Senate
19 November 1957

22nd Parliament · 2nd Session



The PRESIDENT (Senator the Hob. Sir Alister McMullin) took the chair at 3 p.m., and read prayers.

page 1313

DEATH OF THE HONORABLE SIR THOMAS WHITE, K.B.E., D.F.C., V.D

The PRESIDENT:

– I have received from Lady White and family a letter of thanks for the resolution of sympathy that was passed by the Senate on the occasion of the death of her husband.

page 1313

QUESTION

DUTCH NEW GUINEA

Senator PEARSON:
SOUTH AUSTRALIA

– - I ask the Minister representing the Minister for External Affairs whether his attention has been directed to a reference in to-day’s Australian press to an Indonesian newspaper statement to the effect that the presence of Australian troops in Merauke, in Western New Guinea, constitutes an act of aggression. If he has seen the report, is he in a position to deny categorically the assertion that Australian troops are in Merauke? Does the Minister feel that the publication of such an article is part of an attempt to influence the debate on Western New Guinea that is about to take place in the United Nations? Will the Australian Government instruct our delegate to the United Nations to point out effectively that such propaganda is part of a Communist campaign to influence world opinion on this matter?

Senator O’SULLIVAN:
Attorney-General · QUEENSLAND · LP

– I understand that my colleague, the Minister for External Affairs, was asked a somewhat similar question in another place to-day, and that his reply was that it is completely untrue and utterly fantastic to suggest that Australian troops have landed at Merauke. I think he also indicated that, in his opinion, this propaganda is being indulged in for the purpose of influencing the forthcoming debate in the United Nations. I am quite sure that my colleague will make Australia’s position in the matter abundantly clear.

page 1313

QUESTION

CIVIL DEFENCE

Senator BROWN:
QUEENSLAND

– I ask the Minister representing the Postmaster-General the following questions: - Is it a fact that the Right Honorable R. A. Butler, Lord P-ivy Seal in Britain, made a most interesting and informative broadcast some weeks ago on the subject of civil defence? Is it a fact that there is a great need to inform the Australian people on this most important subject? Is it a fact, too, that the Australian Postmaster-General promised to place this matter before the Australian Broadcasting Commission with a view to having Mr. Butler’s speech re-broadcast throughout Australia? Has any action yet been taken to achieve that end? If action has been taken, what has been the result? Will the Minister get a copy of Mr. Butler’s broadcast for the edification of honorable senators?

Senator COOPER:
Minister for Repatriation · QUEENSLAND · CP

– I feel sure that some benefit would be derived from broadcasts in Australia on the subject of civil defence. I do not know whether the PostmasterGeneral is prepared to have Mr. Butler’s speech re-broadcast in this country, but I shall be very pleased to bring the honorable senator’s request before my colleague and obtain a reply for him.

page 1313

QUESTION

URANIUM

Senator SCOTT:
WESTERN AUSTRALIA

– Has the Minister for National Development noticed a statement in the press to the effect that Great Britain has achieved a notable success in the development of hydrogen power? Can the Minister advise me what effect this important discovery will have on the uranium industry of Australia? Will he also advise me whether Australian uranium-producing companies are protected by long-term contracts?

Senator SPOONER:
Minister for National Development · NEW SOUTH WALES · LP

– I have seen the press reports. I think I expressed some views on this matter on a previous occasion in the Senate. My professional and technical advice is that the new development is still very much in the experimental stage and that in the ordinary course of events a long time will elapse before it can compete with what I might call the normal nuclear power process. Therefore, for some long period of time the new development is not expected to have an adverse effect on the uranium mining industry in Australia. In truth, most of the major producers of uranium in Australia have, as the honorable senator said, already sold their output under long-term contracts.

page 1314

QUESTION

COPPER

Senator COLE:
TASMANIA

– My question is addressed to the Minister for Customs and Excise. I presume the Minister has observed the downward trend of copper prices during the last few months. Will he support representations by the Mount Lyell company to the Tariff Board for assistance so that that company can continue to function successfully? Does the Minister realize that as from 30th November the standard of living of the people of Queenstown will be drastically reduced because of the suspension by the company of bonus payments? In order to safeguard the future of Queenstown and other copper towns, will the Minister recommend that the producers of copper - a useful mineral - shall, if the necessity arises, receive assistance similar to that given to gold-producers by the Commonwealth?

Senator HENTY:
Minister for Customs and Excise · TASMANIA · LP

– The senator’s question is in two or three parts. Dealing with the first part, the matter is in the hands of the Tariff Board, the value of which lies in the fact that it is an impartial investigator of such matters. I should like to obtain considered answers to the remainder of the honorable senator’s questions, so I ask him to put them on the notice-paper.

page 1314

QUESTION

VACCINE FROM RUSSIA

Senator BUTTFIELD:
SOUTH AUSTRALIA

– My question is directed to the Minister representing the Minister for Health. Has the Minister’s attention been drawn to the news item broadcast in a national news session last Saturday that a New Zealand firm had contracted to import to that country a vaccine from Russia which is reputed to check the development of the disease known as multiple sclerosis or creeping paralysis? This decision was apparently made after a New Zealand man had been successfully treated with the vaccine. Since there are approximately 6,000 sufferers from this distressing disease in Australia, will the Minister inform the Senate whether the Department of Health is making any move for the importation of the vaccine into Australia? If the department is intending to act, astime is of prime importance in the treatment of this disease, can the Minister inform the Senate when this vaccine can be expected to arrive?

Senator COOPER:
CP

– I did see the article in the press in regard to the importation of this type of vaccine from Russia, but I cannot say what steps, if any, have been taken, by the Minister for Health to import the vaccine to Australia. I shall ask the Minister to give me any information he can in regard to the importation of this vaccine, and I shall be very happy to give that information to the Senate.

page 1314

QUESTION

JAPANESE TRADE AGREEMENT

Senator COURTICE:
QUEENSLAND

– I desire to direct a question to the Minister representing the Minister for Trade. Has the Minister’sattention been directed to a statement made in the press by the Associated Chambers of Manufactures warning that Australia’stariff policy needs strengthening to safeguard Australian industry against dangers arising from the Japanese Trade Agreement?’ Can the Minister assure the Senate that the Government will continue to seek the valuable advice of Mr. McCarthy, the chairman of the Tariff Board, in order that Australian industry will be safeguarded against any dangers arising from the Japanese TradeAgreement?

Senator SPOONER:
LP

– I did not see thestatement to which the honorable senatorhas referred, but it is in line with other statements that have been made by theChambers of Manufactures. They all have been effectively dealt with on the floor of” this chamber. The Government has, I think, disposed of the view that the Japanese tradetreaty is something to be feared by the community as a whole. I share with thehonorable senator his high opinion of Mr. McCarthy, who has reached the retiringage. I do not know exactly what Mr. McCarthy has in mind doing. I shall beinterested to see whether he continues in a consultant capacity, at least for the timebeing.

page 1314

QUESTION

TRADE WITH JAPAN

Senator SANDFORD:
VICTORIA

– I ask the Minister representing the Minister for Tradewhether he has seen in to-day’s press a> report from Tokyo which indicates that Japanese interests hope to break into the heavy machinery market in Australia. The report also states that Japanese businessmen are counting on their country participating in the Snowy Mountains project, and in other Australian public works programmes. In view of the fact that there is still a fairly large army of unemployed in this country, will the Minister take every step necessary to protect Australian industry and employment?

Senator SPOONER:
LP

– I have not seen the newspaper report to which the honorable senator has referred. Tenders for major contracts in association with the Snowy Mountains hydro-electric scheme have been - and I am sure always will be - invited on a world-wide basis. Very little of the heavy machinery to which the honorable senator has referred is manufactured in Australia. Most of it must necessarily be imported. Japan has always had an equal opportunity with other countries to tender for these projects. I do not recollect that she has yet been successful in securing a large contract in connexion with the Snowy Mountains hydro-electric scheme, or any other scheme.

page 1315

QUESTION

UNITED STATES AIR SERVICES

Senator LAUGHT:
SOUTH AUSTRALIA

– By way of preface to my question, which is directed to the Minister for Civil Aviation, I would say that I understand a group of Congressmen from the United States of America is visiting this country to examine the possibilities of a United States air service crossing Antarctica and, possibly, providing a link with SouthEast Asia. Does the Minister expect to meet these gentlemen and have discussions with them? Is this move an indication of the rights recently granted to the United States to use Australian Antarctica for purposes of air navigation? Can the Minister give details of these rights?

Senator PALTRIDGE:
Minister for Shipping and Transport · WESTERN AUSTRALIA · LP

– The Congressmen to whom the honorable senator has referred were in Sydney yesterday. I had hoped to meet them, but unfortunately my own commitments prevented me from doing so. However, I arranged for the DirectorGeneral of Civil Aviation to meet and talk -with them. They are having a look at the -^possibilities for international civil aviation in this part of the world and, without doubt, some of the developments which will flow from their examination of the position in Australia will be relevant to the recent discussions and the agreement reached with their country.

page 1315

QUESTION

DUTCH NEW GUINEA

Senator GORTON:
VICTORIA

– I wish to address a question to the Leader of the Opposition. Has he seen the equivocal statement made last week by the Leader of the Opposition in another place on the question of the Indonesian claim to West New Guinea? If he has seen that statement, or even it he has not, will he indicate clearly and unequivocally whether the Opposition supports the Australian Government in its present action in opposing, in the United Nations, the Indonesian claim to West New Guinea?

Question not answered.

page 1315

QUESTION

ROAD SAFETY

Senator ANDERSON:
NEW SOUTH WALES

– I address a question to the Minister for Shipping and Transport in connexion with the Australian Road Safety Council, which comes within his administration. Is it a fact that road accidents in Australia accounted for the death of 2,165 persons in the calendar year 1956? Is it also a fact that the death rate in New South Wales was the highest of any State in the Commonwealth, being 10.5 per 10,000 vehicles compared with 8.9 per 10,000 vehicles in Victoria and an all-over average of 9.5 per 10,000 vehicles? ls it also a fact that pedestrian fatalities for the Commonwealth represented 31 per cent, of the total? Will the Minister ask the Australian Road Safety Council to consider, as a matter of urgency, recommending to the States a more vigorous introduction of pedestrian crossings in all capital cities? Will he further ask that body whether urgent consideration can be given to recommending the introduction in the capital cities of pedestrian crossings incorporating the principles of the flickering lights, such as are used in London, and which, I understand, are known as Belisha beacon crossings? Is the Minister aware that in London in particular, these crossings, both by day and by night, have come to be recognized and respected by motorists, and that pedestrians using them have a degree of safety not experienced by persons using the pedes1trian crossings in the Australian capital cities?

Senator PALTRIDGE:
LP

-I believe that the figures quoted by the honorable senator as to accidents and fatalities are correct. They were issued at a meeting of the Australian Road Safety Council held in Sydney last week, and, at which, I understand the whole question of pedestrian safety and safety devices was discussed. I expect to receive very shortly from the president of the Australian Road Safety Council a report on that meeting. It will no doubt cover in some detail the very points raised by the honorable senator, and I should think those points will also be raised and discussed at the next meeting of the Australian Transport Advisory Council, to be held in February or March of next year. I think the honorable senator will agree that in recent years considerable progress has been made in the provision of crossings and other safety devices, but the Road Safety Council has not shown any great satisfaction with the results achieved and has continued to campaign for the greater use of safety devices. I shall not be surprised if the Road Safety Council requests the Australian Transport Advisory Council to have a further look at the number of devices which are provided and to seek a sharp increase.

page 1316

QUESTION

UNEMPLOYMENT IN TASMANIA

Senator AYLETT:
TASMANIA

– I preface my question, which is directed to the Minister representing the Minister for Trade, by stating that a very close scrutiny has been made by the Tasmanian Government of pockets of unemployment in various parts of Tasmania, which the Tasmanian Government claims have been caused by the operation of the Japanese Trade Agreement. In view of this, would the Minister consider taking up with representatives of Japan, or with the Japanese Prime Minister while he is in Australia, the possibility of imposing a restrictive import quota on Japanese goods which are having an adverse effect on Australian industries and creating pockets of unemployment here, particularly in the textile industry and the fish-canning industry in Tasmania?

Senator SPOONER:
LP

– I think it would be quite impracticable to attribute any little unemployment which may exist in Tasmania to the operation of the Japanese Trade Agreement. There are about 630 people in Tasmania in receipt of unemployment relief. Speaking from memory, I think that the figure has remained at a rather constant level for some months, both prior to the signing of the Japanese Trade Agreement and subsequent thereto.

page 1316

QUESTION

ROAD SAFETY

Senator KENDALL:
QUEENSLAND

– Is the Minister for Shipping and Transport aware that for the past two weeks the Queensland police force has carried out an all-out war against motorists who commit breaches of traffic laws? Is he aware that during the two week-ends in this period there has not been a single road fatality in Queensland? In his capacity as chairman of the Australian Transport Advisory Council, would he suggest that other States try this experiment?

Senator PALTRIDGE:
LP

– I shall be pleased to examine the results achieved by the Queensland police force in its blitzkrieg against traffic offenders, and to bring those results to the notice of the Australian Transport Advisory Council.

page 1316

QUESTION

ATOMIC ENERGY

Senator SCOTT:

– Has the Minister for National Development noticed a statement in the “Age” of 16th November, 1957, by Mr. J. P. V. Woollam, a joint managing director of the English company, Simon Carves Limited, that his company, in conjunction with the General Electric Company, is building one of the world’s largest atomic power stations in Scotland? Could the Minister advise me whether any consideration has been given to the erection in Australia of an atomic power plant? If so, when is it to be erected, and has any site been suggested?

Senator SPOONER:
LP

– I have not seen the statement to which the honorable senator refers. I know of the English company that he mentions and its interest in the construction of atomic power plants. I do not know of a definite proposal for the erection of an atomic power plant in Australia. That is a matter primarily for the State governments, which are charged with the responsibility for the generation of electricity, and to a lesser degree for any industry, including any mining concern, which may think that atomic power is more economical than thermal power for the generation of electricity. I am hopeful, however, that some mining companies will establish that atomic power is more economic and will embark upon the installation of such a plant.

page 1317

QUESTION

SNOWY MOUNTAINS SCHEME

Senator BUTTFIELD:

– I direct a question to the Minister for National Development. As there seems to be widespread ignorance in South Australia of the scope and’ national importance of the Snowy Mountains hydro-electric scheme and the implications of the Snowy Mountains Agreement recently signed by representatives of the Commonwealth Government and the Governments of New South Wales and Victoria, and: as it is impossible to grasp the significance and’ magnitude of this important national project without studying the scheme on the spot, will the Minister consider inviting the Premier of South Australia and members of the South Australian Parliament who have not already visited the scheme to do so, so that they can inform themselves at first hand and, in turn, pass on their findings to the people in their various electorates?

Senator SPOONER:
LP

– I am certain that the Premier and his colleagues would be very welcome guests indeed at the Snowy Mountains scheme. Honorable senators probably know that about 30,000 Australian tourists inspect the ramifications of the scheme each year.

page 1317

QUESTION

SCIENTIFIC AND TECHNICAL EDUCATION

Senator BUTTFIELD:

asked the Minister representing the Prime Minister, upon notice -

  1. Is it a fact (a) that Russia offers higher incentives to its scientists than to its workers in other occupations, and (b) that Russia has almost three times as many scientists as any country in the free world?
  2. Is it a fact that a number of public-spirited Australians have formed a nuclear research foundation in order to train scientists and to augment the salaries of scientists in universities and research establishments who, because of extremely low remuneration, are in danger of being attracted to other countries or to private enterprise?
  3. Is the Government making any financial contribution to this foundation?
  4. Will the Government endeavour to find ways of encouraging the training of more engineers, technologists and scientists?
Senator O’SULLIVAN:
LP

– I have been supplied with the following answers: - 1. (a) It appears to be a practice in Russia to offer relatively high salary incentives to scientists. (b) It is difficult to be precise about the meaning of the word scientist, but if we take it to mean a university graduate in science, the available evidence suggests that Russia has. considerably fewer scientists at present than the United States of America. But it is clear that the gap is being closed.

  1. A nuclear research foundation has been established in association with the University of Sydney. The objects of the foundation are defined in clause 3 of its constitution as being “ to advise the Senate of the University of Sydney and the Vice-Chancellor on matters associated with nuclear research in the School of Physics within the University of Sydney “. There is no indication that to augment scientists’ salaries is one of its objects, and I have no knowledge that it is. The foundation has a capital fund and in addition is supported by subscriptions from individuals and organizations.
  2. The Government of the Commonwealth of Australia and the Government of New South Wales each made a contribution of £50,000 to the Nuclear Research Foundation when it was established in 1954;
  3. The Government is constantly concerned with problems of the adequate training of skilled workers in all fields and has been particularly interested, because of their importance to the community, in the training of scientists and technologists. Developments in this field are part of the general expansion of university facilities, in which the Government has borne a considerable share. The honorable senator will be aware that the Government is now considering the report of the Committee on Australian Universities, which makes particular reference to the training of scientists and technologists. The Australian Academy of Science has issued a report, “ Scientific and Technological Manpower Supply and Demand in Australia “, copies of which have been presented to the Government for consideration. The Ministry of Labour Advisory Council also has recently published a report, “ The Employment of Scientists and Engineers in Australia “. I am making copies of these reports available to the honorable senator. More particularly, the Australian Atomic Energy Commission, apart from its general programme, is active in promoting the training of engineers and scientists in its own specialized field. It has done this by providing at

Australian universities undergraduate scholarships and post-graduate studentships in a wide range of sciences relating to atomic energy; and by placing research contracts with the universities for specific investigations. The Government has authorized the Commission also to have discussions with the universities, with the aim of establishing a joint organization tentatively called the Australian Institute of Nuclear Science and Technology. Its function will be to further the training of scientific and technical personnel in atomic energy work.

page 1318

QUESTION

WHEAT

Senator WADE:
through Senator Dame Annabelle Rankin

asked the Minister representing the Minister for Primary Industry, upon notice -

  1. Is it a fact: (a) that the growing wheat crop plus the known surplus will be sufficient to meet Australian needs until the 1958-59 crop is harvested, and (b) that the importation of wheat from overseas is being considered to enable Australia to export portion of her present crop?
  2. If the answer to 1 (b) is in the affirmative, what effect will this policy have on the financial return to the growers of the present crop?
Senator PALTRIDGE:
LP

– The Minister for Primary Industry has supplied the following answers: - 1 (a). Yes. (b) This question has been considered, and the Government has decided that, for the present, at least, wheat from the surplus of Australian States should be used to meet the deficiencies in the eastern States.

  1. Whether the answer to I (b) was in the affirmative or not, the financial returns to growers of the 1957-58 crop would not appear to be affected since realizations for home consumption sales or exports are about the same on present prices.

page 1318

QUESTION

WATERFRONT EMPLOYMENT

Senator PEARSON:

asked the Minister representing the Minister for Labour and National Service, upon notice -

  1. What is the present quota established by the Stevedoring Industry Commission for the purpose of providing the required number of waterside workers at Port Adelaide, Port Pirie, Port Lincoln, Thevenard and similar ports in other States?
  2. What was the actual number of waterside workers employed at each of these ports at 30th September, 1957, or the nearest convenient date?
  3. What was the average number of hours worked by each such waterside worker at each of these ports during the twelve months prior to that date?
  4. What was the average wage a week paid for these hours worked?
  5. What was the average amount of appearance money paid to each such employee over the same twelve months?
Senator SPOONER:
LP

– The Minister for Labour and National Service has provided the following information in reply to the honorable senator’s questions: - i and 2. The labour quotas and numbers of waterside workers registered for each of the ports named as at 1st October, 1957, were - 3, 4 and 5. The details sought for each of the ports named for the year ended 30lh June, 1957, which is the latest statistical period for which complete figures are available, were -

As it is not clear what is meant by “ similar “ ports in other States, details relating to ports other than those named have not been provided. However, it is expected that the annual report of the Australian Stevedoring Industry Authority containing such information for these or other ports will be tabled in the Senate at an early date.

page 1318

QUESTION

INTER-PARLIAMENTARY UNION

Senator GORTON:
Victoria

.- I present the following paper: -

Inter-Parliamentary Union - Report of Australian Delegation to the Forty-fifth Conference held at Bangkok, November, 1956. and move -

That the paper be printed.

