21st Parliament · 1st Session
The President (Senator the Hon. A. JML McMullin) took the chair at 11 a.m., and read prayers.
Senator PALTRIDGE. - I refer to the refusal of the Western Australian Government to continue to support the air beef scheme established at Glenroy, as recommended by the Commonwealth and State Kimberleys Development Committee, and adopted by the previous Western Australian Government. Tn view of the damaging effect which that action will have on the progress and development of the beef industry in the Kimberleys area, will the Leader of the Government expedite the presentation .of the report of the committee which this Government recently announced would sit under the chairmanship of the honorable member for Dawson, to inquire into all aspects of the air beef project, particularly in northern Australia?
Senator .McLEAY. - I shall have that matter examined and report to the Senate as soon as possible.
– As the Leader of the Government is aware, recently an exPrime Minister of Great Britain accompanied a delegation, consisting mainly of United Kingdom Labour members of parliament, to Russia and China. Docs the Minister know whether the expenses of that delegation were paid by the British Government ? Does he also know whether a number of private members of the Australian Country party and the Liberal party have asked that a delegation from this Parliament be sent to China? Does the Minister consider that such a proposition is a good one? In the event of that proposal being approved, will the Minister take the earliest opportunity to send a delegation consisting of members from both sides of the Parliament?
– There are some members of the Parliament whom I would like to see go to China and stay there. The question raised by the honorable senator is of great importance, and as it involves a matter of high policy, only the Prime Minister should make an announcement about it.
– I refer to the recent announcement by the Minister for Supply that the Public Accounts Committee will be asked to inquire into and report upon serious allegations of maladministration by the Australian Aluminium Production Commission. Can the Minister representing the Minister for Supply say whether the Public Accounts Committee will visit the site of the aluminium project at Bell Bay? If that has not yet been decided, will he urge the Minister for Supply to request the committee to visit Bell Bay and take evidence on the spot?
– I am unable to give a definite answer to the honorable senator as I only represent the Minister for Supply in this chamber, but I shall direct the attention of the Minister to the request and inform him of the result.
Senator Benn having asked a question without notice,
– Order I It is obvious that remarks that I have made in the past few weeks about the nature of questions that are submitted by honorable senators have not borne fruit. Senator Benn has just asked a long and involved question. The honorable senator would be wise if he placed the question upon the notice-paper so that the Minister to whom the question -was directed may give him a considered reply.
– “Will the Minister for Shipping and Transport inform the Senate whether any dollars are available from loans that were successfully raised from the International Bank for Reconstruction and Development, for the purchase . .of diesel electric equipment and other rolling-stock for the East-West railway to enable a third train to be run?
– Dollars were made available for the purchase of diesel electric locomotives and spare parts. In any future application for more dollars, the question of priorities will arise, but the importance of rail transport is such that dollars would be made available, in my opinion. As I stated in this chamber, last night, the Commonwealth Railways are in a position to run an extra train now but the Western Australian Railways Department and, I believe, the South Australian Railways Department, are not able to provide sufficient trains to take passengers on from Kalgoorlie to Perth and from Port Pirie to Adelaide. That was the position a few months ago. I do not know whether the position has changed in the past month since I saw the Commonwealth Railways Commissioner, but I shall be pleased to make further inquiries and supply the information to Senator Laught.
– In view of the precarious position in which growers of grapes, the processors of dried fruits and the manufacturers of wines find themselves at present, is the Minister acting for the Minister for Commerce and Agriculture in a position to inform the Senate how far the negotiations of the Minister for Commerce and Agriculture have progressed in London during the past few weeks to provide a tetter market for those valuable Australian products?
– Negotiations are proceeding, but I am unable to give the honorable senator a direct answer. I hope to get reports of a definite character from the Minister for Commerce and Agriculture soon. The Minister is doing his best in the interests of the producers and manufacturers to whom Senator Critchley has referred and to assist all producers whose activities have an important bearing on the economy of Australia.
asked the Minister representing the Acting Treasurer, upon notice -
What was ( a ) the cost of land, ( 6 ) the cost of the building, and (c) the cost of furniture and fittings, of the new Com mon wealth Bank at Hobart?
– The Prime Minister, as Acting Treasurer, has supplied the following answer: -
The question concerns the internal administration of the bank, which w a matter foi the bank to determine. However, the Governor of the bank has informed me that the total cost of the bank’s new Hobart premises, including the land, building, furniture and fittings, wast about £1,000,000.
asked the Minister representing the Treasurer, upon notice -
Contribution Assessment Act since the date at which the operation of the 1952 amendment of that section commenced?
– The answers to the honorable senator’s questions are as follows : -
Section 36 of the Income Tax and Social Services Contribution Assessment Act is a provision which is an essential complement to section 25 and, generally speaking, applies to the disposition of trading stock by a taxpayer either by way of gift or where the disposition is not made in the ordinary course of carrying on the taxpayer’s business. As the honorable senator will appreciate, the section has a wide application and a large number of cases would come within its provisions from day to day. I stated in my answer to the honorable senator’s earlier question regarding the operation of the section, that no record of these cases has been kept because it is not seen what purpose would be served by such a record. .
asked the Minister representing the Prime Minister, upon notice -
– The following answers have been supplied : -
asked the Minister representing the Prime Minister, upon notice : -
– The answers to the honorable senator’s questions are as follows : -
– As Chairman, I present the ninth report of the Regulations and Ordinances Committee.
Ordered to be printed.
Bill received from House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner) read a first time.
– I move-
That the bill be now read a second time.
The measures embodied in this bill are all of an administrative nature, and some are no more than drafting amendments. The more important alterations proposed relate to distilling plants which are not used to make alcohol. Owners of such stills were required to furnish a security against their use in the production of spirits. These securities will no longer be demanded. In addition, small stills of less than one gallon capacity will be exempted from registration. The small stills are mostly of the kind employed in analytical and laboratory work. If any still is improperly turned to spirit making a legal prosecution would be instituted instead of relying upon a security.
The bill also includes a proposal to empower collectors of customs, in special circumstances, toallow spirits to be delivered from distilleries in smaller lots than the previous minimum of 10 gallons. In the bill, also, it is proposed to grant distillers greater freedom in the location of stores used to accommodate, and for the disposal of, duty-paid spirits. Previously, the free stores were not permitted within 100 yards of the licensed distillery premises. The Department of Trade and Customs exercises close control over all distilleries and the amendment brings no danger to the revenue. Moreover, a request from the trade will be met. The bill is submitted for the honorable senators’ favorable consideration.
Debate (on motion by Senator McKenna) adjourned.
Message received from the House of Representatives intimating that the following members of the House of Representatives had been appointed to serve on the Foreign Affairs Committee : Mr. Bostock, Dr. Donald Cameron, Mr. Downer, Mr. Drummond, Mr. Osborne, Mr. Roberton and Mr. Wentworth.
Debate resumed from the 20th October (vide page 856), oil motion by Senator McLeay -
That the hill be now read a second time.
– This bill is to amend the Commonwealth Railways Act. Its purpose is simple, namely, to confer on the Commonwealth Railways Commissioner the right to provide goods and refreshments, including alcoholic refreshments, to travellers on Commonwealth railways. This proposal is in accordance with modern developments, and will bring the Commonwealth into line with the practice in the States. The bill has the support of the Opposition. My only comment on it is this: No indication has been given, either in the second-reading speech of the Minister (Senator McLeay) or in the bill itself, that there will be any limits upon the hours during which refreshment-rooms at railway stations may sell alcoholic beverages. I should like the Minister to tell us what is contemplated in that connexion. The Minister has indicated that there will be a modern refreshment-room at Port Augusta. That, I agree, is desirable. This refreshment-room will provide the items that are set out in the Minister’s second-reading speech. However, there is a danger that a refreshmentroom engaged in the sale of smokers requisites, stationery, playing cards, food and liquor may, unless its operations are controlled, offer serious competition to shopkeepers in the vicinity. The Commonwealth Railways Commissioner has, of course, a trading advantage in that his goods are transported free on the railways whereas private shopkeepers have to pay freight on their stock. I notice that, under the bill, the granting of authority to the lessee of railway refreshmentrooms will be subject to such conditions as the commissioner thinks fit. I take it that, pursuant to that provision, limits will be imposed on trading hours. 1 do note that the authority is simply to provide facilities to persons travelling upon the railways. It is all right to record that in a bill, but no doubt there will be lessees who will want to make the most of their opportunities, and frequently it is almost impossible to distinguish travellers from non-travellers. I. suggest therefore, that the limiting of trading to railway travellers, is more a pious hope than a practical limitation. I do not wish to take a narrow view of this matter,, but I think the Minister might indicate what is in mind in taking such a broad and complete authority. Will the licensing hours of the States be observed? Will the operations of these refreshment-rooms be kept in line with the practices of the State railways? If the Minister can give some information on those matters it would clear the- situation.
Senator SEWARD (Western Australia.) ril.25]. - Realizing that persons who habitually partake of alcoholic beverages should be catered for, I am glad that provision has been made- for the sale of liquor at the new railway refreshmentroom at Port Augusta. Although I am not conversant with the liquor laws of South Australia, I understand that that State subscribes to the shocking practice of closing hotel bars at 6 o’clock at night. It is for that reason that I share the apprehension of the Leader of the Opposition^ Senator McKenna) in relation to the administration of the sale of liquor at Port Augusta railway station. In view of my experience of what has happened at railway stations in Western Australia at which liquor is sold, I foresee the necessity for strict control. The bar should be opened only when a train comes in, and closed immediately after it has pulled out. Many complaints have been made by hotel-keepers in
Western Australia about alleged afterhours trading at railway refreshmentroom bars in that State. Unless strict control is enforced at Port Augusta, it will not be very long before the Minister for Shipping and Transport (Senator McLeay) receives strong protests from the local hotel-keepers, who, because they have to pay fairly heavy licence-fees, resent any interference with their trade. I come now to the sale of liquor on the trans-continental train. I hope that, as a result of this measure, alcoholic beverages will not be served to travellers in the lounge car of the train at all hours of the day.
– Why not ?
– We have only to reflect on conditions at the cafeteria on the Adelaide-Port Pirie train, which connects with .the Trans-Australia train when the crowd around the bar is so thick that travellers have difficulty in entering the cafeteria. As one who has travelled by the trans-continental train many times during the last few years, I should like to say that I have not noticed the shortcomings in relation to service on the train that Senator Vincent mentioned last night during the consideration of the proposed vote for the Commonwealth Railways. Generally speaking, the meals are excellent, and the train attendants carry out their work efficiently, particularly in transferring baggage at Port Pirie and Kalgoorlie. I emphasize that I do not want to see the lounge car turned into a bar throughout the day. I have no objection to alcoholic beverages being served with meals. Travellers who require additional liquid refreshment can easily take bottles into their compartments. I am sure that ladies travelling alone, or with children, do not want to be confronted with the spectacle of other travellers guzzling beer, wine and spirits in the lounge car. Whilst on the subject of liquor, I direct attention to the fact that beer is sold at 6s. a bottle on. the trans-continental train. That is an absolute fraud, because Kalgoorlie beer can be purchased at Kalgoorlie railway station for 2s. lOd. or 3s. a bottle, and West End beer for much less than (is. a bottle.
– Where did the honorable senator get his information?
– From personal’ experience. I complained to the Commissioner about that charge, and he told me that it was possible to get only threeglasses out of each bottle. I could not contradict him, but the next time I camethat way I brought a glass with me from the dining-car and was able to pour four glassfuls from a bottle. The charge of ls. 6d. a glass is ridiculous. I think it only fair that Western Australian wines should also be sold on the line. Perhaps the arrangement could be for half South Australian and half Western Australian wines and beer to be sold, if for no other reason than to support the excellent beverages which Western Australia produces.
The only other matter to which I wish to refer relates to the putting on of additional trains, about which the Minister spoke yesterday. If I remember correctly, the Minister stated that the Western Australian and South Australian railways could not cope with the traffic if an additional train were run. With respect, that is not the reason at all. Great disappointment is caused by the Commonwealth putting on a special train of the old type when a large number of people propose to travel, which occurs fairly frequently. Naturally, people expect to travel from Western Australia to South Australia by the new train, and when they find that they are obliged to travel in an old type train they are very disappointed. On more than one occasion, people who have travelled on such a train have told me that, although they intended originally to return by train, they would change their minds and go back by air or by sea.
I support the bill, because I think that it embodies a worth-while idea, but I suggest to the Minister that precautions be taken against indiscriminate drinking on the trains. In Western Australia, people are prohibited from taking liquor from the railway refreshment-rooms on to trains, but that prohibition seems to be honoured more in the breach than iri the observance. I have travelled about a good deal by rail, and I have seen, on many occasions, compartments which resembled bars more than anything else.
That kind of thing, of course, lowers the standard of service provided by the railways.
– As the Leader of the Opposition (Senator McKenna) has intimated, the Opposition raises no objection to this bill. From my observations of conditions at Port Augusta, which is a rapidly developing town, the bill will meet a need which has existed for a long time. A few weeks ago, I asked the Minister for Shipping and Transport (Senator McLeay) a question concerning the proposed trading hours of the refreshmentrooms at Port Augusta, because, as Senator Seward has pointed out, trains arrive at Port Augusta at all hours of the day and night. Senator Seward also referred to the heavy drinking which takes place on trains in South Australia, and I am afraid that I cannot agree with him entirely. This bill is concerned, however, with the provision of a specific facility. Port Augusta is an unusual place, and the establishment of this cafeteria has been rendered necessary by the increased number of travellers who arrive there, many of whom would have difficulty in finding their way from the station to the town, if they wanted a cup of tea, in the time available to them. Incidentally, I assure Senator Seward that the beer that will be available in Port Augusta will be mainly “ West End “, despite his apparent bacl opinion of it.
The business people of Port Augusta seem to fear that the business they do with travellers on trains will be lost to them when this cafeteria is established. That was the reason for my question about the trading hours of the cafeteria, and I hope that the Minister will be able to assure me that it will be opened only a few minutes before arrival of trains and closed a few minutes after their departure. Although the competition provided by the cafeteria will probably not be very great, nevertheless refreshments, cigarettes, books, periodicals and that kind of thing will be sold, and for that reason, there seems to be some ground for the fears of the business people of Port Augusta. 1 hope that the successful tenderer will not be enabled to compete with the local tradespeople on a scale very much different from that on which the lessees of railway refreshment-rooms in other parts of South Australia compete.
– in reply - I can give the Senate an assurance that the bar will be opened just before the arrival of trains and closed just after their departure. That is the practice in other railway refreshment-rooms in South Australia. Those honorable senators who have had the opportunity to visit Murray Bridge will know that the railway station there is very close to the hotels and the centre of the town. Yet, I have never seen any evidence of the Murray Bridge people crowding into the refreshment-room ai the station. Honorable senators will appreciate that, at Port Augusta, the railway station is at a considerable distance from the shopping centre and the hotels, and as many of the trains which arrive there travel long distances, very often through dry areas, the establishment of this . cafeteria will enable travellers to get the dust out of their throats and relieve the tedium of a long journey. I was particularly interested in the point raised by Senator Seward about the Commissioner having to put on an old train occasionally. I assure him that it is my earnest endeavour to persuade the Treasurer (Sir Arthur Fadden) to try to obtain another modern train when funds are available, so thai disappointment and inconvenience will not be caused to people who travel on that line. So. far as refreshments are concerned, I have found Western Australians to be very enterprising people. Senator Paltridge went out of his way to send the Railways Commissioner a case of Western Australian wine to sample, so that he could determine whether it was equal to South Australian wines. I sampled a bottle and I believe I have convinced the Commissioner that the fair thing to do would be to provide half Western Australian wine and half South Australian. Honorable senators from Western Australia will be pleased to know that a number of customers have asked for Western Australian wines, and I believe that if we provide plenty of Western Australian wine and beer, revenue will be considerably increased.
I hope these improvements, added to the efforts that are being made by the Railways Commissioner, will make this service the best in Australia, and one comparable with the best in the world.
Question resolved in the affirmative.
Bill read a second time, and passed through its remaining stages without amendment or debate.
Debate resumed from 14th October (vide page 718), on motion by Senator Spooner -
That the bill be now read a second time.
. - The Opposition is prepared to assist in the quick passage of this measure. It is intended expressly to provide for the appropriation of £42,000,000 for increases of war pensions that were recently approved by the Senate. In his second-reading speech, the Minister for National Development (Senator Spooner) pointed out that it had no relation to the rates of pension and the conditions under which pensions are paid. I regret being denied the opportunity to discuss war pensions further, but I do not wish to incur your wrath, Mr. President. I assure honorable senators that the Opposition supports the bill, but expresses regret and concern that so many pensioners will not have the benefit of a substantial increase of pensions. I am sure that many honorable sena tors on the Government side indivi- . dually support that view. The Opposition hopes that those who will benefit under this measure will derive some comfort from it in these days of increasing living costs.
Question resolved in the affirmative.
Bill read a second time, and passed through its remaining stages without amendment or debate.
Debate resumed from 14th October (vide page 718), on motion by Senator Spooner -
That the bill be now read a second time.
– This bill deals with the pay-roll tax, and its broad effect is to grant further relief in that field of taxation. The Government has progressively increased the amount of exemption in the past from pay rolls of £20 a week to those of £80 a week. The exemption is now to be lifted to pay rolls of £120 a week. That means that an employer paying an amount of £6,240 or less a year to employees will be exempt from payment of the tax on the passage of this bill. In his second-reading speech, the Minister for National Development (Senator Spooner) indicated that this bill would free from the pay-roll tax net about 10,500 employers. That, of course, is all to the good, and it is supported by the Opposition. The second main provision of the bill is an exemption in favour of private hospitals that are not operated for profit. The Opposition entirely supports that proposal.
The amount involved for the current year is only £1,500,000, indicating that the measure of relief will be relatively small. Despite the large lift in the amount of weekly exemptions, and the large number of employers who are to be removed from the field of taxation altogether, the overall relief to those who remain in the field will not be great. Accepting the Minister’s estimate, the loss to revenue for a full year will be £1,800,000 and, for the balance of the current financial year, £1,500,000. The Opposition approves the principles involved and would welcome further extension of the exemption. It would, in fact, favour the abolition of the tax. The tax was imposed originally in 1941 and became operative from the 2nd May that year for the express purpose of financing child endowment. In 1945, after the establishment of the National Welfare Fund in 1943, the proceeds of the payroll tax and other moneys were paid into the fund. Its original purpose was crystallized in the National Welfare Fund Act 1945. Due to variations of the act relating to that fund by this Government, the pay-roll tax has now lost its identity as a primary source of financing child endowment. No specific amounts are paid into the National Welfare Fund for that purpose and the amount required to meet outgoings is simply appropriated from Consolidated Revenue each year. When one looks at the yield of the payroll tax, one finds no great variation from year to year. In 1951-52, actual receipts were, in round figures. £37,000,000; in 1952-53, they were £40,000,000; and in 1953-54, they were £40,000,000. In this year, after a flowing for the concession of £1,500,000, the receipts will -be £41,200,000. It is rather interesting to note that, although the Government claims it is making a concession to the tune of £1,500,000, it will in fact collect at least £1,000,000 more this year than it collected last year.
– That is the aggregate revenue. Many more, people are em- ployed now.
– I have already acknowledged that a lot of people will be let out of the pay-roll tax field, but I have pointed out that, despite the relief granted by the measure, the Government will lose no revenue. In fact, it will obtain more than it obtained last year. That does not indicate any great generosity or any great over-all relief. On the contrary, it puts the concessions granted by the Government in the proper perspective, shows that they are relevantly insignificant, and justifies the claim made by the Opposition that the Government has not gone far enough in the matter.
– The Government has gone further than the Labour party went.
– Let me deal with Senator Guy’s interjection. I point out to him that, in our last full year of office, the total burden of taxation under the pay-roll tax legislation wa? only £22,000,000.
– What was the exemption limit?
– It was £20 a week. To-day, the total burden of taxation under the legislation is £41,000,000 a year. In other words, the total burdell has doubled in that period. I am sure the honorable senator will not attempt to argue that during that period the number of employees has doubled.
– The aggregate revenue does not show the tax in its proper perspective.
– I agree that inflation and the increased wage bill must be taken into account. As the honor ab h. senator knows, the pay-roll tax is a 2-) per cent. levy upon wages paid. Nobody knows better than he does how and why wages rose. The rise was due primarily to the fact that inflation was allowed to run riot in this country. The Government should not preen itself for making a generous concession in this tax field, because it will collect £1,000,000 more from the tax this year than it collected last year. In those circumstances, u might well have gone further than ir has gone.
This tax adds very substantially to the costs of all trading enterprises. In cases where increased costs can be passed on, the tax is an important ingredient in the cost structure, not only because of the amount of the tax itself, but also because of the fact that, as articles pass through the normal channels of manufacturer, wholesaler, carter and retailer, each person who handles the articles calculates his margin of profit on a figure based c”. the original cost, of which the pay-roll tax is an ingredient. So the operation oi the tax has an important effect on the cost of goods and services of all kind.-, throughout Australia. This Government, realizing at long last that there is a need for stability - the present degree of stability having been obtained less bv its efforts than by the decisions >‘.f the Commonwealth Arbitration Court - ought to have as its primary concern to-day the problem, of reducing costs. The major problem with which the Government should be concerned in the economicfield is the problem of reducing costs. The abolition or a substantial reduction of this tax would make a major contribution to the solution of that problem. I do not want to develop at length the difficulties that Australian industries are encountering here and overseas due to the fact that costs of production are so high. The Government shows its lack of appreciation of those difficulties when, having an opportunity to make a substantial reduction of costs, it permits that opportunity to pass by. The Opposition expresses its disappointment at that.
We contend that, as the Government has accepted the principle that non-profit organizations in the hospital field should be exempted from the tax, the principle should be extended to municipalities. Local governing bodies are doing very important work for the community. Their activities in connexion with culture, health, sport, roads, and other subjects are increasing. They are expected to provide many more facilities for the people in their areas. Except in cases where they operate trading enterprises, they are nonprofit organizations, composed of people who render civic services quite voluntarily. If the Government, instead of increasing the total burden of the tax by £1,000,000 a year, had decided to forgo the extra revenue, it could very nearly have abolished the tax in respect of municipalities. The total sum collected from municipalities and State governments pursuant to the pay-roll tax legislation is about £4,000,000 a year. It is safe to say that the cost to the Government of exempting municipalities from the operation of the tax would be a little over £1,000,000 a year.
Forgetting a few trading enterprises, I say municipalities are not in the position to pass the tax on. In that respect, they are in a worse position than manufacturers. At an appropriate stage of the proceedings, the Opposition will move that, as a measure of relief, municipalities be exempted from the tax. The Government, very properly, has. granted an exemption from the tax to non-profit organizations in the field of private hospitals. I cannot understand why it has denied a similar exemption to nonprofit organizations rendering valuable service to the community in the field of municipal activities. The exemption of municipalities from the tax would not involve much money, but I am sure everybody on the Government side of the chamber agrees that it would give wellmerited relief to very worthy bodies. Municipalities are exempted from the sales tax. That is another argument in favour of exempting them from the payroll tax. The Commonwealth is not obliged to pay municipal rates. It has a vast number of properties scattered throughout the municipalities of Australia but, with rare exceptions, such as Commonwealth Bank buildings, it pays no rates in respect of those properties. Surely I do not have to argue in this chamber that the municipalities of Australia are in financial difficulties. They have all been obliged to increase their rates. The rates are levied primarily upon property owners, one section of the community. The burden imposed by the rates is not spread over the whole community. It is a burden, generally speaking, imposed only on property owners.
