10 November 1964

25th Parliament · 1st Session

The DEPUTY PRESIDENT (Senator McKellar) took the chair at 2.30 p.m., and read prayers.

page 1557


Minister for Defence · Western Australia · LP

– by leave - It is my sorrowful duty to report to the Senate the death of Senator Seddon Vincent of Western Australia. He died in Perth during last night. The late Senator Vincent was elected to represent Western Australia in the Senate at the general election of 1949 and took his place on 1st July 1950. He was re-elected at the general elections in 1951, 1955 and 1961. He was a member of the Senate Standing Orders Committee from 21st June 1951, of the Senate Standing Committee on Regulations and Ordinances from 10th September 1953 to 4th November 1955, of the Senate Select Committee on the Development of Canberra in J 954-55, and of the Joint Parliamentary Committee on Foreign Affairs from 25th October 1956 to 27th August 1959 and from 16th August 1962. In addition he was a member of the Joint Committee on the Australian Capital Territory from April 1957, of which Committee he was Chairman from 23ird August 1962 to 1st November 1963. He was a member of the Senate Select Committee on Payments to Maritime Unions in 1958, and a member of the Australian delegation to the InterParliamentary Union Conference at Warsaw in 1959. He was Chairman of the Senate Select Committee on the Encouragement of Australian Productions for Television in 1962-63.

Senator Vincent enlisted in the Royal Australian Air Force on 23rd September 1940 and served at home and overseas with the administrative and special duties branch. He was Director of Staff Duties, Royal Australian Air Force Headquarters, and was discharged on 24th October 1945 with the rank of Wing Commander. Seddon Vincent attended Scotch College in Perth and subsequently took a law course at the University of Western Australia. He commenced practising as a barrister in 1931, first in the eastern wheat belt and then at Kalgoorlie. Throughout his life he devoted much of his time to public affairs and to community undertakings. He was always interested in politics.

My first recollection of meeting Seddon Vincent is of the time of the secession campaign in 1933, when he actively espoused and supported the cause of Western Australia’s secession. His campaign for the Dominion League was conducted with remarkable vigour. His encyclopaedic knowledge of Western Australia and his grasp of statistics made him an extremely effective figure in the cause that he supported on that occasion.

In Kalgoorlie he became a member of the municipal council. Indeed, his interest in local government continued for years after he was elected to the Senate. For many years he was the spokesman in Canberra for the Western Australian Local Governing Bodies Association. He was active in the Chamber of Commerce movement and for a period was President of the Kalgoorlie branch. Subsequently he was Vice-President of the Federated Chambers of Commerce in Western Australia. He was a prominent cricketer in the Eastern Goldfields Cricket Association and he also played competitive tennis.

When he went to Kalgoorlie he devoted himself to a study of gold mining in all its aspects. He could discuss with equal facility the physical aspects of mining or the financial and economic aspects, both in the Australian and in the international contexts. All honorable senators will recall the many speeches that he made about gold mining, and in support of the gold mining industry. His knowledge was profound, and I venture to suggest that in this Parliament he was an unchallenged authority on the subject.

With his wife he had a lifelong joint interest in the theatre. He was an active producer of amateur productions for many years and it was due, very largely, to his efforts and those of his wife that the repertory movement in Kalgoorlie achieved such a high reputation throughout Australia. He adjudicated at many drama festivals. His deep interest in the theatre manifested itself very plainly when he assumed the chairmanship of the Senate Select Committee on the Encouragement of Australian Productions for Television, lt will be agreed by all that the report which the Committee produced - so much of it stemming from his own experience and ideas - showed an outstanding awareness of the problems of television. The public interest which this report has since evoked is evidence of its scope and depth

Seddon Vincent retained throughout his career as a senator a deep pride in the fact that it was his duty and his privilege to represent his State in the Parliament of the nation. He knew Western Australia from end to end. There. was about him something of the spirit of the gold field pioneer. He made light of the difficulties and inconveniences that attached to conducting a legal practice in an outback area. He accepted the ebbs and flows of fortune as a goldfielder has always accepted the luck that comes with the glint of gold and the lack of luck that all too frequently attends the efforts of the prospector.

His philosophy was one of accepting life as it came, seeing little difference between sunlight and shadow. Over the last two years his health had been failing. Faced with the inevitable, he carried on with a calm courage that gave inspiration to those who knew, as he knew, what was his condition and what was to be his fate. I move -

That the Senate expresses its deep regret at the death of Senator Victor Seddon Vincent, senator for the State of Western Australia, places on record its appreciation of his long and meritorious public service, and tenders its sincere sympathy to his widow in her bereavement.

Senator McKENNA:
Leader of the Opposition · Tasmania

– I second the motion moved by the Leader of the Government (Senator Paltridge). I do so on behalf of all members of the Australian Labour Party in the Senate. We on this side deeply regret the premature passing of Senator Vincent at Perth yesterday at the age of 56 years. I find it hard to realise he was with us in the Senate only a few short weeks ago.

The late senator gave generously of himself in service to the public. Senator Paltridge outlined, in the splendid tribute he paid to the late senator, the work that be did. I summarise by saying that he served at the municipal level, on many public bodies, in the Royal Australian Air

Force during the last war, and as a senator in the National Parliament for the past 14 years. His term was marked by his readiness to engage in the work of important committees - work which made heavy demands on his time when the Parliament was in recess. The highlight of his career was his chairmanship of the Senate Select Committee on the Encouragement of Australian Productions for Television. He displayed enormous drive and capacity in guiding that Committee to the production in October 1963 of a report for which not only the Senate but the whole nation should be grateful. That report will be a lasting monument to his memory and his courage. AH the time the Committee was operating he was seriously affected by the illness which has now caused bis death.

He was most knowledgeable in the wide range of matters that come before the National Parliament. He participated freely in Senate discussions and established himself as a very keen debater. He was respected by all of us. Those who knew him best respected him most. On behalf of my colleagues of the Opposition I extend deep sympathy to his widow, to his relatives and to his sorrowing friends.

Senator MAHER:

– In- the absence of Senator Wade, who is the Leader of the Australian Country Party in the Senate, I very sadly join with the Leader of the Government (Senator Paltridge) and the Leader of the Opposition (Senator McKenna) in expressing to Mrs. Vincent, on behalf of the members of the Country Party in the Senate, our great sense of loss and our heartfelt sympathy in tha untimely death of her husband, the late Senator Victor Seddon Vincent. Our late colleague had a long and painful illness which he bore with great courage and fortitude. It could be said that he belonged to the hero class. He promptly answered the call and served his country with skill and gallantry in World War II.

When the war ended he was in due time elected a senator for Western Australia as was mentioned by Senator Paltridge and Senator McKenna. He served with distinction in this chamber. He took into account not only the particular interests of his own State, but also the needs of every State. He adopted a wide Australian outlook.

He was a leading debater in the Senate. He was a convincing and knowledgeable speaker on a wide range of subjects, and he served on many important committees of this Parliament. He served, too, in the Royal Australian Air Force and rose to the rank of Wing Commander. Australia can ill afford to lose a young man of his sterling quality. Vale Seddon.

Senator COLE:
Leader of the Australian Democratic Labour Party · Tasmania

– I desire to add my condolences to those which have already been expressed on the death of Senator Vincent. He was a fine personality and he appreciated the finer things of life. He will be sadly missed in this chamber. I express my sincerest sympathy to his sorrowing widow.

Senator HENTY:
Minister for Civil Aviation · Tasmania · LP

– I would like to associate myself with the expressions of sympathy to Mrs. Vincent and to join those honorable senators who have expressed sorrow at the loss of Seddon Vincent. He and I were elected to our side of politics in 1949. The retiring senators retained their seats until 1950, so we came in as new members of the Parliament after most of the forty-niners who had been elected to the House of Representatives had settled down after “a session and had found their feet. Seddon Vincent and I shared a room in Parliament House. We learned our politics together the hard way, as backbenchers. We had a joint experience which led to a very close friendship. I shall remember him always as a good friend and as a man of high principles with a very highly developed instinct to fight and to spring to the support of the underdog. 1 feel that we have lost a good senator and a good friend. I support the motion.

Senator CANT:
Western Australia

– I wish to support the motion proposed by the Leader of the Government in the Senate (Senator Paltridge). The late Senator Vincent might have been termed a true Western Australian. He was born on the goldfields at Leonora and commenced his education in that town, afterwards going to Scotch College and the University of Western Australia, from which he graduated in law. It is said that those Western Australians who were born and educated on goldfields are true Western Australians, with a much broader outlook than many of those who come from the southern and coastal areas. I believe that Senator Vincent was one of those persons with a very broad outlook.

During his period in Kalgoorlie, after commencing practice there, he became keenly interested in the repertory movement and produced many fine plays. Subsequently, upon his transfer to Perth and election to the Senate, he continued in that field and produced for the Festival of Perth several plays which were very well received. He had a continuing interest in the dramatic arts and culture and in particular the development of an Australian culture, which culminated in the very fine report, for which he was largely responsible, on the encouragement of Australian productions for television. He will be best remembered, perhaps, for his work in the dramatic arts and the cultural field, particularly on the goldfields and in Perth, and the report of the Senate Select Committee on the Encouragement of Australian Productions for Television will be a monument to him for very many years. The people of Western Australia have lost a fine friend who was valued highly in the circles in which he moved. To his wife and other relatives I extend my deepest sympathy.

Senator BRANSON:
Western Australia

– I should like to associate myself with the motion. I know that I speak also on behalf of Senator Scott, who is absent from the Senate today. I had known Seddon for the best part of my life, because we were born in the town of Leonora. He always had a great and abiding faith not only in gold as gold but also in the goldfields of Western Australia and in the industry generally. If ever you wanted to arouse dear old Seddon’s ire you only had to say that gold intrinsically was not worth very much. It was a pleasure then to sit back and listen to him talk about gold and its real worth.

It has been mentioned that he and his wife, Freda, gave so much of their time - and Seddon was a very busy man all his life - to the theatre and the arts generally. I am sure that there are many people in Kalgoorlie today who will be remembering Seddon for the contribution that he made in those spheres. I always regarded it as a great privilege to be in this Senate when a Minister, who was in charge of a complicated bill in which law was involved, was in difficulties. Seddon always would loyally support and help the Minister. His complete loyalty to the Government and to the Ministers I always noted with a great deal of pride as a fellow Western Australian. My sympathy goes to Freda and his other relatives.

Question resolved in the affirmative, honorable senators standing their places.

Senator Paltridge:

Mr. Deputy President, I sugggest that as a mark of respect to the memory of the late Senator Vincent, the sitting of the Senate be suspended until 8 p.m.

Sitting suspended from 3.50 to 8 p.m.

page 1560


Ministerial Statement

Minister for Defence · Western Australia · LP

– by leave - I point out that I am making this statement on behalf of the right honorable the Prime Minister (Sir Robert Menzies) who, at this time, is making a similar statement in the other place. Consequently, the personal pronoun,” I “, is to be understood to refer to him.

For some months the Department of Defence and the Service and Supply Departments, in close collaboration with the Chiefs of Staff Committee, have been making a complete reassessment of our defence needs and programme. Their labours have been conducted against the background of affairs overseas, and particularly in and around South East Asia. The Government has exhaustively studied the reports placed before it, and has consulted closely with its professional military advisers. In the result, we have formed certain views about our strategic position and about our defence requirements which I will now proceed to state as clearly as I can.

I refer first to our strategic position. This requires an examination of our position in relation to our neighbours and our international associates. Since the Second World War and increasingly in the last decade, the struggle against aggressive Communism coupled with other developments in Asia has forced us to recognise that we are in a new situation. General or global war - that is, unrestricted conflict between the major world powers - has receded in probability because of the deterrent effect of nuclear weapons, and we continue to believe that it is unlikely except as a result of miscalculation. But armed conflicts short of general war could develop at any time in areas of tension throughout the world. Communist powers will continue to press their aims through all the varied cold war techniques of subversion and insurgency and other threats to the integrity of States which they wish to bring under their domination.

At present, important questions arise which require frank answers. They will, I regret to say, indicate that there has been a deterioration in our strategic position since the review which I presented to Parliament last year. The range of likely military situations we must be prepared to face has increased as a result of recent Indonesian policies and actions and the growth of Communist influence and armed activity in Laos and South Vietnam. If these collapsed, there would be a grave threat to Thailand and the whole of South East Asia would be put at risk. The effectiveness of the South East Asia Treaty Organisation as a guarantee of mutual security would be seriously jeopardised.

In particular, in South Vietnam the continued instability of government has made the task of resistance more difficult and to some extent frustrates the massive efforts of the United States and our own necessarily small contributions. The aggressive attitude of North Vietnam towards South Vietnam is demonstrated by continued political and ideological support given to the military insurgents, and the infiltration of thousands of trained men. There was the Tonkin Gulf attack on United States warships. Communist China has ignored the Nuclear Test Ban Treaty. These are sinister and significant developments.

In Malaysia, to which we have given the specific assurances which I announced in this House, Australian troops have for the first time been in combat with Indonesian forces. True, in international opinion, Malaysia has been strengthened by the vote in the Security Council, the meeting of the Comonwealth Prime Ministers in London, and the relative failure of President Sukarno to gather support at the Cairo conference of unaligned nations. But, though it is now clear that, for all practical purposes, no impartial person doubts that Indonesia is carrying on active and entirely unjustified armed aggression against her neighbour, the fact is that Indonesia still goes on her unlawful way, seeking to undermine Malaysian morale, to cause the disintegration of Malaysia, and no doubt to dominate the Borneo territories if and when they can be detached from Malaysia.

If Indonesian attacks continue Malaysia may find it intolerable to confine defensive measures to the guarding of Malaysia’s shores and jungles against Indonesian intrusion. These Indonesian attacks may create a real risk of war, a war so hopelessly unprofitable to Indonesia that it is hard to understand how any leader concerned with the well-being of the ordinary men and women of this country could seriously be prepared to provoke it. Indeed, we must prepare for all eventualities including the control and, if necessary, defence of the frontier between West New Guinea and Papua and Australian New Guinea. Meanwhile, by his cultivation of the Communist powers, President Sukarno is exercising an influence in South East Asia whch could weaken resistance to Communism.

