we shall, that they are based upon the assumption that Commonwealth Oil Refineries Limited is to go out of the oil refining business, we shall know that the proposal that we are now discussing is a complete fraud. What does it matter if Commonwealth Oil Refineries Limited is producing little petrol? For the sake of argument, let me accept the proposition that, under the Constitution, Commonwealth Oil Refineries Limited should have refining activities in order to be firmly based. What would it cost this country for Commonwealth Oil Refineries Limited to continue to refine a small quantity of crude oil per annum? The Minister said in his second-reading speech, and, I think, in the statement that he made last January, that there was no difficulty over the continuation of the Laverton refinery.
– The .continuation of the Laverton refinery until the new refinery was completed.
– That is not what the Minister said.
– Then what did I say?
– The Minister said -
In the meantime, and indeed perhaps during such time as the plant continues to be efficient, the refinery at present conducted by Commonwealth Oil Refineries at Laverton will continue to operate.
– Why spend £12,000,000?
– I put it to the honorable senator that if there is to be an expansion of petrol distribution facilities in Australia, it is vastly important from a defence point of view as well as from the point of view of the Australian economy, that .the Government should have a say in relation to such matters as storage and the establishment of depots. The strategic factors involved are vastly important. The Minister also said in his second-reading speech -
When the Kwinana refinery is established, Commonwealth Oil Refineries Limited vill be able to cease operating its Laverton refinery if it is able to obtain products at a more favorable price from the Kwinana refinery.
Let us assume that the company will not get the products at a more favorable price.
– Why assume that?
– Why not? Why should we necessarily assume that the price will be more favorable? In the event of the products not being available at a more favorable price, the Minister himself acknowledges the need for the Laverton refinery still to operate. That is a very necessary inference from what he has said. If there is no need for the refinery at Laverton to cease operation until the new refinery is completed in 1956, why is there such haste with this sale? That alone causes suspicion. Why could the sale not be postponed until we see whether we are, in fact, to have a refinery in Western Australia? The agreement that we are being asked to ratify provides -
After the completion of the sale of the shares, the Oil Company will use its best endeavours to procure the completion as soon as is practicable of the erection and equipment at or near Fremantle in the State of Western Australia of a modern mineral oil refinery with an input capacity of approximately three million (3,000,000) tons of crude oil per annum.
There is no obligation on the company to establish a new refinery in Western Australia. Its only obligation is to “use its best endeavours” to that end. Quite recently in this chamber the Minister for National Development, apologizing for the Government’s failure to secure adequate reparations from Japan on behalf of former Australian prisoners of war, used those very words. The Government, he said, had “ used its best endeavours “, but had found the task beyond it. Why sell Commonwealth Oil Refineries Limited until the new refinery has been established in Western Australia ? The people of Australia would like to hear that question answered, and I invite the Minister, if he has an opportunity to reply to the second-reading debate, to explain the need for all this haste.
I turn now to the price at which the shares have been sold. As the Oil Agreement of 1920 clearly provides for the determination by arbitration of outstanding matters between the AngloIranian Oil Company Limited and the Commonwealth Government, why did this matter not go to formal arbitration so that evidence could be called and a thorough investigation of the proposal made? Why was the assessment made by only one firm of accountants? Apparently the assessment was made, not on behalf of both parties, but on behalf of the Commonwealth. What particular qualifications has that firm of accountants to assess the value of petrol plant and installations, land, machinery and buildings! I want details of the valuation laid on the table of the ‘Senate. Why should that public business not be made known to the people of Australia? The shares were not the property of the Government; they were the property of the people of Australia, and they were sold at a price fixed by one firm of public accountants in Melbourne. I have not a word to say against the reputation or integrity of that firm, but I should like to know how the valuation was arrived at. Was goodwill taken into account? If so, what value was apportioned to goodwill? Who valued the land, the refinery, and the tank installations throughout the Commonwealth? Obviously, those assets could not be listed at cost. Commonwealth Oil Refineries Limited must be regarded as a highly payable and profitable organization dealing in a relatively monopoly commodity. Its future prospects are so great that I venture to say that had the shares gone on the open market they might well have been quoted on stock exchanges throughout the Commonwealth, not at £6 10s. each, but at £30 each. I have not the slightest doubt that they would have been snapped up in a moment on the open market. We are quite familiar with the figures that have been published in annual balance-sheets and other public documents of Commonwealth Oil Refineries Limited, but we should like to have the other details that I have mentioned. The Opposition will not be satisfied, and the people of Australia will not be satisfied, until those details are made public. So many aspects of this matter cause us great concern that we believe there ought to be a royal commission to investigate the reason for the Government’s haste in selling its shares and to determine whether the sale price is fair and reasonable. Nobody knows why the Government will not table the information that we are seeking. The whole transaction is surrounded by suspicious circumstances. Why was the Government not content to wait until the new refinery was established in Western Australia?
– This Government moves fast.
– It moves fast when it wants to move fast. In matters that are not for the good of the people of Australia, the Government moves very fast indeed. I have no wish to prolong this discussion unduly. I shall content myself at this stage by recording the complete indignation of the Opposition and those whom we represent at this Government’s failure to recognize the vital importance of Australia’s interest in oil and at the Government’s scandalous sell-out of the people’s assets. It is vital that the Government should have first-hand knowledge of what is happening in the oil industry and this legislation will destroy the Government’s only avenue to that knowledge. The Government is ignoring its one opportunity to get its elbow into the industry, to open it up and to participate in it. By so acting, it is being false to its duty to the people of Australia. This bill is one more link in the chain of great betrayals by this Government of the interests of the people. It has sabotaged Amalgamated Wireless (Australasia) Limited by selling its shares in that organization at a sacrifice.
– A sacrifice? The value of the shares has since fallen substantially.
– This Government is responsible for that, as it has been responsible for the depression of the loan market. It has ruined the Australian economy. The Australian economy will recover, of course, but not until there is a change in the occupancy of the treasury bench. The sale of the Commonwealth’s interest in Commonwealth Oil Refineries Limited is in line with the sabotaging of Trans-Australia Airlines that is now taking place and the destruction of the Glen Davis shale oil project. In conclusion, with all the emphasis I can command, I record my own and my party’s opposition to this measure. In so doing I have behind me, I believe, the opinion of a vast majority of the people of Australia.
– I wish to preface my maiden speech in this chamber by paying a tribute, on behalf of the people of Western Australia, to the late Senator Edmund Piesse, whose seat in this cb. amber I now have the privilege to occupy. Senator Piesse enjoyed the esteem and goodwill of the whole of the people of Western. Australia. He held very firm convictions and fearlessly supported them, and he equally fearlessly opposed the things that he believed to be wrong. His forthrightness earned for him the approbation of the people whilst his gentle demeanour and courteous manner endeared him to all who came in contact with him. By his death Western Australia has lost a very firm defender of its rights.
I do not expect the views that I shall express on this bill to meet with the unanimous approval of honorable senators. On this occasion, which is a momentous one for me, I shall endeavour to present my views in such a manner as not to provoke or incite honorable senators opposite, whose opinions may be contrary to my own. Shorn of all the legal formalities that are generally associated with a measure of this kind, this bill is in reality and in precise terms a bill to authorize the Government to dispose of its shares in Commonwealth Oil Refineries Limited. The decision of the Government to sell its interests in the undertaking has my whole-hearted approval. I shall endeavour to substantiate the case for the proposed sale under two main heads. First, T hold the view that governments should refrain from engaging in commercial or industrial enterprises, unless exceptional circumstances warrant such a move. Secondly, the limitations of the constitutional powers of the Commonwealth preclude the Government from participating in any extension of the activities of Commonwealth Oil Refineries Limited. I make that statement as a layman, but it is based on information that has been supplied to mo. I fail to see that present circumstances justify the continuance of the Government’s association with this venture. As all honorable senators know, when Commonwealth Oil Refineries Limited was established by the Anglo-Iranian Oil
Company Limited in partnership with the Australian Government, its objective was to commence oil refining in Australia. That objective was a laudable one and deserved all the support that could then be given to it. But in the meantime circumstances have changed. It is now estimated that, with projected developments, Australian oil refineries will, by 1956, be refining SO per cent, of our oil requirements. That is a vastly different proposition from the two per cent, which is refined by Commonwealth Oil Refineries Limited. The company has proved a successful and profitable venture. I respectfully suggest that, possibly, one of the main reasons for its success was the fact that the Commonwealth had minority representation on its directorate in conformity with the terms of the original agreement under which the Commonwealth agreed to refrain from interfering in the technical and commercial management of the company. The original transaction boiled down to an investment of government funds in a private enterprise without government control of the undertaking. That was the position that existed when the AngloIranian Oil Company Limited intimated to the Government that, at an estimated cost of £40,000,000, it was prepared to erect a modern refinery at Kwinana, in Western Australia, with a capacity of 3,000,000 tons per annum. I submit, and I think that my submission will be approved by honorable senators, that such a proposition should receive all the support that can be given to it and that no obstacle should be placed in the way of its being brought to fruition. The Anglo-Iranian Oil Company Limited also intimated that it proposed to expand thu distribution facilities of Commonwealth Oil Refineries Limited to enable the latter company to handle the output, of the refinery at Kwinana.
The Anglo-Iranian Oil Company Limited placed three alternative proposals before the Government : First. that the Commonwealth should join with that company as a partner in the undertaking ; secondly that the Commonwealth should share equally with it in the expansion of the distribution of the facilities of Commonwealth Oil Refineries Limited at a cost of approximately £12,000,000; and, thirdly, that the Commonwealth should sell its shares in Commonwealth Oil Refineries Limited and retire from the venture. I strongly subscribe to the view that jio reason existed for the Government to enter into partnership with the Anglo-Iranian Oil Company Limited for the establishment of the Kwinana refinery, as the company had intimated that it was prepared to provide the whole of the capital cost. Generally, when the cold, clammy hand of government control touches private industry there is a lack of the vigour and drive that is associated with private enterprise. I do not want my remarks to be regarded as a reflection upon the executives of governments that have been concerned in such enterprises. Having myself been one of them, naturally I do not ally myself with any attacks that may be made upon them. However, it cannot bc denied that when governments interfere in private enterprises the ventures with which they are associated invariably lack that vigour and drive that are essential to their success. Organizations controlled by governments which find themselves in difficulties usually overcome their difficulties by the injection of a few pounds from the Consolidated Revenue Fmd. Holding these views, I fully subscribe to the Government’s decision not to enter into partnership with the Anglo-Iranian Oil Company Limited for the establishment of the refinery at Kwinana-.
Some rather illuminating statements have been made regarding the defence aspect of the Commonwealth’s association with Commonwealth Oil Refineries Limited. One of the most important of them, in my view, is that, from 1942 to 1946. when the maintenance of supplies of oil was of vital importance to the defence of Australia, the refinery established by Commonwealth Oil Refineries Limited at Laverton, Victoria, was not in operation. Is it not obvious that the establishment of a refinery with a capacity of 3,000,000 tons is of vast national importance, not the least important aspect of which is the defence aspect? The Laverton refinery was established about 2S years ago. It has depreciated, but what is of more importance is the fact that modern refinery developments have largely rendered it obsolete. Another point that must be borne in mind is that the Laverton refinery is incapable of producing aviation spirit.
Turning very briefly to the proposal to sell the Commonwealth-owned shares in Commonwealth Oil Refineries Limited at £6 10s. a share, I remind honorable senators that the value of the shares was assessed by a reputable firm of accountants. I respectfully suggest that accountants are best able to calculate the commercial value of shares, and that in leaving the assessment to be made by a reputable firm of accountants the Government adopted a method which was just and equitable from its viewpoint and from the viewpoint of the people of Australia. I have made some research into the suggestion that the Commonwealth, by-virtue of its holdings in Commonwealth Oil Refineries Limited, was able to some degree to control the price of petrol. I was unable to find any concrete evidence that the Government was able to control the price of petroleum spirit to the consumer as the result of that investment. It had a minority representation on the directorate of the company and under the terms of the agreement it refrained from interfering in the technical and commercial management of the company. Furthermore, we must bear in mind that the Laverton refinery produced refined oil from imported crudes which were not the property of the company or of the Government. Honorable senators will agree that the cost of the crude oil is the prime factor in the cost of the refined product. As I have said, I subscribe to the view that all governments should refrain from intervening in a commercial or industrial undertaking unless such intervention is justified by exceptional circumstances. Such circumstances did exist when Commonwealth Oil Refineries Limited first came into existence. That position does not exist to-day.
The proposals for the erection of refineries in Australia provide that by 1956, Australia will be producing SO per cent, of its requirements. The Commonwealth Oil Refineries Limited refinery at Kwinana to be in operation by i956 will produce 3,000,000 tons. The Shell Company of Australia Limited will be producing 1,000,000 tons at its Geelong refinery by 1954. The Altona project of Vacuum Oil Company Proprietary Limited, to be in operation by 1956, ‘will yield 1,000,000 tons. The refinery of Caltex Oil (Australia) Proprietary Limited at Kurnell will produce 1,000,000 tons by 1956. In those circumstances, I fail to see any reason why the Government should interest itself in the refining or distribution of petroleum products. Any control that it is necessary for the Government to exercise over such undertakings should be administered by legislative action, either State or Federal. Unless there are exceptional circumstances to warrant it, no government should intervene in competition with private enterprise. As I hold those views very strongly, I am in complete accord with the decision of the Government to dispose of its holdings in Commonwealth Oil Refineries Limited. Therefore, I intend to support the bill.
– I congratulate the Leader of the Opposition (Senator McKenna) upon the way in which he put the case on behalf of the representatives of the people in this chamber. I believe that he put his case also on behalf of many thousands of electors in the Flinders electorate, who spoke with marked certainty on this matter last week. Some of the statements that Senator Robinson made could only come from one who had not had the experience that I hope the honorable senator will gain in the future. Probably he may be excused, because it was his maiden speech in this chamber. The honorable senator said that he did not believe in governments entering into private enterprise, because when the cold, clammy hands of government controls touched private enterprise, it lacked vigour and drive. The honorable senator formerly was a government employee. I am astonished that he has come to the Senate to tell the electors of Western Australia that he was inefficient, had clammy, sticky hands and was not capable of doing his job. The honorable senator said that he did not believe in governments interfering with private enterprise. I hope that we shall have him on this side of the chamber when the Senate is considering the proposed arrangements with Trans-Australia Airlines and Australian. National Airways Proprietary Limited. I have a cutting from the Sydney Daily Telegraph of yesterday. The suggestion was made in that newspaper that the Minister in charge of this bill and some other Ministers should be paid dirt money for the job that they are doing. I believe that some of the proposed legislation should be deferred until the people have been able to consider it.
– The honorable senator should say that about the airways monopoly.
– I believe in all government monopolies if they are in the interests of the people. This grand orgy of selling public utilities must be checked. The Government was returned to office by promising the people things that it has never attempted to do. For 32 years Commonwealth Oil Refineries Limited has been an asset to the people of Australia. It was established by a Liberal government. Now the Government proposes to sell it, and the Minister has informed the Senate that this important measure to implement the sale must go through this chamber in a couple of hours. There is something sinister behind the Government’s actions. This Government has no mandate from the people to sell their property and assets.
– The Flinders electorate made that clear.
– That is true. When the electors get the opportunity to speak again, they will say in another way what I am attempting to say to-night. They will support the views of the Labour party on this matter. The Government made promises to the electors in 1949 in the policy speech of the Prime Minister (Mr. Menzies) but they contained no reference to the sale of Commonwealth Oil Refineries Limited, a subsidy for Australian National Airways Proprietary Limited, the sale of Commonwealth ships, or the disposal of the Government’s interest in Amalgamated Wireless (Australasia) Limited.
The Government has been guilty of snide political practices. The Labour party had a majority in this chamber in 3949 and the Government then submitted legislation insincerely. lt continually played on the fear of communism. For twelve months after its election, there was continual reference in this chamber to Communists. The Government told the people that but for the Communists, it would have proceeded with legislation, not to sell Commonwealth Oil Refineries Limited or TransAustralia Airlines or other government projects, but to reduce taxation, put value back into the £1, and maintain full employment. The Government tricked the people. Immediately the election was over, in 1951, the Government, without a mandate on any of those questions, immediately started the job that it was paid to do by private enterprise which had made its return possible in 1949. That is the job that the Government is doing now. Since 1951, the electors have shown their hostility to the actions of this Government on every possible occasion. The Labour party has won every federal by-election, every municipal election, and every State parliament election since 1951.
– What about Queensland ?
– We won a by-election there on Saturday. Why did not the Government tell the people of Australia that it was going to pawn their assets before the next election?
– Because it would not have been true.
– I had the pleasure of taking an active part in the Flinders by-election. The minds of the electors there were upon the sale of Commonwealth Oil Refineries Limited.
– Order! I have allowed the honorable senator a certain amount of latitude. I advise him to direct his remarks to the bill.
– The bill was discussed closely in “Victoria during that by-election in Flinders.
– It was the issue in Flinders.
– That is true. The Prime Minister said that that was so.
Government supporters interjecting.
– The Prime Minister said that the contest in Flinders would be decided upon the record of this Government. The people voted as they did because they believe that this proposal is a pay-off by this Government and that there is something sinister behind it. If that is not true, why is not the Government prepared to allow Opposition senators a full opportunity to debate this bill? The Liberal candidate in Flinders said that money was not forthcoming. The people who had always put money into the Liberal party’s funds were finished with it.
– I rise to a point of order. The honorable senator persists in discussing a matter that has nothing to do with the bill.
– Order ! Senator Hendrickson should confine himself to the bill that is before the Senate.
– I shall do so. I thought that I was discussing the bill.
– It has a lot to do with the bill.
– Order! On other occasions Senator Sandford has said that all interjections are disorderly and unparliamentary. I ask him not to interject now.
– I am sorry that I have upset honorable senators on the Government side. In my opinion, the Government should withdraw this measure or resign. It should allow the people of Australia to say whether they believe that this asset that has had the support of all governments since it was set up by a Liberal government should be sold to the great oil combines. What is . wrong with the Government falling into line with the Anglo-Iranian Oil Company Limited and being a partner in the Western Australian project? There is nothing wrong with it. Senator Robinson said that the refining plant at Laverton had been closed. He does not understand, or he has not been told, why the Laverton plant was closed during the war. That action was taken because of a shortage of tankers. The Minister knows that, and so do the Government representatives who have misled the people.
There is something behind this move that has not been revealed. The oil companies are paying millions of pounds to petrol stations so that they can control them. Many people believe that the oil companies compete with one another. They do not compete, because they are a huge combine. The Government could have continued to have representatives in the trade to inform it on prices and other trends associated with oil, but the Minister has stated that immediately this bill is passed, the directors who have represented the Government and the people on Commonwealth Oil Refineries Limited will be dismissed. The Government’s capital investment in Commonwealth Oil Refineries Limited is £400,000. The Treasury has been receiving good dividends from that investment. If that were not so, no oil company would be willing to pay the price that the Anglo-Iranian Oil Company Limited has offered the Commonwealth for its shareholding in the Commonwealth Oil Refineries Limited.
– The honorable senator admits that it is a good price?
– No, [ do not, because in view of the increase of value of the shares during the last twenty years, it is reasonable to assume that they have become more valuable.
The Minister for National Development (Senator Spooner) has referred to the possible deterioration of the plant, but I do not believe that any private interest would be prepared to purchase installations that were not worth buying. The people of this country are entitled to be told of the basis on which the valuation was made by a Victorian accountant. The Minister stated in his second-reading speech that the accountant was an authority on the value of company shares. I do not consider that we should accept such a valuation. There should have been a thorough investigation by a judicial body to establish the present value of the Commonwealth’s shareholding in Commonwealth Oil Refineries Limited, as well as the value of the company’s assets.
The Minister has stated that Mr. G. Barwick, Q.C, had expressed the opinion that the Government’s original intention to subscribe additional capital to Commonwealth Oil Refineries Limited for the purpose of expanding its distributing facilities was unconstitutional, aud that, accordingly, the Government had no alternative but to sell its shareholding in the company. Although I do not doubt Mr. Berwick’s knowledge of constitutional matters, he could have been wrong on this occasion, as he has been on other occasions. I do not know whether his opinion was right or wrong, because we have not been told sufficient about the matter.
– Dr. Evatt did not oppose Mr. Barwick’s opinion.
– The Leader of the Opposition in the House of Representatives (Dr. Evatt) is well Me to take care of himself. I do not intend to imply anything derogatory to Mr. Barwick, but the Government should ascertain the opinions of other learned men also. If the Government were sincere about this matter, it would not hurry the measure through the Senate. I remind honorable senators than an election of senators will be held before June of next year. Who are more qualified than the electors to decide whether the Commonwealth should sell its shares in Commonwealth Oil Refineries Limited ? The Government has not received a mandate from the people to sell their assets ; after all, as the people made the Constitution, it is they who should decide whether their assets should be sold. It is quite clear that the huge oil combine is eager to buy the Commonwealth’s shareholding, not because Commonwealth Oil Refineries Limited is a failing business, but because it is a good proposition. During the last war ohe of the biggest headaches of the Government that was then in office was caused by the necessity foi- Australia to obtain oil from other countries. If the Government was sincere in its preparations for defence, it would continue to be a partner in the great oil organization. It is significant that supporters of the Government have changed their minds frequently. I remember that when the subject of overseas capital investment in Australian broadcasting stations was under discussion in this chamber about twelve months ago, Senator Gorton moved a motion to the effect that such investment should not be permitted because of the potential defence value of our broadcasting stations.
– That was not the reason.
– At the time I believed that the Government did not want an organization outside the combine to gain control of some of the Australian radio stations. Labour opposed the motion because it considered that that organization was just as entitled fo a radio network in this country as were the interests that the honorable senator supports.
As the Leader of the Opposition has already pointed out, the Minister for National Development stated previously that the Government was prepared to invest a further £3,000,000 in the project that was planned by the Anglo-Iranian Oil Company Limited in Western Australia. Why has the Minister changed his mind? The people of this country are entitled to be informed of the reason. Of course, I realize that the supporters of the Government parties are apprehensive about their next appearance before the electors, and they are seeking to pull political wool over the eyes of the people. It is quite evident that many of the people who have supported them in the past will not do so in the future. The Leader of the Opposition has referred to statements that were made by Mr. - now Lord - Bruce, who was Prime Minister of this country in 1920 and 1926, to the effect that the Commonwealth’s participation ,in Commonwealth Oil Refineries Limited had resulted in the price of petrol being’ reduced from lOd. to 4d. a gallon. If the oil combine is allowed to assume control of the distribution of oil and petrol in this country it will not consult the Government about the price that the public shall be required to pay for these commodities. Only the profits that it makes in Australia will be known. No information will be available about its profits overseas.
I shall not utilize much more of the limited time that has been allotted for this debate, because other members of the Opposition desire to express their views about the measure. I consider that it is the duty of the Government to ask the people by referendum to decide whether the Commonwealth’s shareholdings in Amalgamated Wireless (Australasia) Limited and Commonwealth Oil Refineries Limited should be sold, whether the Commonwealth-owned ships should be sold, and whether the position of TransAustralia Airlines should be weakened. I am quite sure that the people would reject the Government’s proposals, as they rejected the Liberal candidate for the Division of Flinders on last Saturday week. The Government has not honoured its promises to reduce taxation and to maintain full employment in this country. Honorable senators opposite are apparently ruthlessly determined to sell the assets of the people, without affording to the elected representatives of the people on this side of the chamber an adequate opportunity in which to express their opinions. I am sure that, at the next general election, the people will elect a Labour government to replace the present Government, which favours the interests of huge combines, such as Australian National Airways Proprietary Limited, Amalgamated Wireless (Australasia) Limited, and the great oil companies of the world. I oppose the motion.
– The maiden speech of Senator Robinson has made a greater impact on my mind than the rantings of Senator Hendrickson. Senator Hendrickson lias canvassed two lines of reasoning. The first was that the Government is engaged in selling the people’s assets, and secondly, that the Commonwealth is placing itself in the hands of .great cartels. The honorable senator stated that the people of the United States of America are at present taking action against the oil’ cartels. The probable reason for the action that is at present being taken in the United States of America is the -fact that there is an election just around the corner, and it was considered that this was as good a stick as any other with which to beat a political party. I remind honorable senators that there ‘ are many independent operators in the United States of America in addition to the big oil companies. Senator Hendrickson has apparently overlooked the fact that there are many independent oil operators in Australia also. Petrol, kerosene, and other byproducts of oil are readily .available for any person to import. A number of operators who are quite independent of the oil companies are importing bulk supplies of petrol, kerosene, &c.
– What percentage are they of the total imports?
– I do not know. The problem that now confronts the Government in relation to bil in this country is not similar to the problem that had to be dealt with in 1920. Sir George Pearce, who was Minister for Defence in the government of the day, and who sponsored the original legislation in this chamber, stated that the problem at that time was to try to get some crude oils into Australia to maintain and support the Australian Navy. It was basically a defence measure. Any honorable senator who will take the trouble to read the Hansard reports of the debates both in this chamber and in the House of Representatives in 1920 on the bill to establish Commonwealth Oil Refineries Limited, will discover that the problem that then confronted the elected representatives of the people was entirely different from the present problem. The most violent opposition to the establishment of Commonwealth Oil Refineries Limited was offered by supporters of the Australian Labour party. Every speech by supporters of Labour both in the Senate and in another place was a condemnation of the Hughes Government for introducing a bill to provide for the carrying out of the refining of oil in Australia. The reply of the Government at that time was that it was a defence measure and that, for that reason, it was necessary to refine oil in Australia.
When Senator Hendrickson goes fishing for whiting at Altona he will pass the Commonwealth Oil Refineries Limited distillery. I suggest that that plant might well grace the physical sciences laboratory of the University of Melbourne. It is a small distilling plant which is designed to produce various grades of lighting and power kerosene, petrol and other products. The oil is passed through retorts, and the products drip out of taps all round the place. Its refining capacity is approximately 120,000 tons a year. Australia consumes a tanker load of black oil each clay of the year. The total output of the Commonwealth Oil Refineries Limited distillery is approximately half a dozen tanker loads. A catalytic cracking plant costing millions of pounds would be required to meet the total refined oil needs of Australia. The problem to-day is entirely different from that which confronted the Australian Government in 1920. Because the problem has changed completely, the Government now proposes to sell its interest in Commonwealth Oil Refineries Limited. It must be obvious to the meanest intelligence that the problem which confronts the Government is whether it should expend, say, £30,000,000 each, on the erection of large refineries, or whether it should secure a monopoly of oil refining in Australia. Undoubtedly, the Australian Labour party regards the latter as one of the main planks of its platform. I have not the slightest doubt that, during the next general election campaign, Senator Hendrickson will state that the Australian Labour party, if elected, will take over the whole of Australia’s oil refining.
– Hear, hear!
– Now we know where we are going. It is obvious from the speeches of honorable senators opposite this afternoon that it is the intention of the Australian Labour party to nationalize the oil refineries of Australia, should it be again elected to office.
I point out that the expense involved in refining Australia’s oil requirements is indicated by the fact that the AngloIranian Oil Company Limited proposes to expend approximately £40,000,000 on the construction of a refinery in Western Australia, whilst another refinery is being constructed near Sydney by Caltex Oil (Australia) Proprietary Limited at an approximate cost of £30,000,000. In Victoria, the Shell Company of Australia Limited is erecting a refinery which will cost approximately £28,000,000, whilst the Vacuum Oil Company Proprietary Limited also proposes to erect a refinery in that State at a cost of between £24,000,000 and £28,000,000. An enormous amount of investment capital will thus come into Australia for the purpose of refining crude oils by the most modern methods. It was admitted, by interjection, this afternoon that the aim of the Australian Labour party is to grab these refineries and to nationalize them. I am perfectly willing to fight the next Senate election campaign with Senator Hendrickson on the capacity of the Australian Labour party to nationalize oil.
I remind honorable senators that the debates on this subject in 1920 took place before the Australian Labour party had adopted the habit of “ secret drinking “, which it began after it had been converted to methylated spirits by Mr. “ Jock “ Garden in 1921. For electioneering purposes, the bottle is kept under the bed, but in private it is taken out, and the members of the Australian Labour party then have a good go at it. I should like to point out to the Senate the difference between the views expressed by Senator Hendrickson this afternoon and those expressed by a former member of the Senate, Senator Earle of Tasmania, in 1920. Senator Earle was a realist who was not filled with socialist methylated spirits, as is Senator Hendrickson. The honorable senator stated at that time: - . . but I am afraid that we should be living in a fool’s paradise were we to rely absolutely on operators of oil simply because they were of British extraction or nationality. My opinion, as regards the oil operators, is that they are out for the dollar, thi’ s saveraign or the rupee, no matter where they obtain it.
I am on the side of the oil operators, because it is in the fierce competition for oil that the price of oil falls. I suggest that when Australia has a large oil refining capacity, the price of petrol and other oil products will begin to fall. If the price of oil is high at the present moment, it is because of the enormous lossesincurred by the oil companies through the sinking of tankers during World) War II. Curiously enough, the Angle Iranian Oil Company Limited supplied! no oil to Australia during the war in the South-West Pacific. What is the Anglo-Iranian Oil Company Limited? We know that it is a vast company in which the British Government holds a bare ‘majority of the shares. But who holds the remainder of the shares? We know that throughout World War II. , Commonwealth Oil “ Refineries Limited was supplied with oil, petrol and aviation spirit by other despised oil companies, not by the Anglo-Iranian Oil Company Limited. We know that since the lamentable affair in Abadan, Commonwealth Oil Refineries Limited has; been supplied with crude oil and petrol, not by its co-partner, the Anglo-Iranian Oil Company Limited, but by the competitors of that company. We also know that the Anglo-Iranian Oil Company Limited is in partnership with other despised oil companies in Saudi Arabia-
– We should be in it too !
– :I was hoping that an honorable senator opposite would have the impudence to make that interjection. I point out to the honorable senator that if we go to the Middle East for oil, ultimately we will have to defend it, in which event our troops will be involved. I wish to see the Australian Labour party advocating the defence of the oil interests in the Middle East–
– Who, but the workers, defend all places?
– I also am a worker. Should it be necessary to defend the Middle East oil wells, I wish to see the members of the Australian Labour party advocating that’ defence. On their past records, however, we know that they will adopt the opposite course.
The problem which confronted the Government in this matter was the triple one of whether it should engage in refining or in distribution, or whether it should retain an interest in refining alone. If it was to continue refining, it would be necessary to provide millions of pounds to meet only portion of the refined oil requirements of Australia. Alternatively, if the Commonwealth entered into a new agreement with the Anglo-Iranian Oil Company Limited, whereby it and the company would become partners on a distribution or refining basis, it would be necessary for the Government to provide still more money. The third filternative left to the Government was that it should act as a mere retailer of petrol from roadside pumps. The Government rejected all those alternatives. That is why this bill is now before the Senate.
Senator Hendrickson interjecting,
– Order ! Senator Hendrickson has already addressed the Senate. He should have included in his speech the remarks which he is now attempting to make.
– The sole criticism that can be directed at the Government in connexion with this matter, and which the Leader of the Opposition (Senator McKenna) has, in fact, directed at’ it, is that it has got out of the business of shopkeeping at a price which is, too cheap. It is easy to make specious remarks, such as, “ Which firm of accountants advised the Government to yell at this price ? “. The Leader of the Opposition knows as well as I do that when a person goes to a firm of accountants and asks for advice concerning the sale of a farm, a row of houses, a station, or a factory, the firm asks for the balancesheets and then calls in valuers to value the property and then checks their valuation against the balance-sheets. The accountants then recommend a price at which the property should be sold. That, in fact, is what occurred in connexion with Commonwealth Oil Refineries Limited. I have no doubt that the Minister for National Development (Senator Spooner) will verify that statement when he replies to the debate.