– To that degree, municipalities pass the tax on.
– When municipalities have to pay pay-roll tax to the Commonwealth, they are forced to pass the burden on by increasing the rates levied on property within their boundaries. As I have already said, the Commonwealth does not pay rates in respect of its properties. I think it is true to say that, in effect, the imposition of the pay-roll tax upon municipalities compels them to act as collectors’ of that amount of tax from property owners. I think that this is a variation of the intended incidence of the tax. The Opposition will not oppose this measure. We consider that it is inadequate and mean. We think that it should afford much greater relief and we object to the fact that, although the Government is seeking credit for taxation concessions in this way, it will collect more money this year than it did last year. The Opposition considers, above all, that exemption from the tax should have been extended to municipalities.
– I support this bill and am grateful for the approach that was made to it by the Leader of the Opposition (Senator McKenna), particularly in the first part of his speech. The Leader of the Opposition was good enough to point out that’ this bill would give a very great measure of relief to certain people. With that we must agree. In concluding his remarks, he said that, in his opinion, the relief proposed was inadequate and mean.
I expect that it is quite easy for any member of an opposition, when discussing a measure such as this, to argue in that way. But one feels that if the Opposition were in office it would adopt a different viewpoint on a similar measure. We must agree that the Government has given substantial relief from pay-roll tax if we couple the relief proposed in this measure with that which was granted in a similar measure last year. Two years ago, the act -exempted from tax pay-rolls up to £20 a week which was equivalent to £1,040 a year. Last year, as the Leader of the Opposition has fairly stated, that amount was raised to £4,160 per annum or £80 a week. As a result of that relief, about 50,000 taxpayers under this legislation were totally relieved of any liability to pay pay-roll tax. The number of employers who paid the tax was reduced from 90,000 to 40,000. That is a most important feature of the amending legislation of last year which the Leader of the Opposition overlooked. The Leader of the Opposition admitted that, as a result of the passing of the bill before the Senate, 10,500 taxpayers would be exempted from pay-roll tax. Therefore, as a result of the legislation of this Government, in two successive years, the number of taxpayers liable to payroll tax has been reduced from approximately 90,000 to about 30,000. We know that the number of employers is increasing rapidly throughout Australia so it would not be true to say that the number who will pay pay-roll tax will not exceed 30,000. But the fact that the number of employers is rising rapidly indicates that our economy is rapidly improving. Some credit for that trend must be given to the Government which has taken positive and bold steps to check the inflation which had commenced long before the Opposition left office.
– Rot !
– Does Senator Courtice refuse to admit that in the last year of the Labour Government’s term of office the currency had been inflated by 9 per cent.? Yesterday, the Leader of the Opposition practically admitted, by making certain statements, that inflation had commenced before this Government took office, because he said that the Government had refused to take notice of the inflation that had set in. Not only will this bill give relief to those who will be totally exempted from the payment of pay-roll tax, but it will give relief to every employer by exempting him from paying pay-roll tax on the first £5,200 of his pay roll.
The bill will also grant a benefit to bodies such as private hospitals, which are deserving institutions, and which will be placed on the same footing as public hospitals and certain nonprofitmaking hospitals.
I hope, with the Leader of the Opposition, that this tax will eventually be abolished. However, if Opposition senators advocate the abolition of the tax I would remind them that they had a golden opportunity to reduce this tax or abolish it after the war. The Leader of the Opposition has foreshadowed a motion to amend the bill in the committee stages. Whilst it would be desirable to amend the bill as he has suggested, one must have regard to the amount of relief that can be given at one time. The total amount of relief that has been given from this tax in two years has been by no means inconsiderable. The Opposition’s criticism of the bill is probably calculated to gain it good marks outside this chamber.
I disagree with the contention of the Leader of the Opposition regarding the reduction of costs. The Leader of the Opposition said that the Government would collect, possibly, £1,000,000 more from this tax than it collected last year. I think that he alleged that the Government was giving nothing away. It is giving something away. Had this bill not been introduced into the Parliament, the Government would have collected £1,500,000 more in the current financial year than it will collect as a result of the passing of this bill; and if the Government had not raised the level of exemption from the tax last year it would have collected even more money this year. If, as the Opposition has contended, the Government will collect the same amount in pay-roll tax . as it collected last year, what of it ? The Opposition has stated continually that the-
Government has given no relief from income tax.
– Of course it has not.
– I ask the honorable senator whether it is not true that the Government would collect a lot more tax but for the introduction of this measure?
– The Government is collecting a lot more now.
– What of it? Does that not show that people are more prosperous and that our economy is expanding? It indicates surely that there are more employers, and that everybody, including the wage-earners, are more prosperous. People have more money in their pockets than they ever had before.
– They are living on time payment.
– If that is so, how does the honorable senator account for the fact that savings bank deposits are higher to-day than they have ever been ? I am tired of hearing the argument that the Government is not giving relief from taxation. I ask again what the position would be if the Government had not decided this year to reduce income tax rates and to increase the pay-roll tax exemption? It is easy for an Opposition to take the line of argument that has been advanced by the Leader of the Opposition to-day, but had honorable senators opposite been on the treasury bench, what would they have done?
– We would have abolished the pay-roll tax.
– How many taxes has Labour ever abolished ? We are the tax-abolition party in this country. We have already abolished two taxes, one of which the honorable’ senator and his colleagues are pledged to re-introduce if they ever are returned to this side of the chamber.
– I say that Labour is pledged to re-introduce the land tax. That has been announced by the Leader of the Opposition.
– How much did the Government lose by abolishing the land tax?
– That is not the point. It was yielding several millions of pounds. I repeat that we are the tax-abolition party in this country. We also abolished the entertainments tax last year.
– And the Victorian Government re-imposed it.
– That is so. It has been re-imposed by several State governments of another political complexion. I. doubt very much whether Labour would have abolished the pay-roll tax or even given the measure of relief from that tax that has been given by this Government. In two steps the Government has exempted 60.000 employers from the pay-roll tax. That i.not a bad effort. Employers who remain in the pay-roll tax field will enjoy a further exemption of £5,000 under thi? legislation. That must reduce costs t. some extent. The Leader of the Opposition claims that the yield from thitax will be just as much as it was before in spite of the increased exemption. Bui we must look at the matter from the viewpoint of the individual employer. Employers who will not be exempted completely under this bill will at least enjoy an increased exemption. That must reduce the costs of individual employers, not by ‘a tremendous amount, but. a least in some measure. I too hope that the pay-roll tax will be abolished completely some day. I readily admit that as the pay-roll tax is imposed regardless of whether or not an employer is making a profit, it is a bad tax. I have always considered it to be a bad tax. The Leader of the Opposition has rightly pointed out that the pay-roll tax was introduced to finance child endowment. Although admittedly the tax can no longer be directly connected with the payment of child endowment, the fact remains that our annual child endowment bill has increased tremendously in recent years, not only because of the increase of the birthrate, but also because of this Government’s action in extending endowment to the first child of each family. Therefore, although the pay-roll tax may continue to yield as much revenue as it did last year or the year before, we must remember that the burden of child endowment for which the tax was originally imposed has increased alarmingly. From every point of view this bill deserves the solid support of the Senate. No amendment is necessary.
– It is clear that Senator Pearson has become a victim of his own propaganda. He has obviously mistaken inflation for prosperity. However, I forgive him entirely because he has been over with the Mau Mau for the last three months and is obviously completely out of touch with realities in Australia. He is unaware apparently of the condition of South Australian primary industries. Does he know the state of the wine industry at present? Has he anything to say about the present financial condition of poultry-farmers? Does he know that dairy-farmers in South Australia are engaged in a subsidized industry? Does he know that the wheatgrowers will shortly hold a plebiscite amongst themselves to decide whether they will support a certain stabilization plan? 1. arn surprised that the honorable senator should speak of prosperity in Australia at present. If it were not for one industry, and one -industry alone, there would be no tax reductions at all. The Leader of the Opposition (Senator McKenna) lias made quite clear the original purpose of the pay-roll tax. Obviously no government would introduce such a tax unless it could be justified hi some other way, and the justification for the pay-roll tax was the payment of child endowment. I do not propose to reiterate what the Leader of the Opposition said about the National Welfare Fund. We are all aware that it has lost its identity. We know too that revenue collected from the pay-roll tax nt one time went directly into the National Welfare Fund for a specific purpose. To-day, the National Welfare Fund depends largely upon Consolidated Revenue and in a small measure upon interest on its investments.
I have risen to deal with one or two matters from the Labour viewpoint. We believe that by further increasing exemptions, the Government will eventually abolish the pay-roll tax. However, we think that, at present, it could do much more than it is doing in the way of increasing the exemption. We consider that local government authorities and State governments should be exempted from the tax. I propose to speak only about local governing authorities in Queensland because those are the only ones with which I am completely familiar. Let us consider how local government bodies obtain their revenue. They obtain funds in three ways. Their first source of revenue is the rating of lands and properties. Secondly, they spend moneys from loans granted to them by the State governments. Thirdly, revenue is obtained from the provision of essential services such as transport and the supply of electric light and power. There may be other minor sources of revenue, but those three methods are broadly the ones upon which local government authorities rely for their funds. Local-governing authorities carry out such important work as the construction of streets and footpaths, and, in some instances, the provision of transport and sewerage facilities. They rarely obtain enough revenue with which to provide all of the services needed in their areas. Although the Government has brought many thousands of people to this country under the immigration scheme, it expects the localgoverning authorities to carry on without additional assistance. When immigrants move to an area, it is necessary for the localgoverning authority to provide services for them. In order to assist the localgoverning authorities to cope with the situation that has developed, the Government should exempt them from pay-roll taxation. As matters stand, employers of labour are called upon to pay pay-roll tax to the Commonwealth as well as rates to the local councils. As the localgoverning authorities have to pay interest on loans arranged for them by the Australian Loan Council and to make periodical repayments of the principal amount, we are confronted with a tangled situation. It could be relieved considerably by exempting local-governing authorities from pay-roll taxation. As a first step towards the total abolition of that tax, the Government should exempt local-governing authorities from the pay-roll taxation impost. Senator Pearson stated that, because of the prosperous conditions now enjoyed by primary producers, they should not be exempted from the pay-roll tax. I shall not disagree with him. But the position in relation to secondary industry is quite different. As several honorable senators have stated, the imposition of pay-roll taxation adds considerably to the cost structure of this country. The original conception of pay-roll taxation was that employers should contribute, to a degree, to the maintenance of the children of people engaged in industry. The child endowment system now in operation is really an extension of the wages system of this country. The idea that the pay-roll tax should provide some of the money necessary to pay child endowment was quite sound. Although some secondary industries could pass on that tax to the public in higher prices, they have continued to bear the burden themselves.
I do not consider that sufficient encouragement has been given to the mining industry, particularly to persons who are engaged in mining for minerals. .1 consider that small mining syndicates should be exempt from pay-roll tax. I should like the Minister for National Development (Senator Spooner) to express an opinion on this suggestion”. Pay-roll taxation imposes a very heavy burden, not only on those syndicates, but also on oil companies which are engaged in the search for oil in various parts of Australia. It is expected that pay-roll taxation will yield a revenue of about £40,000,000 in this financial year. As the Commonwealth had a surplus of £57,000,000 at the end of the last financial year, it could, without risking financial embarrassment, abolish the pay-roll tax entirely. The resulting loss of revenue could be set-off against the expected surplus in this financial year.
– I support much of the criticism by the Leader of the Opposition (Senator McKenna) of the pay-roll tax, and I join with him in the hope that that tax will be ultimately abolished. Those who urge the abolition of the payroll tax overlook the fact that the relatively small expected surplus of revenue in this financial year has been calculated on the basis of revenue from all forms of taxation. This is one of the times when it is unsafe to budget for a deficit, although there are times when that should be done, such as in time of depression. This is a time of full employment and rising prices, when it is fundamentally unsound to reduce taxation in such a way as to risk a deficit. The modern social service state, particularly when it is faced with high expenditure on defence, as we are to-day. must use every method of taxation. T think that is undeniable. Arguments against any tax can be advanced on certain canons which have been laid down since the time of John Stuart Mill. Those canons will be found in all text-books on economics which repeat them, amplify them, and, perhaps, qualify them. But they contradict one another. One of the essentials of taxation is to spread the burden equitably.
– What about a capital levy?
Honorable senators interjecting,
– I prefer to conduct my argument in my own way. without help from either side of the Senate. I know that it is the deliberate policy of certain honorable senators on the other side of the chamber, whom I could name, to interject, not with a view to elucidating a principle, but deliberately to confuse the speaker. They hope that he may say something silly or make a statement that is not quite correct. I regard that attitude as utterly contemptible, and I find it difficult to believe that honorable senators would deliberately adopt it. Whenever I take the opportunity to interject, my interjection is pertinent to the argument being put forward. Usually, I try to assist the speaker in advancing his argument. I am attempting to develop an argument on taxation. I am not beating a party drum. Even if I have .to take up the whole of my time, I shall continue to advance that argument. Honorable senators opposite are welcome to the satisfaction they may derive from trying to create a little confusion or disorder. 1 wish them well of it.
To return to the argument, I had said that any tax can be condemned according to some of the canons of taxation that have been understood for a good many years. I had also said that, on many grounds, it could be argued that income tax was the one fair method of taxation, or rather, that it would be if it were not for the reason that it is always possible for some people to conceal income - and I do not care whether any one likes to retort that this Government is to blame if that happens now. That is the fundamental argument against all revenue deriving from income tax. There is also the argument against it that, if it is too high, people tend to become discouraged. People resent a direct tax on their income much more than they resent an indirect tax. That is the reason for the existence of indirect taxation. It has been defended somewhat cynically. All governments, both socialist and non-socialist, admit that one of the most important principles of taxation is to collect the revenue without arousing resentment. It really amounts to plucking the goose without too much noise. It is a perfectly sound principle that taxation methods should not arouse resentment. For that reason, the tax gatherer uses many forms. Though I prefer income tax to indirect tax, and although I regard pay-roll tax as one ofthe worst indirect taxes, I contend that, in the present situation, with enormous and increasing social services expenditure, and with the necessity for great expenditure on defence, our Treasurer cannot afford to let go any type of taxation that is accepted - and pay-roll tax is accepted.
I have taken the trouble to refer to Dr. Benham’s book on economics. As honorable senators may be aware, Dr. Benham was one of our best economists. While stating quite clearly the argument advanced, against pay-roll tax by the Leader of the Opposition (Senator McKenna), Dr. Benham also says that this tax forms a very small part of. the element of cost. That also, I think, is the sound judgment of our Treasury officials and everybody who has studied this tax. I admit that it is passed on to the consumer, but it is a very small element in costs. The point I am making is that, at this moment, we cannot afford to abolish it. However, we have given very substantial relief, and we have- given it in such a way that it will encourage new enterprises and make the greatest impact on those best able to bear it.
I heard Senator Benn say something about poultry farmers during the course of his remarks- on the bill, and I could not see the relevance of it. I do not imagine that there would be many poultry farmers in New South Wales, or in any other State, who would not come within the exemption. Generally speaking, poultry farmers do not employ many people. Indeed, many of them conduct their farms with only the help of their families. I should think that, virtually, all poultry farmers would be exempted. We on this side of the Senate stand for an individualist economy, but not for monopoly or domination of the economy by great businesses. We are not frightened of the term “ big business “. We do not say that, because a business is big it is, therefore, evil. ‘ We know tha t some of the biggest businesses in this country give the best service to the people ; but we believe that an economy that consisted entirely of big businesses would be thoroughly unhealthy. Every economy needs various types of business, and most economies foster many kinds of business, unless they are near to bankruptcy, or are in the unhealthy condition of being ripe for what is called socialization or nationalization. Every economy should have big established businesses. In addition, it should have rising businesses and new businesses. The point I am making is that the big businesses can carry this small tax. We are relieving the smaller businesses of it, in the hope that they will establish themselves and continue to exist as small businesses.
The Leader of the Opposition said that this relief would be of relatively little importance, and he based that argument on the actual amount of tax which the Government will forgo. But that is not the point. The important thing is the number of people who will get relief. More than 10,000 employers will obtain relief as a result of this legislation, and as a considerable- number of employees have already received relief in this direction, it is obvious- that the Government is carrying out its announced policy. I do- not propose to use this debate to raise irrelevant issues or to wage purely partisan warfare. As I have said, the social service state, especially one with- heavy military expenses, must use every method of taxation. Such a state would be very unwise to let any form of taxation go- until it had reached the position where it could make a big reduction of taxes. Pay-roll tax is not the best tax, but it is a good tax because it is certain and is less difficult to evade than are income tax and other taxes. It brings in a considerable amount of revenue which we cannot do without. Therefore, the Government proposes not to abolish it entirely, but to lift it from the shoulders of the small employer and the rising employer. Thus, the Government is doing what it can to establish a healthy economy.
– I have no desire to delay the passage of this measure or to make excuses for it. Honorable senators opposite have not attempted to justify this tax, although some have made excuses for it. In my opinion, it is a most iniquitous tax because it is not based on ability to pay, or even on justice. It was an emergency tax which came into existence about thirteen years ago, against the wishes of many members of this Parliament. I am amazed that honorable senators who were hostile to the tax in the past are now arguing in favour of it. All taxation should be based on ability to pay. The amount paid in wages by some industries may he much greater than that paid by other industries, although their profits may be smaller. On the other hand, the liquor trade has a very low wages bill. Surely, it is unnecessary to tax employers because they pay wages. People resent this tax, and I am disappointed that the Government, which is not in great need of additional revenue, has not abolished it. I feel sure that all political parties would support such action.
The miserable measure of relief proposed by this bill will be of little use to anybody. Why should big industrial concerns be taxed merely because they employ a large number of people? I remind the Government that many professional men with large incomes employ very few people, and therefore are not subject to pay-roll tax. I have been opposed to the tax from its inception, because I do not think that it is soundly based. I have heard honorable senators opposite speak against pay-roll tax, but apparently, the Government has been able to persuade its supporters that the tax is necessary. Nevertheless, I ask the Government to examine the matter again with a view to abolishing the tax. Some of our finest developmental industries are obliged to pay proportionately more in pay-roll tax than are luxury industries, many of which will escape payment of the tax altogether when this bill becomes law. Honorable senators opposite have attempted to justify the tax by saying that the Government needs revenue.
Sitting suspended from 12.45 to 2.15 p.m.
– This bill, upon which I shall speak only briefly, is a miserable measure. The payroll tax is a bad tax, and this measure will give only slight relief to those who have been paying it. The incidence of the tax is unjust. The Leader of the Opposition in the Senate (Senator McKenna) has criticized the “measure fully and I shall not discuss it at length, but I remind honorable senators that there is much foolishness to-day in taxation. Municipalities and State governments complain about the pay-roll tax, and justly so. The Australian Government makes grants to the State governments, and then has to go to all the trouble of regaining large sums by way of pay-roll tax. I was not impressed by the arguments of Senator McCallum, who said that the art of taxation was to pluck the goose so long as it did not squeal. The pay-roll tax has caused concern to. various governments and opposition parties. The Government has the numbers, and honorable senators on the Government side will do their duty when the whip is cracked. Therefore, I cannot expect them to change their minds on this matter, but I believe that all will agree that the measure of relief that is to be provided is very meagre. It will do nothing to correct the unfair incidence of the pay-roll tax. It is unfair to tax persons and organizations simply because they employ labour. The Minister for National Development (Senator Spooner) will agree with that statement. Luxury industries escape the tax or pay only a small amount, but large developmental projects have to have a big work force, and therefore they pay heavily in taxation.
– I support the bill that is before the Senate. Its- object was fairly stated by the Minister for National Development (Senator Spooner) in his secondreading speech. The measure is on all fours with Government policy, which is directed to the reduction of taxation wherever possible. The history of this tax’ is well known to honorable senators. It was introduced by a previous Menzies Government in 1941 when Australia was at war. The proposal was, in effect, to tax employers 2-J per cent, on wages paid exceeding £20 a week. The alternative was a rise of 6s. a week in the basic wage, which, at that time, was only £4 6s’. The average weekly wage was about £5. The pay-roll tax appeared to be the only alternative to an increase of the basic wage, and it was generally supported by members of the Australian Labour party, who were then in opposition. Child endowment was designed to give relief to family men without increasing the basic wage. The amount of child endowment to be paid was at the rate of 5s. a week for each child, after the first child of a family, under sixteen years of age. The pay-roll tax was designed at the time to raise about £8,500,000 of the £11,500,000 required for child endowment. An amount of £3,000,000 was to be contributed from Consolidated Revenue. The amount required was increased to £28,000,000 in 1951-52 and to £40,000,000 in 1952-53. Last year, the amount that was required for child endowment was about £53,000,000, and approximately’ £13,000,000 had to be provided from the National Welfare Fund. The pay-roll tax can no longer be regarded as a tax for child endowment. The amount collected is paid into the National Welfare Fund and the balance required for child endowment is paid from Consolidated Revenue.
Probably no tax has been so roundly condemned by the employing class, principally because the tax has no relation to profits or ability to pay, and can be regarded as a tax on employment. The exemption from pay-roll tax was widened last year by altering the basic pay-roll upon which the tax was paid from £20 to £80. That reduced the number of taxpayers contributing pay-roll tax to 50,000. The exemption is now to be raised to include those who have a minimum pay-roll of £120 a week, or a total of £6,241 a year. Definite relief will be given and the trend is in the right direction. The pay-roll tax could be described as a Treasurer’s dream. A large amount of money can be collected, and those liable can be traced easily. Therefore it is a tax that any Treasurer would be loath to let go. The bill, however, is an indication to the people that the Government intends to honour the promises it has made on many occasions to reduce taxation. Probably the incidence of this tax will be reduced each financial year, until finally, I hope, it will be abolished. I remind honorable senators on the Opposition side that it is not the policy of the Labour party to reduce taxation, but rather the reverse. It usually takes every opportunity to levy taxes. The number of taxpayers contributing pay-roll tax has been reduced from 90,000 originally to about 40,000, and that is a distinct improvement. The principal value of the bill is that it will relieve small businessmen, farmers, builders, grocers and others who are in need of all the help they can get. They will be relieved of the necessity of furnishing returns and paying the tax at regular intervals. The measure is in line with Government policy to reduce taxes and give relief wherever possible to the small men who are regarded by the Government as valuable members of the community. The bill is a step in the right direction, and I support it.
– For once, I find myself in agreement with Senator McCallum. He said that the pay-roll tax was one of the worst forms of indirect taxation, and I agree. After the tax is paid, it goes into prices, and the poorest person in the community pays the same flat rate as the richest. Therefore, it is an iniquitous tax. All indirect taxes are iniquitous. When this Government wants money to carry out governmental projects, it adopts the policy of taxing, both directly and indirectly, those who are least able to pay. That cannot be . denied. Senator McCallum said that the astute gentlemen who frame taxes do so in. a way that will not arouse resentment. I regret’ that there is not sufficient resentment, because I am certain that if the average worker Understood the extent to which he is robbed by indirect taxation, such as the pay-roll tax, it would soon be abolished. The small businessman suffers most, because big business operates on a lower margin of profit, and can compete more effectively against small businesses. As a result of the system of taxation, small businesses are gradually going out of existence, and the big businesses are becoming bigger and bigger. Actually, in effect, big business will never pay a tax in the real sense until a graduated capital levy is imposed. As time goes on, the Government will find that there is a limit to the extent to which it can inflate the currency. That is only another form of corrupt taxation, and opposition to it will grow. The Government will be forced to impose a graduated capital levy. That is a fair levy because it is based on ability to pay. Those who are best able to pay contribute the most. That is as it should be.