It must be conceded, therefore, that the risks of our situation in this corner of the world have increased. This does not mean that we suffer from fatalism or defeatism; there is not the slightest occasion for either. But it does mean that we must do more, and pay more, as our contribution to our national security. This is, of course, to be done having in mind, and indeed never forgetting, that, in the South West Pacific, Australia and New Zealand have allies, including Great Britain and the United States, who are rich in power and goodwill. Without them, Australia’s task in defending so vast a territory with so few people would be a fearful one.

But Australian defence cannot be considered in isolation, any more than the forces we possess should be regarded as garrison forces. Placed as we are, our defence, if it is to be successful, must be beyond our shores, and in depth. Hence

S.E.A.T.O., and A.N.Z.U.S We are in S.E.A.T.O. not only because we have a goodwill towards the nations concerned and would wish to help to protect them against Communist aggression, but also because the further Communist powers are kept away from us, the more secure we will feel. Thus, in S.E.A.T.O. a high common interest is rendered stronger, not weaker, by the individual national interest each of us has.

Again, we are with Malaysia for several good reasons. Malaysia is a well governed and friendly Commonwealth country, and as such is entitled to our support. Malaysia is a non Communist nation, and is willing at all times to resist the Reds; it is monstrous that she should be the subject of unprovoked aggression from the south. But again, we, in Australia, also want Malayasia preserved because we want the Communist powers as far away as possible. It should not be forgotten that one of the aims of what Indonesia calls its “ confrontation “ of Malaysia is the removal of the Commonwealth’ presence, including the bases. We are advised that so long as the bases are availtable and. Commonwealth forces support Malaysia, there is little prospect of a defeat of Malaysia by Indonesian military action. In short, Malaysia and Australia have a common interest and an individual interest, and they coincide.

In the same way, it is tremendously important for us that Indonesia should not become Communist, but retain its independence under a Government serving only the good of the Indonesian people. It is very much to be feared that if Indonesia provoked a war, the only people in Indonesia who would get advantage from it would be the Communists, ever ready to thrive on disorder and defeat. Thus, Indonesia and Australia have vital interests in common. The recent actions of the Indonesian Government are therefore all the more deplorable. It is a misfortune to have to join in a defence of Malaysia against a nation with which we have no other quarrel, and so much in common. Yet it is a misfortune which we must be prepared to face, to the utmost of our power.

Now, this has been a brief account of some of the developments which have led us to the conclusion that there has been, since my review of 1963, a deterioration in our strategic position. What new defence provision should be made, in the light of this conclusion? True, we are not and cannot be the sole guarantors of our defence. But we must be able to say with truth that we are making a contribution to it which is commensurate with our capacity and our national self-respect.

The 1963 review itself added very considerably to the defence programmes and votes. Since then, substantial additions have been made. It will be of interest if I remind the House that until very recent years our defence vote was, and had been for some time, of the order of £200 million a year. The order of financial magnitude involved in our present review can be briefly stated at this stage. The review of May 1963 raised the programme for 1965-6, 1966-7 and 1967-8 by about £40 million a year to a total of £816 million. This present review raises that total to £1,220 million. That is, a further increase of £404 million. I will return to the figures before I conclude.

I will now turn to the concrete decisions which have led to these financial conclusions. Because of the central importance of manpower to the whole of our defence preparations, I shall deal first with this question. At present the regular forces number just over 52,000 including 22,750 in the Regular Army, 16,600 in the Air Force and 12,900 in the Navy. In addition there are approximately 1,000 Pacific islanders in the Pacific Islands Regiment. In the Citizen Military Forces we have 27,630, in the Citizen Naval Forces 5,115, and in the Citizen Air Forces 868.

Over the programme period to mid-1968, the Navy and Air Force will require a considerable increase in manpower to correspond with the planned expansion of these forces including the progressive introduction of new equipment. By June, 1968, the Navy will have a requirement for approximately 16,700 and the Air Force for 2 1 ,000 men. The Government and its naval and Air Force advisers are confident that a satisfactory progressive build up of manpower towards these levels can be achieved by existing means of recruitment.

The question of Army manpower is more difficult. The numbers are larger; the whole strength and organisation of the Army are involved. We have given close attention to this problem, which has before now given rise to great controversy. After an examination of all the factors, and in full consultation with our military advisers, we have reached the conclusion that the Regular Army should be built up as rapidly as possible from the present 22,750 to an effective strength of 33,000 men, which means a total force of 37,500. A peace time Army of this size would be adequate to meet our immediately foreseeable operational requirements and form a basis for rapid expansion in war.

The training effort required to achieve any reasonably quick build up of a much larger Army than the one we now contemplate would be such that the Regular Army would cease to be an effective fighting force and become for some considerable time simply a training organisation. Let me remind honorable members that we have through successive programmes built up the capacity of the Regular Army as an effective and readily available fighting force, and it is essential in present circumstances that this capacity and quality be retained to the greatest possible extent.

The Government has given the most careful consideration to the means by which the Army’s manpower requirements may be achieved. It seems clear, on our military advice and our own carefully formed judgment, that we cannot expect by voluntary means to achieve a build up in the Army’s strength of the order we require and to the timing which is necessary. We are living in a period of unsurpassed prosperity and more than full employment; the attractions of civilian employment are very great indeed.

The Government has therefore decided that there is no alternative to the introduction of selective compulsory service. We know that this presents difficult personal, social, economic, and perhaps political problems. Our decision has been taken only because of the paramount needs of defence and, in the difficult circumstances I have described, the preservation of our security.

May I return at this point to the observations I made earlier in reference to the demands of our deteriorating strategic situation? We expect a continuing requirement to make forces available for cold war and anti-insurgency tasks. We must have forces ready as an immediate contribution should wider hostilities occur. We must at all times retain adequate forces against any more direct threat which might develop to our own security. Because of our geographic position, we have the most compelling reasons to take those steps which will put us in a position to meet these various demands. The necessary units cannot be provided with a lesser effective strength than 33,000, yet this number cannot in present circumstances and in proper time be obtained by voluntary means. lt follows also that to enable the Regular Army to achieve the required degree of operational readiness, selective servicemen must serve in regular units on a full-time basis. If the scheme is to be effective, those called up must therefore be under an obligation to serve overseas as necessary and must be available to go with the regular unit in which they are serving.

In assessing the length of service required, sn average of six months must be allowed for recruit and corps training. Provision must also be made for leave, movement and acclimatisation should the national servicemen be sent to an overseas theatre. In order to permit a period of at least twelve months effective service in a unit, a total period of two years full time duty is required and this will be the basis of the Government’s scheme. This will be followed by a period of three years on the Reserve.

Briefly, we have decided that young men will be required to register in the calendar year in which they reach the age of 20 years. The first actual call-up will take place about the middle of next year. During the second half of 1965 a total of about 4,200 will be required. Thereafter there will be annual call-ups of about 6,900. This will, by December 1966, give an Army of a total strength of about 37,500, which will mean an effective force of 33,000. Detailed consideration is being given to the conditions of service and the question of exemptions and deferments to meet particular circumstances. Civil employment rights of those called up will’ be appropriately protected.

I hasten to say that the introduction of selective compulsory service does not in anyway detract from the importance of volunteers for the Regular Army, the Emergency Reserve or the Citizen Military Forces. On the contrary, we would wish the volunteer spirit, which has meant so much to Australia in the past, to continue. Both the Government and the nation would urge that as high a percentage as possible of those in our armed services should be those who, of their own choice, and in the spirit of a great national tradition, have joined one or other of those Services.

Indeed, so far as the Regular Army is concerned, volunteers will continue to be of fundamental importance to the effectiveness of the force. Volunteers on longer terms of engagement will reach the highest standards of training and will give greater flexibility in the organisation and deployment of our forces. A selective service scheme does not give sufficient time to train highly qualified specialists and technicians and we must continue to look to volunteers to provide these. The Government has already reviewed and improved conditions of service to make a career in the permanent forces as attractive as possible. With this in mind and in the light of the strategic situation which I have outlined, we would ask the young men and women of Australia to consider carefully a permanent career in the armed forces.

The new Emergency Reserve, for which enrolment will be commencing almost immediately, will provide a ready means of supplementing field force units, increasing our cold war military capability and providing reinforcements in the initial stages of hostilities. It has a most important place in the full concept of our defence forces. The role of the Citizen Military Forces - to provide in war or defence emergency the follow-up forces and the expansion of our military effort - remains unchanged, and indeed assumes even greater importance following the passage of the legislation to make these forces available in a defence emergency. I seek the co-operation not only of our young men, but also of their employers and others to ensure that the Citizen Military Forces target of 35,000 is achieved over the period of the new defence programme.

The detailed organisation of the Army will be further reviewed to provide for an expansion in the field force with particular emphasis on a substantial increase in the combat element and high priority logistic units. Two additional battalions will be raised making a total of six including the two battalions in our first two battle groups and the battalion already deployed in Malaysia. In addition, the organisation will provide adequate backing, not only to maintain and support the expanded field force, C.M.F. and cadets, but also to provide a sound basis for further expansion and mobilisation.

There is, for a variety of good reasons, some concentration of military provision and organisation in the south-eastern areas of the continent. We feel, however, that, in the overall interests of rapid mobility, this should not be carried too far. We have, therefore, after careful consideration, decided that a new battle group will be established in North Queensland, probably in the Townsville area. The Special Air Service Regiment already established at Perth will be more than doubled in size to provide a Headquarters Squadron and four Squadrons. The Government has decided on a substantial change in the organisation of the Citizen Military Forces designed to create additional battalions, give greater flexibility and increased opportunities for service, particularly in country areas. The target strength for the cadets is being increased from 40,000 to 45,000.

In the 1963 Defence Review, I announced that it was intended to double as soon as possible the strength of the Pacific Islands Regiment, which at that time was of the order of 700, and I indicated also that further developments in relation to the force were under consideration. Recruitment to the Pacific Islands Regiment has increased steadily, and the target strength we envisaged in our previous plans will be attained earlier than we had expected. In the present strategic situation the Government continues to attach high priority to the strengthening of the Pacific Islands Regiment. The detailed investigations have now been completed, and the Government will proceed with the plans to increase the force to three battalions and supporting units with a total strength approaching 3,500 by June 1968. Tenders closing on November 30th have been called for necessary Army works for Papua and New Guinea which could cost about £12 million. These include additional barrack buildings, workshops and engineering services, and housing for native married members of the force.

The provision of equipment for the Army must match the improvements in the strength and availability of units. In the Defence Review of May 1963, expenditure on Army equipment was raised from the rate of £10 million per annum to the much higher level of £17.5 million.

In the light of the deterioration of our strategic position there is a need to accelerate the rate of progress towards achievement of the approved objective of providing modern equipment for one Division. Provision is also required for the expanded forces in Papua-New Guinea. Provision must be made for the replacement of outmoded equipment as new items become available from research and development for introduction into service. Sufficient additional equipment must be provided to ensure that C.M.F. training is realistic and effective.

For all these purposes, and in line with the expansion in other elements of our defence preparations, the Government has approved a major acceleration in Army equipment purchases. Expenditure will be increased to £20 million in 1965/66 - the first year of the new defence programme - to £25 million in the following year and to £30 million in 1967-68. The equipment to be purchased will include the whole range of modern conventional weapons, ammunition, vehicles, light aircraft, engineering and signals stores and so on. Items of new equipment which the Army is investigating include low level anti-aircraft weapons, airportable armoured fighting vehicles, new artillery weapons, combat surveillance equipment and various other items. Emphasis will continue to be placed on airportable equipment and those items which will improve Army mobility. The general effect of this approval is that as the strength of our forces is built up the weapons and equipment which they require, and of the most modern types, will be available to them. The increase in the Army strength from under 23,000 to some 37,500 by the end of 1966 means that accommodation for an additional 15,000 men has to be provided. This is additional to the large works programme for the Pacific Islands Regiment which I have already mentioned. This will mean a greatly increased Army works programme which will be carried out with the highest priority.

I turn now to our proposals for an expanded Navy and Air Force as part of an overall programme for strengthening the Australian military effort. Before the defence review undertaken by Cabinet last week, the naval programme provided for a fleet comprising the following main units: One aircraft carrier, operating anti-submarine helicopters and also fixed wing aircraft for thenremaining service life; two Daring class destroyers; three Charles F. Adams class destroyers - D.D.G.s; six Type 12 frigates; four Oberon class submarines; six Ton class minesweepers; one escort maintenance ship, being constructed in Australia; one fast transport; one fleet tanker; and one Battle class destroyer for use as a training ship.

This programme involved the construction of ten new ships, including three Charles F. Adams class destroyers which rank among the world’s finest guided missile ships; four Oberon class submarines; and two Type 12 anti-submarine frigates and an escort maintenance ship being constructed in our own shipyards in Australia. These additions in themselves would provide a significant increase in the capability of the R.A.N, to fulfil its increasing operational commitments.

Careful consideration has been given to the future of the Fleet Air Arm which is a complex field of defence and could involve very large expenditures. H.M.A.S. “Melbourne” was converted to the antisubmarine role with the acquisition of 27 modern Wessex helicopters in 1963, and a number of Gannet and Sea Venom aircraft were also retained. A number of possibilities as to the continued operation of “ Melbourne “ have been considered, having regard to the remaining life of the ship, the general cost of naval aviation, and other defence considerations.

The Government has now made two important decisions -

First, as the Gannet and Sea Venom aircraft are approaching the end of their service life and becoming difficult and uneconomical to maintain, it has been decided to replace these aircraft with 14 S2E Tracker anti-submarine aircraft. This aircraft, which is in service with the United States Navy - as members of the House who visited recently the U.S.S. “ Enterprise “ will recall - is a twin piston-engined aircraft with good endurance and well equipped for all-weather operations. The anti-submarine equipment it carries includes the latest electronic devices, and it also has the capacity for carrying a good weapon load. Its inclusion in “Melbourne’s” equipment will improve considerably the ship’s anti-submarine capability.

Secondly, the Government has also approved an extensive modernisation of “ Melbourne “ going much beyond that approved in the 1963 review. This modernisation will cost nearly £10 million, the main functions in which modernisation is required being the operation of antisubmarine aircraft in all weather by day and night, long range detection and height finding radar, improved close range air defence by mounting Seacat missile systems, and improved habitability.