A relatively small investment has been sold by this Government at a most handsome profit to the Australian people. When the members of the Australian Labour party go on to the hustings, I should like them to be honest and rational and to say to the electors of Australia, “ We prefer to spend £40,000,000 or so of your money to erect a refinery in Western Australia rather than to develop the Blair Athol coalmines or the Snowy Mountains hydroelectric scheme “. I suggest that in disposing of its interest in Commonwealth Oil Refineries Limited, the Government has been able to do two things. First it has been able to attract an enormous amount of outside capital - real, hard money - into the country; and, secondly, it has been able to increase its capacity to develop Australia. Any argument of the Opposition, which is not on that basis is not only unreal hut it is also untrue and blatantly dishonest.
Sitting suspended from 6 to S p.m.
– Before discussing this bill, I wish to protest against the manner in which the Government is endeavouring to push it through this Senate by 9 o’clock. The Opposition has repeatedly protested against such tactics. Democracy is the best type of government and the principles of democratic government require that a parliamentary Opposition should have the opportunity to criticize a measure, although after a bill has become law it must be accepted until public opinion can be rallied to have it set aside. A country in which the Opposition is given practically no opportunity to criticize a measure is not a democracy but a dictatorship. Apparently the Government takes no notice of the results of by-elections. When another important bill is introduced into this chamber next week I presume that the Government will adopt a course of action similar to that which it has adopted on this occasion. There is no necessity for the haste with which the Government wishes the Senate to deal with this bill. The Senate will have a further opportunity to attend to its business on Tuesday, Wednesday, Thursday and Friday of next week. All the protests of the Opposition in connexion with this matter have been in vain. If the Government continues its present tactics next week the Opposition will be justified in drawing the attention of the public to this state of affairs. The Government’s action reminds one that whom the gods would destroy they first make in ad. Having wrecked this country the Government is determined, like Hitler, to reduce the nation to such a state that even the Labour party will find it hard to rebuild it.
This is a most important bill. Senator Robinson said that he supported it because he was opposed to government interference in private enterprise. Yet, Senator Vincent recently advocated that the Government should subsidize the production of gold in Western Australia. The raising of the price of gold would only result in further inflation because-
– What has that to do with the bill ?
– Senator Guy would not know whether it had anything to do with the bill or not.
– Order ! I suggest that Senator Grant use his undoubted ability to concentrate on the subject of the bill.
– Senator Vincent, as I just said, advocated that the gold industry should be subsidized-
– I did not.
– I understood the honorable senator to make a statement to that effect. Either I did not understand him. or he did not understand himself. I hope that the people of Western Australia will now realize that he is not very much interested in the subject. At least Senator Robinson is young enough to be able to say, with the psalmist, “ My sins and faults of youth do thou 0 Lord forget “. But Senator Vincent is not in that category. To Senator Robinson this is a simple proposition. To him the only question at issue is whether there should be a refinery in one part of Australia in which the Government should have an interest or whether there should be a refinery in another part of Australia in which the government should not have an interest. How simple! Does the honorable senator not know that oil is the most important commodity in the world? lt is more important than gold. One of the causes of World War I. was a dispute which arose over the control of the oil-fields of Mesopotamia. It was the oil from the United States of America that made it possible for the allies to win that war. Oil is controlled by an international cartel in such a way that the people’s governments are held to ransom. The Government of the United States of America has commenced proceedings against American oil companies for acting detrimentally to the interests of the people of the United States of America. Only 50 years ago oil was not important, but after Rockefeller had laid pipe lines across America and the German, Diesel, invented the diesel engine, oil became the most important commodity in the world. Now, not a wheel can turn nor a piston move without oil. During World War I. oil was found to be so important that the British took special measures to gain control of supplies and break the monopoly of this product which was formerly held by American companies. Since that time nearly every fight that has taken place from the Gulf of Mexico to Peru has been between the Standard Oil Corporation and the British oil companies. Whether it is in Sumatra, Borneo or the middle of America, whoever owns oil controls the world. Yet we have been told that this is merely a question of whether the Government should have an interest in the distribution of oil or not.
Senator Cormack delivered an extraordinary speech in the most immaculate, Geelong College manner. It was very nice to listen to, but, like the speeches of a certain gentleman who speaks beautifully but never does anything-
– Senator Grant!
– No ! Senator Guy will not guess whom I mean because he has neither the imagination nor the intelligence to do so. I hope that I do not misrepresent Senator Cormack when 1 say that he stated that the oil companies were mainly interested in gold and sovereigns. That is a nice state of affairs. If this bill is passed, when war breaks out all the oil in this country will be controlled by people who are mainly interested in gold and sovereigns. The Senate has been told that £6 10s. each is to be paid for the government’s shares in the company. The accountants have gone into the matter and have decided that this is a fair price! Just imagine - accountants! For every accountant that the Government could hire to certify that it is selling the shares at a fair price, the oil companies could hire ten to certify that it was charging too much for them.
Largely due to the efforts of Winston Churchill, the British- Government obtained a controlling interest in the Anglo-Persian Oil Company. At that time World War I. was in its concluding ^stages and attacks were being launched against the Bolsheviks. Sir Henry Deterding considered that the Bolsheviks had no hope of winning. I am not a Bolshevik but I am not a conservative. Sir Henry Deterding considered tha’t he had an opportunity to get control of the oil in the Caucasus. He financed an expedition against the Bolsheviks but it was a failure. He lost millions of pounds and was so incensed that he subsequently gave £1,000,000 to Adolph Hitler to assist him to fight the Bolsheviks. The Senate has been told that this is a simple proposal. I did not happen to be born in Australia. What puzzles me is how individuals who claim to be Australians can support a proposal such as this, which, in effect, will enable private enterprise to hold the country up to ransom.
Government supporters interjecting,
– The Government is in the process of selling its shipping line. Will any honorable senator opposite suggest that, in time of war, shipping companies do not hold governments up to ransom ? A former British Prime Minister, a Scottish Canadian named Bonar Law, bought two ships when World War I. broke out and he made so much money out of them that he said that he was ashamed to take the dividends.
– Order ! The honorable senator must address himself to the bill.
– I am merely replying to interjectors, Mr. President. Apparently honorable senators opposite want to know how governments could be held up to ransom in time of war and I have been telling them. A loan of £1,000,000 is to be made to Australian
National Airways Proprietary Limited. Before long our sea and air transport and the importation and distribution of oil will be solely in the hands of private enterprise. At the next elections, the Government parties will have more money at their disposal than they had during the campaign on the banking referendum. Apparently the Government is determined to gag this bill through the Senate to-night, so I shall not have much morn to say about it. I repeat that oil is probably the most important commodity in the world to-day. Would any other country in the civilized world stand for what this Government is doing to Australia by means of this measure? Do honorable senators opposite not know why Japan is so eager to get Sakhalin back from the Russians? The reason is oil, and Japan will get Sakhalin. Capitalism knows no territorial boundaries. It knows only profits. So, the oil of Sakhalin will go back to the Japanese. The Government has given away its shares in Commonwealth Oil Refineries Limited.
Government supporters interjecting ,
– J do not mean that literally, of course. I am assuming that honorable senators opposite have some imagination and intelligence. I know that a certain price was paid for the shares, but it was far from adequate. I heard a report on the wireless last night that an oil company was offering so much money for a certain piece of land - I think that it was in Sydney - that the local governing authority concerned had refused to permit the sale on the ground that it would disorganize the whole basis of land values throughout the community. From recollection, the price offered by the company was twelve times the figure determined by the Valuer-General. Oil shares are at a premium regardless of their price. The Government must interfere with private enterprise when the interests of the country are at stake. All this talk about the sanctity of private enterprise is rubbish. Private enterprise used to control education. In the days of the buccaneers, private enterprise controlled the navy. At the time of the American “War of Independence, private enterprise controlled soldiers. The British Government recruited Hessian mercenaries and sent them to the United States of America. At one time private enterprise controlled health. Governments were told that they must not introduce old-age pensions. All those conceptions are 50 years out of date. To-day, it would be just as logical for private enterprise to control the armed forces as it is for private enterprise to control oil supplies. I oppose the bill, and I hope that at least some honorable senators opposite will join with the Opposition to prevent its passage. I hope, too, that if “ steamroller “ tactics are adopted again in the Senate next week, a vigorous protest will be made from this side of the chamber. This bill is a scandal. No information has been given about the legal opinions obtained by the Government from Mr. Barwick, Q.C., and others. The Leader of the Opposition in the House of Representatives (Dr. Evatt) and the Leader of the Opposition in this chamber (Senator McKenna) have challenged the Government to table those opinions, but it has refused to do so. I would just as soon vote for a bill to give private enterprise control of the Navy, Army and Air Force as for this measure.
.- The debate-
Senator Grant interjecting,
– Order ! Senator Grant has made his speech. I ask him to refrain from interjecting while other speakers are on their feet.
– The debate on this measure inevitably takes one’s mind back to a similar debate in 1920 when the bill to establish Commonwealth Oil Refineries Limited was under discussion. The Labour party opposed that measure on what it regarded as a matter of principle. It was opposed to monopolies. Opposition to monopolies was the favourite hobby of the Labour party at that time. On that occasion, however, in embers of the Labour party were prepared to say quite frankly, “ We are opposed to this bill because it proposes to set up a monopoly “. That they were wrong, does not matter at this stage. I merely emphasize that the Opposition in those days knew why it was opposing the measure and was courageous enough to state its reasons. If the present Opposition were completely honest and sincere it would say, “ We are opposed to this bill because we regard it as a blow at the grip which socialism has gained on this country “. That blow is, of course, only incidental to the main purpose of the bill. The Leader of the Opposition occupied some time at tho beginning of this debate in voicing his opposition to the time limit that had been placed on the discussion of the measure. He could have shortened the debate considerably had he simply stated that he opposed the bill because it was a threat to socialism, and left it at that. We could then have had a debate on that proposition; but, apparently realizing that socialism has not retained its popularity in this country, he endeavoured to cloud that objection and to give his argument some semblance of respectability by advancing a number of reasons for his opposition. As the honorable senator spoke, I made a note of the points that he endeavoured to make. He said that the sale of the Commonwealth’s shares in Commonwealth Oil Refineries Limited would jeopardize the defence potential of this country; that it would imperil our economy; that the price received for the shares was a sacrifice price ; and that the agreement with the Anglo-Iranian Oil Company Limited was not satisfactory because it did not bind that company completely to go ahead with its plans. Finally, for good measure, he attempted to raise some doubt about the validity and the bona, fides of the legal opinions obtained by the Government on its constitutional position.
– He was right on every point.
– Senator Aylett may agree with his leader on this occasion, but his agreement may not be quite so wholehearted in a few months’ time. In relation to defence,’the first question that should be plainly asked, and an answer demanded, is : “ Where is the defence element in petrol ? “ Is it in the petrol bowser business? Clearly it is not. The defence element in petrol lies in its procurement not only to keep the fighting forces going, hut also to sustain our civilian industries. Under the old arrangement with Commonwealth Oil Refineries Limited, we had a refinery that was of no defence significance at all. lt produced only 2 per cent, of Australia’s petrol requirements. Between 1942 and 1946, the years of Australia’s most vital peril, the refinery was out of production. Not one gallon of petrol was produced. Now we are being asked to believe that a proposal, which will result in the construction of a refinery capable of producing 3,000,000 tons of oil products a year, is of less defence value than a refinery of the kind that I have mentioned.
The Leader of the Opposition next referred to the effect of the sale of the Commonwealth’s interest in Commonwealth Oil Refineries Limited upon the Australian economy. There is general agreement that one of our most crucial needs to-day is investment capital. Here is a proposition under which at least £40,000,000 of overseas funds will be injected into our economy at no cost to our own small capital reserves, yet the Leader of the Opposition has the effrontery to say that the proposal will be bad for the Australian economy ! The honorable senator also endeavoured to show that the operations of Commonwealth Oil Refineries Limited had exercised a restraining influence on petrol prices. I challenge him to mention one specific instance in the 32 years of the existence of Commonwealth Oil Refineries Limited in which the operations of that company have had any effect at all in restraining prices. The output of Commonwealth Oil Refineries Limited has been so small that it has been of no significance in the general situation of petrol distribution and consumption. The Leader of the Opposition then proceeded to deal with the value of the assets of Commonwealth Oil Refineries Limited. This, I consider, was probably the most interesting phase of his speech. I have been most intrigued by the variety of assessments of the value of the company’s assets that have been made by members of the Labour, party since the dissolution of the oil agreement was announced. Those assessments have varied from £3,000,000 to £10,000,000. That is an indication of their worth.
Apparently the difference of £7,000,000 between the minimum and maximum figures is a mere bagatelle in the minds of honorable members opposite. The cold plain fact is that, in determining the value of the assets of Commonwealth Oil Refineries Limited, the ordinary business processes were followed to the letter. Probably the Leader of the Opposition knows better than most members of this chamber that the process which he contended should have been followed was, in fact, followed. The assessing accountants called in specialists to advise them concerning the value of the various sections of the plant. I asked the Leader of the Opposition, by way of interjection, to state the asset value of the shares. He was good enough to inform me that each £1 share had an asset value of £2 3s. I accept that estimate for the purposes of the debate, but I suggest to the Leader of the Opposition that when he has a little more time he should make further investigations, because there is a great discrepancy between the figures he cited and the actual value of the shares. If we assume that the asset value of each £1 share was £2 3s., the Government obtained a remarkable price for its holding. Let us compare the asset value of the shares of another large undertaking with the price at which they are quoted on the stock exchange. The shares of the Bank of New South “Wales, which have an asset value of £36 2s. 3d. for each £20 share, are quoted on the Sydney Stock Exchange at approximately £36; yet we are told that the price obtained by the Government for its shares in Commonwealth Oil Refineries Limited was too low ! The Government did remarkably well to secure such a high price for its shares in Commonwealth Oil Refineries Limited, and is to be congratulated for having done so. In the sale of these shares it has done equally as well as itdid in connexion with the sale of its holding in Amalgamated Wireless (Australasia”) Limited, a transaction which the Leader of the Opposition also scorned but which in his quiet moments he acknowledges to be one of the best transactions of its kind- ever made in Australia.
The next point made by the Leader of the Opposition was that the agreement was not sufficiently binding on the AngloIranian Oil Company Limited, and that no obligation was imposed on the company to pursue the Kwinana project. Clause 5 of the agreement, which is contained in the schedule to the bill, reads as follows : -
After the completion of the sale of tho shares, the oil company will use its best endeavours to procure the completion as soon as is practicable of the erection and equipment at or near Fremantle in the State of Western Australia of a modern mineral oil refinery with an input capacity of approximately three million (3,000,000) tons of crude oil per annum.
– There is nothing binding in that.
– That is so, but as the company has already paid almost £3,000,000 in hard cash to the Commonwealth for the Commonwealth’s shares in Commonwealth Oil Refineries Limited it would scarcely refrain from going on with the development of the project.
– But the company is not bound to pursue the project.
– The abysmal ignorance displayed by the members of the Labour party concerning a matter of the importance of this proposal is, to say the least, alarming. The project has already been commenced. The Perth Daily News published the following article under the London date line, the 1st October : -
To-day has been fixed as the official starting date for the building of the Anglo-Iranian Oil Company’s refinery at Kwinana. Announcing this last night, an oil company spokesman said that a three-year building programme would be inaugurated. This would cost f A.4O,000,000. Simultaneously, it was said, a programme of housing and the dredging of Cockburn Sound, to provide the necessary approach for tankers, would be put in hand by the Western Australian Government.
If Opposition senators from the eastern States care to visit “Western Australia they can see for themselves the progress that has already been made on the project. If they saw the extent to which the work has progressed they would realize how completely stupid were the statements made by the Leader of the Opposition
– The Leader of the Opposition wants to nationalize the industry.
– The attitude of the Labour party in connexion with the oil industry should be clearly stated. Since the negotiations for the establishment of the Kwinana refinery were set in train, it has been said repeatedly, both inside and outside the Parliament, that if a Labour government is again returned to office it will immediately re-acquire an interest in Commonwealth Oil Refineries Limited. In fairness to all parties concerned in this agreement and to those who may be concerned in the industry in the future, the Labour party should be frank and tell the Parliament and the people of Australia how it intends to reacquire an interest in the company. Has it received an assurance from the AngloIranian Oil Company Limited that a future Labour government will be allowed to purchase shares in the venture? If so, upon what terms will the shares be purchased and what price will be paid for them? Will the total amount involved be on the basis of £3,000,000 or £1 0,000,000 ? A future Labour government may be capable of a further refinement of the illegal tactics that were used by past Labour governments. Statements of the kind to which I have referred have an undesirable effect on the investment of overseas funds in Australia. The following editorial appeared in the West Australian on the 29th September last : -
In view of what is at stake, it is most regrettable that the step taken last week by the Federal Government to enable construction of the refinery to proceed should have precipitated what may become a violent and protracted political controversy. The sale of the Commonwealth’s shares in Commonwealth Oil Refineries Limited to Anglo-Iranian Limited, its former partner, has given Dr. Evatt a chance to beat the drum in what he considers to be the cause of defence. If he beats it long enough and loudly enough, he may whip up more votes for the Labour party, but he may also frighten away from Australia money that otherwise would be invested here. By his present attitude, the Leader of the Opposition is not encouraging Americans to risk more dollars in the .search for oil in Australia. Americans are notoriously allergic to even a hint of nationalization.
That is precisely the effect of the statements of members of the Labour party on overseas investments in Australia. Statements of that kind constitute a menace to our future development. Opposition senators and members pursue these tactics because it suits their party line to do so. They give no thought to the ultimate effect of such statements upon the economy of Australia.
As a Western Australian, I am particularly pleased with the proposition embodied in this bill. It has already brought in its train other industries to WesternAustralia. There is to be established at Cockburn Sound a new steel rolling milk and a cement works, and Imperial Chemical Industries Limited is already showing some interest in the area. The traditional backbone of Western Australia’s economy, the primary producing industries, will benefit in the long run from the establishment of these industries because the manufacture of agricultural implements will be brought closer to the points at which they are required. Another aspect that is most gratifying to all Western Australians is that this project will open up for the youth of Western Australia technical and commercial opportunities which have never existed before. This project will not only help Western Australia but will also assist in making possible a greater spread of industrial power within the Commonwealth. For these reasons I endorse the bill and trust that it will be given a speedy passage.
Senator COURTICE (Queensland) 1 8.40]. - The Senate is really wasting time in discussing this bill because the Government has already sold the Commonwealth’s shares in Commonwealth Oil Refineries Limited. The purpose of this bill is merely to validate an action that lias already been taken by the Government, I protest most strongly against the action of the Government iii asking the Parliament to assent to this bill without prior discussion of the issues involved in it. To listen to Government supporters in this debate one would imagine that the Labour party had negotiated the agreement which is the subject-matter of the measure. To-night, we were privileged to hear a reading of the words expressed by an eminent former Prime Minister of Australia, Lord Bruce, in relation to Commonwealth Oil Refineries Limited and the great benefit that would accrue from its establishment. Government supporters find themselves to-night in the unhappy position of being opposed to all the things that their former illustrious leader had to say about the value of the company.
When the original agreement was signed, under which Commonwealth Oil Refineries Limited was established, the operations of trusts and combines were agitating the leaders of countries throughout the world who were fearful of their effect unless they were subject to proper legislative control. Commonwealth Oil Refineries Limited was established, with the Commonwealth as the owner of a large parcel of its shares, in order to circumscribe the activities of the oil monopoly in Australia. As the Leader of the Opposition has reminded us, the then Prime Minister of the Commonwealth, Mr. Bruce, now Lord Bruce, stated that the company had rendered a great service to Australia by keeping down the price of petroleum products. Article 3 («2)(v) of the original agreement made between the Commonwealth and the AngloIranian Oil Company Limited provides -
That the Refinery Company shall not outer into or be in any way concerned in or a party to or aft in concert with any commercial trust or combine but shall always be and remain an independent British business:
That was a fundamental provision in an agreement which was made, not by a Labour government but by a Liberal government. This Government has exhibited extraordinary zeal in carrying out its promises to big business but has been guilty of the greatest tardiness in carrying out its promises to the people, principally in relation to its undertaking to reduce taxes and to put value back into the £1. It has made no attempt to strengthen our economy. On the contrary, as a part of its so-called desocialization policy, it has taken every opportunity to sell out the people’s assets to big business, completely disregarding the effect of such sales on the people generally. If the Government displayed as much zeal in governing the country and in tackling the problems that confront it, as it has shown in disposing of the assets of the people in Commonwealth Oil Refineries Limited and in prejudicing the continuance of another great national undertaking, Trans-Australian Airlines, it would have done much better. Throughout its period of office it has shown the greatest eagerness to favour the big business interests that supports it. The people are seething with indignation at the Government for having sold the people’s assets to its wealthy supporters. Ministers are in the seventh heaven of delight because they believe that they are doing something against socialistic principles and in favour of the large financial institutions, but I cannot understand many of their supporters. I am disgusted that honorable senators on the Government side can be dragged along in the wake of the Government and agree to everything that it is doing in this respect, In a. few short hours, they propose to bludgeon important measures through the chamber and not one honorable senator on the Government side has raised an objection. They murmur outside the chamber, but inside it they are prepared ti> accept anything from the Government. Dic sooner the people of Australia have an opportunity to pronounce judgment on the Government the bettor it will be.
It is a pity that the Government can find nothing better to do than to sell its holding in Commonwealth Oil Refineries Limited when the world and the country require positive action on so many matters. I challenge supporters of the Government to point to one constructive achievement of this Government. What harm lias Commonwealth Oil Refineries Limited done? Only recently the late honorable member for Bradfield (Mr. Hughes) emphasized the importance of the organization to Australia. It is useless to state that Commonwealth Oil Refineries Limited had no influence upon the price of oil. While the Government had an interest in the organization, it had some influence in preventing undue rises of prices. Oil companies were constantly .pressing for increases. During the war refining activities were restricted by shipping and other difficulties. Recently the Government indicated that it would go further into the matter of oil refining. That would have been of great advantage to Australia. Now it proposes to sell the nation’s interest in Commonwealth Oil Refineries Limited and to advance £4,000,000 to Australian National Airways Proprietary Limited so that it can buy equipment. The Government has shown great zeal in trying to meet the wishes of the large financial interests. It has not been concerned about the interests of the people. It has no constructive policy. During the 1949 general election campaign, Government supporters emphasized the great scope for development in Australia. It promised the people that it would assist development, but it cannot claim one achievement of a constructive nature.
– What a silly statement !
– I invite the honorable senator to point to anything constructive that the Government has clone. It has interfered with business. It proposes to interfere with TransAustralia Airlines—
– Did not the Labour party interfere with Austraiian National Airways Proprietary Limited?
– No, we did not !
– You simply cut its throat.
– If I eared to review the story of Australian National Airways Proprietary Limited and TransAustralia Airlines, I could show that Australian National Airways Proprietary Limited has not met its obligation as Trans-Australia Airlines has done. The shipping companies, the oil companies, the banks and other large institutions are looking to this Government to assist them with its so-called desocialization In the Territory of Papua and New Guinea, the Government is now a part-owner with private enterprise of a certain activity. It is inconsistent. I believe that the people will express a clear verdict when they have an opportunity to pass judgment upon the Government. The Government had a great opportunity when it took office. The country was in a reasonably stable condition. There was full employment. It has had every opportunity to achieve greater development and do something worthwhile. All governments to-day have a tremendous responsibility, but this Government has made no constructive effort of any kind. It has tried to tear down the work of previous governments. When
Commonwealth Oil Refineries Limited was established by a Liberal government, the people approved of its policy.
– The Labour party opposed it.
– I cannot verify that statement, but I favoured it. What benefit will be achieved by the proposed sale? We oan only hope that the years will pass quickly so that the people will have an opportunity of pronouncing judgment of the Government.
.- In the five minutes that are left for this debate there is not an opportunity to answer the conglomeration of baseless arguments that have been put forward by honorable senators opposite ever since the Leader of the Opposition (Senator McKenna) opened the debate, but I can select one or two to show the general baselessness of their whole submission. A number of chimerical arguments may be picked out. First there is the question of the defence value of Commonwealth Oil Refineries Limited. During the war it controlled one pip-squeak refinery and distribution service. It had no control of oil whatever, and oil is the basis of modern defence. It had one small refinery and that was closed down by the government of the day during the whole period of the war. Does that record indicate any defence value? The suggestion that Commonwealth Oil Refineries Limited has a great defence potential is merely hypocritical argument. The Leader of the Opposition said that the Government would leave the people at the mercy of the merciless international oil cartels.
Opposition Senators. - Hear, hear !
– That statement has brought forth a cacophony of “ Hear, hears ! “ from the Opposition side. I remind them that the organization that their leader has characterized as a merciless international oil cartel is, in fact, a company controlled by the British Government. Does Senator McKenna suggest that the British Government will exploit the people of Australia? The British Government will run the refinery that, is to be established in Western Australia and the British Government controls the company that is to provide the money to operate the refinery. If the honorable senator claims that they are rapacious cartels, I do not believe him, the people of Australia do not believe him and in my opinion he does not believe it himself.
Honorable senators opposite have been asking what will be gained by the sale of” the Commonwealth assets in Commonwealth Oil Refineries Limited. The answer is simple. Opposition senators have been baying like hounds for weeks about the need for schools, development, dams and power plants. Do they want the Government to put £30,000,000 of Australian money into the Western Australian refinery when the capital can come from overseas and we shall then have that money to invest in education and development? Do they want the Government to reject the flow into the country of steel, iron, cement and basic materials which that capital represents? Do they want us to throw away that investment in our internal economy? Those are the benefits that will flow from the sale of the Government’s holding in Commonwealth Oil Refineries Limited and the establishment of the refinery in Western Australia. The benefit will be derived from the capital that will be invested by the British Government and British interests to establish, an industry, provide employment, and promote prosperity in Australia.
– This bill is one of the most impudent pieces of skullduggery that has ever been presented to the Parliament of the Commonwealth. I have only a few seconds in which to speak because this Government has gagged this measure as it has done with every important bill that it has presented in this sessional period. It is a disgrace. Measures of great national importance have been “guillotined” ruthlessly. The AngloIranian Oil Company Limited is part of an international cartel that has been condemned in the United States of America. Because of the machinations of this organization, diplomatic relations between tho British Government and Iran have been ruptured on this same matter of oil, monopoly and exploitation. The Government proposes to hand over the only control that we have over the machinations of this international combine. The existence of Commonwealth Oil Refineries Limited has had a retarding influence on the tendency of other oil companies, such as the Shell Company companies, such as the Shell Company of Australia Limited, to increase the combine takes over the position will change.
– Order! The time allotted for the debate on the motion for the second reading of the bill has expired.
Question put -
That the bill be now read a second time.
The Senate divided. (The President - Senator the Hon. Edward Mattner.)
Majority . . . . 8
Question so resolved in the affirmative.
Bill read a second time.
– Is the Minister for National Development (Senator Spooner) prepared to table the legal opinions upon which the Government claims that it would be unconstitu tional to continue its interest in Commonwealth Oil Refineries Limited? Will he indicate the facts upon which those legal opinions were based? Did those facts include the supposition that Commonwealth Oil Refineries Limited would discontinue the refinery it now operates orall its refinery operations?
My next question relates to the valuation of the shares in Commonwealth Oil Refineries Limited by a firm of accountants in Melbourne. Is the Minister prepared to make available the terms of the valuation to the Senate ? If he is not prepared to do so, will he state his grounds for refusing? Will he give any information to the Senate about the value that was placed upon goodwill? Will he also inform the Senate who effected the valuations of the very varied assets of Commonwealth Oil Refineries Limited, including its land, buildings, plant and machinery, refineries, and installations of all kinds throughout Australia? Did the firm of accountants itself make all those valuations? If it did not do so, whom did it employ to make valuations on its behalf? Will the Minister also make those valuations available for perusal by honorable senators ?
The other matter on which I desire information relates to the haste with which this transaction has been effected. I point out that there is no obligation under the agreement upon the Anglo-Iranian Oil Company Limited to proceed with the erection of a refinery at Kwinana in Western Australia. Paragraph 5 of the schedule to the bill reads -
After the completion of the sale of the shares, the Oil Company will use its best endeavours
Terms which, I suggest, are particularly vague - to procure the completion as soon as is practicable
More vague words, with no time limit at all- of the erection and equipment at or near Fremantle in the State of Western Australia of a modern mineral oil refinery with an input capacity of approximately three million (3.000.000) tonsof crude oil per annum.
Does the Minister, on behalf of the Government, claim that that constitutes any kind of legal obligation upon the company to proceed in the erection of the proposed refinery? Does he suggest that it indicates a time limit for its completion?
Arising out of that set of circumstances, and in view of the fact that the refinery of Commonwealth Oil Refineries Limited is in the meantime to be continued, will the Minister say, in particular, why there has been such haste over this sale? Why could not it have been deferred until definite steps had been taken for the establishment by the Anglo-Iranian Oil Company Limited of the proposed refinery in Western Australia? Why could not this sale have waited until 1956?
I regret that the Government has seen fit to limit the time for debate at the committee stage of this very important and controversial measure to ten minutes, and I repeat my statement earlier to-day, that this is a complete denial of the rights and obligations of the Opposition. I shall proceed no further with my protest, as I want the Minister at least to have an opportunity to say something in answer to my questions.
[9.101- - The Senate has had three hours in which to debate the bill, which has given a fair opportunity to honorable senators to express their views. A lengthy debate has already taken place on the measure in the House of Representatives. In all the circumstances, it is most unfair to say that the time allotted was unreasonable.
Opposition senators interjecting,
– It is all very veil for honorable senators opposite to put up a play, but the position is as I have stated. The Leader of the Opposition (Senator McKenna) has asked questions on three aspects of the matter. The first was about the legal opinions that have been expressed. He has asked whether the Government will table the legal opinions. There are two legal opinions. The first was furnished by the Solicitor-General. The Government takes the view that it should accept responsibility for acting on advice that it receives, and that it should not attempt to shield behind legal opinion. The Government is not prepared to make that legal opinion available. Indeed, it is not the custom to make legal opinions by the Government’s legal advisers available as public documents.
The second aspect referred to .a legal opinion by Mr. G. Barwick, Q.C. The facts are that the proposed refinery at Kwinana is a very large venture. It required a considerable amount of negotiation. An agreement, which would not in any circumstances be a public document, sets out the terms and arrangements where under Commonwealth Oil Refineries Limited obtained its requirements from the refinery, and the refinery made its arrangements overseas. That was the basis of the arrangement between Commonwealth Oil Refineries Limited and the refinery in which the Government was interested. As Mr. Barwick’s opinion on that document refers to the contents of the document, it would be grossly unfair to the Anglo-Iranian Oil Company Limited and to Commonwealth Oil Refineries Limited, as at present constituted, for the contents of that document to be made available. The Government is not prepared-
– It is a cover.
– I am making a fair and reasonable answer. The Leader of the Opposition has also asked whether I will table the details of the valuation of the company’s shares by the Melbourne firm of accountants. That valuation, as every honorable senator knows, or should know, contains a review of the private trading transactions of Commonwealth Oil Refineries Limited. It reviews all the innermost records of Commonwealth Oil Refineries Limited, which information had to be made available in order that a fair opinion could be obtained on the value of the shares of Commonwealth Oil Refineries Limited. I do not think anybody could reasonably expect that a document which contains exact particulars of the profits of Commonwealth Oil Refineries Limited, the nature of its transactions, its reserves, and payments of taxation should be tabled and made a public document when that company is selling its interest.