After all is said and done, taxes are the basis of the machinery of government and the duty of the Labour party is, with sufficient support, to reverse the incidence of taxation in the direction that I have indicated. I do not expect the Government to do anything of that kind, because such action would not be in accordance with its policy. Its policy is to keep the working community down to the lowest level of subsistence through direct and indirect taxation, no matter how prosperous the country may be. The overall effect of its policy is to increase the slum population and reduce it to the lowest level of subsistence. It is useless to protest against the injustice of indirect taxation while this Government has numbers on its side. Honorable senators on the Government side have used fine phrases to say that they want to do the best for all the people, but, in practice, they do the opposite. Senator Wardlaw referred to child endowment. As a. matter of fact, the payment of child endowment saves the employing class millions of pounds compared with . the time when wages were based upon the needs of a man, his wife and three children. Although the employers are saved all this money by the payment of child endowment, we still insist on further indirect taxation. We shall reach a stage when that will be no longer tolerated, and then we shall strike trouble, similar to the trouble that is being experienced now in England and other parts of the world. This Government is giving effect to the iniquitous taxation policy that has caused ever-increasing poverty, even in this country of practically unlimited resources and opportunities. Although big businesses can carry the pay-roll tax quite easily, they are trying, by a very ingenious system of bookkeeping, to make it appear that they are just paying their way. Business profits during 1953-54 were higher than ever before. In September, Mr. Ricketson, the chairman of J. B. Were and Son, said that 1953-54 was one of the best years in the history of Australia for business profits. Nevertheless, the persons least able to pay are still being called upon to pay indirect taxes.
– I propose to say only a few words about the bill. In other days, it would have been the subject of a. long debate but, as Senator Cameron has pointed out, when we face an overwhelming superiority of numbers we lose heart after a while. The Opposition suggests that the Government give serious consideration to the abolition of the pay-roll tax. Many people believe that, fundamentally, it is a bad tax. I have never believed that when a government abolishes a tax that yields £40,000,000 a year, that amount of revenue is lost completely. Having abolished one kind of tax, very often a government finds that it can move into another tax field and regain some of the lost revenue..
The pay-roll tax is a bad tax because it is a tax on industry at a point of production that is fundamentally weak. The Minister for National Development (Senator Spooner), who is expert in many fields, realizes that one of the great problems facing the country to-day is how to reduce production costs. Already we have costed ourselves out of many export markets”. Internally, we have reached the stage where the Tariff Board is sitting almost continuously to deal with applications for tariff protection made by Australian industries. Many of them are sound, progressive and well-managed industries but, due to circumstances beyond their control, their production costs are rising to such, a degree as to make their position very serious indeed. I suppose that £40,000,000 spread over the whole of Australian industry would not amount to very much, but a tax on industry of £40,000,000, to which other charges are added before goods reach the consumers, can contribute very substantially to increases of prices. I know there is no prospect that the Government will accept any suggestions made by the Opposition in this matter, but I ask it to consider closely our suggestion that the tax be abolished.
– It is like talking to a stone wall.
– I agree that when we talk to the Government, we have the feeling that we might just as well be talking to a stone wall. Although 1953-54 was a year of high profits for industry and high dividends for shareholders, the position now is not so good. During the last few weeks, balance-sheets have been published that give us cause for som’.; concern. Business is not expanding this year at the same rate as last year. There has been a steadying off which could easily be the prelude to a substantial backward movement. “Wool prices have fallen to some degree, and we are facing problems in connexion with the sal? overseas of other important primary products. So our prospects now are not as bright as they were in 1953-54.
I have often stressed in the Senate the necessity to encourage our industries to expand on sound and efficient lines. If taxation concessions will enable our industries to become more efficient, those concessions should be granted. In the long run, the Government will get more revenue from efficient industries and the standard of living of the people will be raised. The United Kingdom has fought a great economic battle, and to-day it can negotiate with the great nations of the world as an equal in the economic field. That was considered to be almost impossible seven or eight years ago. The United Kingdom has made a most impressive recovery. This year, the Chancellor of the Exchequer has given substantial assistance to British industries, with the object of enabling them to reduce production costs. In the long run, that assistance will not cost the British Government very much. Last year, as honorable senators will remember, the British Government made an almost revolutionary approach to industry by allowing a 20 per cent, taxation reduction in respect of capital equipment installed in factories. As a contrast, our secondary industries do not enjoy even the special depreciation allowance that was introduced by the Chifley Government, although primary producers can write off the cost of farm equipment at the rate of 20 per cent, a year. Australian secondary industry has been placed at a disadvantage because of the failure of the Government to encourage it to install modern equipment and so reduce production costs. Any Australian industry, whether it has made a big profit or has incurred a substantial loss on the vear s trading, has to pay the pay-roll tax. It is very unfair that an industry that is in serious trouble through trading losses should have to find money to pay the pay-roll tax. In such circumstances, it is a penalty tax on employment, which goes against the grain of most Australians. In committee, the Opposition proposes to move an amendment designed to exempt municipal authorities and other local government bodies from the payroll tax. We shall discuss that matter when the amendment has been moved.
Senator Spooner having received the call,
– I should like to speak to the bill before the Minister replies.
- Senator Spooner has the call.
– I think I rose before Senator Spooner.
– If Senator Willesee wishes to speak to the bill, I do not wish to deny him an opportunity to do so.
– I want to try to put the bill in its proper perspective. In 1940, the Commonwealth Arbitration Court waa considering an application for an increase of the basic wage. That application involved a consideration of the ques tion whether the basic wage should hi calculated on the basis of the needs of a family with one child or more than one child. The court adjourned the hearing of the case. Then the government of the day introduced child endowment. To raise at least some of the money needed to pay the endowment, a tax was imposed on industry. Had the court decided to increase the basic wage, the burden of the increase would have fallen on the employing classes. Therefore, there was some logical basis for levying on industry the 2£ per cent, tax that we now know as the pay-roll tax. But circumstances have altered very much since then. I should like the Minister to tell me, if he can, by way of interjection, the percentage of the cost of child endowment that is raised by the pay-roll tax. I think the percentage is very small, , and that the Government has to take far more from general revenue to pay child endowment than it receives from the pay-roll tax. So the original idea underlying the imposition of the tax has largely disappeared. Child endowment is being financed, not from the pay-roll tax but from the general revenues of the community.
I suggested the other day that the time was ripe for an increase of child endowment because of the industrial position in which we have found ourselves during the last twelve months. Wages have been pegged. That system has been tried and, I suggest, found wanting, although that is a very debatable point. We have had wage pegging in- Australian industry during the last twelve months. The lower paid workers, as always, have felt the pinch. I think there is. a clear case for an increase of child endowment now. Such an increase would, so to speak, inject money into a section of the community that needs it most, and that section, in turn, would immediately inject, the money into the general economy. I believe, that generally speaking, any indirect tax is a bad tax. It is an indiscriminate tax that cannot be controlled. The pay-roll tax, in the same way as the sales tax, causes an increase of the prices paid for goods by all consumers. The beauty of a direct tax, despite the fact that we do not like to pay it, is that it can be put on to the shoulders of the people in the community who are best able to bear the burden.
The pay-roll tax is a bad tax. It hits the small employer who cannot afford, to pay it. Employers such as small builders and cartage contractors are always worried when they have to employ an additional person because, in addition to making provision for that person’s wages, they have to make provision for pay-roll tax, superannuation payments, and holiday pay. As a result, they are almost frightened by the amount of money that they will have to pay if they engage another employee. A big industry such as General Motors-Holden’s Limited need have no worries in this respect. But the Government should try to encourage the person who is putting his own work and capital into industry.
– The Government, has exempted the small employer from pay-roll tax.
– It has not. Because of the incidence of inflation, this bill will leave small employers in the same predicament as they were in before. Perhaps honorable senators opposite and I disagree on what is a small employer. The man who is working for himself has not the problems that I have mentioned, but when he starts to expand he will be affected by the provision of this bill. I. suggest that all honorable senators should carefully examine the amendment which the Leader of the Opposition will move in the committee stages of the bill. The Government is not financing child endowment from this tax. The subjects of payroll tax and child endowment are as wide’ apart as the poles. If the Government wishes to raise the sum of £40,000,000 I suggest that the fair way in which to raise it would be by means of direct taxation. The Government should not perpetuate this type of tax.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 to 3 agreed to.
Clause 4 (Exemption from tax).
– On behalf of the Opposition I move -
That, at the end of the clause, the following new paragraph be added: - ”’ (bb) by a municipal or other local governing body, or an authority established for the purpose of carrying out all or any of the functions ordinarily carried out by such a body, otherwise than in the conduct of an enterprise which, in the opinion of the Commissioner, is a trading enterprise,’.”.
The motion is self explanatory and, set in its context, means that municipal and local governing bodies which carry out the functions ordinarily carried out by such bodies, other than trading operations, will be exempted altogether from the payment of pay-roll tax. I addressed certain arguments to the Senate on this subject which I shall not repeat to the committee. However. I want to invite attention to the fact that, despite the concession allowed by the bill, the Government will collect £1,000,000 more in payroll tax this year than it collected last year. I think that that tendency will run through the budget. Last year, revenue was very much underestimated and expenditure was overestimated with the result that there was a surplus of £56.000,000. A similar phenomenon may well be experienced this year. I think that the Government will have a surplus of some magnitude, apart from the fact that an additional amount of more than £1,000,000 will be collected by way of pay-roll tax this year. I do not wish to delay the committee by repeating the arguments that I addressed to the Senate.
– I desire to support the amendment that has been moved by the Leader of the Opposition. I. hope that this motion will be treated by honorable senators opposite on its merits and that they will disregard the fact that the resolution has emanated from the Opposition. Possibly, Government supporters may have urged Ministers, in their party meetings, to abolish this tax on municipalities, or they may not have done that. I do not know. But I think that they have received strong requests from municipali ties to bring to the notice of the Government the unfavorable position in which municipalities have been placed and the unfairness of a tax of this nature being levied upon their funds. The work of municipalities is such that the Senate should give favorable consideration to the proposed amendments. In addition to the routine work of maintaining roads, footpaths and bridges, and supplying electricity, municipalities are now called upon to perform many other services. Hardly a year goes by without some bill being passed by the State parliaments providing for municipalities to undertake additional work which is sometimes of a social nature.
Whilst State governments do subsidize municipalities to an extent, insufficient money is paid to them. In recent years, municipalities have been called upon to engage in work such as that which is concerned with infant welfare which benefits not only a town or State, but the Commonwealth as a whole. This form of service, to the community, in the long run, will be of great benefit to the Commonwealth. Municipalities engage in kindergarten and pre-school activities. They construct health centres. They attend to the requirements of citizens by engaging in many activities which do not produce revenue. They provide children’s playgrounds and swimming pools. The financing of all these activities falls upon one section of the community only. In Castlemaine, where I am a. member of the municipal council, only 2,044 of the 6,500 residents are on the municipal roll. Those 2,044 property-owners have to find the money to undertake the various activities of the municipality. They pay about £27.000 a. year towards the cost of the ordinary work of the municipality and another £11,750 a year for the operation of the sewerage works. The council has 40 employees, in addition to which 23 are employed at the sewerage works. The council has to pay a. considerable sum of money in pay-roll tax, money that would be of great benefit to the area if spent on maintenance.
The rate that municipalities can levy on ratepayers is limited by law in Victoria to 4s. in the £1. Most councils are charging the maximum rate. My council was charging the maximum rate until the properties in the area were revalued. Then, valuations rose so much that, in order to give some relief to the ratepayers, rates were reduced by a few pence in the fi. In many instances, the facilities provided by municipal councils are not availed of by the local residents only, but by people from the surrounding districts and even people from other States. _ “We have a very fine swimming pool, which is patronized by people who come from outside our municipality. We have made’ the admission charges as reasonable as possible and have made arrangements to teach the youth of the town to swim. “ Learn to Swim. Campaigns “’ have been conducted by the Herald newspaper in Victoria. People have been clamouring for facilities for physical development, such as play centres. But when a local governing authority employs a swimming instructor or an attendant to look after a swimming pool and safeguard young people from accidents, it has to pay tax on his wages. It is a. different matter for an industry that is producing something for sale at a profit. A manufacturer or a retailer can include his pay-roll tax commitment in the price of his products. We are called upon to expend more than £3,000 a year on the maintenance of a park and playground and very little revenue is received in return. The facilities are at the disposal of every one, including visitors from far and near. Because we, as a municipality, employ men to look after those facilities for the public, we have to pay tax on their wages. This is an iniquitous form of taxation on local governing authorities.
Statements by honorable senators opposite indicate that they, too, hope that the pay-roll tax will eventually be abolished. Surely, in view of the admission that in spite of the increased exemption provided for in this legislation, the yield from the pay-roll tax will be greater this year than it was last year, the Government should not be reluctant to exempt local governing authorities from the tax. I am concerned particularly with those municipalities which provide amenities to make life more bearable not only in country centres, but also in all centres of population throughout the Commonwealth. In our large cities, there is always a clamour for more parklands and playing areas. But when they are provided, and men are employed to care for them, the employing authority immediately becomes liable to pay tax on their wages. This imposes a heavy burden on ratepayers.
It is true that the pay-roll tax wa3 introduced originally to provide funds for the payment of child endowment. But the scene has changed since those days. The National Welfare Fund is now maintained from Consolidated Revenue. I hope that all members of this chamber who are interested in social welfare and municipal government will support the amendment that has been moved by the Leader of the Opposition, and treat it as a non-party matter. The move had to be made by some one. I realize that it would be very embarrassing for the Government to have one of its own supporters attempting to amend legislation, but surely honorable senators opposite can join with the Opposition in expressing to the Government the wish that the instrumentalities mentioned in the amendment should be exempted from the pay-roll tax. I have great pleasure in supporting the amendment, and I trust that it will receive from other honorable senators the support that it so richly deserves.
– Senator Sheehan, who has had long experience in local government affairs, has pleaded his case eloquently and supported it well with facts. But 1 suggest, with all respect, that he should get this matter into its correct perspective. I regret to say that the Government is not prepared to accept the amendment, the effect of which would be to make a major change in the Government’s financial proposals for the year. A considerable sum would be involved if municipal authorities were to be exempted from the pay-roll tax. This is a reform which local governing authorities have been urging upon governments for a long period of years. Before this year’s budget was prepared, the Local Government Association of New South Wales, the Municipal Association of Victoria, and other local governing bodies, asked that an exemption from pay-roll tax be granted. Such representation has been made for a long period of years. Indeed, although I am not quite certain, I think I am right in stating that representations were made to the Labour party when it was in power. That is a reasonable inference to draw because the move has a long history. The reason for the refusal of the request has been that the pay-roll tax was imposed originally to finance child endowment payments which, in effect, supplement the wages of employees. To say that because the National Welfare Fund is now being financed in a different way, there is no longer any relation between the pay-roll tax and child endowment, is once again to get things out of their proper perspective. Our annual child endowment bill is £52,000,000, and the yield from the payroll tax is £40,000,000. . Therefore, there is a very direct relation between the tax and child endowment. Obviously, if the pay-roll tax were to be abolished, that £40,000,000 would have to be found by some other method. The granting of exemption to municipal authorities would reduce the volume of receipts.
– By how much?
– It has been stated from the Opposition, side in the course of this debate that the loss would be about £1,000,000. Whilst I am not in a position to dispute that claim, the information at my disposal suggests that the amount involved would exceed that sum. It has been consistent Government policy to keep exemptions from the payroll tax down to the minimum. I put it to honorable senators opposite that if the amendment were accepted, how could we logically withstand a similar request for the exemption of State governments from the pay-roll tax? There, again, a substantial sum would be involved. Governments depend upon taxes for their revenue. When the incurring of a new liability in the form of child endowment was contemplated, it was decided to introduce the pay-roll tax to meet the added expenditure. The Government is, however, reducing the field of’ the pay-roll tax by increasing the exemption from it. It is removing the burden from the smaller employers. How ever, we must be very careful in granting exemptions lest we find that the yield is insufficient to meet the purposes of the tax. If that position were reached, we would have to recast our taxing arrangements.
– I support the amendment for specific reasons. The Minister cannot reject the amendment on the ground that the total abolition of the tax would reduce the Government’s revenue by £40,000,000. We are attacking only one small corner of the tax. One Government supporter, quoting an economist, said- that the loss of revenue through the exemption of local governing authorities would be almost infinitesimal. The pay-roll tax is a most cowardly tax. In the first place, municipal authorities have to strike a rate on property owners, and after all a rate is just another name for a tax. It is the aim of every local governing authority to strike a rate that will yield just sufficient revenue to carry out essential public functions. Municipalities have always been short of money, but now their finances are getting completely out of control. The point I am making is that, after a municipal council has struck a rate, it is called upon by the Australian Government to contribute part of its revenue from that’ rate in the form of pay-roll tax. In other words this Government, which lacks the courage to impose a direct tax on property owners, is asking local governing authorities to collect that tax on its behalf, and to pay it into federal revenue. That is a most cowardly attitude. Let us look at the matter from another angle. As I have said, municipal authorities are always short of money. They have to borrow funds through the State governments from the Australian Loan Council, and they have to pay interest on that borrowed money. By imposing this tax on municipal authorities, the Government is collecting portion of the borrowed money on which the local governing authorities have to pay interest as well.
– And they pay interest on their overdrafts too.
– Of course. Therefore, they have to strike a rate that will cover not only interest on loans, but also their contribution to Commonwealth revenue in the form of pay-roll tax. For that reason, I consider that the payroll tax is a cowardly tax. Why should we load municipal bodies - whose members give their services voluntarily - with a huge interest debt? The members of the local councils are not paid for their services, as are members of parliament.
– Therefore, no payroll tax is payable in their case.
– Even a schoolboy would realize that pay-roll tax is not payable in respect of persons who receive no pay for their work. The effect of this impost on industry, which can pass on the tax to the public by means of increased prices, is bad enough ; it is ten times worse in relation to local governing bodies. It was ridiculous for the Minister to say that acceptance of the amendment would upset the budget, because all budgets are based on estimates of revenue and expenditure. We all remember occasions when governments have finished a financial year showing a deficit, after budgeting for a surplus. Provided a condition of full employment is maintained, I believe that a surplus will always result when a budget is based on the previous year’s estimates. It was sheer nonsense for the Minister to say that the relatively small amount of relief that would be granted to local governing bodies - small from the Government’s point of view, but considerable from the local governing bodies’ point of view- would upset the budget.
– I support the amendment. In almost every industrial suburb of the capital cities, rates are being increased and construction and maintenance work is falling into arrear. The small property owners are being systematically taxed almost out of existence. Heavy taxation has resulted in the provision of fewer new houses in the ‘industrial suburbs. It has also prevented the replacement of antiquated houses by new dwellings. A shocking state of affairs exists in about 50 per cent, of the industrial suburbs of Melbourne, and Camp Pell has become a slum area. I contend that municipal bodies should be able to provide adequate housing in their areas, although I know perfectly well that it is financially impossible for them to do so at present. It was all very well for the Minister for National Development (Senator Spooner) to say that this matter should be viewed in its right perspective. The municipalities are not to blame for the fact that rates have been increased and maintenance work has fallen into arrear. They are doing the best they can in the circumstances. As every one knows, their costs have been increased considerably by inflation. Not one supporter of the Government has referred to inflation during this debate. Honorable senators opposite have stated, merely, that costs are increasing. As I have pointed out previously in this chamber, that is only a half truth, because the degree of inflation of the currency - caused mainly by the private banks and other financial institutions - was never higher than at present. But real costs were never lower. For how long does the Government intend to allow this state of affairs to persist? Due to the fact that many people are living in overcrowded houses, and houses that have been condemned, the incidence of sickness in the community is increasing. But that does not worry the Government. Perhaps, if honorable senators opposite were afraid of becoming infected as a result of a raging epidemic, they would appreciate the seriousness of the position. Because the incidence of sickness amongst people who are living in slum areas is attributable, primarily, to inflation - which has retarded house building - honorable senators opposite do not worry about it. Acceptance of the amendment would give a measure of relief to thousands of people who are living in the industrial areas. If relief is not given to them soon, their conditions will be intolerable. For how much longer does the Government expect the men, women, and children living in industrial areas to endure the present state of affairs?
– I was astounded to hear so many supporters of the Government who profess to be concerned about the plight of many local governing bodies say that the amendment should not be accepted. L feel very strongly about this matter. After my parliamentary duties for this week are completed, I shall devote myself to assisting members of a municipal council with which I am associated to prepare its budget for the forthcoming twelve months. As I have pointed out before, of the 6,500 people in that municipality, only 2,000 pay rates. Therefore, the cost of providing roads, footpaths, library facilities and other services in the municipality is borne by only about 33 per cent, of the residents. The council lias been considering ways and means of obtaining money to provide a women’s rest room in the town. Acceptance of the amendment by the Government would result in a saving to the council in payroll tax of about £700 a year, which would enable this urgently needed facility to be provided within a measurable time. I point out that the exemption of local governing bodies from pay-roll taxation would result, in. the final analysis, in the cost of services and facilities provided by them being borne equitably by all members of the community instead of by only a percentage, as is the case under the present system. The Minister for National Development (Senator Spooner) stated that acceptance of the amendment would result in ‘a loss of revenue of about £1,000,000 in this financial year. That would not drastically affect the government finances, particularly in view of the fact that the Treasurer (:Sir Arthur Fadden) has budgeted for a surplus. I emphasize that the pay-roll tax is iniquitous in it3 effect on municipalities, whose taxing power is limited. Local governing bodies are not able to pass on the tax, as sections of industry can do. I urge the Minister to reverse his decision, and accept the amendment.
Senator BROWN (Queensland) [3.281. - The amendment expresses an eminently fair proposition, which should appeal strongly to all supporters of the Government. I am sorry that Senator Wood, who is a strong protagonist of local government, is not present in the chamber. Honorable senators opposite continue to decry the growth of communism in the community. If that growth is to be checked, the Government must encourage decentralization by every means .available, and do nothing to discourage the enthusiasm of local governing bodies. The Minister for National Development (Senator Spooner) stated that acceptance of the amendment would result in a reduction of revenue by about £1,000,000 in this financial year: That amount is almost infinitesimal compared to a budget of more the £1,000,000,000. He put up all kinds of paltry arguments against it.. This Senate hardly ever agrees to an amendment. We have reached a stage in our political development when the Australian Senate is merely a “ ditto “ house for the House of Representatives. What is the use of the Senate? We should try to show the country that the Senate is of service to Australia. The supporters of the Government are deliberately putting nails into the coffin of the Senate when they refuse to accept amendments such as this. Relief from liability to pay this tax,, as Senator Sheehan so ably pointed out, would be of great assistance to many municipal bodies. It is the duty of honorable senators opposite, as anti- Communists and believers in decentralization, to support this amendment. I am disgusted that although they are always mouthing words about the need to assist local government, they are not prepared to support this amendment which, obviously, would have the effect of assisting local government bodies. They have sat silent, although an eminently fair proposition has been put’ forward by the Opposition. Surely, the Minister could accept the amendment. I ask him to give some encouragement to local government bodies by stating that, in the near future, such bodies will be exempted from this tax.