I ask for leave to continue my remarks at a later stage.

Leave granted; debate adjourned.

page 1318

INCOME TAX AND SOCIAL SERVICES CONTRIBUTION BILL 1957

First Reading

Debate resumed from 14th November (vide page 1311), on motion by Senator Spooner -

That the bill be now read a first time.

Senator McCALLUM:
New South Wales

– When the Senate adjourned on Thursday last, I had dealt with the existing defence situation following Senator O’Byrne’s attack and other criticism. We had arrived at this point: Although one was not prepared to criticize in any great measure the fact that Australia was defenceless shortly after the end of World War 11., by May, 1948, some eighteen months before this Government assumed office, a state of affairs had developed which altogether altered the international situation. It was in that condition of complete defencelessness that the Liberal-Australian Country party government began its task. Before the Senate adjourned I had answered, with facts, much of the criticism, particularly that relating to equipment at St. Mary’s.

I wish to go on from there and point out that this Government has always had two possible tasks in view. One was to be ready for a possible global war and the other was to be ready for such military operations as were necessary in our immediate area, that is, in the Pacific and to the north of Australia. We have met that situation very effectively. We not only equipped our defence forces in a way in which they had never before been equipped in time of peace, but also waged a war which in former days would have been regarded as being quite considerable. We sent an expeditionary force to Korea with the full consent of both Houses of the Parliament and of all parties, and also sent a force to Malaya. The Malayan force is still overseas. In the face of that, an assertion by the Opposition or any one else that all the very great expenditure on defence has gone for nothing or for little is quite false.

Since we assumed office, we have been making defence preparations against an ever-changing background. We have prepared for defence under conditions which no one has ever faced before and which the experts of all countries have constantly been reconsidering. Therefore, the kind of criticism that is directed against a particular Minister and against the Prime Minister (Mr. Menzies) has no bearing whatever on the actual needs of the situation. In fact, the kind of criticism that has come from the Opposition is a serious embarrassment to those who really think that our defence policy needs to be revised and should be strengthened. If we create the idea that to change the government or even a Minister will bring about the desired result when many of the changes that are sought are being effected all the time, with little being said about them, we are putting the public in a false position.

The Government has done the kind of thing I am about to mention. It has sent men to America and Europe to study new methods of making ammunition and training forces, and has conducted research into methods of saving labour. Although in this debate we cannot, and I certainly shall not, criticize any of the people with whom we consult, I know perfectly well that in their own countries they are criticized in much the same way as this Government is being criticized. I do not think the ordinary member knows everything that has transpired in the intimate relations between what the Americans mysteriously refer to as the Pentagon and our own military people, but we do know that in America, sometimes for political reasons and sometimes for better reasons, the American general staff is criticized, and that it is alleged that there is not always the closest liaison between that staff and the American government.

There has been particular criticism of a certain type of aeroplane. I am not an expert in these matters, but I have obtained all the information that it has been possible for me to obtain. The reason for one change of policy and some delay seems to me to be as follows: When a new super-fighter was brought out in America, we knew what it looked like on the drawing board, and there was a tentative agreement about its being used. The performance of these machines is not known until they are tested in the air. When the aircraft in question was tested in the air, it was discovered that the costliness not only of the plane itself but also of the ground equipment was such that we could not possibly afford it. If one asks what would happen in the event of war, the answer is very simple - everything is abandoned in favour of defence. But we cannot do that when we are not at war, because if we did so we might be abandoning something that is infinitely more important than the particular defence mechanism on which we concentrate. Furthermore, when we know that we must face three possible kinds of war, that the cheapest kind, which is fought with what are known as conventional weapons, is the most likely and in fact is present with us, it becomes absurd ito use the major part of our defence expenditure on a particular weapon which seems to untutored eyes to have greater merit than -Others. We know from history that very often countries have ruined themselves by throwing the greater part of their weight into one particular kind of defence. I am satisfied that the decision to change the policy in regard to the particular aeroplane we have in mind was an excellent one.

With regard to civil defence, I myself have criticized the Government, have urged greater speed, and have said that more should be done. But let me say that what has been done in this direction is excellent. In saying that, I am not using secondhand information, because at the beginning of this year I was present at the civil defence school at Mount Macedon. I repeat that, although not enough has been done, what has been done constitutes a right beginning. In any new field, the beginning must be to get people who know what the problem is, and who can teach other people, to pass on that information. Every member of the Parliament who was present at the school at Mount Macedon knows exactly what is being ,done. The demand for civil defence is growing because of what that school is doing.

My view on civil defence is not that it should be made a matter for the administration of a new federal department or that the Federal Government should try to take the whole of it in charge. To do that would mean a degree of regimentation, which we do not want in this country - rat least, in time of peace. I feel that the Federal Government should enlist the support of the State governments, the local government bodies, and voluntary organizations such as the St. John Ambulance and the Australian Red Cross. One thing we learned at Mount Macedon was that every person has a great task to perform in relation to civil defence and that .a person would probably be doing much more for it if he learned modern methods of helping people in case of fire or accident, or by learning first aid methods and such things, than if he talked a lot about it. One of the results of our attend ing the school at Mount Macedon was that we later refurbished our rather rusty equipment in this respect.

I shall not say that the Government has done everything it should do in relation to civil defence. I say that it has not and that it should do more, but it has started in the right way and has secured the support of some State authorities, including the New South Wales Government. I give full credit to the Premier and Deputy Premier of New South Wales, who have appointed a very fine officer, Major-General Dougherty, to be officer in charge of the New South Wales section pf our civil defence organization.

Many people have sneered at national service training,. I am one of those who deplore the fact that the intake has had to be reduced. The national service training scheme has been effective. We have heard stories about troops being ill-trained and about lazy officers, but we get that kind of story in relation to every government department that has ever existed. I repeatedly heard such stories in the public schools in which I taught. I have seen a lot of what the Citizen Military Forces have done, and what I have seen has been very good. Included in the forces I have seen has been a fine commando group in Sydney. I noticed in Saturday’s press that the Minister for the Army (Mr. Cramer) intends to convert that group into the City of Sydney Regiment. It will be a magnificent regiment. I have seen these men at work. They are all above the average in physique, intelligence, capacity and the sort of courage that induces a person to take a few hearty risks when he is going about his training. It is a magnificent group which will do very well.

It must be remembered that Australia cannot devote the same proportion of its national income to defence as can the United States or even Great Britain because a part of our defence programme is the immigration programme. That is very costly, but in the long run, if it is carried on, it will prove much more effective for the defence of this country than would an enormous expenditure on aeroplanes, which might be obsolete before they could be used.

There is one thing to which I wish to reply without in any way trying to exacerbate feelings. This .attack, as I said before, was to a large measure a personal attack on the Prime Minister. In order to make it effective, reference was made to what happened in 1940’. Some dispute arose as- to whether Mr. Curtin had made an honest and straightforward repudiation of the charges made about our state of preparedness in 1940 or whether, as Senator Toohey suggested, he had merely made a few conventionally polite remarks. J heard Mr. Curtin speak in the Sydney Town Hall. I have no record of what he said then, and 1 have come to the conclusion that probably his speech was not reported in the press, but he said - I heard it and I remember it distinctly - what we say he said. He said it just after he had assumed the responsibilities of Prime Minister. Some months before he spoke in the town hall; speaking in the other House while he was still the Leader of the Opposition, he made another statement. I intend to read that statement so that honorable senators can determine for themselves whether what Mr. Curtin had to say was merely a polite compliment or was a straightforward, genuine statement, intended to be believed. For those who wish to read further and see whether the general context is in accord with what 1 read, the reference to the statement is “ Hansard “, volume 167, page 25. The date of the debate was 28th May, 1941. Mr. Curtin said -

Notwithstanding that there, are political parties in this country, I claim that the war has been prosecuted to the maximum of Australia’s capacity, and I doubt if any great improvements could be made upon what has been done by the Government working in collaboration with the Opposition. T refuse to engage in reflections which suggest) inadequacies that could be overcome by political devices, although I agree that improvements could’ be effected by certain administrative changes.

Remember that this was the then Leader of the Opposition speaking and that he was a member of the Advisory War Council at the time. He continued -

I say frankly that 1 have been in association with: Ministers who have given their maximum service to the problems confronting Australia. The Advisory War Council and the Government have grappled with problems in a way which I believe’ has been as- satisfactory as was possible in the circumstances.

shall summarize some of the things which

Chits Government has done. It has given us a Navy. The Navy was virtually obsoMe, at the end of the war. It has given us fast anti-submarine ships and Fleet Air Arm ships, with all the air equipment that goes with them. Some of us have watched these ships at work. They are certainly effective as far as I can see. I have had more than my ration in this respect, because I have had two trips to sea to watch these ships at work. We have two aircraft carriers, a “ Daring “ class ship, three destroyers, six frigates and four ocean mine-sweepers. The two carriers, “ Melbourne “ and. “ Sydney “, are effective.

As honorable senators know, a possible threat is the submarine. The Government is preparing, not in a vague general way, as most governments have done in the past, bur to meet a specific threat. I have made some” reference to” the Royal Australian Air Force- and to the reason why there was a change’ of policy and a particular type 0i aircraft was neglected. I will not go intodetail; because 1 do not profess to understand’ the technicalities of the different things we use in the air, but from what Ihave seen of the Air Force, it is effective, considering the: circumstances of the times.

We have done a great deal for the Army. We have begun to put into operation the policy of restoring the small arms factories, filling factories and everything else necessary to make the- Army effective. We have now an infantry battalion group-, the greater part of which is on active service. We have built up the mobile brigade group which was denounced as a hollow sham by some honorable senators opposite. That group, .1 understand, now has a personnel strength of 4,100, so it is pretty well a complete force. In addition, our Army equipment has been increased so that we have 120 Centurion tanks, 300 other armoured fighting vehicles, as well as 5,100 guns, mortars, rocket launchers and pieces of artillery generally. There are 300 items of earthmoving equipment. We have spent millions of pounds re-equipping the Army. The equipment is not obsolete. It is up-to-date equipment, which will be effective. T explained fully on Thursday night the reason for certain delays in the building of the St. Mary’s filling factory. I mentioned what it is intended to replace and what it> is replacing. I understand that there will be further opportunity to speak on this subject, and I assure honorable senators that T shall be very happy to return to the fray then.

That is the story. We have an entirely new situation in which changes occur, not only from day to day, but from hour to hour. We have faced up to this situation in a democratic way. There is something very dangerous in the campaign that is being waged at the present time. It has all the aspects of a campaign that asks for something in the nature of a dictatorship. That is the sort of thing we do not want. We know the old story. We heard it in Great Britain and in Australia in the period between the two world wars. It is the Story that there is a need for some strong man who can grasp the whole problem and solve it out of hand. That is not the democratic way of doing things. If we “abandoned the democratic way before we Vere strong, what hope would we have of regaining it afterwards? The constant changes of policy have been necessitated by a situation which Cabinet has constantly met. It has been suggested in another place that certain administrative changes are necessary. I am quite sure that if administrative changes are necessary they will be made, because in the past such changes have been made when the necessity arose.

I want to make one final point before I sit down. When Mr. Churchill waged against a Conservative ministry his long campaign for preparedness, he received great respect and great attention. In the end, he was the man who was asked to solve the problem. Why? Because he showed again and again that he was right and that the British Government was wrong, that it was evading the issue. He had facts and figures and he also must have had a whole army of private advisers, such as, I am sure, no member of the Opposition in this country could have, unless the Opposition suborned the officers of the defence departments - something which 1 regard as incredible, knowing the type of men we have in those departments and in our defence services.

There was one other thing. The Labour party, the Liberal party and the great bulk of the Conservative party in Great Britain knew that when the crisis came and there was a change of government, Churchill would be the only man to lead the new government. There is no Churchill or anybody of a similar calibre in the ranks of the

Opposition. The Opposition has chosen to make an attack on the Government on defence when the Opposition has neither the capacity nor the inclination to frame a defence policy, nor a desire to support the kind of policy which defence necessitates. It is clear that the attack consists of futile partisan criticism, which will be dismissed by the people of this country.

Senator O’BYRNE:
Tasmania

.- Senator McCallum attempted to make a spirited defence of the Prime Minister (Mr. Menzies), but did not get to grips with the main purpose of this debate. During the debate on the Estimates Opposition senators were deprived of the opportunity to discuss the various branches of the armed services. The Leader of the Opposition (Senator McKenna) has drawn attention to the state of our defences, and to the fact that, though £1,200,000,000 has been spent on defence since 1950, to all intents and purposes our ability to defend ourselves is of a very low order.

It is rather interesting that each speaker from the other side - first Senator Spooner, then Senator Gorton and now Senator McCallum - should have sprung to the defence of the Prime Minister as though we had sorted him out as the victim for an unwarranted attack. I realize that in a time such as this, with rapid changes occurring in the world, the responsibility for defence is very great. The speech which the Prime Minister gave on 19th September preceded the launching of the Soviet satellite, and the whole approach to world defence has now gone into the melting pot. In the light of these changing circumstances, it is plain for all to see that the Government’s policy does call for a review. However, I still wish to take up with Senator McCallum his suggestion - following that of a senior Minister, Senator Spooner - that we are knockers because we exercise our right as an Opposition to criticize the Prime Minister and the Government’s policy for the defence of Aus* tralia, and that therefore, in his opinion, we are submitting the proposition that this country needs a dictator. Nowhere is the cult of personality better exemplified and illustrated than in these repeated tributes to the Prime Minister. We admit that the right honorable gentleman has great ability in many things - greatest of all in the art of talking. It is on that very matter that we challenge him. We say that £1,200,000,000 has virtually gone down the drain, and that our ability to withstand the attack of an enemy is not much greater than it was in 1950. Even worse, the Australian people are being given a false sense of security by the repeated assurances that come from the Prime Minister.

Earlier in the debate I directed attention to the need to concentrate on air power, and spoke of the need to change our policy with regard to speedy fighter defence. I pointed out that we were an island continent and that if we genuinely wished to defend ourselves, on a limited amount ‘of money - which is our exact situation - we should concentrate on an efficient and mobile air force, with the emphasis on defence rather than offence. The Prime Minister, speaking of the mission to the United States of America of the the Minister for Defence (Sir Philip McBride) said -

His American discussions took this problem out of the world of abstract perfection into the world of realism and accepted probabilities.

One does not have to be a very keen student of semantics to be able to analyse that sentence as meaning absolutely nothing. It is made up of mere words - designed to confuse further the people of Australia, who depend on the Government to provide them with a defence system. The Prime Minister went on to say -

He was able, by virtue of his office, to discuss these matters with those who make policy and determine the over-riding strategic conceptions which are involved in American policy. He discovered that the operational employment of the FI 04 was still, to some extent, in the experimental stage, but that there were two factors in its proposed use which rendered it inappropriate for adoption by Australia.

The first was that it has developed as a highly specialized machine to cope with the most modern high-level attacking bombers and that it is in no sense an all-purpose fighter. In the second place, its use would involve a literally tremendous refinement and expansion of electronic ground controls at present and in the foreseeable future, f.ir beyond our own capacity.

In those two passages, the Prime Minister has admitted that our international commitments are such that we are not coming to grips at all with the defence of Australia, that somewhere or other along the line our foreign policy is so inadequate that, first, we do not know whether we are prepared to fight on our own, if necessary. Secondly, we have no definite plans, even though our foreign policy is not to cultivate our nearest neighbours as we should. Thirdly, we have not come to the definite conclusion that, if a minor war broke out, our only chance of survival would be the defence of our own continent. Nothing in the Prime Minister’s speech has given any definite line on Commonwealth policy, which is so abstract and wide in scope that it is impossible for any of the services to plan for any eventuality within the limits of the finance available to them. Our country’s defence policy is being justly criticized, because that criticism is coming from the very top.

The Prime Minister himself has added confusion to the chaos that already exists. During the course of the same speech he said -

Great Britain, for example, has been compelled by circumstances to make a large increase in her expenditure on preparations for nuclear and thermo-nuclear war, while, at the same time, reducing quite markedly her expenditure on what we now call conventional forces and armaments.

Under the White Paper issued by Great Britain her arms are being materially reduced, her naval forces are being cut back, she is drastically rethinking her air defences. The emphasis is being increasingly put on new developments in guided missiles and upon the mobility of the forces which operate on the ground. Should there be a global war, Great Britain will be immediately in the very centre of attack. It is, therefore, inevitable that she should place emphasis upon those things which relate to the nuclear deterrent, and for the sake of national peace-time solvency, considerably less emphasis upon those things which relate to a nonnuclear war.

There, the Prime Minister was openly stating Great Britain’s defence policy. The British have realized that their country could be the centre of attack. They have a stockpile of nuclear weapons because they realize that if a global war should break out they will have to defend themselves and retaliate with all the strength at their command.

The Australian Prime Minister has admitted in the speech to which I have referred that as we are a non-nuclear power we cannot expect to fight in a nuclear war. He has stated that all we can expect to do is defend ourselves and our territories. If attack should come from one of our near neighbours we should be able to carry our share of the burden of the overall defence of the Pacific. I submit that our defence policy falls down in this direction because we have neither one thing nor the other; we are not a nuclear power and, because of the dispersal of our defences, because of the heavy burden on our economy, we are not able ito defend ourselves in any one specific sphere.

It is for this reason that 1 feel that the Government’s defence policy is very weale. It places no emphasis on what I feel must be considered would be our only chance of defending ourselves in the event of war. I refer .to the need for a highly efficient and mobile air force. The wisdom of having such an air force is borne out by the fact that When the Germans first attacked in the 1939-45 war, and when the Japanese attacked Pearl Harbour, the armies of France and England, and the United States Navy, were immobilized almost immediately by the use of air power. Despite what our generals and admirals may say, there can be no doubt that defence strategy cannot be carried out effectively without air superiority. The only way in which a campaign .of any .strength at all can be initiated and continued is to launch it under the umbrella of an efficient air force which enjoys superiority in the air.

I cannot stress too strongly the importance of a defence policy which places growing emphasis on the need for air power, on the need for having aircraft of superior speed, manoeuvrability and range sufficient to defend our shores and on the need for having adequate transport aircraft to take whatever forces we have available - goodness knows., they are limited, as is shown by the figures that have been quoted already - to the scene of action. Until more emphasis is laid upon the need for concentrating on the defence of this island continent, we shall continue to ,go round in circles and display the ineptitude which has been the subject of blasting criticism not. only in the press but in various parts of Australia.

It is interesting to compare the defence policy of the United Kingdom with lours. I lay most of the .blame for the weakness of our policy on the fact that in our external affairs policy we have been placing complete reliance on aid from .the United States. I believe that the U.S.A. can and will play a tremendous .and, indeed, -decisive part if a global war were to overtake us. But because of her enormous strength, and because our productive capacity is insignificant .compared with hers, we are only chasing the shadow if we believe we can hope to keep up in any way with the United States in our defence policy. Our population is so small that we cannot hope to stand the burden created by rapidly changing our defence policy to meet changing circumstances. America’s ability to do this is a factor that can do grave harm to Australia.

The United Kingdom Defence Minister, Mr. Duncan Sandys, when speaking on defence, said -

There is no good bankrupting ourselves with a defence burden bigger than we can carry.

That condenses my .arguments against imposing upon the Australian people a defence burden bigger than they can carry. The amount of ?200,000,000 a year which we are :now spending on defence can only deprive (us of developmental works and such essential defence works as roads and so on. Actually, we are getting nowhere with our defences from the expenditure of this money.

Mr. Duncan Sandys goes on to say ;

You -have to concentrate on the things which aase .most essential.

That is what I suggest should be done. He continued -

A .global war fought with present-day weapons would be a calamity beyond the imagination. Therefore, the first ‘essential must be to do everything we can to prevent it from happening.