The third aspect raised by the Leader of the Opposition referred to the legal obligation on the Anglo-Iranian Oil Company Limited to proceed with the proposed refinery. Every one knows that the Anglo-Iranian Oil Company Limited has entered into a legal obligation with the Western Australian Government to proceed with the project, and there is no doubt that the Anglo-Iranian Oil Company Limited will proceed with this refinery as rapidly as possible. The facts are that the AngloIranian Oil Company Limited is keen and anxious to go on with the work, which is a good thing for Australia. The Anglo-Iranian Oil Company Limited is keen and eager to invest between £30,000,000 and £60,000,000 of its own money in this project. In my opinion, it is a good thing that an overseas company is prepared to invest such a large sum in Australia.
– Order ! The time allotted for the committee stage of the bill has now expired.
Question put -
That the bill stand as printed.
The committee divided. (The Chairman - Senator George Rankin.)
Majority . . . . 7
Question so resolved in the affirmative.
Bill agreed to.
Question put -
That the bill be reported without amendment.
The committe divided. (The Chairman - Senator George Rankin.)
Ayes .. .. ..31
Noes . . . . . . 24
Majority . . . . 7
Question so resolved in the affirmative.
Bill reported without amendment; report adopted.
Motion (by Senator Spooner) put -
That the bill be now read a third time.
The Senate divided. (The President - Senator the Hon. Edward Mattner.)
Majority . . . . 8
Question so resolved in the affirmative.
Bill read a third time.
Debate resumed from the 9th October (vide page 2749), on motion by Senator Spooner -
That the bill be now read a second time.
.- The bill before the Senate proposes to abolish the land tax. On the face of it, it is a very short bill of some four clauses. Before I deal with the merits of the proposal, I wish to comment adversely on the untidy and slipshod way in which the Government has approached this measure. The Minister for National Development (Senator Spooner), in the course of his second-reading speech, made a perfectly inadequate apology for this slipshod method without, in fact, referring to it as such. He stated -
The Government proposes, in the next sessional period, to repeal the Land Tax Assessment Ant and the net imposing the rates of tax. It will be necessary, at the time, to provide for the constitution-
He used the word “ constitution “, although I have no doubt that he really meant “ dissolution “ - of the general taxation administration which now has its statutory origin in the Land Tax Assessment Act. It has not been possible, in the time available, to prepare this somewhat. detailed legislation and the present short bill is being introduced in this sessional period to give practical effect to the Government’s decision to abolish land tax. “What would prevent the Senate from repealing the Land Tax Assessment Act and the Land Tax Act? I imagine that a clause of only two lines would be required to achieve that purpose. The Minister must also consider the immediate problem that will be presented by the staff engaged in the collection of land tax. If this matter is to rest for the next five months, until Parliament reassembles, what will the staff be engaged upon in the meantime apart from the collection of arrears of taxation? The Government has made a most clumsy approach to the mechanics of this measure.
The Government has no mandate for its proposal. It made no announcement concerning it prior to the general election of either 1949 or 1951. It promised that rates of taxation, both direct and indirect, could and would be reduced. Not only was that promise not kept, but the reverse effect was achieved by the “ horror “ budget of 1951-52, which provided for rates of taxation to be enormously increased. In fact, the Government added about £400,000,000 a year to the burden of taxation on the community. The Government made no mention of a proposal to abolish the land tax until the Treasurer made his budget speech this year. Since its introduction in 1910, land tax has been imposed, year by year, by successive governments, both Labour and non-Labour. Every government has used it for the twin purposes for which it was originally introduced. In the Minister’s second-reading speech he said that the admitted purpose of the land tax when it was introduced in 1910 was to break up large rural estates. That is certainly not admitted by the Opposition, and is not in accordance with the facts. In introducing the Land Tax Assessment Bill in 1910 the then Prime Minister, Mr. Fisher, said -
Unimproved value taxation is a sound principle, and, while the incidence will tend to break up large estates and help to develop the country from an economic point of view without any other embarrassing conditions, it is a proper kind of taxation for the purpose of raising Commonwealth revenue.
That statement flatly contradicts the Minister’s allegation that the measure was originally introduced for the purpose of breaking up large estates. It also had the object of raising revenue. The then Prime Minister continued -
Honorable members will see that the taxation applies not only to large estates, but to city and town areas, and, therefore, could not be justified alone on the ground of breaking up large estates.
There could not be any stronger refutation of the Minister’s claim that this bill was introduced with only one purpose. Later in his speech Mr. Fisher emphasized the same point by saying -
One of our great hopes is that it will convert the largest areas into smaller areas, and bring about closer settlement. The other is that it will help to raise the necessary revenue to enable the Commonwealth Government to carry on the great services with which they have been intrusted.
In the light of these statements it is beyond question that land tax had two purposes- the breaking up of large estates and the provision of general revenue for the Commonwealth. Mr. Fisher stated plainly that if he had relied solely on the first proposition there would be no justification for the introduction of the measure. The position of the Labour party is conspicuously clear in relation to land tax and has stood unaltered for a long time. The Labour party believes that land tax should be imposed on the unimproved value of land in excess of £5,000. It is a part of Labour’s policy, too, to tax in accordance with ability to pay. Underlying Labour’s approach to this matter is the fact that increases in the value of land, particularly in towns and cities, is not brought about by its owners but by community development. That type of growth has been colossal in past decades so that land which was worth comparatively little a few decades ago is now worth thousands of pounds a foot in the large capital cities.
– Will Labour reimpose the tax?
– The Labour party will face that question at the proper time. If the honorable senator will tell me how much worse the state of this country will be when the Government vacates the treasury bench, I will probably be able to answer his question. I believe that the Government’s proposal to abolish this tax is a part of its ruinous programme to abolish uniform income taxation. I believe that it wishes to clear the way for the States to enter the field of land taxation. That is a very likely development, having regard to the grave financial difficulties in which the States have found themselves during this Government’s term of office. If Senator Pearson will tell me whether the States will have entered the field of land taxation by the time that the Labour party next takes office as a Government, what the economic position of the country will then be and what the revenue needs of the Commonwealth will be, I shall be in a position to answer his question.
– I thought that the Leader of the Opposition said that his party would reimpose the land tax.
– No. I said that the position of the Labour party was clear. But Labour’s policy is implemented only when it is practicable to implement it. Already every municipality and every State Government but one imposes a tax on land. The need of the State governments is so great that it is conceivable that they may levy a major tax of that nature. If the field of land taxation is fully occupied by other instrumentalities than the Australian Government then the policy of the Labour party in this connexion will have been fulfilled. I have no doubt that if the State governments decide to impose a land tax they will impose it on estates of far less than £5,000. Senator Pearson has not posed a fair question. I am not in a position to answer a question which is completely hypothetical. It would require the vision of a prophet to foresee what circumstances will obtain when Labour next forms a Government. I fear that by that time the land tax field will be filled by the States.
– It is already filled in most of the States.
– It is occupied in all States except New South Wales. I doubt whether it is filled. There is undoubtedly room for the States to step further into the field that the Commonwealth has vacated and I have little doubt that they will step into it.
– In other words, if the State governments have not taken over the field completely, the next Australian Labour Government will reintroduce land tax?
– I suggest that the honorable senator should not persist in trying to put words into my mouth. I have said nothing of the kind and I arn quite capable of expressing whatever thoughts I have. I do not mind an honorable senator asking a question but I do not want him to suggest words that I have not uttered.
– I merely wanted to be clear on the matter.
– I have given a clear answer to the honorable senator’s exceedingly hypothetical question. The Labour party has made no decision and would not be so foolish as to make a decision as to what it will do at some time in the future when it does not know what conditions will obtain.
What has been the Government’s approach to this matter? As usual, it has moved in fits and starts and then changed its course. Quite recently the Government introduced a measure which abolished the wartime provision which pegged land values for the purposes of the collection of land tax. Those values had stood for a number of years. The Government chose the most inopportune time to revert to market values. It selected the year 1951 as normal, whereas that was a year of abnormally high values for land, both urban and rural. As I argued in this chamber at that time, the adoption of that standard imposed a completely unfair burden on many land taxpayers. Repenting of its attitude, within month1, the Government drafted a in nawe to raise the rate of exemption from the tax from. £5,000 to £8,750. The Government argued that that action would negative substantially the effect of the previous measure. Now the Government lias produced a proposal completely to abolish land taxation. This is just one more indication of the complete lack of vision anc! clear policy of this Government. These startings and stoppings and (“hangings of course of the Government have been more responsible for the loss of the community’s confidence in the Government than has any other single factor. It lias been a policy which has left people, particularly business people, in a state of complete uncertainty. There is no great jubilation among the owners of city properties over the abolition of the land tax because they fear that the States will move into the field of land taxation and that their burden might even be greater than it is under existing legislation. That is a distinct possibility. The business man is aware of the financial difficulties that face State governments and land taxpayers are by no means jubilant about this legislation.
– They view it with satisfaction.
– A certain section of them do. For the benefit of Senator Hannaford, I think I should, at this stage, ask, “ Who will be the most jubilant taxpayers over this measure?”
– Can the honorable senator point to any State that has announced its intention to impose a land tax even half so great as that now being abolished?
– I have no information about what the State governments propose to do. I remind the honorable senator that it would be premature for a State government to announce any proposal to move into this field until the vacation of it by the Commonwealth has been accomplished.
– Is the honorable senator so remote from the Tasmanian scene that he does not know the position in the State that he represents in this chamber ?
– I suggest that the honorable senator should concentrate on the matter now before the Chair.
– Primarily from the point of view of the State that one represents.
– The honorable senator may take that view-point, but I suggest that there is on every member of this chamber an obligation not only to the State that he represents, but also to the Commonwealth as a whole. Senator Hannaford has suggested that a large number of taxpayers will benefit under this legislation. I refer him to the statistics published in the 1941-42 report of the Commissioner of Taxation. They are the latest available, and that is why I have to go so far back. However, the Commissioner has indicated in his latest report that there was little variation in those figures throughout the period when land values were pegged, and that they would be valid right up to the time when market value sales were restored in 1951. Therefore, in quoting those statistics I shall be quoting the broad position at a comparatively recent date, according to the Commissioner of Taxation himself. The 1941-42 report shows that the number of taxpayers subject to federal land tax was 29,921, and that they paid £3,750,000 in land tax. In the following figures relating to unimproved land values, exemption of £5,000 is not included. The Commissioner has merely shown the taxable balance after allowing for the exemption. Taxpayers whose land had an unimproved value of between £1 and £10,000 numbered 16,81S out of a total of 29,921, and they paid £220,000 of the total land tax revenue of £3,750,000. We find, therefore, that SO per cent, of the total number of taxpayers paid only 6 per cent, of the total tax collected. To that great bulk of the taxpayers the abolition of the land tax will be of infinitesimal benefit. Therefore, we cannot expect them to be unduly jubilant about this measure. In the group of taxpayers whose land had an unimproved value of between £10,000 and £60,000, we find 4,521 land-owners whose total contribution to land tax revenue was £900,000. In the group of taxpayers whose land was valued at between £60,001 and £300,000, there were only 484 taxpayers, and out of the total of £3,750,000, they paid £1 ,120,000. Thus, taking the group whose land had a taxable value of between £1 and £60,000, we find that there were 21,300 taxpayers, and that their aggregate contribution was £1,129,000. In other words, 98 per cent, of the taxpayers paid less than one-third of the total tax collected.
– Those figures would be completely falsified by the distribution of tax in the past year.
– They would be altered, but they would not be falsified, otherwise one might have expected a different comment from the Commissioner of Taxation in this year’s report. I have already drawn the attention of the Senate to what the Commissioner of Taxation had to say about the statistics that I have been citing. He said that the broad picture to-day was about the same as it had been when those statistics were produced. I suggest, therefore, that the figures that I am citing present a completely fair picture for the purpose of the comparison that I now make. If Senator Wright is in a position to give later figures, he certainly knows more than the Commissioner of Taxation himself. I have the authority of the Commissioner of Taxation when I state that statistics based oh the new market values would not materially alter the broad picture. I come now to the group of taxpayers whose land had an unimproved value for land tax purposes of over £300,000. Those taxpayers numbered only 9S, and their tax contribution was £1,500,000 out of a total yield of £3,750,000 from the land tax. I suggest to Senator Hannaford that they are the people who have most cause to be jubilant over the abolition of the land tax. Taxpayers whose land was valued at more than £60,000 numbered 582, and they paid £2,600,000 out of the total of £3,750,000. In other words, 2 per cent, of the taxpayers paid 70 per cent, of the tax. I thank Senator Hannaford for leading me into this matter because he has enabled me now to make the comment that this is sectional relief of the most marked kind. The figures that I have cited pinpoint just where the benefit of the £6,000,000 or £7,000,000 involved in the abolition of the land tax is to go. Last year, the Government estimated that it would receive £7,500,000 from the land tax, but in fact it received £6,200,000. I am not arguing that the abolition of the land tax will involve remissions totalling £6,000,000 or £7,000,000 to land taxpayers, because I realize that land tax payments are allowable deductions for income tax purposes. Accordingly, the income tax paid by present contributors of land tax will increase substantially.
I arn not prepared to say just how much that additional payment will he. I merely state that the total of the net remissions of- land tax will not be £6,000,000 or £7,000,000, but will be a somewhat lower figure. The benefit of the abolition of the land tax, provided that the field is not to be occupied or overcrowded by the States, will go, not to the great bulk of the taxpayers, but to the very small group at the top. That, of course, is another reason why the Labour party objects to this sectional benefit. It will go to a very small, very powerful, and very wealthy class. At the same time, burdens will be imposed on the general mass of the people. “Who are the taxpayers in this small group at the top? We shall find in their ranks very few individuals as such. Instead, we shall find great corporations. Undoubtedly, some of them render a valuable service to the community ; nevertheless, they are wealthy corporations. They include banks whose valuable buildings are scattered throughout the capital cities, theatre companies, great emporiums and breweries which own chains of public houses.
– And friendly societies.
– Yes. Some friendly societies are included. There are also insurance companies. I am not suggesting that those organizations are not performing useful functions. I am merely exploring where the benefit of the land tax abolition will go. I am showing that the beneficiaries are a small select group.
– The benefit will go to the shareholders of those organizations, too.
– Yes, it will go through to the shareholders.
– And to the customers.
– That is problematical. If I may hazard a guess - and I am sure that it will be just as good as the Minister’s guess - I should say that the benefit will either go to reserves or will be distributed between reserves and shareholders. The last ones to benefit will be the customers or clients of those great bodies. Does the Minister really believe that the banks will reduce their interest rates as the result of the abolition of the land tax? Does he suggest that the breweries will lower the price of liquor ?
– Or that the Sydney Morning Herald will lower its price ?
– Yes, or any other newspaper for that matter. I do not wish to single out any organization in particular. If the Minister wishes to pursue his argument, I invite him to indicate in his reply just how the organizations to which I have referred will pass the benefit of the land tax abolition on to their customers - the little people of the world.
– Does the honorable senator not think that prices are falling?
– Some prices may be falling.
– Will the honorable senator agree that the abolition of the land tax is a contribution towards a reduction of prices?
– I do not think that the benefit will be passed on. It will go, as I have indicated, to wealthy corporations. Surely the Minister does not expect theatre prices to be reduced or insurance premiums to be lowered.
– May I put the argument in another way? Prices will not be increased even though costs may be rising.
– I am not so sure about that. Under the stimulus given by this Government, banks have increased their interest charges. I think it is the general policy of this Government to increase interest rates. I read repeatedly about organizations applying for and being granted price increases. I invite the Minister to mention one quarter during this Government’s term of office in which there has not been an increase in the basic wage. He knows as well as I do that basic wage rises have been granted because of the increased cost of living for the whole community. That fact alone is a complete answer to the question whether I consider that prices are falling. Prices have not stopped rising since this Government came to office. The abolition of the land tax will not be of any great benefit to the small farmers who are the backbone of the country. Particularly in view of the fact that extra income tax will have to be paid, their relief will be so negligible that it may be ignored entirely.
– They will get nothing.
– That is so. They will ignore it. There is virtue in the land tax insofar as, if its incidence is severe, it is a tax that can be used as the greatest incentive to increased production if it is properly and intelligently applied. Let us consider the comparative merits of another form of taxation. The sales tax imposes a burden on industry and individuals; it is highly inflationary. Its burden is spread over all the little people of the country. The land tax has vast advantages over the sales tax because it is anti-inflationary and it offers a decided incentive to land-owners to use their land whether it be situated in a city or in the country. The land tax also has the great virtue of being a tax that cannot be evaded. In addition, it is the sole tax in respect of which the Government has security, because the Government has security over the very land which is subject to the tax. No doubt Government supporters during this debate will express their abhorrence of the principle of the land tax and will give voice to paeans of joy and delight at its abolition - -
– Hear, hear !
– There is the first of them. Government supporters who will doubtlessly now find reason to abhor the land tax might also explain to the Senate why non-Labour governments throughout the years from 1910 to this year of grace, have continued to sponsor the tax. I invite those who want to cheer now that the tax is to be abolished calmly to state how soon they discovered it to be a bad tax. I do not propose to address myself further to the measure. I have indicated the Labour party’s attitude to it. We oppose it because it is not in line with the policy of the Labour party that the land tax should be abolished, and we shall certainly vote against the second reading of the measure.
– I have pleasure in supporting the bill. I propose to traverse some of the features of the speech just made by the Leader of the Opposition (Senator McKenna) which was in direct contrast to the speech he made in the Senate only a few months ago-
– That is quite wrong.
– A few months ago in this Senate and when its proceedings were being broadcast, the honorable senator advanced every possible argument for the abolition of the land tax, but in a mere whisper, so low that few, if any, of his listeners could possibly hear him, he said that the Labour party would oppose the proposal to increase the capital value of land subject to the tax to £8,750.
– Certain supporters of the Government proposed an amendment to that proposal, and then voted against it.
– I shall deal with the honorable senator’s assertion in a moment or two. I have opposed the land tax ever since I have been a member of the Senate because I believe it to be a bad tax in the imposition of which no consideration is paid to the ability of the taxpayer to pay. That is one of the worst features of the land tax. Whether a farmer or a business man makes a profit or a loss he still has to pay the tax. Any tax which is imposed regardless of the ability of the taxpayer to pay, is a bad tax. I am pleased that the Government proposes to remove this tax from the statute-book of the Commonwealth.
Contrary to the fair manner in which the Leader of the Opposition usually presents his case, on this occasion the honorable senator quite unjustly said that this Government, which first proposed to increase the capital value of land in respect of which the land tax was imposed, not knowing which way to turn, had suddenly decided to abolish the tax. The honorable senator also said that the Government had chosen the year 1951 to increase land valuations and so increase the yield from the tax. It is well known that land values were pegged by a National Security Regulation which was subsequently challenged in the High Court, and. that the court decided that the regulation was invalid. The second point made by the Leader of the Opposition that the Government increased land valuations in 1951, is easily explained. Land valuations are made at triennial periods. The year 1951 was the next year of the triennial period in which new valuations had to be made. It is neither fair nor true to say that this Government had anything to do either with the invalidation of the National Security Regulation or the choice of the year 1951 for revaluation purposes.
I share the objection that the Leader of the Opposition seems to have to the States entering the field of land taxation. I should much prefer the field to be left to local-governing authorities because, within their organizations, they have men who are closely in touch with the factors that affect land values and their officers have close knowledge of the ability of the people to pay a tax of this kind. They also need revenue additional to that which they receive by way of rates. If the field were left to local-governing authorities it would be in good, sound hands, and the proceeds of the tax would be properly expended. I have the greatest respect for local-governing authorities, which are closer to the taxpayers than any government, State or Federal, could possibly be.
I propose now to deal with the interjection made a few moments ago by Senator Sandford. Tasmanian senators take pride in the stand which they took hi June last when they maintained that the people of those States in which private ownership of land was the greatest were the hardest hit by the Land Tax Assessment Bill. We then pointed out that the people of New South Wales and Queensland, where land .is mostly held under leasehold, were not greatly affected by the measure. As Tasmanians we regarded it as our duty to direct the attention of the Government to the injustice that was being done to the taxpayers of States where most of the land is held under freehold title. Senator Wright moved an amendment of the measure, which was supported by his Tasmanian colleagues, in order to highlight the injustice inflicted on the people of Tasmania. The primary task of honorable senators i3 to ensure that the viewpoint of the States shall be adequately presented in this Parliament. Having succeeded in our purpose, we were amazed to learn that our eloquence had persuaded our fellow Tasmanian senators in the ranks of the Opposition to support our move to bring about a reduction of the tax. Where are those Opposition senators now? Where do Senator Cole and Senator O’Byrne stand in regard to this proposal to abolish the land tax? Obviously the whip has been cracked over them. They are not prepared to disobey a caucus decision-
– The honorable senator did not vote for the amendment proposed by Senator Wright.
– The Government pointed out to us that we had voted in favour of the budget proposals and that the variation of the basis of assessment of land for land tax purposes would not result in the collection of revenue additional to that provided for in the budget, and that the budget for 1952-53 would give practical expression to our wish, and so we let the proposal drop. Honorable senators opposite said that the whip had cracked across our backs and that we were frightened to do what we believed to be right. When the 1952-53 budget was introduced, the Government, instead of reducing the land tax, as we desired to do in our amendment, completely abolished it. What a whip to crack across our backs ! Opposition senators, who are afraid to burke the decisions of the Labour caucus fail to realize that members of the Government parties are free to express their views on all matters that come before them. Tasmanian senators on this side of the Senate are proud of the fact that their representations were heeded by the Government.
– The mighty Henty !
– So says Senator “ Farouk “ ! The Leader of the Opposition indulged in a great deal of supposition and to bolster his unconvincing case quoted statistics that are as old as the years and which have no relation to present values. The greatest benefit from the abolition of the land tax, which is a taxable deduction for income tax purposes, will be gained by-
– The breweries.
– The breweries will get little benefit from this proposal. Many small property owners who pay income tax will get a major benefit from Chis remission of taxation. Those on higher incomes to whom Senator O’Byrne has referred will pay in company tax and personal income tax as shareholders, and a substantial sum will go back to the Treasury. Senator Aylett, who has interjected, does not yet realize that the Liberal party stands for all sections of the community and particularly for the small man. This bill has been introduced to benefit those on the smaller incomes. They will get the greatest benefit. The Leader of the Opposition estimated that £1,000,000 out of the £7,000,000 would go back to the Treasury. I believe that an accurate estimate would be nearer £4,000,000 of the £7,000,000 and’ that the amount that will go back to the Treasury will not be less than £3,500,000. Having traversed Tasmania, I am confident that many of the people there on smaller incomes, who will benefit from this remission of tax, are grateful to this Government for having seen the light and decided to remove this unjust tax from the statute-book.
– Senator Henty shows the light.
– I am prepared to accept the commendation of Senator Hendrickson. It is rarely given. The honorable senator must be benefiting a little himself from this remission of land tax and is grateful to the Government. I hope that the bill will benefit him and other honorable senators opposite who own land. If they had their way, they would support this measure, but under caucus rule they must abide by the old Labour party platform framed in 1910 that declared that a heavy tax must be imposed so that the big estates would be divided. The Labour party is so far behind the times that it will never change that outmoded plank. I compliment the Government upon the removal of this tax. I believe that it will be acceptable to all those who have been paying land tax. The fact that the tax is being removed in a year when there is no general election makes it doubly valuable. The Government believes the tax is unjust and intends to remove it. I commend the Government and 1 believe that the measure has the approval of the people.
– I rise to make a personal explanation. I direct attention to the fact that I have been misunderstood or misrepresented by Senator Henty in two aspects. The honorable senator said that some time ago I argued in this chamber for the abolition of the land tax. He also stated that in the speech that I made to-night I expressed objection to the States moving into the field of land tax. The facts are that some time ago I argued against the foolish and unjust valuation following the unpegging of values in 1950-51. I spoke and voted against the proposal to increase the exemption and also against the super tax on land. The honorable senator suggested that in my . speech to-night that I expressed objection to the States moving into the field of land tax. I said no such thing. I did discuss the possibility of the States moving in, but Senator Henty was completely in error in the statement that he attributed to me.
– In speaking to this bill, it was my intention to deal with the gross misrepresentation by Senator Henty of the remarks that were made by the Leader of the Opposition (Senator McKenna). However, the Leader of the Opposition has dealt with these distortions by making a statement, and honorable senators and the people of Australia know that Senator McKenna is capable of coping with Senator Henty and any false allegation that he may make. Therefore, I shall dispense with the notes that I made on Senator Henty’s remarks and deal with several other anomalies in relation to the bill and matters upon which Senator Henty and the Minister for National Development (Senator Spooner) are evidently in opposition to each other. The Minister said that the Government was unable to agree that land should be singled out for a special imposition. Senator Henty has said that he has seen no reason why the
States and the local government bodies should not enter and absorb the field of land taxation vacated by the Australian Government. Does it make any difference who extorts the tax from the people?
– The local government authorities give some service.
– Senator Henty has suggested that if the authority that imposes the burden is changed, the burden becomes lighter. That is a poor argument. The honorable senator also said with truth that in addition to the tax that would be imposed by the States and local government authorities, the people who previously paid federal land tax would lose their exemption from income tax. Therefore, additional income tax would be imposed upon them by the Australian Government. I do not believe that the Government should reduce land tax at all at this stage. The Minister has said that the land tax is a tax on capital assets and that he totally disagrees with it. Yet it may be imposed by the States or by the local government bodies. From the Minister’s point of view, it is wrong to tax capital assets but it is not wrong to force the States to impose a similar higher rate of tax on capital assets so that they can maintain existing services and carry on public works. “What a statement to come from a Minister in a Liberal government and what hypocrisy! That is the sort of hypocrisy with which the Government blinded the people when it obtained power to govern. The Australian Government should not lift this tax from a section of the public who are possessed of assets, while it continues to levy direct tax from persons without assets. It is a fundamental rule of taxation that tax should be levied with regard to the ability of the taxpayer to pay. This privileged section of the community does not enter into the field of land tax until the taxpayer owns a property to the value of £S,750 on the basis of the Government’s last amendment. The incidence of land tax is to be removed, but the Government continues to impose a sales tax upon string bags and diverse goods in general use, without exemption to the poorest citizens and without consideration of the ability to pay. I have a letter from the Essendon Rowing Club, an organization that is engaged in amateur sport. That club has informed me that all of its fees this year and half of those to be collected next year will be required to pay sales tax on new boats. The Government continues to impose a tax upon ice-cream. Innumerable other taxes are also applied without exemptions. Yet over a period of three years, this Government is reducing Consolidated Revenue by £14,750,483, by abolishing land tax. The Government sees fit to remit to certain taxpayers that sum of money, but honorable senators have been told in reply to questions that the proceeds from the sale of Australian assets will go into Consolidated Revenue because the Government cannot raise enough revenue to continue public works and it denies the States the money that they require for development. On the one hand the Government proposes to throw away more than £14,000,000 in one fell swoop and on the other hand it will sell some of the nation’s most valuable assets which have been proved to be sound trading propositions, allegedly to obtain revenue. By the sale of those assets, the Government expects to obtain about £4,000,000, but it will give back to a privileged section of the community more than £14,750,000. When one is balanced against the other, more than £10,000,000 will be lost to revenue and the assets also will be lost. The Government cannot justify such financial waste at this time.
If honorable senators study basic facts related to this matter they will discover that pressure has been brought to bear on the Government. I have before me the Land Tax Bill 1952. It was passed as a result of a triennial revaluation of land. Land values had skyrocketed to unreal heights and land tax had risen to embarrassing levels. The Labour party objected to the imposition of the land tax on inflated values that had been brought about by the economic policy of the Government and its failure to halt inflation. Although valuations had risen by 200 per cent., the Government proposed to tax land on that valuation. The Labour party said that that was unjust, not because it disagreed with the principle of land tax but because it objected to its application to unreal land values. That act received the Royal assent on the 12th June, 1952. Some time has since elapsed. Pressure has been applied to the Government by groups outside the Government and outside this chamber. The Government has decided that it must give some relief to a section of the community that gave it political and financial backing. As a result it proposes to abolish the land tax with retrospective effect from the 1st July, 1952. The act to which I have referred, and about which there was so much argument, operated for less .than a month. Yet honorable senators on the Government side claim that no pressure has been brought to bear upon the Government in this matter. If the sum in excess of £14,000,000 that will be lost to Consolidated Revenue by this bill could be collected and distributed to the States, they would be enabled to continue public developmental works. Alternatively the Government could have retained in its revenue £.10,000,000, met expenditure of £4,000,000, and still have enjoyed the revenue earned by Commonwealth Oil Refineries Limited, Amalgamated Wireless (Australasia) Limited, and other assets which it has sold. Yet honorable senator opposite try to justify the proposal to vacate the land tax field which yields that amount of revenue. I have already referred to the Government’s hypocrisy in this matter. Ultimately the States may impose land tax of greater severity and extend the tax field to cover people in the lower income brackets. The Minister has stated that he has a strong objection to the taxation of a capital asset. Generally speaking, I believe that capital assets which depreciate normally should be removed from the taxation field. However, I point out that the value of land may appreciate considerably. I have known of instances in which the value of land in big cities has increased from £1 a foot to as much as £500 a foot, not by reason of any effort by the owner, but as a result of the natural growth of the city and the demands of business and commerce which have forced up values. I point out that the only capital asset possessed by many people in this country is their physical capacity to work. If anybody should be removed from the taxation field it is people in that category, not a man who owns £8,750 worth of property, who would not suffer greatly if the equitable system of land taxation that is now operating were continued. As a result of the inflationary position to-day, many people who were not formerly subject to taxation have been brought into the direct taxation field. In addition, people in the lowest income bracket are required to pay sales tax on essential commodities at the same rates as are paid by people in receipt of high incomes. I contend that the Government cannot justify the proposed abolition of land tax while direct taxation without exemption continues. I cannot support the bill. It is sheer cant and hypocrisy for supporters of the Government to deny that this measure will not result in this tax field being shifted from the Commonwealth to the States.
– I rise to support the bill. ] feel that I am attending a burial service, because, after 40 years, land tax is being buried. On one of my early opportunities to speak in this chamber last year, the bill to repeal the wool sales deductions legislation was before the Senate. It gave me very great pleasure to support the abolition of that provisional tax. I regard the measure now before honorable senators as a tangible expression of the Government’s intention to reduce taxation. I look upon it as a bill to “ delouse “ the Commonwealth statute-book of another example of socialism. I believe that honorable senators opposite would like to vote for the passage of this measure, but the Labour caucus will not permit them Lo do so.
Some members of the Opposition, who claim to be the’ friends of the primary producers, have contended that the incidence of taxation has retarded primary production. This dead flat tax has been imposed on practically all of the land owned by primary producers, yet its proposed abolition is opposed by honorable senators opposite. It is fortunate that the proceedings in this chamber are being broadcast, because it is only right that the people of Australia should know that the Australian
Labour party is opposed to the abolition of land tax. It is only four or five months ago that honorable senators opposite put on a similar exhibition when a bill then before the chamber sought to raise the exemption value of taxable land from £5,000 to £S,750. Despite the fact that that provision would free 22,000 federal land taxpayers from further land taxation, the Opposition opposed the raising of the exemption. Therefore, I suppose it is consistent for them to oppose the measure that is now before us.
I welcome the proposal to abolish land taxation for a reason other than the reasons that have been mentioned by other honorable senators. As many honorable senators are aware, it has been necessary for landholders to fill in each year the most involved set of forms that a government instrumentality could evolve. Each parcel of land has had to be listed separately and the forms had to be signed by the taxpayers. If the land was subject to a lease, as many as 50 questions in relation to each parcel of land had to be answered. Many primary producers who conduct farms on three or four farcels of land had to answer more than 100 questions in their annual returns. The abolition of land taxation will remove from those landholders a considerable amount of worry and a tax upon their time.