– I rise to oppose the amendment and support the bill, and I do so because of some of the rather rash statements that have been made by honorable senators opposite. I am prepared at any time in this chamber to give reasons for the views I hold and the votes I cast. I remind the Opposition that the party of which I am a member has been returned to office on three successive occasions by the Australian public. Surely, that indicates that the people whom that party represents are keen for its policies in relation to taxation, social services, and other matters, to be given effect. We were the instigators of child endowment and also of endowment for the first child. Originally, pay-roll tax was imposed to meet the cost of child endowment, and we, as a party, say that child endowment payments should continue.
The Opposition has attempted to justify the proposed amendment by saying that it would cost only about £1,000,000. I feel that that reflects their inability to face realities, and their carelessness of details. They speak of £1,000,000 as though it were nothing. The Government parties, on the other hand, believe that £1,000,000 is a most important sum from the point of view of the people of Australia. It seems queer to me that the Labour Opposition should be twitting the Government about taxation and asking it to make further tax reductions. Already, the Government has abolished two taxes, only to see them re-introduced by Labour governments in the States. I long to see the day when, in the course of good government, the Commonwealth can relieve municipalities and other local government bodies of the need to pay pay-roll tax. I think that that day will come. We are gradually relieving the taxpayers of much of the burden of pay-roll tax, but before I should be prepared to support the total abolition of the tax, I should have to be assured that its abolition would not clear the way for Labour or Liberal governments in the States to re-impose it on the people. If we vacate certain fields of taxation only to allow them to be occupied by the States, we shall not relieve the people of taxation. I hope that the day will come when we can relieve municipalities of pay-roll tax, but I sincerely believe that the time is not yet opportune. For that reason, I oppose the amendment.
Question put -
That the new paragraph proposed to be added (Senator McKenna’s amendment) be so added.
The committee divided. (The Chairman - Senator the Hon. A. D. Reid.)
Majority . . 8
Question so resolved in the negative.
Clause agreed to.
Clauses 5 and 6 agreed to.
Title agreed to.
Bill reported without amendment; report adopted.
Bill read a third time.
Debate resumed from the 14th October (vide page 719) on motion by Senator Spooner -
That the bill be now read a second time.
– This measure opens up the important question of Commonwealth and State financial relations, a subject in which I have a particular interest. I resist the temptation to open up the matter at any length. The bill arises from the introduction of uniform taxation during World War II.
That form of taxation was continued on a permanent basis in the post-war period. In 1946, a formula was settled for determining the amount of reimbursement to the States. It is not a simple formula in expression, although it is in fact and effect. What surprises me is that the formula lias proved sufficiently flexible to’ permit the total grant to the States to grow from £40,000,000 in 1946 to an estimated total of £130,500,000 this year. In other words, pursuant to the formula, the increase amounts to about £90,500,000 a year. 1 believe that that is a tribute to the far-sightedness of those representing the Commonwealth and States who designed the formula some years ago.
Two or three years ago, the Government indicated that it proposed to abandon uniform income taxation whether the States liked it or not. There has been a conspicuous silence on the part of everybody on the Government side on that subject for the past few years. I conclude that supporters of the Government have seen the merit in uniform taxation that induced the Labour Government to set it up on a permanent basis after the post-war period. I recognize that this raises the whole question of the constitutional functions, responsibilities and duties of the Commonwealth and the States. That is a fascinating subject to study, but it is a matter that will have to be considered when, in due course, the committee to review the Constitution, that the Government has in mind, is set up. There is virtue in the argument that those who spend the money should have the responsibility of raising it. Nobody controverts that proposition in particular terms, but it is not the only factor in this situation. Perhaps the committee to review the Constitution - and I deplore the delay in setting it up - will address itself to a more proper definition of the functions and responsibilities of the Commonwealth and the States, and a proper allocation of the revenues so that each can discharge independently its proper functions. Despite the fact that the formula will yield a grant by income tax reimbursement of £130,500,000, the Australian Government acknowledges that it will bc inadequate for State purposes to the tune of £19,500,000. The matter was discussed and argued between the States and the Commonwealth at a conference that was held in June last. It is certain that the Commonwealth is not prepared to accede to all the demands of the States. It does mean, however, that a very large amount will be paid to the States, and that the Australian Government will go beyond the formula to the extent of £19,500,000. I state the Opposition’s position very briefly and completely when I say that, although we doubt the adequacy of the amount for the purposes of the State governments, we do not oppose the passage of th-? measure.
Question resolved in the affirmative.
Bill read a second time, and passed through its remaining stages without amendment or debate.
Debate resumed from the 14th October (vide page 715), on motion by Senator Spooner. -
That the bill be now read a second time.
– Order ! I? it the pleasure of honorable senators that discussion take place as suggested?
– The bills under discussion are similar to those that are presented each year in connexion with income tax proposals. In his secondreading speech, the Minister for National Development (Senator Spooner) went to some lengths to make propaganda statements to convince the people that the Government has done much to reduce income tax. Certainly some reductions of rates have been announced by the Government, but many other factors must be taken into consideration to determine whether the taxpayers will be getting any relief and whether it will be on a fair and equitable basis. I propose to show that it is not on a fair basis. The statement that the Minister made in connexion with income tax rates is wrong. Usually, when figures are used, it is possible to prove anything, provided the whole truth is not told. If anybody take3 a set of figures, and leaves out something, he can prove that he is right up to a point. But when he leaves out something, he is only giving a half truth. That was the method that was used by the Minister for National Development when he tried to bolster the Government’s case and its claim that it had reduced taxation. In his second-reading speech, the Minister said -
In fact, income tax rates are now almost 30 per cent, lower than those in force when this Government assumed office. . The substantial benefits to the Australian taxpayer which have accumulated with the continuous, implementation of this policy since 1H49, are clearly illustrated in the schedules that ha V. been distributed to honorable senators.
That is only half the truth. If the relevant figures are studied, it will be found that, on a pro rata basis, the taxpayer who was paying a very small amount in years gone by, is now paying more in taxation. In 1950, the basic wage for a man with a wife and two children, on the six capital cities’ basis, was £369 a year. If that man had a margin of 12s. 6d. .a week over the basic wage, his total income would be about £400 a year. A wage-earner in that position, provided he had no other deductions for income tax purposes than the concessional deductions allowed for a wife and two children, paid £2 8s. in income tax in 1950. That was the year when this Government took office. A wageearner with a margin of 12s. 6d. above the basic wage, and with a wife and two children, will pay £14 19s. in income tax this year. The basic wage is supposed to provide the ordinary needs of a man with a wife and two children. The man about whom I am speaking gets only 12s. 6d. a week more than the basic wage. Since this Government has been in office, his income tax has risen from £2 8s. a year to £14 19s. a year. Expressed in percentages, he will pay this year approximately 640 per cent, more income tax than he paid in 1950. He has to pay other taxes, and they too have been increased. The standard of living of a man in this class has been reduced by the action of this Government in increasing taxation, although it says all the time that it is reducing taxation. In August, 1950, the basic wage was £6 18s. a week. To-day, it is £11 16s. a week - not quite double the amount paid in 1950. The man’s margin of 12s. 6d. a week remains unaltered, as do all margins fixed by the Commonwealth Arbitration Court. His income now is not quite double the amount he received in 1950, but his income tax has risen by 640 per cent, since then.
Let us consider the case of a ni.au with a wife and two children, who has a margin of £2 10s. a week above the basic wage. That is slightly below the standard margin for a tradesman, but it is approximately the margin received by clerical workers and some professional men on salaries. In 1950, this man received £500 a year. Making allowance only for deductions in respect of his wife and two dependent children, he paid £14 ls. income tax in that year. His income this year is about 71 per cent, greater than his income in 1950. If his income tax had been increased by only 71 per cent., 1 should have no quarrel with the Government, but that is not the position. He will receive £855 in wages this year, approximately £16 9s. a week. He will pay £38 12s. in income tax. Yet the Minister says the Government has reduced taxation. I shall refer to other alleged reductions later. A man who is, so to speak, on the breadline, has to pay £38 12s. income tax this year, compared with £14 ls. in 1950. That is an increase pf 343 per cent, since 1950. During the same period, his wages have increased by only 71 per cent. The standard of living of men in that- category has been reduced to such a degree that they are finding it very difficult to pay their way.
This Government tells us that it is reducing taxes. It is reducing taxes for the people in the top income groups. They are the people who are getting the benefit of the reductions, not the people who are near the basic wage standard. A salary of £855 a year is sufficient only to provide the minimum requirements of a man with a wife and two children. If we examine the taxes paid now and in 1950 by men with incomes of £1,000 a year, and even £1,500 a year, we find that their standards of living are being reduced as the result of increased taxation. Indirect taxes have been increased also, but I am dealing now only with income tax.
This year and last year honorable senators did not receive an explanatory memorandum from the Treasurer to help them to understand the income tax legislation. It was the practice for a number of years for the Treasurer to issue a memorandum explaining the amendments proposed to be made of the taxation acts, but this year he has become so parsimonious that he has not distributed explanatory memoranda. Taxation is a very complicated business at any time, and the explanatory memoranda were of great assistance to honorable senators. As we have not been given that assistance this year, I do not expect that all honorable senators are quite clear about the objects of the alterations of the taxation laws that the Government proposes. If a memorandum had been circulated by the Treasurer, it would have enabled us to understand, at any rate to some degree, the effect of the alterations. However, that is by the way.
If I remember right, in 1950 this Government made some adjustments of the income tax system.. The explanation given was that the system instituted by the Chifley Government was complicated, and that a more simple system should be introduced. So the Government reverted to the concessional deduction system, and rates of tax were taken to the nearest penny. It was said that the alteration was made in order to make taxation matters very simple. What was the result of that simple little adjustment of the system? In 1950-51, because of the adjustments that I have mentioned and other inventions of the Government, taxation for the remaining portion of that year, according to the Treasurer, was increased by £107,500,000. The increase for 1951-52’, a full year, was £113,000,000. Those increases were due to an alteration of the taxation system, alleged to be made only so that taxation matters would be more easy to understand. The alteration was a confidence trick, and I said so at the time. The increase of taxation for 1951-52, a lull year, was £113,000,000. There was a slight alteration of taxation in that year. Honorable senators opposite will remember that the Government increased taxes then. It made provision for a further increase of £160,000,000 for the remaining portion of that year. The increase for 1952-53 was £205,100,000. So from. 1950 to 1953 the total increase of taxation was £585,600,000.
Some Government supporters expressed their opposition to the Government’s policy during that period, especially in connexion with the wool levy. The Minister for National Development (Senator Spooner) stated that substantial benefits had accumulated for the Australian taxpayer as a result of the continuous implementation of the Government’s policy since 1949, but the Minister did not tell the Senate about the accumulated increases in taxation. From 1950 to the end of 1953, increases in taxation amounted to £585,600,000. In 1952, taxation was reduced by £49,500,000. But in that year a part of the increase that had been made in 1950-51 was still effective. According to the figures of the Treasurer (Sir Arthur Fadden), the Government had collected £536,000,000 in increased taxation by the end of 1952. In 1953-54, taxes were still being paid at the increased rates. The Treasurer then proposed to reduce taxation by £81,500,000 which, added to a reduction of £66,500,000 for the previous year, made a total reduction of £147,500,000 up to the end of 1953-54. But, notwithstanding that reduction, by the end of that year increased rates of taxation had resulted in the Government’s collecting an additional £388,600,000 in income tax and other taxes. From 1950 to 1953-54, the Government increased all forms of taxation by £1,509,600,000. The Government has not reduced taxation generally. It has only reduced the tax payable by some people.
The Government has issued so much propaganda that its supporters believe that it has reduced taxation by 12£ per cent.
– Has not the honorable senator’s assessment been lower ?
– I receive the same salary as Senator Hannaford - £2,000 a year. It is the poor devil who is receiving little more than the basic wage whose taxation has been increased. As I said before, the man who receives 12s. 6d. a week above the basic wage paid £2 8s. in tax in 1950. This year that man will pay £14 19s. in tax. His taxation has been increased by about 640 per cent. The man who receives a margin of £2 10s. a week above the basic wage will pay 300 per cent, more than he paid in 3950. Government supporters are bewildered because of the propaganda to which they have been subjected by the Government. The Government has not reduced taxation. It has reduced standards of living.
The Government has announced that it will reduce taxation by £35,000,000 this year by £118,400,000 .in the current financial year, and by £153,400,000 up to the end of 1955. .But after taking those reductions into consideration, the accumulated increases in all forms of taxation since 1950 will amount to £235,200,000 at the end of this financial year. The total increase in income taxation will be £1,744,800,000. The Government will have taken that money mainly from those who receive up to £2,000 a year. It is the people in receipt of over £2,000 a year whose taxation has been reduced. According to the figures that have been supplied by the Treasurer, under this bill, a single man in receipt of £600 a year will have his taxation reduced by £4 7s. a year which is equal to ls. 6d. a week. That amount will only enable him to pay the increase in the price of a pound of tea. The taxation of a man with a wife and one child in receipt of £600 will be reduced by £2 4s. fi year., or 30d. a week. That man hap heavier responsibilities than the single man yet his reduction in tax will be 8d. n week less than that of a single man.. The tax of a man with a wife and two children in receipt of £600 a year will be reduced by £1 18s. which equals 8d. a week. Those examples illustrate the injustice of the Government’s taxation policy:
Up to 1950 there was no suggestion that the amount of child endowment received should be considered in fixing taxation. Yet the Minister has told us that, taking into consideration child endowment, the man with a wife and two children is no worse off. This Government obviously has shifted the incidence of taxation. That is my complaint. Tax adjustments are being made, bearing in mind child endowment payments. That is altogether wrong. Child endowment is paid to compensate people in soma measure for the added expense of rearing children. That is typical of the propaganda that the Government is putting over even its own followers. Apparently honorable senators opposite would not think of examining the figures for themselves. They accept the Minister’s statements without question although he is telling only one side of the story. Hu has spoken of accumulated reductions of tax. But he has not touched on accumulated increases during an earlier period. Even during the period of decreases of tax rates, we find that the people of Australia have been paying considerably more in taxes than they paid previously.
Consider how- the wealthy single man on £10,000 a year will benefit under this legislation. He is being looked after very well indeed. His tax commitment is being reduced by no less than £414 Ss. a year or £7 lis. a week. The man on £600 a year who has a wife and two children gets a reduction of 8d. a week, but the single man on £10,000 a year gets a reduction of £7 lis. a week ! A married man with a wife and two children who receives £10,000 a year is to have a reduction of £400 5s. - or £7 8a. a week. Even in this income group, there fore, the family man is not receiving as great a reduction as the single man. Surely that shows the rottenness of the system of tax reductions that has been put into operation. A single man on £10,000 a year will pay £7 a week less in tax; but the single man on £600 a year will pay only ls. 6d. a week less. The £10,000 a year man who has a wife and two children will pay £7 8s. a week less in tax, but the £600 a year man who has a wife and two children will pay only 8d. a week less. If those reductions are equitable I am a Dutchman.
According to figures issued by the Treasurer, tax reductions this year will in some instances be as high as 20 per cent. But to whom will that 20 per cent, reduction apply? It will apply to the man who has a dependent wife and is earning £300 a year! His tax commitment is being reduced by 8s. a year, or 2d. a week. But even then, the adjustments that will be necessary at the end of the year to bring the assessment to the nearest shilling, will deprive him of 4d. That is the kind of adjustment that this Government is making in its tax schedule. I think I have answered all the arguments that were advanced by the Minister in support of this legislation. The Minister’s statements were mostly propaganda, but I have given the whole truth. The Minister said that under the new tax scales a taxpayer with a wife and two children, whose income amounted to £800 would be required to pay £32 2s. in tax, compared with £60 in 1949-50. I have shown that the man who is on £855 a year, or roughly £2 10s. above the basic wage, is paying 343 per cent, more in tax than he paid on a wage that provided him with the same standard of living in 1950. The Minister’s statement therefore is more propaganda. It is, of course, correct as far as it goes, but it does not take into consideration the accumulated increases of tax that I mentioned earlier. Figures can be used to prove almost anything.
So much for the income tax measure itself. Let us have a look now at the assessment bill. That, too, makes some alterations. Certain features of the principal act, which at present are covered in one section, will be covered in future by two or three sections. That is so, for instance, in relation to the exemption of pensions of United Kingdom widows and in relation to annuities. I have no quarrel with the proposal to extend the exemption in relation to annuities. Obviously a woman would be in more needy circumstances after an annuity bad run out than she would have been during the period of the annuity.
There is a point that I wish to raise in connexion with the drafting of measures such as this. For instance, clause 8 of the assessment measure is merely negative. It relates to the sections of the principal act which deal with mining leases. There is provision in the principal act to deal with individual prospectors and companies and so on. This measure will extend those provisions, but the intention of the amendment is not made clear in the clause. To ‘ find out what is meant, one has to get either the Minister’s statement or a statement by somebody else. Clause 8 states -
After section eighty-eight a of the Principal Act the following section is inserted : - “ SSB. - ( 1 .) Where a mining lease is granted, or a lease of land other than a mining lease is granted for mining purposes, and an election is not made under sub-section (5.) of this section in respect of the grant - .
So it i3 necessary first to turn to subsection (5.) of the proposed new section to find out what it is all about. We find that sub-section (5.) provides - (5.) The parties to the grant, assignment or surrender of a lease may, by notice in writing signed by the parties and lodged with the Commissioner on or before the thirty-first day of August next succeeding the end of the financial year in which the lease was granted, assigned or surrendered or on or before such later date as the Commissioner determine*, elect that this section shall not apply in relation to the grant, assignment or surrender.
The kernel of the matter is contained in the following words of proposed new section 88b. (5.) : -
The parties to the grant, assignment or surrender of a lease may . . . elect that this section shall not apply . . .
It is then necessary to turn to the preceding sub-section in order to ascertain the implication of the election. First, it is provided that if an election Ls made, a. certain provision shall not apply, but, if an election is not made, we have to refer to sections 84, 86 and S9 of the principal act to determine the obligation of the parties to the transaction. Proposed new section 88b states that a certain provision shall not apply unless these has been an election. There is altogether too much verbiage - nothing but words, words, and more words! I am sure that I could explain in simple language to those engaged in the mining industry the way in which taxation may be avoided on premiums received in respect of the sale of mining leases. All of the sub-sections of proposed new section S8b are qualified by other subsections or sections of the principal act. I hope that the attention of the Parliamentary Draftsman will be directed to my remarks so that, when he is framing future taxation measures, he will endeavour to use simple wording, in order to enable taxpayers to understand them readily. I defy any member of this chamber to understand, from a first reading of the bill, the meaning and effect of it3 various clauses. One would need to have a full knowledge of the provisions of. the Income Tax and Social Services Contribution Bill, and then study the assessment measure for half an hour, in order to understand the meaning of the various provisions. Beyond saying that the assessment measure will ameliorate the incidence of taxation of shareholders of a mining company who receive dividends having a tax-free premium content, the Minister for Shipping and Transport (Senator McLeay) has not explained the various provisions. One gathers from a quick first reading of the bill that, if a mining company makes a certain election, it may receive a taxation concession in relation to premiums received in connexion with the sale of prospecting rights, and that a distribution of the premium shall be tax free in the hands of the shareholders. I assume that that is what is meant. By the involved wording of taxation measures, the Government plays a confidence trick on the people of Australia. I come now to the alteration of the incidence of taxation in 1950-51.
The DEPUTY PRESIDENT (Senator the Hon. A. D. Reid):- Order ! The honorable senator’s time has expired.
– I shall respect the wishes of the Minister for Shipping and Transport (Senator McLeay) by directing my remarks to both the Income Tax and Social Services Contribution Assessment Bill and the Income Tax and Social Services Contribution Bill, but I shall not attempt to follow Senator O’Flaherty up every lane. It will be obvious, I think, from my observations that it would he futile to accept, without reservation, even half of the statements that were made by the honorable senator. The important factor when comparing the impact of taxation in the years 1950-51 and 1953-54, is the amount that was left to taxpayers after paying their income tax. I shall show that, at present, the taxpayers of this country still have left a big pro portion of their gross income after paying tax. I do not think it could be contradicted that, during the period that this Government has been in office, our national product has increased enormously. I submit that the amount of taxation is now a lower percentage of the gross national product than it was during the regime of the previous Labour Government. During the so-called golden age - I refer to the period when Mr. Chifley was Prime Minister- 22.9 per cent, of the gross national product was taken by the Government in taxation. In the year to which Senator O’Flaherty referred - 1951-52 - 22.2 per cent, was taken. Bt comparison, the United Kingdom Government took 29.8 per cent, of the national product of Great Britain in that year; the Government of the United States of America took 24.6 per cent, of the national product of that country; and the New Zealand Government took 24 per cent, of the national product of the dominion. It will be seen that the proportion of the national product of Australia that was taken by the Government in that year was less than the percentage that was taken by the governments of the other countries to which I have ref erred.
Let us consider the matter from the point of view of the amount that a taxpayer has left after paying income tax. In 1949-50. our national income was £2,300,000,000, of which approximately £550,000,000 was taken by taxation, leaving with the taxpayers, £1,750,000,000. In the year 1952-53, our national income was £3,579,000,000, of which £900,000,000 was taken by taxation, leaving to the taxpayers £2,679,000,000.’ Despite the fact that there was an overall increase of tax collections in that year, a greater proportion of the national income was hh in the hands of the taxpayers than in previous years. Recently, in Adelaide, Sir
John Allison, who is the chairman of the Chamber of Commerce of Australia,, said that, in this financial year, our national income could be £4,000,000,000, of which- in round figures- £900,000,000 will be extracted by taxation, leaving £3,100,000,000 with the taxpayers. Let us compare that figure with the figure for 1949-50 when, although tax collections were lower, the amount left with the taxpayers was £1,350,000,000 less. I emphasize the necessity for honorable senators, when considering taxation measures, to have regard to the position that I have outlined. As I have said, the important factor is the amount that the taxpayers have left for their own purposes after paying tax, not that this Government is extracting from the national income, in a year, £800,000,000, compared with £500,000,000 extracted by the Chifley Labour Government in its last year of office. As we examine taxation measures that are introduced from year to year, we should reflect on the incidence of taxation generally. This Government’s record in relation to taxation is outstanding. The Treasurer (Sir Arthur Fadden) stated, in his budget speech, that ‘we had effected a 30 per cent, reduction of the 1949-50 taxation rates. In this financial year, the biggest benefit from income tax reductions will be gained by individuals. I think the Treasurer is to be commended on the balanced budget that he brought down, which provided for considerable reductions of taxation. Inflation has been virtually checked. As a matter of fact, figures that were released last week showed that the cost of living has fallen by 2s. a week in Victoria.
– What about the other States?
– In some of the other States, the cost of living has increased, whilst in others, it has decreased. It is encouraging to realize that stability has been achieved, thus making reductions of taxation possible.