Those proposals will add substantially to the anti-submarine capability of the R.A.N. In the 1963 review the Government authorised modernisation of our Daring class destroyers directed mainly towards improving their anti-submarine capability. This plan has been reviewed in the light of the Navy’s tactical requirements and the needs of our strategic situation. It has now been decided to modernise the Darings by providing them with Ikara, which, as honorable members are already aware, is a guided anti-submarine weapons system developed in our own research and production establishments. The estimated cost of modernising the two Darings is in excess of £13 million.

With a view - to enhancing the Navy’s mobility, a fast fleet replenishment ship with some provision for the carrying of oil fuel is to be acquired. It is expected that the ship will come into commission in 1970. The question of local construction, which we would prefer, or purchase from overseas will be determined at an early date. It has been decided to add two minesweepers to the present force of six vessels which were obtained in 1962. The additional minesweepers will be introduced into service in 1968.

Concurrently with the planning of the expansion of the Pacific Islands Regiment, investigations have been proceeding into the formation of a coastal security force in Papua and New Guinea. It has now been decided that five patrol craft of a type suitable for local manning and maintenance will be obtained. These will contribute substantially to the general surveillance of the shores and rivers of the Territory. Nine all purpose patrol craft to replace vessels in use by the R.A.N., which are now approaching the end of their useful life, will also be obtained. These vessels will be suited for patrol duties such as those being carried out at the present moment by our minesweepers in Borneo waters.

In addition to the above proposals, Cabinet has approved a wide range of naval projects designed to support objectives which have already been approved, including support facilities for the Charles F. Adams class destroyers, a missile firing range, development of a submarine base and support facilities and provision for a submarine rescue vessel, replacement of harbour support craft and fleet boats, modernisation of Wessex helicopters, and rehabilitation of Manus Island oil fuel installations.

In recent defence programmes the Government has approved the substantial rearmament of the fighter and strikereconnaissance elements of the R.A.A.F. with modern aircraft of advanced performance. The order which has been placed for 100 Mirage supersonic fighter aircraft will provide for the re-equipment of the four Sabre fighter squadrons. Deliveries of these aircraft from local production to the R.A.A.F. are continuing. The 24 FOA aircraft which have been ordered from the United States will add powerfully to the deterrent and strike capability of the R.A.A.F. The Government is confident that the F1I1A aircraft, which is expected to fly before the end of this year, will amply fulfil its promise as an outstanding military aircraft.

In this programme the Government has given particular attention to the transport, maritime and training requirements of the R.A.A.F. and to the continued development of our airfields. The existing squadron of 12 Hercules C130A aircraft with which the R.A.A.F. was equipped in 1958 has considerably improved the air strategic mobility of the Australian forces. The development of plans associated with our S.E.A.T.O. and other commitments has, however, shown clearly that our present air strategic movement facilities fall short of those required to meet likely military situations. A study by our professional military advisers on the strategic mobility requirements of the Australian Services indicates that in addition to the aircraft which would be provided from civil resources, the Services require an additional squadron of medium range transport aircraft. The aircraft selected to meet this requirement is the CI 30E, a greatly improved version of the C130A at present in service in the R.A.A.F. For operational and maintenance purposes these aircraft are compatible with the C130A. They provide an increased strategic lift capacity and they possess the short field characteristics which enable them to carry out intra-theatre operations as well as inter-theatre tasks. Approval has been given to acquire 12 C130E aircraft. Tin’s will mean an increase in the order of battle of the transport element of the R.A.A.F. from two to three squadrons. The existing squadron of Hercules CBOA aircraft will, of course, continue in service, together with the squadron of Caribou aircraft which has recently been acquired. The detachment of Caribou aircraft in South Vietnam has already given notable service in operations against the Communist Vietcong.

The maritime element of the Royal Australian Air Force, working closely with the carrier “ Melbourne “ and with the escorts of the Royal Australian Navy, provides maritime reconnaissance and anti-submarine protection for our forces. At present there are two maritime squadrons in the R.A.A.F. No. 10 Squadron is equipped with Neptune SP2H aircraft embodying modern surface and underwater submarine detection equipment. No. 11 Squadron stationed at Richmond is, however, equipped with an older version of the Neptune aircraft, the P2E, containing submarine detection and tracking equipment which is now coming to the end of its useful operational life. It is accordingly necessary to re-equip this squadron so that it will be fully effective against modern submarines. It has been decided to re-arm the squadron in 196S with Lockheed Orion aircraft which have outstanding performance in the location and destruction of enemy submarines. The Orion is the best maritime aircraft available in the world today. Ten of these aircraft will b* obtained.

The current flying training aircraft in the R.A.A.F. are the Winjeel in the basic and the Vampire in the advanced stages. The introduction of high performance aircraft of the Mirage and FI IIA types will require new types of training aircraft and new techniques in training. In major air forces operating supersonic aircraft the use of a jet aircraft from the commencement of training has proved to be necessary to achieve the required standard quickly. The Government has accordingly approved the purchase of an all-through jet trainer of suitable performance to replace the Winjeel and the Vampire, thereby enabling the training organization to advance in parallel with the re-equipment of operational squadrons. Seventy-five of the new aircraft will be obtained.

At present navigators and signallers of the R.A.A.F. are trained in Dakota aircraft modified in 1952 for this purpose. In a few more years these aircraft will be inadequate to train navigators and signallers, having regard to the latest training techniques, the type of training equipment required and the modern operational aircraft being obtained for the R.A.A.F. The Government has approved the acquisition of eight replacement trainer aircraft of a suitable type.

Experience gained by the members of the R.A.A.F. Mirage instructional team in in France, coupled with the experience of other air forces operating supersonic aircraft, indicates that a dual Mirage aircraft is necessary to provide safe, efficient and fast conversion of both experienced and less experienced pilots. The Government has approved the acquisition of 10 dual Mirage aircraft. These will be additional to the 100 operational Mirage aircraft already on order.

I have referred already to the additional equipment which we are providing to improve the essential strategic and tactical mobility of our forces. The continued development of airfields to permit the rapid deployment and effective operational use of our forces both strategically and tactically is a complementary measure to which the Government continues to attach the highest importance. In earlier years we have carried out an extensive programme of airfield works and development in such places as Darwin, Townsville, Amberley and William town. The construction of a second airfield in the Northern Territory at Tindal, which was approved in the last programme, is proceeding satisfactorily and will be completed in 1966. Detailed investigations and technical planning for the new airfield at Boram near Wewak in New Guinea have now been completed and construction will proceed without delay. This airfield will be built to standards which will permit its use by all aircraft now in service or to be acquired by the R.A.A.F.

We have now approved the further development of airfields in New Guinea. The existing airfield at Nadzab will be rehabilitated and extended for ferrying purposes to standards permitting its use by Mirage and other aircraft. The airfield at Daru in the south west of Papua-New Guinea will be extended and developed and smaller airstrips between Daru and Boram will be brought to a higher standard. This will add to the flexibility of our forces and improve the effectiveness of the patrols now carried out by the Pacific Islands Regiment. On the mainland the existing airfield at Learmonth, near North West Cape, will be further developed by the provision of taxiways, hardstandings and other essential services. Improvements are also to be made to the airfield- at Cocos to increase its capability.

The Government has previously announced the acquisition of two new control and reporting units, one of which will be installed at Williamtown and one at Amberley. Both these equipments will be mobile. Provision is made in the new programme for the modernisation of the control and reporting unit already installed at Darwin.

Adequate provision will be made for new capital construction and modernisation of existing facilities in our production and research establishments so that they may continue to meet the demands of our expanded forces.

A major expansion of the nature which I have outlined must inevitably bring a substantial increase in expenditure. Briefly, we estimate that Defence votes in the three years of the programme will be. 1965-66, £370,000,000; 1966-67, £421,700,000; 1967-68, £429,100,000.

In our Defence review of 22nd May 1963, we contemplated expenditure allotments as under -

Since May 1963 these allotments have been increased by Cabinet approvals of new projects, of which the main items are: Purchase of 24 FI IIA strike-reconnaissance aircraft; construction of two additional frigates to replace H.M.A.S. “ Voyager “; increased costs for the fleet fitting of Ikara; expansion of the Pacific Islands Regiment in Papua and New Guinea; replacement of V.I.P. aircraft; purchase of seven additional Caribou aircraft; a housing programme; and defence aid for Malaysia. The total estimated cost of these approvals is £1 1 8 million.

In addition to these specific projects, additional costs have also been incurred with the introduction of new Service pay scales, improved conditions of service, basic wage increases and margins adjustments. The addition to the expenditure flowing from all these decisions has involved an increase in the planning allotments of the May 1963 review to the following -

The decisions which I have just announced will increase these adjusted figures still further to the following -

These are very great increases. We consider that they are warranted having regard to the situation which we now face. Although decisions which we have now made will mean an increased allocation over the three years commencing 1965-66 of some £2 12m., we are certain that the people of Australia will also recognise the need for us to continue to maintain adequate Defence forces capable of meeting our obligations to make a great Australian defence effort, and also those obligations which we have assumed with our allies. No one can doubt that the increase in defence expenditure arising from the decisions which I have announced, with their added demands for manpower and material resources, will have very significant economic and financial effects.

In the present financial year, the direct budgetary effects will be limited. There will be a spurt between now and the end of the financial year in accommodation and other works expenditure necessary to the commencement of the selective service scheme in July. And here and there, there will be a need to make small initial payments this financial year towards new equipment which is the subject of the new three year programme. However, in 1965-66 and later years, the impact will be large. In the first place, it will present a formidable budgetary problem. On top of that, the additions to expenditure at home will add to the call on the resources of the economy, which are already under some strain, and the additions to expenditure abroad will increase whatever drawings would otherwise be made on our external reserves.

There are thus involved obvious problems for the national economy. These must and will be faced and solved. All I need say at present is that, as a Government, we have acted under a sense of national duty. We believe that we will have wide public support in whatever tasks may lie ahead. I present the following paper -

Defence Review - Statement by the Prime Minister, dated 10th November 1964- and move -

That the paper be printed.

Debate (on motion by Senator McKenna) adjourned.

page 1569


Ministerial Statement

Senator GORTON:
Minister for Works and Minister in Charge of Commonwealth Activities in Education and Research · Victoria · LP

– I present the following paper.

Academic Salaries- Report of Inquiry (by Mr. Justice R. M. Eggleston), dated 30th October 1964.

I ask for leave to make a short statement.

The DEPUTY PRESIDENT (Senator McKellar). - There being no objection, leave is granted.

Senator GORTON:

– This is a report by Mr. Justice Eggleston and his committee. Honorable senators will remember that the committee was appointed by the Government to make suggestions as to the level of academic salaries. The report recommends a standard salary for professors of £5,200 and for associate professors of £4,300. The report indicates also that the committee made assumptions as to a range of salaries for lecturers and senior lecturers, beginning at £2,400 a year in the case of lecturers and going to a maximum of £3,800 in the case of senior lecturers.

The Commonwealth Government proposes to accept all the recommendations made in the report. It is hoped that legislation will be introduced during this session in order to enable the salaries recommended by the committee to be financed as from 1st January of this calendar year.

page 1569


Reports on Items.

Minister for Customs and Excise · New South Wales · LP

– I present reports by the Tariff Board on the following subjects -

D.C. electrical generators exceeding 250 KW.

Dental chairs and units.

Ginger, oil of ginger, oleoresin of ginger.

Narrow woven fabrics and adjustable shoulder straps.

page 1569


Report of the Public Works Committee.

Senator PROWSE (Western Australia).I present the report of the Parliamentary Standing Committee on Public Works relating to the following proposed work -

Erection of four accommodation blocks for ratings at H.M.A.S. “Cerberus”, Victoria.

I ask for leave to make a statement.

The DEPUTY PRESIDENT. - There being no objection, leave is granted.

Senator PROWSE:

– The summary of recommendations and conclusions is as follows -

There is an urgent need for additional barrack blocks for junior ratings.

As soon as circumstances permit sub-standard temporary accommodation should be demolished and the practice of double bunking discontinued.

Early consideration should be given to the proposals for the chief petty officers’ and petty officers’ accommodation in order that recreational facilities for junior ratings can be improved.

Subject to the recommendations which follow, construction of the barrack blocks as proposed is recommended.

In view of its attractive appearance and durability the use of vinyl floor covering instead of linoleum is recommended.

The use of full aluminium window frames in lieu of timber and aluminium is recommended because of maintenance savings and current architectural practice.

Climatic conditions warrant the installation of hot water radiators in each of the proposed blocks for heating purposes at an estimated additional cost of £7,000 per block.

Sound-proofed heated and suitably furnished space should be made available on each floor of the barrack blocks for study purposes.

The estimated cost of the proposed work, including heating, furniture and furnishings is £804,000.

page 1570


Assent reported.

page 1570


Bill received from the House of Representatives.

Standing Orders suspended.

Bill (on motion by Senator Henty) rend a first time.

Second Reading

Senator HENTY:
Minister for Civil Aviation · Tasmania · LP

– I move -

That the Bill be now read a second time.

This Bill proposes a number of important amendments to the Income Tax and Social Services Contribution Assessment Act. For the most part the measures proposed are in consequence of the Government’s consideration of those sections of the report of the Ligertwood Committee on Taxation that deal with tax avoidance. The Bill embraces measures affecting the income tax treatment of companies, lease arrangements, trusts and partnerships, superannuation funds and alienations of income. The measures proposed by the Bill will not affect the great majority of taxpayers. They are chiefly directed at closing loopholes in the law that are being sectionally exploited at present, and which may be expected to be more widely exploited if no remedial action is taken.

As I have already said, most of the proposals arise out of the Government’s consideration of the report of the Ligertwood Committee. For one reason or another, as I will explain as I go along, it has been found either necessary or desirable to adopt modified versions of some of the Committee’s recommendations and, indeed, in certain instances, to depart from them wholly or substantially. I need hardly say that a great deal of ingenuity is exercised in these matters of tax avoidance by some taxpayers and their advisers. New kinds of arrangements have become evident since the Committee finished its deliberations and the Committee did not, of course, have an opportunity to have a look at these. With those few preliminary remarks

I shall now turn to the measures contained in the Bill that affect the taxation of companies.

The existing income tax law contains a definition of a private company. The broad purpose of this is to distinguish for income tax purposes between companies that are controlled by a small number of individuals and companies in which the general public is substantially interested. A private company is taxed on its taxable income at a lower rate than applies to a public company, but it may be subject to an additional tax of 10 per cent. in the £1 if it does not distribute a sufficient proportion of its taxable income to shareholders. In determining whether a private company has made a sufficient distribution of its taxable income, allowance is made for the primary tax payable by the company and a specified scale of profit retention.