I shall now deal with one other aspect of the subject. The effect of the existing legislation has been to impose land taxation on many organizations and persons to whom it was not originally intended to apply- I refer to organizations such as golf clubs, which have performed a national service by establishing green belts in urban areas. As a result of the rise in value of surrounding land for building purposes, the unimproved value of their land has risen and they have become subject to land tax. Furthermore, it has not been possible for lodges and other organizations to show a profit in relation to buildings that they own in the cities, because rentals have been pegged. The construction of such buildings has been made possible by the contributions of hundreds of people in the lower income brackets, and the organizations have become subject to land taxation as a result of the increased value of adjoining pro- perties. A number of these worthy institutions in Adelaide have incurred a loss on their buildings due to land taxation. The abolition of land taxation will alford welcome relief to those worthy institutions.
From an ethical point of view, I consider that it is right for the Commonwealth to abandon the land taxation field, because the records in relation to land are maintained by sovereign States. If it should again become necessary to impose land tax, I consider that it would be appropriate for the States or municipalities, which rendel’ service in relation to land, to make the levy. The Commonwealth is remote from the land of the States. It maintains no records or lands titles offices, and consequently it is wrong in principle for the Commonwealth to impose land taxation.
I welcome the abolition of federal land tax also because this relatively small country will be freed of the obligation to maintain a separate staff for the purpose. The valuators and records clerks will become available to assist in other fields of activity. I am fortified in my criticism by the report of the Royal Commission on Taxation, which was furnished on the 19th October, 1934. It contained the following paragraph in relation to federal land tax - . . it is denounced as a capital levy, discriminating arbitrarily and unjustly against those whose capital happens to be invested in one special class of property, as a discouragement of operations of pastoral and other industries on the scale best adapted for carrying them on economically and profitably, as a double tax in cases where profits are made which are subject to income tax and as a tax imposed in disregard of the principle of “ ability to pay “ in eases where the land is heavily mortgaged, or is the site of a business which is conducted at a loss.
The report of the Royal Commission on Taxation which sat nearly 20 years ago is a valid authority for the step which this Government, to its very great credit, is now taking. I was glad to hear the Minister state in his second-reading speech that the Government intends, during the next sessional period of the Parliament, to bring down legislation to repeal the land tax assessment legislation. The act contains 74 sections. I shall be particularly pleased to see it removed from the statute-book. I have always been concerned whether section 70, which relates to evasion of federal land tax, is or is not good law. I am sure that no one will approve of the penal provisions which it contains. I point out to honorable senators that the section provides that any person who, by any wilful act, default or neglect - and I emphasize the word “ neglect “ - or by any fraud, act or contrivance whatever, evades or attempts to evade assessment of taxation shall be guilty of an indictable offence. The penalty provided is £500 and treble the amount of the tax payment evaded or attempted to be evaded, or forfeiture of the land. I suggest that one good thing which the abolition of federal land tax will achieve will be to get rid of that socialistic provision which has been on our statute-book for 40 years. I think that I have put before the Senate some very good reasons why I am glad to see the end of federal land tax and to be present at its burial service, as it were.
– Senator Laught stated that land tax is restricting production, although the honorable senator did not explain exactly what he meant by that remark. To a point, I agree with him, although my reasons are different from those which he put forward. The honorable senator also stated that land tax imposes a severe burden on small farmers. Since the tax does not operate until the unimproved value of the land is £8,750, I should like to know what kind of farmer he considers to be a “ small “ farmer. In my opinion, the fact that the operation of land tax is not sufficiently severe in some instances is restricting production. This point was referred to by Senator Henty when he stated that originally land tax was imposed for the purpose of breaking up large holdings. In my opinion, one of the ways in which non-productive large holdings can be broken up is to increase land tax on the unimproved capital value of such holdings.
– What large holdings has federal land tax broken up ?
– If the honorable senator looks round Australia he will find that there are many millions of acres held by private individuals which are not producing to one-tenth of their productive capacity.
– But has federal land tax broken up such properties?
– No, and it will never do so under the present system of land tax. If the Government really wished to break up large unproductive holdings it should have increased the tax on the unimproved value of such holdings until such time as the owners of those properties would have been only too happy to subdivide their land and sell it to people who would be prepared to make it productive.
– The States have the power of acquisition.
– Of course they have. I remind the honorable senator that the Commonwealth also has such power and is now proposing to give it away. Indeed, it is running away from that power. Although the Government is crying out for increased food production, it is running up a hollow log to avoid using the power which might bring about such production.
I now wish to refer to land tax in relation to city areas. The point at which the Opposition previously differed from the Government was the system of valuation which was introduced overnight and which provided that properties should be valued on the basis of sales of other properties in the locality. That basis meant that properties which were erected when building costs were not one-tenth of present costs, were valued according to inflated prices. I happen to know something of the way in which land valuers performed their task in Tasmania. I had many arguments with a particular valuer who graduated from the position of engineer-clerk, or something of the kind, in New South Wales, to the post of permanent valuer for the State of Tasmania. To indicate to honorable senators how inefficient were his valuations, I point out that although he valued a certain property at £7,500, when I approached the head of the branch in Sydney on the matter, the valuation was raised to £15,000. Even that value left very little profit for the vendors after streets and footpaths had been provided. That is the kind of incompetent valuer which this Government has appointed.
This bill will relieve a small minority in the community of the necessity to pay tax. If the Government wished to spread the burden of land tax, I suggest that it should have imposed a higher rate of tax on non-productive holdings in city areas. In the city where I live, a fire occurred some years ago and burnt out a big store which was situated in the main street, right in the heart of the city. The ruins have been an eye-sore ever since. If the rate of land tax were higher, no doubt the owners of that land would be eager to erect another building. That, of course, should be. clone if only to improve the appearance of the street. The abolition of land tax will mean that the value of that land will increase although no improvement has been made on it.
SenatorCormack. - Is the council rate based on unimproved value?
– No. Unfortunately the council rates are based on the capital value. If they were based on the unimproved value of the land, no doubt it would be a completely different story.
Senator Henty stated that land tax on city blocks should be in the hands of the local government bodies which, he said, are in a position to assess truer values than is the Government. When Senator Henty was mayor of the city in which I live, the small land-owner with a little dwelling was obliged to pay rates at the same rate as the man with a big mansion. It seems to me that if the tax was in the hands of the local governing bodies, the owners of land in the centre of the city would pay no more tax than would the person who owned a few houses in the suburbs.
SenatorCormack. - What has this matter to do with the Australian Government?
– I am replying to a statement made by the honorable senator’s colleague, Senator Henty.
On the 3rd June last, Senator Wright moved an amendment to the land tax legislation which was then before the Senate. That amendment was put to the vote after a ruling had been asked for and obtained, and a point of order taken. When it came to a vote, honorable senators on this side of the chamber voted in favour of the amendment because they knew the absurdity of the method under which values had been made. They wished to see justice done. Senator Chamberlain, Senator Guy, Senator Henty, Senator Wordsworth and Senator Wright, from the other side of the chamber, also voted for the amendment. The bill was then returned to the House of Representatives which considered the amendment and, having rejected it, returned the bill to the Senate. Then the Government started to crack the whip over the Liberal senators to whom I have referred, and they bowed to the wish of the Government. When the same amendment was again put to the vote, Senator Chamberlain, Senator Guy, Senator Henty, Senator Wordsworth and Senator Wright turned a complete somersault and voted against it. I suggest that honorable senators opposite are fine ones to chide any one about running away. They ran for cover from an amendment which they had previously supported. Senator Wright wasted hours of the time of this chamber debating his amendment. When he found that it would not be agreed to, he ran up a hollow log.
– 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.
Question resolved in the negative.
- Senator Henty’s vote is on record to show that he ran away from this issue. Again, Senator Henty-
– Is this a Senate debate or a tribal fight at Launceston ?
– Apparently my remarks are hurting the honorable senator. Senator Henty and Senator Laught claimed that the land tax had restricted production and that it was an anomaly. If the tax were assessed by local governing bodies it would probably be even more anomalous. It would be far more sectional and unjust. I think that Senator Henty will agree that there is no justice in the rates that have been imposed on land in Launceston. If local government bodies imposed this tax, insurance companies would have to pay only the same amount of tax on their big properties as private individuals would have to pay on small dwellings. That is what happened in Launceston. That is what would happen all over Australia if it were left to the local government authorities to collect this tax. Taxation should be uniform, regardless of whether a State or a Commonwealth authority imposes it. It would be grossly unfair for the company tax in one State to be twice as high as the company tax in another State. That was the position before uniform taxation was introduced into this country. A similar state of affairs could exist in connexion with land tax if it were collected by the State governments. Some States might increase the tax while others might not impose any tax.
– What would bewrong with that?
– Does Senator Cormack believe in uniformity of taxation or does he believe in discriminatory treatment? Would it be equitable for a man with a property worth £40,000 in New South Wales to pay a heavy land tax on it whilst a man in Victoria paid none on a property of the same value? The popular houses of the State parliaments might wish to have uniformity in respect of land, tax, but an upper chamber in one State with a majority of representatives of big land-holders might veto legislation submitted to it by the popular chamber. It has been indicated in the press that a State Labour government might impose the land tax that has been abandoned by the Australian Government. But it has also been indicated that the legislative council in that State, elected by a sectional vote of big land-holders, will not allow the necessary legislation to become law. If that should happen the tax could be in operation in one State but not in another.
– What would be wrong with that?
– I am an Australian. If Senator Cormack is not an Australian it is time that he had an Australian outlook. Australians believe in justice. They do not believe that a man living in one State should be taxed more than a man on the same income living in another State. In Victoria the Government has cut social services to the bone for the purpose of giving relief to the big companies.
– Order ! This bill contains no reference to social services. It is a land tax measure and the honorable senator will confine his remarks to the subject of the bill.
– I was illustrating the fact that a tory government in Victoria, for instance, could exempt Victoria from this tax whilst the other State governments might be forced to impose it because of their inability to obtain finance from the Australian Government. Victoria might avoid having to impose the tax by failing to provide its people with the benefits to which they were entitled. A Victorian Government has done that in the past and it might do it again. A discriminatory system of taxation must be wrong. The Government which pledged itself to remit taxation has increased it. After increasing the sales tax on ice-creams which are bought by little boys it gave remissions of taxation to big insurance companies and land-holders, in the capital cities. The benefits that it has given have been sectional. It has not made the reductions of taxation that it promised. Senator Laught illustrated that of the £7,000,000 which the Government proposed to remit in taxation, £4,000,000 would be regained by it in another way. The Government has increased taxation by £400,000,000 in one financial year. The Government’s present proposal is not fair. Fairness and justice are possible only by having uniformity throughout the Commonwealth. If the Government is not aware of that it is not aware of the principles of democracy.
. - I take great pride in associating myself with the Government’s proposal to relieve the people of Australia of the federal land tax. The Government has acknowledged that the people are most justly entitled to this timely relief from an outmoded tax. Upon this occasion it is proper to reflect upon the manoeuvres of the Opposition in connexion with this measure. The Senate has heard a spate of specious pleading from the Leader of the Opposition (Senator McKenna), the record of which will not be a high tribute to him. The Leader of the Opposition said that Labour policy in this connexion had been conspicously clear, had remained unaltered and stood for the imposition of the tax on the unimproved value of land exceeding £5,000. When asked by Senator Pearson, by way of interjection, whether a Labour government would re-impose the land tax he equivocated, dissembled and sought refuge in his doubts as to the future. But the Leader of the Opposition stated that the policy of the Labour party was conspicuously clear and stood unaltered for the imposition of the tax on the unimproved value of land exceeding £5,000. That announcement should be taken as a statement of Labour policy. At the end of his speech he lamented the pending passing of this bill on the ground that the land tax could not be evaded. Land values fluctuate considerably and the unimproved value of land is essentially a matter of opinion. I rejoice to have this opportunity to support a measure which is, in effect, a sturdy rebuke to those political playboys who sought to attribute their own antics to honorable senators on this side of the chamber who in May last accepted the Government’s decision as expressed by the rejection in the House of Representatives of certain amendments that we had made to the land tax legislation then before the Parliament with a view to reducing this feudal Fisher imposition. On many occasions we have seen the interference in the work of this Parliament by the miserable Labour party federal executive, which reached its record low level during Senator Aylett’s membership of it. Now that the land tax is to be abolished entirely, this “progressive “ Labour party is so interested in the debate that, until a few minutes ago, only four members of the Opposition were present in this chamber. The Leader of the Opposition, who led the Opposition’s protest against the abolition of the land tax, took the opportunity once more to disparage the Government for propaganda purposes. I regret to note that his deputy, Senator Armstrong, is not present in the chamber because he is recorded in Hansard as having said on the 28th May, 1952-
I believe that the federal land tax could well be abolished, and I suggest that the Government should seriously consider abolishing it.
Apparently the honorable senator was speaking on behalf of the Opposition. I despise the duplicity of those who use the forms of this Parliament merely to impress the electors. On the subject of land tax we have heard the Leader of the Opposition and his deputy indulge in double-tongued oratory. As Senator Armstrong has now returned to the chamber, I take the opportunity to remind you, Mr. President, that in May of this year, dealing with the iniquities of the land tax, he informed us that the assessment of a certain manufacturer had increased from £1,642 in 1950 to £5,420 in 1951; that the assessment of another manufacturer had been increased from £550 to £2,140; and that the assessment of a third had increased from £32 in 1950, to £181 in 1951. He also cited the case of a golf club, which, under this iniquitous tax, was visited in 1951 with an assessment of £2,000, compared with £50 in the previous year. The honorable senator cited those figures to show the degree of exaction and confiscation reached by this tax. Then he made the suggestion that I have already quoted and which I shall now quote again for his own benefit. He said -
I believe that the federal land tax could well be abolished, and I suggest that the Government should seriously consider abolishing it.
It is clear in view of that statement that the Labour party is now pretending opposition to the abolition of the land tax merely for the purpose of seducing voters. The Leader of the Opposition engaged in a series of somewhat specious arguments. He said, for instance, apparently in an endeavour to raise a cloud of apprehension in the minds of land tax payers who might by chance be listening to him to-night, that although the Commonwealth proposed to vacate the land tax field, the States would immediately occupy that field. Fifteen minutes later, however, sagaciously realizing that the knob-twisters probably had provided him with a new listening audience, he advanced the idea that the abolition of the land tax would confer benefits on a very small group of taxpayers. I hope that, by bringing those two statements together, I have demonstrated the speciousness of the Labour party’s advocacy in this debate. Another argument that I have selected from this miscellany of novelties which I think is more suited to the wit that one hears on the regatta ground, was that relating to the figures that he quoted from the twenty-fourth annual report of the Commissioner of Taxation, made in 1942. The honorable senator sought to convince the Senate that, on the basis of land tax assessment in 1942, the last £1,000,000 of this exaction was collected from about 100 taxpayers. The inference that we were supposed to draw was that that position would apply to-day. It should be obvious to any one who has made even the most cursory examination of the matter, that in 1951 there was a vast evening up of unimproved values. As everyone is aware, land tax is assessed not on the capital value of land and the improvements, but on the unimproved value of land. The fear that was in my mind and the minds of my colleagues in May of this year when we sought to prevent an increase of the land tax and if possible to achieve its abolition, was that as the result of the general appreciation of land values, thousands of farms would be raised above the land tax exemption, and that small farmers would be called upon to pay this impost for the first time. Had the land tax continued to operate it would have been exacted from the many thousands of small primary producers who are the backbone of our agricultural prosperity and consequently the backbone of the metropolis in which Senator Armstrong prospers. I think I have said sufficient to put the Labour party’s propaganda into its true perspective. I wonder what is the outlook of the Labour party and particularly of the Leader of the Opposition and Senator Aylett on the future of State and local government finances in the light of the abolition of the land tax. The withdrawal of the Commonwealth from the land tax field will present the State governments and local governing authorities with an opportunity to receive the proceeds of land taxation and municipal rates in the knowledge that they are not imposing an impossible burden on landowners. Surely we, as representatives of the States, must see in this proposal a new recognition of the status of the States. Under the Constitution the States, are responsible for the property lawsof the States. To suggest that because Victoria imposes a State land tax New South Wales would commit a federal sin if it did not do likewise, is to adopt the outlook of a “ gumleaf “. Surely it is the province and responsibility of the State parliaments to decide whether the land that lies within the borders of the States which they control is a proper subject for tax. Surely we are mindful of the need to prosper the administrations of the municipal and shire councils of this Commonwealth which are finding the task of supplying their needs an increasingly burdensome one. Now, they will know that they are at liberty to impose their rates, free from any inhibitions that arise from the fact that an emporium in one street and another undertaking in the next street have already been visited with the terrific exactions to which Senator Armstrong so tellingly referred in the speech which he made in the Senate on this subject in May last. I shall recite some of them to indicate their severity. The honorable senator said that in one instance the impost was increased from £1,642 to £5,420; in another from £32 to £181; and in another from £550 to £2,140. These increased levies, which were imposed on capital assets irrespective of the ability of the taxpayer concerned to meet them, are in line with the sort of feudal taxes imposed during the reign of Henry IV. I have participated in this debate solely to acknowledge my feeling- of gratification that this national Parliament at Canberra, whose sole desire has been to centralize and aggregate the taxation imposed on the country, has now been invited to say, “ We shall vacate a field of taxation”. This is surely an occasion without precedent. Having been subjected to some ironical contumely by the Leader of the Opposition, to which this measure as it stands printed is a sufficient and sturdy rebuke, I express my gratification, which is shared by those whom I represent; and that is the spirit in which my politics will be expressed as long as I am here.
– There are two propositions which we should keep in mind when we speak of taxation. The first is that taxes form the very basis and machinery of government. No government can carry on without levying taxes, either direct or indirect, to meet its commitments. The second is that the workers engaged in essential industries and services provide the wherewithall to pay all taxes. They provide for the non-productive sections of the community, including members of this Senate. It could not, for example, be claimed that Senator Wright is a productive worker. He lives on the backs of the workers just as other non-productive members in the community do. For the honorable senator to attempt to dramatize the position and to hold himself up as one who stands for justice is merely so much make-believe and political shadowsparring. If the workers had a proper appreciation of the values of the assets that they create, particularly of those that are appropriated by the nonproducing section of the community, every man and woman able to work in a productive capacity would do so, with the result that all who work in a productive capacity would be a great deal better off than they are to-day. Senator Laught has referred in glowing terms to this proposal to abolish the land tax and has said that it will result in the reduction of taxes. It is true that if the bill be passed no federal land tax will be imposed, but it is also true that the cost of this concession will be borne by the unfortunate wage-earners who are least able to bear it. All the political hum-bug, the posturing, the exhibitionism and the pretence that honorable senators opposite are the sole guardians of the welfare of the people is all so much hypocrisy designed to mislead the unfortunate workers. As I have said in this chamber on many occasions, the workers are fooled and robbed from the cradle to the grave by honorable senators opposite and their supporters.
The land tax is a just and equitable tax. The land is the natural heritage of the people; it should not belong to a few wealthy landlords, corporations, monopolies, cartels or banks. If the workers had a proper appreciation of their due, there would be no private ownership of land that is not used to its best purpose. There would be no private ownership of land for speculative purposes or for the purpose of forcing the people to pay exorbitant rents or prices. I am not impressed by the speeches made by Government supporters in an attempt to sidetrack the fundamental issues involved in this measure. If the land tax is abolished a greater burden will be placed on the backs of the workers and a few more people will be able to live in a pig’s paradise.
– Order! The honorable senator is getting wide of the bill.
– I think you will agree, Mr. President, that the purpose of the bill before the Senate is to abolish the land tax. Within the limits of my ability I am endeavouring to show that injustice will flow from the abolition of this tax because those persons who should pay the tax will be absolved from its payment and a corresponding burden will be added to the heavy burden already shouldered by the workers, or they will be forced to accept a reduced standard of living. Senator Wright, Senator Laught and other honorable senators opposite have tried to make the people believe that landlords have suffered injustices from time immemorial. We know perfectly well that from the very beginning of what we are pleased to call civilization - I regard our present state as a state of semi-civilization - the common people have always opposed those who monopolize the land. If the land tax is abolished thousands of exservicemen who are thoroughly qualified to work on the land will be denied access to it. I do not suffer from any illusions in regard to this matter. Wage-earners, pensioners and others whose standards of living have been progressively reduced since this Government has been in office, will have to bear the cost of the abolition of this tax. Accordingly, I oppose the bill.
– I shall direct some portion of my remarks to the statements that have been made by Senator Wright. By turning on his vocabulary with the smiles and twinkles that he displays when he is gratified, he has endeavoured to explain a position that cannot be explained. The honorable senator entered this chamber as a promising young man with an independent mind. When another land tax measure was before the Senate earlier, he adopted a strong attitude that I applauded. I thought that this was an example of the great Liberal party, about which we have read so much, actually at work. I thought that Senator Wright was a man who was prepared to fight to a finish. That was the impression of most honorable senators on the Opposition side also. Senator Wright excels at putting a point of view. As Senator Grant has said, quoting Percy Bysshe Shelley -
Bight or wrong, wu vindicate for gold.
Apparently on that occasion something vital was missing because nothing was vindicated and after the honorable senator had been taken into the corridor and spoken to kindly, but, I have no doubt firmly, by a senior Minister, he returned to the chamber and cast his vote as directed.
– The honorable, senator knows that that is a direct statement of untruth. I should think that he would be conscious of that.
– I can remember quite clearly that Senator Wright was sent for more than once.
– You lie! You lie!
– Order ! When honorable senators cease interjecting, perhaps we can return to the debate. I ask Senator Wright to withdraw that remark. It is unparliamentary.
– I withdraw theremark in deference to your ruling, Mr.. President, and substitute the statement that the remark of the honorable senatoris untrue.
– That apparently is what the honorable senator thinks. He gets excited and may not think so in another ten minutes. I remember that an honorable senator touched him upon the arm and whispered something to him. His head was angrily shaken and almost fell off.
– Order ! I suggest that the honorable senator direct his attention to the bill. I have always respected Senator Armstrong’s courtesy and common sense and his contributions to parliamentary debate. I ask him now to return to the bill.
– I am sorry if I have offended, but I believed that I was in order in discussing a measure relating to the land tax that had been debated in the Senate previously. Without going beyond your ruling, I might say that the honorable senator proceeded with much of his argument on that basis, otherwise I would not have referred to the matter. The Bible tells us that we should turn the other cheek. Sometimes one forgets and punches back. If I have offended, Mr. President, I apologize. I have recounted the incident as I saw it. I am perfectly clear on the matter and what was done on that occasion has not been dulled in the minds of honorable senators.
– Will Senator Armstrong stand up to what he said on that occasion?
– Yes, I shall tell honorable senators in good time.
– Then the honorable senator will vote for this measure?
– I shall not vote for it and I shall tell you why.
– The honorable senator speaks with two voices.
– My voice is the one with which I always speak, and I am not ashamed of it. I said in the Senate on that occasion something that I believe. I have said it not only in this chamber but also before the executive of my party. The rules of the Labour party are made by the federal conference. I put my views forward in a quarter where they would be considered by the federal conference. The abolition of the land tax was brought into the Labour movement before there was a Federal Labour party and before a federal platform was printed.
– The honorable senator said “ the abolition of the federal land tax”.
– I am sorry. I meant that the imposition of the federal land tax was in the policy of the party before we had a federal policy printed. Originally there were only State Labour parties. The States- prepared their policies and the first State party policy included a recommendation for the imposition of land tax upon land of a value of £5,000. According to my reading of Labour history, it was introduced to cause the division of the big estates. In my opinion it no longer serves that purpose because that day has gone. In my earlier speech
On this subject, I mentioned that point. The main reason for its introduction into the policy of the Labour party originally has disappeared because, as the Leader of the Opposition (Senator McKenna) has said, more than 80 per cent, of the proposed remissions are upon city properties.
– What was the original purpose of the tax?
– To break up the large estates. It is not achieving that objective now and has not done so for many years. The tax may have the effect of gaining revenue from big city properties, but it is not a tax for that purpose. I believe that the levying of this tax should be the right of local governments or State governments. In the Labour party, its members can say what they think. A man who is to be buried in Sydney on Friday was a foundation member of the Labour movement. When he was in the Labour movement, he used the word that has often been used by its leaders since then. That word is the word “ solidarity “. While my party decides on the vote of the majority, I shall vote with it according to the ma jority decision. The views of my party have been clearly expressed by Senator McKenna and that is how I shall vote upon this bill.
– in reply - I do not propose to reply to the debate at any great length. I propose to eliminate from the notes I have made the arguments that have been advanced on one side and replied to on the other side, and shall restrict myself to a few of the leading points that have not been answered. The Leader of the Opposition (Senator McKenna) began by asking why we have deferred repealing the tax. The answer is that the land tax measure was the first federal taxation act that was imposed and upon this legislation is grafted much of the administration and all the taxation legislation. I understand the position to be that the appointment of the Commissioner of Taxation, the Second Commissioner of Taxation, the Deputy Commissioner of Taxation and the valuation boards are all grounded in the original Land Tax Act. While the Government wants to abolish the tax quickly, it requires further time to consider administrative problems.
Honorable senators have asked how the stait will be employed. The staff will be fully employed for some considerable time in clearing up arrears of work aid in dealing with about 3,000 objections to land tax that are at present outstanding. The Leader of the Opposition asked why the Government produced this legislation when it had no mandate for the abolition of the land tax. I believe that there is no reason to apologize for the abolition of any particular tax. If there is one thing that people like to see above all others and which they will accept as being written into the policy of any political party, it is the abolition of a tax. There has been some confusion with regard to the argument that was advanced concerning the increase of land tax that followed the reversion to 1950-51 values. T do not propose to deal with that matter in detail. I shall refresh the memory of honorable senators by pointing out that up to 1950-51, there had been no triennial revaluation of unimproved capital values, so that the valuation made in 1951 represented only picking up the lae in the increase of values that had occurred over a period of eleven years. 1! was interested in the remarks that were made by the Leader of the Opposition on the purpose of the original Land Tax Act. Open confession is good for the soul. I was one of those who always believed that the land tax was grounded originally in the attempt to break up large estates. I confess to some gratification that Senator Armstrong also apparently shared that view. But whatever might have been the original conception, the land tax in effect has drifted from its original purpose and has become a tax to raise revenue. On the next point, I confess that I have had difficulty in following the arguments of honorable senators opposite. I refer to the suggestion that the abolition of the land tax will not make a contribution towards reduced prices. I cannot accept the odd case in which reduced prices do not follow reduced costs. This tax has been a dead weight upon business and in my judgment its elimination will make quite a substantial contribution towards a reduction of costs. One of our greatest problems is to effect a reduction of working costs. We have priced ourselves out of many markets because our costs are so high. Anything that lessens that difficulty is a worthwhile contribution to our economic wealth.
Thursday30, October 1952.
Question put -
That the bill be now read a second time.
The Senate divided. (Thepresident - Senator the Hon. Edward Mattner.)
Majority . . 7
Question so resolved in the affirmative.
Bill read a second time, and passed through its remaining stages without amendment or debate.
Sitting suspended from 12.10 a.m. to 10 a.m. (Thursday).
Assent to the following bills reported : -
Diplomatic Immunities Bill 1952.
Aliens Bill 1952.
Debate resumed from the 9th October (vide page 2784), on motion by Senator Spooner -
That the hill be now read a second time.
Declaration of Urgency.
– I declare that the Income Tax and Social Services Contribution Assessment Bill (No. 3) 1952 is an urgent bill.
– The question is-
SenatorMcKenna. - I rise to order. The Minister has not moved a motion.
– I uphold the point of order.
– I apologize, Mr. President. I now move -
That the bill be considered an urgent bill.
– I oppose the motion-
– Order! There can be no debate on a motion to declare a bill to be an urgent measure.
Question put. The Senate divided. (The President - Senator the Hon. Edward Mattner.)
Majority . . . . 1
Question so resolved in the affirmative.
Allotment of Time.
Motion (by Senator Spooner) proposed -
That the time allotted in connexion with the bill be as follows: -
– The motion of the Minister for National Development (Senator Spooner) indicates that very little time is to be given to honorable senators to consider this important measure. The bill is not only a very comprehensive one, but is also most technical and of great volume. It proposes to amend a highly complex and technical act. There are 27 pages of the bill, and it contains 24 clauses. I submit that when an honorable senator picks up the Income Tax and Social Services Assessment Act, or even the amending bill, he would be completely insensate if he did not sigh for the simplicity of the stone age. No measure on the statute-book of this country is more complex or more technical. Yet, the Minister has coolly suggested, after having allowed this bill to lie on the table of the Senate since the 9th of this month - a period of three weeks - that 60 honorable senators should have only three and three-quarter hours in which to debate the second reading of this vastly important and controversial measure, and one and a quarter hours for the consideration of the 24 clauses of the bill in committee. I do not think that all of the 60 senators in this chamber want to talk about the measure. I should be surprised if the whole 60 senators understood all that is in this bill. If honorable senators on the Government side of the chamber understood the vast effects of this bill they would have been with Senator Wright on this side of the chamber in the last division. Anybody who upholds, on the merits of the bill, a proposal to “ guillotine “ this debate clearly shows that he has had no understanding of the vast issues involved and their importance to the business life of this country. This is one more instance of a Prussian jack-booted procedure to which this Government has committed itself ruthlessly during the last few weeks, and of which it will hear much in the weeks that lie ahead.
– The broadcasting is off.
– I was aware that it was not on.
– Order ! Interjections are off, too.
– I do not propose to take up any more of the very precious time that has been allowed the Opposition to discharge its obligation to the people whom it represents. It is completely clear that no honorable senator who understands the bill could begin to do justice to it in an hour’s speech, yet in the two and three-quarter hours available for the second-reading debate the Opposition will be fortunate if two of its members are able to speak, and there will be time for only one Government supporter to discuss the measure. The
Opposition wishes to discuss a number of clauses and to move amendments relating to them at the committee stage. Only 75 minutes have been allocated for the discussion of the 24 clauses in committee, or about three minutes for each clause. That reduces the position to absurdity. The Government has treated the whole Senate with complete contempt. In that light its action is regarded by the Opposition and in that light it will be presented to the people.
– -As I keenly disapprove of the misuse of parliamentary procedures to abbreviate the debate on this measure, I want to state the reasons for my attitude. In the first place, I assert that this measure is not urgent. In fact, the provisions of the bill relating to partnerships in respect of the year 1950-51 make it urgent that Boya! assent be not given to the bill at an early date. Secondly, an amendment has just been circulated relating to an important and, in my view, obnoxious provision of the bill under which the Commissioner of Taxation would be put in the position, not merely of administrator
– Order ! The honorable senator is not permitted to discuss the bill. The question before the Senate is the time allotted for debate.
– The Commissioner of Taxation has had a good deal of responsibility for the framing of this measure which he will administer. It has now been proposed that he should be assigned to the role of adjudication. It is imperative that officials should not originate the legislation of this country, administer the same legislation and also preside as a court of law concerning it. There rests on the Parliament as a representative legislature a peculiarly imperative duty to give its consideration to the measure. Thirdly, the mere fact that considerable public criticism, intemperate and, I believe, ill-directed, though much of it may be, has been directed against this measure makes it necessary that there should be the fullest opportunity for debate so that, if justification there is. it may be shown on the floor of the chamber. Finally, as the Leader of the Opposition (Senator McKenna) has said, this measure relates to matters of the utmost complexity affecting most keenly the business affairs of the producing section of our people. It demands our attention for more than the periodbetween now and 5.5 p.m. to-day.