I should like now to refer to a question that was asked to-day in the Senate by the chairman of the Government’s Foreign Affairs Committee, Senator Gorton. It is a very sorry state of affairs indeed when the Government’s Foreign Affairs Committee finds itself in such a hopeless position with its thinking on foreign policy that its chairman has to throw a question across to the Leader of the Opposition, not for the purpose of genuinely seeking information from the Opposition, but in the hope that in an unguarded moment the Opposition will say something that will enable the committee to drag a red herring across the trail. 1 thought Senator Gorton, who is supposed to be responsible enough to occupy the position of chairman of the Government’s Foreign Affairs Committee, showed very poor taste.

Senator Pearson. - He is not the chairman. Sir Wilfrid Kent Hughes is chairman.

Senator O’BYRNE:

Senator Gorton seems to do all the talking, and, as it seems that it is the policy of the Government’s Foreign Affairs Committee to do nothing but talk, I took it for granted that Senator Gorton was the chairman. Senator Wordsworth has been absent, and I understand that Senator Gorton has been his spokesman in the Senate. No information has been forthcoming from that committee on lour relationship with Indonesia, and we are trying to have two “ bob “ each way on this matter. It is very serious that .the Minister for External Affairs should, on his return to Australia, say that the demonstration outside the Australian Embassy .and Dutch head-quarters in Indonesia was provoked ‘by Communists. It is all very fine to just brush it off in that way, pretending to he able to look into the minds of thic Indonesian people. Similar statements were made about the Indian and Malayan peoples when they were trying to achieve their independence.

Senator Cameron:

– It was the same with the .Scots .and the Irish.

Senator O’BYRNE:

– History records a sequence of similar processes when people were overthrowing oppression and tyranny. We cannot always get both sides of a question, but from all accounts and from newspaper reports it appears that the Indonesian people are having tremendous economic and political difficulties within their own country. We, who are their nearest neighbours, should not refuse to assist them, in any way possible, to solve .their problems.

Senator Kendall:

– We assisted them before 1949, did we not?

Senator O’BYRNE:

– We refused even to attend their conference at Bandung. 1 thought that was a magnificent opportunity for Australia to show its goodwill to its nearest neighbour.

Senator Kendall:

– We were not invited.

Senator O’BYRNE:

– If we had made any move at all towards seeking an invitation, we would have been invited.

Senator Hannaford:

– Anyway, it was not the Indonesians’ conference; it was an AfroAsian conference.

Senator O’BYRNE:

– It was .an AfroAsian .conference. It is :germane to the :argument I am putting -forward that our near .neighbours are Afro-:Asian people. The very important matter which I .am now bringing forward in regard to Indonesia involves both the African and the Asian peoples. With all due respect to the colonizing ability of the Dutch, their efforts aroused quite a considerable amount of resentment in Africa. That has virtually nothing to do with us, and the apartheid policy will have to be resolved internally by the South African people. But Indonesia is a country with which we are very vitally concerned. lt is the nearest country to our Territory of Papua and to that part of New Guinea over which we hold the United Nations trusteeship. Those areas are our responsibility, and whatever happens in Indonesia affects us vitally. We should support the application of Indonesia for some settlement of this dispute in the halls of the United Nations. After all, we subscribe to and believe in the great principle of the United Nations that all people shall have the right to self-determination.

For some reason or other, the foreign policy of this Government has been such that .the Government has never come to grips with this one matter which is so close to home. It is a grave reflection .on the Government’s foreign policy and on the Minister for External Affairs that at this stage, twelve years after the end of the war which gave to the Indonesians an opportunity to assert their independence, Australia has not supported them. Australians believe in a fair .go, not only for themselves, but for all people, yet we have consistently refused to support the .consideration of this matter by the United Nations. We do not want to influence the United Nations in a final determination on West New Guinea, West Irian, Dutch New Guinea, or whatever its name will be eventually. This is an area which could lead, if not to conflict, at least to a very delicate situation. Because of the attitude of the Minister for External Affairs and of the Government, we have missed a magnificent opportunity to have this matter brought before the United Nations. Whatever the United Nations, in its wisdom and with a view to international justice, decides as to the future of West New .Guinea, we should be prepared to abide by its decision and to get on with our side of the job.

Senator Pearson:

– Do you support Indonesia’s ‘Claim to West New Guinea?

Senator O’BYRNE:

– The present situation is intolerable and must be resolved as quickly as possible in the interests of Australia’s security and peace. I am asked whether I support Indonesia’s claim. I believe that the Indonesians have as much claim to Dutch New Guinea as have the Dutch.

Senator Wood:

– The Indonesians cannot run a pie-stall.

Senator O’BYRNE:

– Neither can the Dutch. The Dutch colonization was not as successful as that of the British, who still have a tremendous fund of goodwill in their former colonies, to which they brought their laws, language, and other great things of civilization. In the East Indies, the Dutch have never built up any goodwill. This trouble is the fruit of their occupation of the East Indies. To-day they have no friends. In the period that they occupied the East Indies they should have acquired many more friends. Had they done so, this delicate situation that we are facing to-day would not have arisen. As a near neighbour, and as a country which could become directly involved in certain circumstances, Australia should not allow this situation to continue. To do so is a grave reflection upon us.

Senator Pearson:

– To save our friendship with Indonesia, we should support its claims to Dutch New Guinea?

Senator O’BYRNE:

– It is imperative and essential that we should be friendly with Indonesia. The need for a solution of the problem is urgent. It can only be resolved, for better or worse, by the United Nations. I believe it will be for the better. I believe that the United Nations, like many religions, is merely having difficult times, because the world is not allowing its principles to be exercised. It is a tremendous pity that in the first place the United Nations was not- given an opportunity to function thoroughly and properly according to its principles. There has been a difference between Australian and British policies. First, the United Kingdom Government recognized continental China and the Peking Government, while Australia recognized the government of Chiang Kaishek. All sorts of difficulties arose in America when Her Majesty recently visited that country. Due to certain diplomatic procedure, Australia had to sponsor the Formosan representative. But in the Security Council neither Australia nor America has recognized China, which originally was intended to be one of the main member countries of the council.

Senator Gorton:

– Nor has Great Britain.

Senator O’BYRNE:

– Yes she has!

Senator Gorton:

– Great Britain has not recognized Communist China in respect of membership of the Security Council.

Senator O’BYRNE:

– Well, she should have done, because therein lies the veiled undermining of the great principles of the United Nations. It has been said that it is necessary to have the numbers in order to gain the balance of power. I say that it is not sufficient merely to have the numbers; you must have enough of them. That is the Opposition’s difficulty in this chamber; we have the numbers, but not sufficient. I revert to the subject of Indonesia. That country is quite prepared to submit the matter to the United Nations for decision. Australia will not support Indonesia’s request for the matter to be submitted to the United Nations.

Senator Kendall:

– Why should we support it?

Senator O’BYRNE:

– As the United Nations trust Australia sufficiently to administer New Guinea, why should not the United Nations itself be trusted sufficiently to resolve the existing very difficult and inflammatory situation? I suggest that the matter should be submitted to the United Nations for settlement. But Australia is not supporting Indonesia’s request for the matter to be so resolved.

Senator Grant:

– The Government is afraid to do so.

Senator O’BYRNE:

– I think that the Government’s attitude in this matter reflects gravely upon us. I think, too, that Mr. Casey, speaking on behalf of the Government, is afraid the issue can be settled.

Senator Hannan:

– On the honorable senator’s argument, the Indonesians could have a claim to Tasmania.

Senator O’BYRNE:

– It may well be that future generations - or even this generation - will see a challenge to sovereignty in respect of Antarctic regions. I do not know of anybody more capable than the United

Nations of determining the future of Antarctica. I consider that the Australian Government is very remiss in its attitude to the method of solving this problem suggested by Indonesia. Grave consequences could flow from the present situation.

Senator Gorton:

– If the matter were submitted to the United Nations, whom does the honorable senator suggest that Australia should support - the Dutch or the Indonesians? Are you afraid to answer that question?

Senator O’BYRNE:

– I am not afraid to answer the question. I would go into the debate with an open mind. This country should line up the history of United Nations’ trusts or League of Nations’ mandates alongside the consequences of Dutch imperialism and colonialism down the years, and if it appeared, on balance, that we should support Indonesia’s claim, I personally would support it - on all those conditions plus others. I have reverted to this aspect of the matter because Senator Gorton was not in the chamber when I said that I considered that his question to the Leader of the Opposition was in very poor taste. I could have been in error when I said that Senator Gorton was the vice-chairman of the Government’s Foreign Affairs Committee.

Senator Gorton:

– 1 used to be.

Senator O’BYRNE:

– I also said that the honorable senator had been the spokesman for the committee, and that his remarks showed how muddled and negative was the Government’s approach to the subject of Australia’s policy on external affairs. I believe that Senator Gorton drew a red herring across the trail to confuse the Leader of the Opposition in the hope that he would make an incorrect statement. I believe that that was purpose of the question. I am precluded by the Standing Orders, from imputing an ulterior motive to an honorable senator, but I should just like to say in passing that I have a fairly good idea that the honorable senator was fishing when he asked the question.

This matter has been brought to a head as a result of rumours concerning the likely development of a serious situation through this Government’s lack of a definite defence policy. When speaking about getting value for expenditure on defence, Mr. Duncan Sandys said that Great Britain was pruning back ruthlessly every element in its defence programme which was not giving value for money in terms of security. That is the basis of our criticism of the Australian Government’s defence policy. The Opposition believes that Australia is not getting value for the expenditure on defence. Mr. Sandys said that Britain would use its air force to protect its stockpile of thermonuclear weapons which, from Britain’s point of view, acted as a deterrent to thermonuclear and global war. Great Britain could be the point from which the West would repulse an attack from any other part of the world.

Mr. Sandys also stated that there was at present no effective means of protecting the populace against attack by nuclear weapons and that it was not right for the West to waste the people’s money pretending to do what was impossible. Senator McCallum mentioned civil defence against thermonuclear warfare, which is a matter on which this Government has failed to give the people any assurance. As Mr. Sandys has said, the Government has no right to waste the people’s money pretending to do what is impossible. I have another interesting comparison to make. The United Kingdom Minister for Defence, and the United States Defence Minister, one speaking on 17th October, and the other last July, have made significant statements. Mr. John Foster Dulles said -

We believe that it can be made difficult if not impossible for any nation to launch a massive surprise attack. If so, this would greatly reduce the danger of war because potential aggressors usually count on being able to deliver a surprise, knockout blow. We believe that it is possible to prevent a promiscuous spread of nuclear weapons throughout the world.

The Prime Minister has said that it is not the intention of the Government to make Australia a nuclear power. To all intents and purposes, we are a centre of experiment in the production of guided missiles and, probably, would be a target to be knocked out quickly by a potential enemy. We must face the fact that, if there is a nuclear war, it will come suddenly and end quickly. The retaliatory powers of both sides in a future war would be such that the conflict would be short-lived.

Our approach to defence must be reduced to these points: We must try continuously to bring about disarmament. We must try to find some common level of agreement between the nations. We must never cease to try to bridge the gap between rival ideologies which are tearing the world apart. To ensure the continuation of society as we know it to-day, we must apply all our efforts towards international disarmament. 1 am sure that not only the leaders of the United Kingdom and the United States of America, but also those who control the Soviet Union, are fully aware that unless there is co-existence, there will be no existence.

A thermo-nuclear war would not only destroy our great cities and our civilization but would devastate the fabric of the earth itself. That is accepted as the inevitable result of a thermo-nuclear global war yet, because of some cussedness and lack of understanding of the greater issues or, as Senator Cameron has reminded me, because of ignorance, many national leaders are so blind that they will not get down to hard facts. That is the state of affairs in the world to-day, although such great advances have been made in science that we have solved the problem of hard work by the use of various forms of/ power, and are in a position to raise the status of mankind in an era of prosperity.

Senator Grant:

– I rise to order, Mr. Acting Deputy President. What might be termed a committee meeting has been proceeding on the government benches for some time, and is interfering with the debate.

The ACTING DEPUTY PRESIDENT (Senator Pearson). - Order! There is certainly too much noise in the chamber. I ask honorable senators to refrain from audible conversation.

Senator O’BYRNE:

– The days of the old-fashioned diplomacy are coming to an end. Some nations have been able to keep half the world in subjection by hiding certain cards up their sleeves. Those days are ending. The infamy and perfidy of the leading nations which have held the balance of power- by wielding a big stick have been exposed. Education is spreading among the peoples of the world and they are asking why this state of affairs should continue when it could be altered by a little common sense and practical Christianity. The United Nations organization contains the seeds of international law, justice and brotherhood. All those great characteristics are to be found in Christianity also but neither of those forms of approach to world problems has been given a real trial. Because of the lack of sincerity in the application of those principles, we are floundering in a mire of ignorance and confusion. That confusion is reflected in the defence policy of this Government.

The present Government is still living in the days of Poonah and Bengal, but this is the era of inter-continental guided missiles, space satellites, thermo-nuclear’ power, atomic power stations, jet-propelled aircraft and all the scientific inventions which could uplift the status of mankind. The Leader of the Opposition has done a service to the nation by directing attention to the crying need for a more positive approach to defence and to our international obligations.

Unfortunately, this Government’s attitude to public affairs is conditioned by the fact that it has a majority in this Parliament, miserable though it be in this chamber. It is so complacent that it will not heed the plea that has gone out from this side of the chamber. The debate has given us an opportunity to express our opinions. We know that a vote sought from- this side of the House would be defeated, but constant dripping can wear away a stone, and we hope that ultimately we shall persuade the Government to listen to us.

Senator O’FLAHERTY:
South Australia

– The Senate is indebted to the Leader of the Opposition (Senator McKenna) for bringing the problem of the defence of Australia before the chamberHe has used some statements that were published in the “ Sydney Morning Herald “ on this important matter, and’ honorable senators have been given an opportunity, that was denied to them earlier by the use of the “ guillotine “, to express their opinion. Honorable senators on the Opposition’ side wanted to discuss many matters but were- prevented from doing so. Senator O’Byrne has referred, to- international affairs. I was impressed! particularly by some questions that were: directed to the Government by the Leader of the Opposition. He. said that the “ Sydney Morning Herald “ had criticized the policy of the Government, its ineptitude and inefficiency, and the chaotic state of our defence.

Senator McKenna:

asked the Government whether the statements made by that newspaper were true. Up to date, I have not heard any one, including the side-kicks who have risen from time to time, answer that question on behalf of the Government. The “ Sydney Morning Herald “ has only just awakened. I do not know what has happened between the Prime Minister and the proprietors of that newspaper, but apparently something has happened because it has taken off three or four days from slangwhanging the Opposition or Dr. Evatt to slang-whang the Prime Minister, and in doing so to couple him with the Minister for Defence (Sir Philip McBride).

In 1953, and. again in 1954* the Opposition directed attention to the muddle into which the defence departments were getting, and to the waste that was going on in those departments. No one seemed to take much notice of the attack. Apparently it was thought that we were dreaming,, that we had our heads in the clouds, and were doing it purely for the sake of offering criticism. I personally pointed out in 1953, in rela-tion to the Army, that, according to statistics that had been provided by the Minister who introduced the Appropriation Bill in that year, there were two privates for every three officers and that, if a batman were to be provided for each officer, the Army would be embarrassingly short of privates! I was told that I did not know what I was Balking about, that I did not understand the situation. But every year the Opposition has directed attention to the defence programme and to the enormous amount of waste.

We have directed attention many times to inefficiency within the defence departments. But no one took any notice of our criticism until the’ “ Sydney Morning Herald “ bobbed up with various statements. Then, I repeat, when’ Senator McKenna asked’ whether those statements were true, the Leader of the Government in this place (Senator O’sullivan) rose and in- an airyfairy way told us a nice’ little bedtime story but” did1 not answer the question. Senator Gorton, who has. taken- an extraordinary interest in foreign affairs and defence, told, us a nice little bedtime story too, but he did not answer the questions asked by Senator McKenna. Then Senator McCallum apologized and said that we could not blame the defence forces, because America had let us down. We still did not receive an answer to the question that was asked by Senator McKenna.

Then the Government’s expert extraordinary, Senator Spooner, entered the debate. What happened? We still did not receive an answer to Senator McKenna’s question. And we still have not got it! Instead, Government supporters have attacked Senator McKenna. Almost every honorable senator opposite who has spoken in this debate has said that the statements to which he directed attention were made by him.

Let us ascertain the facts without referring to what has been published by the “ Sydney Morning Herald’ “. It will be recalled that on 4th April, 1957, the Right Honorable R. G. Menzies made a statement on defence. I do not intend to read it now, But I wish to direct attention to the fact that he said that the Government intended to- re-organize its defence programme; to get some FN rifles, and to get some 105-mnr. weapons and the Lockheed FI 04 type aircraft because the Government intended to aline Australia with the United States df America. I challenge any one to say that the Prime Minister did not make that statement; it is in print for. us all to see. If any honorable senator says that the Prime Minister did not say that, then I say that he has not looked at the record of the Prime Minister’s speech as it was presented to this chamber.

At that time, the Opposition, in this? chamber and> in> another chamber, made a> bit of a song about the equipment that was to be used. Certain sections of the Australian press also took up the matter and’ made a- song about it. The next thing to happen was that Sir Philip- McBrid’e led a delegation to’ America to. inquire into the matter’. I arn not quarrelling over the fact that the delegation went to America’ or with its findings when it returned’. But’ Sir Philip went over there; wandered around the country; came back and presented; his report:. There: was s bit of & hullabaloo amongst. Government, supporters when- they discovered that Sir Philip reported adversely on some of the items of equipment that the Government intended to acquire. While he was there, Sir Philip discovered that it was not possible to obtain the supplies that the Prime Minister said we were to get from America. If honorable senators want any confirmation of my statement, let them read the second statement on defence by the Right Honorable R. G. Menzies, C.H., Q.C., M.P. He said-

  1. . the mission to the U.S. conducted by the Minister for Defence (Sir Philip McBride) has brought the production and/or procurement of the 105-mm. weapon materially nearer.

In his first statement, the Prime Minister said the Australian Army was going to use that weapon. In his September statement he said that its use was nearer. That gives what I might call the lie direct to the statement that the Government was re-organizing its defence programme to provide for the use of 105-mm. weapons. It was doing nothing of the kind. At the present time an American delegation is wandering around Australia to see whether it is worth while to supply this country with American weapons.

One thing that Sir Philip McBride’s delegation accomplished was to prove that the 105-mm. weapon was not available to Australia. Who was responsible in the first place for telling the Prime Minister that it was available and that it was to be used? I suppose that honorable members opposite know that in connexion with that weapon, and the FN rifle and its ammunition, the Australian delegation was told, according to American press reports, that it was not possible to supply those weapons to Australia until America had re-organized its own defence forces and had supplied them with those weapons. It is a good thing that Sir Philip McBride went over there.

Senator Grant:

– We are all right; we have the backing and filling station.

Senator O’FLAHERTY:

– Yes, we have the backing and filling station. Sir Philip McBride dealt with a number of other Army matters. They have been referred to from time to time by the Leader of the Opposition. 1 am particularly concerned with the Air Force. Away back in 1934-35, our party announced a policy for the defence of Australia, based on air power, but we were told that we had no real defence policy. Right up to 1941 we were twitted, in and out of season, by the “ Sydney Morning Herald “, among other newspapers, with having no defence policy. However, during the war it was proved that Labour’s policy, which was put into operation, was worth while. Now we are being twitted, because of our re-organization of the armed forces and civil industries at the end of the war, with leaving the country defenceless in 1949. The position was that the Air Force was virtually intact in 1949. It is not so to-day.

The Prime Minister, in his statement, said that the Government intended to aline Australia with the United States and to use the FI 04 Lockhead aircraft for the defence of Australia. When Sir Philip McBride went to America he found out that the Lockhead FI 04 was still in the experimental stages. Who was it in Australia who pumped into the Minister for Air, the Prime Minister and the Minister for Defence the belief that the FI 04 aircraft could be obtained for the defence of Australia? It must have been done by somebody who was very illinformed and the Ministers I have mentioned must have been very easily gulled. Any one of them could have obtained the necessary information direct from the United States Government, but that was not done. Instead, the Prime Minister stated that the FI 04 aircraft was to be used for the defence of Australia. He said that the FI 04 had been recommended on the strength of investigations made some time before. Those investigations must have been made before April, when he made his statement. In September he said -

These investigations had indicated that it would be the last word in speed, height, and manoeuvrability.

