Senate
11 November 1964

25th Parliament · 1st Session

  1. Senate
  2. 25th Parliament
  3. 1964

The DEPUTY PRESIDENT (Senator McKellar) took the chair at 11.35 a.m., and read prayers.

page 1593

QUESTION

SENATE VACANCY

Senator McKENNA:
TASMANIA

– I address a question to the Leader of the Government in the Senate. Has the Governor-General notified the existence of a casual vacancy in the Senate to the Governor of Western Australia? If so, what advice has been received from the Governor by the GovernorGeneral or the President of the Senate regarding action being taken to fill the vacancy? Will the Minister inform the Senate as to the position before the Parliament rises?

Senator PALTRIDGE:
Minister for Defence · WESTERN AUSTRALIA · LP

– I am not in a position to answer the question. I shall confer with my colleague, the Minister for the Interior, to see what the situation is and what information can be made available before the Senate rises.

page 1593

QUESTION

TELEPHONE SERVICES

Senator BUTTFIELD:
SOUTH AUSTRALIA

– My question is addressed to the Minister representing the Postmaster-General. For some time I have been making representations to the PostmasterGeneral to see whether it is possible to provide a trunk line radio telephone link to such isolated places as Andamooka and Coober Pedy in South Australia. Can the Minister indicate whether satisfactory arrangements can be made for these two towns?

Senator ANDERSON:
Minister for Customs and Excise · NEW SOUTH WALES · LP

– Several days ago, when Senator Buttfield raised this matter, I promised to obtain some information for her. I have been informed by the PostmasterGeneral that firm engineering plans have been developed for the installation of radio telephone links connecting Andamooka and Cooper Pedy with the Australian communications network. The need for adequate telephone facilities at both these centres is recognised. It is necessary to fix transmitting and receiving sites and to provide the necessary buildings and special radio equipment. It is hoped to commence the work on both projects either late in the 1956-66 financial year or early in the following financial year.

page 1593

QUESTION

H.M.A.S. “MELBOURNE

Senator KENNELLY:
VICTORIA

– In view of his earlier experience as Minister for the Navy, can the Minister for Works give me any idea how long it will take to spend £10 million on the “ Melbourne “ and to have the vessel back in commission?

Senator GORTON:
Minister for Works · VICTORIA · LP

– No detail of this work will be carried out by the Department of Works. Therefore I am not in a position to answer the question.

page 1593

QUESTION

CAIRNS AIRPORT

Senator WOOD:
QUEENSLAND

– Is the Minister for Civil Aviation aware that there is a shortage of hangar space at Cairns aerodrome for light aircraft? Is he aware that many light aircraft have to ‘be parked an the open through lack of shelter? Will he examine the situation with a view to providing the rapidly developing airport of Cairns with additional hangar space to house the important general aviation sector of the industry?

Senator HENTY:
Minister for Civil Aviation · TASMANIA · LP

– I am aware of the position at the rapidly growing airport at Cairns and of the lack of shelter provided for the increasing traffic of light aircraft in that area. I have recently approved of the transfer of a hangar to Cairns airport. The total cost of the transfer and re-erection of the hangar and the provision of gravel space, lighting and power will be approximately £18,000. I understand that the Department is prepared to push forward with this work as soon as possible.

page 1593

QUESTION

SHIPPING

Senator COLE:
TASMANIA

– I direct my question to the Minister representing the Minister for Shipping and Transport and in doing so I direct his attention to an advertisement by Tasbureau Holiday Tours. What factors are responsible for the following difference in charges set out in the advertisement: Twelve days Sydney/Sydney from £52 including travel on “ Princess of Tasmania “; fourteen days Sydney/ Sydney from £82 including travel on the “ Empress of Australia “? Could this difference in charges have an adverse effect on bookings to sail from Sydney on the “ Empress of Australia “? The purpose of my question is to ensure that the many thousands of people to whom these holiday tours will appeal will know why the base rate for the fourteen days tour should be £30 dearer than the twelve days tour.

Senator PALTRIDGE:
LP

– I am not in possession of any knowledge that might be of assistance to the honorable senator. I shall refer his question to the Minister for Shipping and Transport, Mr. Freeth, and request that the honorable senator be given an answer before the Senate rises.

page 1594

QUESTION

EDUCATION

Senator CORMACK:
VICTORIA

– By way of preface to my question to the Minister in Charge of Commonwealth Activities in Education and Research, I make the observation that 1 and many of my Senatorial colleagues are anxious to find out what progress has been made to provide schools with science facilities. I would be grateful to the Minister if he would inform me, in general terms, of the state of these grants.

Senator GORTON:
LP

– At this time I can answer the honorable senator only in general terms. Speaking in round figures, of approximately £1.3 million which is to be expended on private schools throughout Australia, the State committees have recommended for assistance this financial year a total of 190 schools. Of those schools 188 have already received offers from the Commonwealth Government and 166 of them have replied accepting the offers. The reremaining 22 schools have not yet had time to reply. Of the finance available, about £385,000 is already in the hands of schools.

page 1594

QUESTION

THE PARLIAMENT

Senator BROWN:
QUEENSLAND

– I desire to ask a few questions of the Leader of the Government in the Senate. Is the Parliamentary Library fully staffed? Is there not a shortage of trained personnel to perform research duties? How does the Library compare with other similar libraries as far as research work is concerned? Would not the availability of essential information provided by research officers improve the value of debates and assist senators and members to lift debates from the “ Codlin’s Your Friend, Not Short “ level to a higher plane, more in keeping with the needs of the times?

Senator PALTRIDGE:
LP

– I can comment only on the last question asked by the honorable senator. I shall refer his questions relating to the staffing of the Library to the President of the Senate, under whose jurisdiction, I understand, the Library comes. As to the honorable senator’s last question, I think that the provision of better libraries makes for better debates, provided, of course, that those taking part in tha debates avail themselves of the information that is obtainable from the libraries. In that connection, whilst not denying the proposition that a better library should make for better debates, I also suggest with due humility that better debates might ensue if the existing facilities were better used by members.

page 1594

QUESTION

PARLIAMENTARY RETIRING ALLOWANCES FUND

Senator MARRIOTT:
TASMANIA

– My question is directed to the Minister representing the Treasurer. Can the Minister inform the Senate how much money, if any, has been provided by the Commonwealth Treasury towards the Commonwealth Parliamentary Retiring Allowances Fund since its inception, which I believe was in 1947? What was the credit balance in the fund as at 30th June 1964?

Senator HENTY:
LP

– The total of the Commonwealth’s contribution to the fund has been £419,792. The total credit in the fund at the moment is £560,138 6s. 7d. The Commonwealth contribution is intact and there is a credit balance of approximately £140,000 purely from the members’ contribution of £5 a week. Under the new system members’ contributions have been increased to £7 14s. lOd. a week, but under the system which operated from 1947, whereby members paid £5 a week, the Commonwealth’s contribution is intact and there is a credit of more than £140,000 from members’ contributions.

page 1594

QUESTION

AUSTRALIAN EMBASSY BUILDINGS

Senator HENDRICKSON:
VICTORIA

– I direct a question to the Acting Minister for External Affairs. Is the Minister able to give any additional particulars relating to the reported construction of a new Australian embassy building in Washington? Is the building to be used for the residence of the Ambassador or is it to be used for administrative purposes? Are similar buildings in contemplation in respect of Australian missions in other parts of the world? If so, what are the details? Will Australian building materials be used almost exclusively in all of the contemplated buildings? Will Australian architects be engaged exclusively? If so, who will select the architects? In regard to the Washington project, how many architects were considered in addition to the successful firm? What special qualifications did the successful firm possess?

Senator GORTON:
LP

– The building in Washington referred to by the honorable senator is not to be used as the Ambassador’s residence. It is to be used as a chancery for administrative purposes and as offices for people associated with the Department of External Affairs, and also the military attaches, trade attaches and other people who are engaged in that type of work in Washington. I imagine that it would be highly unlikely that Australian building materials would be shipped across to America for the purpose of constructing this embassy because I should think that the cost would be entirely prohibitive. The firm of architects which has been engaged for the construction of the building is the Australian firm of Bates, Smart and McCutcheon. It was selected from a panel of architectural firms by the Minister for External Affairs and his advisers from the Department of Works. The types of matters which were taken into consideration were the ability of the firms in terms of the number of employees, the capacity of the firms to carry out projects of this size, and comparable buildings which had previously been built by them. The firm I have mentioned was selected. I do not know of any other chanceries in contemplation in other parts of the world at the moment, other than those which appear to be either in comtemplation or under construction as shown in the estimates for the Department of External Affairs.

page 1595

QUESTION

MALAYSIA

Senator LILLICO:
TASMANIA

– My question is directed to the Acting Minister for External Affairs. Has he any information further to that published in the Press as to the progress and speed of recent Indonesian paratroop landings in Malaysia?

Senator GORTON:
LP

– No, I have not.

page 1595

QUESTION

COMMONWEALTH SUPERANNUATION FUND

Senator DRURY:
SOUTH AUSTRALIA

– My question is directed to the Minister representing the Treasurer. Is it a fact thatlast year the Commonwealth Superannuation Fund was in credit to the extent of £.102 million of subscribers’ contributions and that the fund is increasing each year? Is it also a fact that the South Australian superannuation fund, with one-tenth the number of those contributing to the Commonwealth fund, has, for a number of years, paid 20s. for each pension unit, and that several other States have increased the value of their units to 20s., whereas the Commonwealth pension unit has remained at the value of 17s. 6d. for the past ten years? In view of the buoyant position of the Fund, the ever increasing cost of living and the fact that superannuated public servants do not receive the concessions that are available to other pensioners and are obliged to pay income tax, will the Treasurer consider increasing the value of the Commonwealth Superannuation unit to at least 20s.? Finally, will the Treasurer make a statement before the end of the sessional period on the Government’s intention in relation to affording relief to superannuated public servants?

Senator HENTY:
LP

– I am sorry thatI have not the facts and figures necessary to answer the question the honorable senator has put to me. If he puts the question on the notice paper I shall bring it to the notice of the Treasurer as quickly as I can and see whether he can give the honorable senator an answer before the end of the sessional period. 1 think that is the best procedure to follow.

page 1595

QUESTION

ESSAYS OF PRINCE OF WALES

Senator BUTTFIELD:

– Has the Minis ter for Customs and Excise seen a Press report that certain newspapers are about to publish photographic copies of essays written by the Prince of Wales? Is it a fact that those copies were obtained without the consent of the Prince of Wales? Does the Minister consider that it is grossly unethical, and certainly unpleasant and nauseating to the public, to have essays of any young person, let alone the Prince of Wales, published without his consent? Is there any way in which these photographic copies can be prevented from being brought into Australia?

Senator ANDERSON:
LP

– The implications of the question are such that I think I should very properly ask the honorable senator to place it on notice. I do so not only because the question relates to Royalty, but also because it opens up a number of matters in relation to the Customs Act. For those reasons I would prefer to have the question put on notice.

page 1596

QUESTION

POSTAL DEPARTMENT

Senator HENDRICKSON:

– Can the Minister representing the Postmaster-General give me some assurance that an answer to question No. 335 standing in my name on the notice paper will be made available before the end of this sessional period?

Senator ANDERSON:
LP

-I will seek the information from the Postmaster-General.

page 1596

QUESTION

SURPLUS GOODS

(Question No. 259.)

Senator MURPHY:
NEW SOUTH WALES

asked the Minister representing the Minister for Trade and Industry, upon notice -

  1. In what respect and to what extent is Australia’s international trade affected by policies of other countries in regard to disposal of surplus commodities?
  2. What other countries are mainly concerned?
  3. What remedial action is open to Australia and what action has been taken?
Senator HENTY:
LP

– The Minister for Trade and Industry has provided the following answers - 1 and 2. Surpluses, as the term is normally used, and the problems involved in their disposal, are most conveniently considered as arising from two separate kinds of circumstances. The first is the case where some part of Government held strategic stockpiles of raw materials is considered to be surplus to requirements. At one time or another, the Governments of most countries have been in such a situation with respect to particular commodities. The normal procedure is for surpluses of this kind to be fed into commercial marketing channels in a manner calculated to disrupt normal commercial transactions as little as possible. In most cases surplus disposal activities of this type are small in relation to the volume of international trade in the commodity concerned, and do not significantly affect Australia’s trade. In some cases, however, the disposal of parcels of strategic stocks can tend to depress prices, or retard rises in market prices. As an exporter of metals and other raw materials which are often involved in these cases, Australia undoubtedly at times has been disadvantaged by these disposal measures, but it is not possible to estimate the extent of damage which has occurred.

The second, and far more important, type of surplus disposal activity arises where domestic price support or other protective measures give rise to levels of production higher than can be marketed internally or exported on commercial terms without Government financial assistance of one type or another. Surpluses of this kind are moved by a wide variety of measures of which the more important are the use of export subsidies and programmes under which surplus agricultural products are made available on concessional terms to underdeveloped countries. In view of Senator Murphy’s separate question on subsidies, it is presumed he has in mind here the latter type of arrangement.

A number of countries make available as gifts modest volumes of agricultural commodities as part of economic aid programmes. Australia does so under the Colombo Plan, although in this case donations are not related to the existence of surpluses but are made in response to requests by recipient countries. However, the United States of America, whose agricultural policies generate surpluses of the kind described above, has instituted under its Public Law 480 a conscious programme of moving surplus commodities to underdeveloped countries. In the ten years to 30th June 1964, actual exports under Public Law 480 programmes total about 12.3 billion dollars at world market prices with substantial quantities still to be moved under existing commitments. The commodities mainly concerned are wheat, rice and cotton. During the ten year period exports of these commodities under Public Law 480 have approximated: wheat 3.5 billion bushels, equal to three average U.S. crops; rice 355 million bushels, equal to two average U.S. crops; cotton 5.3 billion lb., equal to two-thirds of an average U.S. crop.

It is, I believe, a fair statement of the position to say that the damage to the commercial trading interests of exporters of commodities covered in Public Law 480 programme has been reduced to a minimum as a result of the sensible and responsible attitude that has been adopted by the U.S. There has, nevertheless, been damage in the sense that the movement of agricultural commodities on non-commercial terms has undoubtedly been reflected in lower export earnings accruing to commercial exporters. It is not possible, however, to give an accurate quantitative assessment of the extent of any damage.

  1. Australia, together with the other countries concerned, has accepted that the disposal of surplus commodities be governed by the “F.A.O. Principles of Surplus Disposal”. These principles provide, among other things, for surpluses to be disposed of in an orderly manner and so as not to interfere with normal patterns of production and international trade. It is also provided that wherever possible interested countries should consult on the possible effects of such transactions. Consultation arrangements have been established and Australia has used such consultations to ensure that her international trading interests have been protected to the fullest possible extent.

page 1596

QUESTION

TRADE

(Question No. 260.)

Senator MURPHY:

asked the Minister representing the Minister for Trade and Industry, upon notice -

  1. In what respects and to what extent is Australia’s international trade affected by commodity policies of other countries in regard to subsidies?
  2. What other countries are mainly concerned?
  3. What remedial action is open to Australia and what action has been taken?
Senator HENTY:
LP

– The answer to the honorable senator’s question is as follows - 1 and 2. As indicated in the reply to the earlier question asked by Senator Murphy, a number of countries rely on subsidies to expand their exports. Indeed there are very few primary products entering world trade which are not subsidised to some extent by one exporter or another although the commodities mainly concerned are wheat, flour, and dairy products. The use of subsidies has an effect on the price at which trade takes place and Australia has undoubtedly been disadvantaged in this respect. In some cases particular contracts have been lost by Australia to other exporting countries because of the competitive edge given to those exporters through subsidies. It is not. possible to isolate the effects of subsidies from the variety of factors which affect international trade and therefore the exact extent of damage suffered by Australia cannot be stated exactly.

  1. The question of export subsidies and similar devices, employed by a number of European countries to assist the export of surplus agricultural products, particularly flour, has been the subject of intensive international consideration. Australia and other agricultural exporters have made persistent attempts to strengthen provisions of the General Agreement on Tariffs and Trade in regard to export subsidies on primary products. Despite some improvements which have been secured, the G.A.T.T. provisions remain unsatisfactory. Nevertheless, Australia some years ago brought the matter of French export subsidies on wheat and flour to the attention of G.A.T.T. and, as a result of the findings of the G.A.T.T. in this matter, France concluded a bilateral arrangement with Australia which limited French flour exports to Australia’s traditional South East Asian markets. However, the main scope for action by Australia to secure protection against predatory export subsidies has been through bilateral negotiation. Trade agreements or understandings negotiated with the United Kingdom, Japan, Ceylon, the Federation of Malaya, and the Federation of Rhodesia and Nyasaland all included provisions designed to afford Australian commercial exports to those markets reasonable protection against subsidised competition.

In the particular case of butter, ‘where volume and the price of Australian exports sales were being seriously affected by dumping and heavy subsidies a solution was found through the negotiation of a special arrangement between the United Kingdom and the. major exporters of butter to the United Kingdom market. This arrangement has proved to be most valuable to Australia and has resulted in butter prices in the United Kingdom market reaching and remaining at remunerative levels.

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QUESTION

MIGRANT HOSTELS

(Question No. 284.)

Senator BREEN:
VICTORIA

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

Are the migrant hostels, which are under the control of Commonwealth Hostels Ltd., subject to the health and building regulations of the Statein which the hostels are established?

Senator ANDERSON:
LP

– The Minister for Labour and National Service has supplied the following answer -

Irrespective of the strict legal position as regards the Commonwealth hostels which are managed by Commonwealth Hostels Ltd., the company endeavours to have all hostels visited every six months, or more frequently if that appears necessary, by health inspectors of the appropriate local authority and ensures that prompt action is taken on any recommendations they make. The company, in relation to any improvements it makes or new structures it erects, has regard to the requirements of State building regulations.

page 1597

QUESTION

VISITORS’ VISAS

(Question No. 298.)

Senator CAVANAGH:
SOUTH AUSTRALIA

asked the Minister representing the Minister for Immigration, upon notice -

  1. Is a group of 12 Russian tourists, including members of the Russian Communist Party, now in Australia?
  2. Were these tourists granted visitors’ visas? If so, why are members of the Russian Communist Party granted visas to tour Australia while an ex-member of the Communist Party of Germany is refused a visa to visit his children and grandchildren?
  3. Is membership of the Communist Party of one country more desirable than membership of the same party in another country, or is tourism more desirable than family reunions?
Senator ANDERSON:
LP

– The Minister has supplied the following answers - 1, 2 and 3. A group of 12 Russians entered Australia on 18th September 1964, as tourist visitors for a stay which varied between two and three weeks. They were granted visas for this purpose after having complied with the normal visitor requirements. Provided the application for a visitor’s visa is made in good faith, and a visit only is intended, the policy as a general rule is not to refuse a visa solely on the grounds of the applicant’s political affiliation, past or present

page 1597

QUESTION

AGED PERSONS HOMES

(Question No. 311.)

Senator CAVANAGH:

asked the Minister representing the Minister for Social Services, upon notice -

  1. In respect of how many grants made under the Aged Persons Homes Act have undertakings been received that the homes will continue to be usd as homes for aged people in accordance with section 8 (3.) of the Act?
  2. How many grants have been made without any such undertakings being received?
Senator ANDERSON:
LP

– The Minister for Social Services has replied as follows -

    1. It is not the practice to require undertakings or agreements of this nature in the case of religious organisations.

page 1598

QUESTION

DECIMAL CURRENCY

(Question No. 313.)

Senator McKELLAR:
through Senator Dame Annabelle Rankin

asked the Minister representing the Treasurer, upon notice -

  1. Are the modifications to existing machines proposed by the Decimal Currency Board engineers being viewed with misgivings by the companies responsible for conversion on the grounds that machines converted in the manner suggested are likely to develop faults which could not be rectified?
  2. Is it a fact that the Decimal Currency Board has not yet given any official approval for the ordering of conversion parts and that this will almost certainly delay the changeover planned to be completed by February, 1966?
  3. Is the time limit tentatively laid down by the Decimal Currency Board engineers for the conversion of each machine considered by the major companies to be so short as to be incapable of fulfilment by fully trained mechanics let alone by the partly trained mechanics who of necessity will be called upon to carry out this work?
Senator HENTY:
LP

– The Treasurer has supplied the following answers -

  1. The Board is concerned to see that the conversion methods proposed by the machine companies are both efficient and economical and that they result in the least practicable inconvenience to machine owners. To this end, the Board’s engineers are closely examining conversion methods put forward by the companies and have discussed a number of improvements and modifications with the companies concerned.
  2. The Board has already approved in detail the machine conversion plans of individual banks, each of which will need to be fully changed over to decimal operation by February 1966. Following detailed discussions with the Board, each bank has already placed orders with distributing companies for the necessary numbers of new decimal machines, and machines which can be operated in both sterling and decimals. Arrangements have also been completed for the prior conversion of all bank£.s.d. machines which will be required to operate in decimals from February 1966.

The Board recently approved arrangements for the machine companies to order the necessary numbers of reliefmachines for use both by banks and by non-bank owners while their own machines are being converted.