– I too protest againstthe application of the “ guillotine “ to thismeasure. I agree completely with what the Leader of the Opposition (Senator McKenna) and Senator Wright have said. The application of the “guillotine “ to the discussion of legislation is becoming almost a daily happening in this chamber. Without wishing to be in the least personal, I suppose that the main reason for the curtailment of the debate on this measure is that it will suit the personal convenience of the Minister for National Development (Senator Spooner).
– It has nothing to do with that at all.
– Then I am sorry.
– And so the honorable senator should be.
– I thought that the Minister wanted to be free of the business of this chamber by to-night so that he would be able to attend, to other matters which, although important iD their own right, are not important enough to warrant the truncation of this debate.
– I shall be present at the sittings of the Senate next week.
– If that is so, I can see no reason at all for the “ guillotining “ of this bill. The only reason that I could think of was that the Minis tei was eager to be free of his parliamentary duties before leaving for Great Britain. If that is not the reason for the curtailment of the debate, there is no reason at all. As Senator Wright has said, this measure has been the subject of tremendous publicity and controversy.- It is true that much of the criticism has been misguided and completely unfair. Nevertheless, the Senate should welcome the opportunity to have the measure fully discussed. It is bad enough for a government to “ guillotine “ an opposition : in this instance the Government’s own supporters are being “ guillotined “ and they do not like it. Honorable senators have come to this Parliament from all over Australia and many of them wish to say a few words about this most important measure which has aroused such wide public interest, but obviously not all the 60 members of this chamber will have an opportunity to make a second-reading speech before the debate is terminated at 3.30 p.m. This is a travesty of free -speech. There are at least eight members of the Opposition who would like 4o speak and I am certain that, as the result of the educational period that ^honorable senators opposite have gone through in order to make themselves as familiar as possible with the contents of this measure, a substantial number of them would like to speak upon it. If, as has been suggested, the Senate is to remain in session during the whole of next week, there can be no possible justification for the application of the “ guillotine to this measure. The Opposition has cooperated with the Government in expediting the passage of most of its important legislation and therefore the fullest opportunity should be given to honorable senators to debate legislation such as the bill now before us, which is of tremendous public interest. In a relatively few hours we have dealt with a large number of measures and it cannot be said that Opposition senators are opposing this proposal merely for the sake of opposition. A reasonable opportunity should be afforded to discuss all important measures that are brought before us. “We have now reached the state where almost every measure of importance that comes to this chamber is subject to the “ guillotine “. That practice will do more harm to the Government and its supporters than to the members of the Opposition.
– The “ guillotine “ has been used only three times during the present sessional period.
– I used the term “ guillotine “ in its widest sense. I intended it to cover all forms of curtailment of debate, including the application of the gag. Honorable senators would like to learn how much substance there is in the newspaper propaganda that has been indulged in during the last fortnight in relation to this bill.
Already, proposed amendments to the bill have been circulated which will open up wider angles of discussion during the second-reading stage. The Opposition vehemently objects to the limitation of the debate on this most important measure. We see no necessity for it as the Minister for National Development, who is in charge of the bill, will be in his place in the Senate next week. Even if he were unable to be present next week, there would still be no justification for the hasty passage of the bill to-day because other Ministers are competent to handle it on his behalf. The use of the “ guillotine “ will give to the people the impression that the Government has something to hide. The amendments that have been circulated indicate that it has already had second thoughts about the measure and the people are concerned about it.
– I associate myself with the opposition to the application of the “ guillotine “ to this most important measure. It is well known that the bill has been available in the Senate for some considerable time, and also that the Opposition has agreed with the Government to expedite the passage through the Senate of all measures of relatively minor importance. In almost record time, less important matters have been disposed of to permit the Senate to have an adequate opportunity to review this measure, which so vitally affects many sections of the community. The bill contains features that are not normally found in legislation brought before us, and it embodies a serious departure from principle insofar as it is designed to have retrospective effect to override decisions made by the High Court of Australia. It is idle for the Government to contend that an adequate opportunity is to be given to honorable senators to state their views on the bill in the time suggested. The Opposition desires to raise legal aspects of the bill, which have been referred to at length in the press, and to discuss the precedents that are being established in it. It is imperative that full and adequate time should be given to enable the bill to be properly examined and reviewed by this chamber during the second reading and committee stages. If the Senate adheres to the proposed time limit, honorable senators will be prevented from making a proper analysis of the bill. Attention has been focussed on the bill in all States and a heavy barrage of criticism has been directed at the Parliament by the press. It is an insult to democratic government to force a measure of such importance through the chamber in such a limited time. The Minister for National Development (Senator Spooner) has assured the Senate that there is plenty of time to allow a full debate. The fact is that the bill has been in the Senate long enough to permit of adequate debate, if the Government had not held up its consideration. Honorable senators have expressed willingness to sit for several days next week if necessary so that the measure may bc debated properly. The Minister has said that these iniquitous limitations of time have been applied to only three measures. Unfortunately the three measures were bills of considerable importance upon which honorable senators on both sides of the chamber wished to express their views, but the Government has taken charge and has prevented them from doing so.
This matter goes beyond merely stultifying debate on some ordinary measure. The Government is acting in a dictatorial fashion. It is not giving honorable senators on either side of the chamber an opportunity to express themselves adequately or to move amendments. This measure involves an important basic principle. It requires far wider debate than does any ordinary measure that comes before the Senate. The time that has been allotted for the committee stage is particularly brief. The Government knows very well that Opposition senators propose to submit several amendments. We have been forewarned that some supporters of the Government have certain amendments in mind which they wish to move and debate in committee. However, when the committee stage has been completed only five minutes will remain for the final stages. The ‘Government has shown that it is prepared to spend an inordinately long time upon machinery measures of minor importance, but it will use the “ guillotine “ freely to rush important legislation through the Parliament. The Parliament might well go to the people and ask for another charter to carry on. The Government has not received a mandate for the proposals contained in this measure. Indeed, it has departed from its election promises in a number of measures that have been before the Senate lately. Honorable senators opposite should vindicate in this chamber this legislation, which has been criticized by both the electors and the press. The debate will he gagged so that the Government shall not be answerable to any section of the Australian democracy. I protest most emphatically against the use Of the “ guillotine “ on this occasion, because the measure has been available for debate since the 9th October. I am proud of our democracy, and I had hoped that that pride would continue. The very substance of the motion now before us, which destroys the dignity, fairness and justice of democratic government, is in keeping with the line of arguments so often advanced by the Communists against democratic government. The practice of preventing important legislation from being fully debated and considered that has been followed by the Government in this chamber supports statements made by the opponents of democracy that democratic government is a farce. The Government has adopted a totalitarian attitude. Unless its supporters obey the dictates of the Government parties, they face the possibility of removal from public life. I am convinced that, were it not for the strict enforcement of party discipline, a number of supporters of the Government would cross the floor of the .Senate chamber on this motion. Because they are unwilling to risk expulsion from the parties that they support, they are compelled to stand the racket that the advocates of totalitarianism apply continually to prevent important legislation from being adequately debated.
– I rise to order. I submit that the honorable senator should confine his remarks to the motion. He is wasting the time of the Senate.
– The Minister for National Development considers that it would be a waste of time to give the bill full consideration; I consider that supporters of the Government waste time by acting undemocratically. For so long as the present practice of issuing a dictum from the top continues, supporters of the Government in this chamber will have to support the party line, and the Opposition will be treated ignominiously, because the Government, by reason of its numerical superiority in this chamber, can enforce its decisions, no matter how distasteful they may be.
– Order! The honorable senator’s time has expired.
, - I also wish to protest against the limited time that is to be allowed for honorable senators to discuss this measure, both during the second-reading debate and at the committee stage.
– Why not devote the time allocated to a consideration of the bill?
– - It is all very well for supporters of the Government to say that the Opposition should utilize the available time to the full.
– Does not the Opposition want to discuss the bill?
– Yes, our complaint is that we shall not be given sufficient time in which to do so. The Government should allow to honorable senators a reasonable time in which to discuss such a highly technical and controversial measure. I have no doubt that honorable senators on both sides of the chamber wish to express their views on the provisions of the bill. After declaring the bill to be an urgent bill, the Minister indicated that it is the intention of the Government to move a number of amendments. Honorable senators should be afforded sufficient time in which to study the effects of the proposed amendments before being required to vote on them. The Government will allow the Senate only a few hours in which to pass the measure through all its stages.
I can quite understand why the Government does not want ventilated in this chamber the reasons for the public controversy that has been aroused by this measure. The leaders of the Government parties realize that if the Opposition were given an opportunity to debate fully the various provisions of the bill, many people would waver in their allegiance to the anti-Labour parties. To obviate that risk, the Government intends to prevent both its own supporters and the members of the Opposition from fully debating the measure. All honorable senators should be fully informed of the effects of the proposed amendments, and they should be given adequate opportunity to express their views on the subject. During this sessional period inconsequential bills have been passed through this chamber in a normal manner, but whenever bills containing controversial provisions have been brought in the Government has taken steps to ensure that the debate shall be stifled. Members of the Opposition have been prevented from fairly expressing their views. The Government’s attitude has all the hallmarks of totalitarianism. The Government has protested frequently about the inroads of communism in this country, and its supporters have averred continually that they believe in the democratic system by which both sides of the Parliament are permitted to express adequately their views on any subject. Honorable senators opposite have stated repeatedly that we must fight totalitarianism in the form of communism in Australia. That there is an equal danger from the right was revealed in Europe a few years ago. It has manifested itself in this Parliament during recent months and again this morning. Because of its numerical superiority in this chamber, the Government has told the minority party, in effect, that it is not prepared to allow the members of that party adequately to express their opinions, because it has nothing but contempt for minority views. The Government is not prepared to afford to members of the Opposition an opportunity to tell the people of Australia what they consider to be wrong with this measure. The Government has continually gagged debates on measures ‘the provisions of which have aroused considerable controversy in this country.
I wish to express also my resentment and great alarm that this sort of practice is growing in the Parliament. Honorable senators will not be allowed sufficient time even to inform their minds on the proposals of the bill. If we are going to continue in this manner, obviously there will develop in this country a totalitarian system, in which the executive government of the day will merely inform the Senate what it has been decided shall be done in Australia. 11 appears to me that we are rapidly arriving at that position. We may defeat communism on the one hand and succumb to something equally bad on the other hand - a totalitarianism of the right which will destroy our parliamentary institution.
– I wish to voice my protest against the curtailment of this debate. No further support of that protest is necessary than the amendment that has been circulated in the Senate this morning. Because of the publicity that has been given to the obnoxious clauses of the bill, the Government is now trying to extricate itself from the predicament in which it finds itself, and so it has produced this proposed amendment. Much criticism of the measure from all sections of the community has appeared in the newspapers. The justice of that criticism will be appreciated by any honorable senator who seeks to inform his mind about the implications of the bill. Not only the proposed amending legislation, but also the whole of the Income Tax and Social Services Contribution Assessment Act must be considered in such a study. I endeavoured to examine the measure over the week-end, and I confess that I was not able to follow it fully, although I was assisted in my efforts by articles and opinions which have appeared in the newspapers. I should like the Government to express its views concerning land-holders-
– I rise to a point of order. I object to the time of the Senate being wasted in this manner. The motion before the Senate concerns the allotment of time for the consideration of the various stages of the bill.
– Order ! I ask Senator Ashley to confine himself to the motion before the Chair. I know that it is difficult to do so, but he must not deal with the proposals contained in the bill.
– With all respect to you, Mr. Speaker, I submit that the motion before the Chair refers to the curtailment of this debate. I have pointed out the importance of the debate, the publicity that has been given to the proposed legislation, and the need for an extension of the time allotted. I am presenting my reasons for the allotment of a longer period, and I question the right of the Minister for National Development (Senator Spooner) to prevent me from doing so.
I should, like information from the Minister concerning the position of a land-holder who decides to dispose of his property to his sons or his wife. Honorable senators may be able to present opinions which will lead to a solution of the problems involved. I am sure that all honorable senators will agree that injustice in this regard may be (lone at the present time. The very fact that the Government’s amendment has been produced in the Senate only this morning confirms my claim that insufficient time has been allowed in which to dispose of the measure. It is all very well for the Minister to say that there will be plenty of time in which to debate the subject. I wish to know the reason for this haste. Why is it necessary to hurry in this matter? After all, the Senate will be meeting again next week. If, as Senator Armstrong has suggested, the reason is that the Minister for National Development will be going abroad shortly, I suggest that that is not a valid reason. I agree with Senator Armstrong that some other Minister has the capacity to take over the conduct of the bill. However, the Minister has assured the Senate that that is not the reason for this unseemly haste. Perhaps it is that the Government wishes to cover up something that it does not want ventilated in this chamber. Is there some sinister motive behind the measure to impose hardship upon the people who will be affected by the legislation? Because the Government has not sufficiently explained its desire to curtail the debate, I record an emphatic protest.
– I desire to submit an amendment to the motion before the Senate. I move -
That the words “ 3.30 p.m. this day “, “ 5 p.m. this day “, and “ 5.5 p.m. this day “, hu left out, with a view to insert in lieu thereof the words ‘3.30 p.m. on Tuesday, the 4th November “, “ 5 p.m. on Wednesday, the 5th November “, and “ 5.5 p.m. on Wednesday, the 5th November “, respectively.
I consider that the amendment should merit the support of all honorable senators. I suggest that many honorable senators who sit behind the Ministers today would welcome an opportunity to debate this very important measure al greater length than the motion at present before the Senate proposes. It can be rightly said that income tax legislation of any description is most complex and deserves the fullest consideration by the legislature which imposes taxation upon the people. This bill is unprecedented. In the past, the Parliament has discussed a certain method of taxation. Now, for the first time in our history, the Parliament has been called upon to enact legislation to empower the collection of income tax on earnings that have been already assessed. Because of the importance of this measure and the principles at stake, the most earnest consideration is necessary by those ultimately responsible for any change in the method of taxation. Is it not right that we who represent the people should have every opportunity to seek from Ministers the reason for this proposed change? Should not we be able to give to the people concerned our considered opinion why retrospective taxation should or should not become law ?
– Order! The honorable senator is entirely out of order.
– I regret that.
– I sincerely regret it, also. I ask the honorable senator to confine his remarks to his amendment.
– I submit, Mr. President, that it . is difficult to give adequate reasons why the debate on this bill should be extended without referring to the bill. If I were to make a speech supporting an extension of the time for dealing with the measure without giv ing any reasons for my submission, I should leave myself open to a charge of wasting time. The reason why the Opposition is taking time to discuss the motion before the Senate is that great principles in relation to taxation are at stake. We consider that a protest should be entered against the action of the Government in declaring this bill an urgent measure. I consider that the Government’s motion is outside the scope of the Standing Orders. It is provided in the Standing Orders that a. measure may be declared urgent. For what purpose does that standing order exist? It should never be used in the manner in which the Government is using it. It can be properly used to prevent the prolonged discussion of a measure or it can be properly used in an emergency in which it might be necessary for the Parliament to act quickly. On such an occasion both sides of the chamber would agree to such a motion. But the Government has taken advantage of the standing order at the inception of . a debate, although this chamber prides itself on being a house of review where honorable senators may consider hasty legislation that has been passed in another place. If the Government persists in its attitude and refuses to agree that the time for the discussion of this measure should be extended, it will do a grievous wrong.
– I second the amendment. It is obvious that the time that has been proposed by the Government would ‘be useless for the discussion of a measure of this kind. There is something very sinister in the motion that has been moved by the Minister for National Development (Senator Spooner). In my opinion it has been designed for the purpose of assisting major monopolies to the detriment of private companies. That is the reason why no discussion is to be allowed concerning it. For all practical purposes, Government supporters have been reduced to the level of conscripts. Honorable senators opposite have declared themselves in favour of individual liberty and the right to express their opinions on subjects of major importance. They are now as silent as wooden dolls, although not as good looking. They have continually criticized Communists and the dictatorship of the proletariat, yet they now accept the dictatorship of the Government like so many dumb, driven cattle. That is exactly what they are. If this sort of practice continues the Senate willbe branded as a body that is overpaid, overfed and underworked. My colleagues and I are not here merely to suit the convenience of the Government. The fact that certain Ministers wish to prepare to go abroad is no reason why reasonable time should not be allowed for the discussion of the bill before the Senate. This is a highly contentious bill, which has been discussed in the press for a long time, and honorable senators have received protests concerning it from all over Australia. Yet Government supporters are prepared to acquiesce in the Government’s decision to curtail the debate. The Opposition would be recreant to its duty if it agreed to this procedure.
Honorable senators opposite have spoken scathingly in the past of the working man’s claim for individual liberty. They are now subject to the Government’s orders that they should keep quiet. It has been suggested that by opposing the motion before the Senate the Opposition is curtailing the time available for debating thebill, but if the motion is passed the time available for debating the measure will be inadequate in any case. The Government’s attitude is one of sheer hypocrisy and humbug, and is bringing this Parliament into disrepute. In other countries where the government’s methods have been adopted to a greater degree than they have been adopted in Australia, they have brought about violent upheavals. If the Government wishes to antagonize the people, particularly the workers, it has only to deny the Opposition the opportunity to debate measures of this kind. It is not a question of wasting time. It is a question of allowing the elected representatives of the people to deal with a highly contentious measure which, in my judgment, is loaded to the brim. That is all the more reason why it should be discussed fully. Unless it is so discussed, the injustices’ and anomalies that it contains will not be exposed until it is too late. Then, of course, all sorts of excuses will be made by honorable senators opposite. We on this side of the chamber are placing on record our challenge to the Government’s right to suppress us and to deny us an opportunity to discuss this measure on its merits as fully as it should be discussed. Senator Wright, too, wants the fullest discussion of this measure, and, although my political views are diametrically opposed to his, I support him on this occasion. Unfortunately, his suppressed colleagues have not the moral courage to back up his perfectly reasonable request.
Question put -
That the words proposed to be left out (SenatorSheehan’s amendment) beleft out.
The Senate divided. (The President - Senator the Hon. Edward Mattneb.)
Majority . . . . 5
Question so resolved in the negative.
Original question resolved in the affirmative.
Debate resumed (vide page 3817).
– Order ! The question is, “ That the bill be now read a second time “. All those in favour say “ Aye “ ; to the contrary-
– It is bad enough for the Minister to have applied the gag without the President seeking to rush the second reading of the bill. I understand that the motion before the chair is, “ That the bill be now read a second time “. I move -
That all words after “ hill “ lie left out, with a view to insert in lieu thereof the following words: - “be delayed and redrafted to provide for the elimination of those aspects of the bill which, against the will of the taxpayer, retrospectively increase liability to taxation ‘’.
I submit the motion because of the iniquitous provisions of this bill and of the wide application of the amendments which it proposes to the principal act. There has been great controversy on the subject of the retrospective aspects of the measure. I am sure that very few honorable senators have been able to examine its ramifications and ascertain for themselves the extent of its effect on the taxpayers of Australia. I have noticed that the Government has made a compromise in respect of the retrospective provisions of the bill in an amendment which has been circulated and will be moved by the Minister at the committee stage. The amendment, however, does not touch upon the retrospective aspect of the measure in relation to depreciation or the averaging system for primary producers. The provisions relating to depreciation and the averaging of the incomes of primary producers are to remain unaltered. Apparently the Government has devised this compromise in an attempt to hoodwink the Senate into the belief that it proposes to delete the retrospective provisions of the measure. At this stage I foreshadow an amendment which I propose to move in committee. It is designed to add at the end of clause 24 (1.) the following words : -
Provided that the said sections shall not be applied to increase the amount of tax otherwise paid or payable iri respect of income of the years of income which commenced on the 1st day of July, 1950, and on the 1st day of July, 1951, and of the third period ended on the 18th day of September, 1952, except insofar as may lie necessary to give effect to a notice of agreement given under sub-section (2.) under section 27 or under sub-section (2.) of section 1.0.
Before I deal specifically with the clauses of the bill, I want to make some general observation on the assessment of income tax. In the initial stages of the general election campaign prior to the election to office of this Government a specific promise was made by the antiLabour parties that if they were elected to office they would reduce taxation. The people have only now awakened to the fact that not only has the Government made no attempt to honour its promise, but also they are mulct in much greater amounts of taxation than they were previously. The Liberal party is now backing the Australian Country party in its protests against the criticism that has been levelled at the Treasurer (Sir Arthur Fadden). The right honorable gentleman cannot complain at the epithets that have been hurled at him because of his actions, for when the late Mr. Chifley was Treasurer and the right honorable gentleman himself was sitting in Opposition, he had this to say about Mr. Chifley’ s, handling of the portfolio of Treasurer of the Commonwealth -
If a footpad fails to find a roll of notes in my wallet for the very good reason that I left them at homo, how can he successfully plead for clemency at his trial by urging that ha saved me a considerable sum of money?
Surely that is one of the worst statements that could be made about a Treasurer of the Commonwealth. The Treasurer must be prepared to stand up to the criticism that has been levelled at him for his failure to honour the promises he made to the people prior to the last two general elections. Examination of the figures relating to the yield from income tax reveals that, in 1949, the total collections of income tax amounted to £279,600,000, but that by 1951 they had risen to £341,900,000, in addition to which a special wool tax was levied on primary producers.
– It was not a special wool tax. It was a deduction.
– It was used to pay the taxes of the wool-growers and they were told that it was a special wool tax paid in advance. I do not know who is right - the Minister of the day or the honorable senator who is squealing now. The fact is that the Government collected £451,400,000 in income tax and social services contribution in that year. In 1951, those collections increased over the previous year by £171,800,000 including the fine that was imposed upon the woolgrowers. In 1952, the total income tax collections rose to £551,100,000. That almost equalled the entire national revenue in 1949. It represented an increase of £99,600,000 over the previous year’s collections. Yet this Government promised that it would reduce taxation ! It includes among its supporters the members of the Australian Country party, who said that they would guard the interests of the primary producers. Instead, they made a set at the primary producers, imposed an extra wool tax, altered the averaging system and so took £45,000,000 more from them. This year the Government proposes to collect £552,000,000 in income tax and social services contributions. That means that instead of reducing taxation, the Government will collect £900,000 more than it collected last year without taking into consideration indirect taxation. From the 1st July, 1950, to the end of this financial year, the Government will have collected £715,700,000 in income tax, with which is associated social services contributions and the special wool tax-
– That is only a flea bite compared with the amount that a Labour government would have levied.
– The primary producers are paying the extra taxation and all who pay income tax must believe that a big flea is biting them. Possibly they are being bitten by some of the bugs that belong to the parties who support the Government. They promised to reduce taxation, but they have increased it out of all proportion to previous charges. The Government has promised a reduction of income tax this year. It amounts to a paltry £23,000,000. Added to all other reductions of taxation, the total that is to be remitted by the Government this year will amount to £49,500,000. That is a sop to those who pay income tax for the Government continues to collect considerably more than it or any other government has done in the past. When the deduction of £23,000,000 is analysed, honorable senators will discover that big financiers will share in that relief, but more will be obtained from them in other ways by the alteration of assessments that is proposed under this bill.
The Government’s estimates indicate that it expects to get more revenue this year than it did last year. It has already overtaxed the people. That is proved by a statement in the Auditor-General’s report that £1S5,000,000 in taxes was not collected at the end of June last. In the previous year, £56,000,000 was not collected but the amount has risen following an additional impost. The AuditorGeneral stated that there were five reasons why that amount of £1S5, 000,000 was not collected, but they may be summed up in the inability of taxpayers to meet their demands. Either the Government is absolutely irresponsible with regard to its election promises and taxation proposals or it is deliberately attempting to break clown the economy of the country so that it can establish a dictatorship. Strength is added to that belief by the dictatorial attitude that has been adopted by the Government in imposing this measure upon the people. In 1951, the Government collected total revenue amounting to £718.500,000. In 1952 total collections rose to £919,000,000. That was an increase of £200,400,000 in one year. The report of the Auditor General shows that of that total of £919,000,000, the sum of £1S6,200,000 has not yet been collected. The Government has expanded the taxation field in order to gain additional revenue. Last year additional revenue of £200,400,000 was collected.
The Government parties represent different sections of the community. The Australian Country party has always claimed to represent principally the primary-producing interests, while supporters of the Liberal party have claimed that they represent the working people and other people. However, their actions in recent times have made it clear that they do not represent the working people in any shape or form. The Liberal party, which I call the “ Shiner “ party, assists the Australian Country party to get at the primary producers of this country. The Treasurer, who is the leader of the Australian Country party - which I call the “ Snollygosters “ party - has taken £109,000,000 from the wool-growers, and has extracted an additional £45,000,000 from the primary producers generally as a result of the alteration of the averaging system in relation to taxation.
The hill contains provisions aimed specifically at primary producers and private companies. Nearly 80 per cent. of primary-producer partnerships pay income tax, and nearly 70 per cent. of the private companies in Australia are engaged in primary production. Although the Government has claimed that the bill will provide concessions for primaryproducer partnerships and private companies, several of its provisions will impose retrospective taxation. Clause 7, clause 10 and clause 18 all relate to retrospective assessment. I have no quarrel with proposed concessions, so long as they will be actual concessions.
SenatorLaught. -Does the honorable senator mean retrospective concessions?
– Naturally, I would accept retrospective concessions from a government which claims that it wants to help the primary producers, whom it has treated unjustly in the past. But retrospective taxation is not a concession.
SenatorLaught. - The Chifley Government never granted retrospective concessions.
– That is an entirely different matter. I remind Senator Laught that that Government did not impose taxation retrospectively. The provisions of clause 6 in relation to the disposal of trading stock are very wide. They cover any change of business at all. The clause refers to taxpayers, not merely companies or partnerships. Proposed new section 36 of the principal act reads - (1.) Subject to this section, where -
The scope has been widened by the inclusion of gifts. Formerly, members of a partnership have been able to give to members of their families an interest in the business without the transaction being taxable at market prices. The proposed new section will now render such disposal of trading stock taxable. The bill also provides for retropective taxation in this connexion. The only concession that the Government proposes in relation to transactions by partnerships involving trading stock is that the partners concerned in such transactions shall be given the right to elect, if they unanimously agree to do so, to be treated as a continuing business, for taxation purposes.
Clause 7 provides for certain exemptions in relation to property that has changed ownership in terms of clause 6. Sub-section (2.) of proposed new section 36a provides - (2.) Where-
The effect of these exemptions will be to make a re-assessment. The taxation assessments will be retrospective to 1950 in relation to the goods of partnerships that have changed hands within family groups. Such transactions were not taxable in 1950. Clause 10 makes similar provisions in relation to depreciation in cases where agreements for the variation or disposal of partnerships are not reached before August, 19.53. In this instance a little longer period will be allowed.
SenatorSpicer. -Where is it provided that a re-assessment may he made?
– Clause 7 provides for re-assessment back to 1950. It is quite clear that the clause provides power to re-assess those transactions at 1950 rates. The effect of clause 18 is similar. Why has the Government done such a stupid thing? Why has it decided on a system of pernicious and vicious retrospective taxation, particularly in relation to primary producer partnership ? Perhaps the reason ‘lies in a judgment of the High Court of Australia on the 5th November, 1951, to which the Treasurer has referred in his explanatory notes on decisions in disputes relating to changes of partnerships over the years. Those disputes culminated in the case Rose v. The Commissioner of Taxation. 1 have before me the Legal Monthly Digest. I digress for a moment to suggest to the Government that the House Committee should consider making available more volumes of law reports for perusal by honorable senators. All the volumes have disappeared. I have been obliged to refer to the Legal Monthly Digest for particulars relating to the case of Rose. According to the December, 1951, issue of that publication, the following is a summary of the proceedings: -
Disposal of Whole or any Part of Assets of Business - Pastoralists Admitting Sons into Partnership. Sections 31 and 59 of the Income Tax Assessment Act 1930-1949 are directed at the disposal of the entirety of ownership in assets and not at the conversion of single ownership into collective ownership. The pastoralist admitted his two sone into partnership in his business and gave and transferred to them equal shares with himself in the assets and profits.
Held: That the transaction did not amount to a disposal of assets within Sections 3G or 59, and the pastoralist was not assessable to income tax under those Sections in respect of the transaction. The partnership was not, for the purpose of those Sections, to be considered as a distinct entity, and the transaction amounted to imparting to the sons undivided interests in the assets as an incident of their admission into partnership.
I pause in order to point out, for the benefit of the Attorney-General (Senator Spicer), that in that instance transfer of ownership was not assessable for taxation purposes. The bill now before the Senate proposes to give the Taxation Branch the right to assess such transfers, notwithstanding the fact that the High Court has held that it is wrong to do so.
– The honorable senator should study the amendment which has been circulated.
– I shall deal with the amendment at the proper time, which is during the committee stage. If the Government has not the courage to provide the Opposition with sufficient time in which to discuss this measure properly, it must put up with the kind of criticism that I am now making. In any event, the amendment represents a compromise. It still provides for retrospective taxation.
It seems to me that some member of the Government has become spiteful because of the judgment of the High Court, to which I have referred. That responsible Minister has said, in effect, “ These people cannot be allowed to go to the High Court, obtain a decision in their favour and get away with it. We shall bring down legislation to cover such cases and to make them assessable for income tax purposes if any consideration at all was given”. I suggest that that is why this bill is now before the Senate. To make income tax retrospective is absolutely unjust to persons who have already submitted their income tax returns. The compromise amendment does not deal with the averaging system or with depreciation allowances. It refers only to clause 7 of the bill. In fact, the Government proposes to make a discriminatory assessment of past income. It is discrimination with a vengeance. I believe that the proposal is inequitable, unjust and extremely dangerous.
Honorable senators may have noticed that the retrospective provision is cunningly and neatly concealed. On reading the measure, one could be pardoned for thinking that it was quite in order. Not much notice might be taken of clause 24, which at first glance is a formal clause, but which, on examination, is found to render all the other sections to which I have referred retrospective in their operation. It is to clause 24 that I propose to move amendments during the committee stage.
Clause 6 refers to “ a taxpayer “, which is a general term, whereas clause 7 deals specifically with particular taxpayers, namely partnerships. Honorable senators will see that it is proposed to alter the method of assessment of tax in relation to private companies. When a private company has profits it is liable to a primary tax of 5s. in the £1 for the first £5,000 of such profits and fs. in the £1 if the profits exceed £5,000. It is now propo.ed to make the tax on undistributed pro fits a flat rate. Generally speaking, i he proposal means that a company must distribute all its profits less a retention allowance. If it does not do so it will become liable to a flat rate fine of 10s. in the £1 on all profits which have not been distributed to shareholders. Dividends normally flow to the shareholders who pay income tax according to their liability. The bill proposes that if undistributed profits are not disseminated within two months before the end of the income year, the Commissioner of Taxation may hold that they are, in fact, undistributed profits and liable to the flat rate of tax of 10s. in the £1. I point out that many small companies retain some of their profits, over and above the statutory retention allowance, and distribute them at a later date. Under this legislation, such profits will not only be subject to primary tax, but they will also he subject to undistributed profits tax. When they have been distributed at a later date, the recipients would also be obliged to pay tax on them. In that way undistributed profits could be taxed at the rare of 15s. in the £1 and in addition ri:e shareholder recipients would pay a further tax at the personal rate.
– A company is not forced to hold extra money. It can distribute the money.
– The Government proposes to force companies to distribute such money before the end of the financial year.
– The Labour Government used to force them to distribute the whole of it.
– Yes, but it should not be forgotten that when a dividend is paid a rebate of tax is allowed. The Government proposes to do away with that rebate. In our time there were only two applications of tax in such cases. In future, it will be possible for three applications to be made.
– There was no right of retention when Labour was in office.
– The Minister is apparently arguing that because something was right or wrong in the past it is necessarily right or wrong to-day. He should be aware that different times demand different circumstances. The Australian Labour party has never at any time said that it believes in a capital levy.
– We have often heard such a belief expressed in the Senate by members of the Opposition.