The Ligertwood Committee noted that the present definition of a private company does not fulfil its function satisfactorily. The Committee pointed out that companies find it comparatively easy for income tax avoidance purposes to switch at will from private to public status, or vice versa. The switch from public to private status is made to receive the benefit of the lower rate of primary tax on taxable income, and the more common switch from private to public status to avoid tax on undistributed profits. The Ligertwood Committee recommended a new approach to the matter. It suggested that a public company should be defined and that companies not falling within the definition should, with certain exceptions, be regarded as private companies for income tax purposes. The Committee proposed as a primary requirement for public status that the ordinary shares of the company be on the official list of a stock exchange.

The main features of the Committee’s recommendations are being implemented by this Bill. In broad terms it is proposed by the Bill that a company will be a public company for income tax purposes if the ordinary shares issued by the company are, at the end of the relevant year of income, on the official list of a stock exchange and, if at no time during the year, 20 or fewer persons owned three-fourths of the paid-up ordinary capital, or controlled’ three-fourths of the voting power, or were entitled to three-fourths of distributions made by the company. 1 may note that the Ligertwood Committee proposed that the test relating to capital, voting power and distributions should be based on the proportion of twothirds. The Government sees no reason to depart from the less severe proportion of three-fourths that has proved satisfactory in the existing law.

Provision is being made by the Bill to ensure the continued public company status of certain types of companies and organisations that are at present public companies for income tax purposes. For example, clubs and non-profit companies will continue to be treated as public companies. So will subsidiaries of public companies. There are also provisions in the Bill that will authorise the Commissioner of Taxation to classify a company as a public company where this would be appropriate, even though the company fails to meet all of the prescribed tests.

The Ligertwood Committee also considered the question of avoidance of tax by the use of interlocked private companies. It noted that these arrangements frustrate the plan of the tax on undistributed profits of private companies by the circulation of dividends amongst a group of such companies. It observed that these arrangements depend for their effectiveness on the dividends being 100 per cent, rebatable in the hands of the company receiving them and recommended that the rebate on dividends received by any company from a private company should be reduced by 15 per cent.

The Government has carefully considered the Committee’s recommendation and sees no reason why the present situation should be disturbed in relation to dividends received by a public company from a private company. As to dividends received by one private company from another the Government has found the matter a very difficult one indeed. There is, on the one hand, a need for comprehensive legislation on the lines proposed by the Committee, yet on the other hand, there are cases where no reduction of the rebate would be warranted. The Government has concluded that the Committee’s proposal would, in practice, prove unduly harsh in some cases and in others would not provide an effective discouragement to tax avoidance arrangements. In the face of this situation the Government has decided that in relation to dividends received by one private company from another the best course would be to reduce the rebate by 50 per cent, but to authorise the Commissioner of Taxation to allow a full rebate where circumstances justify it. Provisions contained in the Bill are designed to do this. I may add that the aim of these particular proposals is to ensure, within a reasonable time, either a tax payment by individual shareholders on dividends or a payment of additional tax on undistributed profits by the company.

There is one further matter concerning companies to which I should briefly refer. Honorable senators will be aware that, paradoxical though it may seem, many unsuccessful companies have of recent years found that their accumulated losses constitute, in effect, a saleable asset. This arises from the fact that a loss incurred by a taxpayer in one year may be carried forward as a deduction against income of the taxpayer of the succeeding year. The maximum period of the carry-forward is seven years. A profitable public company that is able to divert income to another public company with accumulated losses can escape taxation on the income until the losses have been absorbed even though there has been no connection at all between its business and the business in which the loss company incurred the losses, and even though the proprietorship of the loss company has completely changed. Hence the traffic in the shares of companies that have tax deductible losses available, but no prospects of income from which to deduct the losses.

For quite some time now the income tax law has contained provisions intended io deny a deduction for a loss incurred in an earlier year by a private company if, broadly speaking, more than 75 per cent, of the shares in the company had changed hands since the loss was incurred. The Ligertwood Committee examined these provisions and found that they were ineffective in most cases and had inappropriate effects in some others. The Committee recommended their repeal but it also referred to the possibility of strengthening them and applying them to public companies as well as private companies. The Government has decided to adopt the alternative approach referred to by the Committee. Action is unnecessary in relation to sole traders or partnerships as they, at present, have no opportunity to realise on accumulated losses.

Putting the matter in a general way, it is proposed by the Bill that, in future, losses of a previous year will not be allowed as a deduction against the income of a year of income of a public company or a private company, unless there exists during both years a beneficial ownership by the same shareholders of shares in the company that carry at least 40 per cent, of the voting and dividend rights and 40 per cent, of entitlements to distributions of capital if the company were to reduce its capital or be wound up.

The Ligertwood Committee also considered the income tax treatment of lease transactions. It drew attention to the great complexity of the present law and instanced tax avoidance practices being extensively adopted to take advantage of weaknesses in the law. Under the existing provisions a capital premium paid for a lease is taxed in the hands of the recipient when he receives it, and allowed as deductions to the payer in instalments spread over the term of the lease. The situation is, however, different as regards leasehold improvements made by a lessee. If the improvements not subject to tenant rights are made under a covenant with the lessor or with his written consent, deductions are allowed to the lessee for the full cost on the same basis as for a premium. The lessor, on the other hand, is taxed on only a proportion of the estimated value of the improvements as at the end of the lease.

Improvements that are not made under a covenant or with a written consent are treated in a different way again. Initially, the lessee is entitled to no deductions for their cost, but, by relatively simple arrangements involving either a surrender or an assignment of a lease to an associated person, the whole of the expenditure becomes deductible. No part of the value of improvements made in these circumstances is taxable to the lessor. The examples I have quoted show basic inconsistencies in the present complex provisions. These are accentuated when the lessor is a government instrumentality or some other body that is exempt from income tax. In these cases income tax is not payable by the lessor and there is never any amount taxed to balance the tax value of the deductions available to the lessee. The Ligertwood Committee recommended action designed to remedy some, but not ali, of the existing inconsistencies and anomalies. Legislation to implement these recommendations would need to be highly complex and, in the Government’s view, would lead to greater practical difficulties for both taxpayers and the Commissioner than the already considerable difficulties being experienced at present. Moreover, such legislation would not provide solutions for all of the problems.

The Government proposes by the Bill that the present lease provisions will have no application in respect of lease transactions entered into after the date on which the Treasurer announced these measures, that is, 22nd October 1964. However, the general effect of the present law in relation to lease transactions entered into before that date will not be disturbed. Where an entitlement to a deduction now exists in consequence of a transaction made before 23rd October 1964, it will not be lost by reason of the proposed amendments. Before leaving the subject of leases I should mention provisions which it is proposed should apply to a premium paid for a lease of property that is not used for producing assessable income, for example, a premium paid in lieu of, or in addition to, rent for a lease of a private house or flat. At present such a premium is assessable income of the recipient, but the payer does not, of course, receive a deduction for it. Comparatively few premiums are paid in these circumstances, but, following the introduction of the measures I have already described, there would, in the absence of some safeguard, be a tendency for lessors of private houses, and other properties not used by the occupier to produce assessable income, to look for the payment of a premium instead of rent. A provision to prevent loss of revenue in these circumstances is proposed by the Bill.

The next matter covered by the Bill to which I would refer relates to the taxation of certain income of trust estates. The existing law has for many years provided a special basis of assessment for trusts set up by a taxpayer for his unmarried children under the age of 21 years. Under these provisions the tax payable on the income of such a trust is the amount that would have teen payable by the taxpayer if he had not set up the trust. These provisions were examined by the Ligertwood Committee which found them to be unsatisfactory in practice. The Committee proposed that the scope of the provisions should be made wider. It also proposed that a tax of 10s. in the £1 should be charged on income of a trust if the deed of trust permits the settlor to vary its terms in favour of a minor unmarried relative.

In the circumstances now prevailing, it is unlikely that the Committee’s proposal would prove reasonably effective. Nowadays it is found that large numbers of trusts are being set up in such a way that the special basis of assessment is circumvented. These devices are attractive because, if enough trusts are set up, very substantial amounts of income can be accumulated either completely free of tax or at a negligible tax cost. The devices rely a lot for their effectiveness on the fact that a taxable income of a trust estate of £208 or less is free of tax. The Government proposes special measures to counter these devices. It is, at the same time, very much aware that not all trusts in which income is accumulated are set up with the purposes of avoiding tax that would otherwise be payable. With this in mind it is proposed by the Bill that the Commissioner of Taxation will be obliged to consider all the relevant facts of each particular case. The Commissioner will be authorised not to apply the new provisions where it would be unreasonable for them, as measures directed to preventing tax avoidance, to apply. Specific matters that the Commissioner must consider for this purpose are stated in the legislation. The basic proposal regarding trusts is that a- special rate of tax shall apply to trust income to which no person is presently entitled, that is to say, to income which is being accumulated in the trust. The special rate will not, in any circumstances, apply to the trust estates of deceased persons. The rate proposed, and to be formally declared at an appropriate time, is 10s. in each £1 of income.

The Bill also proposes measures arising out of recommendations of the Ligertwood Committee concerning the taxation of a share of partnership income which a partner does not effectively control. The broad concept of the Ligertwood Committee’s proposals in this connection is that such income should be taxed as though each of the other partners had received a share of it proportionate to his agreed share in partnership profits. The Government has concluded that this basis would, in some cases, be unfair to other members of the partnership and, accordingly, does not propose to adopt it. The Government considers a better approach is to make the partner lacking control of the income liable for the tax and, where appropriate, apply a special rate of tax. The Bill adopts this approach to the problem. Separate legislation declaring the rate of tax payable on uncontrolled partnership income will be introduced at an appropriate time. I say now, however, that it is proposed that the income shall be taxed at the relevant partner’s personal rate of tax or 10s. in the £1 whichever is the higher. The Ligertwood Committee formed the view that certain partners under the age of 21 years ought to be deemed to lack control of their shares of partnership income. While recognising the basic merit of the Committee’s view, the Government considers the age qualification of 21 years unduly high. In reaching this conclusion, the Government has paid particular regard to family farm partnerships. What the Government proposes is that partners under the age of 16 years shall be deemed to lack control. Allowance will, however, be made for the value of any services rendered by such a partner in producing the assessable income of the partnership.

I pause here to refer again to a matter I have already touched on. The general measures proposed by the Bill are to counter tax avoidance. To be effective they have to be comprehensive, but it is also important that they should not affect arrangements which do not have the pur-, pose of tax avoidance. To ensure this, it has been necessary to authorise the Commissioner not to apply particular provisions when the relevant facts do not warrant their application. The Commissioner will have this power in relation to the provisions relating to partnerships.

I shall pass on now to the matter of alienation of income not accompanied by a transfer of the assets producing the income. As honorable senators will know, most people cannot effectively transfer income to others so as to avoid or reduce the tax payable on it. Wage earners cannot so transfer their wages. Professional men cannot transfer their professional fees, and so on. The position then is that these devices can be used only by a relatively small section of the taxpaying community and thus confer a sectional advantage. The Ligertwood Committee recommended that_ income alienated in the way I have mentioned should bear the tax it would have borne if the alienation had not been made, but only where the alienation is in favour of a minor unmarried relative of the taxpayer. If implemented, the Committee’s proposal would have a very limited effect. The Government has given much careful thought to this matter and proposes by this Bill that a person who makes an assignment of income to another person, but retains the assets that produce the income, shall be taxed as though the assignment had not been made. This position will, however, apply only in relation to assignments made after 22nd October 1964 and which will, or may, apply to income derived over a period of less than seven years.

Further measures in the Bill arise out of the Ligertwood Committee’s recommendations concerning superannuation funds for employees. Measures relating to deductions for contributions to these funds follow the broad plan outlined by the Committee, and I do not propose to elaborate further on these at this stage. The Ligertwood Committee also made recommendations concerning the exemption from tax of superannuation funds. For the purposes of its proposals the Government has, in effect, divided these funds into three broad classes. The first class is one with which honorable senators will be quite familiar, that is, the traditional type of fund to which employers contribute for the benefit of their employees. The second class of fund accepts contributions from the general public and is not necessarily restricted to providing benefits for employees. These funds do, however, serve a useful purpose in providing retirement benefits for some employees who are not catered for by the traditional type of fund. They are, nevertheless, used also by contributors to some extent to accumulate income free of tax.

In addition to the two broad types of funds I have mentioned there are also some funds which are in the form of superannuation funds but which are really only a means of accumulating capital and at the same time gaining freedom from tax on the income derived through the fund.

The Ligertwood Committee’s broad proposals concerning the exemption of income of the traditional type of fund are being implemented by the Bill. Income of these funds will, generally speaking, continue to be exempt from tax if the existing rules regarding investment in public securities are adhered to. The Committee proposed that a fund that does not comply with the tests it specified should be taxed on the excess of its current income over its income for the year ended 30th June 1961.

Largely for the reason that this basis would operate “over-severely in relation to funds established since 1961 the Government does not propose to adopt this recommendation. The Government proposes an alternative basis which is, broadly stated, that a fund that does not meet the tests for full exemption will, in effect, bc exempt from tax on its income up to an amount equal to 5 per cent, of the net cost of its assets. To receive this exemption, these funds will be required to meet somewhat different tests from those that have to be met by fully exempt funds. As the level of exemption is to be limited to 5 per cent, of cost of assets the Government does not propose to apply the “30/20” investment rule to these funds.

A further proposal of the Ligertwood Committee was that no superannuation fund should be exempt from tax on dividends from private companies and, in certain circumstances, other income derived from a private company. The Government considers, however, that a full and unconditional withdrawal of the exemption on private company dividends would not be warranted in all cases. Accordingly, it proposes that the Commissioner of Taxation will examine each case on its individual merits to determine whether such dividends should be taxed in full, without regard to any exemption otherwise available to a fund. To be treated in a corresponding way is income from a transaction by a superannuation fund with a person not dealing with the fund at arm’s length. This income is to be taxed in full if it exceeds the amount that might have been expected to be received by the fund from the same transaction with a person dealing with the fund at arm’s length, for example, a person completely independent of, and unassociated with, the fund.