Production of complete machines for use in relief work is a bigger task than that of making conversion parts and, for this reason, the Board has given priority to settling these arrangements. The Board is now settling details of the kits of parts which will be required to convert each£.s.d. machine, so that orders for these may be placed by the machine companies.

  1. The times being set for conversion work are based upon well-established and recognised engineering practices. These methods have been used in industry and Government in Australia for many years. They necessarily take into account the fact that much of the labour force used for conversion work will have only a limited amount of training.

page 1598

QUESTION

RICE

(Question No. 314.)

Senator MAHER:
QUEENSLAND

asked the Minister representing the Minister for Trade and Industry, upon notice -

Will the Minister obtain and make available to the Senate figures showing the amount of rice production in the rice importing countries of India, Ceylon, Indonesia, Malaysia and the Philippines during the years 1958 to 1963 inclusive?

Senator HENTY:
LP

– The Minister for Trade and Industry has supplied the following reply -

Figures published by the Food and Agriculture Organisation for the years 1958-59 to 1963-64 show that the production of paddy rice (in ‘000 metric tons) for the countries in question was: -

For the information of the honorable senator 100 tons of paddy rice convert to about 75 tons of milled.

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QUESTION

DEFENCE

(Question No. 320.)

Senator ORMONDE:
NEW SOUTH WALES

asked the Minister representing the Minister for Air upon notice -

Is it a fact, as claimed in press reports, that the Mirage supersonic fighter can never be used outside Australia because the necessary ground electronic control equipment is not available in Australia? If so, can the Minister inform the Senate when the necessary equipment will be available?

Senator ANDERSON:
LP

– The Minister for Air has supplied the following answer to the honorable senator’s question. -

The rather sweeping statement that the Mirage aircraft can never be used outside Australia because the necessary ground electronic control equipment is not available in Australia cannot be taken seriously. In fact the Mirage can be used outside Australia with existing ground control equipment. However, its capability will be improved with the introduction of the later types of ground control equipment. As already announced, plans are in hand to procure this equipment.

page 1599

QUESTION

TAXATION

(Question No. 328.)

Senator MARRIOTT:

asked the Minister representing the Treasurer, upon notice -

  1. Does the C.B.O.A. Credit Union Co. Ltd., which has 6.532 members, have its profits taxed at the same rate as public companies, as is stated in its annual report?
  2. Are there as also stated, some 21,000 credit unions in the United Slates of America and some 4.600 in Canada, all of which are not subject to tax?
  3. If the answers are in the affirmative, will the Treasurer advise if consideration has been given to releasing Australia credit unions from the burden of company taxation?
Senator HENTY:
LP

– The Treasurer has supplied the following answers to the honorable senator’s questions - 1.I have no knowledge of the affairs of the credit union mentioned by the honorable senator but it is correct that the rates of tax payable by a credit union not qualifying as a private company arc the same as those payable by a public company.

  1. It is understood that neither the United States of America nor Canada grants a comprehensive exemption from tax of the income of credit unions. In the United States, the income of a credit union is exempt from tax only if it has no share capital and is organised and operated for mutual purposes and without profit. The Canadian income tax law contains a special provision that, upon conditions mentioned below, exempts the income of companies and associations incorporated or organised as credit unions, but the available information docs not indicate the circumstances in which incorporation or organisation as a credit union may occur. Where appropriate incorporation or organisation has occurred, exemption from income tax is conditional upon the credit union restricting its operations to one province and investing funds in prescribed ways. I am not aware of the number of credit unions that qualify for exemption from tax under the laws of the two countries.
  2. The basis upon which tax is payable by certain credit unions is the subject of appeals to the High Court of Australia. The suggestion made by the honorable senator will be considered in the light of the decisions of the High Court in these cases.

page 1599

QUESTION

EDUCATION

(Question No. 332.)

Senator COHEN:
VICTORIA

asked the Minister representing the Minister for Territories, upon notice -

  1. Has the International Development Association, since 1963, given financial assistance for education projects in developing countries?
  2. Did the International Development Association grant or lend 5 million dollars for secondary and technical schools in Tunisia in September 1962; 4.6 million dollars to Tanganyika in December 1963; and 13 million dollars to Pakistan in March 1964?
  3. Does the International Development Association co-operate with U.N.E.S.C.O. to decide what specific educational projects should be supported?
  4. What requests, if any, has the Australian Government made (a) to the International Development Association, (b) to U.N.E.S.C.O. for advice and guidance and (c) to any other specialised agency of the United Nations in connection with the implementation of the recommendations of the Currie Commission on Higher Education in Papua and New Guinea, and what has been the response to any such requests?
  5. If no such requests have been made, will the Government give consideration to seeking assistance from these agencies for the purpose of establishing an Institute of Higher Education and an autonomous university in Papua-New Guinea?
Senator ANDERSON:
LP

– The Minister for Territories has supplied the following answers to the honorable senator’s questions -

  1. Yes.
  2. Credits to those countries were approved at the times and for the amounts mentioned.
  3. Yes.
  4. No such requests have been made at this stage, pending consideration of the implications of the recommendations of the Committee on Higher Education in Papua and New Guinea.
  5. Yes.

page 1599

QUESTION

MAINLAND CHINA

(Question No. 341.)

Senator COHEN:

asked the Acting Minister for External Affairs, upon notice -

  1. What countries give de facto or dejure recognition of the Government of mainland China?
  2. What countries have voted in favour of resolutions in the United Nations for the admission of mainland China to membership of the United Nations?
  3. What countries have voted against such resolutions?
  4. What countries, not recognising mainland China, have substantial trading arrangements with that country?
Senator ANDERSON:
LP

– The Acting Minister for External Affairs has supplied the following answers to the honorable senator’s questions -

  1. Fifty-three countries recognise Communist China. Forty-eight are members of the United Nations, as follows -

Afghanistan, Albania, Algeria, Bulgaria, Burma, Burundi, Byleorussia, Cambodia, Central African Republic, Ceylon, Congo (Brazzaville), Cuba, Czechoslovakia, Denmark, Finland, France, Ghana, Guinea, Hungary, India, Indonesia, Iraq, Israel, Kenya, Laos, Mali, Mongolia, Morocco, Nepal, Netherlands, Norway, Pakistan, Poland, Rumania, Senegal, Somalia, Sudan, Sweden, Syria, Tanzania, Tunisia, Uganda, Ukraine, U.S.S.R., U.A.R., United Kingdom, Yemen, Yugoslavia.

The other five are Switzerland, Zambia, East Germany, North Korea, North Vietnam. In addition, Nigeria recognises both the Republic of China and Communist China but has diplomatic relations with neither. 2 and 3. The full voting list at the eighteenth session of the General Assembly on 21st October 1963 - the last occasion when the matter was considered - on an Albanian draft resolution which would have called for the removal of “ the representatives of Chiang Kai-shek “ and their replacement by “ the Government ofthe People’s Republic of China “ in “ the United Nations and all its organs “ was as follows -

In favour (41) - Afghanistan, Albania, Algeria, Bulgaria, Burma, Burundi, Byelorussia, Cambodia, Ceylon, Cuba, Czechoslovakia, Denmark, Finland, Ghana, Guinea, Hungary, India, Indonesia, Iraq, Laos, Mali, Mongolia, Morocco, Nepal, Norway, Pakistan, Poland, Rumania, Somalia, Sudan, Sweden, Syria, Tanganyika, Tunisia, Uganda, Ukraine, U.S.S.R., U.A.R., United Kingdom, Yemen, Yugoslavia.

Against (57) - Argentina, Australia, Belgium, Bolivia, Brazil, Cameroon, Canada, Central African Republic, Chad, Chile, China, Colombia, Congo (B), Congo (L), Costa Rica, Cyprus, Dahomey, Dominican Republic, Ecuador, El Salvador, France, Gabon, Greece, Guatemala, Haiti, Honduras, Iran, Ireland, Italy, Ivory Coast, Jamaica, Japan, Jordan, Liberia, Libya, Luxembourg, Madagascar, Malaysia, Mexico, New Zealand, Nicaragua, Niger, Panama, Paraguay, Peru, Philippines, Rwanda, Senegal, South Africa, Spain, Thailand, Togo, Turkey, U.S., Upper Volta, Uruguay, Venezuela.

Abstentions (12)- Austria, Iceland, Israel, Kuwait, Lebanon, Mauritania, Netherlands, Nigeria, Portugal, Saudi Arabia, Sierra Leone, Trinidad and Tobago.

  1. Complete statistics of Communist China’s trade are not known, but, insofar as they are available, countries not recognising China which during the calendar year 1963’ had a total of more than U.S.10 million dollars worth of trade with China were Australia, Belgium/Luxembourg, Canada, Federal Republic of Germany, Italy, Japan and Malaysia.

page 1600

QUESTION

CANBERRA AND AUSTRALIAN CAPITAL TERRITORY

(Question No. 343.)

Senator FITZGERALD:
through Senator Poke

asked the Minister representing the Minister for the Interior, upon notice -

  1. Has the attention of the Minister been directed to the splendid efforts being made by the A.C.T. Handicapped Children’s Association to raise funds for a building to provide sheltered workshop facilities for sub-normal children under the Association’s care who are precluded from attending the government classes at Koomarri?
  2. Is the Government assisting in any way in this project or has it any plans to help this worthy cause?
Senator ANDERSON:
LP

– I have received the following reply from the Minister for the Interior - 1 and 2. I am aware of the splendid work being done by the A.C.T. Handicapped Children’s Association. In factI met a deputation from the Association only recently to discuss its activities, and the question of some further Commonwealth assistance in extending the facilities available for the care of sub-normal children. The Commonwealth made a substantial grant towards the capital cost of the existing building, and it makes an annual contribution towards operating costs. The question of further assistance is at the moment under consideration.

page 1600

QUESTION

PAPUA AND NEW GUINEA

(Question No. 350.)

Senator McCLELLAND:
NEW SOUTH WALES

asked the Minister representing the Minister for Territories, upon notice -

  1. Has the Minister seen a report (a) that a Port Moresby building contractor plans to sue the Commonwealth Department of Works for breach of contract because his £740,000 contract to build the Goroka teachers’ college has suddently been cancelled because of a World Bank recommendation, and (b) that already the Department of Works has ordered plans to be shelved for four other major projects?
  2. Have such projects been shelved? If so, why?
  3. Is the Government in possession of the World Bank report? If so, how long has the report been in its possession, and when does it intend to release the contents?
Senator ANDERSON:
LP

– The Minister for Territories has supplied the following answers -

  1. Yes.
  2. No.
  3. The text of the report of the mission of the International Bank for Reconstruction and Development was received by the Treasurer last month. Printed copies are not yet available. The question of release of the report is at present under discussion with the Bank.

page 1601

EXPORT PAYMENTS INSURANCE CORPORATION BILL 1964

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 lime.

This Bill proposes a number of amendments to the Export Payments Insurance Corporation Act 1956-61. The amendments will have the effect of generally strengthening and improving the facilities which the Corporation can provide for the benefit Of Australian exporters. Before dealing with these, I ought perhaps to refer briefly, for the benefit of honorable senators, to the purpose for which this institution was established and the progress it has made. The Export Payments Insurance Corporation, or E.P.I.C., as it is more commonly known, was set up in 1956 to insure exporters against the risk of overseas buyers failing to pay for exports. This protection has encouraged exporters to develop and penetrate new markets, which otherwise would have been virtually inaccessible, because of the trading risks involved.

E.P.I.C. has made outstanding progress in this field and has now firmly established itself on the export scene. In J 957-58, its first full year of operation, E.P.I.C. insured some £11 million of exports for 43 policy holders. In 1963-64, six years later, E.P.I.C. insured some £64 million of exports for 436 policy holders.

There can be no doubt then, that exporters are becoming more and more conscious of the need to secure themselves against non-payment, if they are to continue to expand their existing export markets or develop new ones. Nor can there be any doubt, that E.P.I.C. is fully aware that it has a vital role to play in providing this security. However, security against the risk of non-payment is not the only benefit of export insurance. An exporter, if he wishes, can. arrange for E.P.I.C. to assign his insurance policy to a bank and this often proves of great benefit to the exporter in obtaining finance for exports on credit terms.

In particular, where a manufacturer of capital goods wishes to export on medium or long term credit - and there is a growing demand for credit in this field - he generally needs to obtain E.P.I.C. insurance cover in order to secure bank finance. However, even with this added security, banks do not always find it easy to accept the risks which are not covered under the standard E.P.I.C. insurance policy and in the past, this has sometimes presented difficulties for exporters seeking export finance.

The main purpose of this Bill is to strengthen this feature of export insurance. It proposes that E.P.I.C. should be permitted to guarantee advances made by a bank to finance export transactions, against non-payment by the buyer, regardless of the reason for non-payment. In other words, the normal E.P.I.C. insurance contract covers only specified risks of nonpayment; the proposed guarantees will cover non-payment for any reason whatsoever. The guarantees would work in this way:

The exporter would obtain from E.P.I.C. normal payment insurance cover on the transaction and assign the policy to his bank.

If the bank required further security the exporter could then obtain from E.P.I.C., for a small additional premium, a guarantee in the bank’s favour which would extend cover to include risks of non-payment not insured against, under the normal policy.

The extent of indemnity under the guarantee would be 90 per cent. initially, rising to 100 per cent. after two years, if performance of the contract had been satisfactory.

This reduces the need for the exporter to provide collateral security to the bank and protects the bank’s interests - if non-payment occurred the bank would receive payment under the guarantee within three months of the date of non-payment, regardless of the cause of nonpayment.

The bulk of Australian exports are transacted on a cash or short term credit basis and the guarantees will not be used for these. They will in fact be confirmed to transactions in which:

Capital or semi-capital goods are involved;

The value involved is £100,000 or more;

Credit terms of two years or more are being extended to the overseas buyer.

It sometimes happens that, because of the size of a transaction or the risks in the export market, E.P.I.C. is unable to provide insurance cover on its own account. In these cases, the Government already has the power to accept liability for insurance cover under the “ national interest “ provisions of the Act, if it considers that it is in Australia’s national interests that the transaction should be insured and the export made. The Bill before the Senate proposes that where guarantees are also required on these “national interest” transactions, they may be authorised and the Commonwealth shall accept liability for any claims which may arise under them. There have also been cases in the past where, because of the size of the contract and the risks involved, E.P.I.C. has felt unable to insure the full amount of a transaction on its own account but would have been prepared to share part of the risk with, the Government. Since the present legislation does not provide for the sharing of “ national interest “ contracts between E.P.I.C. and the Government, it is intended to amend the Act so that E.P.I.C. can participate in these cases if, and to the extent, it wishes.

The Bill also proposes several other amendments to the Act which I shall deal with briefly. It proposes that in future the maximum cover which the Corporation may offer will be prescribed by regulation, rather than in the Act as at present. These percentages are at present 85 per cent, where the cause of loss is commercial and 95 per cent, where the loss is from any other cause. The purpose of this amendment is to enable E.P.I.C. to make changes in the level of cover provided without undue delay. This would allow E.P.I.C. to move quickly to meet changing competitive conditions in international trade. For the time being it is not intended to vary the present maximum level of cover that E.P.I.C. has been providing. The Bill also proposes that the Minister may approve higher percentages of cover than those prescribed in the regulations, in special circumstances. The type of special circumstances in which higher cover might be warranted could arise where the insurance cover under the- standard E.P.I.C. policy would expose the exporter to unduly high financial risk; and where the effects on the exporter of accepting this risk could endanger current or- future export transactions in a particular market.

The Bill also proposes an increase in the maximum contingent liability’ which the Corporation can assume under its contracts which, in effect, sets a maximum to the business the Corporation can write. When E.P.I.C. was established in 1956” this maximum was set at £25 million. It soon became apparent that this needed to be increased and in 1959 the Act was amended to provide for a maximum contingent liability of £50 million. As at 30th September 1964, the actual contingent liability on contracts was £34 million. Since business under firm offer or negotiation totalled £12 million at that time, the total current and prospective, contingent liability of the Corporation is now about £46 million - only £4 million short of the statutory maximum. There is therefore an urgent need to increase the maximum contingent liability of the Corporation and the Bill proposes that it should be raised from £50 million to £75 million.

Finally, the opportunity has been taken of making several minor amendments to certain sections ot the Act. It is proposed to amend the banking provisions of the Act to take account of the change of name of the Commonwealth Bank and to bring them into line with the corresponding provisions included in other recent Commonwealth legislation relating to statutory authorities. It is also proposed to raise from £2,500 per annum to £3,500 per annum, the maximum salary of a position which the Corporation may determine without ministerial approval. Honorable senators will be aware, of course, of the continuing need to increase our export income. If we are to do this we must strengthen and improve, from time to time, the facilities available to exporters. The proposals contained in this Bill are designed to do this and I am confident that they will enable both E.P.I.C. and the exporters it serves to add to the already valuable contribution they are making to the drive for increased exports. I commend the Bill to honorable senators.

Debate (on motion by Senator Kennelly) adjourned.

page 1603

MEAT INSPECTION ARRANGEMENTS BILL 1964

Bill received from the House of Representatives.

Standing Orders suspended.

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

Second Reading

Senator ANDERSON:
Minister for Customs and Excise · New South Wales · LP

.- 1 move-

That the Bill be now read a second time.

The purpose of this Bill is to make provision for the Commonwealth to enter into an arrangement with a State or a State meat authority for Commonwealth inspectors “ to undertake “ the inspection of meat for consumption in Australia. The Commonwealth has the responsibility of inspecting meat for the export markets whereas the inspection of meat intended for home consumption is the function of the State authorities concerned. In most approved export meat establishments Commonwealth and State inspectors work together on the inspection of meat for both export and home consumption. There has been a commendable degree of cooperation between Commonwealth and State inspection services, but a certain amount of over-loading has been inevitable.

The problem associated with CommonwealthState inspection has been considered by the Australian Agricultural Council over a lengthy period but an acceptable solution to cover all States has not been found. It has been generally agreed that there would bc considerable advantages for meat inspection to be under one authority in each State but it has been recognised that a number of difficulties such as disease control, seasonal conditions affecting transfer of staff, salary differentials, etc., must be overcome in achieving this objective.

The desirability for the introduction of a single inspection service has been further emphasised recently by the import conditions applied by the authorities in some of Australia’s important markets. One of these conditions is that the control of meat inspection must bc under “ a service organised and administered by the national Government “. This implies that the overall control of registered export premises including those which process meat for home consumption as well as for export must be under a Commonwealth department. To comply with this requirement, it has been necessary in States which prefer to maintain their own inspection services, for agreements to be made for Commonwealth and State and/ or municipal inspectors to work together under the supervision of a Commonwealth veterinary officer. This has ensured uniform inspection procedures and standards for export and home consumption meat and meat products.

The Bill is primarily intended to enable an arrangement to be concluded with the South Australian Government and the Metropolitan Export Abattoir Board in South Australia for Commonwealth officers to inspect both export and home consumption meat in registered export establishments in that State. The Bill has, however, been expressed in a manner which would enable other States to enter into a similar arrangement if so desired. If, at the request of a State or a State meat authority, the Commonwealth undertakes the inspection of meat for home consumption, action will be taken to ensure that there is no retrenchment of State, meat authority or Commonwealth inspectors.

Under the proposed arrangement with South Australia, all State Departments of Agriculture and Metropolitan Export Abattoir Board meat inspectors will, if they so desire, be transferred to the Commonwealth Public Service as permanent officers. The Bill provides for the South Australian inspectors to preserve their eligibility for accrued recreation leave up to 30 days, also the total credit of sick leave and furlough credits. The Bill also makes special provision for those officers who are contributors to the South Australian Superannuation Fund to transfer to the Commonwealth Superannuation Fund on appointment to the Commonwealth Service.

It is proposed that the Commonwealth will be reimbursed for the inspection of meat for home consumption (a) by the State Department of Agriculture on the basis of the cost to the Commonwealth of the work performed, and (b) by the Metropolitan Export Abattoir Board on the basis of a formula which will determine, the upward or downward movement of charges based on the throughput for home consumption. There have been tremendous changes in the character of the meat trade in recent years. These changes have been brought about by the development of the North American market for Australian meat and the fact that 99 per cent, of exports to that market are in the form of boneless beef and mutton, which require much more extensive inspection and supervision than did the previous carcase inspection procedure. This tendency is also developing in respect of the United Kingdom market to which approximately 90 per cent, of the export meat now being shipped is in boneless form. The traditional trade with the United Kingdom for many years has been in carcase form. Associated with this development is the tendency for a greater number of meat works to register as export establishments so that the surplus meat above home consumption requirements can be diverted to export markets. A combination of requirements of importing countries and the inspection procedures which will enable the meat to be sold for either the export or home consumption markets is bringing Commonwealth and State inspectors, standards and procedures closer together.

I commend the Bill to honorable senators.

Debate (on motion by Senator Cooke) adjourned.

page 1604

TELEVISION STATIONS LICENCE FEES BILL 1964

Bill received from the House of Representatives.

Standing Orders suspended.

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

Second Reading

Senator ANDERSON:
Minister for Customs and Excise · New South Wales · LP

– I move -

That the Bill be now read a second time.