– No doubt it has been made by individual senators. However, the members of the Australian Labour party stick together on main principles, as do the members of the Government parties. I contend that by means of this bill the Government is proposing insidiously to place a capital levy on private companies. The Government has endeavoured to hide its actions under a mass of verbiage. It is afraid of criticism so it has restricted this debate and arranged for it to be held at a time when the proceedings of this chamber are not being broadcast.
This bill provides for an income tax concession for educational purposes. It provides that £50 may be deducted from the amount of taxable income in respect of a dependent child who attends a school at which fees have to be paid for its education. But no provision has been made for such an allowance in relation to part-time education or in relation to the full-time education of the children of working people whose children do not attend private schools. Many parents whose children attend high school are involved in considerable expenditure in purchasing text-books and other educational requisites. Yet, under the bill, they will not be permitted to claim the concession of £50. Many young people, including apprentices, attend technical classes at night, but the concession has not been extended to their parents. Only the wealthy section of the community which can afford to pay private school fees will benefit from it. I had hoped to move an amendment at a later stage of the debate in connexion with the educational concession, but it now appears that I shall not be given an opportunity to do so. The Government’s proposed amendment is only compromise. The bill will still relate to the year 1950-51 in some of its phases.
– The phases that assist the taxpayer.
– The amendment does not affect the subject of depreciation which is referred to in clause 10 and it does not affect the averaging system which is referred to in clause IS. I ask the Government to agree to my amendment so that the Senate may examine this matter and arrive at some other compromise than that contained in the Government’s proposed amendment.
– I am indebted to the Minister for National Development (Senator Spooner) for announcing the amendment that he proposes to move at a later stage. I am also indebted to Senator O’Flaherty for circulating his amendment. If it means what I believe it to mean I shall oppose it. This is a bill to alter the income tax assessment law. Senator O’Flaherty devoted a good deal of time to a criticism of the amount of taxation that had been collected in the past. This subject is not relevant to the bill, but I cannot allow the opportunity to pass without stating that a very wrong comparison has been made by Senator O’Flaherty. During the last few years the income of the community has increased enormously. The increase has been far greater among the rural sections of the community than among other sections. It is quite unfair and wrong to allege that the Government has extorted money by way of income tax. In the financial years 1942-43, 1943-44 and 1944-45, a person who had a dependent wife and two children, and who received £400 a year, paid £46 10s. in income tax and social services contribution. A person with the same income and number of dependants would now pay £2 8s. A person with three dependants and whose income was £1,500 a year in the years to which I have referred paid £538 in income tax, whilst at present he would pay £208. A person with similar responsibilities in receipt of £5,000 would have paid £3,432 8s. in those years, whereas at present he would pay £1,914 3s., a reduction of £1,500. His present tax liability would also be £194 less than it would have been during the last year of office of the Labour Government.
– The Government looks after the big man all the time.
– And the little man, too. The Government has made decided improvements in the method of assessing income tax. For many years governments, whether Labour or LiberalAustralian Country party, have found it difficult to devise a fair method of assessing the tax payable by private companies. Year after year, efforts to deal with this problem have resulted in further complexity. It is to the credit of the Government that it has presented the method contained in the bill to the Senate. A government has a responsibility to obtain revenue so that it can carry out its vast functions. It would be seriously criticized if its method of assessment were open to evasion by devious means. As the Minister for National Development mentioned in his second-reading speech, the bill will place private company taxation on a more solid foundation. It will discard the old approach to taxation and substitute fresh proposals involving substantial changes. In framing the provisions of the bill the Government has had the advice of the expert committee on taxation.
One of the features of the proposed plan is a liberalized scale of retention allowances. I commend the Government for that proposal. When a private company makes a profit it first pays a flat rate of tax at the rate of 5s. in the £1 in respect of the first £5,000 of profit. After a company has paid this tax, what is a fair amount for it to retain in its business, tax free ? The committee decided that, on sums of up to £6,000. the old retention allowance percentage was satisfactory but that, on sums in excess of that amount, a higher percentage should be allowed. Then comes the question of the taxing of undistributed profits. The normal practice is for companies to distribute their profits, and that is encouraged by the Government. When profits are distributed to shareholder.? they may be re-invested in the company if the shareholders so desire. Thus, undistributed profits tax may be avoided. If on the other hand a company elects not to distribute its profits, those profits, under this legislation, will be taxed at a flat rate of 10s. in the £1. Previously the tax levied on undistributed profits was calculated by an involved method which required many hours of the valuable time of tax assessors, and the result was very little different from that to be achieved by the amendment provided for in this measure. Therefore, from the point of view of simplicity the new method has everything to commend it.
I pass now to the allowance for education expenses. I remind honorable senators opposite that although they were in office for eight years in this Parliament, they did nothing to ease the burden that has to be carried by the family man who desires to have his children educated at a college, convent, or university. Many people for reasons which they consider to be sufficient prefer not to take advantage of the education facilities provided under the various State systems. The proposed concession is an experimental venture into a new sphere. The Minister said in his second-reading speech that the Government would not hesitate to widen the scope of this concession if it could safely do so without opening the way for abuse. I commend the Government for this experimental venture into the realm of income tax concessions for education expenses. The proposal will, no doubt, encounter some criticism. Some people may say that this proposal goes too far, and others may say that it does not go far enough, but I welcome the Government’s frank approach to the problem. As one who lives in the country and is in close contact with people who live in isolated areas, I commend also the Government’s decision to permit taxpayers to claim as an income tax deduction fees paid to tutors or governesses for the full-time education of children. This move will be particularly appreciated by people who live in such remote areas as the far north of South Australia. I have been privileged to meet and to mix with many of those people, and I know how much they will welcome the concession.
Senator O’Flaherty referred to the provisions of this measure relating to that hoary old subject, the taxing of goodwill. A few months ago we had before us a measure which was the first instalment of the Government’s plan to straighten out the provisions of the act relating to this subject. The report of the Commonwealth Committee on Taxation has now been received, and the Government has adopted its recommendations in full. As honorable senators are aware, there is always a clash of interests between an out-going vendor and an incoming purchaser in relation to the taxing of the value of local goodwill. The Government is adopting a sound liberal principle in permitting the parties to such a transaction to decide in their agreement how the taxation question is to be decided. It is, of course, to the advantage of a purchaser to have whatever sum he has paid for goodwill deductible for income tax purposes over the years, and normally it is to the disadvantage of a vendor to be taxed in the year in which he disposes of a business, on the value of goodwill together with whatever profit he may have made in that year. However, the Government, in accordance with true liberal principles, will permit the parties to decide for themselves how tax payments are to be adjusted. I am sure that the business community generally will welcome this innovation.
Although I listened attentively to Senator O’Flaherty, I did not detect in his speech any indication that he had a clear conception of what the partnership provisions of this legislation mean. I shall endeavour to outline the position as I see it. An important judgment was given by the High Court of Australia on the 5th November, 1951, in what has become known as the Rose case. For many years prior to that judgment, if, say, a farmer desired to take his wife and perhaps two or three children into partnership with him, a new income tax identity was established. I refer to the partnership identity. The farmer would have his stock, perhaps 1,000 sheep, in his return at a fairly nominal value, say £1 a head. While sheep were valued at about that figure, they would go out of his return into the return of the partnership at £1 a head, and no profit would be deemed to be made. However, when the price of sheep rose to SA and £5 a head, the matter became of great financial importance to the Taxation Office. The taxation authorities required the sheep to be included in the partnership returns at the high market value then ruling, but required the original owner to put them in his return at the same high value. Consequently he was deemed to have made a profit which, in some instances, would be £2 or £3 a head. In the Rose ease, the High Court, in effect, held that the Taxation Office was wrong in that matter. However, I submit that it is quite appropriate for this Parliament now to say, “ Despite what the High Court has ruled we want the law to be so and so “. There seems to be nothing wrong with that. Senator O’Flaherty was somewhat concerned about the effect of this measure. As the law has been for many years, the people who could take advantage of the decision in the Rose case, are those who were being assessed round about the time of that judgment, and who objected to the old principle being applied. There is a certain limited time in which such objections may be filed. In answer to a. question asked by Senator Seward shortly after the Rose case had been decided, it was pointed out in this chamber that only a limited number of people could take advantage of the High Court’s decision. They were those who had entered a notice of objection. This bill will enable a number of other people to gain the benefit of the Rose case. I give the Government full marks for its approach to the problem of retrospectivity. The retrospectivity provided for in this bill is a benevolent retrospectivity. The Government is merely providing that every taxpayer who has been assessed in a manner contrary to the decision in the Rose case since the 1st July, 1950, may, if he so wishes, apply to be re-assessed in the light of the Rose case. It is rather important that all the taxpayers who wish to take advantage of the decision should be able to do so, but that we should not force unwilling taxpayers to be assessed upon the basis of the High Court’s judgment. We must realize that it is in the interests of individuals who are entering new partnerships to have stock estimated at the higher value. Therefore, we are allowing all taxpayers who wish to take advantage of the Rose case to do so, notwithstanding that the law has always provided that unless a notice of objection has been entered the claims of taxpayers will not be considered.
I come now to the Government’s amendment of clause 7. When the Rose case was decided, obviously lawyers, tax agents and accountants read the judgment with great interest. Certainly they would read it at first with caution pending a possible appeal against it. However, assuming that the time had passed for the lodging of an appeal, lawyers and other interested individuals would be entitled to advise their clients to arrange their affairs according to the decision in the Rose case. It is their duty to advise their clients on matters concerning the law. The Government has shown great understanding of the difficulties experienced by partnerships during the period between the 1st July prior to the announcement of the decision of the Rose case and the introduction of this bill. It has said that any taxpayer may carry forward his stock at the old book value, provided that, when the new partnership is established, not less than 25 per cent, of the interest remains unchanged, and all parties agree to the retention on the basis of the book value. In cases where there is a retention by the original owner of less than a 25 per cent, interest the Commissioner of Taxation has discretionary power, so long as he is satisfied that upon the change the property becomes an asset of a bona fide partnership of the persons who own the property after the change. The Government is to be congratulated upon having given the commissioner such discretionary power. Section 94 of the principal act which has been in operation for many years vests in the commissioner discretionary power to deal with the assessment of partnerships. He has the right to assess additional tax where a partner is not in receipt and control of his share. It is not unusual to give the commissioner power to determine the bona fides of a partnership. The Government has treated in a very fair manner those who have entered into partnership arrangements both before and since the decision in the Rose case. Despite the criticism that has been levelled at the Treasurer by the Sydney Daily Telegraph and the Sunday Telegraph, many South Australian accountants who have closely examined the proposals embodied in this bill have found no fault with them. I was interested to note that Senator O’Flaherty, in his attack on the bill, did not cite a specific case of hardship that would arise as the result of its provisions.
– I do not deal in personalities.
– The honorable senator refrained from dealing with the realities of the proposal. If there is retrospectivity in the provisions of this measure it is. a benevolent retrospectivity for which the Government is to be commended.
I propose now to deal briefly with some minor aspects of the bill which are nevertheless of great importance to the people of South Australia. The bill provides that the income of community hospitals shall be exempt from tax as from the income year 1951-52. There is a certain amount of retrospectivity about that proposal, but it is a feature of the bill that I am sure all honorable senators will thoroughly endorse. Community hospitals are usually conducted by religious and charitable organizations. As the Minister has said, community hospitals, being essentially public institutions, are not carried on for profit. South Australia has been developed to its present position as a State of great importance in the federation mainly because of the encouragement given by successive State governments to community efforts. I also commend the Government for its decision to assist those engaged in the mining of uranium by exempting from income tax profits derived from the mining of this important mineral. As honorable senators are aware, apart from deposits in Commonwealth territories, the most important uranium deposits in Australia are located in South Australia. This decision is very much appreciated by the people of South Australia, particularly by those gallant men who go into the remote areas of the north to prospect for this strategic mineral.
I congratulate the Government on its simplification of income tax returns and of the methods of assessment. When it assumed office in 1949 it immediately devoted its attention to the need for the simplification of income tax procedure. The preparation of income tax returns had always been a complicated task for most taxpayers. I commend the Commissioner of Taxation and his officers for the very desirable improvements they have devised in the form of the income tax return during the last three years. The Government is also to be congratulated on having adopted a system of concessional deductions to replace the former rebate system. These improvements are especially appreciated by taxpayers in the lower income groups.
The Government granted a desirable concession in relation to the taxation of elderly persons in receipt of small incomes. Under the administration of the Labour Government all persons in receipt of an annual income of £104 or more were obliged to pay income tax. Last year, under the administration of this Government, complete exemption was granted to males 65 years of age or older, and females 60 years of age or older who were in receipt of less than £234 a year. In the case of married couples, where a husband and wife were living together, the total exemption granted was £468. This year, the Government has increased the total exemption to married couples living together to £507. The old folk in the community very much appreciate these concessions.
I pass on to refer briefly to other improvements that have been effected by the Government during my short term in this Senate. The method of self assessment which was introduced three or four months ago will be greatly appreciated by taxpayers. This system will to a great degree lessen the disadvantages and dangers that were inherent in the provisional tax system introduced by the Chifley Government in 1944. When the advantages of this bill, which is an assessment and not a revenue measure, are fairly reported in the press, and the people understand them as they should do, the Government will be thanked and not criticized for having introduced it. I support the bill and I oppose the amendments proposed and foreshadowed by Senator 0’Flaherty
– The principal matters with which I am concerned in relation to this very important measure are the retrospective applications of certain of its clauses and the new provision relating to the taxation of private companies. Before I embark upon a discussion of them I want to touch upon three other matters. First, however, let me take the opportunity to express my personal congratulations to Senator O’Flaherty upon his speech on the measure. Whether or not one agrees with his contentions, it is obvious that he has given a great deal of thought to it.
– Hear, hear !
– I also congratulate Senator Laught upon the objective and thoughtful contribution that he made to the debate.
The first matter to which I wish to refer is the allowable deduction in relation to the spouse and other dependants of a taxpayer. These are set out in section S2b of the act and are as follows: - £104 for a spouse; £104 for a daughterhousekeeper; £7S for the one child under 16 years of age; £52 for other children under 16 years of age; £78 for a student child; and £78 for an invalid relative over the age of 16 years. Having regard to the manner in which the cost of living has increased since these amounts were first fixed in December, 1950, it is now impossible to maintain dependants upon the concessional amounts allowed. I point out that since these allowances were fixed the basic wage has risen from £7 2s. a week to £11 lis. a week. If one proceeds on that comparison - I suggest that it is a fair one - the allowable deductions should be increased by approximately 100 per cent. The second matter that I wish to touch upon is the liberalization of the income tests applicable in relation to allowable deductions for dependants of a taxpayer. They are set out in section S2b (3.).
– One of the concessions relates to a student child. From the allowance is to be deducted the value of any assistance provided by the Commonwealth. In the case of an invalid relative, the amount of any pension depreciates a3 an allowable deduction at the rate of £1 for each £1 by which it exceeds £52. I suggest that that is a very steep provision. Having regard to the general depreciation of the currency, I suggest that there should be a substantial alteration of the income test. I put it to the Senate that that would be a far more practical and human approach to the matter. It would give an amelioration of income tax to a wide spread of persons, particularly to the most deserving person in the community, the family man. I recommend to the Government that it might well have been better for it to expand from that point concessions of that nature rather than to grant relief in the first instance to those who paid land tax.
With those comments I pass to the third important but relatively minor aspect. I congratulate the Government upon being the first to sponsor an allowable deduction in respect of money that is expended upon educational facilities. That is plainly a move in the right direction. I realize that as it was stepping into a new field, the Government has made a cautious and tentative approach to the matter, but I think that it has been somewhat timid and there are obvious criticisms of the provision that it has made. I shall detail a few of them in the hope that the Government will give them consideration. The basis of that provision is too narrow. It is restricted to money that is paid to a school, university or institution of that nature. Some schools sell text books to the pupils. Some do not- do so. There may be two taxpayers, each with a child in the same education year, using the same text books. One child might pay the school and the other might obtain its books from a bookseller in the city. One parent would be granted a concession in respect of that payment and the other would gain no benefit. Honorable senators will see the obvious weakness of a provision of that kind. The deduction is not wide enough to cover the expense incurred by a father living in the country who is obliged to send a child to the city and to pay travelling expenses and board even though the child may obtain free education in the city in a specialized sphere. That is a second reason why I believe that the basis is too narrow. I see a difficulty were a payment is made to a residential school in a lump sum covering, not only education, but board and sustenance also. Who is to allocate the amount paid for education against the amount paid for maintenance and sustenance?
– The school does that.
– That is a matter which needs clarification. I think that that one relatively minor point is an example of the difficulties that arise under the section as it is drawn. There is a further provision that the student child must be under 21 years of age. Many full-time students, particularly those attending the universities, are older than 21 years. I am thinking particularly of medical students who, in their later years in the university, are probably a heavier financial burden upon their parents than they are at any other time of their careers. I suggest that this benefit might be extended to a full-time student at a university or in any comparable branch of study or educational activity. The other requirement in the section as it is drawn is that the beneficiary or the dependant must be a. full-time student. That provision could operate very harshly in many cases. In the various law schools or in some of them in Australia, there is a. requirement that the student must do three years’ articles. He is prohibited by the terms of the course from engaging in any employment, perhaps for two years, and then he is compelled to serve articles as a part of his educational course. At ‘the University of Sydney a student is compelled to serve three years’ articles. He receives a small nominal remuneration, often no higher than 15s. a week, during that period. It is not enough to cover his tram fares. I suggest that the Government should revise the narrow requirement that the student must be a full-time student. Subject to those criticisms and comments, I positively commend the Government for initiating this move.
I shall refer now to the important matter that was the subject of the amendment which has been moved on behalf of the Opposition by Senator O’Flaherty. It provides that the bill be delayed and redrafted to provide for the elimination of those aspects of the bill which, against the will of the taxpayer, retrospectively increase liability to taxation. I give that amendment my cordial support. Before I deal with the bill, I wish to make some observations upon the subject of retrospectivity or retroactivity as His Excellency the High Commissioner for Canada assured me during the adjournment that it should be called. He is probably correct on that point. There is noquestion about the Commonwealth’spower to pass retrospective legislation. That was determined positively so long ago as 1915, in the Kidman case. Incidentally, I was associated with that case and heard its presentation and the judgment.. In that case, the High Court of Australia held that the Commonwealth had power even to make criminal law retrospective, and apply it to an action according to Commonwealth law that was non-existent when the act was performed. A conviction was obtained in that case, the first under the criminal jurisdiction of the High Court that was based upon retrospective legislation. Therefore, on the matter of power there can be no doubt.
No objection can be offered to retrospective legislation that confers a new right or a benefit or eases a burden or liability, but it is a different proposition when retrospective legislation takes away a right, imposes a burden or increases one, or creates some new liability with retrospective operation. I would say that that type of legislation, with rare exceptions, is unconscionable, indecent and offends that sense of fairness that is inherent in the human mind. Apart from rare cases, it is an offence against natural justice. That is so clear that it is a wellestablished rule of interpretation in every British Court that the courts, in construing legislation, lean very strongly against an interpretation that will give retrospective effect to an enactment. They hold that the clearest intention must he expressed by the legislative before retrospective effect will be given to an enactment of that type.
By way of illustration, I select a very simple hypothetical case that is not connected with taxation to show how retrospective legislation can work with iniquity. A man may have walked down the right-hand side of a road in a onestreet country town on the 1st July, 1950. At the time there was no law relating to such an activity. He was free to walk on the left or the right or in the centre of the road as he chose. More than two years later, a law is passed requiring those using that particular street to keep to the left and making that law retrospective from the 1st July, 1950. The man who walked down the street on the righthand side on the 1st July, 1950, offending no law at that time because there was none, now becomes an offender. He is liable to prosecution, conviction and punishment. Thus an act, which was innocent when it was performed, is translated retrospectively into an offence against the law. Although that is an extremely exaggerated example, it is a very clear one illustrating what takes place when retrospective legislation operates. I would say that no free or civilized community would tolerate that kind of thing for a second. That proposition and the popular reaction to it is not di fferent when, in a civil matter, the law imposes a burden or increases a liability with retrospective effect. I suggest that there is something wrong when a citizen who has shaped his course in the light of the existing law and who cannot retrace his steps suddenly finds himself tripped by retrospective legislation which can and does retrace its steps. Such legislation is unfair and provokes a great resentment in every section of the community, even among those who are not particularly affected by such retrospective legislation. In my view it is viciously unjust that irretrievably past conduct of persons should be regulated and governed by laws that were not even in existence when the conduct took place. Those are prejudicial aspects of this measure.
I am concerned primarily with the retrospective effect of clauses 7 and 10 of the bill, but before dealing with them I am obliged to refer to clause 6. That clause repeals the old section 36 and reenacts it in different form and with different effect. It inserts an entirely new sub-section, and the effect is to provide that where the whole or any part of the assets of a business are disposed of by sale or otherwise and the assets include trading stock, the market value of that trading stock is to be included in the assessable income. The person acquiring the trading stock is then deemed to have purchased it at that market value. Proposed new section 36 (1.) has genera] application to every type of business, but I suggest that its effect will be particularly potent in the case where trading stock consists wholly or largely of livestock. For the purpose of simplicity, I shall confine my remarks to the effect of the proposed section on trading stock, particularly live-stock. The Senate will appreciate that, for taxation purposes, live-stock bred by a pastoralist can be included in the books at a very low level, even at cost price. Frequently, expensive animals are included at amounts that range around fi a head when, in fact, their sale value might be many times that amount. When a person disposes of such stock a very large profit is realized, on which there is visited very heavy taxation. The existing section 36 (1.), which it is proposed to repeal, has stood unaltered for ten years from 1941. It has been interpreted by the Commissioner of Taxation to apply to cases where the taxpayer has made a gift, a sale, or other disposition of live-stock. A very common case has been where the taxpayer has taken other members of his family into partnership with him. The Commissioner of Taxation has treated that transaction as though a sale had taken place, which added greatly to the book profits of the taxpayer, and attracted heavy taxation, although, in fact, he had made no sale and had realized no cash from the transaction upon which the increased taxation was based. Then, as both Senator Laught and Senator O’Flaherty have stated, that interpretation by the Commissioner was successfully challenged in the High Court on the 5th November, 1951.
The High Court held that the assets of a business moving under a partnership deed from the sole ownership of one person to the co-ownership of that person and two others as partners in equal shares were not “ disposed of within the meaning of section 26 or section 59 of the Income Tax and Social Services Contribution Assessment Act, and that the Commissioner, in computing the assessable income of the disponor was not entitled to apply section 36 in respect of live-stock, or section 59 in respect of such assets as had been the subject of allowances for depreciation. Proposed new section 36 is intended to broaden the whole application of the existing section to take in transactions such as gifts, as to which there was some doubt previously, and tends to counteract the judgment of the High Court.
– There is nothing wrong with that.
– I am not opposing that as a principle. I think that a government that intended a certain interpretation - and I think the Government did intend the interpretation that was adopted by the Commissioner-
– The previous Labour Government.
– I am speaking at large. That interpretation had been applied for a period of ten years. Tho Government, on finding that it has not been expressed as was intended, can alter it. My complaint is not about that aspect of the matter.
– Does not the Leader of the Opposition believe that it was the duty of the Parliament so to do ?
– The Parliament failed to express its intention adequately. I see nothing wrong in principle with a government, whether the same government or a subsequent government, going back to the original interpretation, but presently I shall voice a criticism on another aspect of the matter.
I come now to the really controversial clause of the measure, clause 7, the one that will be the subject of an amendment that has been foreshadowed by the Minister. As the proposed amendment is not vet before the Senate, it is not a part of the formal proceedings at the moment. Clause 7 proposes to insert in the Income Tax Act an entirely new section. The Commissioner’s memorandum says that there is nothing comparable with it in the income tax act at present. It deals specifically with trading stock, but includes live-stock in a limited number of transactions.
– I wish to inform the Senate that the Right Honorable Viscount Bruce of Melbourne, a member of the House of Lords, and a former Prime Minister of the Commonwealth of Australia, is within the precincts of the chamber. With the concurrence of honorable senators, I shall invite him to take a seat on the floor of the Senate beside the President’s chair.
Honorable Senators. - Hear, hear!
Lord Bruce thereupon entered the chamber and wa& seated accordingly.
– Clause 7 has limited application to trading stock in connexion with transactions relating to partnerships falling under the four headings: Formation; dissolution; variation; and change in the interests of the various partners. Proposed new section 36a will do two separate and distinct things. Where a person, who owned the trading stock before the changes involved in one of the partnership transactions that I have mentioned, retains an interest in the trading stock after the partnership formation or transaction, the handing over to the partnership is deemed to be a sale, with all the consequences that it attracts to the disponor in relation to profits arising. That provision has general application, not only to businesses in which livestock is concerned, but to every type of business. I repeat that the provision is confined solely to trading stock in transactions affecting partnerships. The proposed new section also contains an escape clause, which provides that if the dis.poner retains at least one-quarter of the property that is being circulated into the partnership, and all members of the partnership agree unanimously, they may give notice to the Commissioner of Taxation in order to deprive the transaction of the nature of a sale imposed by the first part of the proposed new section and enable the partners themselves to determine the value of the property. In other words, the trading stock is then not deemed to have been sold until, in fact, it has been sold and profits have been realized. In those circumstances, the value of the trading stock transferred may be cost price, market price, or any intervening value.
I come now to the really important impact of clause 24, which states that the relevant provisions of the bill shall have effect, not from the time of its enactment, but from the 1st July, 1950, which will carry the provision that I have mentioned back over a period of more than two years. I have no objection at all to the retrospective operation of the escape clause. After all is said and done, it will confer a benefit on a limited class of persons who fall within its ambit. . It will permit assessments to be re-opened, reduced or increased with the unanimous consent of all the parties who are concerned. However, the Opposition takes the strongest possible exception to the retrospective application of the other more important and general aspects of the provisions of clause 7. Let me put to the Senate the case of a taxpayer who is a pastoralist. He is engaged in an industry of very great importance to Australia and to the world. Because of the provisions of existing section 36 (1.), which is now to be repealed and another section inserted in lieu thereof, he has hesitated for a long time to follow the desirable action of taking members of his family into partnership with him. He has realized that the moment that he transfers his interest, and divests himself of assets and so of income, taxation will be attracted to the transaction as though it were a sale. He has hesitated to take the very desirable action, from the national viewpoint, of bringing male members of his family into partnership, and so keeping them on the land, thus preventing them from drifting into non-productive ind us tries in the cities. What was his position in November, 1951 ? He heard first that the High Court had ruled that the law had been wrongly interpreted. He probably then thought, “ If I take my sons in, I do not attract to myself vast taxation from an imaginary sale at a time when, though making the disposition, I shall be least able to meet it “. I agree with Senator Laught’s opinion that it is the duty of the pastoralistslegal adviser to draw his pointed attention to that fact.
As probably the bulk of the assessmentsfor the taxation year 1950-51 had not been made by the 5th November, 1951, most of them would flow over into theyear commencing January, 1952, when the Commissioner of Taxation accepted and applied the principle of the High Court judgment to all outstanding assessments in relation to the year ended the 30th June, 1951. Then the commissioner upheld the objections of all who had been wise enough to lodge objections against their assessments within, the 60 days allowed. What did the pastoralist, see? He saw the way wide open, and almost an invitation from the Government to proceed with his long-cherished ambition to take his sons into partnership, and he went ahead with the transaction. In the process, he divested himself of assets and of income. In the meantime, until this measure was introduced, there was not one word from the Government to disturb his ease of mind that he could proceed with the transaction at his leisure. A period of almost twelve months elapsed before thisbill was introduced. There was no warning at all that the pattern very properly evolved by the commissioner after theHigh Court decision to which I havereferred, was to be disturbed. The taxpayer now finds himself, even conceding the escape clause and its benefits, in the position that unless, perchance, he has retained one-quarter-
– What about theMinister’s amendment ?
– The AttorneyGeneral (Senator Spicer) should not be impatient. I shall have something to say about the amendment in due course, but I remind him that it is not yet even before the Senate. It has been circulated privately to honorable senators.
– And it is only a partial answer, after all.
– I agree with the honorable senator. Let me return to the case of the pastoralist to which I have been referring. After divesting himself of all his property, with the exception of perhaps 20 per cent, or 25 per cent., by transferring it to his sons, he will find that the transaction is treated as a sale and that he will be obliged to meet ruinous taxation at a time when he lacks both the assets and the income to do so. That is retrospective legislation at its worst. It is vicious and unconscionable in concept, and equally vicious and distressing in practice. If time permitted - which, for various reasons, it does nol: - I should like to discuss, as adequately as possible, the incidence of the proposed private company taxation. I should also like to refer to several of the instances referred to in a Sydney newspaper by a practising country accountant concerning the operation of this clause as it now stands. I shall cite only one such instance. The accountant claimed that on the 7th July, 3952, one of his clients disposed of fivesixths of her interest in live-stock to four members of her family, retaining only one-sixth for herself. The live-stock had a book value of £1,100, and a market value of £5,000. Under this bill she will be assessed for taxation on the difference of £3,900 as though she had made that profit on a sale. She will be expected to meet that taxation from her one-sixth interest in the stock and her one-sixth share of her former income.
I now wish to deal with the point raised by the Attorney-General who, I take it, contends that, under the amend-, ment that has been circulated, the Commissioner of Taxation will have a discretion in such matters. If the Commissioner considers such a case to be a bona fide partnership he may allow it to proceed as though no sale had taken place. An important matter of that kind should not rest on the discretion of any officer, no matter how wise he is. I suggest that it is a discretion that the Commissioner is not likely to exercise personally but will be delegated rather extensively down through many ranges of the Income Tax Branch. It is conceivable that, in the absence of a set of rules to guide such discretion, different applications of it may be made in the various States. I am sure that the Commissioner, in order to fulfil his function and to perform it properly, and also to preserve unanimity, will himself evolve a set of rules to guide and govern his officers. That kind of thing should not be left to his discretion. It should be written into the provisions of the bill. It should be a matter for determination by the Parliament. In this connexion, I make no criticism of the Commissioner in his individual capacity. If I were to refer to him in person I could not do otherwise than speak of him in terms of praise and respect. I am not thinking of him personally, but of his office when I put forward this argument.
The escape clause already in the bill, and even throwing in the amendment contemplated by the Government, is not an end of the matter. For instance, a man may retain a fourth interest in his property, and his case may even warrant the discretion of the Commissioner of Taxa tion, properly exercised ; but he will still have to obtain the unanimous consent of all the parties to the partnership. That is not an easy matter, because the interests of the two parties - the original transferor of the interest and the subsequent co-owner with him - create two entirely divergent problems in the matter of taxation. If the whole burden of the sale is to fall upon the disposer or transferor, and the sons take over at market value, in due course when the sale is effected a very narrow margin of profit will be made, and the sons will have the better end of the stick. In a family which is closely knit, I concede that that might be practicable, but in the ordinary case, where the interests are necessarily divergent, it could be virtually impossible to secure unanimity, despite compliance with every provision of the clause.
Who will escape and who will be caught up by these retrospective provisions? First, I suggest that those who will escape are those who, in respect of the year 1950-51, were assessed after the High
Court judgment of the 5th November, 1951. I concede that they represent the great bulk of those involved, bearing in mind that this clause is expressed to be retrospective to the 1st July, 1950. They apply, subject to the escape clause, to everybody who earned income in that year. The majority of persons are let out in that way. Secondly, those who were assessed just prior to the High Court judgment in respect of 1950-51 and who had the good sense, or who had received the good advice, to lodge an objection within the limited time of 60 days and had their objections upheld in accordance with the High Court decision will also escape. But who will be caught? First, there will be the 1950-51 taxpayers whose assessments have been delayed. I say, from practical and personal experience, that many assessments are delayed every year. I had an experience recently where an assessment caught up with me after four years. I received four assessments at once. Although my returns had been duly lodged, there was an outstanding query in relation to a certain matter, and a delay of four years ensued. I put it to honorable senators that it is not unusual, when queries are pending in these matters, that there is delay in the making of assessments. Anybody who is in that unhappy class will be caught up by the retrospective effect of this legislation. That is the first group.