As to rates of tax on the income of superannuation funds, no variation is proposed in relation to traditional type funds that may be subject to tax only if there is a failure on the part of the trustee to observe the “30/20” investment rule. Partially exempt funds and non-exempt funds are to pay 10s. in the £1 on income that is subject to tax. It is proposed that this rate shall also apply to income of any fund for employees that is to be taxed in the special circumstances I have already described. The rate of tax is being formally declared by another Bill on which I propose to speak shortly.

I come now to the final matter dealt with by this Bill. This is the matter of payments by a taxpayer to his relatives. Expressed broadly, the existing law has for many years provided that those amounts may be allowed as deductions only to the extent that the Commissioner of Taxation considers them to be reasonable in amount for their purpose. This Bill proposes to amend the law so that this principle is, in specific terms, applicable in relation also to payments by a partnership to a relative of a partner. It is also proposed by the Bill that any amount of such a payment that is not allowed as a deduction will, in general, not be treated as income of the recipient.

There remains for me to mention the commencing dates of the proposed measures. In general, the new law will be applicable for the first time in assessments on income of the coming income year - 1965- 66. The amendments concerning leases are one exception. These will apply from the day after the Treasurer announced the proposals, that is, from 23rd October 1964. The measures applying to income of superannuation funds derived from certain private company dividends or transactions not at arm’s length are the only other exception. These measures will also be effective as from 23rd October 1964. Alienations of income made on or after 23rd October 1964 will be subject to the proposed new basis of assessment in the income year 1965-66.

A memorandum giving detailed explanations of the measures contained in the Bill has been madeavailable to honorable senators and I do not propose to say any more about the various provisions at this stage. I commend the Bill to the Senate.

Debate (on motion by Senator McKenna) adjourned.

page 1575


Bill received from the House of Representatives.

Standing Orders suspended.

Motion (by Senator Henry) proposed -

That the Bill be now read a first time.

Debate (on motion by Senator McKenna) adjourned.

page 1575


Bill received from the House of Representatives.

Standing Orders suspended.

Bill (on motion by Senator Henty) read a first time.

Second Reading

Senator HENTY:
Minister for Civil Aviation · Tasmania · LP

– I move -

That the Bill be now read a second time.

By this Bill it is proposed to effect technical amendments to the Income Tax (International Agreements) Act consequential upon measures contained in the major Bill to amend the Income Tax and Social Services Contribution Assessment Act, that is, the first of the taxation Bills that I have introduced today.

The measures contained in this Bill are of a formal nature. The technical reasons that make them necessary are explained in a memorandum available to honorable senators, and I do not propose to discuss these at any length at this stage. I commend the Bill to honorable senators.

Debate (on motion by Senator McKenna) adjourned.

page 1575


Bill received from the House of Representatives.

Standing Orders suspended.

Bill (on motion by Senator Gorton) read a first time.

Second Reading

Senator GORTON:
Minister for Works · Victoria · LP

. -I move -

That the Bill be now read a second time.

The purpose of this Bill is to amend the Papua and New Guinea Act 1949-1.963 to make provision for the office of a senior puisne judge on the Supreme Court of Papua and New Guinea Act 1949-1963 to desirable, having regard to the special conditions of the Territory, and possible future developments in its judicial system, to provide in the Act for the appointment of one judge, who is clearly distinguished by rank and appointment, to act as Chief Justice where necessary.

The Supreme Court bench at present consists of the Chief Justice and three judges. The Chief Justice and the judges are on circuit for a considerable part of each year and it is the practice of the court to sit without the usual recesses for law vacations. Judges receive the usual leave entitlements for Territory service, so that the occasions on which the Chief Justice is absent from duty are more frequent than we might expect in the Australian courts which sit during regular law terms, at the end of which members of the judiciary normally take their vacations.

The second consideration in the proposal for a senior puisne judge is that it would facilitate the establishment of a Full Supreme Court of Papua and New Guinea if provision were made for appeals to be heard in the Territory in the first instance. This would be a logical development in a courts system designed to meet the requirements of a Territory which is being advanced with a view to eventual self-government or independence.

A system of appeals from the decision of a judge to the Full Supreme Court of the Territory would mean that decisions of the Chief Justice could be subject to appeal. An alternative chairman to the Chief Justice would, therefore, have to be available to sit on these appeals, and other appeals on which the Chief Justice is unable to sit.

Referring briefly to the provisions of the Bill, honorable senators will note that the only amendment proposed is contained in clause 3, which provides for the insertion of a new sub-section in section 58 to provide that the Governor-General may appoint a puisne judge to be the senior puisne judge with seniority next after the Chief Justice.

Debate (on motion by Senator McKenna) adjourned.

page 1576


Second Reading

Debate resumed from 30th October (vide page 1506), on motion by Senator Gorton -

That the Bill be now read a second time.

Senator MURPHY:
New South Wales

– The Opposition opposes this Bill because of its fundamental objection to the jurisdiction exercised by the Commonwealth Industrial Court through its contempt powers in relation to what are described as the bans clauses of awards. The case against the Bill has been well made out by Senator Cohen. He dealt, not only with that fundamental objection and the grounds and reasons which support it, but also with other considerations such as the miscellaneous and unnecessary jurisdiction which’ from time to time is exercised by the Court in matters falling outside what might be described as its true industrial functions. To meet this objection, a number of observations have been addressed to the Senate by Senator Wright. In those observations the honorable senator suggested that the advocacy by Senator Cohen was calculated to undermine the Commonwealth Industrial Court. He suggested also that the trouble in the industrial field was due to grave want of leadership on the part of labour. The honorable senator suggested that trouble in relation to convictions for contempt could be cured if only applications were made for adjournment so that the parties might conciliate. Senator Wright said in that connection that the experience of the Court had been that no such applications had been made.

It is apparent that the speech of the honorable senator from Tasmania was characterised by prejudice and ignorance and by lack of insight. So far as ignorance is concerned - and I do not say this in any persona] way to deprecate him - the plain position is that he is quite in error as to the practice of the Court. The experience of the Court is quite the opposite to that stated by the honorable senator. Applications are frequently made for adjournments so that the parities may conciliate. This has been done prior to some injunction being made and also prior to some order for actual contempt. The parties frequently confer in an endeavour to solve matters in dispute. This may not be strictly in accordance with the judicial role of the Court but it is something that ought to be done and is done. That is the common experience of all who are acquainted with the practice of this Court. Senator Wright also observed that there had been bad leadership on the part of labour. He said that the men voted under bud leadership and bad guidance and added -

That illustrates the grave want of leadership among employee organisations when they tend to go on [side arbitration and resort to the old outmoded methods of industrial dislocation.

For many years, running into centuries now, that has been the complaint by those who arc opposed to labour. It has been said that the mcn are all right and that they arc innocent. It has been said that these workers in the fields and factories would not bc troublesome if it were not for the agitators who led them astray. The opponents of labour say: “ It is the agitators who are bad. If only the workers were left to their own devices, all would be well “. What Senator Wright has said in this debate was never more eloquently expressed than it was by the president of the Philadelphia and Reading railway in 1902, Mr. Baer, who said -

The rights and interests of the labouring man will be protected and cared for not by labour agitators but by the Christian men to whom God in his infinite wisdom has given the control of the properly interests of the country.

Again and again this theme intrudes itself into debates on industrial matters. It is said that the men are all right, but their leaders are the villains of the piece. It is said that if only these agitators were removed, all would be well. We say in reply that this is nonsense. Through the ages there has been advancement by labour because of the strength and courage and leadership of those who have emerged at the top of the Labour movement. They have demanded a fairer share of the national wealth. They want a larger participation in increased productivity. They want a fairer distribution of the benefits flowing from the genius of men of science. They will seek by whatever means are open to them to get justice for those whom they lead. No matter what the difficulties or setbacks, they will pursue those objectives. They should not be made the villains of the piece and even if they are they will strive for justice.

Senator Wright:

– Is the Australian Council of Trade Unions proud of its leadership in the General Motors-Holden’s strike recently?

Senator MURPHY:

– The A.C.T.U. is proud of its leaders whether battles are won or lost. The Labour movement is proud of its leaders. Mistakes will be made, but the men and their leaders know that what they are striving for is right and that is a fairer division of the wealth of the community. They have a sense of injustice that some men working in factories and elsewhere are getting a much smaller share of productivity than they merit.

Senator Wright:

– There is no question as to that. It is the method of getting a share that is in question.

Senator MURPHY:

Senator Wright has said, in effect, that the workers should stand by the awards that are made by the Conciliation and Arbitration Commission.

Senator Morris:

– Of course, they should.

Senator MURPHY:

– That is really the crux of the matter.

Senator Morris:

– It has not been said. It would have been said.

Senator MURPHY:

– It has been said by Senator Wright, and it will be said by Senator Morris. What I have stated is really the crux of the matter. It is like the moment of truth. The question is: Should the workers stand by these awards of the Commonwealth Conciliation and Arbitration Commission? The honorable senator from Queensland says: “Yes”. So this is the hub of the problem.

Let us consider, first of all, how these awards are made. They are not made by collective bargaining. They are not made by the men or their unions saying: “ We agree to have these terms and conditions to cover our work for the next three years”.

Senator Morris:

– Hundreds of them are.

Senator MURPHY:

– In regard to those which are industrial agreements and which are so made, one can visualise that there is a proper approach on the basis that if an agreement is entered into voluntarily, and lt circumstances remain the same, the agreement ought to be observed. Anyone can understand such an argument. But, leaving those industrial agreements aside, turn to the subject of awards which are not entered into voluntarily but are imposed by the Commission. This is the important matter. Those awards declare the minimum wage to be paid. They do not declare the maximum wage to bc paid. They leave an area for private arrangements between employers and employees. This position has been stated in the clearest terms by the Commonwealth Conciliation and Arbitration Commission in 1964.

What does this mean? It means that some awards are made to provide for minimum wages. Everyone understands that some employees concerned will be paid amounts above those awards. Some of them may not be paid over the award but others certainly are. So it is quite conceivable and quite in accord with the industrial system that persons will be paid £3 or £4 above the award rate. Then, when persons who have been paid wages above the award seek to improve their conditions, which is a situation contemplated by the Conciliation and Arbitration Commission, what is the position in which they find themselves? The moment they seek to use the only weapon that is available to them, the employers race into the Commonwealth Industrial Court and say that the employees are not working in accordance with their award. In many cases, the employees have never worked at the wage rates prescribed by their awards. One of the significant aspects of the whole matter is that throughout the industrial community a great part of the work force is being paid above award wages. What happens when the employees seek to alter their wage rates which are already above the award conditions? All the employers have to hand an automatic weapon provided by the Conciliation and Arbitration Act and are enabled thereby to go to the Court and say: “ We seek an injunction to make these workers adhere to the conditions of their award “. If there is failure to observe that injunction there is an automatic imposition of penalties, so it seems to unions, for contempt of court.

It is not only the Australian Labour Party which puts forward this view. Responsible leaders of trade unions also say that the existence of bans clauses in awards, and the existence of provisions in the Act which permit injunctions and the imposition of penalties for contempt of court are militating against conciliation and arbitration. Trade union leaders have said so in the clearest terms in recent times, In recent weeks, this opinion has been expressed by Mr. Heffernan, the General Secretary of the Sheet Metal Working, Agricultural Implement and Stovemaking Industrial Union, Mr. Heagney of the Federated Ironworkers Association, Mr. Manser of the Federated Miscellaneous Workers Union and Mr. Hutson of the Amalgamated Engineering Union. This is the true position. The opinion has been expressed by those persons. The same kind of view has been voiced by members of the Commonwealth Conciliation and Arbitration Commission. The late Mr. Justice Foster himself expressed a similar view on the operation of the Act. He said in effect that the existence of bans clauses in awards, in conjunction with penal provisions of the Act. was taking matters out of the control of the Commission. In a case which is reported in Volume 87, Commonwealth Arbitration Reports, at page 932, Mr. Justice Foster said -

I have again and again expressed my reluctance to put ‘bans’ clauses in awards, even under the old law. The essence of conciliation and arbitration is goodwill; ‘ bans ‘ clauses are antithesis; not only do they jeopardise good relations but (hey impede my work as an arbitrator. The present separation of the judicial from the arbitral function makes me, if possible, more reluctant than ever to concede to the applicant’s plea for this variation. I. as the arbitrator, have now lost control of the consequences which follow the insertion of ‘ bans’ clauses.

Senator Wright:

– What is the dale of that judgment?

Senator MURPHY:

– That judgment was delivered in 1957 after the separation of the Court from the Commission, which was effected by the Act of 1956. So this array of opinion, which is closely connected with the industrial movement of this country, is unanimous that the existence of these penal provisions militates against the achievement of the objects of the Act, which are to create goodwill in industry, induce conciliation, and provide, in the event of failure of conciliation, for effective arbitration. The purposes of arbitration are not served if, when a dispute arises, one of the parties to that dispute goes to the Court to ask it to enforce penal powers which are directed to deal, not with the dispute itself, but merely with the consequences of the dispute.

This distinction is of the utmost importance. It has been pointed out by the highest authority that a dispute is a disagreement between people. The consequences of the dispute may be some strike, some dislocation, or some ban. But that is not the dispute itself. Here we have a situation in industry where disputes, when they arise, are not dealt with directly by the arbitral authority. Instead, a dispute is transferred into the sphere where penal powers are invoked against the consequences of the dispute and in such a way as to lead to the most grave resentment on the part of unions. It is all very well for Senator Wright to say that a fine of £500 amounts to a payment of 6d. by each member of a union. The fine may be £500 a day. But it may be £500 a day in relation to a number of different disputes occurring under the same award. All sorts of refinements have been sought in order to multiply the ways in which unions may be penalised under these provisions of the Act. They all lead to resentment and not to goodwill. They do not lead to conciliation and are not conducive to fair arbitration.

Senator Wright:

– The honorable senator’s idea is that they should abide by the award if it pleases them.

Senator MURPHY:

– This kind of nineteenth century thinking that is again advanced by the honorable senator illustrates the poverty of the thought that has emanated, not from the Minister in charge of the Bill, but, unfortunately, from those honorable senators opposite who so far have participated in the debate. I trust that it will not continue. These matters are of too great importance to be dealt with by what might be described as smart phrases.