The Department of Defence and the Department of Air, apparently on the strength of investigations that had been made some time before, determined that the Avon Sabre jet, which had been manufactured in Australia, was out of date. What did the Government do? It did not actually scrap the plan to manufacture Sabre jet aircraft, but it curtailed their production considerably. For a long time, it has not placed any orders for these aircraft and production has virtually ceased. Who gave the Government the information that the FI 04 aeroplane was the last word in speed, height and manoeuvrability? Sir Philip McBride went to America, and on his return the Prime Minister said -

My colleague’s investigations were of immense value on these points.

He was referring, of course, to all the things the Government intended to obtain from America. He continued -

His American discussions took this problem out of the world of abstract perfection into the world of realism and accepted probabilities.

Just imagine that! Previously, apparently, the Government was dealing with all sorts of ideals up in the sky - with ideas put forward by some airy fairy chap who did not know anything about the subject but then Sir Philip McBride went to America and brought the problem back to realism and accepted probabilities. The Prime Minister went on -

He was able, by virtue of his office, to discuss these matters with those who make policy and determine the overriding strategic conceptions which are involved in American policy. He discovered that the operational employment of the FI 04 was still, to some extent, in the experimental stage, but that there were two factors in its proposed use which rendered it inappropriate for adoption by Australia.

The Prime Minister himself condemned the defence policy that he had announced in April, six months before, on the advice of some expert or other. I remind honorable senators that every service Minister has the right and obligation to make such necessary investigations himself. 1 am still anxious to learn the answers to the questions which Senator McKenna put to the Government. If Government supporters will provide them, they will doubtless be able to do something about them, instead of hiding behind abuse, preserving a state of chaos, further wasting the people’s money, and remaining unable to defend this country against an aggressor.

I raised this matter before, when we were sending troops to Malaya. Some one suggested that by doing this we were defending Australia. We were not. We were merely involving ourselves in international affairs. History surely proves that to send troops somewhere else is not to defend Australia. As recently as in the last war we sent our troops away, only to find that an aggressor was striking at us when we were absolutely defenceless. The Govern ment’s obligation is to defend this country against any possible aggressor - not busy itself sending troops away. 1 have not referred to Senator Spooner’* replies to our criticism. To give him his due, he used his right to speak and did not apply the gag. Neither the honorable senator nor any one else from the other side has answered Senator McKenna’s questions. Senator Spooner followed my colleague very closely, so those questions must surely have been fresh in his mind. The day after he spoke he was taken to task in an editorial of the Sydney “ Sun “, which read -

As an apologist for the Federal Government’s defence programme, Senator Spooner would be better silent.

Senator O’Byrne:

– That will be the day!

Senator O’FLAHERTY:

– I agree with Senator O’Byrne. Perhaps I might be pardoned for quoting further star items from this editorial, which Government supporters would be well advised to read. It continues -

He hasn’t the verbal acrobatics of the Prime Minister and is less able to stunt himself out of an impossible situation.

Senator Spooner would be well advised to remember that. The editorial goes on -

For £200,000,000 a year Australia is getting a defence policy which consists of a series of speeches, each cancelling the other out.

I have already pointed out that the Prime Minister’s speech of September cancelled out that of April. Senator Spooner has been equally guilty of cancelling himself out, and this fact has not been overlooked by the Sydney “ Sun “. I may say that I do not know whether the proprietors of this newspaper are affiliated with the proprietors of the “ Sydney Morning Herald “, but they are at one in their criticism of the Government’s defence policy. Perhaps I might read another star item -

When that policy is attacked, its defenders point with pride to the brilliance of the chief speechmaker - Mr. Menzies.

I am afraid that we shall have to replace Senator Spooner by the Prime Minister as he is apparently the only Government member who can talk us blind. The editorial continues - “ We are a fortunate nation indeed,” says Senator Spooner, “ in having a Prime Minister with such attributes.”

We would be a more fortunate nation still if we had a Prime Minister with a defence programme.

It’s true, as the senator says, that no democracy could provide continually the resources that would permit .instant mobilization.

It’s also true that to-day’s peculiar difficultly is to lay down a hard and fast programme when sudden and revolutionary changes are taking place in defence methods.

Of course it is impossible to lay down a programme when you change your mind every few months; when you get certain advice from overseas but, upon going there, find that your advice was faulty and that a certain plane is still in the experimental stage. The editorial said further -

But Senator Spooner does nothing to show what we have got for the £1,200,000,000 already spent.

The editorial certainly takes Senator Spooner to task. He cannot accuse Opposition members of doing it this time. Here we have a newspaper taking up the cudgels against the Government for its muddling defence effort -

And he certainly does nothing to explain away the unforgiveable delays, the financial blundering, the lack of knowledge and the spineless inaction which have -characterized this Government’s dithering attempt at defence since the war.

That is an awful indictment of the Government. If I were guilty of making it in this place I should doubtless be accused of unparliamentary language. It is made in a newspaper with a substantial circulation, and Senator Spooner is asked to explain the position and answer the questions which Senator McKenna has also asked him. I read further - “ I hope we will always be able to look at things soundly without being afraid to keep in step with the times,” he says.

Those are extraordinarily good sentiments!

The Government, he remarks, has acted cautiously and wisely in keeping its trust funds intact until its future plans become clearer.

We all remember what happened to the trust funds! Senator McKenna asked a question regarding them, and Senator Spooner got up in high dudgeon and condemned him for even suggesting that anything was wrong. This is what the editorial has to say -

The Government has acted so “ cautiously and wisely “ that its plans have remained forever in the future.

There is nothing concrete now. There may be at some time in the future, :if we are not exterminated in the meantime. I mentioned that article in the “ Sun “ to bring to the notice of the Minister for National Development just what that newspaper thought of his failure to answer Senator McKenna’s questions.

We debated the subject of defence last Wednesday. The next day, another article appeared in the “ Sydney Morning Herald “ and repeated some of the charges I have mentioned. I do not propose to read the whole article, but I do feel that I should read one or two extracts from it. For instance, it .says -

The Government -cannot exculpate itself by the typical “.dodge “ of trying to throw the responsibility on to the Chiefs-of-Staff. Nor is any one likely to be impressed by -the equally typical dark (hints about secrets known only to the inner circle.

We all remember the Minister’s statement that there are some things that -cannot be disclosed. Other honorable senators on the Government side adopted the same attitude. It seems that they all belong to a cloakanddagger brigade, that they must not say anything about these things, that certain matters must be kept -under the hat. The people of Australia are entitled to know everything about the Government’s defence policy, and they should be told everything about it. This is what the “ Sydney Morning Herald “ said after the Minister’s attempt to defend the Government’s actions -

To the people of .Australia the most baffling secret will be what the ‘Government has been doing with all its defence funds and plans when, after eight years, the country is still unready for even the most -limited of wars, and two battalions remain the maximum ground force that could be put and maintained in the field in an emergency, just as it was in the “ crisis year “ of 1953.

We remember that in 1953 we were told that we would :have only about three years of peace, and that then we would be taking up the cudgels with Russia, or some other nation. The years 1951, 1952 and 1953 were emergency years, according to the Government. The “Sydney Morning Herald “ draws attention to the fact that our defences are in exactly the same position now as they were then, despite the fact that the Government has spent nearly £1,000,000,000 since then. The article goes on to say -

The stark fact is that Australia is worse prepared for the military situations which it has to consider to-day than it was in 1938 for the situation which then had to be considered. It is this fact which makes dishonest nonsense-

I repeat that -

It is .this fact which makes dishonest nonsense of claims that we are “.better prepared than ever before in peace-time “. 1 hope Senator McCallum -reads this article because he seems to be of the opinion that we are prepared. The “ Sydney Morning Herald “ then prints this, in heavy black type-

The basic cause of the failure of the Menzies defence policy is not hard to diagnose. It is lack of firm direction at the top of the defence pyramid - lack .of direction from the Prime Minister and from the Defence Minister. lt goes on to say -

Mr. Menzies has worked on the familiar principle that a defence programme announced is a defence programme achieved.

We have been saying for seven years that all the Government has been doing is talking. One honorable senator on this side said that all we have had from the Prime Minister has been words, words, and still more words, and nothing has been achieved. The “ Sydney Morning Herald “ is now agreeing with that statement by pointing out that the Prime Minister has worked on the familiar principle that a defence programme announced is a defence programme achieved. The article then goes on to attack Sir Philip McBride by saying that he is a weak Minister. 1 am not concerned with that part of the article ‘because Sir Philip did prove himself when he went to America. After making inquiries there, he came back and proved that all the military experts and advisers in Australia were only dreaming, that they were not facing up to facts.

There are only two other extracts I should like to read from this article. One is -

The public may well be astonished that it has taken the Prime Minister no less than eight years to discover this need, which has existed for the whole -of his period of office.

It was referring to the need for coordination of the defence services. The “ Sydney Morning Herald “ makes that statement because the Prime Minister has now set up a committee to consider the most effective way of co-ordinating all branches of the (defence services.

We have reached the stage again where we ‘have more words, more promises for the future. It seems that the Government will follow its policy of “ something promised is something achieved “. Does it believe that the people of Australia will take its policy as something achieved? For too long the Government has been promising without achieving what it has promised, despite the fact that, as many honorable senators on this side have pointed out, it has spent something over £1,200,000,000.

The article in the “ Sydney Morning Herald “ mentions some of the things to which I have referred this afternoon. It mentions rifles, certain ammunition, transports and the Fl-04 Lockheed aircraft which Sir Philip McBride has told us is unsuitable and which he said was still in the experimental stages when he was in America. After mentioning these things, the “ Sydney Morning Herald “ states -

The list could be very much extended, but it is long enough to show that, although Mr. Menzies pledged himself in his 1949 policy speech to “ adequate national preparedness for defence to-day, eight years later, almost every major defence problem still remains to be solved.

The Government’s defence policy has failed. It has failed to ensure national security; it has failed to put Australia in a position to meet her treaty commitments; it has failed to reduce .the time for mobilization below six months; it has failed to build up an adequate logistics organization; above all, it has failed to win public confidence.

That is the “ Sydney Morning Herald’s “ latest comment. I now ask the Minister whether he can answer the questions asked by Senator McKenna. Will he admit that the statements made in the “ Sydney Morning Herald “ about the items that the Government proposed to procure, about the Government’s intention to co-ordinate the various branches of the defence services with America’s defence policy are correct? Will the Minister tell us on whose advice those statements were based in the first place? I am particularly concerned with the Lockheed F104 aircraft, because the Government has stopped the manufacture of the Avon Sabre aircraft, which is recognized as one of the best, if not the best, aircraft of its class in the world. The Government stopped the manufacture of the Avon ‘Sabre and dismissed thousands of men, because Australia was going to aline itself with America by equipping its Air Force with the FI 04 aircraft - an aircraft which was proved later by Sir Philip McBride to be only in the experimental stages. Who advised the Government? Was the Minister for Defence Production or the Minister for Air .advised? Did either of those Ministers attempt to find out i he position for himself, by undertaking a mission similar to that which was undertaken by Sir Philip McBride at the instance of the Prime Minister? On his return, Sir Philip McBride told the Prime Minister that the defence policy enunciated in April and again in September was a fairy tale, and that the Government was living in the clouds. There was no realism about its defence policy.

The Government was to equip the Air Force also with CI 30 transport aircraft, to achieve such mobility that our troops could quickly be shifted to any point of danger. But the Government will not get those aircraft soon. First, there was a difficulty about dollars. The International Bank said that the Government could not have any more dollars for the time being, because it had had enough already. Sir Philip McBride made some arrangements to finance the purchase of these transport aircraft, but we cannot get them until 1958 or 1959, although we were told in April that we were to have them. We were told that we would aline ourselves with America by equipping our forces with these transport aircraft, but now the Government cannot get them, even with the assistance of such an able man as Sir Philip McBride, who went to America and used his charm. It is not a rhetorical charm, such as is possessed by the Prime Minister, but the charm of a man amongst men. He made some arrangements about finance, which the Prime Minister probably thought had already been arranged. The provision of these transport aircraft has been brought a little nearer to the stage of probability. Probably we will have them in 1958 or 1959, after the American mission has been here and settled whether it would be worthwhile for America to stand behind this Government, which has shown such ineptitude in connexion with defence, particularly the aerial defence of Australia.

Question resolved in the affirmative.

Bill read a first time.

Second Reading

Senator SPOONER:
New South WalesMinister for National Development · LP

– I move -

That the bill be now read a second time.

By this bill, it is proposed to declare the rates at which tax shall be payable by individuals and companies for the current financial year, 1957-58. So far as individual taxpayers are concerned, it is proposed to re-enact for this financial year, the rates which were operative last year. It should be borne in mind, however, that taxation relief is being provided for those with family responsibilities by reason of the increased dependants’ allowances proposed by the amending assessment bill. In addition, provision is made in this bill for the extension of the exemptions from tax which apply to persons of pensionable age.

Since special income tax provisions for aged persons were first introduced by this Government in 1951, the exemption levels for persons of pensionable age have not been lower than the total of the age pension and the maximum permissible income of age pensioners. As a result of the 7s. 6d. per week age pension increase, a single age pensioner may now receive an annual pension of £227 10s. and other income of £182, making a total of £409 10s. The corresponding figures for married couples are combined age pension of £455 and other income of £364, or a total of £819. To accord with these increases, the bill provides that a single person of pensionable age will not be liable to tax unless his net income exceeds £410, while married taxpayers of pensionable age will not be liable to tax unless the combined incomes of husband and wife exceed £819. As in the past, marginal relief will be provided for taxpayers with incomes moderately in excess of the exemption limits. For a single taxpayer of pensionable age a reduced amount of tax will be payable until normal rates of tax are reached at an income of £460 and in the case of a married taxpayer contributing to the maintenance of his spouse, a reduced amount of tax will be payable up to an income of £1,106. The cost of revenue of extending these exemption limits is estimated at £450,000 for a full year and £250,000 in 1957-58.

A reduction of 6d. in the £1 in the company rates of tax is proposed. Resident public companies will thus be required to pay 6s. 6d. in the £1 on the first £5,000 of taxable income and 7s. 6d. in the £1 on the balance, compared with 7s. in the £1 and 8s. in the £1 respectively for the financial year 1956-57. Private companies which for the 1956-57 financial year paid 5s. in the £1 on the first £5,000 of taxable income and 7s. in the £1 on the balance, will pay 4s. 6d. in the £1 and 6s. 6d. in the £1 respectively in 1957-58.

The various rates at which tax is payable by non-resident public companies, life assurance companies, co-operative companies and non-profit companies, other than friendly society dispensaries, will similarly be reduced by 6d. in the £1. Friendly society dispensaries paid tax for the 1956-57 financial year at the same rates as other non-profit companies, namely 6s. in the £1 on the first £5,000 of taxable income and 8s. in the £1 on the balance. For 1957-58, a fiat rate of tax of 5s. 6d. in the £1. is proposed. This reduced rate is to be applied as it is recognized that one dispensary sometimes serves the requirements of members of several friendly societies. If each society conducted its own dispensary a taxable income in excess of £5,000 would seldom be derived.

As in the past, non-profit companies will not be liable to tax unless the net income exceeds £104. Similarly, provision is again made for a reduced amount of tax to be payable on taxable incomes slightly in excess of £104. This is achieved by limiting the tax and contribution to one-half of the excess of the taxable income over £104. Under this provision, reduced amounts of tax will be payable on taxable incomes up to £231, beyond which amount the normal taxes will be payable.

No change is proposed in the rate of tax payable on the undistributed income of private companies. This rate has remained constant at 10s. in the £1 since the financial year 1952-53, when the present system ot private company taxation was introduced. The cost of the proposed reductions in company rates has been estimated to bc £14,500,000 in a full year and £13,000,000 in 1957-58. I commend the bill to honorable senators.

Senator O’FLAHERTY:
South Australia

– The Minister for National Development (Senator Spooner) has stated that the rates of taxation on individual taxpayers for this financial year will be the same as they were last year. That does not impress me. The rates have not been changed over the last three or four years. The Minister also stated -

It should be borne in mind, however, that taxation relief is being provided for those with family responsibilities by reason of the increased dependants’ allowances proposed by the amending assessment bill.

How very kind of the Government! The Minister sought to create the impression - as he did also when the assessment bill was before the chamber - that additional concessional deductions were being introduced. He said very little, really, about individual taxpayers. In point of fact, the bill practically ignores them. Their assessments will be worked out on the basis of the rates prescribed.

There is to be some alleviation of the taxation of aged persons. As a result of the recent increase of 7s. 6d. a week in the age pension, the exemption level for persons of pensionable age is to be increased accordingly. The Government is not giving the aged people anything special; this is merely a consequential amendment. Of course, the Minister made a song about this provision. He stated that a single person of pensionable age will not be liable to tax unless his net income exceeds £410, anc! that married taxpayers of pensionable age will not be liable to tax unless the combined incomes of husband and wife exceed £819. Even here, the Government is pinching a quid, because twice £410 is £820. From memory, I think the tax payable by married taxpayers of pensionable age on the combined incomes of husband and wife in excess of £819 is calculated on the basis of nine-twentieths of the amount received.

I should like to direct the attention of the Minister to the fact that there appears to be no specific method for arriving at the assessable income of an age pensioner. I have looked through the bill but could not find any reference to this matter. Apparently, the gross income of an age pensioner is his taxable income. I think that pensioners are as much entitled to deductions as anybody else, in order to arrive at the taxable income.

Senator McKenna:

– Assessable income.

Senator O’FLAHERTY:

– According to the information I have received on the subject, an age pensioner is not allowed any deductions, and therefore his taxable income is his gross income.. Of course, there could be some little concession that I do not happen to know about, whereby age pensioners are allowed certain deductions, enjoyed by other individual taxpayers.

The Minister then dealt with company taxation. He said -

A reduction of 6d. in the £1 in the company rates of tax is proposed’. Resident public companies will, thus be required to pay 6s. 6d. in the £1 on the first £5,000 of- taxable income and 7s. 6d. in the £1 on the balance . . . 1 seem to recall that we put that extra bob on only last year. The new rates compare with 7s. in the £1 and 8s. in the £1 respectively in 1956-57. It seems to me that we increased the rate by a bob last year, and although the companies were liable to pay tax at the higher rate they did not actually do so. I think the Treasurer (Sir Arthur Fadden) stated that the new rate would be applicable to last year’s’ taxes, but the Minister said that the new rate would apply fo this year. It is proposed to reduce the rate by 6d. in the £1. The Minister enumerated the various kinds of companies and stated that although’ different rates applied to nonresident public companies, life assurance companies, co-operative companies and non-profit companies, other than friendly societies dispensaries, they would all be reduced by 6d’. in the £1. If appears that friendly societies will now be taxed at a flat rate of 5s. 6d. in the £1. I do not think that friendly societies should be taxed at all. How they got into the taxation field, I am bothered if I know, because they are purely co-operative concerns. Some, of course, sell medicine to persons other than their members.

Sitting suspended from 5.45 to 8 p.m.

Senator O’FLAHERTY:

– When the sitting was suspended, I was referring to the rates of tax that are paid by companies. I had pointed out that a reduction in the rate of company tax by 6d. in the £1 was of real benefit to companies, but that no similar reduction was provided for individuals. Perhaps I shall revert to that matter later. I wish to direct the attention of honorable senators now to clause 4 of the bill, which incorporates in the measure the provisions of the Income Tax and Social Services Contribution- Assessment Act. With your concurrence; Mr. President, I shall refer to assessments separately from the provisions of this measure, bat the two matters are related by the provisions of the’ relevant measures.