The purpose of this Bill is to provide for the payment of fees in respect of licences for commercial television stations. I will later introduce Bills to provide for the payment of fees in respect of licences for commercial broadcasting stations; to repeal the existing Broadcasting and Television Stations Licence Fees Act 1956; and to amend, inter aiia, section 106. of the Broadcasting and Television Act 1942-1963, as amended by the Broadcasting and Television Act 1964. The fees payable for licences in respect of both broadcasting and television stations are at present laid down in the Broadcasting and Television Stations Licence Fees Act 1956, which it is now proposed to repeal. The annual fee payable by a licensee is £25 in the case of a broadcasting station and £100 in the case of a television station plus, in each case, 1% of the gross earnings of the station “ in respect of the broadcasting or televising of advertisements or other matter “.

The provisions of the Act of 1956, the year in which television was introduced, were, of necessity, framed in the light of experience with the broadcasting services and the manner in which, at that time, it was envisaged that the television station licensees would conduct their operations. Experience has, however, since shown that it is virtually impossible to assess properly the licence fee in respect of television stations on the basis now prescribed - that is, on the basis of the “ sale of station time “.

I should here explain to the Senate that broadcasting and television stations earn revenue in two ways - (a) in the case of sessions sponsored by an advertiser, partly by selling the programme itself to the advertiser and partly, but as a separate transaction, by selling the advertiser station time to put the programme on the air; and (b) in the case of unsponsored sessions, by selling station time to spot advertisers, the station itself meeting the cost of the programme, but taking this into account in fixing the price to advertisers for spots during the session. Licensees of commercial television stations have, in arriving at their gross earnings for licence fee purposes, adopted the practice of excluding not only the amounts paid by advertisers for programmes in sponsored sessions, but also an estimated amount of the revenue received from spot advertising in unsponsored programmes, as representing the cost of programmes with which the spot advertising is associated. The deductions from spot advertising revenue are being made on the basis of arbitrary and varying proportions which the Board has no way of controlling.

Honorable senator will, no doubt, agree that it is desirable, from all points of view, that the basts of assessment of licence fees should be clearly defined and capable of ready determination. After considering the various possibilities it has been decided to adopt what may be termed an “ advertising receipts “ basis of assessment, the view being taken that the fee should be assessed on a station’s turnover and be a first charge on revenue. Such a basis is, also, directly related to thc main business activity deriving from the grant of the licence, that is, the selling of advertising. On this basis of assessment the licence fee would be payable on all revenue received from advertisers by a licensee with respect to the broadcasting or televising of advertisements, extending to cover both station time and payments for programmes. In clause 4 of the Bill, “ gross earnings “ are defined accordingly. It follows that all revenue, both from spot advertising and from sponsored advertising, would be subject to licence fee including revenue from the sale of station time and from programme sales. I direct the attention of honorable senators to the fact that the definition of “ gross earnings “ specifically excludes earnings from the production of filmed advertisements. It is known that some organisations closely related to licensee companies perform such work on behalf of advertisers as a commercial activity separate from the licensees’ normal business of operating a television station. If this exclusion were not made, licensees’ earnings from this source could be subject to licence fees, pursuant to clause 7 of the Bill relating to the diversion of revenue to related organisations. This did not seem appropriate.

I turn now to the question of the scale of rates to be imposed. This is probably the most important aspect of the proposed legislation, as it is the rates pf the levy which determine its impact. I would like to preface my remarks in this regard by a brief account of the financial progress and position of the commercial television stations based on the last annual accounts available. From £1.2 million in 1956-57 the gross revenue of the stations had risen to £18.8 million in 1962-63 with profits in that year of £3 million before income tax and licence fees. The profit figure was somewhat reduced by the fact that some country stations in their early years of operation had incurred losses. The gross revenue of the 10 metropolitan stations for 1962-63 was £16.8 million with profits, before tax and licence fees, of about £3.5 million - a profit margin of the order of 20 per cent. The gross revenue of the four stations in Sydney and Melbourne rose to about £11.2 million in 1962-63 with profits, before tax and licence fees, of £2.3 million approximately, representing an overall profit margin of 20 per cent. The overall return on issued capital of these four stations, before tax and licence fees, was of the order of 48 per cent, while, after tax and licence fees, it was of the order of 28 per cent. These figures illustrate a remarkable increase in the revenue and profitability of the services since they were established in 1956.

The country television stations derived a gross revenue in 1962-63 of £1,978,000, incurring losses of £415,000. It should be mentioned, however, that all these stations have been established only a short time and that such losses are a normal result in the early stages of operation. In fact, most country television stations have reported that they are ahead of budget figures. Although the increase in the financial results of broadcasting stations has not been so marked as in the case of television stations, income and profits have increased from £7.5 million and £1.5 million respectively in 1956-57, when the present Licence Fees Act came into force, to £12 million and £2.5 million respectively in 1962-63, with a profit margin of some 21 per cent.

Whilst there has been a great increase in the earnings of both television and broadcasting stations, the rates of licence fees have remained unchanged since 1956. The fees paid for 1962-63 in respect of television stations amounted to only £112,896 notwithstanding that their gross earnings were £18.8 million with profits of £3 million. So far as broadcasting stations are concerned, the fees paid were £109,544 as against gross earnings of £12 million and profits of £2.5 million. I believe honorable senators will agree that there is complete justification for the new scale of licence fees which is proposed in clause 6 of the Bill. This clause provides for application of the following rates of licence fees on gross earnings from advertising receipts; 1 per cent, up to £500,000; 2 per cent. from £500,001 to £1 million; 3 per cent, from £1,000,001 to £ 2 million; and 4 per cent, over £2 million.

Based on the financial results for the year 1962-63, the effect would be to increase the total licence fees payable by all television stations from £112,896 to £400,000 and in the case of broadcasting stations from £109,544 to about £125,000. Only the four metropolitan television stations in Sydney and Melbourne earn in excess of £2,000,000 and thus they will be the only stations which will be subject to the 4 per cent, rate on revenue in excess of £2 million. All of the other metropolitan television stations except Hobart are earning either a little more or a little less than £1 million. Three of these stations earned over £1 million for the first time in 1962-63 and would be subject to the 3 per cent, rate on the excess over £1 million. None of the country television stations would pay more than 1 per cent, on their present earnings but some of these stations will enter the 2 per cent, area in the. years to come. Only three broadcasting stations earn over £500,000 at present and only these three stations will be subject to the higher rate of 2 per cent, on revenue in excess of £500,000. Clause 7 of the Bill gives the Minister a discretionary power, in certain circumstances, to treat as gross earnings of a licensee, advertising receipts collected by related organisations. This provision is necessary to ensure that all income properly attributable to the licensee is included in his gross earnings. I commend the Bill to the Senate.

Debate (on motion by Senator Cohen) adjourned.

page 1606

BROADCASTING STATIONS LICENCE FEES BILL 1964

Bill received from the House of Representatives.

Standing Orders suspended.

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

Second Reading

Senator ANDERSON:
Minister for Customs and Excise · New South Wales · LP

– I move -

That the Bill be now read a second time.

The purpose of this Bill is to provide for the payment of fees in respect of licences for commercial broadcasting stations. The provisions of. this Bill are substantially the same as those relating to the payment of fees in respect of commercial television stations, a Bill concerning which I introduced earlier. For convenience, such comments as were necessary on this particular Bill were incorporated in my second reading speech on the Television Stations Licence Fees Bill. I commend the Bill to the Senate.

Debate (on motion by Senator Cohen) adjourned.

page 1606

BROADCASTING AND TELEVISION STATIONS LICENCE FEES REPEAL BILL 1964

Bill received from the House of Representatives.

Standing Orders suspended.

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

Second Reading

Senator ANDERSON:
Minister for Customs and Excise · New South Wales · LP

– I move -

That the Bill be now read a second time.

The purpose of this Bill is to repeal the Broadcasting and Television Stations Licence Fees Act 1956. This Act will be replaced by the Television Stations Licence Fees Act 1964 and the Broadcasting Stations Licence Fees Act 1964, if the Bills for which are passed by the Parliament. These were introduced by me earlier.

Debate (on motion by Senator Cohen) adjourned.

page 1606

BROADCASTING AND TELEVISION BILL (No. 2) 1964

Bill received from the House of Representatives.

Standing Orders suspended.

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

Second Reading

Senator ANDERSON:
Minister for Customs and Excise · New South Wales · LP

– I move -

That the Bill be now read a second time.

The purpose of this Bill is to amend the Broadcasting and Television Act 1942-1963 as amended by the Broadcasting and Television Act 1964. Clause 3 of the Bill seeks to amend section 106 of the principal Act. The Bills for the Broadcasting Stations Licence Fees Act 1964 and Television Stations Licence Fees Act 1964 change the basis of the licence fees to be paid by the broadcasting and television stations. In consequence, it is necessary to alter section 106 of the principal Act to provide for stations to furnish information on gross earnings as now defined.

The Bill also seeks to amend certain licensing arrangements for broadcast and television receivers. It is proposed to transfer the responsibility for taking out licences for broadcast and television receivers provided as part of the furnishings of rented premises from the tenant to the lessor. Under the present provisions it is necessary for each tenant, who has the use of a broadcast or television receiver provided by a lessor in rented premises, to take out a licence at the prescribed full annual fee for the receiver concerned. With a succession of tenants during any period of twelve months a number of such licences would thus be required in respect of the one receiver. The present legislation did not intend such a requirement and the proposed arrangements are intended to overcome this anomaly.

The present Act enables the grant of a licence with effect from a date prior to that on which it is issued. Doubts have arisen as to whether the provisions of the Act and the appropriate regulations relating to ante-dating of licences enable a person to present to the courts an antedated licence as an answer to a charge in respect of proceedings for having used an unlicensed receiver. The proposed section 126d which is referred to in clause 4 of the Bill specifies that in any proceeding for an offence against those sections of the Act which concern licences for broadcast and television receivers, an ante-dated licence shall not be assumed to have been current prior to the date on which it was issued. Clause 5 of the Bill seeks to introduce appropriate provisions to enable the Department to refund fees where there is a moral or implied legal obligation to do so. Cases arise where a licence has been taken out unnecessarily or where a person eligible for a reduced rate licence pays the full fee.

It is desirable that the Department should have authority to make the appropriate refunds in such circumstances. I commend the Bill for consideration by the Senate.

Debate (on motion by Senator Cohen) adjourned.

Sitting suspended from 12.56 to 2.15 p.m.

page 1607

INCOME TAX AND SOCIAL SERVICES CONTRIBUTION ASSESSMENT BILL (No. 3) 1964

Second Reading

Debate resumed from 10th November (vide page 1575), on motion by Senator Henty -

That the Bill bc now read a second time.

Senator McKENNA:
Leader of the Opposition · Tasmania

– Yesterday I dealt with the Government’s grave delay in attending to the question of tax avoidance and with it’s failure to honour its own solemn undertaking, given on 17th August 1961, that this legislation, when introduced, would be made retrospective to that date. I pointed out how this Government, having regard to the time that has elapsed and is still to elapse before the major part of this legislation becomes effective on 1st July 1965, has allowed some £50 million to escape through its hands. I do not traverse that subject again. I dealt at length with the complexity of the Bill and the matters with which it deals,, and I protested on behalf of the Opposition at being obliged to consider a Bill of this magnitude and importance in less than three weeks, particularly as some 40 other matters have to be concluded before the present sessional period ends. Then I mentioned the factors that create difficulties in settling this legilation in normal form, that is, that the conditions under which a taxpayer is liable should be clearly specified. I pointed out that in this measure there is an approach which casts the net rather widely, and having done that, provides a discretion to the Commissioner to make allowances in cases of hardship.

This legislation is not altogether unusual when one compares it with the existing Income Tax and Social Services Contribution Assessment Act because in many respects a good number of matters are already left to the discretion, judgment and opinion of the Commissioner of Taxation. This Bill really does not strike any notoriously new provision. The section of the Act that I have in mind is section 167 which deals with three sets of circumstances. Amongst other things, it enables the Commissioner of Taxation, if he is not satisfied that an accurate return has been submitted or if a taxpayer has not submitted a return, to make such assessment as, in his judgment, he thinks proper. That is a particularly wide power. I cannot imagine a more omnibus power than that. The section provides that in these circumstances - the Commissioner may make an assessment of the amount upon which in his judgment income tax ought to be levied, and that amount shall be the taxable income of that person for the purpose of the last preceding section.

The preceding section, section 166, authorises the Commissioner to make assessments. One finds this pattern running right through this Bill. I think it is exemplified best in clause 6 which begins on page 3 and deals with the exemption of income of certain superannuation funds established for the benefit of employees. The normal superannuation fund established by an employer for the benefit of employees falls into the exempt class. Proposed sub-section (2.) which appears on page 4 of the Bill provides that the exemption is to apply in favour of funds to which the section applies. Those funds are defined elsewhere. They are exempt, as one will see by reference to the proposed subsection, if the Commissioner is satisfied that nine particular complicated matters are in existence. The listing of those nine matters takes up two fully printed pages of the Bill.

Proposed sub-sections (3.), (4.) and (5.X which are devoted to explaining and amplifying particular phrases and situations that are outlined in proposed sub-section (2.), are spread over pages 6 and 7 of the Bill. Proposed sub-section (6.) contains this rather delightful provision -

Where, in relation to a superannuation fund, the Commissioner is not satisfied as to a matter referred to in sub-section (2.) of this section but the trustee of the fund satisfies the Commissioner that, by reason of special circumstances that existed in relation to the fund during the year of income, it would be reasonable for this section to have effect as if the Commissioner were satisfied as to that matter, this section has effect as if the Commissioner were satisfied as to that matter.

Senator Wright:

– A sub-section which one might say is very satisfactory.

Senator McKENNA__ It is one of the escape clauses to which I referred a moment ago. Proposed new sub-section (7.) provides for exemption from income tax and proposed new sub-sections (8.), (9.) and (10.) are qualifications of proposed new sub-section (7.). The exemptions are to be subject to the three new succeeding sub-sections to sub-section (7.). Each of these provide for circumstances in which the opinion of the Commissioner of Taxation is the determining factor.

That illustrates very well what I have said about the set-up under the Bill. A wide number of matters are necessarily left to the Commissioner’s being satisfied as to each of the long explanations required in relation to these matters, and often the exemption itself, after all that, is subject again to three matters which are dependent upon the opinion of the Commissioner of Taxation. I merely direct attention to these things because that pattern runs right through the Bill. I remarked last night that it was an unusual procedure. That is true if you look at general law, but when one looks at the specific problems of income tax and what has been in the Act without question for many decades, one ultimately finds that it is not so unusual in this specially complex field of income tax law.

I want to refer to three other cases where the opinion of the Commissioner determines matters and where escape clauses are provided. First I would refer to dividends being paid by one private company to another private company. The Ligertwood Committee recommended that the rebate on dividends received by one such company from another such company should be reduced by 15 per cent. There was complete exemption for those dividends and a complete rebate of tax on them. The Ligertwood Committee recommended that the rebate should be reduced by 15 per cent. This is one of the recommendations the Government has not accepted for reasons that have been given. We learned from the Treasurer that this was the final decision. In the end, the Government has decided that the rebate in relation to private companies, but not public companies, that receive dividends from other private companies be reduced to half the present level, but that the Commissioner of Taxation should be authorised to allow a full rebate where he is satisfied that this is justified by the circumstances of the case. That is one example of the exceedingly wide discretion that it given to the Commissioner and it is shown in clause 10 and proposed new sub-section (3.) (c).

I pass now to the imposition of a special rate of tax on the income of trusts to which any person has present entitlement. The rate to be fixed under the Bill is the very high one of 10s. in the £1. Under the terms of proposed new section 99a, the Commissioner is obliged to consider all relevant facts and he is authorised not to apply the new provisions where it would be unreasonable to do so. The Bill goes on to set out the various specific matters that the Commissioner must consider for these purposes. This also is a particularly wide discretion. Again, in relation to partnerships where there are provisions dealing with the situation in which a partner is deemed not to have control of his income from the partnership, proposed new section 94, shown in clause 24, provides that the Commissioner may not apply the legislation in a suitable case. 1 merely put these matters on the record to indicate that the Opposition has given consideration to the principles on which the Bill has been developed. I am not complaining about them at this stage of the Government’s approach to the matter. I think it merely proper that I direct particular attention to them. It behoves everybody in this Parliament and in government to watch the developments under these particular provisions. My hope and expectation is that the Government of the day will from time to time review these very wide provisions and, if circumstances permit, reduce them to specific requirements that will be clear to taxpayers and will get away from the resting of matters on the satisfaction or opinion of the Commissioner and leaving him with such wide discretion to set aside the normal provisions of the Act.

I sympathise with all those concerned with the drafting of this measure in view of the infinite variety of transactions with which they are faced. No matter how many draftsmen or experts sat down, I venture to say there would bc as wide a field outside any specific net they sought to erect as would fall within the net. So I give a general concurrence to this somewhat unusual feature to meet the case of tax avoiders although I would be very much opposed to it in almost any other field of legislation.

It is as well to remember that an appeal is provided from all decisions of the Commissioner either to a Taxation Board of Review or a judge of the Supreme Court or the High Court of Australia. It may well be that, arising out of this legislation, there will be many more such appeals, particularly to the Taxation Boards of Review. If the Minister is in a position to do so, I should like him to give to the Senate an assurance that if there is any need to strengthen the Taxation Boards of Review following the introduction of this measure, the Government will be alerted to do it and not let the situation develop to a stage where there is a vast accumulation of cases awaiting decision. This is of real importance because we must remember that under the income tax measures and in view of the vast power the Commissioner has, once he makes his assessment, the obligation is cast on the taxpayer to pay, no matter how much merit may be found later in the taxpayer’s objection. The money must be paid and quite a long time might elapse before an appeal. I should like to have from the Minister the assurance that I seek on that point.

As I understand it, sections 192 and 193 of the Act allow the Taxation Board of Review the opportunity to supplant the Commissioner or, in other words, to step into his shoes and reverse the judgments he has made of satisfaction and of opinion as though the Board itself were the Commissioner acting from the beginning. I have seen criticisms of particular provisions of the Bill in the Press and I directed the attention of the Minister for Civil Aviation (Senator Henty) to them. I notice that the Treasurer, who is represented in this place by the Minister for Civil Aviation has answered them generally. I shall not pursue them at this stage and I would be quite happy to accept the assurance hitherto given by the Treasurer that the alleged difficulties to which attention was directed do not, in fact, exist. I would hope that the Minister for Defence would be in a position to give a similar assurance on these matters if they arc raised.

The Parliament is indebted to the honorable member for Melbourne Ports (Mr. Crean) who within the last day or two made a review, based upon recent statistics issued by the Commissioner of Taxation, of the people who are involved in various categories of taxation. It was a very comprehensive statement, but I merely want to record the honorable member’s broad conclusions. He dealt with the number of partnerships and the persons who constitute them, the number of superannuation funds, the number of trusts and all sorts of other matters, including the distinction between taxpayers who pay provisional tax and those who do not. The conclusion that he reached and which I think he demonstrated quite adequately was that the great bulk of the taxpayers of Australia will in no way be affected by this legislation. He pointed out that three-fourths of the taxpayers of Australia lie outside the possible scope of this measure. Of the balance there would be many who have not been pursuing practices of tax avoidance such as are aimed at by the Bill. It is consoling to know that the Bill might apply to only a section - I should hope it would be a reasonably small section - of the remaining one-fourth of the taxpayers. That reduces the impact of this legislation to a reasonably small field.

The broad purposes of the Bill were adequately described in the second reading speech of the Treasurer and were repeated, with some slight variations, here last night. I do not think that at this stage I need to concern myself with them. In conclusion, to those who are uneasy about the exercise of discretion on the part of the Commissioner of Taxation I say this: I have learned from a fairly wide experience gained over very many years that, in cases where there is no falsehood, deceit or dishonesty, the Commissioner of Taxation and his officers are always ready to meet the taxpayer.

Senator Sir William Spooner:

– Hear, hear!

Senator McKENNA:

– I am interested to hear my friend Senator Sir William Spooner, who has had vast experience in the accounting and taxation field, endorse what I said. It has occurred to me that the reaction of the Commissioner of Taxation in such cases should be made more widely known. A taxpayer who perhaps has put in a wrong return but who without being detected by the department goes along voluntarily and makes a complete disclosure is met exceedingly well. The proper tax is charged and interest is charged as from the date when the tax. was properly payable, but the taxpayer is not posted on the list of defaulters. I have had some experience in this direction. I hasten to add that I have been acting for other people. If the Commissioner of Taxation cares to accept the suggestion, he might well decide to use the advertising media of this country to announce that that is his policy. By doing so he might give peace of mind to many people and accumulate a lot of unexpected revenue. I merely digress in that way to indicate that, from vicarious experience, I am not alarmed about leaving matters to the fairness and sense of justice of the Commissioner of Taxation.

Although this is an exceedingly complicated measure, the Opposition welcomes it. We regret that it has been delayed for so long. It is unfortunate that it should be complicated - necessarily so - but we hope that it will achieve the purposes which the Government hopes it will achieve. This is more an expression of hope than an act of faith on the part of the Opposition, because of the extreme complexity of the matter and the infinite variety of transactions to which ingenious minds can be applied with very astonishing results. I have pleasure in supporting the measure at this stage.