We are dealing with a situation in which large bodies of men are concerned with thenwages and conditions, and the amount of money that is available for themselves, their families and the education of their children. They are at the bottom of the economic scale. They comprise the only section of the community that is subjected to civil conscription. I have no doubt that if Senator Wright were asked whether he approved of the provisions in the Constitu tion which protect the medical profession against civil conscription he would say that he did. I would say the same. I would approve of those provisions being made applicable to the workers in this community. I repeat that the workers comprise the only section of the community that is subjected to civil conscription. It is they who are required willy-nilly to work. There is no escape from the fact that that is what the penal clauses mean in the ultimate. Civil conscription does exist, and the means of enforcement are the penal clauses of the various enactments.

Senator Wright:

– Who was it said that the time had come when people could not choose whether they would live within sight of the town hall clock? That was said by a great Labour leader.

Senator MURPHY:

– It is all very well for the honorable senator from Tasmania to jest. The workers are faced with a situation in which awards are made. At the time they are made those awards may appear to be reasonable assessments of the needs of the workers and proper assessments of work value, and perhaps they do justice as the Conciliation and Arbitration Commission sees it. But we are living in a condition of inflation, in which wages which are just rapidly become unjust. The trade unions and their members concede that, where work is done under an award, then the award ought to be enforced against both the employers and the employees and that if it is broken penalties ought to follow. But it is a different matter when there is a requirement to work under certain terms and conditions in the future. In a free country men ought to be entitled to say whether they will work under those conditions. If they voluntarily agree to work for a certain time under certain conditions and for certain. wages, that is all right. It could be argued that, if the circumstances remain the same, they ought to work under the same conditions. But if men have not agreed to do so voluntarily or if the circumstances change, then as free men they ought to be entitled to say whether they are prepared so to work. The men say that, if the circumstances are serious enough, they ought to be entitled to decline to work under terms and conditions which are imposed upon them.

Senator Ormonde:

– That is the sign of a free man.

Senator MURPHY:

– As Senator Ormonde has observed, that is the sign of a free man. Ultimately it is the right to strike which distinguishes a free man from a slave. The Australian Labour Party will never retreat from that position. We do not encourage strikes, because we know exactly how much hardship is suffered by a working man and his family when a strike occurs. Recently Senator Wright jested about the strike, at the works of General MotorsHolden’s Pty. Ltd. and made certain remarks about union leadership. The leaders of the Australian Labour movement are fully aware of the hardship that is suffered by the workers when a strike occurs. Every time there is a strike the hands of the leaders of the trade unions are tied. I repeat that they know quite well what a strike means to their members and to their organisations. They are extremely reluctant to enter upon a strike or to continue a strike if through conciliation they can avoid doing so. A strike is embarked upon or is continued only when union leaders conceive that justice is on their side. We say that there ought not to exist in this community a set of provisions which enables the great weight of the law to be brought down immediately on the side of those who are in the stronger economic position and against those who are in the weaker economic position, because the system of awards envisages that men are entitled to bargain for more than an award allows.

Senator Wright said that the advocacy, of Senator Cohen was calculated to undermine the position of the Commonwealth Industrial Court. Senator Cohen would* not seek to undermine the position of the Court, nor would I or the Australian Labour Party as a whole. We say that nothing is more calculated to undermine the position of the Court and the whole judicial system of this country than the existence of legislative provisions which make it inevitable that the Court will be constantly brought into contempt. Nothing is more certain than this: If the trade unions and the Labour movement believe that men must go on strike to achieve justice, then they will go on strike. If possible they will exhaust every other means to settle a dispute and to achieve justice; but if bans or limitations or strikes are necessary, then the trade unions will not be deterred from employing whatever methods are necessary to achieve justice. Any system which makes it inevitable that the trade unions will become in contempt means that ultimately the prestige, stature and standing of the Court will be diminished. We contend that these provisions were aimed at relying upon the well known prestige of the Australian courts and their well known detachment from political parties.

The Australian Labour Party said at the time of the introduction of the penal provisions that they were ill-designed and prophesied that the Commonwealth Industrial Court inevitably would be brought into contempt. No one in the Labour Party is pleased to see that it has become common in processions on Labour Day and on other occasions for judges of the Commonwealth Industrial Court to be portrayed as being against the Labour movement of this country. Our courts should never be placed in that situation. There are other means whereby the objects of the Conciliation and Arbitration Act may be achieved. It is our contention that the Act is bad in this respect. Because of its provisions, the Commonwealth Industrial Court is used as an engine which may be put into motion by the employers, who are all too ready to invoke the penal provisions of the Act to assist them in handling disputes in a manner which is improper, in that disputes ought to be dealt with by negotiation or conciliation, or ultimately by the arbitral authorities away from the atmosphere of the Commonwealth Industrial Court and its penal powers.

This Bill is designed to facilitate the use of the penal provisions of the Conciliation and Arbitration Act. For that reason the Opposition is fundamentally opposed to the Bill and we desire to record our most emphatic protest against the continuation and expansion of the invocation of the present contempt provisions of the Act.

Senator MORRIS:

.- We have just listened to a speech by a member of the Opposition which is staggering in its implications. It is probably the most fantastic speech that has been made on the subject of industrial legislation for many years in an Australian Parliament. That a prominent member of the New South Wales bar - a Queen’s Counsel - should so misunderstand the provisions of the Conciliation and Arbitration Act as to be able to make the speech just delivered is literally unbelievable. The honorable senator referred to statements made in 1902. I am afraid that he is still living in the era of 1902 and that his mental attitude towards the Act is typical of that time. He charged Senator Wright with being filled with prejudice and with being ignorant of the Act, but it is perfectly obvious from what the honorable senator has said that he docs not understand the Act and its application or implications in any degree whatsoever.

Senator Cohen:

– Come off it.

Senator MORRIS:

– I will give honorable senators an example. He tried to tell us that the Commission’s task is to fix a grade of salary which is not at all to be considered as a final salary, but merely as the lowest level or the base from which practically all employees in Australia have their salaries built up, and in the result are paid infinitely more. This is a lot of nonsense and the honorable senator must know that it is. For his education and possibly for the edification of other honorable senators who appear to be equally ignorant, I shall quote section 33 of the Conciliation and Arbitration Act, which sets out the powers, tasks and duties of the Commonwealth Conciliation and Arbitration Commission. Section 33 states - (1.)The powers of the Commission to make an award, or to certify an agreement under section thirty-one of this Act -

  1. altering the standard hours of work in an industry;
  2. altering the basic wage for adult males (that is to say, that wage, or that part of a wage, which is just and reasonable for an adult male, without regard to any circumstance pertaining to the work upon which, orthe industry in which, he is employed) or the principles upon which it is computed;
  3. making provision for or in relation to, or altering a provision for or in relation to, long service leave with pay;

Paragraph (d) applies to females the provisions of paragraph (b).

This morning the Press carried reports that the Commonwealth Conciliation and Arbitration Commission in its wisdom had approved of the payment of the male rate to female shop assistants. Surely this decision cannot be construed as acting to depress the wages of employees. It acts to provide by law a fair and just wage. Certainly in some callings an extra margin is paid for skill, and additional amounts are paid for this and that and for a whole host of conditions which I shall not detail now. Honorable senators should not charge me with not knowing the Conciliation and Arbitration Act. Four years ago in Queensland I brought in an Act which has been stated by people of all political philosophies to be the most advanced Act of its kind in operation in Australia today.

If honorable senators care to study the Act they will find that not only does it provide the machinery whereby employers and employees are brought together to discuss wage claims and finally to fix wage rates, but if there is no agreement between the parties it is provided that the Industrial Court is to fix the wage. That becomes the law. I would hate it to be thought by anybody that the task of conciliation is neglected by the courts. That is not true. The Act we are discussing imposes an obligation to resort to conciliation and to the subsequent processes which are provided. I confess that the Queensland Act differs from the Commonwealth Act in certain aspects relating to the early stages of a wage dispute. However, I think it would be somewhat out of order forme to enlarge on that subject in this debate. I look forward to an opportunity of discussing it more fully at a future time.

For Senator Murphy to say that the application of the awards of the Commonwealth Conciliation and Arbitration Commission is civil conscription is unbelievable. That is the only word I can find to describe it. The system of conciliation and arbitration has been built up in Australia for over half a century. At every election the leaders of the Australian Labour Party mount soap boxes and take to themselves the credit for developing the industrial arbitration system in Australia. In fact they did not, but they claim that they did. That is one side of the picture. Senator Murphy said that the operation of the Act involved civil conscription, and he went on to say. that the right to strike was the basis of freedom. I strongly disagree with him. Very often the act of striking is a sign of bondage to irresponsible men.

We have in Queensland a very large industrial organisation known as Mount Isa Mines Ltd., where a strike has been in progress for several weeks. It is the type of strike which the Minister for Labour and National Service (Mr. McMahon) theother day described as the go slow strike. At all events, it is a form of industrial unrest which is costing this country millions of pounds and is depriving individual families at Mount Isa of comforts and pleasures to which they have been accustomed, as well as involving them in grave restrictions. This has been brought about because a few of the employees of Mount Isa Mines Ltd. have disregarded their union leaders. When the leaders attempted to talk to them, they chased the leaders out of the meeting and disregarded what they were attempting to say. That is an example of a strike causing grave hardship and indicating a state of bondage.

Let me, as another example, mention a strike that was settled only within the last couple of days. The Merinda meatworks are situated at Bowen. Some two weeks ago, one of the employees turned up incorrectly dressed. We all know that the American meat trade now demands of Australia certain hygienic standards in its meatworks. One of the requirements is that men working in boning rooms shall wear gum boots - long rubber boots. These boots were issued by the company. About a fortnight ago, one of the employees working in the boning room turned up in what are commonly called thongs. Naturally, because this large meatworks wants to retain the American trade, the man was told to go home and get his boots. He was informed that otherwise he could not work. He did not work that day. The next day he turned up again, wearing thongs instead of rubber boots, and this time he was accompanied by a friend who also worked in the boning room. The friend also was wearing thongs. Because these men deliberately disregarded orders, the breaching of which could mean the loss of many thousands of pounds to the economy of Australia, they were sacked. The result was that the rest of the men - 250 of them approximately - walked off the job and stayed out for two weeks.

The federal executive of the union to which the men belong urged them to go back to work and told them how stupid it was to continue the strike. The Queensland executive of the union gave the same advice, as did the executive of the northern division of the Queensland branch, but the men took no notice. Finally, after being out of work for two weeks, depriving the country of the benefit of this industry during that time and depriving their wives and children of money on which they were depending, the men went back to work. There was inquiry into the dispute by Commissioner Gough, who is reported as having said - at the level of Merinda meatworks itself, where the dispute had grown to enormous size from quite small beginnings, it was hard to find any element of caution, judgment, or even common sense, in the way the case of the union members had been handled.

Apparently negotiations with the management and conduct of a large part of the case before the commission had been placed in the hands of local representatives working at Merinda.

The elected officers of the union were given a minor role, if any.

The report continued -

Commissioner Gough said conduct of the dispute had been extraordinary. Lack of flexibility in the approach to the dispute in face of reasonable concessions by the employers, failure to understand the relative positions of management and the employees in the conduct of a meatworks, and the essential minimum of co-operation and give and take, and the almost complete inability to see the wider picture of the union’s interest outside the small number of members involved, had characterised the dispute.

All these add up to an incompetence, amateurishness and a lack of understanding in award and trade union affairs that are almost incredible where a union like the A.M.l.E.U. is concerned.

That was the judgment of the Commissioner. Referring to the federal executive of the union, the report continued -

Commissioner Gough said it would never occur to him to doubt the competence, integrity, and dynamic approach of the union’s officers in Sydney, Brisbane, and Townsville to a dispute and their wholehearted devotion to the best interests of their members.

That is, perhaps, the best illustration I can give of the point I am trying to make. The leaders of the union involved in this dispute were highly commended by the Commissioner, but in almost the same breath - on the same occasion, at any rate - the Commissioner pointed out that a strike had been precipitated by hasty, foolish action on the part of large numbers of members of the union, with the result that a great deal of industrial disruption had occurred.

This pattern can be seen in, many strikes. It is time, I believe, that all members of this Parliament recognised that the future prosperity of Australia depends on the continuance of industrial harmony and peace. I believe that if a ‘lead along sensible lines were given by members of the Opposition in this Parliament and by their colleagues in other Parliaments, that lead would ‘be followed by people who engage in capricious strikes. Those who engage in such strikes are harming not only themselves but also their families and the industrial life of Australia.

Senator Cohen:

– Does the honorable senator think that all the unions that have been brought before the Commonwealth Industrial Court for contempt have engaged in capricious strikes?

Senator MORRIS:

– No, I do not. I do not think all of them have. I believe that half a century ago conditions of employment were not at all fair or just, not only in Australia but in all parts of the world. At that point of time, strikes were a necessary element of industrial development. But over the years there has been built up such a splendid system of arbitration that it would be extremely difficult today to find a strike that is other than capricious. This is what I believe. In the last five years I have not seen a strike which has ‘been of any value whatsoever.

Senator Poke:

– The honorable senator has a lot to learn.

Senator MORRIS:

– We all have. I have just been pointing out how much Senator Murphy has to learn. I will refer to something else that Senator Murphy should learn. The Act contains machinery whereby wages are determined by the Commission if conciliation fails. It also provides conditions to protect employees against unfair treatment by employers. There are a number of provisions in the Act which apply most strongly for the benefit of employees. Do not forget that. We cannot pick out one section of the Act and say: “ The Act is no good because of this section “, when, in fact, we are using 95 per cent, of the provisions of the Act to great advantage.

Senator Cohen:

– What about dealing with the sections of the Act which we are attacking?

Senator MORRIS:

– I will deal with those sections straight away. In this country, as in all civilised countries, we live by the rule of law.

Senator Wright:

– We think we do.

Senator MORRIS:

– We hope we do. That is the basis on which we have established our life and our civilisation. Where there are laws there must be penalties provided should the laws be broken. Under sections 109 and 111 of the Conciliation and Arbitration Act penalties are provided if the Act is breached. Let me remind honorable senators that the first step towards fixing an award is not by making an application to the Court, but by conciliation.

This is not the only industrial law which exists in this country. There is the industrial law relating to workers accommodation. That is an act which applies to the conditions of work. Then there is the Apprenticeship Act. There are a number of other acts of an industrial nature, and in every one provision is made for penalties should the law be broken.

Senator Cohen:

– Do they make provision for penalties for contempt?

Senator MORRIS:

– They do.

Senator Cohen:

– Which Act contains that provision?