Income tax is a very significant form of taxation because the Government collects by way of income tax an amount equivalent to 12i per cent.- of the value of national production. That is a very big slice of our earnings. The rates of income tax are set on a progressive scale. A person with an assessable income of £100 pays income tax at the rate of Id. in the £1, or a total of 8s. 8d. a year. However, the legislation provides that the minimum amount payable by way of income tax is l’Os., so that a person with an assessable income of £100 is. virtually fined ls. 4d. Under the progressive scale, a person with an assessable income of £150 pays income tax at the rate of 3’d. in the £1’.

The last available report of the- Com–, missioned of Taxation shows that 33,920 persons’ we’re assessed on an income of £104. Each one of them had to find the ls. 4d. extra I have mentioned. Those in receipt of taxable incomes of £300, whether they number 10,000 or 16,000, have’ to pay by way of income- tax £7 18s. 4d. I believe that the exemption from income tax should be raised from £104 to £300. I know that that would cost a fair amount of money, but if all those With incomes between £104 and £300 were exempt, the impost on all other individuals necessary to’ recoup the loss would not be Id. in the £1 extra. I think that the minimum of £104 is too low and that £300 is low enough for the minimum income on which income tax should be payable.

Then the matter, of dependants arises. The Government proposes to raise the tax concession for a dependent! wife from £130 to £143. That is not quite sufficient to* equal the effect of the exemption of incomes below £300. A man- on £600 with a dependent wife would not pay any income tax at all if the exemption were raised to- £300 for each person. The granting of such a concession would cost less than a halfpenny in the £1 spread over all other taxable incomes. There is no social service con–’ tribution now, and the: additional impost would not amount to much. After all, an income of £300 is equivalent only to £6 a week. I would like to see the exemption’ raised to cover incomes of £300, with suitable adjustments so that a man with a dependent wife on an income of £600 would not have to pay income tax at all.

We often hear it said that a person in the higher income groups pays 12s. 6d. or 13s. 6d. in the £1 by way of income tax. That is only partly true. If a man with a taxable income of £10,000 had to pay income tax at the rate of 12s. 6d. in the £1, he would pay £6,250, but he does not pay that amount of tax. The fact is that he pays only £4,817 18s. 4d. because the progressive scale applies to all incomes up to £10,000. The same principle applies to a person who claims that he pays 13s. 4d. in the £1. That rate of income tax does not apply until an income has been assessed at more than £16,000.

The gross income of a man assessed at £16,000 is actually considerably more. A man receiving an assessable income of £16,001 would pay £10,667 6s. 8d. if he were charged at the rate of 13s. 4d. in the £1 but, in fact, he pays only £8,417 18s. 4d. He pays at the rate of 13s. 4d. in the £1 on £1 only. I mention those matters because it has been stated time and time again that certain people are paying 13s. 4d. in the £1 with a view to leading others lo believe that they are paying that rate on the whole of their assessable income. To raise the exemption from £104 to £300, the cost of which could be recouped by raising that rate of tax by Id. in the £1, would not make much difference to the class of people to whom I have just referred.

Now I come to the position of companies. The rate of company tax is to be reduced by 6d. in the £1. That reduction will mean, according to figures contained in the last report of the Commissioner of Taxation, that 1,193 public companies with a taxable income of more than £50,000 will receive more than £8,169,000 of a total concession of £14,000,000. In addition, 4,299 public companies with an assessable income of less than £50,000 will receive a total benefit of £1,083,000. Those figures indicate that a minority of .the companies will receive the major part of the total benefit.

Then, 495 private companies having a taxable income of more than £50,000 will receive £1,322,278. As against that, 19,521 private companies with a taxable income pf Jess than £50,000 will receive £2,591,000. lt will be noted that 495 private companies with a taxable income of more than £50,000 will receive approximately half as much as will be received by 19,521 private companies with a taxable income of less than £50,000. If we average the benefit that will be received - a method that is employed by Government supporters now and again - we note that each company will enjoy a reduction of £127 in its income tax payment next year. The Government makes a song of the way in which it helps the family man, but the figures I have quoted show that public companies will receive approximately £9,250,000 of the total tax benefit in the first full year.

If we consider the increase of depreciation allowances under the diminishing value method, we find that in a full year 1,688 companies with a taxable income of more than £50,000, of which 1,193 are public companies, will receive a dividend of £17,900,000 from a total estimated benefit of £26,000,000. If any honorable senator opposite rises and says that the Government is helping the family man, he will be talking with his tongue in his cheek. The Government is not helping the family man; it is helping the big companies of Australia. It is those companies that will receive the benefit of the reduction of company tax and an increase of 50 per cent, in depreciation allowances. The remaining benefit of approximately £8,000,000 from the increase of depreciation allowances will be divided between 18,328 other companies, according to the figures as at 30th June, 1954, which are the latest figures available. It will be noted that the big public companies will receive twice as much as will be received by nearly ten times as many small companies.

Senator McCallum:

– But the family man can buy a 5s. share.

Senator Maher:

– And he does.

Senator O’FLAHERTY:

– Every one of you on that side of the chamber, having been nicely trained to do so, will rise and tell us that the Government has presented a family Budget and that taxation concessions will help the family man. But you cannot get away from those figures. I have applied figures produced by the Commissioner of Taxation to the sum that the Treasurer has told us is to be made available as a tax concession under this bill.

The reduction of company tax by 6d. in the £1 helps the smaller companies to some degree, but the main benefit will be enjoyed by the larger companies. The new rate of company tax, together with the new provisions for depreciation allowance, represents a gift to companies - very few individuals come into this matter - of £40,900,000 in a full year. Then Government supporters tell us that they are concerned about the family man! As I have said, there are 1,688 companies with a taxable income of over £50,000 a year. Of this £40,900,000, those companies will receive £27,391,000. I do not know whether the Government regards that as a concession to the family man. Concessions are being granted only to the big fellows, those right at the top of the tree. If we work out the figures, we shall find that most of the benefit derived from the new depreciation allowance provisions and the reduction of company tax will be enjoyed by only 226 companies, I think.

Contrast the concessions given to com-‘ panies with those given to individual taxpayers. The total value of the concessions to individual taxpayers has been estimated to be £9,032,000 a year. The value of the increased allowances for dependants has been estimated at £8,425,000, the concessions for aged persons at £450,000 and the new gift duty concessions at £157,000. That total of £9,032,000 will be divided amongst over 3.500,000 taxpayers. The Government gives a paltry concession of £9,000,000 to individual taxpayers and then says that it is helping the family man. By the reduction of company tax and the new depreciation allowance provisions, about 1,600 companies will enjoy a benefit worth £27,000,000) a year, but 3,500,000 taxpayers are given concessions worth only £9,000,000. That is preposterous. The ordinary people should have been given concessions of some real worth, but instead, the biggest concessions are given to the big companies. That is the policy of this Government, and I am drawing attention to it. The Government makes a huge gift to a few companies and then makes a great song and dance about giving a paltry, mean concession to the individual family man.

We find that in 1954 about 3,500,000 taxpayers paid £319,100,000 in income tax and that last year approximately the same number paid £403,727,000. This year,, despite these concessions, approximately the same number of taxpayers will pay £465,050,000. So income taxation has been increased each year. According tothe Treasurer’s figures, this year the Government expects to collect an additional- £61,000,000 in income tax, not from companies, but from individual taxpayers. Theincreased collections this year would havebeen £75,000,000, but some concessionshave been made. The Government estimates that it will collect from the taxpayers in income tax £61,000,000 more this year than last year, yet it says that income taxis being reduced. Income tax is not being: reduced. The rates are maintained at the same level. How can there be a reduction’ if the rates are the same as before? Certainly, the Government has made someconcessions, but total collections will begreater than previously. About £61,000,000-‘ more will be collected in income tax fromindividuals this year than last year, but theGovernment expects to get from companies this year only an additional £6,000,000. Next year, collections of company tax may fall because the reduced rates of tax and the new depreciation allowance provisions will have’ been in operation for a full year.

How can the Government say that it ishelping the family man when it proposes to collect £129,000,000 in sales tax and £305,000,000 in customs and excise duties? Except in a few specific cases - such as luxury goods - these taxes are borne by the working man with a family. They are provided by the 3,500,000 taxpayers, and the further 500,000 individuals who are not taxpayers. The wage and salary earner is slugged every day, and in every way. This Government seems to specialize in putting taxes on the small man and taking them off the big fellow.

In the Budget certain minor concessions are given to the family man. A man with a wife and two kiddies will receive a tax concession of about £7 5s. annually, but he will have to pay more than that out if he is to receive the new hospital benefits. If he is receiving a taxable income of £600 a year the budgetary concession will give him a reduction in tax of 2s. Id. a week. However, he will have to pay out 3s. a week to get the extra cover that he needs in the way of hospital benefits. A man with a taxable income of £900 a year will save 2s. 7d. a week, but will also have to pay out 3s. a week to get the greater hospital coverage promised by the Government. On the one hand the Government is giving him a concession, and on the other it is telling him that he will have to pay more than that out to a private concern in order to get a still further concession.

Originally, this legislation provided for the payment of a social services contribution. Indeed, the words “ social services contribution “ still appear in the title. In fact, no social services contribution is made. The Government wiped that out and said that social services would be provided for out of income tax. It also promised that an adjustment would be made. A slight reduction was made, but the Government has made certain that an even greater sum has to be paid out to some private concern with which it has no financial association whatever. The Government is saying, “ If you want what you had before - or, rather something not quite so good - you must pay out to a private association more than the concession that we have granted you “.

The family man is not given a chance. Originally, he had only to make his contribution towards social services. That was subsequently included in the general income tax. The maximum amount of medical benefits may be derived only by the payment of £7 10s. a year. In the case of the hospital benefit the appropriate payment is £9 12s. a year. Therefore, in addition to income tax, one now has to pay £17 2s. a year in order to get normal medical and hospital benefits. I am, of course, referring to the man with a wife and two or more children. The additional concessional deduction of £13 for each child, and £13 for the wife means, for the man on £600, a tax reduction of 2s. Id. a week. For the man on £900 it results in a saving of 2s. 7d. a week. However, as I have pointed out, a man must pay out 3s. a week in order to receive normal medical or hospital benefits for his family.

Perhaps we might have a further look at the concessions which the Government has granted in the Budget. Income tax rates are the same this year as last year. A man who previously had a taxable income of £939 paid £94 lis. 2d. in tax. Of course now every one pays to the nearest ls. The new concessions would reduce his assessable income by £39. On £900 he will pay this year £87 18s., or £7 9s. 6d. less than he paid last year. As I have already pointed out, he must pay out more than this to receive normal medical benefits. The man, with a wife and two kiddies, on £600 a year is worse off. Last year he would have paid £45 2s. 2d. tax. He is, in reality, receiving less than the basic wage. The increased concessional allowance - £39 for his wife and two children - will result in his paying this year £39 lis. 8d., or £5 10s. 6d. less than last year. He is assessed at the same rate, namely, 34d, in the £1. He saves approximately 2s. Hd. a week, or less than 5d. a day in taxation, but before he becomes eligible for that reduction he must spend more than that in extra premiums to a hospital benefits scheme. If he wishes to take advantage of the concessions proposed by the Government under this bill, he will find that, in fact he will be 10id. a week worse off this year than he was last year. Yet, honorable senators on the Government side have the audacity to say that taxation is being reduced for the family man! 1 come now to the question of depreciation. I shall not attempt to explain its intricacies; I shall refer paricularly to the application of the proposed new principle. The memorandum issued by the Treasury contains a full explanation of how depreciation is to be assessed under the new proposal. At the present time there is in existence what is known as the diminishing value method of assessing depreciation. There is also the prime cost method. This applies in respect of primary production to a greater degree than in any other industry. A new category is now to be added. It applies to the disposal of assets. Under this heading, we have what is known as the principle of taxation of depreciation balancing adjustments. It will now be possible for a taxpayer to sell assets and still claim depreciation benefits whereas previously this could be done only in the case of assets lost or destroyed. For instance, there is now a provision covering the loss or destruction of stock through such causes as fire. In those cases, any moneys received by way of insurance payment may be offset against depreciation, but under that system the benefit is limited to five years. That applies mainly to primary production. But to the big companies, these friends of the Government to which the Government is continually giving something and which the Government is always helping out of some difficulty, an increase of 50 per cent, in the depreciation rates is to be applied to what is known as the diminishing value method.

Under this method, the provision is not to be limited to loss or destruction of assets. The taxpayer - in the main the big company - may dispose of an asset and any surplus over the depreciated value of the asset may be utilized to reduce the value of other assets.

I wonder whether the Minister realizes that no time limit is set in this proposal under which assets may be disposed of at a huge profit, the excess above the depreciated value being used to reduce the value of other assets the taxpayer may have. Putting it as simply as I can, I point out that the effect of this proposal is that a taxpayer may dispose of an asset at a huge profit and, because there is no time limit within which the excess must be transferred to the depreciation of another asset, the taxpayer will pay no income tax on that profit. That is an extraordinary position. It is a departure from all accepted methods of taking income into account for taxation purposes. I know that the whole matter is complex and technical, but the effect of the new proposal is that without any time limit for the transfer of profit from the sale of a depreciated asset to another asset, it will be possible to evade payment of taxation for many years. I foresee some great arguments in the near future between the Commissioner of Taxation and some of these companies which will use the provisions contained in this bill for the purpose of collaring the profits they would make on the sale of assets.

Actually, the Government is bestowing benefit upon a few taxpayers - companies, in the main - who happen to be in the fortunate position of owning assets which can absorb the profit from the sale of another depreciated asset. This, in effect, is providing a selective allowance for given taxpayers in particular circumstances. Actually, the benefit will go to the favoured few, to the big companies.

Many royal commissions have been held into taxation in Great Britain. The latest one presented’ its report to the Parliament in 1955. That commission, known as the Royal Commission on the Taxation of Profits and Income, considered that the transferring of profit made from the sale of a depreciated asset was wrong. It favoured the inclusion of that profit in the net income of the taxpayer, and it protested against a suggestion for the adoption of the system that is to be adopted there. In paragraph 391 of its report, at page 121, the royal commission- said -

It would be better expressed by a general rule that realized; surpluses on the sale of assets for which the tax system provided capital allowances should be charged to tax.

That royal commission dealt with many other points in. connexion with taxation. It examined the whole field, as honorable senators will see if they care to peruse its report. The alteration of the depreciation allowance provisions will make a gift to the big companies. It will not help the primary producers, as they already have the benefit of a provision in relation to depreciation. There will be a gift of £26,000,000 to a few private companies, as against a miserable, paltry concession of £3,500,000 to individual taxpayers generally.

Some few comments will need to be made in connexion with the assessment bill, but I have tried to combine my remarks to cover both bills, with the object of saving discussion later on. We do not oppose this bill, but we shall propose some amendments to the assessment bill.

Senator ASHLEY:
New South Wales

.. - I want to deal with the method of tax collection, and I should like the Minister for National Development (Senator Spooner) to give some clarification of it. I stand to be corrected, but I believe that huge surpluses have been accruing from the collection of social services contributions and pay-roll tax. It will be remembered that a social services contribution tax was imposed in 1946, and according to records, to the end of 1953 there was a surplus of £186,836,000 in the National Welfare Fund, into which the proceeds of the social services contribution tax and the pay-roll tax were paid. In 1950-51, the Government merged collections from the social services contribution tax with collections from income tax. In 1949-50; which is the last year during which the collections’ were kept separate;, social! services contribution tax collections amounted to £100,560,000, and income tax collections to £95,416,000.

The Commonwealth “ Year-Book “ discloses the amounts collected’ from 1948 to 1953. lt shows the amounts contributed from. Consolidated Revenue to the National Welfare Fund, the expenditure, and the balance at the end: of every year. At the end of 1952-53 there was a balance of £186,8-36,000 in the- National Welfare Fund: That fund was established from collections under the social services contribution fax, to provide finance for social services and a national health scheme. The pay-roll tax was imposed’ in 1941 to provide portion of the finance necessary for child endowment:

In 1953-54, £394,000,000 was collected in combined social services contribution tax and income tax. On the basis of collections in 1949-50, approximately £200,000,000 of that amount would be accounted for by social services contribution. In the same year £40,000,000 was collected in pay-roll tax, so that a total of £240,000*000 was collected in pay-roll tax and! social services contribution, estimated on the basis of collections for 1949-50. An amount of £177,000,000 was expended in 1953-54, so there was a surplus of £63,000,000.

In 1954-55, an amount of £361,000,000 was collected in income tax’ and social services contribution. Calculated on the same basis, social services contribution would have amounted to £183,000,000 of that sum. Pay-roll tax returned £41,000,000, making a total of £224,000,000. There was an expenditure of £189,000,000 on social services, which left a balance of £35,000,000’.

In 1955-56 the amalgamated tax yielded £387,000,000. Social services contribution, calculated on the same basis, would have amounted to £200,000,000. Pay-roll tax returned’ £45,000,000, making a total of £245,000,000. The expenditure on social services was £214,000,000, leaving a surplus of £31,000,000. The total surplus tax collected1 for social services- was therefore £315,000,000 to the end of 1956. I, and I think the taxpayers too, would like to know how this surplus has been used I shall be corrected, I am sure, if this statement is wrong: This surplus revenue, derived from the pay-roll tax and from the. social services contribution, has been used to finance loans to the States, which are required to pay interest at rates ranging’ from 3£ per cent, to 5 per cent. The matters that I have raised call for explanation.

I referred earlier to a table on page 516 of the “Year-Book” for 1955. In the following paragraph, it is stated that £98,000,000 had been paid into consolidated revenue to provide finance for the States. I believe that the Constitution provides that surplus revenue shall be made available to the States. I should like to know whether manipulation has taken place and the money, instead of being provided to the States, has been placed in certain reserve funds, particularly the National Debt Sinking Fund. Have surpluses been paid into that fundand utilized, to provide loans to the States? I challenge the Minister to deny that, during the last two years, some of this surplus money has been provided to the States for housing purposes and that the States are paying this Government 4 per cent, interest on it. I based the figures that I have quoted to-night on the previous year’s calculations. I did not work them out to the last £1, but stated the approximate amounts. I should not think there would be any great variation from the figures I have quoted. I shall be obliged if the Minister will explain what has become of these surpluses.

Senator SPOONER:
Minister for ‘National Development · New South Wales · LP

– in reply - I shall reply first to the latter part of Senator Ashley’s remarks. He acknowledged, during his speech, that the basis for financing social services was changed in 1950-51. As can be seen from this year’s Budget papers, an amount has been paid into the National Welfare Fund each year sufficient to meet expected commitments. Last year, the expenditure from the fund totalled £223,900,000. This year, it is expected that £243,500,000 will be expended, or £19,600,000 more than last year. If I understood Senator Ashley correctly, he relied on a series of estimates and computations which assumed a con:tinuance of the old system.

Senator Ashley:

– Why does not the Minister clarify the position in relation to the amount of £186,000,000?

Senator SPOONER:

– Over the years, the amount in the trust account would increase. 1 say, with respect, that that is an entirely suppositious approach to the matter.

Senator Ashley:

– Tell me what the Government has done with the £186,000,000.

Senator SPOONER:

– Does the honorable senator mean that he does not want me to continue my answer. He put up an aunt sally, and now that I am bowling it over he does not want me to proceed. There can surely be no foundation for argument in an entirely new set of figures going back over a period of six years, showing the position that would have developed had we continued on the old basis. Any one of a dozen things might have happened. We might have changed the rate of tax, or the rate of benefits. What we have done each year has been to appropriate from revenue amounts needed to meet commitments under the Social Services Act.

Senator Ashley:

– What about the £186,000,000?

Senator SPOONER:

– I can easily settle the honorable senator’s doubts on that score. If he turns to page 21 of the Budget papers he will see that there was a credit balance of £193,100,000 in the National Welfare Fund at the end of 1956-57. I assure Senator Ashley that that balance is in exactly the same form as was the balance that the Chifley Government bequeathed to us when we came into office. The money had been spent by the Chifley Government and treasury-bills issued. The amount of money indicated by the credit balance in the trust fund at the time of the change of government was not available to pay for social services.

Senator Ashley:

– What became of the £186,000,000 that was in the fund in 1953?