Senator WRIGHT:
Tasmania

.- I hope the Minister for Civil Aviation (Senator Henty), who is in charge of the Bill, will get such comfort as is appropriate from the lukewarm approval that has been accorded to the measure by the Leader of the Opposition (Senator McKenna). Having noted that the Bill strikes at fundamental principles for which I should have thought the Government stood, 1 should think that in the long run the remarks of the Leader of the Opposition will be cold comfort to the Government.

The Bill stems from the fact that in 1959 it was recognised that the income tax laws of this country were becoming too complex. In that year the then Treasurer announced the appointment of a Committee which was presided over by a no less distinguished person, from the point of view not only of having a sense of justice but also of having an insight into this complex legislation, than Mr. Justice Ligertwood of South Australia. Mr. Justice Ligertwood was joined in his labours by others, each one of whom had had special experience with this type of legislation. One of the oddities of this measure is that the Treasurer (Mr. Harold Holt) has felt obliged to apologise for its excessive complexity. His effort at simplification has resulted in a broad stream of inextricably confused complexities. He has found the task of rewriting the law to be one to which he is unequal, and in desperation he has committed the taxpayers of Australia for the most part to the decision, perhaps permeated by goodwill, of no less than the Commissioner of Taxation.

The Government strikes at the very root of my political purposes when it directs the Commissioner of Taxation to say whether or not a partnership is reasonable, whether or not, with no criterion available, it is reasonable for a rebate to be paid to a private company, and whether or not a family trust is reasonable. Mr. Deputy President, I ask you which parent in this country is prepared to put the Commissioner of Taxation in the position of saying what is the appropriate provision to make by way of trust arrangements for members of his family. As an exponent of taxation law, the Commissioner of Taxation is especially experienced. From the viewpoint of saying whether taxation law has been evaded, his opinion is valuable. But he is an inappropriate person to presume to decide whether in the terms of the Bill, a certain arrangement is reasonable.

Let it be said without equivocation that the loopholes for evasion of taxation which the Ligertwood Committee revealed should have been stopped up immediately. J shall refer to some of them. At that time I used all my influence with the Minister of the day immediately to bring in corrective legislation. I stand not to utter one syllable in defence of tax evasion; but by the same token, for so long as I am here I shall defend the proposition that a bona fide taxpayer enjoys the right, according to law, to settle his affairs, make a partnership or engage in any other transaction so as to arrange for his family to derive the benefit of his exertions and earnings with a minimum of taxation incidence. I say that as one who has no interest other than one of proper principle.

As I have said, the Treasurer was certainly conscious of the degree to which he has resorted as the last haven of escape to the discretion of the Commissioner of Taxation because in this Bill - I adopt someone else’s figure - there are 97 such instances. In effect, the Treasurer has said: “The thing has got so complex that we must hand over to the Commissioner of Taxation the right of deciding whether it is reasonable in these circumstances to tax A and exempt B, or whether it is reasonable to apply in a particular case a section that Parliament has written into an Act - in other words, whether it is reasonable in the opinion of the Commissioner to dispense with the application of that section to a particular taxpayer.” In addition to the futility of that position, delay has taken place in closing the wide loopholes that the Ligertwood Committee revealed. Mr. Justice Ligertwood was so conscious that public damage could be done by a disclosure of the evasion arising from the loopholes that in paragraph 336 of his report he said -

The Committee recommends that the recommendations made in this report should operate from the date on which the report is first made public, in respect of improvements made on leasehold property and completed after that date, not being certain improvements -

Mr. Deputy President, 3i years have gone by and to an observer it is obvious that metropolitan building construction in the two big cities has been continuing apace. Despite the fact that Mr. Justice Ligertwood made that recommendation and the Treasurer in tabling his report in August 1961 said that the provisions would operate from that date, the Bill purports to operate as to improvements effected under arrangements for leaseholds only after October 1964. All those persons who exploited the loopholes before the disclosure in Mr. Justice Ligertwood’s report and all those persons who have gained the benefit of the report from then until October 1964 are to continue to enjoy the benefit of huge deductions. I hope that before I have finished, the Labour Party in the Senate will take such an interest in this matter that it will consider the proposal I shall make before we reach the committee stage - that the Senate appoint a select committee on the matters covered by this Bill. As Senator McKenna in the course of his speech last evening said most appropriately, this Bill is ideally suited for such consideration.

When the futility of the provisions of the Bill is coupled with the delay in the implementation of the specific recommendations in the Ligertwood report, it indicates that the Treasurer must be marked with conspicuous incapacity in the administration of the taxation law of this country. Loopholes of substantial significance have been brought to attention but have not been closed; instead, they have remained available for public abuse for three years and are to remain available for exploitation in respect of leases arranged in that interval. I take the Treasurer’s obligation to be the administration of taxation statutes. If their provisions are shown from year to year, by cases which I hope the Commissioner reports to the Treasurer, definitely and concretely to allow for evasion, then the proper thing to do is to bring each instance forward for the Parliament’s decision; and not commit future instances to the discretion of the Commissioner of Taxation without considering whether thelaw should be altered in order to make taxation equitable among the various taxpayers.

Let me take several instances from the Ligertwood report. Paragraph 40 draws attention to what Mr. Justice Ligertwood called “ chain “ companies in respect of the undistributed profits tax that is imposed on private companies. His Honour pointed out that undistributed profits tax could be evaded by what he called “ other devices “. Paragraph 40 of the report states -

One method has been to form a new company each year. Company A, for example, in relation to the income year ended 30th June 1960, must make a sufficient distribution of, say, £10,000 by 30th April 1961, or incur a liability of £5,000 undistributed income tax. In April 1961, the shareholders in Company A make over their shares to a newly formed Company B, accepting in their place shares of equivalent value in Company B. Company A then pays a dividend of £10,000 which is received by Company B as income of the year ending 30th June 1961. Company B does not incur a liability for primary company tax because of the rebate provisions of section 46 of the Act, under which section a rebate of tax at company rate is allowed on dividends included in a resident company’s taxable income. Neither does any question of undistributed income tax arise until the end of Company B’s prescribed period for distributions, that is 30th April 1962. In April 1962 Company C is formed, and Company B makes a sufficient distribution to it. This process of forming new holding companies in the April of each year can be continued indefinitely, and in the result, profits are being continually accumulated in respect of which the real proprietors of the enterprise pay no individual rate of tax, and no undistributed income tax is payable by any company. Such companies are referred to as “ Chain “ companies.

This racket was revealed to the Commissioner of Taxation as long ago as 1957, at the very latest. It was revealed to the public in August 1961 by Mr. Justice Ligertwood and the opportunity for evasion of taxation has remained open for three years.

I turn now to consider leaseholds, Mr. Deputy President. The report of the Ligertwood Committee referred to the taxability of premiums and improvements in relation to leaseholds. For the purpose of simplicity and brevity I shall refer to page 53 of the report, dealing with what are called, in the language of the taxation game, uncovenanted improvements. The report states -

  1. A parent company obtains a lease ofland from its own subsidiary company;
  2. The parent company erects a building for £250,000 without the written consent of the subsidiary;
  3. The parent company assigns the lease to another of its subsidiary companies for a nominal consideration.

The taxation position is that -

  1. The parent company gets a deduction of the cost of the building - £250,000. . . .
  2. Neither subsidiary is assessed on the value of improvements because they are “ uncovenanted “. . . .

I hope that the members of the Labour Party will consider this matter.

I turn now to the example which the Committee thought fit to express in respect of covenanted improvements -

  1. The owner of an undeveloped city block consents to an investor erecting a £1,000,000 building on the block.
  2. The owner grants the investor a 98-year lease of the building at an appropriate ground rent.
  3. The investor subleases the building to tenants.
  4. The building reverts to the owner at the expiration of the lease.

The taxation position is that -

  1. The investor gets a deduction of the cost of the building spread over the term of the lease. . . .
  2. The owner is assessable on instalments of the value of the building at the end of 98 years. . . . However, the value at the end of 98 years may be expected to be negligible.

They are the words of the Committee, not my words. Although the Committee advised that those matters should be corrected as from the date of the publication of the report, and although the Treasurer said in August 1961 that that would be done, we have the situation in October 1964 where matters, which relate to leases arranged or agreed to be given before October 1964, are not being corrected. The conditions will continue to be enjoyed throughout the whole term of the lease. The leasehold abuses which relate to leases agreed to on or after October 1964 will be stopped. I should think that anybody who had energy to spare for the cause of stopping tax evasion would join with me in ferreting out a few of these instances. One has not to use confidential information which the Commissioner of Taxation is obliged by law not to disclose. One has only to go to Sydney or Melbourne and then go to the Titles Office. In one instance I went to the Titles Office in Tasmania. It is easy to nose out these things.

The amount of revenue involved in the continuance of the deductibility of the premiums over the terms of the leases is considerable. When I say “ considerable “, I am thinking in terms of millions of pounds. Do not let us stop there in the interest that we display in this Bill. It should be remembered that some trades habitually divide their revenue from land into premiums or bonuses paid for leases. I refer particularly to the brewery trade where a licensed house lease is sold for a premium and rent is received throughout the period of the lease. In 1936 this country made such premiums liable to taxation.

I heard nothing from the Leader of the Opposition regarding this matter. I am prompted to ask: Is it appreciated in the Senate that this Bill will exempt those premiums from income taxation of any sort in the future? Is it appreciated that premiums paid in the future, not only for brewery leases, but for all commercial leases, will be non-taxable? Is it appreciated that income taxation is to be applied in the future only to leases of premises that are being leased other than for the making of taxable income; that is to say, as private residences?

Surely I have said sufficient to indicate that this Bill, far from catching up in a proper way with tax evaders, is continuing to allow them to enjoy the fruits of tax evasion. It is creating an exemption for lease premiums of commercial premises in the future, and it is establishing a principle that I think every honorable senator, once he individually applies his mind to it, will want to consider further before accepting the Bill.

Senator Sir William Spooner:

– Would not the lessee lose his right of deduction?

Senator WRIGHT:

– Of course he would. That is the commercial consideration which, as a matter of policy, I am told the Treasurer relies upon for the prevention of undue loss of revenue. I wonder whether the people who are responsible for this Bill have read the economic history of landlord ownership in the last century and have seen the increasing force of landlord ownership in the large metropolitan centres where huge economic power is built up in ownership of land for letting purposes. I hope 1 speak impartially. I speak forcibly to bring the matter to the attention of the Senate because at the conclusion of the second reading debate I am going to ask the Senate to refer this Bill to a select committee. When I say that, I refer to the application of this Bill to leases. I have given instances of abuses, not in the language of Senator Wright, but in the language of the Ligertwood Committee.

I come now to the way in which the Bill deals with trusts and partnerships. The word “ partnership “ has been referred to almost as if it was a naughty word in taxation law. I was mortified when it was revealed to me some 10 or 12 years ago that the Commissioner of Taxation thought that he had to recognise an agreement of partnership where one of the parties was a mere three year old child. To me it is simply nonsense for anybody to put forward a piece of paper that has been signed by a three year old child or an infant whose mind is not capable of understanding the true nature of a transaction. In my opinion, the transaction would be void in law. But when Mr. Justice Ligertwood came to consider partnerships he made a recommendation which I am pleased to see the Government has modified. Mr. Justice Ligertwood said that partnerships entered into by anybody under the age of 21 years should not be effective for the purposes of taxation law. I for my part was just as vehement in the defence of those partnerships as I was enthusiastic that there should be an immediate destruction of the lease loophole evasions and the circle company evasions.

In this generation we have developed a social community, especially in the primary industries. Instead of the former situation prevailing whereby a father would retain control of his agricultural enterprise and keep his sons on a mere misery wage, in this day and age he enters into partnership with them when they reach the age of, say, 16 years. The sons gradually develop an independence, buy the farm next door, marry, and continue their pursuits after the pattern of this sturdy Australian community.

Thank goodness an element of prudence has been introduced into the Bill whereby partners are not to be deemed as recognisable under taxation law unless they have reached the age of 16 years. I have no quarrel with that part of the law because for the most part a partner who is under 16 years of age has not a real and effective control of his share of the income. However, the Bill provides that where it is shown that a partner in a partnership, whether under 16 years of age or otherwise, has not a real and effective control of his share, instead of that share being attributed to the other partners for the purposes of income tax assessment, it is to be, as it were, considered apart, and subjected to taxation at the rate of 10s. in the £1. Of course, under this legislation the blessed Commissioner of Taxation is given the right, if he thinks it is reasonable, to exempt the share from this punitive confiscatory rate of tax. He will use his discretion.

I pass now to the question of trusts, and in the main the Bill deals with little trusts, although there may be some larger ones that are established in the interests of charities or of families - usually handicapped or junior members of families. If, under the terms of a trust, no person is entitled to a year’s income, then irrespective of whether that income is £100, £500 or £5,000, the Commissioner of Taxation can impose a tax of 10s. in the £1. However, if in his opinion it is reasonable that the relevant provision should not apply, he has the discretion to decide that it should not apply. It may interest the Leader of the Opposition and his supporters to look at the clause which specifically provides that where trust income derived by a municipal corporation, a religious, scientific, charitable or public educational instrumentality, a trade union, a friendly society or a public hospital, is conditional in any respect, that is, if the trust has other than a vested interest, being an indefeasible interest, the Commissioner of Taxation can say in effect: “ Please pay 10s. in the £1 to the Treasury.” Thus the public charitable organisation, the scientific organisation, or the trade union organisation, is deprived of this money.

If a person has an invalid daughter, he may decide that while the daughter’s mother is alive half of the income from a trust is to accumulate for his daughter. No matter how meritorious his purpose may be this income will be subject to a tax of 10s. in the £1 unless the Commissioner of Taxation decides that the trust is a reasonable one. The wishes of the settlor - the father of this daughter - are not to prevail unless the Commissioner of Taxation, governed not by the criterion whether the trust is entered into with the intention of evading tax, but by his consideration of what is reasonable, says that they can prevail. That horrifies me, particularly where little trusts are involved. 1 admit that some people were abusing this provision. It was revealed in the Ligertwood report that some 30 odd settlors resorted to settlements in which they ensured that each person would receive an income of not more than £204 and so be exempt from taxation under the old law. But surely it would have been appropriate to meet such cases by providing that where a settlor has made multiple trusts within a certain period the Commissioner of Taxation should aggregate them and tax them as an aggregation.

We are on the air today and we have a long standing custom that on such days second reading speeches shall be limited to 30 minutes. We have a terrific pressure upon us because of the business of the Senate. I content myself at this stage, therefore, with having exposed the provisions of the legislation which I think are obnoxious to every political outlook in this chamber. I shall have more to say in Committee. I think that the principle of giving this huge discretion to the Commissioner is not in any degree parallel to the provision in the existing section quoted by Senator McKen’na under which a default assessment can be made if a taxpayer’s return is unsatisfactory or if no return is made. The giving of unlimited discretion, as this Bill does, which may cause injustice to the bona fide taxpayer, is obnoxious to me. I hope that at the appropriate stage the Senate will agree that before the Bill goes beyond the second reading, it should undergo the scrutiny of a select committee of this chamber.

Senator BENN:
Queensland

– 1 do not propose to take the 30 minutes allotted to me to discuss this Bill. There are, however, one or two aspects which should be brought to the notice of the Parliament. When I was issued with a copy of this Bill, which is described as the Income Tax and Social Services Contribution Assessment Bill 1964, together with an explanatory memorandum, I set myself the task of obtaining a second copy of the Bill and a pair of scissors. I then cut up the copies of the Bill and pasted the amendments in the original Act so as to make it readable. I wished to acquaint myself fully with the provisions of the Bill and to assist myself as much as I possibly could by referring to the explanatory memorandum. But after I had been on the task for quite a while, and after I had devoted a lot of attention to the contents of the Bill and the memorandum, I concluded that so many aspects of taxation are affected by the provisions of the Income Tax and Social Services Contribution Assessment Act, by the explanatory memorandum and by the Bill itself that no living man could understand them. That is the conclusion 1 reached.

Therefore, I thought I would make a few observations and see what was really wrong with the whole structure. May I mention at this stage that members of the Australian Labour Party in another place discussed this Bill in a very skilful manner indeed and that what they had to say may be examined in “ Hansard “? But there were one or two points that they missed and I thought I would not let this occasion pass without having a word or two to say about the omissions. The Bill deals with several matters of great importance. It deals with private companies, the taxation of interlocked private companies, and with the employment and use that can be made of what are termed “ tax losses “. It also deals with lease transactions, the taxation of certain income of trust estates, the taxation of a .share of partnership income which a partner does not effectively control, the alienation of income not accompanied, by a transfer of the assets producing the income, the exemption from tax of superannuation funds, payments by a taxpayer to his relatives, and other matters. I think I have enumerated most of the important points dealt with in the Bill. May I mention at this stage that Federal uniform taxation was introduced into the Commonwealth in 1942?

So today we are in the happy position of dealing with one Act which will cover the whole of Queensland, unlike some of the other acts which operate in the Commonwealth and its Territories while State acts cover the rest of the Commonwealth. It is fortunate I think that we are dealing with an Act which will apply to the whole of the Commonwealth and Commonwealth Territories.

In the second reading speech reference was made to the Ligertwood report. I examined that report and it is another complex document. One really has to be a taxation expert to understand it fully. I noticed that it was brought in three years ago. The report was furnished to the Treasurer (Mr. Harold Holt) and to the Parliament in 1961. I asked myself why no action had been taken previously by the Government to make good the omissions which appeared to exist in the Income Tax and Social Services Contribution Assessment Act. Three years was a long time to elapse after it became known in a positive way that certain practices were being used which, although, shall I say, within the law, operated against the intentions of the Act. There is no question but that the people would have been entitled to observe those practices. People are entitled to match their knowledge against the Act. The very fact that the Commissioner of Taxation never took proceedings against anyone in respect of these matters is evidence that those people were acting within the law. After the Act is amended by the Bills that we have before us today we will find the experts again matching their knowledge of the English language with the English which appears in the Act. This practice will go on indefinitely because cluttered up with income tax legislation is a mass of court judgments.

No apology has been made by the Government for its delay in bringing down this Bill. Three years is a long time to elapse without taking any positive action to correct what I refer to as weaknesses in (he Act. When honorable senators realise that the sum of £15 million is being lost annually because the Government has not given attention to the Act it becomes a very serious matter. The Commonwealth is building up its structure of taxation - excise, customs, sales tax, income tax applying to individuals and taxation on companies - and yet it is allowing to trickle out of the bottom of the taxation structure a sum of £15 million annually. There is a serious crack in the whole structure. If this Bill is an honest attempt to block up that leaky structure I will vote for it and vote against any action that may be proposed to delay its passage. If it is thought that a select committee should be appointed to deal with some aspects of this new legislation, that action can follow afterwards. The committee can examine the effect of the amending Bills upon the Act and again examine all the provisions of the Act. 1 am sure that the Treasurer cannot feel proud of himself in having these Bills brought in three years after the Ligertwood report was furnished to Parliament. What is he going to say about the millions of pounds that have been lost? The probability is that he would not have brought the Bills in when he did if it were not for the fact that he knew a certain Bill would bc introduced relating to defence matters and that more money would be required for defence purposes. In a way, this Bill is a legislative cover-up of neglect of duty on the part of the Treasurer. The Treasurer’s view is that if you do not want anything put into operation you should appoint a committee to investigate the problem and then let its report rest indefinitely.

I referred quite recently to the neglect of the Commonwealth Government to do anything about the apprenticeship problem that has existed in Queensland for 10 years since 1954. A report on the problem was furnished by Mr. Justice Wright, the chairman of the committee which investigated the whole question, and he pointed out quite clearly that there would be a shortage of tradesmen in the Commonwealth from 1960 onwards. There is a serious shortage of journeymen in the Commonwealth now. The Treasurer was Minister for Labour and National Service when that report was furnished to the Government. As Treasurer, he received the Ligertwood report. So. he is. quite capable of allowing serious delays - too serious to be passed over. The people of the Commonwealth should be informed of his serious shortcomings,, because I believe that he proposes to become Prime Minister of the Commonwealth some day.

Are we to believe that all of the provisions in the Bill and all of the information contained in the Ligertwood report were discovered by the Ligertwood Committee? I am one who will not believe, that the Committee discovered the matters to which it has referred. I say that the Taxation Branch has known, since uniform taxation was introduced, exactly what was going on in the Commonwealth in regard to all phases of income taxation. I know that the whole Branch is sectionalised and that it is the duty of the head of each section to deal with only one phase of income tax. There would be one officer dealing with private companies, another officer in charge of another section dealing with public companies, another dealing with trust estates, and so on. One of their duties would be to put down in writing all of the things that they thought should be done to make the income tax legislation operate as the Parliament intended it to operate. I know that those gentlemen are quite capable of doing their work efficiently. They have gone on for a number of years doing this. Their suggestions were probably submitted by way of memorandum to the Ligertwood Committee, which made inquiries on information passed on by the Branch. If an income tax department set out to tax all of the people, partnerships, and private companies in the Commonwealth, and did not have its office organised in such a manner as to deal with the work efficiently, it would have to go out of existence.