I come now to the internal working of the Taxation Branch. I shall direct the attention of the Senate to certain very important matters, which have a considerable bearing on the legislation now before us. I compliment the Commissioner of Taxation and his staff, who, by their diligence during the last twelve months, have reduced the amount of income tax outstanding. According to the report of the Auditor-General, at the 30th June, 1953, no less than £124,000,000 of assessed taxation had not been collected. By the 30th June last, that amount had been reduced to £81,000,000. In other words, the amount of taxation uncollected at the 30t!i June last was only two-thirds of the amount that was outstanding at the end of the previous financial year. I am sure that the improvement in that position helped the Government considerably to decide on the proposed reductions of taxation that we are now considering. The AuditorGeneral also referred to his powers over the work and staff of the Taxation Branch. I refer to paragraph 128 of the annual report of the Auditor-General for the year ended the 30th June last, the heading of which is “ Audit of Accounts of Receipts and Expenditure of the Taxation Branch of the Treasury “. I do not propose to read the paragraph, but merely to comment on it. It seems that the’ Auditor-General has been denied the right to examine taxation documents and procedures. This matter was referred to in an opinion dated the 11th January, 1949, before this Government came to office, concerning the powers of the AuditorGeneral in relation to income tax assessments. I do not propose to deal with the details of that opinion, but it indicates that there are very definite limitations to the power of the Auditor-General with regard to matters of assessment and procedure within the Taxation Branch. The Auditor-General, in his report, refers to the practice that applies in Canada and New Zealand.
At this stage, I express no opinion on the question whether the Auditor-General should or should not be given the power which he seeks, but I mention, in passing, that this is a big question because it involves the element of secrecy which is very strictly observed in the internal working of the Taxation Branch. I urge the Government to consider this very important question with a view to settling the matter one way or the other. There is, apparently, a difference of opinion between the Auditor-General and the Commissioner of Taxation, who are both highly respected servants of this Parliament. The question should be resolved to the satisfaction of the Parliament because, according to the AuditorGeneral, he is being hampered by the lack of authority. He states -
Furthermore, owing to this lack of authority in regard to the audit of revenue, an attitude is erroneously developing in the Taxation Branch that the Auditor-General is similarly restricted in the audit of expenditure.
That is merely his opinion. I do not intend to express an opinion one way or the other until I know the real position, hut I direct the attention of the Minister representing the Treasurer to this important matter. It must be appreciated that approximately £900,000,000,’ or about nine-tenths of our annual budget, is collected each year by the Taxation Branch which has its head-quarters in Canberra. For that reason alone, I think that this important question should be cleared up. In addition, it is necessary for these high-ranking civil servants to know where they stand. It is the responsibility of this Parliament to resolve the matter once and for all.
I consider that the gesture made by the Government in completely exempting certain elderly people from the liability to pay income tax is to be commended. In practice, a man who is over 65 years of age, with a wife who is over 60, can have a joint income of £975 per annum before they become liable for the full amount of tax. If their joint income is £750 or less, they enjoy complete exemption from tax. Records which I have consulted indicate that, in England, such a couple would pay £140 a year, and in New Zealand, approximately £100 a year. I also invite the attention of the Senate to the practical effect of income tax and child endowment, in the case of a man with a wife and two children. Senator O’Flaherty overlooked, in his comparisons of a man on the basic wage with a man in receipt of 7s. 6d. a week more than the basic wage, the additional money that comes into the home by way of child endowment. The position is that a person with a dependent wife and two dependent children can have income of up to £855 a year before his tax will exceed the amount of endowment which is paid to him. If he has a wife and five dependent children, his income can he £1,466 before his tax will exceed the amount of endowment. Therefore, 1 direct the attention of the Senate to the very real appreciation which this Government has for the family man.
I compliment the Government, also, on its approach to tax deductions in respect of educational expenses. It is only about a year since the Government introduced the deduction of £50 for each child attending a college, convent, or similar school. Last year, that deduction was increased to £75 per annum in respect of each child receiving full time instruction at such a school, and the scope of the deduction was widened to cover expenses incurred in connexion with the purchase of books and school uniforms and the payment of boarding fees. I assure th Senate that this understanding approach by the ‘Government to this imaginative deduction, if I may call it that, has been very much appreciated. The proposed widening of the scope of the deduction in respect of educational expenses will be even more appreciated, because the Government has approached the matter in a particularly liberal manner. It proposes to allow, as an income tax deduction, gifts made to educational institutions. I shall refer to this matter in a little more detail. The bill at present before the- Senate provides that gifts of £1 or more to public funds for the acquisition, construction or maintenance of a .building used, or to be used, as a school or college by a non-profit organization, such as a public authority, shall be allowable deductions. I regard that as a very fine gesture towards collegiate and religious organizations which are doing so much to further the cause of education. That provision will encourage people to donate money to such institutions. People who make such donations will be able to claim, as deductions from income tax, the amount of their gifts.
Now, I pass to a matter which was referred to by Senator O’Flaherty, but which I propose to approach from a somewhat different angle. I refer to the deduction which is to be allowed in respect of mining leases. I agree that such a deduction should be allowed, but I should like the Government to consider the advisability of widening the terms of the provision. Although the bill refers merely to “mining”, I think that the provision should not be limited to the definition of mining contained in the act. The Government might consider making this concession applicable to other phases of mining, such as quarrying for sand, stone, chalk and lime. Australia is building up a fairly large number of manufacturing industries which use sand, chalk and lime, and various other products of quarrying operations. We should . encourage land holders to permit companies and private individuals to go on to their property for mining purposes, but the people who do that should not be penalized because of high taxation in the year in which they receive a premium. I invite the attention of the Minister to that matter.
I turn now to the question of depreciation allowances. In common with other honorable senators, I listened with great interest to the budget speech which the Treasurer (Sir Arthur Fadden) delivered in the House of Representatives. Honorable senators will remember that, in the course of his speech, the right honorable gentleman referred at considerable length to depreciation. He is to be complimented for the attention which he gave to that subject. I have received communications from people in various parts of South Australia stating that they were grateful that a start had been made to tackle this matter of depreciation. It must be appreciated that Australia is fast growing up as an industrial nation. Factories are being erected in every State of the Commonwealth. In addition, we are attracting capital from overseas. Only last year, this Senate gave its approval to an act to enable avoidance of double taxation between Australia and the United States of America. Already, reports have appeared in the press which indicate that companies in America are becoming interested in bringing to Australia their know-how and industrial potential. That will be to the advantage of both countries, particularly Australia. In passing, I remind the Senate of the good which the previous amendment of the Income Tax and Social Services
Contribution Assessement Act has produced already. I suppose that all honorable senators have read in the newspapers comments by American businessmen, in the course of which they have complimented us for our imaginative taxation methods. I suggest that we must take another step forward and do something imaginative about depreciation. I find that Income Tax Order No. 1217, which relates to depreciation, lists hundreds of items. For instance, reading at random, it refers to depreciation on buildings, except in relation to special industries, to the extent that they form an integral part of manufacturing plant. If the buildings are of brick, stone or concrete, the depreciation allowance is 1 per cent, per annum. We’ expect a building of that character to last for 100 years. The depreciation that is to be allowed on a freezing works of brick and stone is 1 per cent, a year. The depreciation on an electric cardiograph used by a doctor is to be 5 per cent, a year, so that it will have to last the owner twenty years on that basis. The depreciation on galvanized iron tanks is to be 5 per cent., so tanks must be expected to last for twenty years. This document may have been a worthy one in years gone by, but the schedule is not one to attract substantia] overseas capital to Australia quickly. In Great Britain, there is a completely new attitude towards depreciation. I believe that in the United States of America and in other countries the depreciation allowed is as high as 40 per cent, a year. In Switzerland, it is almost 100 per cent.
The schedule from which I have been quoting may have been justified in the past, but it has no proper basis now. I express some disappointment at the approach of the Treasurer to this matter. I am glad that he has given consideration to the matter, but I am disappointed because he did not give a wider charter to the committee that has been appointed to investigate it. The chairman of the committee is the honorable member for Petrie in the House of -Representatives (Mr. Hulme). Four men will comprise the members of the committee under his chairmanship, but I do not believe that the charter is wide enough to enable the committee to deal with .the important problems in connexion with depreciation that confront Australia. In his budget speech, the Treasurer dealt with the matter of the charter rather briefly, but he did not include in the charter terms of reference that would enable the committee to consider the system in force in the United Kingdom. The Parliament of the United Kingdom has given close attention to this matter in two stages. In 1953, the initial depreciation allowance in Great Britain was somewhat similar to that in vogue in Australia a few years ago. This year, the authorities went a step further and allowed a system of investment allowances. Upon reading the terms of reference of the newly appointed committee on depreciation in Australia, I noticed the following : -
Whether the effective lives of units of property as estimated by the Commissioner of Taxation as required by Section 55 (1) of the Income Tax and Social Services Contribution Assessment Act 1930-1953 are fair and reasonable.
That is a very valuable line of inquiry. The terms of reference continue -
Whether the basis of depreciation provided by the said Act ensures that the cost of each unit of property is deducted in a reasonable manner over the effective life of that unit.
That also seems important, but no provision is made for the committee to examine sufficiently the important systems that are in existence in other parts of the world. In his budget speech the Treasurer stated - . . criticism seems to concentrate mainly on the rates of depreciation allowed for various types of assets. Without saying whether such criticism is justified or not, I think this is a matter upon which the public mind ought to be set at ease and with this in view, the Government has decided to refer this aspect of the matter to a special committee for independent inquiry and report.
Why did not the right honorable gentleman submit to the committee other matters relating to the vexed question of depreciation? One matter in particular has received a good deal of attention in some quarters. That is the question of the depreciation allowance on assets that have been disposed of in some way. Difficulties continually arise in ascertaining the profit or loss which arises from the disposal of assets. Those difficulties have been aggravated by the introduction of provision for initial depreciation. We shall face some big problems in connexion with the course that is to be adopted after certain assets are disposed of and upon which the special 20 per cent, depreciation has been claimed. To me, it seems a pity that some provision is not being put into the law to make this problem less difficult for a person who sells an asset upon which, at the time of the sale, for example, 80 per cent. depreciation has been claimed, because depreciation is often claimed at the rate of 20 per cent, a year and,- in many cases, the sale takes place in the third or fourth year of the life of an asset.
I am sorry that the report of the committee under the chairmanship of the honorable member for Petrie is not expected until possibly the end of March, 1955. That is the last day upon which the committee can function. I suggest strongly that as soon as the report is available, the Government should take some action with regard to it. In the light of industrial expansion in Australia, the question of depreciation allowance is one of prime importance. When a decision on the matter has been reached, I hope that leaders in industry, in particular, will know where they stand in connexion with this matter. Many intelligent minds are concentrating upon the problem. In connexion with this matter I direct the attention of honorable senators to an address that was given by the president of the Taxpayers Association of South Australia, Mr. W. Saint B. More, at the annual meeting of the association on the 15th September. He said that the association complimented the Government upon the appointment of a committee to investigate all phases of depreciation, and that it was a matter of great importance. His address contained this statement -
It was resolved at the Sydney conference that the Government be urged strongly to follow the lead of the 1954 British Budget in introducing an investment allowance which really provides that incentive, not only in respect of plant and machinery, but also in respect of buildings used in the deduction of assessable income.
Opinion on this matter throughout Australia is strong, and I hope that the Government will not lose sight of its importance. I hope that it will give some consideration to the system that is in operation in the United Kingdom. I thank the Government for the action it has taken so far, and although I believe that the scope of the committee of inquiry is limited, I hope that something useful will be achieved for those who are engaged in trade, commerce and agriculture in Australia.
Question resolved in the affirmative.
Bill read a. second time, and passed through its remaining stages without requests or debate.
Debate resumed, from the 14th October (vide page 71’7) on motion by Senator Spooner -
That the hill be now read a second time.
.- The Minister for National Development (Senator Spooner) said in his second-reading speech that amendments to the bill would be moved by the Government. I think it is entirely wrong for the Government to poke copies of the amendments at us a few minutes before the resumption of the debate on the motion for the second reading of the bill. That indicates a lack of courtesy on the part of the persons in charge of the measure. I had secured the adjournment of the debate, and that fact wa3 recorded on the notice-paper. Surely somebody could have sent me a copy of the amendments shortly after the document was printed. I have had time to consider only two of the amendments. I hope I shall have had time to consider the third one before we reach the committee stage. I should not have complained if the document had been handed to me even half an hour before the debate on the bill was resumed, but I object to it being handed to me at the very last minute.
In my speech on the Income Tax and Social Services Contributions Bill that was before the Senate to-day, I said that certain facts and figures had been only half quoted. Senator Laught, who spoke after me, said that a man with a wife and two children on a salary of £855 a year would receive as much in child endowment this year as he would pay in income tax. That is quite right, but the honorable senator did not go far enough. The child endowment scheme was in operation in 1950. The only alteration of the scheme since then is the provision for the payment of 5s. a week in respect of the first child. That fact should be taken into consideration in comparing taxes paid in 1950 with those payable this year. In dealing with these matters we should tell the whole truth. If honorable senators opposite want to take child endowment into consideration in calculating the amount of tax paid by a taxpayer now, they should remember that, apart from the payment of 5s. a week for a first child, the rates applicable in 1950 are also the rates applicable now.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 and 2 agreed to.
Clause 3 (Exemptions).
Senator McKENNA (Tasmania- [5.35]. - The purpose of this clause is to exempt from income tax in this country war pensions paid by the United Kingdom Government. I should like to know whether, if this proposal becomes law, any alteration will be made of the incidence of United Kingdom taxation on the pensioners concerned. Are the pensioners taxed now by the United Kingdom Government? If not, is there any likelihood that they will be so taxed when they are exempted from income tax here?
– The answer is “Yes “.
– They will be taxed by the United Kingdom Government?
– As far as the incidence of taxation on the individuals is concerned, everything will depend on the difference between the degree of taxation imposed by the Australian Government and that imposed by the United Kingdom Government. This provision may not give any real relief to the people concerned.
– That is correct.
– In short, this provision will not, of necessity, extend any concession to these people. Everything will depend on the action, not of this Government, but of another government. I should like the Minister for Shipping and Transport (Senator McLeay) to say, “ Yes “ or “ No “ to another proposition that I shall put to him. In view of the discussions I had with the officers concerned, I do not think there will be any difficulty about the matter. I refer to the statement by the Minister for National Development (Senator Spooner) that, in the future, when the period of life expectation of a person in receipt of an annuity expires, the annual instalments not subject to tax will be continued. They will not be discontinued, and the taxpayer will not be required to pay income tax on the whole of the annuity. I have found some difficulty in following the provision by reading only the proposed new section that deals with annuities. I have reached the conclusion that one must refer also to clause 10 (1.). Am I correct in assuming that that is so?
Clause agreed to.
Clauses 4 and 5 agreed to.
Clause 6 (Dividends).
– The purpose of this provision is to exempt from income tax dividends paid by bona fide prospecting companies out of profits made from their prospecting operations. I understand that in the House of Representatives attention was drawn to the fact that, under section 23 (p) of the principal act, the Government has power to exempt certain minerals, and the question was asked whether oil and uranium would be declared by the Government to be such minerals.
– Oil will not be, but uranium has been.
– In other words, the Government will not exercise its power to extend the benefit of that concession to oil?
– That is right.
Clause agreed to.
New clause 6a.
– I move -
That, after ela.use 6, the following new clause be inserted: - “0a. Section sixty-three of the Principal Act is amended by omitting from, sub-section (2.) the words ‘is adjudicated bankrupt’ and inserting in their stead the words ‘ becomes a bankrupt V.
Three amendments of the bill, including that just moved, are proposed by the Government. The proposed new clause 6a, and also the proposed new clauses 7a and 9a, result from a recent decision of the High Court in a matter arising under the Bankruptcy Act. Under the Bankruptcy Act, a person becomes bankrupt on the making of a sequestration order. These orders may be made by a court having jurisdiction in bankruptcy, but the act provides also for such order to be made, upon- a debtor’s own petition, by a registrar in bankruptcy. In the recent case of the Queen v. Davison, the High Court has held that the provisions of the Bankruptcy Act empowering a registrar to make a sequestration order are invalid as purporting, contrary to the Constitution, . to confer a part of the judicial power of the Commonwealth upon a person who is not a court.
The Government is giving urgent consideration to the question whether any amendment of the Bankruptcy Act is required as a- result of this decision, and the form, which the amendment should take. One possibility is that the Bankruptcy Act will be so amended that debtors may become bankrupt upon their own petition: without any adjudication or sequestration order. If this course is adopted, the expression “ is adjudicated bankrupt “ in section 63 of the Income Tax and Social Services Contribution Assessment Act will become inappropriate to some cases where debtors become bankrupt upon their own petition. Similarly, the references to persons adjudicated bankrupt and to the order of sequestration in section 80 and section 22.1 of the act will become inappropriate.
It is considered desirable to take the opportunity to amend the principal act by this bill, so as to refer merely to the fact of a person becoming bankrupt, without referring to the particular procedure by way of adjudication, of sequestration order or otherwise by which he becomes bankrupt. Honorable senators should note that the amendments proposed will be perfectly consistent with the Bankruptcy Act as it now stands, as well as with the act in any form in which it is contemplated it may exist after any amendments made as a result of the recent High Court decision. The proposed new clause 6a is designed to amend sub-section (2.) of section 63 of the principal act. That sub-section provides that, on the bankruptcy of a debtor to a taxpayer, the amount of his debts which have been brought to account by the taxpayer as assessable income in any year or which are in respect of money lent in the ordinary course of a money-lending business shall, to the extent that they are not recoverable, be deemed to be bad debts. The effect of proposed new clause 6a is to substitute the words “ becomes bankrupt “ for the words “ is adjudicated bankrupt “.
Perhaps it would be convenient for me to explain now the object of the other two amendments that will be moved. Proposed new clause 7a is designed to substitute for sub-section (4.) of section 80 of the principal act a new sub-section. The existing sub-section provides that, on the bankruptcy of a taxpayer, losses incurred by him prior to the. bankruptcy shall be excluded from deductions otherwise allowable in respect of losses in previous years. The new sub-section (4.) will have substantially the same effect as the sub-section which it is proposed to delete, subject to the substitution of the words “ has become bankrupt “ for the words “ has been adjudicated bankrupt “.
Proposed new clause 9a is designed to amend section 221 (1.) (b) (i) of the principal act. The sub-paragraph provides that, subject to specified exceptions, the trustee in a bankrupt estate shall apply that estate in payment of Commonwealth income tax in priority to all other unsecured debts. The effect of the new clause will be to substitute the words “ the date on which he became a bankrupt” for the words “ the date of the order of sequestration”. Honorable senators will appreciate that the three proposed new clauses are designed only to effect drafting alterations.
”. - I express my regret that, when these amendments were being drafted, consideration was not given to the whole of section SO of the principal act. That section gives a taxpayer the right to deduct from income any losses not previously allowed as a deduction from income, provided the losses were incurred within the preceding seven years. The Minister for Shipping and Transport (Senator McLeay) has referred to subsection (4.) of the section, which suspends the operation of the section in the event of a taxpayer becoming bankrupt. But there is nothing in the legislation to annul the operation of sub-section (4.) in the event of a bankrupt repaying his debts. I think that that is a consideration to which the Government should give some thought. The existing legislation provides very little incentive to a person who has become bankrupt to pay his debts, wholly or in part. I should like the Government to give further- consideration to the whole of section 80, and particularly to .sub-clause 2 which makes no provision for a bankrupt to have past losses deducted from his income for taxation purposes if he repays his prebankruptcy debts.
– The proposed amendments are of a purely technical nature. I understand that the matters that have been raised by Senator Wedgwood are receiving consideration. The committee will appreciate that they cannot be provided for in this bill. I shall bring them to the notice of the Treasurer (Sir Arthur Fadden) at the first opportunity.
New clause agreed to.
Clause 7 (Gifts, contributions, allowances and pensions).
– I should like the Minister for Shipping and Transport (Senator McLeay) to indicate whether my interpretation of this clause is correct or not. Clause 7 provides that contributions to a public fund of the type mentioned shall be allowable deductions for taxation purposes. I can find no definition of the term “ public fund “. If the principal of a college or educational institution were to make a public appeal for funds for the purpose either of building or maintaining his educational institution, would the moneys received fall within the definition of the term “ public fund “?
– I should also like to be informed whether the benefits of this clause will extend only to such associations as are carried on other than for the purpose of profit or gain for the individual members. I instance the case of a denominational institution, the members of which may have taken a vow of poverty.Whilst they use whatever profit is made in order to advance the general cause of their institution, nevertheless, they pay for their food and clothing out of the income of the institution. I imagine that the mere fact that such persons obtain food and clothing alone would not debar the institution from benefiting from the provisions of this clause.
– That is correct.
Clause agreed to.
New clause 7a.
Motion (by Senator McLeay) agreed to -
That, after clause 7. the following new clause be inserted: - “ 7a. Section eighty of the Principal Act is amended by omitting sub-section (4.) and inserting in its stead the following sub-section: - (4.) Notwithstanding any other provision of this section, where, prior to the year of income, a taxpayerhas become a bankrupt, or not havingbecome a bankrupt, has been released from any debts by the operation of the Bankruptcy Act 1924 or that Act as amended, no loss incurred by him prior to the date on which he became a bankrupt or the date on which he was so released, as the case may be, shall be an allowable deduction.’.”.
Clauses 8 and 9 agreed to.
New clause 9a.
Motion (by Senator McLeay) agreed to-
That after clause9, the following new clause be inserted: - “9a. Section two hundred and twenty-one of the Principal Act is amended by omitting from sub-paragraph (i) of paragraph (6) of subsection (1.) the words ‘ the date of the order of sequestration ‘ and inserting in their stead the words ‘ the date on which he became a bankrupt ‘.”.
Clause 10 agreed to.
Title agreed to.
Bill reported with amendments; report adopted.
Bill read a third time.
Sitting suspended from 5.51 to 8 p.m..
Debate resumed from the 30th September (vide page 658), on motion by Senator Gorton -
That a Select Committee be appointed to inquire into and report upon the justice and effects of the present formula by which portion of the customs and excise duties collected on petrol . . .(vide page648).
– Senator Gorton’s motion refers, of course, to the formula operating under the Commonwealth Aid Roads Act, by which portion of the moneys collected under the statute by means of customs and excise duties are allocated to the six. States of the Commonwealth. As I understand it, the federal aid roads legislation dates back to 1923. Within the next few days amending legislation which will extend the federal aid roads agreement for a further five years, and makesome alterations of the details of the collection and allocation of the money. That bill has already been debated by the House of Representatives and I hope that, in the course of our discussion of this motion,we shall be permitted to refer at least to the parts of that legislation which are general knowledge. In the terms of the 1950 act, after the retention by the Commonwealth for road purposes of £600,000 of the money that is collected by the tax on petrol, an allocation is made to the States on the basis of 6d. a gallon on petrol and petroleum products imported into Australia, and an excise duty of 3½d. a gallon on petrol and petroleum products produced or processed in this country. As among the States themselves, the money is distributed according to a formula. Senator Gorton believes that that formula now requires revision, and he has suggested that the appropriate body to carry out that revision is the Senate of the Commonwealth Parliament, composed as it is of an equal number of representatives of each State. Senator Gorton’s proposal is that an inquiry should be made to ascertain whether the basis of the allocations to the States should be altered, or whether there are any other matters that require attention.