Senator SPOONER:

– I have just explained what became of it. Senator Benn’s speech ranged over a wide field, and it indicated that he had done a great deal of research. It is not an easy speech to answer because, again, many individual computations were used and the figures were re-arranged to support various contentions. It is difficult to retain in one’s head a new set of figures to show a certain position when one already has in his head another set of figures revealing the same information.

Senator O’Flaherty stated, in effect, that the re-arragement of the depreciation provisions would be a great boon to big companies, that it would give them a big cash concession. Of course, the proposed increase of the depreciation allowance will not produce that result. Irrespective of the rate of depreciation, obviously the value of an asset cannot be depreciated beyond 100 per cent. For instance, if a motor car, or an item of machinery costs £1,000, the total amount of depreciation that is allowed on the item over a period of years cannot exceed £1,000. The biggest advantage from the increased depreciation allowance will be the change in the period in which the full value of an asset can be written off. In other words, the owner of the item will get the full advantage of the depreciation allowance earlier than formerly. He will not get it twice. If he gets it this year, he will not get it next year. In the opinion of the committee of experts, the purpose of the depreciation arrangement is to make a more equitable provision to allow companies to charge depreciation earlier in the life of the asset. The asset is then more efficient, by and large, than it is in later years. Therefore, it is more equitable to make the charge when the plant is operating more effectively-.

There is no point in saying that this provision is a boon to the big companies. Obviously, those who have the largest investments in plant will always get the larger amount of depreciation. The point is that if a business on one corner has plant valued at £1,000, it will get the benefit of depreciation on £1,000 invested. If the business on the next corner has £10,000 invested in plant, it will receive depreciation on £10,000. For the life of me, I cannot understand why Senator O’Flaherty should make an invidious comparison against the business that has plant valued at £10,000 simply because it gets a larger amount of depreciation allowance. The business writes its asset off over the period.

If you go beyond the value of the asset and follow it through to a conclusion from the point of view of income tax, there would be a concrete advantage instead of merely a re-shifting in the incidence of the tax. The business which has plant valued at £10,000 probably has a greater number of shareholders than the business with the smaller investment. Therefore, the distribution is spread over a greater area. I notice that Senator O’Flaherty is scratching his head over that proposition. I have not the figures readily available, but I remember that a year or two ago, I cited some figures concerning the number of shareholders in and employees of Australian companies. Research had revealed that shares in large companies are held, by and large, over a very wide area of Australian citizens.

I want to tilt a lance with the honorable senator about his criticism or disparagement of the Government’s claim that in this year’s Budget, as in other budgets, we have made tax concessions for persons with families. I have some information on that point, and I believe it is worth citing because we not only have reduced the rates of tax but also have extended quite materially the range and variety of concessional allowances for dependants and for medical expenses, education and other charges. The weight of income tax on those with families has been reduced and concessional allowances to which they are entitled have been increased.

I wish to submit to the Senate some factual comparisons. I can see no fallacy in presenting them. Under the proposed rates of tax for this year, a man with a dependent wife and two children under sixteen years of age may earn up to £17 4s. a week before he will pay more by way of income tax than he will receive in child endowment. In 1949-50, the same taxpayer would have paid £48 ls. more in income tax than he received in child endowment. If the same taxpayer had been entitled also to an allowance for educational expenses, and assuming that he spent £100 a year on the education of each child, he could have earned income up to £21 ls. a week before his income tax liability exceeded the amount he received in child endowment.

Senator O’Flaherty:

– That conveys nothing.

Senator SPOONER:

– It is a good cash basis for comparison. A taxpayer with a wife and two children in those circumstances would receive more in child endowment than he would pay in income tax on an income up to £21 ls. a week.

Senator Cooke:

– If a man on the same income had a large family, say, five or six children, the concessions for his wife and children would not operate because he would have cut out his concessions under the old basis.

Senator SPOONER:

– If he had a larger family, he would pay less income tax and receive more child endowment. Another test is to compare the family man’s tax liability with that of an unmarried person. In 1949-50, a taxpayer with a dependent wife and two children and earning an income of £800 a year, was called upon to pay 65.6 per cent, of the tax payable by a single person. In 1957-58 he will pay only 39.1 per cent, of the tax payable by an unmarried man. Whether or not Senator O’Flaherty agrees that those figures have a bearing on my argument, they must establish to the satisfaction of those who approach the matter reasonably that one of our principal objectives as a Government in our fiscal policy has been to put the young couple with a young family upon as good a taxation basis as is practicable.

Question resolved in the affirmative.

Bill read a second time, and reported from committee without requests or debate; report adopted.

Third Reading

Motion (by Senator Spooner) proposed -

That the bill be now read a third time.

Senator ASHLEY:
New South Wales

– During the second-reading stage I made certain statements in regard to surplus revenues and collections for the purpose of providing social service benefits. In 1950-51, the Government merged social service collections with income tax collections. The Commonwealth “ Year-Book “ for 1955 shows, at page 616 that the National Welfare Fund, into which were paid the social service and income tax collections, stood at approximately £186,000,000 at the end of 1952-53. I have asked the Minister for National Development (Senator Spooner) to tell me how that surplus revenue has been used. I presume it has been used for making loans to the States. As a matter of fact, a notation after the table to which I have just referred shows that surplus revenue amounting to £98,500,000 had been paid into the National Debt Sinking Fund to provide finance for the States. 1 have also stated that for 1949-50, the last full year of separate collections of :social service contribution and income tax, there was an additional amount of surplus revenue. The Minister has more or less ignored my question by saying that this was merely an assumption on my part. I think I should be furnished with the information that I have sought, because it is of importance to the small taxpayer. I refer to the man or woman on the basic wage who is paying a social service contribution -of £1 a week. When the two collections were merged, the reduction enjoyed by a basic wage-earner on £700 a year was 30s. for the year or 7d. a week. There was no significant reduction in the rate .of taxation. The social services contribution component still stands at -£52 10s. a year for a man or woman on the basic wage who has no dependants.

I ask the ^Minister to furnish me with some explanation as to how the surplus of £186,000,000 in 1952-53 is being used, to state whether it is being used for loans to the States for housing or other purposes, and to state whether it is a fact that the Commonwealth is receiving between 3f per cent, and 5 per cent, interest on surplus revenue that is provided by the taxpayers.

Senator SPOONER:
Minister for National Development · New South Wales · LP

– in reply - I am sorry that I can do no more than repeat what I said earlier. I refer the honorable senator to page 21 of the annexure to the printed copy of the Treasurer’s Budget speech. On that page are set out the National Welfare Fund transactions for 1956-57 and the estimated transactions for 1957-58. I am sure that if we had before us the Budget papers for each of the preceding years, we would find the same information. We would then have a complete sequence of events as they relate to the National Welfare Fund. I shall -not read all the amounts, but shall refer to some of them in round figures. The balance brought forward from 1955-56 was £193,000,000. The amount .appropriated from .Consolidated Revenue in 1956-57 was £223,000,000. Interest earned amounted to £2,000,000, .and the total receipts were £225,000,000.

The -statement shows that the total expenditure on the various items of social service benefits was £223,900,000 and the balance carried forward to the succeeding year was £195,000,000. The fund commenced -the year with a balance of £193,000,000 and the year closed with a balance of £l-95,<000,000. The honorable senator asks, “ Of what does the fund consist? “ In reply, I say that the fund to-day :is in the form in which it was handed over to this Government by the -preceding Government. In other words, it was invested in 1949 or earlier -in treasury-bills and Commonwealth securities.

Senator Ashley:

– I know that.

Senator SPOONER:

– There it stands.

Question resolved in ;the affirmative.

Bill read a third time.

page 1344

INCOME TAX AND SOCIAL SERVICES CONTRIBUTION ASSESSMENT BILL 19.57

Second Reading

Debate resumed from 12th November (vide page 1144), on motion by Senator Spooner -

That the bill be now read a second time.

Senator O’FLAHERTY:
South Australia

– I have said most of the things that I want to say on this subject. I have had handed to me a copy of an amendment to clause 20 -which has been foreshadowed by Senator Wright. Whether the honorable senator desires to indulge in some of the heroics for which he is .noted I do not know, .but when one examines the proposed amendment one is a bit doubtful about it. Although I believe in the principle that the cost of fares from a person’s home to his place of employment should be deducted from his income for the purpose of assessing tax, particularly in the case of the ordinary working man, I should like to hear the honorable senator explain the amendment before we make up our minds about it.

It will be noticed that I have circulated an amendment to clause 18, suggesting that the proposed allowance for a wife or a .daughter-housekeeper be increased from £143 to £156. In other words, we are proposing .that the paltry increase of £13 in the allowance be doubled.

It is extraordinary that, according to the Treasurer, the Government expects to collect this year £107,000,000 more by way of taxation than it collected last year. If these income tax concessions had not been granted, £71,000,000 more would have been collected from individual taxpayers, but, even with the concessions, an additional £61,000,000 will be collected from that source. Taking this year and the last two years, income tax collections have risen by £200,000,000. That is an enormous amount of money, which comes, not from companies, but from individual taxpayers.

Perhaps the Minister can explain just what has happened to that £200,000,000. Was it given as loans to the State governments to enable them to carry on with their work, or was it given to the States free of interest? Company tax has been reduced, but more money is being collected from individuals. I agree with the Minister that figures can prove anything. I expect that he will tell me soon the same sort of thing as he told me when he was speaking on the other bill. He will go back to 1949 or 1950 and say that men on certain salaries then were paying less by way of income tax than men on the same salaries now, but that argument does not take into consideration the decrease in the value of money. I think the Minister mentioned the case of a man with a salary of £17 a week in 1949-50. To maintain the same standard of living, that man would need considerably more than £17 a week now. He would want about two and a half times that amount. There is no point in making comparisons of that kind. They do not lead anywhere, because they do not take reduced values into consideration. In terms of purchasing power, the equivalent of £17 a week now would be about £6 a week in 1949. So, for the purposes of a proper comparison, we should compare the position of a man on £6 a week in 1949 with that of a man on £17 a week now. We know that in 1949 a man with a salary of £6 a week did not pay a penny piece in income tax. The Minister tells us that the tax payable on a salary of £17 a week in 1949 was greater than it is now. I agree, but again I point out that in 1949 £17 a week was worth a great deal more than now.

Then the Minister said that the benefit of the reduction of company tax would be enjoyed by a great many shareholders. That does not alter the plain fact that the concession given to 3,500,000 taxpayers is worth only £8,250,000 - I am leaving pensioners out of account because the majority of them do not pay income tax - while the Government has made a gift to companies oi: £.14,500,000 by the reduction of the rate of company tax and of £26,000,000 by the alteration of the depreciation allowance provisions. I agree that in that latter case a few private individuals may benefit also. The Minister pooh-poohs my suggestion that the reduction of the rate of company tax and the depreciation allowance concession will not benefit individuals and says that it will be of benefit to shareholders in companies. That is not so. This gift will be given, not to individual shareholders, but to companies, which will be able to manipulate it in whatever way they wish. Companies are to have a gift of £40,900,000, whilst a miserable concession is given to individual taxpayers.

There is no doubt that collections, from income tax imposed on individuals, are rising from year to year. During this year and the last two years the Government has gathered £200,000,000 in taxation. I know very well what will happen. Next year, just before election time, millions of taxpayers will be offered a reduction in taxes. The Government will blow its bags up, and throw out its chest. It will make such a welter of the whole business that people will begin to think that in other years they must have been dreaming. The Government might be able to win their votes, and it might not. The companies are being given £40,000,000 and, naturally, they will favour the Government. The Government wants great revenue now so that next year it can offer general tax reductions and make a great song about it. That stands out very clearly. Twenty thousand people are to share a tax reduction of £40,000,000, but 3,500,000 people are to share only £8,000,000. In the commitee stage I shall move the amendment that I have circulated among honorable senators.

Senator LAUGHT:
South Australia

– I support the bill and will leave the question of Senator O’Flaherty’s proposed amendment to be dealt with by the Minister in committee. That foreshadowed by Senator Wright is not, of course, before us. The bill is worthy of support because it imports into the law certain very humanitarian concepts. It is excellent that the Government should, at last, have recognized the service rendered by those who adopt children and provide for them life insurance, sick and accident policies, and superannuation payments. I have always been amazed that such payments have never been recognized. As I said when we were debating the Estate Duty Assessment Bill a few days ago, the Government should consider amending the Commonwealth Life Assurance Act so that adopted children will be protected in regard to family policies in the same way as are natural children. That kind of recognition seems to flow from the amendment embodied in the bill before us. I realize that it relates specifically to income tax, but it also permits, as an income tax deduction, the payment of money for a policy which will benefit an adopted child.

I am pleased to see that the residents of Nauru are to enjoy the exemption from income tax that is already possessed by residents of some other Territories, such as Papua and New Guinea and Norfolk Island. Nauru is within 100 miles of the equator, in the centre of the Pacific, and its residents live in a very difficult part of the world. They are certainly entitled to the proposed income tax remission. In staying at their post, and keeping up the supply of rock phosphate, they are doing a very important job for Australia.

The increase from £130 to £143 in the concessional allowance for the spouse, and the accompanying deductions for other dependants, are well justified, and I am sure that the criticism of Senator O’Flaherty on that score will be dealt with adequately by the Minister.

Similarly, I am glad to see that mothersinlaw are to be regarded in their true light as a subject for the granting of an income tax deduction. It has always been rather surprising to me that a man who supports his mother-in-law should not be able to claim even a modest deduction for so doing. Indeed, as a colleague suggests, he should, perhaps, get a medal. It is surely in the interests of the nation that when an elderly woman’s husband dies, she should go to live with one of the members of her family, rather than stay, virtually alone, in her old home. It is in the interests of the nation to encourage her to live with another family so that, in a time of housing shortage, her house will be available to a family needing accommodation. This deduction is imaginative in that respect, and offers an incentive of the kind I have described.

I wish to say a word or two about the depreciation provisions of the bill, which Senator O’Flaherty was inclined to regard as conferring a great benefit upon already wealthy corporations and companies. 1 remind honorable senators that the question of granting depreciation allowances has received the attention of the Australian Labour party from time to time. 1 think it was during the 1954 election campaign that Labour’s policy included the granting of an income tax deduction, for initial depreciation, of 40 per cent. In the wisdom of Labour’s leader, Dr. Evatt, that was considered necessary for the encouragement of Australian industry. Therefore, I do not expect to hear any opposition from Labour supporters to what I shall have to say on this question of depreciation.

The Government has provided for primary producers a generous depreciation allowance at the rate of 20 per cent, a year, over five years. The allowance has applied to plant and equipment, structural improvement, sheds, barns and accommodation for employees, tenants or share farmers, and has had rather an interesting result - one that has been apparent to all of us. Within the last four or five years there has been an increase on farms and properties of improvements, amenities, and the size of flocks and herds. Ten years ago the sheep population of Australia was no more than 94,000,000. At present it would be of the order of 150,000,000. Primary production of every kind has increased, though the number of persons engaged therein has not increased to anything like the same extent. A good deal of this disparity has been attributable to the provision of additional fixed improvements and better plant. That has been stimulated and encouraged a good deal by imaginative depreciation allowances.

I turn now to depreciation allowances for industries other than primary industries. Here the question of depreciation allowances is dealt with under Order 1217 of the Taxation Branch, and I am pleased to see that under the bill it is possible to increase the rate by 50 per cent, when the taxpayer adopts the diminishing value method of assessing depreciation. But there is one provision that has been omitted from this bill and I commend it to the Minister for inclusion in future measures of this nature. I refer to the case for depreciation onindustrial buildings, and quote in support of my argument the report of the Tariff Board for the year ended 30th June, 1956. Dealing with rising costs in industry, this important board had this to say in paragraph 19 of that report -

To the extent that other factors are responsible they also should be corrected. The Board in its annual reports, has frequently suggested methods which would assist in the reduction of costs in industries competing in the home market with goods from overseas, and of costs of Australianproduced or manufactured goods competing in export markets with goods from other countries. More generous allowable deductions for depreciation in arriving at taxable income have been suggested. There must be recognition sooner or later that costs of production from old plant are generally higher than costs from new and modern plant and that any impediment to the provision of modern plant should be removed. Some countries with which Australia is competing assist their industries by generous depreciation allowances and the Board believes there is a strong case for similar treatment to our own industries.

I am pleased to see that there has been recognition, in part, of those important words in the bill before us, but I am disappointed that there is no recognition of the case for depreciation of industrial buildings, although there is recognition of the principle of depreciation on the machinery and plant within those buildings.

Of recent years many important bodies have dealt with the question- of depreciation, and I refer now to the April-June, 1954, issue of “ Review “, the journal of the Institute of Public Affairs, Victoria. On page 55 of that journal, direct reference is made to the question of depreciation on buildings. The article refers to the fact that expanding Australian industries face many handicaps compared with overseas competitors. It also mentions that Australia is one of the few countries in the world where the tax laws make virtually no provision for depreciation of buildings. It also states that in Canada frame buildings and component parts and oil storage tanks attract a depreciation allowance of 10 per cent, while buildings in general, irrespective of use, attract a 5 per cent, depreciation allowance.

It states that in the United Kingdom a depreciation rate of 2 per cent, is allowed on all factory and industrial premises.

I think that one of the most important documents to come before the Senate and members of Parliament in general is the first annual report of the Australian Coastal Shipping Commission, issued last week. It will be seen that this new commission has endeavoured to set out its work on the basis of an ordinary business. For instance, it pays pay-roll tax, income tax, municipal rates, and so on. In that report, the commission refers with dismay to the questions about which I have spoken this evening. For example, in the Chairman’s review we find the following: -

The Line must also accept the same depreciation allowance, and in every way face the same problems as beset any Australian public company engaged in the business of shipowning.

On page 7 will be seen a very interesting diagram under which is the footnote, “ Percentage distribution of ships’ running costs “.

Here it should be borne in mind that the usual rate of depreciation for ships under the order to which I referred is, I believe, as low as 5 per cent., but the table in this interesting report of the Australian Coastal Shipping Commission shows that depreciation accounts for 17.8 per cent, of ships’ running costs whereas nothing like 17.8 per cent, would be allowed for depreciation on ships under the taxation orders.

Senator O’Byrne:

– Every six years you write them off.

Senator LAUGHT:

– Yes, yet the annual report of the commission indicates that actual depreciation is accountable for 17.8 per cent, of ship’s running costs.

Senator Vincent:

– What rate is allowed?

Senator LAUGHT:

– I understand that 5 per cent, would be allowed by the Commissioner of Taxation.

As to land and buildings, this interesting report states, on page 8, that with ministerial approval - I see the Minister in the chamber to-night - a freehold property at Riverside-avenue, South Melbourne, was purchased for £115,000 for use as head office. It also states that renovations and alterations to date have cost £9,920 and that depreciation is provided for at 2 per cent, per annum. It will be seen, therefore, that for the purposes of good book-keeping the commission provides for depreciation of 2 per cent, per annum although no depreciation would be allowed by the Commissioner of Taxation because there is no provision in our law for depreciation on buildings.

So it will be appreciated that even our own Australian Coastal Shipping Commission cannot see eye-to-eye with our present taxation law in respect of the provision of depreciation on buildings. The commission then makes a general statement in its report setting out some of the difficulties it is experiencing. Amongst other things, it says -

Lately, moreover, the British Government gave owners the benefit of a 40 per cent, initial depreciation on new construction against the Australian Government’s allowance of 5 per cent., whilst in addition both British and foreign shipowners can have their vessels repaired or surveyed at ports where the cost of such work is perhaps one-third of that which the Australian owner must face.

So I pass rather lightly over some of the problems associated with depreciation as referred to in the first annual report of the Australian Coastal Shipping Commission. That commission could not be regarded as a grasping company or corporation wanting to take the Commissioner of Taxation for a ride. Yet it pinpoints the problem that must be facing the whole of industry in Australia to-day.

Finally, I point out to the Senate that the matter of depreciation of buildings has received careful consideration in a report that has been referred to from time to time in another place by the Treasurer, namely, the report of the Commonwealth Committee on Rates of Depreciation. This committee is sometimes known as the Hulme committee. The report was presented to Parliament in 1955. The committee’s term of reference No. 5 was -

Whether it would be desirable to extend deductions for depreciation to any classes of assets not subject to such allowances under the present law.