In the Public Service, including the Taxation Branch, are Organisation and Method Sections. Matters are reviewed as they arise not monthly, not annually, but probably every day of the week. Surely to goodness it would not be putting out the Treasurer too much to have a frank discussion with the Commissioner of Taxation every week. This would take only an hour. It would be the duty of the Commissioner at that interview to explain to the Treasurer the shortcomings that were being discovered in the structure of the income tax legislation. The problem could be overcome so easily. Here we are dealing with an accumulation of weaknesses that have been found in the income tax structure. There are many of them. What are we to tell the wage earners who have to pay tax under the “ pay as you earn “ scheme that was introduced in 1944? They probably have to overpay income tax, and get rebates at the end of the year.

Here we have evidence of weaknesses of the legislation being exploited by experts. One of the bad features of the Public Service is that some officers who serve a lifetime in the Taxation Branch set themselves up on retirement as income tax experts. Of course they are income tax experts; nobody would deny that. They sell information to the public and there is no law against that at present. The only way in which it could be prevented would be to obtain a pledge or a bond from every officer in the Taxation Branch to the effect that he will not function as an income tax expert when he leaves the Branch. I do not support that, because I do know that the Branch has officers who are honest. They have great technical skill and they are experts in their field. I have found them to be men of common sense. On occasions persons inform me that they have not furnished income tax returns for a number of years. I know what to do in such cases. It is so simple. I say. “ You start by making a clear confession of your neglect to the Commissioner of Taxation.” There and then I write a letter to the Commissioner, informing him of the name and address of the person concerned, stating that he wishes to clear everything up. The Branch deals with the problem in a commonsense manner, with the result that there is a wash up. Sometimes the Branch finds that it owes the person something. In other cases, he has to make a payment to the Branch.

We are told that the tax that has been evaded annually amounts to £15 million, but that is only a guess. It would be a very good idea, when things quieten down after this legislation is passed, for a general review to be made to see what further remedies are required and to ascertain for our own benefit exactly how much tax has been lost in this way. I take a generous view .of the companies and the persons concerned, with them. They acted as they did under advice and within the law. Therefore, we have no serious complaint against them, but for goodness’ sake let us not allow another three or four years to elapse without having an inquiry to see how good is the legislation that we are considering today.

I do not object to dealing with the matters that are being raised today, but I think that all such matters should come up singly as’ they are discovered. I am sure that officers of the Taxation Branch discover them month by month. There must be a way in which they could be brought to the notice of the Commissioner. Undoubtedly it is his duty to discuss them with the Treasurer. They could be put in writing, presented to the Treasurer and some action taken to amend the legislation when required. I have nothing more to say on that aspect.

I oppose the appointment of a select committee to deal with the income tax legislation before it is passed by the Parliament. If the legislation is passed by the Parliament I then would be in favour of appointing a Senate select committee to investigate its complete ramifications.

Senator LAUGHT:
South Australia

– I rise to support the Bill and to comment upon certain reservations that I have in my mind about it. I realise that taxation is one of the tremendous problems of government. In its budget each year the Government commits itself to certain heads of expenditure. In the light of the statement that was made to the Senate last night, one head of expenditure that unfortunately will be with us for many years relates to our enlarged defence effort. The Government is increasing annually its expenditure on national development not only through its own organisations but also through the States. Reimbursements to the States are now greater than ever before. The problem facing a government which has a great forward looking urge is to get the necessary revenue so that its objectives may be achieved. Each year a government seeks a predetermined revenue.

This afternoon we are discussing mainly the loopholes in the existing income tax legislation. I am grateful to have in my possession a. copy of the report presented by the Commonwealth Committee on Taxation which was headed by Sir George Ligertwood. This report was placed before the Government in 1961. The Government has not been tardy in implementing those recommendations in the report which it considered to be urgent and which hud application to the vast majority of taxpayers.

At this stage it is appropriate to mention to the Senate some of the recommendations in the Ligertwood report that the Government has already adopted in the form of legislation. I shall mention first the various avenues in which relief has been afforded to the general taxpayer. Deductions may be claimed for the cost of preparing income tax returns and mortgage documents and for other expenditure incurred in earning an income.

Concessional deductions’ have been increased. The maximum concessional deduction that may be claimed for dependants remains unaffected unless the separate net income of the dependants exceeds £65. Deductions may be claimed for education expenses, for the cost of employing a housekeeper to care for a taxpayer’s invalid wife and so on. Then there are certain deductions that may be claimed in respect of aged persons. Honorable senators will recall the increase from £104 to £208 in the exemption that may be claimed by non-profit companies. The committee also recommended certain deductions for primary producers. Persons who travel overseas are not obliged now to obtain taxation clearances before leaving Australia. The matters that I have mentioned may be small in terms of cost to the revenue, but they are evidence of how assiduous the Government has been in implementing the suggestions contained in the report.

As T have said, the Government has not been completely idle. The matter now before the Senate concerns mainly items of great legal complexity relating to the whole question of tax avoidance. In the introduction to the report the Committee which was charged with the duty of investigating tax avoidance, amongst other things, had this to say -

During the course of our inquiry, our notice was drawn to various parts of the Act which, in conjunction with the general law, have been used by ingenious taxpayers and their advisers for the purpose of avoiding or diminishing their liability for income tax which would otherwise be payable by them.

The Senate should . bear in mind the rather precise words that follow-

Such schemes, although not illegal, arc nevertheless inequitable. The provisions of the Assess ment Act and the rates of tax levied from time to time arc designed to secure to the Treasury a predetermined quantum of Revenue for carrying on the government of the country; and if, by the ingenious use of the provisions of the Act, and of the general law, a significant number of taxpayers are able to diminish their tax liability or avoid it altogether, it follows that the consequential loss of Revenue must be made good by the remaining body of taxpayers who either have not the same knowledge or opportunity of avoiding tax or are unwilling to lend themselves to schemes to thwart the apparent intention of the legislature.

The main clauses of the Bill are directed towards schemes which, although not illegal, are nevertheless inequitable. If certain people or institutions are allowed to get away with these schemes, the remaining body of taxpayers who have not the same knowledge or opportunity to engage in these schemes must pay more so that the services of the country can continue.

This is a matter of very great importance, and 1 join with other honorable senators who have expressed their disappointment that such a limited opportunity has been given for a precise study of the Bill and the accompanying memorandum to enable us to conduct the debate as it should be conducted. I am encouraged that the Treasurer (Mr. Harold Holt) is receptive to a close scrutiny of the matter.

Senator Wright has proposed that the Bill be referred to a Senate select committee for consideration and report, and that the committee present its report to the Senate not later than 31st March 1965. I believe that the Senate could well consider the promise given by the Treasurer (Mr. Harold Holt) in answer to the honorable member for Gippsland (Mr. Nixon) on 30th October when considering the amendment that has been moved by Senator Wright. On 30th October the Treasurer had received in the morning a delegation of gentlemen who were interested in the income tax legislation. They were accountants, lawyers and representatives of taxpayers’ organisations. In reply to the honorable member for Gippsland later the Treasurer acknowledged having received many requests for a deferment of the Bill. He promised that in the interval between the passage of the legislation and the meeting of the Parliament next year, further study would be given to the matter by officers of the Taxation Branch and by outside organisations.

I refer to organisations that are really learned societies in matters of taxation. The Treasurer added - lt, in the New Year, it can be demonstrated to the Government that there are particular aspects pf this matter which should be examined, then the Government will be willing to look at them in the light of the representations then made to it.

I regard that as an important promise made by the Treasurer. He said that he and his officers would constantly examine any evidence that the legislation was improperly or ineffectively drawn so that amendments could be brought forward. The right honorable gentleman said this would be done between the present time and the next meeting of the Parliament. Senator Wright has moved for the Bill to be referred to a committee of the Senate. That would mean that the Bill would be shelved possibly until the end of March. The question is whether better legislation would be achieved in that way than by acting in accord with the promise of the Treasurer. That is the crucial question. One must have regard to the intense study of the legislation that has been promised by the Treasurer in association with the zealous work of the taxpayers’ associations which might be called the learned societies on taxation. The Treasurer has promised to make available officers of the Treasury so that this continuing study may take place.

Personally, I would prefer to see that course adopted rather than see the Bill shelved and put into the hands of a committee of the Senate. I say that because we have before us the tangible promise of the Treasurer reported at page 2561 of the “ Hansard “ record of the House of Representatives. In the light of that promise I am prepared to agree to the passage of the legislation as it is today. However, I have some fears about the legislation and I hope that my remarks will be taken into account when the Treasurer and the officers of the Taxation Branch consider this matter.

I do not want to go into the technical aspects of the Bill now but I want to advert generally to the question of discretionary power, lt is the duty of the Parliament to make laws so precisely that officers of the Commonwealth Public Service who have to adminster the laws are not uncertain as to their meaning and are not called upon to exercise a general discretion especially where punishment or favour are involved. If the laws are- not so framed, this is a sign of a lazy Parliament which does not set out in black and white what it means. The Bill purports to confer discretionary powers in favour of the taxpayer but I still think it is wrong to grant these discretionary powers in the quantity or with regard to the gravamen of the measure as set out in the Bill. If such discretion is in the hands of the Commissioner of Taxation, no matter how commendable a person he may be, a great problem arises with the delegation of that power of discretion. Being a human being, the Commissioner would exercise it in a certain way.

Australia has possibly 5,000,000 taxpayers and maybe only a portion of them would have a case to come within the power of discretion of the Commissioner of Taxation, but the practicability of getting a uniform quality of discretionary power in Adelaide, Perth and Brisbane at one point of time is so huge that it would be most difficult to administer these provisions fairly. That is more apparent when one considers that at present, and possibly for many months, there will not be one word in writing to which any legal advisor or accountant will have access so that he can get some idea of the broad principles under which this discretionary power would be used. I think the Government is likely to meet a lot of trouble if, by the autumn session of the Parliament, it does not set down in black and white what it wants concerning many of the discretionary powers which will be granted under the Bill. I urge the Government to put into legislative form guide lines - if I may use that term - as precise as possible to define how these powers of discretion are to used so that relief may be given along definite lines where a final tax as high as 10s. in the £1 in many cases is involved.

I emphasise the complexity of the legislation. My vote in support of it is given on the basis of the promise made by the Treasurer in answer to the honorable member for Gippsland on 30th October. I commend the Government for what it has done before the introduction of this Bill towards the implementation of the Ligertwood report. I think I have adequately expressed my fears about the complexity of the Bill and particularly about the wide discretions that will be given to the Commissioner for Taxation and the difficulty he will experience in delegating those discretions to the Deputy Commissioners in the respective States. 1 reluctantly support the Bill, with the reservations I have just mentioned.

Senator HENTY:
Minister for Civil Aviation · Tasmania · LP

– in reply - Doubtless all honorable senators will concur in the views that have been expressed by many honorable senators about the complexity of the Bill. Unquestionably, normal taxation bills are very complex. But when we try to deal with the devious but legal methods by which taxation has been avoided, we enter upon a very complex field indeed. It is difficult for other than the experts to unravel the complexities. In preparing this legislation, the Government has taken up the recommendations of the Ligertwood Committee and an honest effort has been made to stop the leak.

I was impressed by one or two statements’ made by Senator McKenna. He referred to the discretions that will be available to the Commissioner of Taxation. Of course, decisions made by the Commissioner may be referred to a Taxation Board of Review. Moreover, as Senator McKenna said, the taxpayer has the safeguard of being able to appeal to a Supreme Court or the High Court of Australia.

Senator Wright:

– A decision based on the exercise of a discretion cannot be appealed against.

Senator HENTY:

– No. I stand corrected there. Senator McKenna asked whether, as provision is made in this legislation for additional discretions, the Government would strengthen the Boards of Review. I tell the honorable senator that, if in the future there is need for an additional board, one will be set up. I thank the honorable senator for raising that point, because it is relevant. It is of particular interest to taxpayers to know that an additional Board of Review would be set up if the exercise of these additional discretions made that course desirable.

Senator Ormonde:

– The Board would be a committee of inquiry?

Senator HENTY:

– A Board of Review is a body to which taxpayers may appeal against the Commissioner’s decision. A

Board of Review can set aside the Commissioner’s decision and substitute its own finding.

It has been suggested that vesting the Commissioner of Taxation with a discretion as to whether certain provisions should apply involves the abandonment of parliamentary responsibility. In other words, it has been suggested that in every case the Parliament should spell out precisely in the legislation the particular circumstances in which various provisions apply. The Government has approached the task of formulating the provisions from the viewpoint that wherever possible the taxation obligations of the taxpayer in any given set of circumstances should be stated with precision and certainty. Departures from this approach are mainly for the purpose of protecting the interests of taxpayers who are not involved in tax avoidance. The tax avoidance arrangements of the ordinary business and family arrangements are often identical in form. To be effective the proposed measures must be comprehensive; but there are areas in which, as measures directed against tax avoidance, it would be unjust for them to apply. For those reasons, certain discretions have been given to the Commissioner.

The discretions that the Commissioner is to have will not be uncontrolled by any means. In many instances specific guide lines are set out in the legislation, and the Commissioner will be obliged to follow those lines in exercising his discretion. In all cases the Commissioner’s opinion will be open to review by an independent Taxation Board of Review which can substitute its own opinion for that of the Commissioner. The discretions are not unprecedented. It has long been the practice of the Parliament to vest important discretions in the Commissioner subject to the taxpayer’s right of reference to an independent tribunal.

I have noted the amendment that has been foreshadowed by Senator Wright for the appointment of a select committee. The Government cannot accept this proposition. I agree with the comments of Senator Benn, who stated the position adequately. If a select committee were appointed, that committee in turn would present a comprehensive report.

Senator Cooke:

– This is something like the Government’s handling of the wool situation.

Senator HENTY:

– Let me develop my own point of view. Knowing what has been * done by select committees in the past, such a committee would pay great attention to the responsibility given to it by the Parliament and a voluminous report covering all aspects of the subject would be presented. That report would have to be investigated by every section of the Treasury. As Senator Benn pointed out, no one person deals with all the divisions concerned. So we would have a further delay which would probably run over another year and thus allow another year’s escape from the provisions of the taxation law. I am sure the honorable senator has advanced his proposal in good faith, but I must say that I completely disagree with any proposal that would lead to further delay. Because of the complexities of the situation the preparation of this legislation has already extended over a considerable period. If a comprehensive report submitted by a select committee had to be investigated, there would be considerable further delay in implementing the necessary legislation. We would do much better to pass this Bill, with the qualifications that were expressed by the Treasurer (Mr. Harold Holt) and about which I shall have something more to say a little later.

A number of honorable senators have mentioned the exemption from taxation of premiums on leases. The present position is that the lessor is taxed on a premium at the rate applicable to his income and the lessee is allowed a deduction which saves him the payment of tax at the rate applicable to the lessee. The rates payable by the two parties might be the same; both parties might be public companies. In other cases the rates might differ. In some cases the rate of tax payable by the lessor might be higher than that of the lessee. In other cases the position might be the reverse, the overall result perhaps being unfavorable to revenue. But there is no rule which suggests that the present position favours revenue or that the amendments will be unfavorable to revenue in their overall effect. The overall effect depends upon the facts in each case. These premiums would not, without special pro visions, enter into income tax assessments, except perhaps in very isolated cases in which there is trading in leases. This is because lease premiums are, apart from exceptional cases,, capital payments on the one hand and capital receipts on the other hand, for income tax purposes. The general effect of the Bill will be, therefore, to allow general legal considerations to apply.

Reference has been made to “ chain “ companies. I point out to honorable senators that while there have been instances such as those to which Senator Wright referred there are many more genuine commercial leases amongst people of modest or wealthy means, which were contracted in good faith. These people would suffer great hardship and I believe would consider themselves unduly and unfairly treated if their genuine commercial contracts were affected. Following investigation into the broad picture of commercial leases it was found that so many genuine commercial contracts would be damaged by retrospective action that it was decided that the appropriate date to set for. all future leasehold undertakings to be covered should be the day following the date of introduction of the legislation - 23rd October. This decision was made after full investigation. The Treasurer has pointed out that deferment would leave persons in doubt whether the legislation applied to them. Even those persons who expected the legislation to affect them would not know its effect until the Bill was ultimately passed. Those persons who quite appropriately wished to confirm that the legislation could affect their affairs accordingly would be prejudiced. They would not know what action to take. I have in mind a number of superannuation funds which may be willing - even anxious - to accept the principles of this Bill but cannot do so until the law is enacted. Similarly, partnerships who wish to remove the features at which the legislation is directed should know as soon as possible where they stand. They will not know their position unless the Bill is passed at this stage.

This morning representatives of three of the great insurance companies in Australia interviewed Treasury officials. These companies conduct superannuation schemes. No request was made for deferment. The companies wished only to know the provisions of the legislation. Their representatives were quite satisfied with the assurances of the Treasurer that expert bodies had found it was necessary to overhaul the legislation. The Treasurer pointed out that following reports in the next few months he would be prepared to listen, to- their representations. lt has been mentioned that the Treasurer has given some undertakings. I want to repeat them in this chamber. It is fully appreciated that the Bill is one of great complexity and that many honorable senators are worried about some of its aspects. There will be a breathing space of some months before any of the measures are given practical effect in the assessments of taxpayers. There will also be during this period opportunities to consider reports that may be made by interested organisations and by honorable senators. The Treasurer has already indicated in very clear terms that all such reports will be carefully considered. He has also said that any amendments judged to be necessary in the light of matters raised by persons having an interest in the effects of the measures can be attended to in the coming autumn sessional period of Parliament. All matters raised by honorable senators in the course of the debate and any matters raised by honorable senators after further consideration of the provisions of the Bill will be dealt with in accordance with the undertakings given by the Treasurer.

Question resolved in the affirmative.

Bill read a second time.

Senator WRIGHT:
Tasmania

.- I move -

  1. That the Bill be referred, for consideration and report, to a select committee to consist of seven senators to be appointed in a subsequent resolution.
  2. That such committee have power to send for persons, papers and records, and to move from place to place.
  3. That the committee report to the Senate not later than 31st March 196S.
Senator Lillico:

– I second the motion.

Senator WRIGHT:

– I urge the Senate to adopt this motion. I listened to Senator Henty, the Minister representing the Treasurer (Mr. Harold Holt), when he closed the second reading debate. However, I would like the Senate to consider a few matters in relation to the setting up of a select committee. Honorable senators will recall that when the Ligertwood report was tabled it was accompanied by an announcement that its provisions would be made the subject of amending legislation which would have effect as from the date the report was tabled. It will be remembered that Mr. O’sullivan, who in the three years that have intervened retired from the position of Commissioner of Taxation, was appointed as advisor specially to examine the Ligertwood report and to make submissions to the Treasurer.

Although I have asked from time to time whether Mr. O’Sullivan’s recommendations would be made available, they have been regarded as secret advice to the Government and have not been made available. In many important respects the decisions and recommendations of the Committee have not been adopted. The reasons for the Government’s decision may be inferred to be the recommendations of the former Commissioner of Taxation, Mr. O’sullivan, to which we have not had access. I believe that the Senate ought to know whether any reference back to Mr. Justice Ligertwood took place. I am one who has a profound respect for anything that comes by way of decision or recommendation from Mr. Justice Ligertwood. He occupies in the judicial structure in this country a place of very high eminence. I would like to know whether his views have been sought upon the propositions that have been rejected. I would also like to have a closer understanding of the principles underlying Mr. O’Sullivan’s recommendations. I have no doubt that if a select committee of this chamber were appointed, the Government would agree that Mr. O’sullivan, if he were willing, should attend and yield to us the views that he holds and the reasons for them.

I am disquieted by the continued enjoyment of taxation deductions by great companies for the whole of building costs of very expensive metropolitan buildings over the terms of leases made before October 1964. I view with great disquiet the inequity that is created in favour of the big metropolitan companies at the expense of the ordinary taxpayer. I am provoked to say that when there is no unusual anxiety on the part of the three large insurance companies to whom .’the Minister referred in his reply - and who can remain nameless -

I entertain the shrewdest of suspicions that they arc the chief beneficiaries of the deductions for leases for metropolitan building construction. Although I am a policy holder in one of the large insurance companies, I am here to dispute their right to inequitable deductions. I am quite unsatisfied with thu situation disclosed in the administration of the Taxation Branch in regard to the application of these deductions for income tax purposes. I know that the officers of the Taxation Branch will do what they think right according to the interpretation which they place upon the Act. But Mr. Justice Ligertwood had no doubt in stigmatising these arrangements as devices.

Section 260 of the Act provides -

Every . . . arrangement made or entered into . . . shall so far as it has or purports to have the purpose or effect of in any way, directly or indirectly -

defeating, evading, or avoiding any duty or liability imposed on any person by this Act; be absolutely void, as against the Commissioner

If we take the case to which 1 referred in the report of the Ligertwood Committee concerning a lease arrangement between a company and a subsidiary, until a judgment of the court has been obtained I will not yield in my opinion that these arrangements would be defeated under section 260 of the Act. Therefore, when we introduce a special clause in this Bill to preserve the enjoyment of the deduction during the remainder of the lease, I fear that we impair the operation of section 260. In my opinion, if the section were applied to these arrangements it would itself operate to defeat tax avoidance. Premiums on leaseholds have been taxed since 1936. Their exemption was not recommended in the Ligertwood report. In this Bill complete exemption from taxation is given to all leasehold commercial premiums. Surely in the interests of a proper balance of equity as between the lessor and the lessee, the Senate has the right to satisfy itself upon the subject by means of the select committee procedure.