The formula at present provides that one-twentieth of the residual revenue from the petrol tax shall go to Tasmania, and that of the balance, threefifths shall go to the States on a population basis, and two-fifths to the States on an area basis. There seems to be only one question arising in the terms of Senator Gorton’s motion, and that is whether the Senate should appoint a select committee to investigate the formula. Senator Gorton very properly :said this matter was above party politics, and I agree with him on that. Nevertheless, he directed many of his remarks to the substantive part of the whole matter and virtually attacked the present formula because of its alleged discrimination against the State that he represents. In the course of my remarks, I too propose to deal with what I call the substantive part of the matter and to bring before the Senate certain facts and figures which will indicate that any prejudice to Victoria is perhaps more apparent than real when compared with the position in Queensland. I admit that the Senate, constituted as a States house, at least technically, has an obligation to protect the States of the Commonwealth. The only question that arises is whether the function of the Senate is to protect the States inter se. that is against one another, or to protect the States against the Commonwealth.
– I think both.
– I think that, primarily, our function is to protect the States against the Commonwealth. Of course, the allocation of the proceeds of the petrol tax is a matter in which the Commonwealth is, to a major degree, neutral because it is handing out Commonwealth revenue to the States and leaving the States to determine the method of distribution.
– Daddy Christmas !
– That may be so, but is is the accepted practice and the question before us is whether the Senate is the proper body to examine the formula.
– Tasmania was given an equal number of senators with the other States to protect it against the more populous States such as New South Wales.
– The purpose of the Senate was primarily to protect the States against the Commonwealth. Probably the most effective protection for each State against the other .States in connexion with the matter we are now debating, would be a meeting of the States themselves. That would be much more effective and much more valuable than any intervention by this -chamber.
– They would not have the constitutional power.
– It is only a matter of agreeing amongst themselves. Since 1923, the aid roads legislation has been enacted and re-enacted many times. Even up to very recently, the States have been meeting and agreeing on the formula. Indeed, it is as the result of a recent agreement between the States and the Commonwealth, through the Prime Minister (Mr. Menzies), that the legislation to which I have taken the liberty to refer will be placed before this chamber within a few days. Therefore, we have, in Senator Gorton’s suggestion, a proposal that the Senate should intervene in a matter in which the States have interested themselves actively and closely, and in connexion with which they have met recently to protect their interests. Nobody can protect .State interests better than the States themselves. Even if it were a prime function of the Senate - and I do not say it is - to protect the States against each other, a better method would be a meeting of the States, and that is what has happened.
– They have no constitutional way of doing that.
– But in practice it has worked. Here we have a formula to which the States have agreed, and which has worked satisfactorily for a period of years. The Commonwealth is not proposing to reduce the allocation of revenue to the States. On the contrary, the Commonwealth proposes to increase the allocation. So, the question whether the States are spending the money wisely or not does not come into this debate at all. [f the Commonwealth wanted to write the formula that would be another matter ; but the Commonwealth has never sought to write the formula or to disregard the views of the States. The States themselves have written the formula by agreement. If the formula is to be disturbed, then evidence should be given to show that it is out of date, out of gear, unjust, or unworkable. If it is not any of these things there is no warrant for an investigation by us or by any other body. We should like Senator Gorton to offer a reason why the formula should be examined.
– I tried to give the reasons.
– I know that. A pre-requisite to the formula is the acknowledgment of the principle that the revenue should not necessarily be expended in the area in which it is collected. Senator Gorton acknowledged that in the course of his speech. But the fundamental principle of the payments by the Commonwealth to the .States in accordance with this formula is the need for the States which leapt ahead economically and in population in the early days of federation and since then, to accept a heavier financial burden in order to assist the development of the less populated States. If that is a pre-requisite of the formula, we would expect some remarks to be directed to that very important matter. But I have examined Senator Gorton’s speech, and I find that at no stage did he direct any part of his remarks to a claim that South Australia or Queensland had now reached such a condition of’ development that the prerequisite of the formula to which I have referred no longer existed. If that fundamental basis still exists the formula must remain in its present form. That is my submission. The two factors which intrude for the purpose of mechanical calculation are factors of area and population. The factor of area is, of course, static. It is unalterable by Senator Gorton or by myself. The factor of population is perhaps alterable by both of us; but the honorable senator did not submit to the Senate evidence of any violent change of population to show that the formula was not working justly or in accordance with the agreement. If we were to adopt the honorable senator’s proposal that the formula should be disturbed on the ground that he submitted
– To examine it, that is all.
Sena-tor BYRNE. - Or even to examine it, the result would be an increasing discrimination between the States which would contradict the fundamental basis of the agreement and would put Victoria out of proportion. It is all very well for the honorable senator to say that the differences in money terms are becoming greater;- but while the formula exists it should continue to operate regardless of the level of aggregate revenue. The differences to which the honorable senator referred must have been considered by those who were parties to the formula. It is illogical to suggest that merely because the money has varied, the formula is basically unsound.
I shall deal to the best of my ability with further arguments that were submitted by the honorable senator. He quoted road mileage in the various States and suggested that that was a reason why Victoria should have a better deal. All the time the honorable senator was protesting that all he wanted to do was to have the formula investigated, the great bulk of his argument was directed to establishing that the formula was wrong, was operating badly and was discriminating against Victoria. It is interesting to analyse the following figures in relation to road mileage, which were prepared for me by the Bureau of Census and Statistics. As honorable senators for other States will doubtless cite figures in relation to the State they represent, I shall confine my remarks to Queensland and Victoria.
– I should be glad if the honorable senator would also mention the Tasmanian figures.
– The first category of roads mentioned in the schedule relates to those constructed of wood or stone, of which Victoria has 62 miles. No roads of that kind_ exist in Queensland or Tasmania. The next category is concrete roads, of which Victoria has 352 miles, Queensland, 90 miles, and Tasmania. 20 miles. Then come .bituminous roads, of which Victoria has 10,241 miles, Queensland, 5,250 miles, and Tasmania, 938 miles.
– Do those figures appear in the Y ear-Book 1
– They “are the most recent figures available. I do not know whether they are the figures that were published in the last edition of the YearBooh. The remaining categories shown on the schedule before me are as follows : -
It will be seen that Victoria has a total of 101,411 miles of roads of all kinds.
– According to figures that have been supplied to me, Victoria has a total of 104,648 miles of roads.
– I shall not quibble over the difference. Queensland has a total road mileage of 132,197 miles, and Tasmania, 12,676 miles. It is evident from these figures that Queensland has the greatest road problem in this country. A situation has been reached in which Victoria has 10,241 miles of bituminous roadway, compared with 5,250 miles in Queensland. I should say that that category includes most of the first-class roads. Victoria has 28,418 miles of macadamized roads, compared with 11,565 miles in Queensland. I am beginning to wonder whether there is any land left in Victoria for the growing of crops. Queensland has 42,943 miles of formed roads, compared with 23,901 miles in Victoria, and Queensland has 72,349 miles of cleared or natural surface roads, compared with 32,487 miles of similar roads in Victoria.
If we approach this matter from the point of view of the State that has the least mileage of first-class and secondclass roads, we must conclude that that State is Queensland. If the formula is to discriminate against any State, it is obvious that that State should be Victoria. From Senator Gorton’s remarks, I concluded that he advocated that the area basis should be abandoned in favour of the road mileage basis, or, in other words, that the distribution of. money to the States should be proportionate to their existing road areas or road lengths. The adoption of that suggestion would create a very extraordinary situation. Because of its tremendous existing roads system, Victoria derives more revenue from Commonwealth road aid grants than do the States that are under-provided with roads. If the suggestion were adopted the position would become farcical.
– “We should be greasing the fat pig.
– That is so. In more academic language, there would be created a situation in which there would be a disproportionate distribution of the money. Victoria, which already has an excellent roads system, would derive increased Commonwealth grants, which would enable that State to run ribbons of road in all directions. Ultimately, the fantastic position would be reached that Victoria would receive all of the money. That would be a stupid situation.
One of the aims of the initial legislation was to provide for the construction of roads in the sparsely populated parts of Western Australia. At some future time, it may be desired to run a road from the south to the north of that State, through many areas that are devoid of population. The adoption of the suggestion would not assist the under-developed States. I do not think that the States are entitled to ask the Commonwealth for financial assistance until they have made a reasonable attempt to obtain revenue from their own taxation fields. I consider that those who use the roads are responsible primarily for paying for their maintenance and extension. It is interesting to compare the revenue derived by Queensland and Victoria from licence-fees and other vehicle charges. “When the Premier of Victoria .asked the late Mr. Chifley - when he was Prime Minister of this country - for an increased grant for roads purposes, Mr. Chifley suggested that Victoria should raise its railway fares and charges, as they had not, apparently, been increased for many years. Furthermore. other States had already made necessary increases.
I shall now cite figures in relation to what I shall call the direct taxation of motorists in Victoria and Queensland. During the year 1952-53, Victoria collected £3,890,000 in registration fees and taxes, £319,000 in respect of drivers’ licences, and £1,246,000 in motor transport co-ordination fees, &c. - a total of £5,455,000. Omitting the dissection, Queensland derived revenue from similar sources totalling £4,424,000 in that year. In the aggregate, Victoria collected about £1,000,000 more than Queensland. I come now to a comparison of the number of vehicles registered in those States. According to the latest published statistics, there are 557,097 motor cars and commercial motor vehicles registered in Victoria, compared with 284,207 in Queensland. Although there are in Queensland only about a half of the number of motor vehicles in Victoria, Queensland imposes motor vehicles charges which yield a revenue of only about £1,000,000 less than the revenue that is derived from that source by Victoria.
– Does the honorable senator imply that the Queensland Government is plundering the motorists of that State?
– I consider that the motor fees and charges imposed by Queensland bear a fair relationship to those of all other States, except Victoria, in which State, I understand, motor registration fees have not been increased since 1927.
– That is a lie!
– I have before me a transcript of a statement that was made by the Queensland Minister for Transport to that effect. Although that gentleman did not claim to be an authority on the matter, he stated -
It must not be forgotten that we do not depend solely on federal aid money. We have exploited the local field of revenue to the full. Victoria, on the other hand, has not altered its registration fees, so far as can be ascertained, since 1927.
– That statement was ridiculous, if it included commercial vehicles.
– The Minister apparently spoke with some reservation, inasmuch as he qualified his statement with the words, “ as far as can be ascertained “.
– He probably spoke with tongue in cheek.
– And Senator George Rankin probably drives with his hand in his pocket ! In 1927, Queensland imposed a motor vehicle charge of 2s. 8d. per weight unit, compared with 6s. per weight unit to-day. The fees for the registration of motor cars in Queensland are higher than in the other States. The following table gives a comparison of the registration charges for the popular Holden motor car in the various States : -
Although Senator Gorton advocates a revision of the formula, in order that Victoria might gain an advantage in the distribution of roads funds, the above table shows that motor vehicles registration fees in that State are the lowest in Australia.
– Read out the figures for trucks.
– I think that, in relation to trucks, Victoria is in a slightly better position, although it is not in a particularly good position. In New South Wales, a registration-fee for a 3-ton diesel truck is £54 10s., whereas it is only £36 in Victoria. It is £46 16s. in Queensland, £58 in South Australia, only £9 12s. in Tasmania, and £19 in Western Australia. As I have said, I am submitting the case for Queensland as against that of Victoria. I shall leave it to honorable senators who represent other States of the Commonwealth to put the case for the States which they represent.
The cost of registration of a 6-ton diesel truck in New South Wales is £54 10s., whilst in Victoria it is £40 12s., and in Queensland slightly more than £46. Is it not obvious that this motion would not do justice to the other States of the Commonwealth? Senator Gorton, who has presented this proposition, undoubtedly wishes to disturb the formula in the interests of Victoria.
There are, perhaps, three sources from which the various road-constructing authorities in the States receive revenue. First, there are the moneys that are paid out from the consolidated revenue funds in the States directly to main roads boards, rural roads boards, and other authorities of that nature. Then, I understand that, in some States^ moneys paid out to those minor authorities also come from loan funds. Whether they are loan funds raised by State governments or local authorities, I do not know. There is also the direct impost on the motor vehicle users. I have given the Senate figures which indicate the number of road users in Queensland and Victoria, and I have also cited figures to show the total revenue which has been received from such imposts and levies. I wish to refer very briefly to the proportion of such money that is paid by the recipients for the purpose of road construction. In 1952-53, £5,455,000 was raised in Victoria directly from taxation imposts, and, of that, £3,862,000 went in payments for road purposes. In Queensland, we collected £4,424,000, of which we paid £3,524,000 to road authorities. From memory, that represented a payment of 70 per cent, by Victoria, against a payment of 79 per cent, by Queensland. On a vehicle basis, it meant that Victoria paid, from the direct revenue received from vehicle owners, £9 8s. for each vehicle for the purposes of road construction, whereas Queensland paid £15 10s. for each vehicle. I suggest that those figures illustrate that a much more honest effort is being made by Queensland than is being made by the much more financially powerful State of Victoria. Apparently, Victoria is still not completely satisfied and wants to obtain even more money by the alteration of the formula.
There are other figures which are equally interesting. In 1950-51, of £5,362.023 paid to road authorities in Victoria, £2,029,795 represented Commonwealth aid roads money.
– The proceeds of petrol tax.
– That is quite true. The remainder of the money, £3,332,228, would have come directly from motorists’ registration-fees. The corresponding figure in Queensland was £3,427,195. In that year, therefore, Queensland returned much more money to road users, by way of road construction, than did Victoria. Those figures are convincing. I consider that, unless Victoria can prove that it is constructing roads to the limit of its ability, and is at a disadvantage compared with the less developed States, it is not entitled to have the formula even looked at, much less altered and reoriented to assist it further.
– I take it that the honorable senator is disregarding municipal road rates altogether.
– I am referring to the moneys raised by taxes levied as registration fees. I know that some criticism has been directed at Queensland because £1,415,000 of the money received from the Commonwealth by way of aid roads is unspent. I have tried to find the reason for that, and at short notice, 1 have been able to do no better than obtain the budget speech of the Treasurer of Queensland, Mr. Walsh, which he delivered in the Queensland Parliament on the 23rd September last. This is what he said in explaining that matter -
It was hoped to expend larger amounts on road works during the year but difficulties, resulting from the unusual 1vet weather conditions in the second half of 1953.-54, together with a shortage of skilled and unskilled manpower, were retarding factors. The short supply of bridge timber, steel, and cement also slowed up many jobs. For 1954-55 the sum of £10,023,242 has been provided on the Estimates of the Department of Main Roads for all purposes, exclusive of £1,065,530 to be made available to local authorities from moneys received under the Commonwealth Aid Roads” Act. Queensland has carried out its responsibilities in providing funds through registration fees, towards road maintenance and development and it is hoped’ that the recent action by the Commonwealth Government in making available to the States a greater proportion of moneys received by it from the proceeds of petrol taxation, is a forerunner .to handing over the remainder of the revenue from such taxation to the States. Motor registration fees totalling £3,7t>6,4(>0 formed nearly 52 per cent, of the amount credited to the Main Roads Fund in 1933-54.
I do not wish to speak at great length on this motion, but I submit that Senator Gorton has not discussed the fundamentals which called the principles of the formula into operation. He has not demonstrated to the Senate that the development of any State has leapt ahead to such a degree that it should be entitled to a greater share of petrol tax than it at present receives. Yet, I feel that that is a condition precedent. That is the thing which must be proved before the motion can hope to succeed. The very conception of the act presumed a certain financial disability against a State such as Victoria, and nothing has been proved, to my mind, to convince the Senate that the operation of the formula has become unjust or unfair. Before any request is made for revision of the formula, Victoria should be prepared to supplement its revenue by a fair and reasonable charge on the users of motor vehicles on Victorian roads. Finally, I suggest that, as the States have so very recently agreed again to this formula which is operating in the interests of all States of the Commonwealth, particularly those which are not fully developed, it should be undisturbed. In my opinion, the Senate should reject Senator Gorton’s motion.
– I oppose the motion on several grounds, and I sincerely hope that the Senate will not agree to it. I hold that if we were to agree to the motion we should be driving one more nail into th, coffin of federation. The States arc sovereign States with powers of selfgovernment. For this Senate to take upon itself the right to dictate to the States how they should expend money that is made available to them, would he to exceed our powers.
The matter of this petrol tax has been before the State Premiers on approximately six occasions since the act came into operation, and on all of those occasions the Premiers did nothing to alter the formula. Surely, it is not contended that, if the Premiers thought that the formula was not operating equitably between the States, they would not take action to have it reviewed! This matter is almost in the same category as is distribution of money by the Australian Loan Council. The Australian Government makes a certain amount of money available to the States. The Premiers then meet and distribute that money according to a formula which has been used over the years. The formula in respect of petrol tax was drawn up in 1923, presented to the States by the Commonwealth, and agreed to by them. As I have said, it has been renewed on each occasion that the Premiers have met to review it. Of late years, of course, there has been a dissentient voice at those meetings. The Premier of Victoria has been in the habit of dissenting, but it is interesting to note that, on the last occasion on which the matter was reviewed, the Premier of Victoria withdrew his opposition and agreed to continuation of the formula.
I know, of course, that Senator Gorton does not intend alteration of the formula, but is seeking an inquiry with a view to ascertaining whether a better formula could not be adopted. Surely, if the Premiers of the States think that a better formula could be adopted they have power to ask that that be done. They have not done so, and there is no reason for this Senate to do so.
– The Commonwealth is a party to the agreement.
– I know it is. The Commonwealth and the States have agreed to it. I wish to recall to the Senate the circumstances in which this grant originated. I remind honorable senators that the motion stipulates that the matter should be referred to a select committee for inquiry, but when , this grant first came into being, it was as a result of inquiries made in Great Britain, the United States of America and various other countries of the world by the father of this matter, Sir Earle Page, who is the present Minister for Health. He travelled the world. He arrived at what he thought was a common formula and presented it to the Government and that is the formula that has been adopted. Lord Bruce, when he was Prime Minister of Australia, stated in presenting the enabling bill to the House of Representatives -
In the past, it has been accepted almost as an axiom that payments to the States by the Commonwealth should be made upon a per capita basis. Ou the present occasion, we have departed from that principle, but I think that the action we propose to take will commend itself to the House irrespective of party considerations. In the past, the result of the per co/pita distribution of Commonwealth payments to the States hae always been that the more thickly populated and more highly developed States have received the major portion of the money available, while it is obvious to every one that the great undeveloped and sparsely populated States are most in need 0 any assistance we can give.
That was the basis for the distribution of the petrol tax. The distribution was made on a national basis for the improvement of the roads of Australia, and not only for roads in one part of the country. If more money were made’ available to Victoria, it would be a departure from that principle. The object of the motion that is before the Senate is to get a better distribution of money for Victoria. When the scheme was originated, the authors proposed to make the money available on a population-cum-area basis, but it was found that under that system, Tasmania would be adversely affected. The first vote was £500,000 in 1923. On a populationcumarea basis, Tasmania would have received £12,000 on a population basis, and £2,200 on an area basis. Consequently, it was decided that Tasmania should receive 2 per cent, of the total amount available, and on that basis, its share in those days was £25,000 instead of £14,200. The arrangement has been altered considerably since and to-day, Tasmania receives 5 per cent, of the total amount. The shares received by the other States, under the last amendment in 1937 were- New South Wales, £281,000 ; Victoria, £175,000; Queensland, £191,100; Western Australia, £192,000; South Australia, £111,000; Tasmania, 5 per cent. The latest figures available to me are* those in the Australian Year-Booh and they are not as up to date as they might be. According to that edition, the distribution to the States in 1949-50 was -
I point out that even those figures show that Victoria received only £159,000 less than Western Australia did. For the purposes of comparison, I should like to give the areas of the States. .
– What year was that?
– That was the year 1949-50. The total area of New South Wales, Victoria and Queensland combined is 1,067,817 square miles, and the total population is 6,617,529. Western Australia, with an area of 975,920 square miles, has a population of 558,709. Honorable senators can realize from those figures how impossible it would be for Western Australia to develop roads equal to those in New South Wales, Victoria and Queensland if the distribution . were made on a population basis. I now want to refer to roads in the different States. I. am not referring to unformed and unclassified roads, but to sealed_ roads for which the money is provided. There is not one yard of sealed road north of Carnavon, in Western Australia, which is about level with the southern border of Queensland. The whole of the area in the northern part of Western Australia has no bitumen roads.
– The density of population causes Victoria to need more sealed roads.
– I shall refer to that matter later. I have been waiting for this discussion for the past three years. I am more concerned with the amount of money that the States have received and what they have done with it. Before I have finished, I believe I shall show that Victoria does not appear in as good a light as the other States. In the period 1949-50, Victoria received £1,540,233 and spent £995,135, leaving £545,098 unspent or 35.5 per cent, of its receipts. Western Australia received £1,740,482 and spent £1,641,347, leaving £99,135 or 5.7 per cent, unspent.
– What is your authority for the figures ?
– They are taken from the Year-Book. I turn now to the figures for the period from 1938-39 to 1949-50. Victoria received in that time £5,264,391 and spent £4,955,968, leaving £308,423 unspent. Western Australia had £154,203 unspent or half the amount that Victoria had unexpended. I direct attention now to the various States and the manner in which they have used their road money. These figures are rather illuminating, and they are also taken from the Year-Booh. They are -
The percentages spent on the construction of roads were : New South Wales, 42 ; Victoria, IS; Queensland, 46.4; South Australia, 44.7; Western Australia, 68.6; and Tasmania, 17.3. Over the period covered by the Year-Booh, Victoria spent on the construction of roads the following percentages of receipts in successive years: 31.9, 15.6, 18.3, 17.5, and 18.9. I believe that Victoria’s trouble arises from the fact that it has been tearing up sealed roads by allowing heavy fast-moving motor trucks to travel over them. Other States have followed Western Australia’s example and have not allowed similar transports to use the roads freely. I had a report from the United States of America four years ago which showed that one heavy fast-moving motor truck did 16,000 dollars damage to a road on one trip. That is the basis of Victoria’s trouble. The railways in Victoria have been allowed to deteriorate, and instead of rehabilitating them for the transport of heavy freight, Victoria has allowed heavy fast motor traffic to tear up the roads. As a result, it is spending most of its money on maintenance, and is not constructing roads.
– The Victorian railway system is the best in Australia.
– I do not know about the quality of the railway system, but I suggest that the carriages could do with a coat of paint. A comparison of the area of the States and the mileage of sealed roads is interesting. The following are the latest figures at my disposal: -
Victoria is one of the smallest States, yet at the time I have in mind, it had 2,200 miles more sealed roads than any of the other States.
– Might that not be the reason why Victoria has to spend more on maintenance?