The second group consists of those who were assessed prior to the 5th November, 1951, when the High Court made its determination, and who did not lodge objections in time. The third class consists of those who lodged objections in respect of the 1950-51 assessments and whose objections have not yet been determined. The determination of those objections could, and should, be made, once this bill becomes law, in accordance with the provisions of the bill.
I come now to the last and most numerous class. I refer to those who, relying on the existing law, had partnership transactions in trading stock between the High Court judgment on the 5th November, 1951, and the 18th September, 1952, which was the date of the introduction of this bill, and who can not bring themselves within the terms of the escape clause. I suggest that they will represent a large body of taxpayers who, in practical effect, have been invited by the absence of any announcement of the intention of the Government during a period of almost twelve months, to come in and take advantage of the High Court judgment. I put it that people who, innocently or inadvertently, are lulled into that false sense of security are put into an outrageously unjust position when, retrospectively and belatedly, the Government acts. I would have no complaint at all on this score if, immediately after the High Court judgment, the Government had announced, “We thought that the law, up to this point, was so-and-so. The High Court has ruled that it is not. We have not properly expressed our intention, and we therefore make it known now to everybody concerned that we shall legislate from this date to give effect to the original intention of the legislature “. No complaint would have been made had the Government taken such action. That is the real sin that I lay at the door of clause 7, particularly. That that contention is correct is borne out by the words of the Treasurer (Sir Arthur Fadden) and by the Minister for National Development (Senator Spooner), who represents him in the Senate, when, on the 9th October last, they made simultaneous statements in the Parliament, drawing attention to gross trickery in the private company income tax field. Did the Treasurer or the Minister on that occasion say, “ We shall enact retrospective legislation to deal with these tricksters “ ? Not at all. The Treasurer merely stated -
I therefore desire to make it clear that the Government will, as soon as practicable, introduce legislation-, for this purpose and that it will certainly be made retroactive to the date of this announcement. In other words, those who, from this time on, seek or intend to employ these devices are put on plain notice that the legislation to be introduced will be aimed at invalidating action which they may have in mind.
The right honorable gentleman concluded -
Whatever law is appropriate to deal with this problem should, when passed, be made to operate as from to-night.
I pose a simple proposition to the Senate. Is it right to have prospective law for tricksters and retrospective law for decent traders? The Treasurer himself acknowledged the propriety of not retrospectively applying punitive law to those who are engaged in trickery.
I again invite attention to the words used by the Minister in his secondreading speech, when he stated -
The Government has been concerned in these proposals to cause the law to effect what was clearly intended to be effected, but at the same time not to affect retroactively any genuine case analogous with the cases deliberated upon by the High Court.
With that broad principle we can agree. The claim of the Opposition, however, is that the Government has not achieved that broad purpose in drafting the measure now before the Senate. In due course, when we come to discuss clause 24 in committee - if ever we reach that position, concerning which I have grave doubts - the Opposition will move the amendment which was so carefully foreshadowed by Senator O’Flaherty. The purport of that amendment will be to give general application to clauses 7, 10 and IS, but amending them to provide that they shall not be allowed to operate in such a way as to increase - and I emphasize the word “ increase “ - taxation liability from the 1st July, 1950, until the 18th September, 1952, the date when this bill was introduced, except to give effect to the escape provisions of those clauses. I am tempted to discuss clause 10 which deals with depreciated property that is transferred in connexion with partnership transactions. A benefit will be broadly conferred by this clause, but it will establish an entirely new liability which will be retrospective. Again, discretion will be vested in the commissioner. I agree with Senator O’Flaherty that that subject could be more adequately examined in committee. My comments with regard to the retrospectivity of clause 7 apply with equal force to clause 10.
I deplore the fact that if I took the whole of the time allotted for the debate on the second-reading of the bill I could not do complete justice to the subject .of private company taxation. I shall not attempt to do partial justice to it. There are many features upon which I have prepared copious notes and to which I object strongly. I do not mind action being taken to prevent trickery of the nature that was encountered by the Labour Government in 1948 when it set out to prevent all the known misdemeanours.
– If the Labour Government had introduced retrospective legislation it would have been able to deal with those who had been guilty of misdemeanours.
– I cannot argue that proposition at present. The Senate is considering the sins of the present Government, not the sins of the last Labour Government. We have been tried and sentenced to the Opposition for our sins. The Government has its trial and sentence ahead of it.
– It is a long way off.
– At least, the judgment is ahead. I come now to the provision for the payment of 10s. in the £1 tax on undistributed profits of private companies. I do not like a provision that prohibits any rebate being allowed in respect of undistributed profits unless such profits are distributed before the 31st December, 1957. I do not like the fact that, under this measure, four taxes can be collected in relation to one original set of profits. I do not propose to develop that argument, but the Treasurer’s suggestion that there would be no need to pay the tax was exceedingly naive. He said that he proposed to force private companies to distribute the whole of their profits so that he would be denied the revenue from the undistributed profit tax. That view is not only naive; it is divorced from reality. Only a few companies are in the major income earning bracket. Although I should like to develop my argument in this respect, in deference to the limited time available to the Senate to discuss the bill, I propose to conclude at this point. I have no great hope that I shall have an opportunity to develop many points in committee. I have already recorded my protest in this chamber against the restriction of debating time and I shall also record it outside this chamber.
– I rise at five minutes past three with the knowledge that only 25 minutes are left to me, on the vote of the majority of my colleagues, to express my views upon this measure which concerns the principles and propriety of taxation law in several important aspects such as trading stock, sale of depreciated assets, goodwill of leases and private company taxation. In the field of law in which I have been habituated to practice I would have been accorded by a court 25 hours to argue a case involving all those issues affecting only two private litigants whereas these public issues affect thousands of taxpayers and involve hundreds of thousands of pounds. This is a most embarrassing position for honorable senators to face. I mean to be brief, but not silent. Had I been accorded sufficient time to state my views, I had intended to recite the features of this bill that do the Government credit. I can now do no more than enumerate them. The proposal to liberalize the retention allowance for private companies is a step in the right direction. Government supporters also welcome the deduction from assessable income of the proposed educational allowance. The proposal in relation to exempting the goodwill of leasehold businesses from taxation unless both parties agree that it should be taxed is also welcome. That aspect of taxation had become so vicious that it has applied its antidote arid has been destroyed. There are some laudable provisions in the bill for the benefit of primary producers whose pastures have been denuded by drought or fire and who have been compelled to sell their livestock. These people will be forced to pay income tax on only one-fifth of the profit of that economically forced sale. The bill provides for certain benefits to be accorded to the primary producers of the Northern Territory. Great and extensive benefits were accorded to primary producers last session - I hope successfully - and if I have sufficient time I shall show that the present provisions quality those benefits very severely. I deplore the fact that income from the self-employed person’s pension fund is to be exempt from taxation only if the scheme is considered by the Commissioner to be reasonable. Such funds require a degree of permanency for their efficacy and I protest against parliament giving to the Commissioner of Taxation the power to make a decision as to whether the terms and conditions of superannuation funds are reasonable, which decision shall be subject to review only by the Taxation Board of Review and not by any court of law. The Government has magnificently recognized the absurd degree to which exactions have been levied on sporting clubs. Previously, a dinghy club at Sandy Bay, Tasmania, made a profit of £8 8s. from its external activities, and it received a company taxation assessment of 10s. in the £1 under legislation that had remained as a hangover from the Labour Government. I credit the Government with having removed that provision from the statutebook. The provisions of the bill in regard to community hospitals and the encouragement of uranium production are also commendable.
But at that point I pass into the desert. Last November, the Senate was asked to pass legislation to simplify the complex statutory provisions relating to the taxation of private companies. That legislation was passed in December, 1951, twelve months after the Commonwealth Committee on Taxation had reported on the subject. I believe that the reports of the committee have not been tabled in this chamber. It was not suggested last year that the Government would impose a triple tax on the profits of private companies. Private companies are the commercial means whereby, with limited liability, the industrious, the thoughtful and the venturesome may undertake the business of the community. They make their profits and should pay a just degree of taxation on them. I am well aware of the complexity that pervades this field of taxation. I think that the system which the Government proposes to replace involved the imposition on the private company of a primary tax of 7s. in the £1. Then, after permitting a retention allowance, the undistributed profit was taxed, on the basis of a notional distribution, as if those profits had been distributed to the taxpayer. If a shareholder was paying income tax at the rate of 15s. in the £1, and was entitled to £1,000 of undistributed profits, that £1,000 was subject to tax at the rate of 15s. in the £1 - which the company paid and retained the other 5s. in the £1. If another shareholder was paying income tax at the rate of 4s. in the £1, the company paid 4s. in the £1 on his share of undistributed profits and retained the other 16s. in the £1. But whatever amount was retained by the company, when it distributed the money at a later date, the shareholders paid no further tax on it. The complexities of the situation were such that when the taxation, committee submitted a report in December, 1950, it said -
The Committee is of the opinion that the only sound solution of the present complicated method of taxing the undistributed profits of private companies, is to impose a flat rate of tax on those profits, so severe that all private companies would distribute the balance remaining after payment of primary tax -and deduction of the permitted retentions.
At paragraph 113 the report states -
The Committee emphasizes that this proposal is not intended as a revenue tax. It considers that a penal rate would compel all, or nearly all private companies to distribute and that the 12s. Od. ra.te- the rate which the committee then recommended - would bc paid by few, if any, companies.
So, a tax of that kind was recommended in December, 1950, for the purpose of compelling, in the interests of simplicity of taxation, an actual distribution, whereas already, in all its fullness, a tax was imposed on those very profits on the basis of a notional distribution. In all my simplicity I protest. There is one other small aspect of company tax to which I shall refer. I wish to go on record as disagreeing with the statement of the Minister for National Development (Senator Spooner) that it is proper to exclude property income from the permissible retention allowance, and I submit with doubt, diffidence, and great respect that there is no proper analogy between the case of a company trading and earning 90 per cent, of its income from trading profits, but making 10 per cent, interest on invested reserves, and that of the investment company which was not permitted this benefit in the prewar days.
I pass now to the depreciation, provi- nella of this measure. I invite the par- ticular attention of the Senate to clause 10, which provides that, upon the sale of any assets on which depreciation has been allowed, that depreciation, so far as it is covered by the subsequent sale price, must be written back. In respect of the sale of any assets on which depreciation has been allowed on the basis that there has been a deemed disposal by reason of any change of ownership or interest, including a partnership arrangement dating back to the year commencing the 1st July, 1950, relief is given from the imposition of tax on that written back depreciation only if the parties make a unanimous written election, and if the value that the parties are prepared to accept in that written election is not inconsistent with the original agreement. I refer honorable senators to page 55 of the annotated copy of the bill. Twelve months ago the parties can say we made our arrangement and, business-like, we specified the value or, if we did not specify the value, it was referred to in general terms. On a partnership arrangement, an asset is taken over by the new partners, and that transaction gives rise to what my colleague, Senator Laught, aptly described as a constructive profit. On that constructive profit depreciation already allowed is written back and taxed. It is my fear that these provisions will destroy the benefit of the depreciation on structural and other improvements that we have agreed to allow to primary producers as an incentive to production. If, for instance, the workers’ cottages that we intend to encourage are sold with the freehold hereafter at a figure to cover the depreciated value, the taxpayer, instead of getting the benefit of that yearly depreciation, will find the aggregate re-introduced into his accounts in the year of sale as taxable profit.
I can merely sketch my thoughts on these matters, but it was a theory of my old classical master that “It is shameful to be silent and let barbarians, speak”. I intend to go on to the other most obnoxious provisions dealing with deemed disposals. In 1931, the High Court held that a sale to end a business was P<H the subject of income tax and that only .sales that gave rise to profits in the course of business activities were properly within the income tax field. In 1936, the present section 36 of the act was introduced to eliminate that distinction. The Commissioner of Taxation held that that section applied to partnership transactions in which trading stock was transferred as between partners either on the formation, dissolution, or variation of the partnership arrangement and he continued to issue assessments on that basis. The Taxation Board of Review supported him. In November, 1951, the High Court reversed the position by holding that, according to the law, such transactions did not attract taxation. The court ruled that if an interest that passed from an owner to his partners was an undivided fractional interest, it was not a disposal of property within the provisions of the act. Before that decision, the Treasurer had been approached and, in a memorandum circulated only yesterday, which, with great labour I have read and digested, he said that the Government had asked the Commonwealth Committee on Taxation to report on the matter and had given an indication that, if the committee recommended a modification of section 36, it would be made to apply to income derived in the year of income commencing the 1st July, 1950. The explanatory memorandum on clause 8, now clause 7, states that “ the purpose of new section 36a is to give to the parties concerned an opportunity to decide for themselves whether such a change of interests should be treated as a disposal for the purposes of section 36, or whether, upon their unanimous agreement, the business should be treated as a continuing one “. So, that was the position even before the Rose case. The aim of the Treasurer is to give relief from the irksome decision of the Commissioner of Taxation to treat partnership arrangements as disposals. The Commonwealth Committee on Taxation had reported that partnership transactions should be made to come within section 36, but the Rose case was then decided, and the matter was referred back to the committee for a further report. In the report, dated the 3rd April, 1952, the committee adhered to the view that a disposal of trading stock for the purpose of a partnership arrangement should be made to come within section 36. However, to that report, the committee attached a draft amendment. In view of the limited time at my disposal I ask for leave of the Senate to incorporate the amendment in Hansard.
– The amendment is as follows: -
Provided that this sub-section shall not apply to any disposition which is in the ordinary course of carrying on a business. (1a. ) For the purposes of this section, “disposition” shall be deemed to include -
I point out that it never suggested itself to the committee that out of that transaction, even though a partner had only disposed of half of the trading stock, there would arise any provision such as sub-section 1 of proposed section 36a, which provides that if a person disposes of his trading stock to himself and one partner, he is deemed to have disposed of the whole of the property. Furthermore, the committee never suggested that the provisions would apply to involuntary disposals; yet, under this measure, if for any reason, including the formation, dissolution or variation of a partnership, a change occurs in the ownership of trading stock or in the interests of trading stock, the provisions of section 36 relating to the disposal of trading stock shall be deemed to apply as if the disponer had disposed of the whole of the trading stock. Therefore, the incidence of taxation imposed by this measure, even prospectively, is far wider than was ever contemplated in the recommendations of the Commonwealth Committee on Taxation. I suggest that in providing that where a change takes place in the interest of one owner so that disponer retains any interest after the change, this measure will apply to transactions to which there was never any intention to apply it. It will apply, for instance, to ordinary mortgages of livestock, to discharges of mortgages, and to hiring transactions. If there is an answer to that I should like to hear it. I hope that there is an answer. However, the effect is that the “ deemed disposal “ provisions - perhaps they would be better described as “ damned “ disposal provisions - are much wider than was ever intended by the Commonwealth Committee on Taxation. The committee’s purpose would have been met, and a proper remedy for the Rose decision, if it did not express the intention of the legislature, could have been found, by providing that the disposal of a fractional interest in partnership stock should be regarded as a disposal, not of the whole of the assets of the partnership, but only of that fractional interest.
– Order ! The time allotted for the consideration of the second-reading stage of the bill has expired.
Question put -
That the words proposed tobe left out (Senator O’Flaherty’s amendment) be left out.
The Senate divided. (The President - Senator the Hon. Edward Mattner.)
Majority . . . . 5
Question so resolved in the negative.
Original question resolved in the affirmative.
Bill read a second time.
That consideration of clauses 1 to 6 be postponed until after consideration of clause 7.
Clause 7 (Disposal on change of ownership or interests).
.- I move-
That, at the end of the clause, the following new sub-clause be inserted: - “ (4.) Where
a change in the ownership of, or in the interests of persons in, property, being a’ change in relation to which the section inserted in the Principal Act by this section applies, occurred on or after -
the first day of July, One thousand nine hundred and fifty -one; or
if the person or persons who owned the property before the change adopted an accounting period in lieu of the year of income that commenced on that date - the first day of that accounting period, or the fifth day of November, One thousand nine hundred and fifty-one, whichever is the earlier, and not later than the eighteenth day of September, One thousand nine hundred and fifty-two; and
b ) the Commissioner is satisfied that the property became, upon the change, an asset of a business carried on by a bona fide partnership of the persons by whom the property was owned after the change, sub-section (2.) of the first-mentioned section applies in relation to that change as if the reference in paragraph (ft) of that subsection to one-quarter of the value of the property were a reference to such smaller proportion of that value as the Commissioner considers reasonable having regard to the number of partners and the circumstances in which the change occurred.”.
The purpose of this amendment is to modify the application of proposed new section 36a, insofar as that section applies to certain transactions in partnership interests between the 1st July, 1951, and the18th September, 1952. Section 36a, in brief, gives clear expression to one of the original purposes of section 36 of the principal act. In November, 1951, it was disclosed by the High Court judgment in the Rose case, that section 36, as at present enacted, failed to give effect to that original intention. The principle to which section 36a gives effect is that transfers of interest in partnership assets, including live-stock and other forms of trading stock, should be treated as disposals of those assets. In consequence, the value of such trading stock is required to be brought into the assessable income of the former owner or owners, and is allowable as a deduction in the assessments of the new owners. The new section provides that where all the parties to a transfer unanimously agree, the value of the trading stock to be taken into account shall be the book value of the stock as adopted for income tax purposes. In effect, the business is to be treated as a continuing one, and as though no change of ownership had taken place. In those circumstances, no taxable profit would arise from the transaction.
In the absence of unanimous agreement that the business is to be treated as a continuing business, the value to be taken into account in the former owners’ assessment and allowed as a deduction to the new owner, will be the market value of the stock. However, the right of unanimous agreement to be treated as a con tinuing business is subject to an important qualification. That right is to be restricted to those cases where one or more of the former owners retain, after the change, at least a quarter interest in the transferred stock. In the absence of such a restriction, an anomalous position would arise if a taxpayer converted his business into a partnership but retained only a nominal or fictitious interest in business assets. It is possible, for example, that the interests in a partnership so formed might be - father, 1 per cent. ; son, 99 per cent. If the father had made an outright gift or sale, and so transferred 100 per cent. interest in the trading stock, he would be taxed on the market value of that stock. By transferring a 99 per cent, interest, however, he would, but for the proposed restriction, secure a right of election, subject to the son’s consent, to have the transaction treated as though no disposal had taken place. The proposed limitation is necessary, therefore, to restrict the right of election to those cases where, despite the change of interests, the business may be fairly regarded as a continuing one.
Whilst there is undoubted justification for the adoption of this restriction in the case of transactions effected since the introduction of the bill in the Parliament, an examination of actual cases cited in representations made to the Government has disclosed that a rigid adherence to the proposed limitation might operate in a manner not intended where transactions were entered into between the date of the judgment in the Rose case - the 5th November, 1951 - and the18th September, 1952, when the bill was introduced in the Parliament. In a typical instance, a father took his four sons into partnership on equal shares, during June, 1952. The transaction was effected in the belief and understanding that the decision in Rose’s case would apply and that no taxable profit would accrue to the father from the transaction. The effect of the bill, as introduced in the Senate, would be to require this transaction to be treated as a disposal of the father’s stock at market selling value, and, as the father retained less than 25 per cent. interest in that stock, the parties would have no right of election to be treated as a continuing business. The amendment now proposed is designed to provide a reasonable method by which the cases mentioned previously herein may be satisfactorily met. To avoid dissimilar treatment of transactions occurring in the same year of income, the modification will operate from the beginning of the year of income in which the High Court decision was given, namely, the 1st July, 1951. While the right of agreement will normally be exercisable in those cases only where there is a retention of 25 per cent, interest, in the case of transfers during the specified period the right may be exercisable in certain circumstances, if an interest of some lesser percentage than 25 per cent, is retained by the former owners. The precise percentage which will suffice to ensure the right of agreement, is proposed to be left to the discretion of the Commissioner of Taxation. In determining that percentage, the Commissioner will have regard to the number of partners in the new partnership and to the other circumstances in which the transfer of interests occurred. In the case previously cited, for example, where a father took four sons into partnership on equal shares, equity would be preserved by the Commissioner accepting the father’s retention of a 20 per cent, interest as sufficient to establish that the business was, in effect, a continuing one.
In order that the proposed extension of the right of agreement should be restricted to genuine cases, the amendment provides that this special right shall be exercisable only where the Commissioner is satisfied that the property became, upon the change, an asset of a business carried on by the new owners as a bona fide partnership. It is necessary to make special provision for those cases where the accounts of the transferors are made up, for income tax purposes, for a period commencing on a date other than the 1st July, 1951. In such cases the amendment will apply to transactions entered into on or after the first day of that substituted accounting period. In any event, the amendment will apply to transactions entered into between the date of the Rose judgment - 5th November, 1951 - and the date when this bill was introduced in the Parliament - 18th September, 1952.
Senator WRIGHT (Tasmania) [3.49J. - I had so framed my second-reading speech when faced with the short space of time at my disposal as to reach a stage where I intended to refer to the retrospective effect of section 1 of the bill. I wish to occupy a few minutes now in completing my thoughts upon that matter. I begin by saying that I welcome the amendment that the Minister for National Development (Senator Spooner) has just announced and introduced. I believe that it is a partial answer to the objections that were sustainable against the clause. As the Minister has now acknowledged, the restrictions upon relief which were imposed by section 7 were twofold. The first was that the disponer should retain not less than one-quarter interest. The second was that a’ll the parties to the transaction, including those where there had been a dissolution of partnership upon the basis that one partner had committed a crime and had been forced out, or where insanity had supervened, were entitled to immunity from the retrospective imposition of tax back to disposal since the 1st July, 1950, only on unanimous written agreement substituting book value for market value. In the bill as printed that applied to a variation of a partnership in the ordinary business arrangement of vendor and purchaser and to a new partnership where an outside buyer agreed to pay so much for trading stock. It applied also to all those cases where obviously there was incapacity of contract that made it difficult to secure unanimous agreement, or where there were divergent interests between the parties which would preclude them from coming to an agreement. I am glad that it has been acknowledged that a modification of the condition applying to a quarter interest was needed. However, the modification is in form only partial. It does not apply to any disposals that took place in the year 1950 to June, 1951. No assurance has been given by the Minister that all assessments for that year have been completed. Obviously the difficulty of giving such an assurance is great; but there remains a possibility that the partners lodged their returns in due time and assessments have been delayed by four years or so, as in the instance that was given by Senator McKenna. I would not subscribe to the imposition of such a liability upon one individual in circumstances of that sort. In relation to the year 1950-51, there is the further objection that in the case where a taxpayer satisfies the Commissioner that his assessment for that year was wrong, or where on a collateral matter such as travelling expenses, he asks for it to be re-opened, the whole assessment is exposed to this retrospective imposition. I submit that the terms of this bill, even as it has been amended, make it mandatory on the Commissioner to take back the retrospective provisions of section 7 and apply them to the amended assessment that he makes after that date.
I am in doubt upon two other matters that I hope to see clarified. In the ease of partners whose deemed disposals were taxed between June, 1950, and June, 1951, and who did not lodge objections to that year’s assessment, I understand the position to be that they still carry the liability of those assessments without relief under this provision in cases where one-fourth interest has not been retained or where there is no unanimous agreement. In the case of the year 1951-52, the conditions that the bill originally contained relating to the retention of a quarter interest upon unanimous agreement have been modified. I believe that the relaxations of the conditions should not rest within the discretion of the Commissioner of Taxation. I make no personal reference to the Commissioner of Taxation, but nowadays the Commissioner’s prime duty i3 recognized to be that of a guardian of the Treasury. When his interest in the course of his duty is so great, the taxpayer upon whom the assessment is made should know precisely the rule of law. The decision whether the taxpayer comes within that provision or is to be classified outside it should not rest with the Commissioner of Taxation. This amendment is framed in such a way that it creates that position. The decision of the Commissioner as to whether it is reasonable to apply the lower values as against market values, having regard to the number of partners and the circum stances in which the change in partnership occurred, is reviewable only by a board of review. There is no provision for an appeal to any court of law from the decision of a board of review or the Commissioner. By this provision, the Commissioner is given the right to conclude the assessment and the courts of justice are precluded by the amendment from passing judgment upon it. Those things are so important that they should be stated in this chamber. If an honorable senator holds these views, I believe that it is his bounden duty to state them. Further, contrary to the exhibition that was given by Senator Armstrong last night, I believe that in such a case an honorable senator should vote according to his expressed conviction.
Let me conclude by giving the Senate an instance of the type of liability with which we are dealing. I refer to a transaction in which a partner disponer on, say the 29th June, 1952, takes into partnership his four sons and he retains less than 25 per cent., or there is no unanimous consent to an acceptance of book value instead of market value in the disposition of the assets, or the commissioner is not convinced that the number of partners is reasonable and that the circumstances are not acceptable. I assume that the disponer had a trading income of £4,000 in the year from the 30th June, 1951, to the 30th June, 1952. If the book value of his stock was £10,000 and the market value was £40,000, the taxpayer would receive an assessment of not less than £25,9S3 16s. It goes to the credit of the Minister in charge of the bill in this chamber that that situation has been made impossible by the amendment, in relation to 80 per cent, of the cases that will arise. I have quoted that as the percentage of transactions from the 30th June, 1951, to September, 1952, which may be relieved by the amendment, but the cases which are not met by that provision may be visited with liabilities, the magnitude of which those figures illustrate. In my opinion, there is still a remaining retrospective liability in many of these transactions which the Senate should not sanction. In view of my conviction regarding the situation, I shall, of course, vote in favour of the amendment, but if the opportunity should occur to do so, I shall vote against the original clause.
– The Opposition will gladly accept any concession from the Government. Even at the risk of traversing some of the ground that has been already covered by Senator Wright, I shall mention several aspects of the matter. The proposed amendment will not remove the retrospective application of taxation to many transactions since 1950, although there will probably be a little relief in some cases. I am not blaming or condemning the Commissioner for Taxation, who is required to work within the four corners of the act. Where an act lays down a formula to be applied to assess taxable income, the Commissioner cannot use his discretion outside the formula. In instances in which an agreement has not been reached by the members of a partnership, the issue ‘s whether the Commissioner would, in fact, have the right to re-assess the old assessments, or be required to base the new assessments in the light of the effect of the proposed amendment. I understand that in some instances of partnership transactions in which 25 per cent, or more of the interest has not changed, the partnerships have already been assessed on the basis of the old interpretation of the law from 1950 onwards. Will those partnerships obtain any rights under the amendment that is proposed ? In the absence of this amendment, I assume that the old assessment would have stood.
Let us consider also partnership transactions in which less than 25 per cent, of the interest does not change, which has been assessed on the basis of the old interpretation of the law. Those partnerships that were assessed in 1950 and 1951 on that basis would have no. chance to obtain a concession as a result of the proposed amendment. The taxation assessment would stand if they were assessed on the old basis prior to the High Court judgment in the Rose case. I do not consider that the amendment will provide for their cases to be reviewed by the Commissioner. Then there are partnership transactions which have been assessed in the light of the High Court judgment. I assume that they will not be affected by the amendment. The only effect on partnership transactions which have not been yet assessed, in which 25 per cent, or more of the interest has not changed, is that the partnerships would have the right of re-assessment, in accordance with the High Court judgment. Of course, the partners could have a unanimous agreement to the effect that they should be assessed as though the partnership were a continuing business, but if there has been any squabble or dispute, the effect of the amendment will be that there will be the right of alteration from 1951 onwards.
I come now to partnership transactions in which less than 25 per cent, of the interest does not change, and which have not yet been assessed. At least some of those partnerships which were carried on between 1951 and the 18th September, 1952, would probably be able to obtain some concession as a result of the amendment. I doubt very much whether a concession would apply to partnership transactions before 1950-51. I should be glad if the Minister for National Development (Senator Spooner) would examine closely the aspects of the matter that I have raised. They are very complicated
I am extraordinarily sorry that the Government proposes to apply the “ guillotine “, because we are considering a most complex subject. A South Australian supporter of the Government has criticized me for not citing illustrations in support of my contentions. Although I shall not mention names, because I prefer to deal with the subject on an impersonal basis, I should like the honorable senator to know that my remarks have been pertinent to the case of a partnership business not far from his home. I have curtailed my remarks because I was eager to hear the views of other honorable senators. I believe that the proposed amendment will not obviate discrimination. A difficulty will still exist as a result of the provisions of clause 24, because many people will be subjected to retrospective taxation. However, the Opposition will accept the concession that will be effected by the amendment, but, if time permits, we shall move an amendment to cut out retrospectivity.
– I think that the Minister for National Development (Senator Spooner) should take heed of the case that has been presented by Senator Wright and Senator O’Flaherty. At this stage I wish merely to make the comment that the great bulk of the 1950-51 taxpayers already have received, or will receive, the benefit of the High Court’s judgment of the 5th November, 1951, including those who were assessed by the Commissioner of Taxation after that date, who were dealt with on the new basis that was set up by the judgment; those who were assessed prior to that date, who lodged objections which were sustained in accordance with the principles of the judgment. There are three categories of taxpayers who will not get the benefit of the High Court judgment; they are the taxpayers whose 1950-51 assessments are outstanding; taxpayers whose incomes for 1950-51 were assessed before the 5th November, 1951, and who did not lodge objections; and those taxpayers whose objections lodged in respect of the year 1950-51 are still outstanding. I do not suggest that there will be a vast number of people in any one of those three categories, but surely the Minister will agree that it is wrong that the great bulk of the taxpayers in 1950-51 should be dealt with on one basis and that three relatively small groups should be dealt with on an entirely different basis as the result of the operation of this legislation. That, in fact, is the basis upon which the Opposition intends to move an amendment to a clause other than the one that we are now discussing. I refer to clause 24. The amendment will seek to negative the retrospective effect of clause 7 in any case in which its operation would increase the amount of tax payable. Can the Government justify even the possibility that there will be categories of taxpayers in respect of the year of income 1950-51 who will be dealt with on an entirely different basis from the great bulk of the taxpayers in that year? I pose three specific questions: Are there any returns in respect of 1950-51 not yet assessed? Are there taxpayers assessed prior to the 5th November, 1951, who lost their opportunity to object and will be in a different category from those assessed later who objected successfully ? What will be the position of objectors whose objections have not yet been determined and might be pending? The Commissioner of Taxation might well be in a position to say there is none in the third category, but I think that it would be impossible for him to say that there are no outstanding assessments. He may not say that of his own knowledge, because he has to depend on officers all over Australia, who might easily be in error. As I have previously stated, from my own experience there are always a hundred and one reasons for outstanding assessments, and in a survey in a taxation office in a State it would be very difficult to comb out every possible return and to assert positively that there were no outstanding assessments. It would be a most surprising thing to me if, at this stage, the Commissioner of Taxation were able to say, “ We have cleared the whole slate of those three categories as at the 30th June, 1951”.
– I think that the best way that I can approach this matter is by giving a factual summary of the position that will arise as a result of the amendment. Let us take the assessments for the income year ended the 30th June, 1951. First, we have those who were in the category of having been assessed and have not received the benefit of the Rose judgment. Their position is clear. The next category comprises those people who have not yet been assessed. I give no undertaking, but short of an undertaking I believe that those who have not yet been assessed will not in any way be prejudiced, provided they have lodged their returns. If they have not lodged their returns, it is hard to foretell the situation that may arise.