Under that heading, the learned committee dealt with the subject of buildings. In paragraph 68, it stated -

In none of the matters which came before us did we encounter more wide-spread representations, nor more unanimity of opinion, than that an allowance should be given for depreciation of buildings.

The committee dealt particularly with, manufacturing industries, and the report continued^ -

There has also come about a closer commercialrelationship with oversea countries, bringing with, it increasing problems of competition and the need for constant change and improvement to keep abreast of modern world developments. The result has been that obsolescence has become asimportant a factor for buildings as for plant.

Just as plant become obsolete, so do the buildings which house the plant. The provision of new types of plant and equipment has to be considered. How can we expect people to install an atomic reactor, for which a specialized building is required, when there is no allowance for depreciation, of buildings? How can we expect people to erect the specialized buildings which will be so important to this country, if we do not adjust our taxation laws with regard to depreciation of buildings to make the proposition attractive and encouraging?’ How can we expect the investment of capital from the United States and the United Kingdom, where adequate depreciation allowances for buildings have been, provided for many years? How can we expect people from those countries to erect buildings under our antiquated taxationlaw in this respect, on which the Hulme committee reported so unfavorably?

In all directions there is a great move for the development of our tourist industry. Paragraph 74 of the committee’s report stated -

Commercial buildings are hardly less affected. For example, the hotel industry is faced at thepresent time with the need to undertake largescale rebuilding to meet the public demand for improved amenities and more modern standardsof accommodation. Theatres and broadcasting: centres provide further instances of the need for periodical change and reconstruction to keepabreast of new developments.

I mention also that television has been introduced and will be extended to all States of the Commonwealth.

Paragraph 78 of this important report referred to the position in other countries -

In the United States of America, Canada andNew Zealand, an allowance is given on all: classes of buildings used in the production of income.

Paragraph 80 stated -

Having regard to all of these considerations, we have found the conclusion inescapable that the time has arrived when a depreciation allowance should be given for buildings.

The report, very modestly, recommended that -

The annual rates of depreciation allowable will be 1½ per cent, for brick, stone or concrete construction and 2½ per cent, for timber, fibro or iron construction, calculated on the prime cost method.

I submit to the Minister that Australia is developing at such a fast rate that it is high time definite consideration was given to the further implementation of the Hulme report, particularly with regard to depreciation of buildings. The Minister for Shipping and Transport, in the report that he presented to Parliament last week, stressed the very point that I am trying to make. With regard to buildings, shipbuilding, and the operation of ships, depreciation allowances are necessary. I accordingly support the bill and hope that it has a speedy passage.

Senator BYRNE:
QUEENSLAND · ALP; QLP from 1957; DLP from 1968

.- I am sure that when a taxation measure is before the chamber the infinite capacity of members of Parliament for discovering further concessions that could reasonably and logically be granted must be a matter of amazement to the Minister representing the Treasurer. Senator Laught, in his interesting speech, has indicated some concessions that, in his opinion, could in time be granted.

I rise to direct attention to another matter which stems from an amendment which has been circulated by Senator Wright and which relates to a proposal to make an allowable deduction moneys paid out by invalids employed in industry because of expenses necessarily incurred, due to their disabilities, in attending their places of work. I indicated to Senator Wright that if that amendment were moved I would support it, but I must say in logic it purports to be an application of an extended principle before the principle itself has been accepted. Apparently the principle of allowing as a deduction moneys paid by workers in travelling to or from their places of business has not been accepted. In income tax law they are not regarded as moneys expended in earning income. Section 51 (1.) of the Income Tax and Social Services Contribution Act 1936-1956 reads-

All losses and outgoings to the extent to which they are incurred in gaining or producing the assessable income, or are necessarily incurred in carrying on a business for the purpose of gaining or producing such income, shall be allowable deductions. . . .

I do not know what interpretation has been given to that section either by boards of review or by courts of justice, but it would appear that it would be within the province of the Commissioner of Taxation to allow as deductions travelling expenses incurred by people going to or from work. I should be very interested if the Minister for National Development, both in his capacity as representing the Treasurer and in his private position as one who has been associated for a lifetime with matters of this character, informed the Senate, at the conclusion of the debate, whether it lies within the administrative discretion of the Commissioner of Taxation, in terms of that section, to allow as deductions expenditure incurred by people in going to or from work, or whether an amendment of the act would be required to make possible such an allowance.

Senator Spooner:

– There is a High Court case on the matter.

Senator BYRNE:
QUEENSLAND · ALP; QLP from 1957; DLP from 1968

– I was not aware of that. In that case, apparently, an amendment of the statute would be required. This is a matter which seems to me to be of increasing significance because in the whole field of municipal, State and national economics, and not in the income tax field alone, one of the disturbing features is the extraordinary way in which modern cities tend to so distribute their new industrial undertakings and population as to impose the maximum travelling on sections of the community. We find, for example, that white-collar workers, who almost invariably work in the heart of the city, either in banks or attending the law courts, or professional men who are engaged in solicitors’ offices, very often live on the perimeter of the city in the newer and more attractive suburbs. They are, therefore, required to travel from the perimeter into the heart of the city. Strangely enough, many of the older suburbs accommodate workers who are employed in the newer factories which are on the perimeter of the city. A third group of workers live on one side of the city and work in new factories on the other side; consequently, they have to travel right across the city. That, I think, is imposing a tremendous strain on the transport facilities and also is putting a tremendous financial impost on those workers.

That is one aspect of the matter. For the individual, it has a definite financial significance. The additional expenditure incurred by taxpayers in travelling to and from their work is adding to their costs. While the principle of allowing money so spent as an income tax deduction has not been accepted, I should say that it is worth while at this stage to give some thought to the matter. The problem could grow to big proportions, and it might demand, in the interests of justice, statutory attention at the appropriate time.

A couple of years ago, I obtained some information from the Bureau of Industry in Queensland on how these matters are affecting modern cities. One of its regular publications is called “ Economic News “. Some of the statistics that the bureau supplied are extremely informative, and they tend to bear out the contentions which I am now submitting. For example, the “ Economic News “ of January, 1955 - No. 1 - contains a table of what the bureau called isochronic boundaries, which are lines drawn on a map joining points of equal travelling time from a common point. In 1947, according to the publication, 14,000 people lived less than ten minutes’ travel from the heart of Brisbane; by 1954, the number had dropped to 12,000. In 1947, I find, 89,000 people lived within a radius of ten to twenty minutes; by 1954, the number had dropped to 81,000. Honorable senators will note that these were census years, with seven years intervening. In 1947, I-find, 138,000 people lived between the twenty and 30 minute boundaries; by 1954, the number had increased to 146,000. The figures for the 30-40 minutes belt were 83,000 in 1947 and 126,000 in 1954. This shows that there was a movement of the workers out to the perimeter of the city. In the 40i-50 minutes belt there were 40,000 in 1947 and 70,000 in 1954. In the 50-60 minutes belt there were 25,000 in 1947 and 43.000 in 1954. In the over-60 minutes belt there were 13.000 in 1947 and 24,000 in 1954.

The “ Economic News “ made the following comment on these figures: -

A rough appreciation of the population living within these 1954 isochronic belts at both the 1947 and 1954 Censuses shows that, with the increasing industrialization of the inner areas and the development of transport services to the outer areas, the population of the area which can be reached from the G.P.O. in less than 20 minutes has actually declined by 10 per cent. The population within the 20-30 belt has remained fairly steady; but, within the 30-40 belt it has increased by 50 per cent., and beyond the 40-minute line population has increased by about 75 per cent.

Apart from the ordinary physical burdens, the energy expended and the time involved, this problem is imposing a heavy financial burden on the workers. I had figures taken out which give an indication of the amounts paid yearly by the workers in fares. I ask you, Mr. Acting Deputy President, to bear with me if these figures are slightly out of date. The only thing we can be certain of is that the figures to-day would be considerably higher.

Inquiries that I made from the Transport Department of the Brisbane City Council in relation to the sales of weekly tickets on trams - the only substantial and verifiable information available - reveal that in June, 1954, 88,487 tickets were sold, of which 10,204 were priced at 4s. 6d. This was equivalent to £11 5s. a year, for travel to and from work; there were 36,543 tickets at 5s. 6d. sold, equivalent to £13 15s. a year; 27,438 tickets at 6s. 3d., equivalent to £16 5s. a year; 10,149 tickets at 7s., equivalent to £17 10s. a year; and 4,153 tickets at 7s. 9d., equivalent to £19 8s. a year. I suppose we could up-grade those amounts by possibly 20 per cent, to bring them up to date. Therefore, the workers are incurring fares averaging about £22 a year, based on the cost of concessional weekly tickets - not buying a ticket in the morning and another in the afternoon. This is a tremendous annual impost on people - the basic wage workers, at any rate - whose earnings are not high. Apart from the sheer acceptance of the principle that this is a continually increasing figure, there seems to me to be grave injustice to the people concerned.

Figures taken out in relation to the council’s bus services showed - I shall not go through all the groups - that 3,151 people bought tickets at 6s. 3d. each, equivalent to £16 5s. a year; 4,912 bought tickets at 7s. each, equivalent to £17 10s. a year; and 8,387 bought tickets at 7s. 9d. each, equivalent to £19 8s. a year. Again, we could up-grade these costs at £23, £24, or £25 a year to bring them up to date.

The railways provide a cheaper form of transport. In 1955, workers who travelled by train on weekly tickets, paid an average of £14 5s. in fares. This figure could well be up-graded to £20 to-day. That is a lot of money for a worker to have to pay for fares incurred in travelling to earn his income. I cannot for the life of me see why, in justice and in principle, this is not an allowable tax deduction to any person within a certain income range. 1 wonder whether the principle, if it could not be accepted completely, could be adopted to the extent that a deduction would be granted to a person whose income did not exceed a certain figure. I am not an expert on income tax law or the practical politics of income tax administration, but it seems to me that there is a problem - an increasing problem - as a result of increased burdens being placed on those least able to alford them. Something should be done about the matter. in the course of my inquiries, I obtained valuable information from commercial and business bodies in Brisbane. I shall read one or two comments that were made, so that honorable senators may see the extent to which this problem is increasing. One was -

We are also well aware of movement in plant location, and of new establishments likely to be made to keep in touch with the new development of new dormitory suburbs in Brisbane; and these new suburbs are considerably distant from the centre of the city; e.g., Inala (9-10 miles), Wynnum (8-9 miles). Zillmere (7-8 miles), Sunnybank (8 miles). The development of the Hamilton lands for industrial purposes will mean increased travelling distances for many workers.

This is the type of comment that comes from bodies which are in touch with this problem.

Senator Maher:

– Would not there be a tendency for the workers to live in the vicinity of their work?

Senator BYRNE:
QUEENSLAND · ALP; QLP from 1957; DLP from 1968

– I know that tendency is developing. There is a tendency to congregate workers’ houses in some of the newer factory garden suburbs. In the opinion of some interested bodies, the practice might be well worth While fostering. Nevertheless, it is a slow development and inevitably will only partially succeed. Once houses are built, they will remain and be occupied for a long time, and only planning over an extensive period would overcome the problem I am trying to relieve. The information from the Bureau of Industry has also stated -

The Queensland Employers’ Federation too is aware that numbers of workers are travelling long distances and at considerable expense to their places of employment.

I do not want to prolong this debate indefinitely or to delay it unduly, but I would be pleased if the Minister would inform the Senate, in his ministerial capacity and from his private experience, whether these observations, if not acceptable to-day, might have an increasing compulsion that may make them acceptable later and warrant an amendment to the act at some future date.

I believe that Senator Wright’s amendment did purport to extend a principle, which itself has not been accepted. Until the principle is accepted that a healthy worker is entitled to his travelling expenses which we will call (a), we can hardly write into the statute that (a) plus (b) be deducted. However, as a gesture, if the matter should come before the chamber to-morrow and the amendment is proposed, I will support it because if it goes beyond the principle I am advocating, that will make the adoption of my principle more acceptable, the lesser being included in the greater.

Senator COOKE:
Western Australia

– The Opposition does not oppose this measure. It has not been encouraged to submit constructive criticism by the attitude of the Government. It is interesting to note that although the Government supporters have used many arguments to justify their claim that the Government is reducing personal income tax and social services contribution, it will obtain an additional £61,300,000 this year from those taxes. The Government has reduced company tax by £6,500,000, but cil other forms of indirect taxation will be increased this year although they hit the family man hardest. That is the position although the Minister for National Development (Senator Spooner) has spoken consistently and hypocritically about the Government’s concern for the family man.

If the legislation is properly adjusted, this tax will be levied in accordance with the capacity of the taxpayer to pay. If the Government wants to give relief to the family man, it should look at other forms of taxation and do something about sales tax, excise and many other kinds of indirect taxation which the Government has increased. In this amending legislation, relating to income tax and social services contribution, the Government has not been generous to the family man. When we refer to the family man in Australia, we are speaking of a man with the statistical family of three children. Even in relation to a man with four, five or six children, the concessional deductions that are allowed are not sufficient to remove the breadwinner from the income tax field.

During the term of office of the Chifley Labour Government, a man on the basic wage with the so-called statistical family did not have to pay either income tax or social services contribution. He was free of those taxes. The basic wage has not risen consistently with the increase in the cost of living, but a basic-wage worker with a wife and three children is no longer free of income tax. Inflation has altered the value of money and has forced up the basic wage. Therefore, any comparisons that the Minister for National Development might draw in terms of actual amounts are not tenable. The only true basis of comparison is one which takes into account the value of the money earned.

If the family man is to get any real concession from this Government by way of income tax and social services contribution, he must be given more consideration in this bill, and there must be a severe pruning of indirect taxes which are imposed on everybody - the age pensioner and the family man alike - irrespective of the capacity to pay. The ordinary taxpayer pays indirect taxes in huge amounts. The pay-roll tax yields about £50,000,000, and the revenue from sales tax is about £129,500,000. Those taxes bear heavily on the family man.

It was refreshing to hear Senator Laught talking about depreciation and the generosity of the Government in allowing and extending depreciation allowances to industry. The depreciation allowance was severely criticized by supporters of this Government when the allowance was of real value to industry. Under the Chifley Government, an allowance of 40 per cent, was made by way of initial depreciation on plant.

Senator Laught:

– Not on buildings.

Senator COOKE:

– Is this Government allowing a deduction for depreciation on buildings? Of course it is not. I am talking about plant. During the regime of the Chifley Government, the depreciation allowance was of real value as a tax concession. At that time, cost of production was low and world parity for goods that were sold overseas was high. Those in both primary and secondary industries earned real money. They were fortunate to be able to trade in the world market with a low cost structure in Australia and an inflated cost structure outside. Industries had ready surplus money to invest and to enable them to expand.

The Chifley Government appreciated the position which had been brought about by a solid and stable cost structure within Australia. It decided to give primary and secondary industries an opportunity to take full advantage of the money that was available for expenditure on plant and industrial expansion. Those who support this Government were most severe critics of the Chifley Government in that connexion. When they were elected to office, they complained about Australia’s excess prosperity. They were alarmed about it and reduced the depreciation allowance.

Now the Australian cost structure is near the ceiling. We are handicapped in world trade by our high production costs. We cannot produce at a price that will enable us to compete with nations which we could compete against successfully during the regime of the Chifley Government. Australian industries are now handling big money but they are striving desperately to keep within world parity. Their costs are above it and industries are urgently seeking relief. They are paying big dividends, but in many industries the amount that is being expended on plant is negligible.

Because of the high cost of production and the better position of other nations, Australian industries, with a few exceptions, have to go to the banks and seek fairly large advances if they wish to expand. The Government is trying to encourage and stimulate sales in Australia by increasing the depreciation allowance, but it wasted seven or eight years before so doing.

Debate interrupted.

page 1353

ADJOURNMENT

The PRESIDENT (Senator the Hon. Sir Alister McMullin). - Order! In conformity with the sessional order relating to the adjournment of the Senate, I formally put the question.

That the Senate do now adjourn.

Question put. The Senate divided. (The President - Senator the Hon. Sir Alister McMullin.)

AYES: 23

NOES: 27

Majority . . 4

AYES

NOES

Question so resolved in the negative.

page 1353

INCOME TAX AND SOCIAL SERVICES CONTRIBUTION ASSESSMENT BILL 1957

Debate resumed.

Senator COOKE:

– Just before the Senate was obliged to vote on whether it should adjourn in accordance with the sessional order, I was saying that I thought that the Government had wasted many years before introducing depreciation rates in accordance with the standards recommended by the previous Labour administration. That was a period when returns to Australian industry were buoyant, when world price levels were higher than our costs of production, and when industry could have developed. In the intervening period, the

Government has cut back depreciation rates and taken ready money from industry so that industry is now forced to parley with the banks if it wants to develop. Now the Government says, “ Yes, your production costs are high, world prices are lower than your costs of production and, although you are turning over an immense amount of money, the real profit is much less than it has been for very many years “.

This depreciation concession is now thrown in with the Government’s policy to increase interest rates and restrict credit. If industry is not strangled as a result of the Japanese Trade Agreement, the restriction of credit, the forcing up of interest rates and inflated cost of production, it is not the fault of the Government. The Government has said to itself, “ We must hold out some hope to industry to enable it to develop “. So it now says to industry, “ If you extend your operations and install new plant, we will allow you a depreciation rate of 20 per cent, to enable you to amortize, over a period of five years, the cost of the extension and the new plant. But the Government has acted too late for the concession to be of any real national advantage. However, the position will be better than it has been in the past. At the same time, the man in industry will derive some advantage in regard to interest rates when his income is assessed for taxation purposes.

Very little, however, is being done for the wage-earner. The family man has been treated very harshly in the recent Budget. The man who works for wages or salary in any capacity whatever catches the full blast of every form of income tax and social service tax that is imposed. I join with Senator Byrne in submitting a plea on behalf of the ordinary man and in suggesting that fares incurred in travelling to and from his place of employment should be allowed as a concessional deduction. The cost of tools of trade also should be allowed as a deduction.

Although I agree with the suggestion of Senator Laught that allowances for depreciation on buildings and other forms of depreciation could be extended in industry, I think it is manifestly unfair that a person who is engaged in industry should benefit from such concessions when the wageearner cannot. If I conduct a business, I can charge against that business the cost of petrol, the cost of running my car, depreciation, insurance and a host of other costs; but the “ wage-plug “ cannot do it. If the wage-earner is fortunate enough to have a car, he must bear the full cost of running that car even when it is used mainly to take him and his tools of trade backwards and forwards to his place of employment. I agree that depreciation should be allowed on industrial buildings. I also think that a re-assessment is necessary of the Government’s approach to Australian industry, which, heaven knows, is struggling, having been beaten to its knees by every action the Government has taken. Instead of encouraging Australian industry, the Government has shown more interest in industries outside Australia. By affording concessions to foreign industries, it has treated Australian industry unjustly.

If depreciation is to be allowed on buildings and plant, and if concessions are given to people who own property from which income is earned, the Government should extend some concessions to the Australian family man who is buying a home. After all the backbone of the nation consists of the men who aspire to have homes of their own, even if it takes half a lifetime to pay for them. They are the really good citizens. If a young man marries and buy a home, under present inflated costs he finds himself loaded with a debt of £4,000 or £5,000, even though his wages may be low. If he wants a family, it is not very long before he needs to add to his home, but no concession is granted to him for that purpose, nor for keeping his home in good repair. On the other hand, a landlord charges a rent that allows for the expense of maintaining his property. I suppose that a return of 11 per cent, would be the minimum basis, but in some cases it is considerably higher. The landlord would be entitled to claim as deductions for taxation purposes all the expense of repairs, improvements and additions.

Although the Opposition is not opposing this bill, it wishes to point out that there are a multitude of deficiencies, particularly in relation to equity in taxation. The Government has shown . clearly to-night that it does not intend to have a proper discussion of the bill. The Minister has, in effect, informed us that when the Opposition shuts up on the bill, the Senate will shut up too. Very little consideration will be given to our remarks. Having made my submissions now, I await an opportunity to speak again when the bill reaches the committee stage.