– Not necessarily. We had a similar experience in Western Australia. During World War II., our roads were allowed to deteriorate. After I became a Minister in the Western Australian Government, a royal commission was appointed to report on the railways. It reported that they were the worst in the civilized world. When we had a heavy wheat harvest in 1948, 1949 and 1950, wheat had to be carted on the roads because of the condition of the railways. I made it clear to the hauliers that as soon as the railways were able to handle the traffic, their licences would be cancelled, and that was done. In that short period, however, we could see the sealed roads deteriorating because of the fast-moving traffic. Those roads have been repaired since and, according to Senator Kendall, who took part in the Redex trial, Western Australian roads are now the best in Australia. Many visitors who have been shown around the State by me have supported that opinion. We are appreciative of the fact that we are getting a reasonably good cut from the petrol tax revenue. I explained to the road hauliers that it would not be fair to the eastern States if we cut up bitumen roads that had been constructed with money obtained from the petrol tax and had to use future grants to repair the roads. In Western Australia, we believe in keeping our roads in a good state of repair. I commend that policy- to Victoria. If the Victorians adopted it, perhaps they would be able to get along very much better.
It may be said by some people that road transport is cheaper than rail transport, but that is quite wrong. The last figures that I ‘ saw - I think rates have increased slightly since then - showed that the cost of road transport was in the vicinity of 9d. or ls. a ton-mile, compared with 2¾d. or 3d. a ton-mile for rail transport. There is no doubt that the railways can carry heavy goods cheaply. If we want to carry heavy loads by road, we shall have to construct roads that are much more substantial than the bitumen roads we have now. If Victoria wants to do that, it will have to change its tune.
I have another very interesting set of figures. The figures show that in 1950, New South Wales, with an area of 309,000 square miles, received £5,450,000 for roads purposes, and that administrative costs were £246,226, or 4.5 per cent, of the revenue. In the same year, Victoria’s revenue was £5,784,640, and the administrative costs were £985,930, or 17 per cent, of the revenue. The area of Victoria is 87,000 square miles. In Queensland, revenue was £4,619,237, and administrative costs came to £458,000, or 8.9 per cent, of the revenue. South Australia received £2,274,060 and administration cost £100,938, or 4.4. per cent, of the receipts. Western Australia, which covers a huge area, had a revenue of £2,197,127, and administrative costs came to £103,254, or 4.7 per cent, of the receipts. In Tasmania, the revenue was £1,265,440, and administration cost £67,726, or 5.3 per cent, of the revenue. So we see that in 1950 administrative costs ranged from 17 per cent, of total revenue in Victoria to 4.5 per cent, of total revenue in New South Wales. It may be that Victoria could save some money by reducing administrative costs.
I have discovered some, interesting figures in a recent publication. The figures relate to the year after that to which the figures I have just cited relate.. It is interesting to notice that although through the years Victoria and other States have shown the cost of road construction and the cost of road maintenance separately, in the figures for that year Victoria lumped the two -items together so that it was impossible to see the amount spent on road construction and the amount spent on road maintenance. It is interesting to note also that two sources of revenue that previously brought in about £700,000 or £900,000 a year for Victoria disappeared mysteriously from ‘ the figures.
Reference has been made to vehicle registrations and money received from that source. I point out that in Western Australia, local governing bodies register all vehicles owned by persons living in the districts for which they are responsible and retain the registration fees.
The money does not go into a general fund. It is retained by the local governing bodies, and is spent by them on the construction and maintenance of roads within their boundaries. In other States, the revenue from vehicle registrations is received by a central authority. I was interested in an article published in the Melbourne Herald a few nights ago, in which the Commissioner for Main Roads in Victoria stated that the Victorian roads network could not be extended by the year 2000 unless the State Government made more money available to the country roads boards. Apparently he wants the State Government to supply more money for that purpose.
I hope the Senate will not agree to the motion. If we altered the formula in such a way as to reduce the payments made to thinly-populated States such as Queensland, South Australia and Western Australia, the roads in those States could not be brought up to the standard required. I have heard honorable senators refer to the need to have uniform railway gauges so that our railways will be able to handle increased traffic in wartime. When I was Minister for Railways in the Western Australian Government,
I engaged in discussions on that problem. I came to Canberra in connexion with it. On the return journey to Western Australia, I thought it would be advisable to call in on the military authorities and get their views about the need for a standard gauge line from Kalgoorlie to Perth. When I put the question to the military authorities, they simply said, “ We are. not interested in it “. That shows the attitude that the military authorities adopt towards railways They want roads. In the northern area of Western Australia, we have no sealed roads at all. I say that the motion should be rejected, and that we should bear in mind that the original intention of the agreement was expressed by the Prime Minister of the day when he said the great need was to make money available to the less-developed and more thinly-populated States so that they could bring their roads systems up to the standard of the roads system in the thickly-populated States.
– Senator Gorton has moved -
That a Select Committee be appointed to inquire into and report upon the justice and effects cif the present formula by which portion of the customs and excise duties collected on petrol is apportioned among the various States of the Commonwealth; and upon possible alterations to that formula . . .
The formula was put into operation in about 1926. Prior to 192’6, the customs duty on petrol was Id. a gallon. In 1926, it was raised to 3d. a gallon, the increase being alleged to be necessary to finance the” first Federal Aid Roads Agreement between the Commonwealth and the States. From 1931, the amounts made available for distribution to the States have been as follows: -
The act provides that, after paying .’« per cent, to Tasmania, distribution to the States shall be on the basis of threefifths population and two-fifths area. On that basis, Western Australia receive? 19.2 per cent, of the amount available. If the distribution were made only on a per capita basis, it would be most unfair to Western Australia. I think it is only right that, in making the distribution, consideration’ should be given to both area and population.
The area of Western Australia is 975,920 square miles and its population is 591,602. Victoria has an area of S7,S84 square miles and a population of 2,291,354. Honorable senators will see, therefore, that in the interests of the development of the less populous States, it is necessary to have regard both to population and area. I submit that the distributions made on that basis have been fair. In Victoria, there are 101,411 miles of roads of all types, compared with S0,066 miles . in Western Australia. There are 14,666 miles of all-weather roads, macadam and other types, in Western Australia, compared with 28,418 miles in Victoria. There are 4,573 miles of bituminous’ roads in Western Australia and 10.241 miles in Victoria. A great proportion of the roads in Victoria are sealed, although they may be in a bad state of repair. Victoria has a distinct advantage because of the comparatively high density of its population. The disadvantage to Western Australia by reason of its large area can be offset only if area is taken into consideration in making the distributions.
The suggestion made by Senator Gorton is not a new one. Victoria and other States with well-developed road systems have urged previously that the agreement be altered. There would be no justification for such an alteration now, although at one time there was what appeared to be some justification for altering it. In two States, moneys allocated under the Federal Aid Roads Agreement remained unexpended from year to year. When one year’s payment was made, not all of the money allocated in the previous year had been spent. In those circumstances, some of the States that had the plant to undertake road construction and maintenance work complained that, although they could not get all the money they required for road purposes, other States were unable to expend all the money that had been made available to them. In 1950, the allocation to the States from customs duties was increased from 3d. to 8d. a gallon and the allocation from excise duty from 2d. to 3-Jd. a gallon. That increase was made at a time when road-making plant and machinery was in short supply all over Australia, particularly in Western Australia, owing to shipping difficulties. The roads everywhere were in need of attention. There was the toll of the war years, when government road construction forces were engaged on military works. Immediately after the war, and for several years following it, tremendous loads of wheat and superphosphate were carted by road owing to the inability of the railway system to cope with the traffic. Strenuous efforts were made to build up construction forces to cope with the increased income and the needs of the roads systems. The act that provided for the increased allocation was not assented to until halfway through the financial year 1950-51, so that the “Main Roads Department was virtually called upon to expend twelve months increased receipts in a period of six months. At that time I made representations in this chamber for a release of moneys to Western Australia to enable that State to buy plant at a reasonable price. Argument took place between the States and the Commonwealth in relation to the pooling of plant. That argument resulted in delay and the States were deprived of money during a period of six months when they should have been undertaking maintenance and construction.
The carry-over of Western Australia’s receipts from Commonwealth petrol tax at the 1st July, 1949, was £1,170,S87. The States’ receipts from that tax during the last five years have been as follows : -
It was during the financial year 1953-54 that Victoria, which had been able to keep its roads in good repair because plant had been available to it, criticized the less developed States. Those States had been waiting for the plant necessary to carry out road maintenance. Victoria decided to try to have the formula for the distribution of petrol tax altered. The Victorian Government alleged that other States were receiving money but were not spending it. No valid argument can be put forward that the formula is not sound while it remains based on population and area. The figures that I have just cited show the need for a steady increase of expenditure on roads in Western Australia. This has been effected by building up the forces of the Main Roads Department. This process has been carried out in competition for labour, skilled and unskilled, with industrial enterprise including house construction, which has been increasing sharply during the last few years in Western Australia. The Main Roads Department has carried out much road work from funds other than petrol tax money on behalf of the State Housing Commission, the Anglo-Iranian Oil Company Limited, and the Western Australian Petroleum Proprietary Limited. In the Exmouth Gulf area in the north-west of the State, the existing road system has been strengthened and extended in order to cope with the increased traffic in those outlying areas.
Western Australia needs at least as much from the Commonwealth petrol tax as it has been receiving. When I spoke on the Commonwealth Aid Roads Bill I contended that more of the money that is obtained by the Commonwealth from the petrol tax should be used for the maintenance of the roads and highways of all States. But the formula should not be altered in such a way as to reduce the amount payable to the less developed States which need good roads and highways. The expenditure by the Main Roads Department in Western Australia from petrol tax funds during the la.-t five years has been as follows : -
When Western Australia was able to spend the money allocated to it there was practically no surplus at the end of the financial year. It should be noted that the local authorities outside the metropolitan areas of Western Australia retain vehicle licence-fees, and that in the metropolitan areas only a part of the licence-fees are allocated to the State road authority. As a consequence, about 85 per cent, of the Main Roads Department’s total revenue comes from petrol tax. It is not possible, therefore, to arrange works so that those to which petrol tax funds are applied are completed and the money expended prior to other works. Nevertheless, the unexpended balances have been markedly reduced, and during the last few years they could be regarded as practically negligible, being equal to the amount normally expended by the Department in a week or two. That is the answer to any argument by Victoria that the formula should be readjusted because of unexpended balances. The carry-over of funds during the last three financial years has amounted to £1,290,810, £120,520, and £154,203. In other words, expenditure has approximated the amount received. Consequently, any alteration of the formula could not be justified. If any alteration is to be made it should only be made so as to result in more money going to the States for the maintenance of their roads. It is necessary, for strategic reasons, to have good roads in Western Australia. It is necessary to have roads across great distances of our undeveloped country. It is only that part of the formula relating to the area of the States that makes it possible for Western Australia to receive a fair share of the petrol tax, and it would be most unfair to change the formula so as to allocate the tax on a per capita basis only.
The rate of development in Western Australia has been unprecedented. The formula is fair and just, but insufficient money is distributed by the Commonwealth. During the last financial year only 7 per cent, of the total petrol tax funds was spent in the metropolitan area of Western Australia, the other 93 per cent, having been spent on the opening up :md protection of forest areas, new land settlement projects, increased maintenance due to a much higher rate of traffic movement on the whole road system, and improvement of roads consequent upon the increase of mining activity, and the activity of many oil exploration parties which operated in remote parts of the State. The improvement of roads leading to the northern part of the State where this activity is taking place has now become one of the State’s most urgent projects.
The roads of Western Australia are reasonably good but it is vitally necessary that repairs should be carried out. The roads of Western Australia may be termed a developmental project. The existing formula is the only one on the basis of which petrol tax funds can be equitably distributed between the States. The area of Western Australia is probably ten times that of Victoria. Queensland and South Australia are also much larger than Victoria. Victoria is a great place. But, from a national point of view, we must concede more money to States with big, underdeveloped areas.
– I have listened with a good deal of interest to the remarks of honorable senators from Queensland and Western Australia. Senator Seward used to be Minister for Transport in Western Australia and in that capacity he grappled with a very important problem. I know the jealousies that exist between the supporters of road transport and rail transport. Both systems’ of transport affect the economy of the States. The motion before the Senate is a simple one. I shall not attempt to follow other honorable senators through the maze of figures that they have presented to the Senate. In considering such figures it is necessary to have a starting point, and I do not know where to find the starting point to the figures that have been used in this debate. I thought that I was listening to a discussion in a retired burglars union or at a meeting of company directors. In the days that are gone, bandits carved up certain territories where they could ply their trade and whatever developments took place after the original agreement was made, each confined himself to the area that had been allotted to him. That is not the way in which a progressive nation should handle its affairs. Honorable senators should not attempt to peddle the interests of a particular state. The motion before the Senate proposes that a committee should be formed for the purpose “ of investigating the distribution of the proceeds of a tax which is levied upon a commodity which is essential to the development of our country. It has been suggested that because the existing formula was laid down in 1923, 31 years ago, and because the Premiers of the various States have from time to time agreed to its continuation, it should not be altered. I remind honorable senators that the Constitution of Australia was formulated about 50 years ago and very many eminent constitutional lawyers agree that our Constitution is outmoded, and that to meet the requirements of present-day government, it should be amended. The opponents of that proposal say, as the opponents of this motion have said to-night, “It has stood for many years. Let it continue to stand “. If Victoria’s case for a revision of the formula is so vulnerable, why is there opposition to the appointment of the proposed select committee? if there is nothing to hide, why not let the committee examine the matter and blow out Victoria’s argument for all time ? Victoria contributes in petrol tax at least £16 for every registered vehicle on its roads, but it receives in return only £5 per vehicle. That is why we are so concerned about the matter. Surely it is not necessary to produce long lists of figures to convince the Senate that that is not a fair proposition.
– Victoria also has one-third of all motor vehicles in Australia.
– That is so. Western Australia contributes £15 per registered motor vehicle, and receives back £21 per registered motor vehicle. That is the problem that the select committee would be asked to examine. Victoria is not opposed to a fair distribution of the petrol tax revenue. We believe that Australia must be developed as a nation. We appreciate the road maintenance and construction difficulties of the other States. Victoria itself has a roads programme which will cost £30,000,000, yet last year we received only £7,000,000 in the form of Commonwealth assistance. That is our problem. When the formula was first introduced, the petrol tax revenue was only about £500,000, and nobody worried about a few thousand pounds more going to Western Australia, Queensland, Tasmania or South Australia. But now the revenue to be distributed has reached the colossal figure of £24,000,000, and when a sum of that magnitude is being divided up, it is necessary to have an accurate formula. Possibly the existing formula was not scientifically calculated or perhaps it is out of date. All that Senator Gorton is asking on behalf of municipal .authorities in Victoria is that the formula be examined.
Speaking earlier to-day on other legislation, I pointed out, as a member of a municipal council, the financial difficulties that local governing authorities were encountering. We are all aware that, at meetings of the Australian Loan Council, the State Treasurers complain about their allocations. The States line up one against the other, and the will of the majority prevails. That is what happens when the State Premiers accept the formula for the petrol tax allocation. Just because the Victorian Premier may be the odd man out, it does not mean that the decision reached is fair and equitable. He has to submit to force of numbers, and whilst the other States are getting away with the larger share of the proceeds, it will be difficult to have the formula altered. That is why we have asked for an investigation by a select committee. If we attempted to determine the matter finally in this Senate what would happen ? We would all be looking after the interests of our own States, and a satisfactory adjustment of the formula would be impossible. The House of Representatives would meet with a similar difficulty. The problem can be tackled adequately only by an independent body representing all States. Such a body could examine, for instance, the figures that have been given by Senator Byrne from Queensland and Senator Seward and Senator Cooke from Western Australia. Once the committee had given its finding, everybody would have to be satisfied.
– It would still have to be approved by the Senate.
– Surely if a decision were given by an impartial tribunal we would all be big enough to accept it. Perhaps Victoria’s submissions would be completely rejected; but the Municipal Association of Victoria, and the Victorian Government itself, consider that they have a legitimate grievance. They believe that, as the amount of money available for distribution increases over the years, so will the discrimination against Victoria increase. We appoint committees to investigate various matters. That is part of our life, and generally speaking we accept the decisions of those committees. Senator Henty is always prepared to condemn any workers’ organization which,having submitted its case to arbitration, fails to accept the umpire’s decision.I am sure that he would not dispute the umpire’s decision in this instance.
I could weary the Senate with a lot of figures about the percentage of revenue contributed in Victoria and the manner in which that money is spent, but figures seldom prove anything. We are asking for a fair and equitable distribution of petrol tax revenue to be determined by a special tribunal. If the Senate does not like Senator Gorton’s proposal for a select committee, then let us submit the problem to some other independent authority for investigation. It would be impossible for us, wrangling as we do from time to time, to devise an acceptable formula. As Senator Gorton said when speaking in support of his motion, this matter should be above party politics. All political parties in Victoria agree that something must be done. A preponderance of municipal councillors in Victoria are Australian Country party or Liberal party supporters. They are this Government’s own followers, and they want something to be done. They want the Government to set up a tribunal to settle this matter once and for all. I hope that the Government will either appoint a select committee as Senator Gorton has suggested, or will charge some independent tribunal with the task of investigating the whole matter and bringing in a report which I am sure we should all be pleased to support.
Debate (on motion by Senator McLeay) adjourned.
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator McLeay) read a first time.
Bill received from House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator McLeay) read a first time.
SenatorMcLEAY (South Australia -
Minister for Shipping and Transport) [9.46].- I move-
That the bill be now read a second time.
The purpose of this bill is to authorize the payment, during the current financial year, of special grants amounting to £12,300,000 to South. Australia, Western Australia and Tasmania. The payment of these grants was recommended by the Commonwealth Grants Commission in its twenty-first report, which was tabled recently. In that report, the commission continued to apply the same general principle of financial need that it adopted in its third report of 1936. The commission has expressed that principle as follows : -
Special grants are justified when a State through financial stress from any cause is unable efficiently to discharge its functions as a member of the federation, and should be determined by the amount of help found necessary to make it possible for that State, by reasonable effort, to function at a standard not appreciably below that of the other States.
In applying this principle, the commission makes a detailed comparison between the budget results of the claimant States and those of the non-claimant States. In making this comparison, the commission takes account of the differences between the claimant and non-claimant States in relation to their levels of expenditure, and their efforts to raise revenue. As in recent years, the commission has adopted a balanced-budget standard as the starting point of its investigation.
The detailed methods of the commission include a comparison between the level of social services expenditure in each claimant State and the average level of such expenditure in the non-claimant States. In making this comparison, a proportional allowance is made to each claimant State for “ greater difficulties “ in providing social services, on account of such factors as sparsity of population, age distribution and overhead costs. For reasons set out in its report, the commission decided this year to increase these allowances from 4 per cent, to 5 per cent, for South Australia, from 10 per cent, to 13 per cent, for Western Australia, and from 6 per cent, to 9 per cent, for Tasmania.
Because of the difficulty of making precise estimates of the needs of the claimant States in the year in which the grants are paid, the special grants recommended each year are divided into two parts. One part represents the commission’s estimate of the State’s financial’ needs in the current financial year. This part of the grant is treated by the commission as an advance payment, which is subjected to adjustment two years later after the commission has examined in detail the audited budget results of the State for that year. The other part of the grant represents a final adjustment of the special grant paid two years earlier. The special grants recommended for payment in 1954-55 were therefore arrived at by the commission as follows : -
Compared with the special grants paid last year, the commission’s recommendations this year involve substantial variations in the special grants payable to two of the claimant States. In relation to South Australia, there is a decrease of £3,850,000, whilst for Tasmania there is an increase of £l,100j000. There are two main reason for the decrease of £3,850,000 in the special grant recommended for payment to South Australia. In the first place, the commission has found that the special grant to South Australia in 1952-53 exceeded, by £1,100,000, the amount that that State required to balance its budget for that year. This amount of £1,100,000 may be regarded as available to meet the State’s current financial needs, and the commission has, therefore, reduced correspondingly the total grant recommended for payment this year. The main reason for the decline in the special grant, however, is the continued improvement in South Australia’s finances. In the financial year just closed, South Australia enjoyed a budget surplus of £1,810,000 after receiving a special gran: of £6,100,000. After taking account of the various factors likely to influence South Australia’s budget prospects in 1954-55 - including an increase of £683,000 in tax reimbursement grant - the commission has decided that a substantial reduction of the special grant would be justified.
The total special grant recommended for payment to Western Australia in 1954-55 is £7,450,000, which is £350,000 less than in 1953-54. In making this recommendation, the commission took account of the fact that the tax reimbursement grant to Western Australia will increase by about £525^000 in 1954-55. Last year, Western Australia had a deficit of £103,000.
Despite a negative adjustment of £600,000 in respect of the advance payment made to Tasmania in 1952-53, the special grant recommended for payment to that State in 1954-55 is £1,100,000 more than the amount that was paid to Tasmania last year. Tasmania’s finances have been affected adversely by the transfer of Tattersalls lottery to Victoria. In 1953-54, Tasmania enjoyed a budget surplus of £14,000.
On the basis of the preliminary budget estimates submitted to the commission by the claimant States, the effect of the commission’s recommendations will be to leave each of them with a 3mall deficit in 1954-55. These estimates, however, are only tentative. In two years’ time, the commission will recommend adjusting payments, in the light of the actual budget results achieved by the States. The special grants recommended by the
Commonwealth Grants Commission have bean adopted each year by the Australian Government. The present Government considers that the commission’s recommendations should be adopted again this year..
Debate (on motion by Senator McKenna) adjourned.
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator McLeay) read a first time.
Senator McLEAY (South Australia -
Minister for Shipping and Transport) [9.54].- I move-
That the bill be now read a second time.
The purpose of this bill is to repeal the Commonwealth Aid Roads Act 1950, and to replace it by new legislation to govern Commonwealth payments for roads purposes during the next five years. The Commonwealth Aid Roads Act 1950, which was designed to operate for five years, would normally expire on the 30th June, 1955. It became evident, however, that unless some action were taken, the increase in the local refining of petrol would affect adversely the road grants to the States in 1954-55, because an increased proportion of the petrol consumed in Australia would become subject to excise duty, ofwhich 3½d. a gallon is allocated to roads, rather than customs duty, of which 6d. a gallon is allocated to roads. The Government therefore took the opportunity to completely review the legislation. This bill will not only solve the problem created by increased local refining of petrol, but will also ensure a further substantial increase in the Commonwealth Aid Roads payments. Briefly, the main proposals of the bill are as follows: -
Constitutionally, roads are the responsibility of the States and their local authorities. Since 1923, however, successive Australian Governments have made grants to assist the States to construct and maintain Australia’s roads. The Commonwealth has made these grants because of the national importance of roads from both defence and developmental points of view.
The remarkable increase of roads grants since 1923 is illustrated by the following figures, which show the average annual grants to the States under the provisions of various acts governing road grants : -
It will be noted that the average annual grants to the States; during the four years of the operation of the legislation introduced by the present Government in 1950, were more than twice as great as the grants paid annually under the previous legislation. In total, the road grants paid over to the States during the past four years have amounted to approximately £60,000,000.
Gratifying though this increase has been, the Government now proposes to liberalize still further the basis of road grants to the States. In particular, it is proposed that the allocations for roads purposes should be increased to a flat rate of 7d. a gallon on all petrol, other than aviation gasoline, which is used for home consumption and in respect of which customs or excise duties are payable. Details of these allocations are given in the schedule to the bill. The new allocations involve an increase of Id. a gallon in the allocation from customs duty and a doubling of the allocation from excise duty. The new allocations also will solve the problem created by increased local refining, since it will mean that the same allocation will be made for roads purposes, irrespective of whether the petrol is imported or locally refined. It is estimated that the total allocations in 1954-55 will, on this basis, be of the order of £24,000,000, or nearly £7,000,000 more than last year. If, as is expected, petrol consumption continues to rise, further increases in Commonwealth roads payments may be expected in subsequent years.