Another matter on which the Senate would want to satisfy itself is that, in the incidence of this Act to leases, leases arc unaffected if they were made before October 1 964. The trusts affected by this Act are not trusts made for family provision or even charitable provision. If the benefit of a charity is dependent upon any condition at all, it is taxed to the extent of 10s. in the £1, even though it was made perfectly bona fide in the year 1963, or at any time before October 1964. The axe comes down in regard to the present year of income and the Commissioner continues to confiscate 10s. in the £1 of the income during the remainder of the life of the trust. One must realise that trusts are often created in favour of a multiplicity of people, or of people contingently entitled, such as infants or persons who have been confined through temporary mental illness. One cannot cancel trusts as one can cancel leaseholds. So the income is taxed to the extent of 10s. in the £1 for every year that this legislation remains in operation until the accumulation in the trusts ceases to be effective.

I am not impressed with the suggestion that the select committee procedure is going to involve undue delay. That argument comes from Ministers who have had the responsibility of considering this matter. It took them three years to consider the matter. They have given Parliament less than three weeks to consider it. We would not be discharging our duty if we took less than three months on select committee procedure, especially when one remembers that the Bill which would emerge from the select committee would not need prolonged consideration. The Senate would know that every opportunity had been given to a Committee of its own members to examine the matter and recommend appropriate provisions. The procedure would ensure that nol one penny of revenue was lost. We would bc satisfied that the measure, before it went on to the statute book, was equitable.

The argument against this procedure is that the Bill has to be passed so that people may know their position. There has been a declaration from the Treasurer as to their position in the “ Hansard “ record of this Parliament since August 1961. They have had to suspend the re-arrangement of their affairs since the report of the Ligertwood Committee was brought down three years and three months ago. The Treasurer says that the passage of this Bill is not final. If reliance is to be placed on his undertaking, he and his officers are going to subject this measure to continuous scrutiny. If that scrutiny is real, at the end of three months it will reveal matters which require amendment. How false and illusory it is to induce people in the next three months to rearrange their affairs on the basis of an amendment now being formally passed, to the accompaniment of an undertaking, given in another place and repeated here purposely and deliberately, that the whole matter will be coming up for review at the end of three months.

If the Senate is a responsible House of the Parliament, as it is, I suggest that a just and much more practicable approach to every section of the community would be to defer the final passage of this Bill until a committee consisting of members of this chamber had an opportunity to examine it closely and in detail and to bring up a report not later than 31st March 1965.

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

– I wish to support the motion moved by Senator Wright that this Bill be placed before a select committee. I think that we in the Senate are being rather lazy in this matter. I suppose that not more than 5 per cent, or 6 per cent, of honorable senators understand the legislation. Some honorable senators, such as Senator Wright, have done their homework on the measure. We are really proposing to pass a bill that we know very little about. The Bill has been brought forward with the object of stopping people avoiding the taxes they are due to pay. That is a very laudible objective, but because of the complexity of the measure I think that something should be done along the lines that Senator Wright has suggested. Anybody who has listened to Senator Wright’s argument this afternoon - I have listened to him all the afternoon, which is quite a change - for the appointment of a select committee, so that this Bill can be studied and a more exact measure introduced, will, I am sure, support the motion.

There is a tremendous lot that we do not know about this Bill. There is a tremendous lot that the people responsible for introducing the Bill do not seem to understand. The Government has delegated too much responsibility to officers of the Public Service. The appointment of a select committee would enable the Senate to fulfil one of the important functions for which it was instituted. I do not think that the functions of this chamber are being utilised to the extent that they should be. Here we have an outstanding instance where the Senate can be used to the great advantage of the people of Australia. Acceptance of the amendment would give us an opportunity to prove that this Senate can play a worthwhile part in the legislative sphere of the Commonwealth. I have much pleasure in supporting the proposal for a select committee.

Senator WOOD:
Queensland

.- I support the amendment moved by Senator Wright for the simple reason that this Bill is probably the most complex and technical measure that has been presented to this chamber since I came here in 1949. The Bill is extremely difficult to understand. At the outset I should like to pay a tribute to the Minister for Civil Aviation (Senator Henty), who has handled the Bill in this chamber on behalf of the Treasurer (Mr. Harold Holt), for his courtesy and for the trouble to which he has gone to try to make departmental officers available and; generally, to make it possible for us to understand the Bill. We owe him a debt of gratitude for what he has tried to do; but the Bill is very extensive and difficult to understand. It really requires much further investigation than we have been able to give it in the limited time available to us since its introduction into this Parliament.

I am one who believes that in a democracy it is wrong to pass legislation that we do not understand. I believe that I have at least a certain amount of common sense, but having had a look at this Bill I must confess that it is beyond my understanding. Honorable senators have been supplied with an explanatory memorandum. The Bill itself is almost a book but the explanatory memorandum runs to 116 pages. I think that the general consensus of opinion amongst honorable senators, and amongst members in another place, is that whilst the Bill itself is very technical, the explanatory memorandum is just as difficult to follow. I believe therefore that the motion moved by Senator Wright is a good one in that it will enable the Parliament to know the legislation it is passing.

I want to make it very clear that I compliment the Government for the general terms of the legislation and for trying to prevent people from evading taxation. I do not want there to be any misunderstanding on that point. I support the general principle of stopping tax evasion, but we must realise that if we do not understand the legislation before us there is the possibility - I think Senator Wright has pointed to one or two aspects of this - that we will cast the net too wide and drag within the ambit of the Commissioner of Taxation, some people who are innocent of any suggestion of tax evasion. As a deliberative chamber we should take much more time to consider this type of legislation. Acceptance of the amendment would put the Senate in a position in which it has not been for some time. The appointment of a Senate select committee would enable a thorough investigation and examination of the Bill to be made. People who cared to submit evidence could do so and the committee would be able to arrive at conclusions and make a very clear submission to the Senate. 1 would strongly urge that the submissions of the committee, if it is appointed, should bc made in the clearest language possible so that we, as laymen could understand what is involved. I know that the Minister has gone to a great deal of trouble to obtain an assurance from the Treasurer that once this legislation is passed any anomalies that crop up, and any suggestions that arc made, will be considered. Nevertheless, I believe that, from a democratic point of view, before we pass any legislation into law it should be tidied up and made as effective as possible. I do not think that we should adopt the attitude that although we do not understand a measure we will put it through and amend it later on. If I understand the principle of democracy aright I do not believe that the Parliament should hand over all its rights and powers to the Government, lt should hand over what is necessary, but if it hands over too much power it may find it difficult to get that power back. I believe, therefore, that the Senate should be a watch dog in every possible sense. It should know that the legislation that it passes is correct. It should not pass bills which, if they were clearly understood, it would not allow to go through.

Therefore, Mr. Deputy President, as one who believes that much more opportunity should be given to us to understand this legislation, I support the amendment. I believe that most parliamentarians think that the Bill certainly deserves much greater amplification, from a layman’s point of view, than we have had at the present time. Senator Benn said that he did not understand the measure itself or the explanatory memorandum of 116 pages.

Senator Cavanagh:

– He said that no one did.

Senator WOOD:

– As Senator Cavanagh has said Senator Benn said that no one understood them. If we do not understand the Bill I do not think it is right for us to pass it until we have had the fullest amplification possible. If the Bill is allowed to lie on the table, having passed the second reading stage, that will indicate that whilst the Government and honorable senators are determined to close the loopholes that exist, we desire further information to make sure that we are not giving too much power to the Government or to the taxation administration. The amendment moved by Senator Wright, if carried, will do justice not only to this chamber but also to the people of Australia.

Senator HENTY:
Minister for Civil Aviation · Tasmania · LP

– I have already indicated that the Government cannot accept the suggestion to appoint a select committee to investigate taxation matters. I think all honorable senators should realise the difficulties, not only of this particular Bill, but of the taxation law as a whole. Senator McKenna said that the matter of discretion in the Bill is not new. The Income Tax and Social Services Contribution Assessment Act is permeated with discretion because over the years great difficulties have arisen with regard to individual cases. I discussed the matter of trusts and the tax rate of 10s., raised by Senator Wright, with the Commissioner of Taxation. The Commissioner told me that the tax rate of 10s. in £1 would be applied as a general rule only if it were in his mind that the matter before him was one of tax avoidance.

Senator Wright:

– If that could be inserted in the Bill-

Senator HENTY:

– This is one of the discretionary powers. I am stating what the Commissioner advised me and Senator Wright was advised of this before he came into the chamber. This is not new to him. The Commissioner said that the 10s. rate would be -applied only in the case of a tax avoidance. The normal family trust would not be affected. But if it were clearly established in the mind of the Commissioner that there was a tax avoidance, he would say to the trustee: “ I believe that this is a tax avoidance and it is now for you to establish the fact in my mind that that is not so. If you cannot do that then 1 will continue to hold my opinion that it is a tax avoidance.” The matter would then go to the independent board of review. That is a clear indication of how the 10s. rate would affect trusts. I did not think that the position had been fairly put by honorable senators and so 1 thought I should deal with it.

The only real beneficiary from a long protracted select committee hearing would be the tax avoider. Believe me, the recommendations of a select committee on income tax and tax evasion and avoidance would present a set of problems similar to those which the Ligertwood Committee presented. As Senator Benn stated, honorable senators should not think that the Ligertwood Committee found all the problems associated with taxation. A select committee would, in turn, present a set of problems which would take a long time to examine and this would only be to the advantage of the tax avoider.

I would point out to honorable senators that this is not an income tax bill. It is a bill to stop up the gaps allowing tax avoidance which have been quite legal but which have developed in such a way that they are not in the national interest and should be stopped up. The avoiders are the only people who would benefit from a delay. Senator Wood said that this Bill may cast the net too wide. That is a fair comment. It may cast a little wide in some odd cases perhaps but if that is so then, as the Treasurer (Mr. Harold Holt) has said, taxation experts and taxation organisations familiar with this particular field of tax avoidance can approach the Government and say that, in fact, the net has been cast too wide because it does take in certain cases. This is something that can be examined and, as the Treasurer has said, the legislation will be subject to amendment. I repeat again that, as in so many of these cases, it was found that by getting at the occasional tall poppy we hurt, to an extent, the small men in genuine commercial deals made in good faith. However, it was felt that the best and fairest policy for all was to bring this legislation in on 23rd October.

I say, with great respect, that I do not believe delay is advisable.

Senator McKENNA:
Leader of the Opposition · Tasmania

– On behalf of the Opposition I indicate that we do not support the proposal for a select committee at this stage. It is quite true - and I repeat what I said on another occasion in this debate - that there is no more suitable bill for investigation by a select committee than this. But a select committee on this Bill, in my view would have no chance of completing its thorough work in short order. I should regard the fixing of a date such as 31st March next year for completion of the committee’s work as being of very short order. I invite the Senate to consider that it took the Ligertwood Committee, comprised of experts, some 18 months to prepare its report. It has taken the Commonwealth Government, with all the resources that it has at its disposal, some three years to bring up this Bill. I advert to the fact that consideration of the multiplicity of transactions which would need to be considered to do justice to a bill of this nature would take a very long time. It would want very leisurely consideration. If the Senate were to appoint a select committee to review taxation laws generally and took some years of study over the matter, that would be a work which would be well worth while. There is not very much purpose in looking at this aspect of the matter alone. Whilst I indicated that I favoured a select committee and that this was a bill suitable for reference to a select committee, I also put another proposition exceedingly strongly. I said how concerned the Opposition was that people were still allowed to avoid tax to the tune of £14 million or more per annum. I stressed the point that there had been altogether far too much delay up to date.

The Opposition has already made a firm decision that the Bill should come into operation. If there are defects in it they will emerge and we will examine them when they arise. But I think it is also fair to the body of taxpayers upon whom this particular measure will impact that it should come into law soon so that, as least, they may have on the statute book, in the form of this Bill, a guide for their activities.

Whilst there may be matters that are left to the discretion of the Commissioner of Taxation - as indeed there are - I have already expressed the view of the Opposition that we are prepared to trust his fairness. With those thoughts in mind I reject the motion at this time. However, if in the New Year when Parliament reassembles somebody proposes a scheme to review these aspects, or any other aspects, of income tax Jaw, with ample time to devote the necessary attention to it, then I will certainly recommend to my party that that proposal 6hould be supported. But the Opposition is strongly of the opinion that after the delay, and having regard to the evils aimed at, this legislation should be passed without further delay.

Senator TURNBULL:
TASMANIA · IND; AP from Aug. 1969; IND from Jan. 1970

– I wish to support the amendment. I did not intend to speak on the Bill because I do not think 1 know very much about it, any more than any other honorable senator. I think there are only about four people in this chamber who know anything about the Bill in detail and that is why I think we should have this select committee. The Minister for Civil Aviation (Senator Henty), in his reply, kept confusing the issue by speaking about tax avoidance when he meant tax evasion. Tax avoidance is strictly legal and everyone in this chamber engages in it.

Senator Henty:

– I am sorry, but the honorable senator does not understand the Bill.

Senator TURNBULL:
TASMANIA · IND; AP from Aug. 1969; IND from Jan. 1970

– I am happy about that - I do not understand the Bill. But the Minister does not understand words.

Senator Henty:

– This is avoidance. It is not evasion at all.

Senator TURNBULL:
TASMANIA · IND; AP from Aug. 1969; IND from Jan. 1970

– There is avoidance and evasion. They are two different propositions altogether. Everyone is entitled to avoid income tax if they can do it legally. That is quite acceptable and every honorable senator in this chamber does it. There is not one senator who does not try to avoid paying income tax if he can get out of it.

Senator Wedgwood:

– Speak for yourself.

Senator TURNBULL:
TASMANIA · IND; AP from Aug. 1969; IND from Jan. 1970

– All right. I have no halo. As Senator Wright pointed out it is tax evasion that we should stop and it is tax evaders we should penalise. Senator Henty, practically with tears dripping down his cheeks, spoke about the small commercial leaseholders but forgot about the big ones whom he allowed to escape his net. He talks about the Ligertwood report but forgets to say that implementation of these proposals was recommended three years ago. The Government is. quite happy to let the big people go free. It is quite happy with the three insurance companies. I go further than Senator Wright. He may have a shrewd suspicion, but I am certain that they are interested. Every insurance company is interested in big commercial leases. The Minister says that this is for the little man. The tax that the Government would obtain from the little man would be nothing compared with the tax that it would obtain from the big man if it had the courage to implement what it should be implementing. The Minister spoke about the amount of £14 million that was needed for the Budget. Looking back on the Budgets introduced in this chamber during the last few years, we remember that the Government has been out by £100 million in its estimates, but this does not worry the Government. What is an amount of £14 million? The Government says that the legislation is needed in order to collect £14 million, but this is no justification at all.

Finally, we know very little about this Bill. Some honorable senators, of course, are experts on it and know what they are talking about, but most of us do not, and I cannot see that a delay of another three months would hurt at all. At least we could then find out something about the Bill. We are just making a farce of this chamber by the way we go on. We are approaching the end of the session and we are in the grip of the laissez faire attitude. We do not care two hoots. We are not interested. The idea is that we should get the legislation through as fast as we can, with as much indecent haste as we showed when we approved our salary increases. The idea is just to get the legislation through quickly so that we can go home for the weekend. I support the amendment.

Question put -

That the motion (Senator Wright’s) be agreed to.

The Senate divided. (The Deputy President - Senator G. C. McKellar.)

AYES: 6

NOES: 41

Majority .. ..35

AYES

NOES

Question so resolved in the negative.

In Committee.

Clauses 1 to 8 agreed to.

Clause 9 (Assessable income - premium for lease).

Senator WRIGHT:
Tasmania

.- This clause, as the shoulder note indicates, relates to assessable income in the form of a premium for a lease and revives the language that has been used in the income tax legislation for some lime to define a premium as - a consideration payable in one amount, or each amount of a consideration payable in more than one amount–

That is to say, whether it is payable in a lump sum at the commencement of a lease or the assignment or surrender of a lease, or by instalments over the term of the lease - where the consideration is -

  1. in the nature of a premium, fine or foregift payable for or in connection with the gram or assignment of a lease; or
  2. for or in connection with an assent to the grant or assignment of a lease, but does not include an amount in respect of goodwill or a licence.

Proposed new sub-section (2.) is the operative one. It states -

Where, in the year of income, a taxpayer receives a premium that relates to the grant or assignment of a lease of property that was not, at the date on which the agreement to grant or assign the lease was made, or the assent to the grant or assignment of the lease was given, as the case may be, intended by the grantee or assignee to be used by the grantee or the assignee … for the purpose of gaining or producing assessable income, the assessable income of the taxpayer shall include the premium.

In the previous law a premium was taxable income in the hands of the recipient irrespective of whether it was paid in respect of premises, the lease of which was given for the purpose used by the grantee for producing or gaining assessable income. So far as 1 know, that has been the law since the amending act of 1936.

The effect of this Bill - I will be corrected if I am wrong - is that a premium in respect of brewery premises, or any commercial premises or any premises of a primary producing nature that are let for the purpose of the lessee carrying on some business to gain an assessable income thereon, is free of income tax. I think that the Committee should ponder hard and long before it adopts that principle. Mr. Jutice Ligertwood did not recommend anything of that kind. He did not recommend, as I recall, any abolition of the taxability of the premium.

The principle upon which the Government is relying is that the landlord is not to be taxed on the premium and the tenant is not to receive a deduction in his assessable income for the premium that he pays. The Government is suggesting that it is sufficient protection, first, of the revenue, and secondly, of the business equity of this lease arrangement in regard to commercial properties that in the bargaining between the parties the tenant will be able toprotect himself sufficiently. I would have thought that a century’s experience of landlordism would have shown that, in an increasing degree, the power of ownership of freehold, particularly in our huge cities where the ownership of freehold gives terrific power from the point of view of leasehold bargaining, exposes the tenant, in the majority of cases, to pressure and power to which he is unequal.

Senator HENTY:
TASMANIA · LP

– That is not the case in New South Wales, is it?

Senator WRIGHT:

– I would think especially in New South Wales. I have not sought to intensify my knowledge of the intricacies of the landlord and tenant legislation in New South Wales. I have no relish for it. I do not approve it. When Senator Henty made his comment I was about to say that New South Wales senators probably would see the argument that I am advancing in a special sense because, as I understand it, there is rent control in regard to some commercial properties in New South Wales and there is freedom to bargain about premiums out of the rent control.

Representations have been made to me by people who have a particular insight into the injustice to which a tenant will be subjected in the payment of that premium. Whereas at present he enjoys a deduction in respect of his income tax assessability after this Bill is passed he will no longer be able to claim that deduction. I would have thought that where the law itself marks this division between permissible rent and premium, the tendency to exaggerate the premium so that the - landlord will receive a non-taxable amount at the expense and to the injustice of the tenant would appeal to all those who espouse this form of rent control particularly for the just protection of tenants.

But it is in the generality of cases that I feel we are taking a long step backwards in relying upon the argument that the fairness of the market is sufficient to protect the tenant. I rose to bring this matter to light because I think the clause should be deleted if only as an indication that the proposed alteration of basis should not be adopted.

Let me call attention to the language of proposed sub-section (4.) which is one of those intriguing sub-sections that I think will let the people know what massive cobwebs we are weaving into the income tax law to which we expect them to conform. First, let me refer to proposed sub-section (2.) which states in effect that the premium exacted in respect of the lease of premises that are let wholly or partly for the purpose of gaining or producing assessable income is not taxable. Then proposed sub-section (3.) refers to the intention of the grantee or assignee and the use of the premises. If the grantee or assignee takes premises not for the purpose of using them to raise assessable income and the landlord levies a premium on those premises, he is taxable. Now I come to proposed sub-section (4.). How would honorable senators like to have their affairs determined in this way -

Where, in a case referred to in either of the last two preceding sub-sections, the taxpayer satisfies the Commissioner that, at the date on which the agreement to grant or assign the lease was made, or the assent to the grant or assignment of the lease was given, as the case may be, he -

The landlord - believed on reasonable grounds that the grantee-

The tenant - or assignee intended a particular use of the property-

Senator Murphy:

– What if it is a company?

Senator WRIGHT:

– Take a company - this juristic person without a body to be kicked or a soul to be damned. I am not speaking of governments, but of companies. What is the intention? We have ways of ascertaining the intention. But here is a situation in which you have to inquire whether or not the landlord beleived something. Then you have to know whether he had reasonable grounds to believe it. What is the subject matter of his belief? It is that the lessee intended to do something. This shows a complete lack of consideration of this Bill.

We had just the same shemozzle in regard to the deductibility of covenanted improvements under the old system whereby if you consented to a lease in writing which contained a provision that the tenant should carry out improvements certain things should be done. Mr. Justice Ligertwood after going through the cobweb involved in examining a man’s mind said: “ Make it certain. Let the parties at the time of the transaction each sign a document that this lease is to be used for that purpose. Let that be the obviously clear statement that would determine taxability.” But, no. We have a situation again presented to the Commissioner of Taxation that he must be satisfied that the landlord believed on reasonable grounds that the lessee intended the premises to be used for commercial purposes. For the purpose of indicating my position in relation to the changed basis of this taxability and non-taxability of premium, I wish to oppose the clause,

Clause agreed to.