Senator MORRIS:

– 1 am afraid 1 cannot refer to a specific act. I have not got the details with me at the moment. But the honorable senator knows perfectly well that the question of contempt only arises when the law is disobeyed.

Senator Cohen:

– Where are there other comparable provisions?

Senator MORRIS:

– The honorable senator should know that better than I do. He knows the provisions contained in the Crimes Act.

Senator Cohen:

– Is that industrial law?

Senator MORRIS:

– No, it is not. I realise that the honorable senator is attempting to break my train of thought. If he wants the information, I will get the details for him at some future stage. The point I am trying to make is that there are many industrial laws in this country, and penalties are provided should any one of them be breached. But the Conciliation and Arbitration Act is the only one that I can think of at the moment in respect of which the employee is the person who is usually subjected to the penalties because he is the one who breaks the law. If the employer broke the law, he too would be subjected to penalties. Senator Cohen in his speech on this debate the other night said that the law applies wholly to the employees. That is not the case at all.

Senator Cohen:

– But it is in practice.

Senator MORRIS:

– It is in practice only because the employee breaks the law. If conditions are laid down which are detrimental to the employer,-he still obeys them. Therefore, he is not subjected to the contempt provisions. It is only by breaking the law that a person is subjected to the contempt provisions. 1 Senator Cohen. - What about a lockout? If the employer is not guilty of a lockout, he is not guilty of any breach.

Senator MORRIS:

– Yes, he is. As the honorable senator should know, there are many provisions in the Act under which the employer could become subject to penalties.

Senator Prowse:

– He would if he did not pay the prescribed wages.

Senator MORRIS:

– That is only one provision. There are many others. The employer can be subjected to penalties if the correct hours of work are not observed, if the correct wages are not paid or if the correct working conditions are not provided. Similar provisions apply under the Workers Compensation Act, the Factories and Shops Act and the Apprenticeship Act. If these Acts are breached, penalties are imposed. Similarly, if the provisions of this Act are breached, penalties are imposed and have to be paid. The Act remains on the statute books to provide justice for the employees as well as for the employers.

I cannot believe that some honorable senators can be so blind to the value of the Act that they disregard logic and reason when they consider it. Honorable senators opposite have said that they intend to oppose the Bill because if sections 109 and 111 were repealed there would be no need for an extra judge to be appointed. Of course, one must agree with that proposition. But if we are going to accept that proposition, why not go the whole hog and abolish all the provisions for penalties in the other Acts to which I have referred. Perhaps we could go further and abolish the penalties provided under the vagrancy and gaming acts, or the Traffic

Act. We could get rid of a lot of judges by abolishing these penalties. But in every case where we tried to abolish penalties, inevitably the people would suffer.

Honorable senators opposite are advocating, the abandonment of industrial law and a return to the law of the jungle and the tooth and the claw.

Senator Cohen:

– That is nonsense.

Senator MORRIS:

– It is true. The only nonsense that we have heard in this chamber tonight came from Senator Murphy who should know a great deal more about this matter than his remarks illustrated.

Senator Cohen:

– He knows a great deal about this Act.

Senator MORRIS:

– He did not give any examples of his knowledge. Senator Cohen, in his contribution to the debate, referred to the number of penalties that had been imposed over a number of years. Then he went on to say: “These penalties are becoming greater in their monetary value”. That is true, but they are becoming greater in their monetary value only because of the- continuity of the efforts that are being made by the agitators - to use the word that Senator Murphy used - who are operating so successfully. I should like to refer the honorable senator to a speech made on Thursday, 29th October, in another place by the Deputy Leader of the Opposition, Mr. Whitlam. He said -

The average number of working days lost per worker has in fact fallen’ and is now very much less than it; was ten years ago. Over the last two years, it has shown.- no increase.

It may be possible to advance. an argument that the monetary value of the penalties has increased, but the very fact that less ‘time is lost per man indicates a great ,deal of success, I think, in the application of these clauses.

I seem to have got away from the things that I wanted to say. It is, perhaps, one of the greatest industrial tragedies of Australia that those men, who are in a position to exercise very great influence on the leaders and members of unions and who recognise that every strike that occurs is damaging to the country itself and to’ the people, do not try to inject a greater sense of responsibility into the people who so capriciously and so unnecessarily impose hardship on the wives and families of the unionists whom they pretend to serve.

South Australia

Mr. Acting Deputy President-

Motion (by Senator Gorton) agreed to -

That the question be now put.

Original question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 1585


Debate resumed (vide page 1575).

Senator McKENNA:
Leader of the Opposition · Tasmania

.- On 3rd December 1959, the Government appointed the Committee on Taxation under the chairmanship of Sir George Ligertwood to examine various anomalies in the income tax laws and to make certain recommendations. I refer to the terms of reference set out in the early pages of the report and note that the first function allocated to the Committee was - to examine and inquire into the existing Jaws of the Commonwealth relating to taxation of income . . . and to formulate proposals for remedying those anomalies, inconsistencies, complexities and other defects and for simplifying those laws. . . .

What appeals to me is the injunction that the Committee should recommend proposals to simplify the income tax laws. I think that, in imposing that injunction upon the Committee, the Government set it a perfectly hopeless task. I cannot imagine anything more hopelessly complicated, in any event, than the income tax laws as they are at the moment, without the addition of the provisions of this Bill.

What do income tax laws, and this one in particular, deal with? They are concerned with the infinite variety of transactions between human beings and between companies, in the whole field of commercial law, human relationships and business transactions. I use the term “ infinite variety “ quite deliberately, because I am prepared to say that no mind or combination of minds could envisage all the circumstances that could arise and provide for the income tax results in relation to any specified number of them. The fact that this Bill runs to some 62 closely printed pages, yet seeks to implement only a few of the recommendations of the Ligertwood Committee, leads me to the conclusion that even the Committee itself would not claim that it had succeeded in simplifying the income tax laws of the Commonwealth. The Committee’s own report ran to 185 pages. I make the first point that in asking the Committee to simplify the income tax laws, the Government, from the beginning, set it a most hopeless task. If I might borrow a phrase, I would put it that the income tax law is considerably complicated by the simplifications introduced by this Bill of 62 pages. I am indebted to Viscount Radcliffe for an observation to that effect on laws of another nature. That is my first comment on the task that was set for the Committee.

In another of the terms of reference the Committee was instructed in these terms -

The Committee . . . shall take it to be necessary for the Commonwealth to continue to receive, from the taxation of income, Revenue not less in total than the Revenue that might be expected to be received under the existing laws.

Pursuant to that injunction, the Committee indicated that if its recommendations were adopted in certain matters - namely, with regard to leases, family partnerships, trusts, alienation of income and superannuation funds - it could be expected that additional tax revenue of some £14 million a year would be received. That would be a very significant contribution to the revenue of the country. The Committee pointed out that various strategems or devices within the strict letter of the law were resorted to by partnerships, trusts and certain superannuation funds and that these enabled what one might call the more affluent members of our society to avoid tax to the extent of £14 million a year, casting the burden upon the less affluent members of the community of making up that annual deficit.

The purpose of this Bill is to give general effect to the Committee’s recommendations in these matters. The Bill departs from the Committee’s recommendations in quite a number of particulars, which have been indicated by the Treasurer in another place and by the Minister for Civil Aviation (Senator Henty) here. The Opposition sees no reason to differ from the Treasurer in the departures that he has made.

I come now to what is a matter of grievous concern to the Opposition. The

Committee’s report was in the Government’s hands in June 1961 - more than three years ago. It was presented to the Parliament by the Treasurer on 17th August 1961. In paragraph 335 of its report the Committee made this very significant comment -

We think that it is important that our recommendations should not operate retrospectively to the detriment of taxpayers who, in good faith, have entered into arrangements based on the existing law. On the other hand, it is possible that a relatively long period may elapse between the lime the Committee’s recommendations are made public and, if enacted by the legislature, the date of their enactment. We do not consider it reasonable that during this period taxpayers should be afforded the opportunity of entering into arrangements in order to avoid the proposed alterations in the law. Consequently, we think that the operative date should be the date on which the Committee’s recommendations are made public.

They were made public on 17th August 1961. In putting the report before the Parliament the Treasurer is reported on page 1 83 of “ Hansard “ in this way -

The Committee has drawn attention to several parts of our income tax law which are being exploited to the serious detriment of the revenue. The areas of avoidance of tax to which the Committee specifically draws attention are -

Superannuation funds;

Family partnerships, trusts and alienation of income; and


The Government shares the concern of the Committee that ingenious taxpayers should make use of the existing provisions in a manner not intended by the legislature, thus obtaining advantages at the expense of their fellow taxpayers. The Committee places the annual revenue loss due to these strategems at no less than £14 million.

The Treasurer then pointed out that extensive research and consideration would be required before the recommendations were translated into legislative form, and he went on to say - I invite the Senate to note these words particularly -

I propose, however, that any legislation to be introduced to prevent the abuse of the existing legislation will also date from today.

I repeat that those statements were made on 17th August 1961. Some three years later this Bill is presented to us, the result of much research and consideration. I concede that the subject matter is complex. I agree that it is difficult. I agree that it would take time to prepare legislation, but I say that a delay of three years and three months is totally unforgivable. The evils were pointed out by the Committee, the Government accepted the Committee’s report on the spot and thereafter it became primarily a matter of. drafting the measure. During the three years that elapsed those who had been warned of the advent of the legislation have been able to look for new sources. Those who already had committed what the Treasurer called abuses of the income tax law have been permitted to continue their £14 million a year rake-off, to the detriment of the great bulk of thetaxpayers of this country. Taking only the past three years, the revenue loss amounts to £42 million. One might have expected that that sum would have stirred the Government and the Treasurer out of their lethargy and that action would have been taken certainly within the financial year 1961-62. I am quite certain that when the Committee referred to the time that it might take to prepare legislation, it had in mind that the legislation would operate in the financial year which followed the presentation of its report. On all reasonable standards, we might have expected the legislation to have been operative in the income year 1961-62 and subsequent years. But the delay goes beyond three years. In relation to only two matters, the Bill is to be operative from 23rd October 1964, the day after it was introduced into another place. Those two matters are in relation to leases and the alienation of income. That is coveredby clause2 of the Bill. According to clause 45, the Bill will not be operative in respect of the remaining six matters until the year commencing on 1st July 1965.

Far from curing this leakage of taxation and doing justice to the honest taxpayers - those who comply with the spirit as well as the letter of the law - there will be an escape of four years in relation to the majority of the matters comprised within this legislation. If the escape or leakage is only £14 million a year - I have no doubt that in view of this warning it has been growing annually for the past three years - the total loss of revenue as a result of this Government’s delay is some £56 million. That calls for the clearest explanation by the Government. Let us concede how difficult it is to think out all these things. The Government has not attempted to put before us legislation that will cover every conceivable act. It proceeded on broad principles to spread its net pretty widely in relation to the delinquents - if I may properly call them that - in these eight categories and then provided escape clauses for people who might be regarded as being in the innocent class while offending the broad principles of the Bill. lt is a shocking thing and a reproach to the Government that it should have failed to introduce this important piece of legislation until now. What adequate explanation have we had from the Government? I invite the Minister for Defence to address himself to this point with some particularity because the Opposition will have a good deal to say on this subject not only here but also elsewhere.

In the meantime, to make up revenue, the Government has embarked on new taxes in the current Budget. We have had taxes on tobacco and an increase in income tax on individuals. The Government has resorted to a new form of taxation by increased charges on telephone rentals and telephone installations. By and large, it has cast its net pretty widely over all the less affluent people in the community. A great many of these charges would not have been necessary had the Government bestirred itself in this matter which is so vital to the protection of the national revenue. The solemn promise and the notice served on the people by the Treasurer on 17th August 1961 have been completely ignored. I concede that at this late stage it would be impracticable to go back and reopen all the assessments of the past three years. But this law should have been enforced down the last three years and on every day of those years. No injustice would have been done had the measure been put through in 1961 and 1962 after the Treasurer’s own statement that it would operate from that date. Who could have complained if that had been done in that year or in the subsequent years? The Government stands convicted before the people of dereliction of its plain duty in allowing some £50 . million and maybe more to slip through its fingers because of the delay.

While the Treasurer has taken three years to bring in this complicated measure, he presented it to the Parliament on 22nd October right in the end of session rush.

This piece of legislation is one of about 40 measures to which we have had to address our minds in about a fortnight. The Treasurer asks that this measure be put through in less than three weeks. That is not merely wrong. It is outrageously wrong. In these circumstances, it is completely impossible to give proper consideration to the measure.

I have read the Bill and the explanatory memorandum of 116 pages. I think - but I am not sure - that. I understand what I have read. I do not know - as I should know - that I understand everything about it. Only prolonged study would enable one to grasp all the implications of the provisions of the Bill. What one would need to know to do justice to this Bill would be the provisions of the principal taxation acts which in 1963 ran to more than 400 pages; one would also have to know the Ligertwood report which covers 185 pages. This Bill which requires the most intense study contains 62 pages and there is an explanatory memorandum of 116 pages. So there are nearly 800 pages of matter on this most complicated subject which we are expected to digest. As representatives of the people, we are expected to address our minds to that mass of material in a period of less than three weeks when simultaneously we are concerned with some 40 other measures.

When you think of the complexity of accounts and company matters, commercial law, human relationships, company transactions and interlocking considerations you can see that the whole matter is truly one of great complexity. The Opposition lodges an emphatic protest at being called upon to deal with the Bill in these circumstances. This above all Bills would be an appropriate measure for a select committee of this Senate to consider. Such a committee could sit quietly over a period of months and study the Bill and its implications from a legal viewpoint, a human viewpoint and in relation to revenue. All these aspects really need consideration.

The Opposition will not oppose this Bill. It supports the purpose to which it is addressed. We hope - but do not know - that it will achieve its purpose which is to plug effectively the avenues open to tax avoiders. With us, it is a matter of hope rather than an act of faith that we support the Bill. We can only hope that it will be effective and will achieve its purpose. I have no doubt that, as new trends develop in the community and patterns of conduct begin to emerge, we will have these things identified and they will be dealt with from time to time in further legislation. It is too much to hope that every gap has been closed by this measure.