I should like, at this point, to refer to the suggestion which is sometimes made that the petrol tax receipts should be devoted exclusively to road works. One argument often advanced in support of this contention is that the petrol tax was imposed in the first place to raise money for roads. This particular argument will not stand examination. The petrol tax was first imposed in 1902. It was not until 1923 that the first road grants were made to the States, and not until 1926 that road grants were first associated with petrol tax collections. Since 1926, the petrol tax has remained, to some extent, a general revenue tax and indeed, a number of increases has been made in petrol tax rates since 1926, specifically for general revenue purposes.
Another argument sometimes put forward is that, since petrol tax is paid by road users, it should be used exclusively for their benefit. Apart from the fact that there has never been any suggestion that taxes on other commodities should be used exclusively for the benefit of those who pay them, this argument overlooks the point that most of the petrol tax is paid by people who use roads for commercial purposes and who pass on the tax to the public in. costs of transportation., On the basis used in this argument, it would be only equitable that some part of petrol tax collections should, therefore, be spent on the general public, as happens when portion of the petrol tax is used for general revenue purposes.
The fact is, however, that all such arguments, which seek to use the level of petrol tax collections as the sole criterion for determining the extent of Commonwealth assistance for roads, are largely academic. In practice, the extent to which the Commonwealth should assist the States by way of road grants must be determined, from time, to time, having regard not merely to the level of petrol tax collections, but also to such factors as the nature of the road problems’ existing at that time, the resources available to the .State governments to deal with those problems, and the nature and extent of other commitments with which the Commonwealth may be confronted. After considering all such factors, the present Government introduced new roads legislation in 1950, which caused the road grants in recent years to reach record levels. The further increase now proposed demonstrates once again the importance attached by us to developing and improving Australia’s road systems.
In the 1947 roads legislation, a specific part of the road grants was earmarked each year for rural Toads. . The Government saw how beneficial this provision had been for primary producing areas and how it had assisted local authorities in those areas. In the 1950 legislation, this amount was, therefore, increased to 35 per cent, of the total annual allocation to roads, and the provision was widened to cover all roads in rural areas, other than main roads, trunk roads and highways. This provision has proved so beneficial that the Government proposes to increase it once again. It is, therefore, provided in clause 9 of the bill that at least 40 per cent, of the total annual allocation must be spent on these secondary roads in rural areas.
The problem of local authority participation in road grants is not unrelated to that of assisting primary producing areas. Local authorities in these areas and, indeed, right throughout the Commonwealth, are responsible for a high proportion of roads, other than main roads. The Government is anxious that they should participate in the increased road grants to the greatest possible extent. At the same time, the Government recognizes that, as the State governments are responsible for local authority matters, it is for each State government to determine the extent to which local authorities should share in these grants. In the present bill, as in the 1950 act, it is provided that any part of the Commonwealth roads grants may be made available by the States to their local authorities.
Under the 1950 legislation, an amount of £600,000 was set aside for Commonwealth purposes. This amount remained constant over the four years for which the legislation operated, not rising with the allocation as petrol consumption rose. Of this amount, £500,000 was for strategic roads and roads of access to Commonwealth property, and £100,000 was for the promotion of road safety practices. In the present bill, an amount of £900,000 is to be set aside each year for Commonwealth purposes. £800,000 is to be used for strategic roads, including roads of access to Commonwealth property, and other roads servicing Commonwealth purposes. The remaining £100,000 is set aside for the promotion of road safety practices.
By its very nature, road accident prevention involves many and varied interests, and the work cannot be carried out successfully without cohesive effort. The Australian Transport Advisory Council provides the machinery for Commonwealth and State consultation on such matters and, some time ago, established three permanent complementary committees to deal with different phases of the common objective of obtaining a higher degree of road safety. The assignments were as follows : -
Australian Road Safety Council. - Conducting a nation-wide education and public relations campaign to inculcate better behaviour on the part of road users; and
Australian Motor Vehicle Standards Committee. - Devising national standards for the construction, equipment and operational efficiency of all road vehicles; and
Australian Road Traffic Code Committee. - Drafting recommendations for uniform road traffic laws, for the entire Commonwealth, which are in keeping with present motoring conditions.
These committees have provided the opportunity for the pooling of technical skill and practical experience of not only those engaged in Commonwealth and State Government road transport activities, but also key men representing practically all phases of non-governmental road transport interests in the Commonwealth. Arising from the exchange of ideas, and out of consideration for the viewpoint of other interests, a remarkable degree of unanimity has been reached in uniformity of methods and standards. This performance is, in many ways, an object lesson, because these achievements have been made through mutual consent, rather than by any overriding power vested in the central Commonwealth administration. -
When the Australian Transport Advisory Council meets in January next, it will have before it an impressive array of model regulations for traffic laws and vehicle standards on which complete unanimity has been reached. “When introduced into State legislation, they will iri ve uniformity throughout the entire
Commonwealth on the major aspects of these phases of road transport. The council will also have before it a report, showing that, thanks largely to the combined efforts of these three committees, and the Commonwealth’s substantial contribution to the construction of better and safer highways, road travel to-day is safer than ever before.
The 1950 legislation provided that, if the States so desired, up to one-sixth of the general roads grant to any State in any year could be spent on works, other than road works, connected with transport by road or water. This provision was designed primarily to assist those people who use petrol and pay tax on it but who do not use the roads in their ordinary business and, therefore, get no direct benefit from the road grants, [f continued in its present form in the new legislation, this provision would involve a sum of nearly £3,00.0,000 in 1.954-55. As the new legislation is designed primarily to increase the funds available for roads purposes, a provision of this magnitude for other than roads would be excessive. The amount which may be spent on works, other than road works, is therefore limited in the bill to £1.000,000 per annum.
Under the 1950 legislation, 5 per cent, of the annual road grant was allocated to Tasmania, and the remaining 95 per cent, was shared among the other five States, three-fifths according to population and two-fifths according to area. This method of distribution had been in use since 1937 and was incorporated in the 1950 legislation after a majority of the Premiers indicated at a. conference of Commonwealth and State ministers held in September, 1950, that they desired no change. “When this question was raised once again at a similar conference in June of this year, a majority of the Premiers again indicated that they were perfectly satisfied with this method of distribution. The only Premier who voiced opposition was the Premier of Victoria, although he agreed that this method took account of the special needs of the large, sparsely populated States, such as Western Australia and Queensland. The Government proposes, therefore, to use this same method of distribution in the new7 legislation.
It is proposed that the new legislation should operate for a period of five years from the 1st July, 1954. The Government considers that this period is long enough to permit the authorities responsible for roads in Australia to plan ahead. On the other hand, since ir is probable that circumstances affecting transportation and roads will continue to change, it would be inadvisable to project this legislation any further into the future. Although this bill will noi come into operation until the day on which it receives the Royal assent, the various provisions governing the increased payments now proposed will take effect as from the 1st July, 3954. It has, therefore, been necessary to include in the bill certain provision to ensure that the payments which have already been made in the early months of 1954-55 conform with the provisions of the new legislation.
As the 1950 legislation will not be repealed until this bill receives the Royal assent, payments under that act have continued in the early months of 1954-55. Clause 5 of the bill, therefore, provides, in effect, that any payments made under the 1950 act in respect of 1954-55, will be deemed to have been paid under the new legislation. To avoid duplication of payments these payments under the 1950 act will be deducted from the payments authorized in other provisions of the bill. Pending the passage of this new legislation, payments to the States in the early months of 1954)-55 have been increased to the level provided in the new legislation by drawing on the sum of £5,000,000 set aside, during 1953-54, in the Commonwealth Aid Roads (Supplementary) Trust Account. This ensured that the States would receive increased grants from the beginning of 1954-55. As the increased payments provided for in the bill will be effective from the 1st
July, 1954, clause 8 provides that the payments to the States under the new legislation will he reduced by the amount of the payments made to the States in the early months of 1954-55 from the Supplementary Trust Account. This is necessary to avoid duplication of payments.
Clause 8 also provides that, after the commencement of the new legislation, payments may be made to the States out of the Supplementary Trust Account, and that the payments into and out of the trust account may be reduced correspondingly. The purpose of this provision is to enable the Government, if it so desires at any time, to finance portion of the Commonwealth aid roads payments from the supplementary account instead of from current petrol tax collections.
Finally, I should like to emphasize that the aim of the Government in introducing this new legislation is to help to provide Australia with better roads. To do this we propose to pay higher grants to the States for roads than they have ever received before. - 1 should like to make it quite clear that the purpose of these additional grants is to facilitate an improvement in Australia’s roads, and not to relieve the States of the need to make a maximum contribution to roads out of their own resources. I commend the bill to honorable senators.
Debate (on motion by Senator McKenna) adjourned.
Bill returned from the House of Representatives with an amendment.
In committee (Consideration of House -of Representatives’ amendment) :
Clause 3 -
The Australian Antarctic Territory Acceptance Act 1033 is repealed.
Mouse of Representatives’ amendment. - Before “The” insert “Section 3 of”.
Motion (by Senator McLeay) proposed -
That the amendment be agreed to.
– The Opposition supports the amendment. It is perhaps proper to say that it is natural that a doubt would arise in one’s mind about the measure. It did arise in my mind when the bill was first introduced, and I think that the action that has been taken in this matter in another place is well justified. Clause 3 of the bill, as passed by’ the Senate, proposed to repeal the whole of the Australian Antarctic Territory Acceptance Act 1933. The effect of the amendment is that only section 3 of the 1933 act will be repealed, leaving section 2 still in operation. Section 2 provides that the Territory described in the section is declared to be accepted by the Commonwealth as a territory under the authority of the Commonwealth, by the name of the Australian Antarctic Territory. As a matter of law, the Government is satisfied that the repeal of this section would not affect the title of the Commonwealth to the Territory, or its status as a territory accepted by the Commonwealth. This is ensured by the Acts Interpretation Act, which provides that the repeal of an act does not affect its previous operation. However, it has been suggested that the repeal of the section might lead to misunderstanding in other countries amongst people who are not familiar with our legal system, and might give the impression that the continuity of Australia’s title to the Territory is in some way affected by the repeal. In order to avoid even the possibility of misunderstanding on this point, the Government has decided that section 2 of the act of 1933 should be allowed to remain in force, and that section 3 only of that act, providing for the making of ordinances, should be repealed.
Question resolved in the affirmative.
Resolution reported ; report adopted.
Debate resumed from the 14th October (vide page 719), on motion by Senator McLeay -
That the bill be now read a second time.
.- The bill to amend the Wine Overseas Marketing Act is a short bill and the Opposition does not intend to oppose it, but some pertinent remarks should be made.. The purpose of the bill is to put beyond any reasonable doubt the legality of advertising wines within Australia. The title of the. act is the Wine Overseas Marketing Act, and such are the ways of parliamentary draftsmen and lawyers, that we propose to amend an act that has nothing whatever to do with the overseas marketing, but applies to the marketing of wine in Australia. Money is to be raised and expended by the Australian Wine Board under legislation that will be introduced immediately this bill has been passed. That legislation will permit a charge to be made on the wine industry and the money will be handed to the Wine Board, which will have power to do all the things that are necessary for the promotion of the sale of wine, the operation of laboratories and other purposes that might seem desirable. The purpose of that measure will be to give the requisite power to the board and to put beyond doubt the amendment of the act that is proposed in this bill. The bill seeks to amend section 22 of the act and merely serves to strike out the words “ all Australian wine “ and insert “ in Australia or elsewhere of wine. and. brandy “. I point out that, for the first time, the word “ brandy “ is to appear in the relevant legislation. The only other amendment to the act is a definition stating that “ brandy “ means “ brandy distilled from wine “. I do not know whether there is any other brandy. I assure honorable senators that I have not been selected to speak on this bill because of my knowledge of the production or consumption of wines.
Within the last month or so, a regulation has been promulgated dealing with the marketing of wine. It is one that might be thought to be hardly necessary because there is ample power in the act for the issue of licences for the export of wine, and to lay down regulations and conditions on which licences may be issued to wine exporters. This regulation has been brought into being to provide that importers of wines in London or elsewhere must also be approved by the Australian Wine Board before persons who already hold licences can export wine to them.
That brings me to the point that I wish to raise particularly, because on looking back over some old notes, I have been reminded that this matter was raised by me in the Senate four years ago. Although the Senate is to amend the act, it will not thereby improve a situation that has obtained in the wine industry for many years, particularly in connexion with the export of wine. It has been recognized only at this late stage, first by the amendment of the act and, second, by the regulation to which I have referred. It has been fairly plain that the Wine Board and the exporters have not paid the attention to the overseas wine market that they might have done. Obviously, they have hoped that Australia, with an expanding population, including many people from older countries who have been brought up to drink wine from childhood, would develop a local market through which the consumption of wine would be increased. I have always thought that that was not a wise outlook, and the board is beginning to realize the dangers of the situation.
The wine industry finds itself between two fires. Production has doubled since pre-war days. In 1939, production of wine grapes was 16,000,000 tons a year. To-day, it is just under 32,000,000 tons. Exports of wine in the 1938-39 season totalled 3,700,000 gallons. In 1953-54, exports totalled 1,300,000 gallons. In his second-reading speech, the Minister for Shipping and Transport (Senator McLeay) said consumption of wine in Australia had also contracted considerably. The industry has doubled its production, and it is faced with a decrease of consumption, both overseas and in Australia. Therefore, the Government i? justified in deciding to do something towards solving the problem. I do not know anything about the set up of the Wine Board or the industry, but I have been interested in this matter over the past few years, and I believe that there has been a lack of initiative. The measure that is before the Senate may provide too little. Certainly it is late, if not too late. In 1950, I read from the annual report of the Australian Wine Board, which stated -
The story of our industry is now told by the aid of scripts, suitable photographs, and lighted transparencies, in addition to which a coloured diorama has been provided, depicting a typical Australian vineyard scene during vintage. The production of improved show- cards and their distribution to the trade was authorized, as was an increase in window displays arranged by the London office.
That report indicated to the responsible Minister of that day, and he in turn indicated to the Senate, that all things necessary for advertising Australian wines were being done. But the report of the overseas officer in London stated -
I feel that much could be done to prepare and educate the consumer for the day when prices are more reasonable. The average British consumer is still prejudiced against Australian wines. This could be broken down by an appropriate advertising campaign to make the consumer more conscious of our industry and our wines. [ pointed out at the time that there were 500 different types of Australian wines on the market, and they were going through 200 different exporting channels. How could we hope to compete in the highly competitive market in London when we were exporting and marketing wines under such conditions? That position is recognized by the regulation to which- 1 have referred. I commend the regulation to the Senate and, at the same time, point out that I have seen a similar problem arise in other industries, ineluding the glass importing industry. The moment a move is made to limit the number of persons who can import a. particular commodity, there is a danger that an exclusive power may be put into operation. The trade concerned can become tied up with trade agreements, as in the glass industry. In that case, the Australian people and the building trade are being held to ransom. Not even governments can overcome the monopoly that is held by five firms in the capital cities. That is a warning to the Minister who has promulgated the regulation, although the comparison might seem to be far-fetched. The wine industry has not been able to organize and channel the marketing of wines through the London market by its own resources and initiative, and the Government has had to step in.
– Order ! In conformity with the sessional order relating to the adjournment of the Senate, T formally put the question -
That the Senate do now adjourn.
Question resolved in the negative.
– The report of the officer in London, to which I have already referred, is very direct. Hp said -
The present system of marketing Australian bulk wines and brandies of non-proprietary brand origin is far from satisfactory.
I use that statement to reinforce the remarks I have made. I think I have said enough to indicate the urgency of the need to help this industry.
I realize that the wine industry has many obstacles to surmount, but those obstacles present a great challenge to the board and the people who are trying to sell’ Australian wines. In the London market, there is a certain amount of snobbishness about Australian wines. The quality of our best wines compares favorably with that of the best European wines but, because of the snobbishness to which I have referred, some wine-drinkers insist upon wines manufactured in certain countries. We have been sending good wines to London, but very little control has been exercised over the importers. Some of them have mixed our good wines with cheaper wines. Any cheap brand of wine has been dubbed Australian.
South African wines have taken over the place formerly occupied by our wines. The reason for that is that the South Africans have been doing a job that we, at this late stage, are just setting out to try to do. They have a good advertising service and a good system of marketing. They concentrate on one or two brands of wine that consumers will remember. I know this is- a very debatable point, but I say we have made an error in trying to compete with every kind of European wine. I think we should try to develop distinctive wines of our own.
There would have to be an indication on the labels of the types of wines they are, or of the relationship they bear to European wines that were first produced years before Australia became a nation. But, with the proviso, we should develop our own distinctive brands. Obviously it is wrong to try to market 500 different brands. We should concentrate on four or five wines and publicize them so that they will be remembered.
I was very pleased to hear the Minister for Shipping and Transport (Senator McLeay) explain that action will be taken to enable Australian wines to be sold on trains operated by the Commonwealth Railways Department. In that way, Australian wines will be brought to the notice of railway travellers. Australian airlines have a golden opportunity to advertise our wines. The most lasting impression I have of a journey on an Air France aircraft is of the way in which French wines were advertised. Each passenger was given a small bottle of French wine. If he did not want to drink the wine then, so much the better for the wine company, because he would take it home with him and give it to his friends. In that way, the wine-maker got a good advertising plug. I suggest that the big airlines in Australia could do a great deal to help the Australian wine industry in that way.
The peculiar licensing laws of the various States which prevent people from buying wine to drink with their meals at restaurants, no matter how low the alcoholic content of the wine may be, are completely outmoded. A relaxation of those laws to enable people who eat in restaurants to drink wine with their meals would do a great deal to help our wine industry. I am interested in the fees and allowances paid to members of the board. Section 9 (2.) of the principal act states -
Subject to the next two succeeding subsections, a member or his deputy shall be paid fees and allowances at such rates as are prescribed.
I should be interested to know the fees that are paid to the members of the board, not because I want to be a stickybeak, but because the information would give us some idea of the kind of people who are serving on the board. Section 9 (3.) indicates that the Commonwealth representative on the board can be either a public servant or a member of the Parliament. I understand that at present the Commonwealth representative is not a member of the Parliament. I suggest to the Minister that, at any rate for a limited period, it might be a good idea to have a member of the Parliament as the representative of the Commonwealth on the board. Of course, he would not be eligible to receive a fee, but he could act, so as to speak, as a. pipeline to channel information to the Parliament about an industry that obviously is struggling for its existence. He would be a kind of parliamentary publicity agent. Obviously, he should be a man who was interested in the wine industry, and the Government would have to decide who was the most suitable member of the Parliament for this purpose. I should be interested to hear the Minister’s views on that subject.
I am very interested in the representation of the Australian wine industry in London. I am deeply interested in any department that sends Australians overseas to represent u3 in any walk of life. I should like to know the number of Commonwealth employees engaged in promoting the sale of our wines overseas. Are they able to handle publicity themselves, or do they farm the work out to publicity agents in London? It is obvious that only a limited amount of publicity work has been undertaken.
During the last five or six years, there has been some buying up of small vineyards, but there has not been a concerted move in that direction. Generally speaking, the producers are small land-holders. I make a plea for something to be done to assist them, because, in certain circumstances, they could be the very backbone of some of our agricultural regions. In the present state of our economy, any additional export market is of vital importance to us. If there is one weakness in the Australian economy, it is that our export earnings are obtained from so small a number of industries. We have natural advantages for grape production and winemaking. We are already producing good wines, and the problem is how to market them overseas. I suggest that, by the use of good publicity methods, we could build up an export trade in wine which, in the years to come, would be as valuable to us as the wine export trade is to some European countries, although I admit it would not be so valuable as our wool and wheat export trades.
– in reply - I am sure all honorable senators will appreciate the constructive suggestions that have been made by Senator Willesee. A representative of the Department of Commerce and Agriculture has been appointed to the board, and I shall place the honorable senator’s suggestions before him, because I think they are very valuable. This is the first occasion on which money raised by a levy on grapes will be used to advertise Australian wines and brandies. As the honorable senator has said, there was some doubt whether such funds could be used for that purpose, as the legislation stood.
The brandy industry is the greatest consumer of Australian grapes. A special effort is being made to advertise brandy and to increase sales in Australia. We are producing a splendid brandy, of which we have enormous stocks. Honorable senators will remember that this year the Government reduced the excise duty on brandy by 30s. a proof gallon. We hope, by that method and by a vigorous advertising campaign, to dispose of a considerable quantity of the brandy in stock before the next vintage comes to hand. It is obvious that, unless we improve sales in Australia, our winemakers will be hard put to it to absorb all the grapes that will become available.
– The trouble is that if the people drink more brandy, they will drink less rum.
– Perhaps that would be a good thing, but I do not propose to enter into that argument. A special1 effort must be made to increase sales of wines. A considerable sum of money has been spent by the Commonwealth and the States to assist returned servicemen to develop this important industry. If a large quantity of grapes cannot be processed into wine, great hardship will be suffered by people who have been encouraged to go in for the production of grapes.
– Does not the Minister agree that wine is probably the best advertised product in Australia now?
– I do not think so. As a result of the reduction of the excise duty on brandy by 30s. a proof gallon, brandy can be sold by retail at 15s. a bottle. That should help to increase sales.
I do not propose to deal in detail with the other points raised by the honorable senator, but I assure him that I shall convey his remarks to the Commonwealth representative on the board. I agree with him that there is a great deal of room for improvement of our arrangements for the sale of Australian wines overseas. The Minister for Commerce and Agriculture (Mr. McEwen) is negotiating with the British Government for a reduction of the exhorbitant levy imposed on Australian wines sold in the United Kingdom. I do not know precisely the fees that are paid to members of the wine board, but I do know that, in accordance with established practice, they are increased from time to time in conformity with general increases of costs.
Question resolved in the affirmative.
Bill read a second time.
– It is proposed that in section 22 of the principal act the words “ of Australian wine “ shall be deleted and the words “whether in Australia or elsewhere, of wine or brandy” inserted in their stead. In the act, reference is made to Australian wines. Is there any significance in the proposed amendment, or is it merely consequential?
– I am advised that it is consequential.
Bill agreed to.
Bill reported without amendment; report adopted.
Bill read a third time.
Debate resumed from the 14th October (vide page 720), on motion by Senator McLeay -
That the bill be now read a second time.
.- This bill is a natural corollary of the Wine Overseas Marketing Bill. It is a machinery measure which will give authority for the collection of a levy for the purpose of financing those projects that we discussed when the Wine Overseas Marketing Rill was before the Senate. This bill merely proposes to increase the levy because of the times in which we live. The Minister for Shipping and Transport (Senator McLeay) stated that this proposal had been advanced by the Australian Wine Board and that it had the strong support of the Federal Viticultural Council. He also informed the Senate that it was supplementary to the Wine Overseas Marketing Bill. Without the proposed increase of the levy it would not be possible to undertake the advertising desired because the necessary funds would not be available. The Opposition supports the bill.
Question resolved in the affirmative.
Bill read a second time, and passed through its remaining stages without requests or debate.
Senate adjourned at 10.48 p.m.
Cite as: Australia, Senate, Debates, 21 October 1954, viewed 22 October 2017, <http://historichansard.net/senate/1954/19541021_senate_21_s4/>.