Clause 10 (Rebate on Dividends).

Senator WRIGHT:
Tasmania

.- This Bill is so framed that if we followed the clauses in sequence we would go from dividends to private companies, then to trusts, then to partnerships, then to trusts, then to dividends, then to leases round and round a very inexact mulberry bush many times. Clause 10 goes on to another subject - rebate of dividends of private companies. Here 1 raise the question of the new definition of private companies for the purpose of special taxation of private companies. It is one of the essential parts of the new definintion of a private company that its shares shall not be listed on a stock exchange. I have seen it stated quite responsibly, although I have not checked this myself, that there is no Commonwealth or State legislation governing the establishment of stock exchanges. If the Minister for Civil Aviation (Senator Henty) can conveniently get the information, I want him to give the Committee a statement from the Government on this position. I have heard it stated that it is competent for any group of businessmen to establish a stock exchange and lay down their rules for that stock exchange. I want to know what security there is based on Commonwealth or State law to provide that there will be an authorised stock exchange, listing on which will be a satisfactory criterion for the definition -of a public company. That is the first point.

The second point is that in relation to private companies, as I understand it, Mr. Justice Ligertwood recommended that in respect of a dividend paid by one private company to another, the payer should have rebated to him not 100 per cent, of the payment but 85 per cent, of it for the purpose of considering whether or not there had been a sufficient distribution of income to escape the special taxation on undistributed profits. For a reason that has not been explained, that recommendation has not been adopted.

The next thing I want to say concerns the curtailing of opportunities for the evasion of undistributed profits tax by the formation of chain companies. According to a passage in Mr. Justice Ligertwood’s report a new company can be formed each year with a new payee and he is able to evade not only the undistributed profits tax but also the main company tax. Why is not a definition introduced into the Bill so that a parent company and its subsidiaries are grouped as a family of companies payments between which are not recognised? Within the natural family this taxation law’ long since has accepted the family group. It has ignored the creation of trusts for the benefit of unmarried minor relatives - for infants. I liken a juristic company in the form of a subsidiary to a minor or an infant. Why do we not have a concept that where there is such an inter-relationship of power, voting, control, dividend receipt, and distribution of capital dividends on winding up, payments one to the other should be ignored for the purposes of considering undistributed profits tax? We do not have that. The Bill adopts a provision that I would think was the worst of three possible worlds. It contains a provision that where a company makes payment to another company, the payer can get a rebate of only 50 per cent, of that payment for the purposes of rebate. But then, bless you, the Commissioner of Taxation, an apostle of good will, comes in, and it is he who has to say whether or not that provision should apply. Under proposed new section 46, sub-section (3.), he may grant a further rebate, I think, up to the remaining 50 per cent, of the payment. That is to say, he may allow a rebate of the whole 100 per cent, if, after considering certain things, he is satisfied that, as proposed new sub-section (3.) (c) states, “having regard to all the circumstances, it would be reasonable to allow the further rebate “.

So the final conclusion is expressed only in the terms that the Commissioner of Taxation is to be satisfied that it would be reasonable to allow the 100 per cent, rebate instead of the 50 per cent, as the law prescribes. But a power to discriminate between commercial companies, big and small, is a power fraught with the possibility of the greatest dissatisfaction to the community. With whatever goodwill and with whatever prudence the Commissioner directs himself, he cannot attain that position of omniscience as a dispenser of perfect justice that would leave the taxpayers without a sense of unjust discrimination. To my mind, the principle is odious.

I come now to sub-section (4.) of proposed section 46. It is a gem. I propose to read it as being an example of the tortuous ideas that will govern the taxability of companies. It reads -

Where, after the Commissioner has allowed a shareholder, being a company that is a private company in relation to a year of income and is a resident, a further rebate in its assessment in pursuance of the last preceding sub-section, the Commissioner becomes satisfied that, having regard to all the circumstances, the rebate ought not to have been allowed, the shareholder shall be deemed not to have been entitled to the rebate.

So when the Commissioner, having been satisfied in the first instance, is later satisfied that initially he was in error, the shareholder, bless you, is to have the benefit of this beneficence stripped from him and be deemed not to have been entitled to the rebate. This is just nonsense in the extreme. This provision will give the Commissioner unfair power. For that reason, I oppose the clause.

Senator McKENNA:
Leader of the Opposition · Tasmania

– I was rather intrigued by sub-section (8.) of proposed section 46. Here we are dealing with rebates of taxation on dividends paid by one private company to another private company. The sub-section reads -

A shareholder in a company that is a co-operative company within the meaning of Division 9 of this Part is not entitled to a rebate in its assessment in respect of dividends paid to it by that company.

I read that provision many times without understanding it until 1 came to the explanation offered in the explanatory memorandum that has been circulated. I realise that the draftsman, who had a terrific task to perform, just lifted this provision out of the existing Act and, with scarcely a change of wording, inserted it here. Any honorable senator who has before him the clause we are considering will see how the difficulty arises. In the passage which reads “A shareholder in a company that is a co-operative company within the meaning of Division 9 of this Part “ the words “ that is a co-operative company “ apply not to the word “ company “ which precedes them but to the word “ shareholder “. When one understands that, the reference to the shareholder in the phrase’ “ its assessment “ falls into place. I suggest that when the legislation is next being examined, this provision might well be redrafted to read -

A co-operative company within the meaning of Division 9 of this Part which is a shareholder in a company is not entitled to a rebate in its assessment in respect of dividends paid to it by that company.

I leave the matter on record here. 1 am sure that that was the intention behind the provision. I may have understood it on the first reading instead of on about the tenth reading if it had been couched in those terms. I express my indebtedness to the explanatory memorandum for what it did to help me.

While I am on my feet, Mr. Temporary Chairman, I hope you will permit me to make a brief comment on the general application of this clause, lt has been submitted to me that a great deal of uncertainty and uneasiness would be removed if taxpayers believed that they could submit proposed transactions to the Commissioner of . Taxation before concluding them. 1 realise that this might make the Commissioner of Taxation a general adviser to business in these matters. However, I believe that the Commissioner has been disposed to look at transactions and to indicate whether a particular course of action would be right or wrong. Can the Minister say anything on this subject that will be helpful? Is that the practice of the Commissioner? If so, is it proposed that the practice should be continued? A person might say: “ I would like to enter into this transaction, but first I would like to submit it to the Commissioner to see how he views it. If his views are unfavourable, I shall not proceed. If he says that the proposal is acceptable, I shall go on with it.” I ask: Is that kind of service available to the taxpayer?

Senator MURPHY:
New South Wales

– I rise to support the criticisms that have been levelled against this and other clauses on the ground that the discretions that are to be given to the Commissioner of Taxation are far too . wide and therefore unjustifiable. We live under a system of law. Law means certainty. What has just been said by Senator McKenna illustrates the kind of situation into which we are falling with this kind of bill. The honorable senator’s suggestion is most helpful in the situation in which we find ourselves, but we should never have been put in that situation. A citizen should never be in the position where he has to go to the Commissioner of Taxation or some other official to seek advice before entering into a transaction or before ordering his affairs.

There ought to be certainty in all law so that persons may order their affairs and know- whether or not they are observing the law. Whether citizens are rich or poor, innocent or villianous, they are entitled to know exactly where they stand according to the letter of the law and should be able so to order their affairs. They ought not to be put in a position where they cannot know before entering into a transaction exactly what will happen and whether the tax they will have to pay will depend ultimately upon the discretion of a public official. That places an unfair burden on the public official. The Commissioner and his officers should never have to bear the burden of discriminating between persons. In this legislation the Commissioner is not being given the guidance to which he is entitled. The community should know that a certain rule is being applied as between various citizens and as between great companies and small companies. It has been well said that the power to tax is the power to destroy. Because of that, there should be absolute certainty in these matters. Those who can place before the Commissioner a sufficiently strong case to induce him to exercise his discretion in their favour will succeed in obtaining a favorable decision. That means that the more powerful, the more influential and the richer persons and corporations will be in a stronger position than others. They will be able to prepare themselves, to marshal the arguments and the evidence and to pay for persons to present these views to the Commissioner or to his officials in a way which would be beyond the resources of a smaller company or of a person of more limited means. That is not good. The law ought to be certain and available for all persons upon a reading of the enactments or the practice books in taxation. Taxation legislation is to be passed. It is called legislation, but it is not law. Law means certainty. Law means rules. The rules are not here; the certainty is not here. It is a matter of the say-so of the Commissioner or his officials as to how much tax a citizen or corporation will be liable to pay. I agree with the criticism expressed by Senator Wright most eloquently in relation to this clause, and with his earlier criticisms. I also agree with what has been said by Senator McKenna.

Senator HENTY:
Minister for Civil Aviation · Tasmania · LP

– I refer first to the matter raised by Senator McKenna. I agree with him that sometimes it is of great importance to be able to consult the Commissioner of Taxation on steps which an organisation proposes to take on the advice of an accountant or a lawyer. It is very important that this service should be available and that organisations should be able to approach officials of the Taxation Branch and say: “In spite of the advice I have had, I wonder whether the proposals I have in mind would be interpreted to conform with the taxation law as it stands “. That opportunity has always been available to taxpayers and, so far as is reasonably possible, it will be available in the future. I have only one qualification to express: Persons consulting the Taxation Branch must place their cards on the deck. At times people approach the Taxation Branch and do not make full disclosure of their intentions. They try to anticipate decisions which are not in fact given. Then, of course, they complain about the action taken. The service is available, I am sure, to all taxpayers asking for advice who place their cards on the deck.

Senator Wright raised the matter of listing on the stock exchanges. It has been suggested that the requirement of stock exchange listing of ordinary shares could be nullified if a company obtains listing on an overseas stock exchange or a new Australian stock exchange without strict listing requirements. This possibility has not been overlooked. A safeguard is that to obtain public status a company needs to satisfy additional tests to that of stock exchange listing. Since 1934 the law has included provisions granting public status to a company whose ordinary shares are listed on a stock exchange and which meets other prescribed tests. So far there has been no evidence of misuse of these provisions. The Treasurer (Mr. Harold Holt) has indicated that, if there were found to be manipulations to exploit the position, the Government would have to look at the matter and possibly the Parliament would be asked to do something about it.

Senator Wright also referred to private companies. In his second reading speech the Treasurer said -

The Government has concluded, after looking at the matter from all angles, that the Committee’s proposal would operate partially in some cases and not provide a sufficient deterrent to tax avoidance in others. We recognise, also, that not all groups of private companies exist for tax avoidance purposes and that, in some cases, no reduction of the rebate would be warranted. But it is necessary, nevertheless, to provide a substantial deterrent to such tax avoidance practices. In the end, the Government has decided that the rebate should, in relation to private companies but not public companies that receive dividends from other private companies, be reduced to half the present level, but that the Commissioner of Taxation should be authorised to allow a full rebate where he is satisfied that this is justified by the circumstances of the case. This is broadly the basis of the provisions embodied in the Bill.

Senator Sir William Spooner:

– Did I understand the Minister to say that registration on an overseas stock exchange was a sufficient qualification?

Senator HENTY:

– There is a safeguard where a company obtains listing on an overseas stock exchange or a new Australian stock exchange without strict listing requirements. This possibility has not been overlooked. A safeguard is that to obtain public status, a company needs to satisfy tests additional to that of stock exchange listing.

Senator Wright:

– Could the Minister refer the Senate to the page of the Bill where that reference occurs?

Senator HENTY:

– It is in clause 29, on page 48. The Committee will be coming to it later.

Clause agreed to.

Clause 11 agreed to.

Clause 12 (Payments to associated persons and relatives).

Senator WRIGHT:
Tasmania

.- Clause 12 greatly extends the power of the Commissioner of Taxation to decide what are reasonable payments as between relatives and associated persons, such as companies and partnerships, who have dealings with a relative of a partner or whose directors are relatives. I would like the Minister to confirm or correct my understanding of this clause. As I understand it, a payment of any sort as between those associated persons in future is to be considered by the Commissioner from the point of view of whether it is reasonable in the Commissioner’s opinion. I am curious to know whether that covers wages, directors’ salaries, rental of leasehold premises and interest payments, for example. Does the Commissioner of Taxation have the right to say in respect of those payments that they are excessive or are too small, and that the amounts will be adjusted upwards for the purposes of income and downwards for the purposes of deductions, according tq the Commissioner’s view of what is reasonable?

I also wish to ask the Minister specifically whether the Commissioner is given power in the circumstances I am about to describe. I shall take the hypothetical example of a father and two sons on a farm. Let us say that they are in the fortunate position where, on a small farm in Tasmania, they might net an annual income of £6,000. The boys, who are 18 and 19, receive an annual income of £2,000 each. Has the Commissioner of Taxation the power to say that £2,000 for each of those boys aged 18 and 19 years is unreasonably high and that the share of the profits to which he should be entitled under the partnership should be cut from £2,000 to what the Commissioner might think is a reasonable wage for such boys, say, £1,200?

Senator HENTY:
Minister for Civil Aviation · Tasmania · LP

.- 1 am advised that the provision is an extension of the provision which is already contained in the Act. It is being extended to apply to partnerships. There is no provision in the Act which deals with payment to partners.

Senator Wright:

– That is to say, it does not apply to the partners’ share of the profits?

Senator HENTY:

– That is so.

Senator WRIGHT:
Tasmania

.- Would the Minister bear with me and tell me specifically whether the provision applies to rentals, interest payments, wages and directors’ fees?

Senator HENTY:
Minister for Civil Aviation · Tasmania · LP

– The provision could be applied to those matters as it always has been applied under the existing Act.

Clause agreed to.

Clauses 13 to 16 agreed to.

Clause 17. (Losses of previous years not to be taken into account unless there is substantial continuity of ownership of shares in company.)

Senator WRIGHT:
Tasmania

.- This clause deals with what have come to be known in the trade as loss companies. We should realise that under the tax law a taxpayer is entitled to take a seven-year bracket for the purpose of considering his net profit or loss. If, in the past five years, he has been unfortunate enough to incur heavy losses, and in the sixth and seventh years he makes considerable profits, as I understand the position he is allowed to set off the losses against the profits. Under the tax law a company is regarded as a person. So if the entity of the company is maintained, it is entitled to take a seven-year bracket for the purpose of taxability.

In the early years of the last war, just before uniform taxation was introduced, it was found that some companies were mere shells, with huge losses that they could not pay. If there was a profitable company which could buy all the shares in the loss company and so bring under the cover of the loss company part of the profitable operations of the profit making company, it could establish a branch of its own business under the aegis of the loss company and set off its profits. Therefore, the Government of the day said, in effect, that where shares were transferred in a private company, the right to take advantage of losses which had been made in the earlier part of the seven-year bracket should apply only if there was an identity of shareholding to the extent of 25 per cent, of the voting power of the company. If the shareholding existed in the years of loss, the right was carried through without break into the years of profit. The retention of the shareholding was made a qualification for the use of previous losses. The provision of the 25 per cent, shareholding did not apply to public companies. Therefore, public companies could be bought and sold, although the shareholding in the years of loss might be completely different from that in the years of profit.

I am bringing these matters to the attention of the Committee to show the vagaries with which this Bill has been brought before the Parliament. The Ligertwood Committee considered this matter. It said that there is no sense in the distinction between public companies and private companies for the purposes of this part of the taxation law.

Senator Sir William Spooner:

– There is a distinction in the Act, is there not?

Senator WRIGHT:

– I think not. The Ligertwood Committee looked at the debates in “ Hansard “ when the 25 per cent, shareholding stipulation was introduced. I suppose that a lot of people would give a good measure of credit to the Committee for considering the arguments advanced by the then Leader of the Opposition, who is the present Prime Minister (Sir Robert Menzies). He advanced the view that if a company is to be considered as a person and is made to pay tax as an entity, it is immaterial who the shareholders are. I had better be precise in this regard. The report states that the then Leader of the Opposition said -

It is extraordinary to notice how the taxation laws flit about, sometimes treating a company as a legal entity quite distinct from its shareholders and then again, as in the present instance, suddenly saying “ We shall cease to look at the company, but shall look at the shareholding “.

Having considered that argument, the Ligertwood Committee recommended the repeal of the retention shareholding of 25 per cent.

After the report was tabled by the Government there was not a breath of suggestion that it was going to disagree with the proposition. In the interval between 1961, when the report was tabled, ami 1964, when this Bill was introduced, all of the States engaged in the moulding of uniform company legislation under the general guidance of the then Federal Attorney-General, Sir Garfield Barwick, who is now Chief Justice of the High Court. For the first time they introduced special provisions, outside the liquidation provisions, into the company legislation to provide for official management as a means - of overcoming chronic debt chaos. They took advantage of the recommendations of the Ligertwood Committee that the provisions should not be repealed but allowed to continue. No indication was given to the commercial community before the Bill was introduced that it was going to run counter to or would modify substantially the recommendations of the Ligertwood Committee. I do not want any honorable senator to think that I am advocating the continuance of trading in loss companies. I am not. But the Bill itself enables the practice to continue under certain conditions.

Sitting suspended from 5.45 to 8 p.m.

Senator WRIGHT:

– Before the suspension of the sitting I was pointing out that under the existing law a company, taking over another company could obtain the benefit of its losses for the purpose of taxation so long as there had been a continuity of at least 25 per cent, of its shareholding from the year of the loss until the year in which the tax return was lodged. The Ligertwood Committee recommended the deletion of even that shareholding requirement. It accepted the view that a company was to be recognised on its own basis as an entity, and if it had suffered losses in any of the previous seven years, it should be entitled to offset those losses against any profits that it had made in the subsequent years, irrespective of the identity of its shareholding.

Between the time of Mr. Justice Ligertwood’s report in August 1961 and the date of the introduction of this Bill in October 1964, the States had, as I said just before the suspension, gone to the trouble of moulding uniform company laws and they introduced provisions specially to take advantage of this situation. They did that through a committee of State AttorneysGeneral, irrespective of political party. The Attorneys reached an agreement whereby Chey provided for some official management to bc an alternative to a liquidation in a winding up. The very purpose of preventing the company from going into liquidation and adopting this status of official management was to preserve the company with its loss structure so that if the creditors could obtain a takeover company, the losses would have some income tax benefit. The creditors could sell that so-called asset and make some recovery. This is a very artificial approach, which is a development of the last few years, but it received the official recognition of the State Attorneys-General, and as honorable senators know, our own Attorney-General of the day lent a guiding hand in this uniform company legislation.

Now we have this Bill introduced and so far from accepting Mr. Justice Ligertwood’s recommendations it proceeds in the opposite direction without giving any notice to the commercial public, and without taking any regard of transactions that have been made right up to October 1964 on the faith that if anything were to be done on the subject it would be done in accordance with Mr. Justice Ligertwood’s recommendations. This situation has to do with a 7-year programme, and it is very interesting to notice the difference in the incidence of the provisions of this Bill in relation to loss companies and in relation to leases. In relation to leases that may go on for another 5; 7, 15, 30 or 40 years and the position is preserved, but in relation to company losses extending over seven years, people who have bargained on the faith that any alteration that would be made would be a sequence of the Ligertwood report, can be very badly treated. I should like to know the reason for the difference in treatment. The only reason I can think of is that in the case of leases the Treasury would have to forgo its tax if the landlord failed to receive his money from the tenant, but in the case of loss companies, if the procedure is permitted to go on to the natural conclusion of seven years, then the Treasury gets no makeweight against that at all. The proposal fails to have regard to the incidence of altered legislation on bona fide commercial transactions that have been made on faith in existing legislation

As I have said, it is an artificial position and I do not contend for the continuance of that position and I have no protest to offer against the provisions that are proposed in the Bill. However, we should see that justice is done to those in the community who have entered into transactions.

The TEMPORARY CHAIRMAN (Senator Wood:
QUEENSLAND

– Order! The honorable senator’s time has expired.

Senator McKENNA:
Leader of the Opposition · Tasmania

– I should- like to make two submissions to the Minister for Civil Aviation (Senator Henty). The first one relates generally to the proposed new section 80a. The thought in my mind is this: Many private companies of today have shares issued in different classes, with variable dividend rights and without specific rights on reductions of share capital or liquidation. If such a company incurred a loss, it would be precluded from any share transfers of, say, a class of shares, even if only a small percentage, until after the year of income in which losses were recoupled. The submission is that it is reasonable that the trafficking in loss companies should be restricted or eliminated, but on the other hand it is thought that bona fide write-offs by companies should not prevent reasonable internal transactions in shares as so envisaged. I take it that what is in mind in this submission is that there may be reconstructions in a company, particularly by a reduction of capital. I invite consideration by the Minister’ of whether a variation between the shareholders in the year of income and in the year of the loss which it is sought to use to offset profits in the first mentioned year, would negative the right to offset the loss.

The second submission I put is in these terms: In section 170, sub-section (2.) of the Act it is provided that where a taxpayer has not made to the Commissioner a full and true disclosure of all the material facts necessary for his assessment, and there has been an avoidance of tax, in a case where there is no fraud or evasion the Commissioner may amend the assessment within six years. That is the present Jaw. It is agreed that the Commissioner should be entitled to amend where an attempt has been made by the taxpayer to withhold relevant information, particularly as the onus of proof is on the Commissioner to prove that there has not been a true and full disclosure.