Question resolved in the affirmative.

Bill read a second time.

In committee:

The bill.

Senator O’FLAHERTY:
South Australia

– I have circulated an amendment to clause 18, which reads -

Section eighty-two ti of the Principal Act is amended by omitting the table in sub-section (2.) and inserting in its stead the following table: - and move -

Omit the amount “£143” (twice occurring) from the Third Column of the table, insert the amount “£156”.

The bill seeks to increase the amount at present allowed for the spouse of a taxpayer, or a daughter-housekeeper, from £130 to £.143. We propose that the amount be increased to £156. As we know, the tax payable by a taxpayer is not reduced by the actual amount of an allowance such as this. The actual reduction depends on the rate at which his income is taxed. For instance, if his taxable income were £600, he would be paying about ls. 8d. in the £1, so all that the Government would lose in such a case by allowing this extra £13 concession would be thirteen times ls. 8d.

I do not intend to argue the point about this matter. I am making it a test case, because I believe it is necessary for the Government to grant a greater allowance for the dependants of a taxpayer.

Senator SPOONER:
New South WalesMinister for National Development · LP

– In the course of the second-reading debate

I dealt with the merits of this proposal. I pointed out that the Government has made certain concessions which benefit the family man. I do not propose to traverse that ground again, but merely to deal with what might be termed the mathematics of the proposal. The amendment relates only to allowances for a spouse or daughterhousekeeper. The loss of revenue involved if the proposed amendment were adopted as it stands would be £3,000,000, which is a substantial sum of money, lt would considerably disturb the Budget that has already been agreed to by the Parliament. The Government, accordingly, is not prepared to accept the amendment.

I make the further point that the amendment proposed omits any reference to comparable allowances for a dependent parent, housekeeper or children. If the allowance were to be increased for a spouse or daughter-housekeeper, it would be reasonable and logical to suggest that it be increased throughout the full range of allowances for dependants, to include a dependent parent, dependent housekeeper and dependent children. If that logical approach were adopted, rather than picking out just two items, the loss to the revenue would be £7,700,000. I mention that point merely to give the complete picture. The fact that £3,000,000 would be involved in accepting the present amendment causes the Government to refrain from accepting it.

Senator McKENNA:
Leader of the Opposition · Tasmania

– I desire to address myself very briefly to the matter before the committee. Senator O’Flaherty made it clear that the Opposition has in mind that comparable benefits should be extended to housekeepers, children and others mentioned in the schedule. He indicated that the present amendment was moved really for the purpose of obtaining a test vote, to see whether the Government would accept our proposal regarding a spouse or daughter-housekeeper. If the Government accepted the amendment, the Opposition thinks it would then be necessary to amend other items in the schedule. The financial result might well be, as the Minister indicated, of the order of £3,000,000 plus £7,700,000.

Senator Spooner:

– It would not be £3,000,000 plus £7,700,000, but £7,700,000 in all.

Senator McKENNA:

– The amount would be £7,700,000. I merely desire to point out who would benefit from this provision.

Let us consider the position of the man who receives a little more than £16,000 per annum and pays the highest rate of 13s. 4d. in the £1. The proposed deduction will save him £8 13s. 4d. annually - for him an insignificant amount. The man whose income is about £4,000 or £4,500 is paying tax at the rate of 10s. in the £1. He will benefit to the extent of £6 10s. per annum. For him. too, the saving is insignificant. However, these savings are colossal when compared with the benefit derived by a man on an average income.

The man who is paying 4s. in the £1 will receive a benefit of only £2 12s. per annum, or ls. a week. Insignificant as it is to every one in the whole income tax range, the concession will cost about £7,000,000. It is quite clear that the great bulk of that sum will go to those in the higher income brackets, the very people who do not need it. They will get the big deduction, though when I say “ big “ I hasten to add that, in reality, it will only amount to £8 13s. 4d. Relief is most needed at the level of the small wageearner with a family, but in the majority of such cases the benefit will be no more than ls. a week. All this merely emphasizes the point that has been made repeatedly on this side of the chamber to-night, that proper thought has not been given in the Budget to the position of the family man.

I do not wish to repeat all the arguments that have been addressed to this subject elsewhere, beyond summarizing them in a few sentences. The individual taxpayers of Australia will this year provide revenue amounting to £465,000,000. But for this concession they would have had to provide another £7,000,000. Companies, which will provide £210,000,000, will get concessions amounting to £40,000,000. Of course, we are not arguing that these concessions are not desirable, but the companies pay tax equal to only half the amount provided by individual wageearners. When the position is stated in that way, one can see the complete disproportion that exists between the proposed tax concessions. We are not arguing that these concessions should not be extended to companies. We favour depreciation allowances and have done so consistently. The illustrations which I have given merely emphasize how futile a benefit costing about £7,000,000 would be from the point of view of the ordinary family man. It would be paltry, and our amendment is moved mainly as a protest that not enough is being done for the family man. If it were possible to carry the amendment, we should be prepared to revise the whole schedule.

Senator SPOONER:
New South WalesMinister for National Development · LP

– The hour is late and I do not wish to promote an argument, but I feel that I should not let pass unchallenged the comparison which Senator McKenna attempted to make between the company concessions, and those to be granted to private individuals. One pointthat should not be overlooked, and which I sincerely hope will not become of increasing importance in the future, is that it is the company which is the employer. Employment and wages are of far more consequence for economic stability than even tax concessions.

Question put -

That the amounts proposed to be omitted Senator O’Flaherty’s amendment) be omitted.

The committee divided. (The Chairman - Senator the Hon. A. D. Reid.)

AYES: 24

NOES: 27

Majority 3

AYES

NOES

Question so resolved in the negative.

Bill agreed to.

Bill reported without amendment; report adopted.

Bill read a third time.

page 1356

QUESTION

QUESTIONS

The PRESIDENT:

– I wish to draw the attention of honorable senators to a question that was asked this afternoon by Senator Gorton. It was directed to the Leader of the Opposition in the Senate. As the question was obviously contrary to the provisions of the Standing Orders, I did not call upon the Leader of the Opposition to answer it.

I would remind honorable senators that questions put to senators other than Ministers of the Crown must relate to a bill, motion, or other public matter connected with the business on the notice-paper, of which such senators may have charge.

page 1356

ADJOURNMENT

National Service Training - Dutch New

Guinea

Motion (by Senator O’Sullivan) proposed -

That the Senate do now adjourn.

Senator MARRIOTT:
TASMANIA · LP

– I shall detain the Senate for only a little while, but I want to make what I believe is a constructive suggestion to the Government - something which, judging from the debates to-day, is an innovation. I believe that there is a need in Australia and all the western nations to encourage those students who have decided to study science, technology and engineering. We should encourage them as much as we can. This has been the call throughout the western world in the last few weeks, and I believe that both sides of each House of the National Parliament will agree with that view.

I digress to refer briefly to national service training. I have supported the enlightened legislation of this Government which introduced national service training, and I am disappointed that, because of economic and defence needs, it has been necessary to cut down national service training. I am disappointed because I believe national service training has a great defence value and a great national fitness value.

Only once in the four years I have been privileged to be a member of the Senate have I made any representations to have excused a youth who was called up for national service training. Those representations were made on behalf of a young farmer, the son of a widow on a small dairy farm in Tasmania. I made the representations because I felt it was necessary that he be excused. But I support national service training.

To-night 1 speak on behalf of all university students who are studying science, technology, or engineering, and 1 speak in particular for those students who have done their initial period of national service training. I make that quite clear. I do not ask that they be excused from their initial period of national service training.

I speak also for those who, having done their initial period of national service training, obtain employment during the long Christmas vacation with a view to gaining further knowledge of their future calling. 1 believe that any student of science, technology or engineering who has done his initial period of national service training, and who has obtained employment, or who is certified as continuing his studies through the long vacation should be excused from attending camps in completing the remaining period of his national service training. Such camps take up fourteen days of the long vacation and a student who is seeking employment in pursuit of experience and further study is handicapped if required to attend a camp. When a prospective employer asks the student whether he can remain with him until the university reopens in March, the student is forced to reply that he can stay with the employer for the full period except for a fortnight in January. The employer almost invariably replies that it is not worth while employing the student for a short time, then having a break for a fortnight and re-employing him. If a student is prepared to continue his studies throughout the long vacation I feel that a fortnight’s interruption at a camp is handicapping him in the furtherance of his studies.

Another important point to be remembered is that many of the students attending our universities to-day find it expedient and wise to be gainfully employed during the long vacation to help provide funds for the purchase of the things necessary to their studies. The interruption caused by a fortnight’s training in camp is a definite handicap to those students in these particular fields to whom this Government and this nation must give every encouragement. I believe quite sincerely that, in the present world situation, students in the fields to which I have referred are equal in respect of defence value to semi-trained Army, Navy or Air Force personnel. I believe that such students will be of great value to the defence of Australia on the completion of their training. After all, they should be encouraged because they know that they will be entering a profession in which they can ascend only to low-paid jobs. We should encourage every student we can to be fully trained in science, technology or engineering.

Briefly, my request to the Government, through the Leader of the Government in this place, is that any student of science, technology or engineering who has done his initial period of national service training shall be excused from attending national service training camps in the long vacation if he is employed, or if he is certified to be continuing his studies in pursuit of his calling. All I ask, in great modesty, is a considered reply to my suggestion as soon as possible.

Senator GORTON:
Victoria

.- Mr. President, I should like to refer to the statement that you made a few minutes ago relating to the question which I addressed to the Leader of the Opposition (Senator McKenna) earlier to-day. Your statement, Sir, indicated that the question, at the time at which it was asked, was contrary to the provisions of the Standing Orders and, accordingly, the Leader of the Opposition was excused from answering it at that time.

I wish to state now that, on the adjournment debate, no excuse can be offered by the Leader of the Opposition for refusing to reply to that question. I shall now read it again, not as a question but as a mere request to Senator McKenna to state the attitude of the Opposition to the Indonesian claim for Dutch New Guinea.

I should like to ask the Leader of the Opposition whether he can clearly and unequivocally state whether the Opposition supports the Australian Government in its present action in the United Nations in opposing the Indonesian claim to Dutch New Guinea. I gather from the confused noise on the Opposition side of the Senate that honorable senators there do not know what this action is. There is no excuse for such ignorance because this question has been before the United Nations on two or three occasions. It has been voted on by the United Nations, and Australia has, in the United Nations, taken a position opposing Indonesia’s claim to West New Guinea. She has indicated that she will again do likewise, and I should like to give the Leader of the Opposition an opportunity, which he may think he did not have before, to state unequivocally whether the Opposition supports the Australian Government in its action in the United Nations.

Senator McKENNA:
Leader of the Opposition · Tasmania

– I am very happy that to-day Senator Gorton has been educated to the right procedure. It was no accident at all that I did not rise when he addressed his question to me to-day. I put to the honorable senator first, that he had no right to ask the question, and secondly, that if he did have the right he broke Standing Orders by introducing contentious matter. He was completely unfair in that he knew that if I did reply I could not embark upon debate.

Senator Gorton:

– You have an opportunity now, have you not?

Senator McKENNA:

– I am talking, first, about this afternoon. I say to the honorable senator that he did not behave fairly in those circumstances. He has other opportunities at any time he wants to promote a debate on any subject, and he will not find the Leader of the Opposition in this place running away from an issue, as long as it is presented where I can fairly deal with it. Now that I have that opportunity, I do not hesitate to take it, because the Australian Labour party has nothing to be ashamed of in relation to its position in regard to Indonesia and the Dutch.

I was a member of the Chifley Labour Government at a time when fighting on a very large scale broke out in Indonesia between the Dutch and the Indonesians. Mr. Chifley was not in Canberra; he was in Queensland at the time It was quite apparent not only that there was bloodshed, but also that hostilities on a very large scale were about to break out. The Indonesian representative in Australia at the time spoke to me. I gathered some facts, and I conferred with the Department of External Affairs. I had been giving the matter a lot of thought and, in the interests of humanity, I pressed Mr. Chifley to ask the Australian representative to intervene and refer this dispute between the Dutch and the Indonesians to the United Nations.

Senator Gorton:

– That is not the dispute I am talking about.

Senator McKENNA:

– We pressed for it, and it was on Australia’s initiative that the matter was referred to the United Nations Organization. The cease-fire order that was made as a result of that action by Australia, at the instance of the Labour Government, in the view that I take and the certain view that I then had, saved untold lives of human beings, and God knows what suffering. When a conflagration like that starts, who can say how far it will spread? That is the first matter. Following the cease-fire order, a treaty was negotiated. I should mention that there was in the United Nations unanimous support for Australia’s stand for a cease fire.

Senator Willesee:

– But it was criticized by the Opposition in this Parliament.

Senator McKENNA:

– That may bc. The matter then went to negotiation between the Dutch and the Indonesians, and a treaty was negotiated. It left out of consideration the position of Dutch New Guinea, as I recall it, for a period of a year. That matter was to be dealt with within a year, and on the question of where that should be dealt with now one may have quite an open mind. It may be that that issue is capable of reference, as a matter of interpretation of the particular treaty, to the International Court. It is prefectly certain that nobody wants war about that. Australia does not want war, nor does it want to damage the very good relations it established with Indonesia, and in establishing good relations in an argument between two other powers, it pays Australia to keep quiet.

Senator Gorton:

– You still have not answered my question.

Senator McKENNA:

– Let me conclude and do not interrupt. You have had your say. Australia has a vital interest in its own security. I acknowledge immediately that whoever is in charge of Dutch New Guinea is in a position of vital strategic importance to this country. That is Australia’s great interest, and the Australian Labour party has never forgotten that. The Australian Labour party will always be conscious of that fact and will be influenced in its own positive actions by those considerations. 1 do not think the present Minister for External Affairs (Mr. Casey) helped relations with Indonesia, and we claim that it is vastly important to us to be on good terms with Indonesia. I regret that I have not my file before me now so that I might recount to the Senate the extraordinarily tolerant statement that was made quite recently by the Indonesian Ambassador in this country, asking simply for tolerance and understanding of the Indonesian viewpoint on this matter. The Australian Labour party’s attitude to the whole position is that it is an argument between two countries about an area of vital concern to us. We must always be interested in the matter, but just as Senator Gorton’s question this afternoon was designed to tear down the very thing that he claims the Government is seeking to set up - a common foreign policy - and to exacerbate relations between the Opposition and the Government on that very matter-

Senator Gorton:

– In what way was it so designed?

Senator McKENNA:

– I point to the terms in which the honorable senator addressed the question and to the completely unfair circumstances in which he presented it to-day.

Senator Gorton:

– Does the Opposition support the Government in its stand?

Senator Sheehan:

– Which stand? The one it made last week, the one it made to-day, or the one it will make to-morrow?

Senator McKENNA:

Senator Sheehan is quite right. I recall that in 1954 the present Minister for External Affairs, speaking in the United Nations, used terms that made me ashamed of Australia’s diplomacy, when, without hearing both sides, without an objective, independent examination of the facts, he rejected Indonesia’s claim completely out of hand, said that it was not only against ethnical, geographical, and other considerations, but plainly against common sense, and threw an insult at Indonesia. I am not supporting Indonesia’s claim. I say that Indonesia, in common with every other country which has a claim that it believes to be legitimate, is entitled to a hearing of the claim by an independent, objective tribunal and is then required to be bound by that decision.

Senator Gorton:

– Are you supporting Australia’s stand in opposing Indonesia’s claim to Dutch New Guinea?

Senator McKENNA:

– I say this to the honorable senator: We are not supporting Indonesia’s claim. We recognize our interest in this great matter, and we think that if there is a dispute that may lead to hostilities, the Government, and we on this side, are bound to refer the matter to the adjudication of the United Nations and to leave it to that organization.

Senator Gorton:

– But we must make a stand in it on Australia’s point of view.

Senator McKENNA:

– You must make a stand on your own viewpoint.

Senator Gorton:

– Do you support it?

Senator McKENNA:

– Unquestionably, I have admitted that we concede immediately that we have a vital interest. Does the honorable senator want me to repeat it?

Senator Gorton:

– I want you to answer my question, but you obviously will not.

Senator McKENNA:

– It may well be that as a result of a reference to the United Nations, Indonesia, the Netherlands and Australia might have a tripartite trusteeship over the area. The United Nations organization might restrict the trusteeship to two parties. It might, in its wisdom, and after a full investigation of the matter, place the area under the trusteeship of a nation other than the three I have mentioned.

Senator MARRIOTT:
TASMANIA · LP

– There may be a good job for Marshal Zhukov.

Senator McKENNA:

– Yes. The solution will not be that either Indonesia will have it or the Dutch will have it. There are other alternatives, and 1 think that. until the matter is properly argued, properly judged and determined, and Australia’s viewpoint properly presented, it behoves Australia to stay on the sidelines, and not worsen relations with Indonesia, despite all the swashbuckling that has been indulged in recently by uninformed people. I do not want to see Australia participating in the swashbuckling over this issue. We must look down the years that lie ahead - not merely the decades, but also the centuries. It may be vastly important to Australia to have very good relations with Indonesia, and we should start developing those good relations now. The argument over Dutch New Guinea will one day be resolved, and if the principles of the United Nations mean anything, it will be resolved without the use of force. What does that mean? It means that it will be resolved by negotiation and discussion. But abuse and the making of threats are not negotiation and discussion. It is good diplomacy, and good sense, to look to Australia’s future interests, and not to barge into this situation with wild words. Australia would do very well to stop, look, and listen - I put a personal view when I say this - and not use its influence to prevent the matter from being discussed by the United Nations - the one tribunal that can ever resolve it.

Senator Gorton:

– When it is discussed, should Australia oppose Indonesia’s claim?

Senator McKENNA:

– This Government should take the first steps that are necessary. If it does what it should do, it will follow the course that I suggest, and not rush in with violent expressions of opinion. Sooner or later, it will recognize that shooting - whether shooting off the mouth, or shooting with weapons - will never solve the matter, which will be resolved ultimately by negotiation.

Senator Mattner:

– In other words, the Leader of the Opposition is prepared to give Dutch New Guinea to Indonesia straight out?

Senator McKENNA:

– It is completely improper for the honorable senator to attempt to put that sentiment into my mouth. I have neither said nor implied anything of the kind, and I will not have the honorable senator or anybody else put into my mouth words that are neither there, nor in my mind.

Senator Gorton:

– The honorable senator is not prepared even to answer a simple question.

Senator Sheehan:

– “ Simple “ is the word.

Senator McKENNA:

– It is. At the outset of his question, Senator Gorton asked me to be clear and unequivocal. I cannot help it; it is the honorable senator’s fault if what I have said has not been clear to him. 1 consider that I have been as unequivocal as one can possibly be in discussing an issue in which the facts and the law are not determined, and in which we have a selfish - if I use that word in a proper sense - and vital vested interest, which this Government must preserve at all costs. It owes a great responsibility to Australia in this matter. The Opposition would support the Government to the hilt in asserting and maintaining that vital interest, but that does not mean that we approve all the methods that the Government chooses to use from time to time, or the course that was taken by the Minister for External Affairs in 1954. It does not mean that we, pledged to the support of the United Nations, will refuse to allow a matter of this kind to be discussed by that body. I completely repudiate any implication that the Opposition supports Indonesia’s claim.

Senator Gorton:

– Does the Opposition support the Government in opposing Indonesia’s claim?

Senator McKENNA:

– I have already said that I do not support the Government in an unqualified way in seeking to prevent the matter from being discussed at the proper diplomatic level.

Senator O’SULLIVAN:
General · QueenslandVicePresident of the Executive Council and Attorney · LP

– in reply - Out of courtesy to the Senate, I should like to say thatI shall be very happy to discuss with my colleagues the implications of the matter raised by Senator Marriott.

Question resolved in the affirmative.

Senate adjourned at 11.25 p.m.

Cite as: Australia, Senate, Debates, 19 November 1957, viewed 22 October 2017, <http://historichansard.net/senate/1957/19571119_senate_22_s11/>.