I take the opportunity to express appreciation of the work of the Ligertwood Committee and its staff.I have the greatest sympathy with” the Parliamentary Draftsman and his staff in the task they had to undertake. I am grateful indeed for the explanatory memorandum which the Commissioner of Taxation invariably presents with a Bill of this kind. I am happy on this occasion as on others to compliment him on that presentation. It is of enormous help to us in understanding the technical provisions of the Bill. When the memorandum was attacked recently by a writer in a prominent journal, I was happy that the answer was that there was one word wrong and that it had been detected and corrected before the memorandum had progressed very far. I think the Commissioner can take great credit to himself and to his officers from the fact that the memorandum has come through unscathed. I repeat what I have said on many occasions: I wish that every department that presented a Bill to the Parliament would follow the splendid example set by the Taxation Branch. It is impossible to visualise in advance and provide for every situation that may arise. Ingenious minds - business, accounting and legal minds - all of whom have specialised in this particular field and are directed at leisure to particular problems will still find ways of avoiding taxation. Because of the factors I have mentioned, the Bill has been drafted in an unusual way.

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

Leave granted; debate adjourned.

page 1588


Motion (by Senator Paltridge) agreed to -

That the Senate, at its rising, adjourn till tomorrow at 1 1.35 a.m.

page 1588


Television Programme

Motion (by Senator Paltridge) proposed -

That the Senate do now adjourn.

Senator CANT:
Western Australia

Mr. Deputy President, I rise to direct the attention of the Senate to the recent happenings in staff appointments in the Australian Broadcasting Commission. On 27th October 1964 I referred to what I considered to be political interference in the affairs of the A.B.C. Events which have taken place since that time have confirmed my opinion in this respect. At that time, I said that the Premier of Western Australia had become involved with the A.B.C, television programme “ Four Corners “. I want to quote the relevant passage from the “ Hansard “ of the Western Australian Parliament. The first part of the question asked by the honorable member for Collie was a reiteration of a statement in the “ West Australian “. The honorable member then asked -

  1. Has the Premier seen this item?
  2. If so, does he approve of this gruesome commercialisation of capital punishment?
  3. If not, will he take immediate action to have this matter fully investigated with a viewto preventing the film being shown?

The “Hansard” report continued -

The SPEAKER (Mr. Hearman): May I point out to the honorable member that this question refers to a matter that is not within the jurisdiction of the Premier, although he may be able to answer it. However, I repeat it is not within his Department.

MR. BRAND: I was about to say that I do not altogether agree with this. I certainly feel that the honorable member for Collie has raised a reasonable query; but as you have said, Sir, it is a matter over which I have no control. I believe that some interviews with Mrs. Cooke have already been televised by another channel -

These interviews were not televised by the Australian Broadcasting Commission. Mr. Brand continued - - and I am not prepared to make any further comment.

MR. H. MAY: Arising from the Premier’s answer, may I suggest that he takes such action as is necessary for an approach to be made to the authorities on this matter to prevent the film being shown?

MR. BRAND:I am prepared to raise the point as put forward by the honorable member for Collie.

Mr. Brand did take the matter up with the Western Australian Manager of the Australian Broadcasting Commission. I would not like to say that, as a result of that action on his part, the film was not shown, but the fact is that it was not shown. Whether anything else happened from that action, I am not prepared to say; but it certainly indicates clearly that, despite the warning from the Speaker of the Legislative Assembly, the Premier was more than prepared to intervene in this particular matter. The request from the honorable member for Collie was for the Premier to intervene and prevent the showing of the film. Mr. Brand forwarded the request to the A. B.C. In this way, it was a request from the Premier of Western Australia to the Manager of the Commission. It is history now that the film was not shown.

But other events have taken place which are more far reaching. Three members of the staff of the Australian Broadcasting Commission have been removed from their positions with respect to this programme. These men were removed from important work and were not allowed to continue with the presentation of this programme which is deemed to be controversial. It has quite a good rating, if one can take any notice of ratings in respect of television programmes. Of course, the A.B.C. and the commercial television stations do take notice of ratings. “Four Corners” has quite a good rating because of its independent attitude.

Looking at the positions which Were held by the three persons who were -removed from this programme, we find that Mr. Allan Ashbolt was the executive director of “ Four Corners “; Mr. John Power was the producer of this programme; and Mr. John Penlington was a reporter for it. The A.B.C. gave the following reason for the changes which occurred -

The changes are a rational readjustment which would place the ultimate responsibility for direction and editorial supervision at a higher level within the Commission’s executive staff than it has been before.

I want to remind the Senate that the programme, “ Four Corners “, goes into recess every year. It will go into recess ion 12th December next for ten weeks. Surely if there was any rearrangement to be made in the staff connected with this programme, the time for any readjustment .-would be when the programme was in recess and not at this particular time. The timing of the changes can lead to one thought’ only; that is, that someone was displeased with the way in which the programme’ was being handled. The result of that displeasure is that these three men are being made the scapegoats. The real offenders will be let off. The programme is to be denuded of the trained talent built up over the years.

Senator Wright:

– Have the three men concerned made any complaints?

Senator CANT:

– They are rather restricted in regard to the complaints they may make. I will come to that matter later. They are covered by the provisions of the Crimes Act in regard to making statements. If Press reports can be believed at all, I understand that Mr. Ashbolt, who is the president of the registered organisation to which the staff of the A.B.C. belong, was instructed not to make any statement even at the meeting of his registered organisation. I cannot verify that statement. I know only that that statement has been in the Press and has not been contradicted.

Senator Wright:

– Is the honorable senator authorised by any of these men to make a complaint here on their behalf?

Senator CANT:

– No, I am not. I am bringing this matter to the attention of the Senate on behalf of the Australian people. It is my place to do that.

Senator Wright:

– Does the honorable senator not think that it is rather unfair, perhaps, to their interests if they have a case to put to another tribunal that he should mull it here in public?

Senator CANT:

– I am quite entitled to raise in this chamber what matters I consider I should raise here.

Senator Wright:

– I am raising the question of personal fairness.

Senator CANT:

– That is the honorable senator’s opinion. If he reads the newspapers, he knows that this matter has aroused heated public opinion. But I suspect the honorable senator does not read newspapers.

If this programme is to continue - and the Australian Broadcasting Commission says that it will continue - from where is the trained staff to come to operate it? We have to consider in this context that Michael Charlton was removed from this programme. Mr. Bob Raymond resigned from it and went to one of the commercial television stations. Now three men, who were top personnel connected with the programme, have been removed from it, and there is no-one to supervise its production.

The point is not so much whether pressures were used on this occasion - I believe that they were - but that the removal of these men has created in the public mind an impression that pressures have been used. There can be no question about this fact, because great publicity has been given to this matter in every newspaper in Australia during the whole of last week. In the “ Australian “ every day last week not only was there Press comment but also there were pages of letters to the editor sent in by members of the public concerning this programme. Yet nothing has been done by the A.B.C. or the Government to relieve the public mind in this respect. Statements to the effect that this action has to do with staff arrangements are not sufficient to relieve the public mind of its distress over the suppression of this programme. This is particularly so in view of past happenings in connection with the A.B.C. I shall not go through all of their, but shall instance a few to give some idea of the pressures that have been applied to the A.B.C. In 1963 there was the incident of the Bidault film. The Commission said that it was not of good quality, that the sound track was not sufficiently clear to allow the film to be shown.

Senator Mattner:

– What one was that?

Senator CANT:

– That was the film on De Gaulle. When it was televised by a commercial station it was proved that the sound track was quite all right, that the film was quite clear and was fit to be shown. The Postmaster-General had the right to intervene from the point of view of censorship, and he did intervene. Whether he acted wisely in doing so is another matter. Subsequently he had to give permission for the film to be shown. He had no power over the Press, which owned the television stations, to prevent them from publishing the Bidault story. The newspapers did publish the story and one of the commercial stations ran it. The Minister was then forced to allow the other commercial stations and the A.B.C. to run the story.

The next incident concerns the need for the Commission to make application to a travel committee for permission for members of its staff to travel overseas to make films. Nowhere in the Estimates can I find any appropriation for this travel committee. Nevertheless, there is admittedly an over seas travel committee to which the Commission must go for approval for overseas travel. If the purpose of the travel is not approved by the Committee, then money for travel is not available. Such a requirement detracts from the independence of the A.B.C. I do not even know which department controls the committee. This is another instance of political interference in the operations of this body.

We come now to the Commission’s programme on housing. On this occasion Senator Sir William Spooner was invited to take part in the programme. He gave as his reason for not taking part the fact that he had too’ much other work to do. I do not doubt that at that time he did have too much work to do. I know that a Minister is a very busy person. Subsequently Senator Sir William Spooner did get time on television to express the Government’s view. This again was an instance of political interference with the A.B.C. After the programme was shown, Senator Sir William Spooner complained that the Government’s point of view had not been presented and was then given time to present that point of view. This again was evidence of political interference with the A.B.C. Then we had the scandal involving the R.S.L. Even officials of the Commission are in conflict over this matter. Sir Charles Moses said that the presentation was not balanced but was terribly one sided. Dr. Darling said that the documentary was quite balanced, that he personally saw nothing wrong with it. He went on to say -

I should not be 100 per cent, honest if 1 said that the R.S.L. Dim had nothing to do with Alan Ashbolt’s removal from “Four Corners”.

Mr. Semmler came into the picture and said that the general impression that Mr. Ashbolt had been taken off the programme because of the R.S.L. situation was quite incorrect. We know that representatives of the League did lobby here in Parliament House in connection with the programme. This clearly is further evidence of the pressures that are being applied, and of the fact that people are trying to shift the onus from one to the other.

The Dr. Russo talk on Cuba apparently offended our American friends. This led to some criticism. On this occasion the Prime Minister (Sir Robert Menzies) came into the picture and requested that he be given a script of the talk. Security officers were sent to Sydney to get it and Dr. Darling was summoned to Canberra to give an account of the matter. This too, is further evidence of my recent complaint that political pressures are being applied to the Australian Broadcasting Commission, that the producers of controversial programmes are being inhibited in their work, that when it suits somebody at the top those producers can be prejudiced in their employment, and that they are in constant fear that they will not do the right thing but will offend somebody. This all prevents the reporter concerned from reproducing what he believes to be the facts on controversial issues.

As I said earlier in answer to Senator Wright, it has been stated in the Press that the president of the registered organisation concerned in the most recent episode was instructed not to pursue the matter at a meeting of his trade union. That is a complete taking away from the individual of the freedom to air his grievance in the place where it might be righted. It seems to me that we are returning to the conditions that obtained in the early days when the Press had to fight for its freedom. Real freedom for the Press was first obtained when the American Constitution was written. Prior to that, the instrument of the established government was the medium for communicating public information and nobody else was allowed to say anything. If these things I have referred to tonight are allowed to continue, we will quickly return to that state of affairs. It will be a sad day for Australia if the present state of affairs is allowed to continue. It will be a sad day for democracy if freedom of expression is suppressed.

I believe that the Parliamentary question forwarded by the Premier of Western Australia had at least something to do with the withdrawal of the most recent programme to which I have referred. Whether the time chosen to televise the programme was a good one is a matter of opinion. Not only was the incident in question to occur on the day mentioned, but also at that time there was before the Western Australian Parliament a private member’s bill which was designed to abolish capital punishment in that State. These were matters of public interest. This was the proper time at which to bring this controversial issue before the people. The programme should not have been suppressed and the employees of the A.B.C. should not have been prejudiced in their employment because of it.

Minister for Customs and Excise · New South Wales · LP

Senator Cant has adverted, to a matter which he had already raised in the Senate. He has advanced no new argument to bolster his case. He has raked through incidents in relation to which the Australian Broadcasting Commission has been involved in some controversy and has advanced them in support of his case in regard to the “ Four Corners “ programme about the application of the death penalty in Western Australia. He referred to the Commission’s programme on housing. Senator Sir William Spooner, who is in the chamber at this very moment, gave the lie direct to Senator Cant’s accusation in that respect. I suggest that we cannot have a better refutation than that.

Senator Cant referred to a programme dealing with the activities of the Returned Servicemen’s League and said that Sir Charles Moses, the General Manager of the A.B.C. - as is his right within the powers of the Act - commented that the programme was not balanced. Tonight the honorable senator, in the climate of an imminent election campaign, has tried to whip up an argument about the “ Four Corners “ programme. Yesterday the Postmaster-General (Mr. Hulme) was confronted in another place with a question on this programme and gave an answer which, I think, should resolve for all time any doubts on the subject that the honorable senator may have. Senator Cant said tonight that nothing has been done to assure the public that there is no substance in the proposition that there has been interference with the Commission in the control of the “ Four Corners “ programme.

I propose to read the precise words used by the Postmaster-General in his answer yesterday. He said -

I have tried to make it clear to the House in the past that neither the Government, nor I, as the responsible Minister, interferes with the control of the Australian Broadcasting Commission.

That is the assurance that the honorable senator is seeking, given in the words of the

Postmaster-General, the Minister who is directly responsible. He continued -

The Commission is granted its authority and charter by the Broadcasting and Television Act, which was passed by this Parliament.

That is the point I made to Senator McClelland when I answered his question on this issue several days ago. The PostmasterGeneral then said -

I did inquire into the origin of the current con troversy and discovered that it arises from a question asked by a Labour member of the Western Australian Parliament who asked the Premier of Western Australia to make representations to the Australian Broadcasting Commission. The Premier of Western Australia promised to do so, but he merely sent to the Australian Broadcasting Commission the relevant issue of the Western Australian “Hansard”.

That was the beginning of this matter, and the first I knew of it was when I read about itin the Press. In the same way, the first I knew of any staff adjustments by the Australian Broadcasting Commission was when I read about them in the Press.

It is the responsibility of the Australian Broadcasting Commission to create, abolish or reclassify positions. As the responsible Minister, 1 have no intention of interfering with the Australian Broadcasting Commission, and I hope that no other Minister or member of the House will interfere with it.

The Postmaster-General has given an unqualified assurance that he knew nothing about the controversy until he read of it in the Press. I ask, in all truth and conscience, what more can Senator Cant want? I must say to the honorable senator that this is not an occasion to try to create a political controversy. There is no basis for such an attempt. It is quite clear, as the PostmasterGeneral said, that the responsibilities and obligations of the Australian Broadcasting Commission are laid down by an act of Parliament. The Commission is performing its functions in accordance with that act.

Question resolved in the affirmative.

Senate adjourned at 11.25 p.m.

Cite as: Australia, Senate, Debates, 10 November 1964, viewed 22 October 2017, <>.