– Would the Minister say whether that will follow from the exercise of the discretion of the Commissioner or whether it will flow from this bill?
– It will flow from the bill.
– Would the Minister indicate which part of the bill, because I do not see that it will flow from the bill?
– I think, that it is impossible for it to do so.
– I shall continue with my remarks. Then there are those who have been assessed and who have objected, thus preserving their rights. There are those who have been assessed aud who have not objected, their position being that they may receive the benefits of the .Rose case provided that there has been the 25 per cent, retention and uniform application. The next group consists of those who, within the period from the 1st July, 1951, to the 18th September last, receive the benefit of the Rose judgment, provided that there has been the 25 per cent, retention, and provided also that all parties have agreed. Putting it in colloquial terms, that class consists of those in respect of whom the Commissioner is satisfied that their businesses can fairly be regarded as continuing ones, although the retention has not been 25 per cent. Coming to the period subsequent to the 18th September last, when the new legislation will commence to operate, there are those who will receive the benefit of the Rose case, provided that there is a 25 per cent, retention and that all parties agree.
To answer the points made by Senator Wright, I repeat that the Commissioner will issue assessments in respect of all 1951 incomes, provided that returns have been lodged. The honorable senator expressed the view that it is mandatory on the Commissioner to apply the new provisions if, for some reason or other, an assessment has to be reconsidered. If I remember rightly, he gave as an example the need to review a minor item, such as travelling expenses. I can only say that that expression of opinion by the honorable senator is not correct. There is no mandate upon the Commissioner to reopen an assessment in those circumstances. .
Those in the July, 1950, to June, 1951, group who did not lodge objections do not receive the .benefit of the Rose case, but they have the right of election referred to in the bill. The last matter raised by the honorable senator concerns the discretion which it is proposed to give to the Commissioner of Taxation. In my opinion, the views expressed by the honorable senator should be modified. In moving the amendment, I indicated the principles that will determine the manner in which the Commissioner shall exercise his discretion. In addition, as I think the honorable senator himself stated, provision is made for appeals to the Taxation Board of Review.
– Earlier, I referred to the fact that the Commonwealth Committee on Taxation, in submitting its recommendations, made no reference to the need for a 25 per cent, retention. Apparently, it never entered the thoughtful minds of the members of the committee to suggest an arbitrary figure concerning the value of the undivided interest retained and which should be stipulated as a condition to the granting of relief. All that I wish to say is that, provided that it is a bona fide partnership, the only extent to which taxation is primarily justified is to the value of that undivided interest; not to the whole value of the asset but merely to the value of the fractional share. A man who took into partnership his four sons and retained 20 per cent, of the property for himself should bring into his taxation return the profit made on the disposal of the four-fifths share. So long as it is a bona fide transaction, legally entered into, I submit that there is no need whatever for this 25 per cent, retention allowance, with the subsequent complication and unsatisfactory discretionary relaxation proposed by the Minister’s amendment. Section 260 of the act provides that -
Every contract, agreement or arrangement made . . . shall, so far as it has or purports to have the purpose or effect of in any way, directly or indirectly, relieving any person from liability to pay any income tax or . . . defeating, evading or avoiding any duty or liability imposed on any person by this Act be absolutely void, as against the Commissioner . . .
I submit that that provision, which is interpreted and applied to particular cases with all the careful scrutiny of courts of justice, covers the matter. After all, the court is the referee between the Executive and the subject. That dominating provision of the income tax legislation is sufficient to invalidate, as against the commissioner, any contract, including a partnership contract, which is made for the purpose of or has the effect of defeating, evading or avoiding any liability imposed by the act.
I suggest that that is the safeguard which the Commonwealth Committee on Taxation had in mind and that it was not merely by inadvertence that the committee thought fit to refrain from referring to conditions such as the 25 per cent, retention condition. It seems to me that the whole trouble in this connexion arises from the fact that, after the report of the committee came back to Canberra in April last, there was unwisely engrafted on to it these arbitrary conditions relating to the retention allowance of 25 per cent, and the unanimous agreement of all interested parties. When the Commonwealth Committee on Taxation considered this matter, it was careful to refer to the “ unanimous agreement of all persons with the legal capacity to enter into such contract “. This legislation requires the unanimous agreement of all parties, whether they be infants or mentally infirm persons. Apparently, the signature of all beneficiaries, as well as the trustees, will be necessary. I point out that the position may arise that one of the four sons, to whom reference has been made, may be killed in a motor accident, leaving a wife and an infant child of two years. Conscious of those imperfections, I do not think that it is wise to allow provisions to be placed on the statute-book which will not only confuse and harass the taxpayers, but perhaps also give rise to most unjust treatment.
– Before the Minister for National Development (Senator Spooner) replies to the points raised by Senator Wright, I should like him to indicate on what lines the Commonwealth Commissioner of
Taxation will proceed in exercising his discretion under these clauses. Has the Commissioner at the present time any general principles in mind? As the Minister has already stated, I understand that he will be guided by general considerations which will determine whether the partnership is bona fide or not. What considerations would be in the mind of the Commissioner- that would not also be in the mind of the court in any proceeding under section 260? I take it that both would be bound by the general principles of equity and of law, and that both would seek to apply the same principles. There should not be an arbitrary set of rules in the mind of the Commissioner. The Senate is entitled to some information concerning the manner in which he proposes to exercise the discretion that is to be vested in him under the amendment.
– Both the Leader of the Opposition (Senator McKenna) and Senator Wright have placed a good deal of reliance on the fact that the formula contained in section 260 of the act is effective to render liable transactions which are evolved for the purpose of evading taxation. I put it to both honorable senators, who are not without experience, that throughout the years section 260 has proved a most ineffective weapon in the hands of the Commissioner. Cases under that section are few and far between compared with those which arise from ordinary departmental procedure.
– Does not that merely mean that the department has not been able to satisfy a court of justice that the cases come within section 260?
– I do not know, but surely there must be a more reasonable approach. Surely it should not be necessary for such cases to be taken to court, with all the attendant expenses? Why is it necessary for such a procedure if a suitable formula, which provides a reasonable solution, can be written into the legislation? In my opinion, the case has been overstated by the honorable senator. The retention of a. quarter interest is not an unreasonable criterion to adopt in order to decide what is or is not a continuing business. Replying to Senator McKenna briefly, what I said in opposing the earlier amendment was that in determining the amount of retention allowance the commissioner will have regard to the number of partners in the new partnership and the other circumstances in which the transfer of interest occurs.
Question resolved in the affirmative.
Amendment agreed to.
Clause, as amended, agreed to.
SenatorMcKENNA (Tasmania - Leader of the Opposition) [4.31]. - The clause in which the Opposition is most interested is clause 24 (1.). Senator O’Flaherty has already given notice of his intention to move an amendment to this clause. As only 29 minutes are left for the consideration of this bill in committee, I ask the Minister for National Development (Senator Spooner) to agree to the committee’s dealing with that clause next. The Opposition would like to discuss many other clauses but, at this juncture, we prefer to deal with this one. Therefore, I move -
That clauses 1 to6 and 8 to 23 be postponed until after consideration of clause 24.
Question resolved in the affirmative.
Clauses 1 to 6 and 8 to 23 postponed.
Clause 24- (1.) This section applies where a taxpayer who derives assessable income from mining upon a mining property in the Northern Territory of Australia has, while a resident of that Territory, incurred expenditure of a capital nature -
before the first day of July, One thousand nine hundred and fiftytwo -
– I move -
That the following proviso be added to subclause (1.) : - “ Provided that the said sections shall not be applied to increase the amount of tax that was paid or payable in respect of income of the years of income which commenced on the 1st day of July, 1950, and on the 1st day of July, 1951, and in the further period ended the 18th September, 1952, except insofar as may be necessary to give effect to the notice of agreement given under sub-section (2.) of section 7 or under sub-section (2.) of section 10.”.
Section 24 (1.) of the bill reads -
The amendments effected by sections 7, 10 and 18 of this Act apply to assessments in respect of income of the year of income that commenced on the 1st day of July, 1950, and in respect of income of all subsequent years.
The amendment, if agreed to, will allow the concessions for which this clause provides to remain retrospective, but it will deprive the Taxation Commissioner of authority to claim increased tax because of adjustments that might be made in respect of the years 1950-51 and 1951-52. The Opposition is not concerned about the fact that there has been a widening of the provisions relating to partnerships as set out in clause 6. That section does not apply to the year 1950-51, but clauses 7, 10 and 18 do apply to that year. Clause 10 deals with depreciation in a manner similar to the manner in which clause 7 deals with partnerships. Clause 18 also deals with the averaging system on a retrospective basis. The Opposition desires that the primary-producer shall obtain whatever benefit he can from this legislation, but it does not wish him to be liable to pay taxation retrospectively to 1950.
– The amendment appears to achieve the purpose which Senator O’Flaherty wished to achieve when he moved his former amendment. I want to draw the Minister’s attention to the difference in language between sub-clause (1.) and sub-clause (4.) of this clause as originally drafted. As this bill was printed and circulated in another place, clause 24 applied to retiring allowances and deferred pay received during the year of income that commenced on the 1st July, 1952, and in all subsequent years. The provision as to retiring allowances does not now appear in the bill and the provisions relating to deferred pay and retiring allowances were expressed not to. apply to amounts received before the 19th September, 1952. As originally drafted the bill exempted from its amending provisions retiring allowances and deferred pay received before the 19th September, 1952. Subclause (4.) was based on a principle of which I approve and I believe that the amendment which Senator O’Flaherty has moved is designed to give effect to the same principle in sub-clause (1.).
– The Government is not prepared to accept the amendment for reasons that have already been advanced.
.- As I understand the position, the provisions of the new section 36 of the act are not intended to apply to income derived between the 1st July, 1950, and the 30th June, 1951. I understand that all assessments issued during that year have been dealt with or that endeavours are being made to deal with them before the new section becomes effective. Will the Minister state whether this is the position? If it is the position, can he state why at least a portion of the amendment should not be inserted in the bill? That portion which deals with income derived during the year beginning the 1st July, 1950, would merely give effect to what appears to be the intention of the Government.
.- The amendment before the Senate would give effect to the view of the Opposition that retrospective legislation ought not to impose a burden. This proposed adendum to sub-clause (1.) of clause 24 will merely ensure that no additional burden shall be imposed by virtue of the fact that this legislation will have retrospective effect. At the same time, it will preserve any retrospective benefits that are conferred by the legislation. If the Minister for National Development (Senator Spooner) were to object to the amendment on the ground that it presented drafting difficulties the Opposition could understand that objection. But the Minister’s refusal to accept the amendment is apparently based on a resolve to apply the burden of this legislation retrospectively to cases in the categories that were discussed earlier in this debate. That is a matter of principle upon which the Opposition differs from the Government.
– Perhaps I may interpose in connexion with the matter that Senator Gorton has raised. I have been associated with the preparation of some of the Government’s amendments to this legislation and I think it would be correct to say that clause 7 will only operate to give relief. I understand that all assessments - certainly the bu’lk of assessments - for the year 1950-51 will be based on the Rose case, the Commissioner for Taxation, having given instructions that all assessments since a date in February were to be issued in the light of the decision given in that case. The decision in the Rose case was given in November, 1951. It is most unlikely that any assessment for the year ended the 30th June, 1951, was made before November, 1951. A few people who had gone overseas might have received their assessments; but, apart from such cases, it is safe to say that assessments had not been issued before then. Assessments may have been made - again their number would be very few - between November, 1951, and the following February, when the Commissioner of Taxation issued his instruction. Taxpayers who were vigilant about their affairs would lodge an objection against assessments issued on the old basis and such objections could be dealt with only on the basis of the Rose case. Therefore I suggest that, looking at the matter fairly, the position of taxpayers in that category is clear. They will be taxed in accordance with the decision in the Rose case. It is, of course, quite impossible for the Commissioner of Taxation to give a guarantee that everybody who was assessed between November, 1950, and
February, 1951, has lodged an objection. Some taxpayers who were not vigilant may not have exercised their right of objection, and thus are liable to pay now the total tax for which they were assessed. The provision that we are now discussing will offer relief to those people. I remind the Senate that those are taxpayers who, in the absence of this legislation, have lost all their rights. They were assessed on the basis that the Commissioner of Taxation had adopted for many years. They accepted his assessment and took no steps to exercise their right of objection. Clause 1 will operate retrospectively to relieve them. I should like Senator O’Flaherty to realize that I am citing the case - and it is the most likely ease - of the taxpayer who has been assessed not on the basis of the decision in the Rose case, but on the basis of the old ruling by the Commissioner of Taxation. That taxpayer has been caught for the whole amount. He has not exercised his right to object to his assessment, and therefore he is liable to meet it. He has no claim for relief-
-laherty. - If he has paid his tax, he will have no redress under this bill.
– Yes he will. The whole purpose of the new provision insofar as it applies to that taxpayer is to authorize an amendment of the assessment, notwithstanding that the taxpayer at present has no claim for any such amendment.
– On the conditions stated in the clause.
– I “agree entirely. Surely when a concession is to be granted to some one who at the moment is liable to pay 100 per cent, of his assessment, it is not unreasonable that this legislature should set down the conditions under which the relief is to be granted. When the position is analysed in the manner I have indicated, it is fair to say that the new provisions, insofar as they apply to partnership transactions and in relation to income for the year 1950-51, will operate retrospectively only to relieve people- who would otherwise be called’ upon to bear and continue to bear a heavier responsibility.
– The Attorney-General (Senator Spicer) proved conclusively that some taxpayers will not get relief under this measure. He said that the bulk of taxpayers would be relieved. He did not say that all taxpayers would be relieved. On the Attorney-General’s own admission, therefore, some individuals will be called upon to pay retrospective taxes under this measure. All we ask is that clause 24 be amended to indicate clearly that no person may be called upon to pay taxation that is retrospective to 1950. From now on, of course, taxpayers will know what to expect, but there is no justification for making the amendment retrospective. If the Government is not prepared to agree to the Opposition’s amendment forthwith, Ave should adjourn for a while to give Ministers an opportunity to study the position with a view to inserting a provision that will meet the wishes of honorable senators on this side of the chamber and of some Government supporters.
.- The Attorney-General (Senator Spicer) stated admirably the benefits that this measure will confer and he has given the reasons why I, at least intend to vote for the bill. Nobody has contested the claim that the bill will confer certain benefits. That is not the point that I raised. My point is this: We have been assured that, in respect of the income year 1950-51, no taxpayer will be penalized under this legislation. If that is so, why not insert a provision stating that no taxpayer is to be penalized, in respect of that year and no assessment is to be increased? I should be glad if the Attorney-General would answer that question without referring to the benefits that the measure will confer.
– I support Senator Gorton. The AttorneyGeneral (Senator Spicer) left the committee with the impression that, so far as the year 1950-51 was concerned’, there would be scarcely anybody in the group of special cases. If that is so, by insisting upon the inclusion of retrospective, provisions in this legislation, the Government must be seeking to affirm the principle of retrospectivity. Whilst I agree with Senator Gorton and others that the bill does confer certain benefits, before we acknowledge that, we must acknowledge that it imposes an omnibus liability. The proposition is that if the High Court’s decision had been allowed to stand, the present position would not have arisen. There would have been no need for the Government to insert an omnibus provision to catch every body in the partnership field. When the Attorney-General says that the bill mainly makes concessions, I remind him that it does that only after imposing a dragnet liability. There are plenty of entanglements for the feet of those who will be caught in this retrospective legislation. There is, for instance, the unfortunate taxpayer who has chosen to retain 20 per cent., a proportion that would not be unreasonable in the light of all the circumstances. An active working father may be accidentally disabled, and may be content to take 10 per cent. Many people will be caught up. The evil that the Opposition sees is that owners have made disposals to their families through partnerships and by other means, without knowing that the Government intended arbitrarily to fix a minimum of 25 per cent. Had they been advised of that intention soon after the High Court’s judgment, there would not be any excuse for them but I think the Government owes something to the people who will be affected by this legislation, even though they may be few. They have been tricked - perhaps I should say led - by the Government’s invitation, into the establishment of such arrangements as family partnerships without any warning that if their remaining interest is less than 25 per cent., their fate depends upon the discretion of the Commissioner of Taxation.In these circumstances, I believe that the Government could, with safety to its revenue and without jeopardy or damage to the principle which is opposed to retrospectivity in this matter, accept the amendment that has been sponsored by the Opposition.
Question put -
That the words proposed to be added (SenatorO’Flaherty’s amendment) be so added.
The committee divided. (The Chairman - Senator George Rankin. )
Majority . . . . 3
Question so resolved in the negative.
Clause agreed to.
– The time allotted for the consideration of the remaining stages of the bill has expired.
Remainder of bill agreed to.
Bill reported without amendment.
Motion (by SenatorSpooner) proposed -
That the report be adopted.
SenatorMcKENNA (Tasmania - Leader of the Opposition) [5.6]. - I desire to move an amendment in the f ollowing terms : -
That all words after “ That “ be left out with a view to insert in lieu thereof the following words : - “ the Bill be recommitted to provide for -
– Order ! I direct the attention of the Leader of the Opposition (Senator McKenna) to the fact that the time allotted for the consideration of the remaining stages of the hill has already expired. In these certain circumstances the amendment cannot he accepted.
SenatorMcKenna. - It is true that the time expired two minutes ago. I regret that an opportunity has been denied to me to pursue the matter further.
Question resolved in the affirmative.
Bill read a third time.
Debate resumed from the 7th October (vide page 2509), on motion by Senator Spooner -
That the bill be now read a second time.
– During the debate on the bill which the Senate has just disposed of I cited some figures in relation to income tax assessments. I propose to pursue the subject a little further during the consideration of this bill, the purpose of which is to declare rates that shall be applicable to taxable incomes assessed in accordance with the provisions of the earlier measure. During the debate on the earlier bill Senator Laught stated that reductions in income tax rates had been made by this Government and in order to support his contention he illustrated the case of a taxpayer who received an income of £400 a year some years ago and still received the same amount of income, but now pays a smaller amount of tax than he paid previously. The honorable senator conveniently forgot to mention that during the intervening years the value of the £1 had considerably diminished. Evidence of the extent to which the purchasing value of the £1 has decreased is shown by the upward trend of the basic wage. Because living costs have increased the purchasing power of the £1 has diminished. It is now necessary to use much more money to buy an article than was the case a few years ago. The comparison sought to be made by the honorable senator was therefore not a fair one. In order to make a true comparison he should have taken into consideration the extent to which the basic wage has been increased during the period covered by the comparison. I have before me a table showing the amount of income tax paid this year by a basic wage-earner with a wife and two children and the amount paid by a basic wage-earner in a similar position in 1949. The figures shown in the table relate to a basic wage worker in Adelaide. I have used the figures relating to Adelaide because I am naturally more familiar with them than I am with those that relate to other capital cities. The comparison is a generous one because the basic wage worker in Adelaide is a little better off than is a basic wage worker in most of the other capital cities. As honorable senators are aware, the basic wage is the minimum wage sufficient to provide for the essential needs of a man with an average family. In the compilation of the wage no provision is made for income tax payments but allowance is made for certain medical and social needs. In 1949-50, a basic wage worker in Adelaide with a wife and two children received £6 4s. a week and paid in income tax an amount of 10s. a year. In 1951 the basic wage had risen to £9 4s. and a basic wage worker of the class to which I have referred paid in income tax an amount of £7 12s. By 1952 the basic wage had increased to £11 4s., and the basic wage worker with a wife and two children had to pay in income tax no less than £16 17s. I admit that such a basic wage worker would receive 5s. a week by way of child endowment for the first endowed child. Child endowment was paid in 1949-50. All those payments do not make much difference. The ordinary taxpayer pays more to-day than he paid in 1949-50. The basic wage is still rising and the taxpayer will be taxed more heavily. Even after the 10 per cent. levy has been lifted, the basic wage earner will pay more in income tax and social services contribution than he paid in the years preceding 1951. A man with a wife and two children paid £9 5s. more in income tax last year on the basic wage than he paid in 1951. That was a rise of taxation of 121.8 per cent. Since 1949-50 income tax charges on a basic wage earner with a wife and two children have increased by £16 7s. 4d. That represents an increase of 3,270 per cent. Yet this Government claims that it has reduced taxation. Despite the removal of the 10 per cent. levy total direct taxation will return to the Government £900,000 more this year than it did last year. Income tax is the most important factor because social services contributions are just a name attached to the bill. The lifting of the 10 per cent. levy will mean a loss of revenue of £23,000,000. Concessions on company taxation will cost £1,500,000. New conditions will apply to the payment of income tax by companies and that source will return £14,000,000 less to the national revenue. However, the companies should not expect to get that money back. It can be used as credit against future commitments but there is no provision to repay it to the companies although it was. paid in advance. Other minor concessions are to be given, including an allowance for educational expenses and assistance for aged persons and particularly for those who are in receipt of superannuation payments. Altogether the Government proposes to relinquish £49,500,000 in direct taxation. Of that amount, £23,000,000 is represented by income tax and social services payments and contributions on personal exertion income. Companies will be relieved of the payment of £14,000,000 in advance. A few thousand individuals, including companies and big land-holders, will have relief amounting to £21,750,000, and they will also derive some benefit from the £23,000,000 reduction of tax on personal extertion income. Most of the Government’s legislation gives concessions to big interests. Very little concession is to be given to the basic wage earners. In fact, persons in that category will pay more in taxation than they did a year ago.
– What about reductions of sales tax?
– The Government has reduced sales tax on expensive items but the man on the basic wage cannot afford to buy them. He will not benefit in the slightest degree from sales tax concessions because the Government has not reduced the tax that is levied upon goods that the basic wage earner and the middle class man can afford. If a man is paid a margin of 30s. above the basic wage, he is taxed heavily. The total taxes that are imposed by the Government returned £369,250,000 more last year than they did in 1949. Those figures apply only to income tax and social services contributions. The Government has charged the Labour party with being extravagant. It promised to reduce taxation but actually it is taxing the people beyond their ability to pay. The Auditor-General has reported that taxation payments outstanding at the 30th June, 1952, totalled £186,255,843. Last year the total was £58,960,000. In one year the amounts that are outstanding have increased by approximately £130,000,000. That supports my statement that the people are being taxed beyond their capacity. The AuditorGeneral reported as follows : -
The increase in taxes outstanding is almost wholly attributable to income tax, and the following reasons have been advanced therefor: -
An increase in gross debits.
That was because taxpayers were unable to meet their taxation commitments -
Although the Taxation Branch had sent out more assessments, the taxpayers had been unable to meet their previous assessments.
This is an aspect of the matter to which the Opposition directed attention when the Government introduced modification of the averaging system.
When wool prices decreased considerably, many wool-growers were unable to meet their taxation commitments. I advised a number of graziers to apply for extensions of time in which to pay.
That means, in plain language, that the people were unable to pay their taxes. Although the Auditor-General’ has been criticized for certain things recently, I do not think that any honorable senator doubts the accuracy of his report.
– This Government cannot be blamed for introducing the principle of provisional taxation.
– No, but by its modification of the averaging system, the present Government has extracted an additional £45,000,000 from the primary producers of this country.
I object to the title “ Income Tax and Social Services Contributions Bill”, because there is now no social services contribution as such. It has been absorbed within the income tax structure. The proceeds of all kinds of taxation are now credited to general revenue. We have been led to believe that before long the Government intends to introduce a contributory national insurance scheme. As a result, doubtless the people will be called upon to make increased social services contributions. The Government has stated that the expenditure on social services will be met from general revenue. Under the old formula, an amount of approximately £185,000,000 would have been collected in social services contributions during this financial year, but the Government will pay only £164,000,000 into the National Welfare Fund. The Government proposes to get over the difficulty by introducing a contributory national insurance scheme in order to further mulct the people. It has applied various titles to its financial measures in order to try to convince the people that they are not taxation measures.
During the general election campaigns of 1949 and 1951 honorable senators opposite won the confidence of the people by a false promise to reduce taxation. They stated that the extravagant Chifley Government had extracted £500,000,000 a year from the people in taxes. Yet, in this financial year, taxation has been imposed to yield about £850,000,000.
– We are growing up.
– It is time that supporters of the Government woke up to themselves. Already they have lost the confidence of the vast majority of people who returned them to office. I have previously described the Liberal party as the “ Shifler “ party, because supporters of that party shift from here to there and back again. Although the Income Tax and Social Services Contribution Assessment Bill was received from the House of Representatives on the 9th October, the Government saw fit to-day to apply the “guillotine”, and also circulated a proposed amendment. When the measure was before the other place there was much newspaper criticism of it. I should not like to be associated with some of the tough criticism of the Treasurer (Sir Arthur Fadden). However, the Government said, in effect, “ We shall stick to it. This is the bill that we want “. The Treasurer made a statement to the effect that the Government intended to rope in certain people in the income tax field. To-day, that position is reversed. One day the chests of the supporters of the Government are bloated like toads; the next day they are deflated. When the Treasurer was criticized a Cabinet meeting was held and the Prime Minister (Mr. Menzies) subsequently announced that the Government, not the Treasurer, was responsible for the proposals contained in the bill. To-day, the Minister for National Development moved an amendment to alter the provisions in relation to what the Prime Minister had stated the Government bore full responsibility. The Government parties do not know whether they are coming or going. As the assessment legislation has been passed by the Senate, it would be futile for the Opposition to oppose the passage of a bill to provide for rates. I shall not oppose the bill, although I do not support it.
– I support the bill whole-heartedly because it is a further earnest of the intention of the Government to honour its promise to the people to reduce taxation as and when possible. It is one of a series of bills designed to reduce the over-all taxation in this country by approximately £50,000,000 in the current financial year. The concessions provided in the bill were foreshadowed by the Treasurer (Sir Arthur Fadden) when he introduced the budget, on the 6th August last. I commend the right honorable gentleman for introducing the budget within a few weeks of the end of the last financial year, notwithstanding the fact that it is one of the heaviest budgets in the history of this country. The proposals contained in the budget gave great stimulus to production, particularly primary production. The abolition of the 10 per cent, special income tax levy acted as a great incentive to the people. During this financial year there has been a remarkable upsurge in primary production in South Australia, particularly dairying production, although statistics may reveal an overall lag in primary production in Australia as a whole. The reductions of company tax are also very important. It should be borne in mind that all companies, both private and public, will benefit from the removal of the 10 per cent, advance payment provision which it was found necessary to impose last year. There is no need for me to deal further with’ reductions of company tax. For the reasons that I have already presented, and for many more valid reasons which I could also put to the Senate, I support the bill.
Question resolved in the affirmative.
Bill read a second time, and passed through its remaining stages without requests or debate.
Motion (by Senator O’sullivan) agreed to -
That the Senate, at its rising, adjourn to Tuesday next, at 3.30 p.m.
Motion (by Senator O’SULLIVAN proposed -
That the Senate do now adjourn.
– I rise, at the close of a most peculiar day, to place on record my complete disgust with the manner in which the Senate has been treated by the Government during the last fortnight. The legislation that has occupied the time of honorable- senators for most of the day has been on the notice-paper for almost a month. I contend that legislation of such magnitude and importance to the Australian nation should receive far more attention from honorable senators than has been possible because of the limitation of time imposed by the Government. I am at a loss to understand the attitude of the Minister for National Development (Senator Spooner), who was in charge of the bill, in moving, that it be declared an urgent measure, in view of the time that it has remained on the notice-paper. I can only conclude that unanimity had not been reached amongst the followers of the Government. In my fairly long activity in political affairs, both in Government and in Opposition, I have never seen a parliamentary institution treated in such a cavalier fashion as the Senate has been treated by the Government to-day. I sincerely trust that the Government will yet appreciate its responsibilities and not attempt to bludgeon through the Senate bills that remain to be dealt with, and that it will refrain from adopting the bush-ranging tactics with which it has been so successful recently. To a degree, I am sorry that the South Australian member of the ministry in the Senate, the Minister for Shipping and Transport (Senator McLeay), who is the most ruthless member of the Government so far as political attacks and gagging are concerned, has now been deposed as the chief exponent of the “ guillotine “ in the Senate. [Quorum formed.’]
– I desire to bring to the attention of the Minister for National Development (Senator Spooner) a matter which vitally affects the State of Victoria. As the Minister is no doubt aware, round Colac there is a large tract of country which is one of the richest dairying areas in the Commonwealth. During recent years, the level of the lakes in the district has risen considerably, with the result that 10,000 acres of land have been submerged. That land is worth approximately £600,000. Fifty families engaged in primary production in the area are being slowly but surely forced from their holdings. Fifty thousand gallons of milk are lost each week because this land is being thrown out of production, to say nothing of the inestimable amount involved in the loss of grazing land. It is considered that this phenomenon is due to the denuding of forests in the area and to poor drainage.
Whilst I appreciate that, primarily, the work of preventing further encroachment of the water from the lakes devolves upon the Victorian Government, it has occurred to me that the Australian Government also may be able to do something in this matter, in view of the action that it has taken in the past to make good losses due to floods and other disasters. No doubt the Government appreciates the difficulty which confronts the State governments in financing major works such as drainage projects. I believe that in Victoria there is sufficient earthmoving equipment for this purpose. However the State lacks the financial resources to undertake such an operation. In my opinion, the Commonwealth is interested in this matter because of the fact that primary production is being lost to the country. If nothing is done, the level of the lakes will continue to rise. It is not as though the area was originally covered with water, as it was in the case of Lake George, near Canberra. No one dreamt that this land would be flooded. It has been settled for many years and has been of great value, not only to Victoria but also to the Commonwealth. It is futile to ask the shire councils in the area to deal with the matter because their revenues are so limited that they are totally unable to finance such a project. It is really a national undertaking.
– I have listened with a good deal of interest to Senator Sheehan’s description of the position that exists in the Colac district, but I am unable to see how the Commonwealth could provide financial assistance in order to carry out the work which is required. The project is not in the same category as a national disaster such as floods, or bush fires, in connexion with which the Commonwealth from time to time makes a £l-for-£l contribution with the States. Having, regard to the precedent which financial assistance by the Commonwealth would establish, I am unable to see how we can assist in the matter. If a special appropriation were to be made in respect of this area, which is so well and truly within the boundaries of Victoria, I do not know how we could avoid refusing, with justice, a similar application in respect of an area within the boundaries of another State. As the honorable senator is aware, the number of such applications received by the Commonwealth is large. However, I shall allow my department officers to investigate the matter and await their advice. One day next week I shall mention the matter to my colleague, the Treasurer (Sir Arthur Fadden).
Question resolved in the affirmative.
The following papers were presented : -
Aluminium Industry Act - Australian Aluminium Production Commission - Annual Report (Seventh), for year 1951-52.
Audit Act - Finance -Supplementary Report of the Auditor-General upon other accounts for the year 1951-52.
Australian National Airlines Act - Australian National Airlines Commission - Seventh Annual Report and Financial Accounts for year 1951-52.
Banking Act - Regulations - Statutory Rules 1952, Nos. 92, 93.
Defence Act - Royal Military College - Report for 1951.
Defence (Transitional Provisions) Act - National Security (Industrial Property) Regulations - Orders - Inventions and designs (3).
Income Tax and Social Services Contribution Assessment Act - Regulation - Statutory Rules 1952, No. 90.
Patents Act - Regulations - Statutory Rules 1952, No. 91.
Public Service Act - Appointments - Department -
Attorney-General’s - B. W. Norman.
Repatriation Department - J. H. Kelly.
Trade and Customs - B. T. Taylor, I.S. Taylor.
Works - J. R. Sanders.
Regulations - Statutory Rules 1952, No. 94.
Senate adjourned at 5.57 p.m.
Cite as: Australia, Senate, Debates, 29 October 1952, viewed 22 October 2017, <http://historichansard.net/senate/1952/19521029_senate_20_220/>.