I turn now to proposed section 80d, which provides that the Commissioner may amend an assessment for the purpose of giving effect to five sub-sections - they are set out in the proposed new section - if the amendment is made within six years after the date upon which the tax became due and payable under the assessment. The submission that has been put to me is in these terms: The proposed section 80d referred to in clause 17 of the Bill goes much further and provides that the Commissioner may amend an assessment if the amendment is made within six years after the date upon which the tax became due and payable under the assessment and .this, of course, will shift the onus of proof from the Commissioner to the taxpayer to prove that the assessment should not be amended. I invite the Minister to look at the four sub-sections of section 80b to which reference is made - and perhaps to section 80d - and indicate whether in the view of the Government there is any element of trickery in the subsections that I have mentioned and whether the onus does fall upon the taxpayer or upon the Commissioner of Taxation. If the Minister is in a position to comment on those two matters I would appreciate it.

Senator HENTY:
Minister for Civil Aviation · Tasmania · LP

– This clause deals with the purchase by companies of companies that have built up losses over some years, thus providing an opportunity for a company making profits to use the losses to offset the profits it has made over a period of seven years. This Bill now gives the companies until this financial year to make use of any losses that they have purchased. After that time the losses cannot be used for this purpose. Quite frankly, I think that this is one of the loopholes in taxation legislation which should be tightened up considerably. I can see no merit’ whatever in a company which is trading and making profits purchasing the shares of a company which has failed simply for the sole purpose of not having to pay taxes on its profits.

If that is not a complete avoidance of tax then I do not know what is. It has been legal but it is something which should not be allowed to continue and every indication was given that it would not be allowed to be continued. It is one of those practices which I think should cease. There are only two beneficiaries of this practice. One is the shareholders who have invested in a company which has failed - has reached a stage where it has made considerable losses and its share value is practically nil. The shareholders of that company can, by selling the company to a concern making profits, get some value simply because thenown company has been unsuccessful and has suffered a loss. They can recover something because the other company can avoid paying its due tax on the profits that it is earning. I think it is quite time that this practice stopped and under this Bill it will be stopped after this financial year. Anybody or any organisation which has purchased a company during this financial year has the right to write off its losses against this year’s profit. After that time it is prohibited from doing so and, to my mind, that prohibition is correct. This practice is one of those things which I do not think have been a credit to the commercial community. It has been perfectly legal. I am not saying that it has not. But to my mind it is not one of those things which have been a credit to the commercial community. It is not a credit to the community that a profitable company should want to avoid paying tax and should do so simply by buying a company which has failed to make the grade - which has piled up losses - and so write off the losses of that company even though they had not previously been associated.

Senator Wright:

– The company can still do so if it maintains a 40 per cent, shareholding.

Senator HENTY:

– That is correct. If the company originally had a 40 per cent, shareholding in the company that failed then that is a different matter. But when the purchasing company had nothing to do with the loss company at all - never owned a share in it - until it took over the losses to write them off in seven years-

Senator Willesee:

– It is an injustice within the law.

Senator HENTY:

– I think it should be stopped, anyway. There are one or two things which Senator McKenna raised to which I have an answer. I understood the honorable senator’s question to relate to cases in which there has been a reduction in capital of a company with losses. So long as shares carrying the appropriate rights are held in the same rates as before the reduction, the section will not prevent a deduction. Concerning section 80d, this will authorise amendments only where one of four specific sub-sections applies. In other cases there will be no change in limitations upon amendments in other circumstances. The four sub-sections relate only to cases where special arrangements have been made and may well have been made for tax avoiding purposes. The onus of proof as it is under the present law will, 1 understand, be unchanged.

Clause agreed to.

Clauses18 and19 agreed to.

Clause 20 (Application of Division).

Senator WRIGHT:
Tasmania

.- We switch back, now, to the subject of leases. This clause concerns itself with assignments and surrenders. I carefully abstained, in any reference I made to leases in my previous speeches, from the question of assignments and surrenders because I wanted to isolate the original creation of the lease for simplicity purposes. I have already explained the position and in relation to leases it is not at all satisfactory. So far as 1 have attempted to understand the position with regard to assignments and surrenders, it seems to me to be much less satisfactory and, if I might indicate it to the Minister for Civil Aviation (Senator Henty), my difficulty arises in understanding, particularly, sub-section (4.) of the section which stales -

Where, after the twenty-second day of October, One thousand nine hundred and sixty-four, improvements are made on land the subject of a lease with the written consent of the lessor of that land, sections eighty-five, eighty-seven and eightyeight of this Act do not apply in relation to those improvements unless -

the written consent was given on or before that date; or

the Commissioner is satisfied that, on or before that date, the lessor had agreed, whether absolutely or subject to conditions, to give that consent and the written consent was given within a period after that date that the Commissioner, on the joint application in writing of the lessor and the lessee made or within such further times as the Commissioner allows, has approved (whether before or after the giving of the consent) as reasonable for the purposes of this sub-section.

Quite frankly I do not begin to understand that and I rise to seek some explanation of what is meant by this section in relation to assignments and surrenders of the lease. Old section 85 provided that if the terms of a lease required that improvements were to be made on the leased property, or if the landlord gave in writing his consent to improvements being made, the lessee was entitled to a deduction of the cost of those improvements over the term of the lease. This afternoon I mentioned the enormity of some transactions in which, mainly, subsidiaries of parent companies took leases of land and agreed to erect on them buildings costing, say, £1 million over a lease of, say, 40 years. They would then become entitled to a deduction of £1 million over the 40 years. Due to the enormity of that situation, we have given up taxing improvements for which a landlord has bargained, and abandoned the idea of giving the tenant a deduction for improvements that he has made to the landlord’s property under covenant.

That seems to me to be a most odd idea for the Labour Party to accept, but honorable members opposite are apparently accepting it holus bolus in this Bill to have some election point on which to go to the country, Here is a situation in which a lessee is bargaining in his lease to make improvements - often very substantial improvements - to the freehold. Previously he has been entitled to a deduction in respect of them. In the case of ordinary improvements, this would seem to me to be a very reasonable proposition, but the Labour Party now has abandoned any concern for the interests of lessees and is letting the Bill go through, trusting to the discretion of the Commissioner.

I am not advocating the cause of a lessee subsidiary company that erects a building costing £1 million on the freehold of its parent company and then gets a deduction of £1 million over 40 years. That condition has been carefully preserved to the lessee in the Bill, and I am amazed to find that the Labour Party is not even concerned about that situation. It has renounced the right to have a select committee scrutinize the position or object to the clause. Here we have a situation where, in relation to assignments and surrenders, the conditions set out in sub-clause (4.) seem to make it almost as difficult as it is for the proverbial camel to get through the eye of a needle for an assignee to gain any benefit from the improvements that he has made to his leasehold. I pray for light.

Senator HENTY:
Minister for Civil Aviation · Tasmania · LP

– The new provisions will apply in relation to improvements in respect of which deductions are now allowable. Lessors will be taxed broadly on the residual value of. improvements at the end of a lease. The lessee will be entitled to deductions for the cost of improvements. Turning to section 85, which Senator Wright has mentioned,the position has been that the cost of improvements was deductible as soon as a lease was assigned or surrendered, even though the lessor had no liability for tax on the value of the improvements. As from 23rd October, that position will be terminated, unless the assignment or surrender was made or agreed by that date.

Clause agreed to.

Clauses 21 to 24 agreed to.

Clause 25.

Section ninety-nine of the Principal Act is repealed and the following sections are inserted in its stead: “99a. - (1.) This section does not apply in relation to a trust estate in relation to any year of income if the trust resulted from -

  1. a will, a codicil or an order of a court that varied or modified the provisions of a will or codicil; or
  2. an intestacy or an order of a court that varied or modified the application, in relation to the estate of a deceased person, of the provisions of the law relating to the distribution of the estates of persons who die intestate.
Senator WRIGHT:
Tasmania

.- This clause deals with the trust estates to which we referred this afternoon. I wish to refer to that part of the clause that seeks to introduce new section 99a. It is concerned with trusts in which the income earned by the trust investment is such that no person is presently entitled to that income during that year. I have had this provision described to me by a man of credit, knowledgeable in these matters; as a really illogical proposition, an extortionate proposal that has vicious consequences for trusts which for the most part are of small importance. If this clause goes through unaltered, in the case of a trust in which no person is presently entitled to a particular year’s income, the income of that trust will be assessed and liable to tax at the rate of 10s. in the £1 for the year. It may be a trust that is yielding income of only £400. Nevertheless, simply because it is directed to be accumulated for three years - it may be for an invalid daughter, an aged parent, or for any other worthy cause, such as a religious body or a scientific or charitable institution - unless, in the case of the last mentioned institutions, they have an indefeasible vested interest - the income is confiscated to the extent of 10s. in the £1. Sub-section (5.) of the proposed new section 99a, refers to paragraph (f) of section 23, which relates to trade unions. I mention that in the hope that it will alert the Labour Opposition to concern with this clause at least. In the creation of a trust, there may be a contingency upon which a trade union becomes entitled to the interest. Suppose it is a trust in the first place to be accumulated for the benefit of a sick daughter. Her health is such that she will probably die. If she survives until she is 21 she receives the income, but if she does not, it goes to the settlor’s trade union.

I am amazed that any parliament in the country can accept this provision without horror and without categorising it as my correspondent categorised it as really illogical, an extortionate proposal and something that is vicious in its incidence. Merely because the income of that trust is not payable to any individual person for the particular year, it is taxed to the extent of 10s. in the £1. This applies to trusts that have been created at any time prior to October 1964; it applies to trusts, the purposes of which were to avoid income tax, and it applies to a perfectly bona fide family provision. It does not apply to trusts that arc created by will or trusts arising out of intestacy, lt imposes that punitive rate of tax upon a perfectly legitimate trust. The only protection that it gives to the beneficiary who, I think every honorable senator would concede, is entitled to some protection, is contained in proposed section 99a(2.) which states-

Tins section docs not apply in relation to a trust estate … in relation to a year of income if-

Here I begin my beatitudes - the Commissioner is of the opinion that it would be unreasonable that this section should apply

Although I regard the Commissioner of Taxation with all the divinity to which I think he is entitled, I am not prepared to acquiesce in a situation that beneficiaries or trustees of bona fide trusts whose income may be accumulated for two years or ten years shall be treated in this way. The law sets a definite limit beyond which the accumulation becomes completely invalid. I have not checked it, but by and large honorable senators can take it that our law sets the limit at 21 years. Beyond that it is void. Yet we have the Taxation Branch coming in to confiscate 10s. in” every £1 of income, and trade unions, if they are conditional beneficiaries in these trusts, will be met with this scythe. The only protection they have lies in the hope that the Commissioner will be of the opinion that it is unreasonable to apply this provision.

Wc fought this situation three centuries ago when a king wanted to dispense with the laws. Most people would find it in their heart to give a king superior recognition to that accorded a Commissioner of Taxation. I find it completely unworthy and obnoxious that any parliament would think that that was appropriate protection to trust estates whose purposes are as worthy as I have described.

Just ponder on the enormity of this proposal, the viciousness of it and its effect on a trust which is not in its terms irrevocable. I sec no escape unless the Commissioner can be induced to take the view that to impose the provisions of this section on the trust would be unreasonable. I see no escape from the situation that throughout the remaining period of operation of that trust, the annual income, however small it may be, will be taxed at the rate of 10s. in the £1.

With all the respect that is due to the Commissioner of Taxation, whoever he may be from time to time - whether he be Cain or Abel - and with all the respect that is due to his advisers and to the traditions that may prevail in his office I claim that he should not have authority to say whether it is reasonable, for the protection of my family, to create a particular trust. When I state this in terms of my family let me hasten to say that I have no such trust. I am not concerned in this either in a personal sense or professionally. I speak here to prevent these small trust estates being victimised by a vicious piece of legislation that quite properly could have been framed to cure any defects. The only defect that has really been disclosed is the case of a man who has created a multiplicity of trusts. Instead of confining himself to one trust instrument he has been advised that if he sets up a trust which will return incomes of less than £204 a year, he can escape the payment of taxes. If he has a total income of £3,000 and forms .15 trusts and so keeps the income of each trust under £204 a year he has the loophole. In such a case I would have thought it a very simple proposition to provide that where a settlor within the last seven years, or ten years if you like, has created a number of trusts with the same or substantially the same beneficiaries, the trusts should be taxed upon their aggregate income.

I think the proposal is a reflection on any parliament. Honorable senators will notice that in proposed section 99a (I.) provision is made that it will not apply to a will or to an intestacy. To learn whether the Senate will prescribe a proper criterion, I move -

After paragraph (b) of proposed Section 99a. (1.) add the following new paragraph: - “ or (c) a transaction bona fide made without any intent to evade income tax.”

If the settlement is made bona fide without any intent to evade income tax it will not be subject to the proposed arbitrary imposition.-

Senator HENTY:
Minister for Civil Aviation · Tasmania · LP

.- The . Government cannot accept this proposed amendment because it makes the -provisions of the Act ineffective. It would make multiple trusts and all that goes with them again the order of the day. It would mean that the wealthy people could set up multiple trusts, spread their income over a number of beneficiaries who would each receive less than £204, thus escaping the taxes that they should pay. The application of a flat rate can be supported on the ground that it is no more appropriate to tax income being accumulated in a trust at individual rates than it would be to tax a company at those rates. Progressive rates apply to individuals on the basis that a taxpayer with a higher income can afford to bear a relatively higher tax burden.

The amount of income of a particular trust in relation to which there is no present entitlement is no real reflection of the income levels of the prospective beneficiaries or of their ability to pay. There may be either several beneficiaries or only one beneficiary presumptively interested in the income of one trust. A flat rate of .tax is necessary in rela-lion to trusts created for tax avoidance purposes in order to remove any incentive in the future for the creation of multiple trusts. As to the proposed rate of 10s. in the £1, this is the rate of tax applied to the undistributed profits of . private companies. At the present time trusts are used extensively to avoid the undistributed profits tax. Application of a 10s. rate to the income of trusts set up for tax avoidance and that derive dividends from private companies will mean that this avenue for tax avoidance will be closed. The’ Ligertwood Committee proposed a 10s. rate in relation to trusts which could be varied for the benefit of the settlor’s minor unmarried relatives. Too low a flat rate of tax under section 99a would provide an inducement for taxpayers with a rate of tax of up to 13s. 4d. in the £1 to create trusts for their own benefit and if they were not made presently entitled to the income, a saving in tax could be achieved.

I would add to that what I said this afternoon in relation to the matters raised by the honorable senator regarding the discretionary power of the Commissioner of Taxation. As I have said, if the trust is a tax avoidance trust and the Commissioner is satisfied that it is of that character, he would inform the trustee that it would be taxed at the rate of 10s. in the £1 unless the Commissioner could be persuaded that it was not a tax avoidance trust. If the trustee cannot so persaude the Commissioner, the trust will be taxed accordingly, but there is an independent Taxation Board of Review which can review the decision of the Commissioner. Where there is no tax avoidance, the Commissioner can rule that this rate of taxation will not be applied.

Senator McKENNA:
Leader of the Opposition · Tasmania

– The Opposition does not support the proposed amendment. Apart from reasons that have been indicated by the Minister for Civil Aviation (Senator Henty), we see a section of this nature as being necessary to cure the very real evils, some of which have been outlined by the Minister. It is not a matter of leaving a determination to the unfettered discretion of the Commissioner of Taxation in exempting a particular trust, because proposed subsection (3.) of proposed new section 99a, which is the one we are considering, directs the Commissioner in forming an opinion about whether it. is reasonable or unreasonable to have regard to quite a number of factors. They are set out at length and I shall not repeat them but clearly it is not a completely unfettered discretion.

The broad outlook of the Opposition on this measure is this as I made clear at another stage of the debate: While we do not favour the failure to set out the ills to be guarded against, we recognise the impossibility of the task of the draftsmen at this stage. Frankly, we are concerned that there should be wealthy taxpayers playing tricks, keeping within the law and causing the vast number of taxpayers to make up the amount they save, The purpose of this clause it to prevent that from happening. I suppose there, has been no phase of activity that has been more abused than the setting up of trusts. I think the amendment that has been, submitted to us would not fit in which the purposes of this Bill. This Bill is not directed at tax evasion but at tax avoidance.

The honorable senator asks that the section should not apply to a bona fide transaction made without any intent to evade income tax. Of course, an attempt to evade is clearly wrong. Nobody argues about that. The evil we are trying to avoid is avoidance of tax by clever strategems that are within the law but are clearly against its spirit and are the things a good citizen would not do. That is the kind of thing that is aimed at here and the question of evasion really is not relevant to that purpose.

As regards trade unions and beneficiaries under trusts that they may make I would have no fear in the world about how the Commissioner of Taxation would regard some trust that had been formed by a trade union and things of that sort. That is the obvious case that would fall within subsection (2.) and which the Commissioner would consider it reasonable to exempt. I think it is straining a point to say that that could happen. I am completely convinced that it would not happen. I would hot know any trade union that would be uneasy about leaving a decision on that kind of trust clearly within the discretion of the Commissioner.

Senator WRIGHT:
Tasmania

.- I rise only to put on record the notice I take of the unity of purpose between the Minister for Civil Aviation (Senator Henty) and the Leader of the Opposition (Senator McKenna) on this matter. When I get to that stage it gives me greater disquiet with regard to the purposes of the legislation that the Treasurer (Mr. Harold Holt) has put before us. I have no full confidence in the political purposes of the Leader of the Opposition and my confidence does not grow when I find him submitting an argument in opposition to his own colleague, Senator Murphy, who stressed to us before the sitting was suspended that tax avoidance was the right of anyone. It was tax evasion that was to be destroyed, he said. But now the Leader of the Opposition has come along with the proposition that it is tax avoidance that he is out to stop. I wanted to test it and therefore I put the language I did into the amendment hoping that the Leader of the Opposition would support the protection I seek to give to any trust that can be described as a bona fide transaction without any intent to avoid income tax.

Those who deny the need for this amendment say, in effect, that they want to impose a tax of 10s. in the £1 on any’ trust income from a transaction creating a trust that is bona fide without intent to avoid income tax. They can go to the country and support that proposition. I think it is vicious, preposterous, and monstrous that where there is a trust that is bona fide without any intent to evade income tax, that trust should bc subject to 10s. in the £1 income tax. I hope that the country will take heed of this attitude that has been defined for it by the Leader of the Opposition. That is his purpose in relation to this particular provision of the Bill. It fills me with the utmost apprehension.

Senator McKenna:

– The honorable senator is not worried also about the Government?

Senator WRIGHT:

– I have told the Committee that my disquiet increases when I find the Minister for Civil Aviation sharing a purpose in legislation that is so warmly espoused in this respect by the Leader of the Opposition; that is to say, to impose income tax of 10s. in the £1 on any taxable income which may be acquired by the trust instrument in one particular year or two or three years for the benefit of X. Just because X is not entitled to it in that year, even though the transaction is made bona fide, with the intent to evade income tax, it is to be taxed at 10s. in the £1 unless tha Commissioner of Taxation thinks it is unreasonable to apply this section of the measure. I believe I have said enough to put on record my position.

Senator COOKE:
Western Australia

– I submit to the Committee that Senator Wright has pointed out a very definite weakness in the Bill. If we have a responsibility to set out in statutory form the rights of individual taxpayers, then Senator Wright was correct in what ho said. I believe that we should define without equivocation the rights of individual taxpayers. Even though we may have the greatest confidence in the Commissioner of Taxation, it is wrong that these matters should be referred to him for decision. As the Bill is drafted, it removes from this Parliament to the Commissioner of Taxation the duty to decide whether a certain form of tax avoidance is legitimate. The Commissioner should not have to carry that responsibility.

I should like to know from the Minister whether the Commissioner’s decision can be challenged. If there is a right of challenge, is the exercise of that right to be made too expensive for the average citizen to be able to enjoy it? The Parliament should be very definite about the form of protection that is to be accorded to the taxpayer. I have no doubt that the Commissioner would act honorably in making his decision. Indeed, probably his would be the best opinion in the community about whether a particular form of tax avoidance was illegal. But what does the Government intend to do to protect the company or person who wants to appeal against that decision? This is one of the cases in which the community has come to realise that the processes of law are too expensive for the average person to pursue. It is encumbent upon the Minister to tell the Committee whether, if it becomes necessary for a taxpayer or small company to appeal against the decision of a very respected officer in the person of the Commissioner of Taxation or his agent, the Government is prepared to assist that person or company to pay the costs.

Is the Government prepared to assist a citizen to exercise his right to appeal against a decision that a contract into which he has entered can reasonably be classified as being an unlawful avoidance of taxation? If the Minister is not prepared to give an assurance that every citizen will be protected, then the submission that has been made tonight by Senator Wright must be regarded as being correct. This is one of very many matters to which the Government has given little consideration. If it persists in its attitude, it will be imposing on some people the need to establish the legality of their action through tribunals that have not previously been recognised in this country.

Senator HENTY:
Minister for Civil Aviation · Tasmania · LP

– I point out in reply to Senator Cooke that a decision made by the Commissioner of Taxation in the exercise of his discretion may be challenged before a Taxation Board of Review. A Board sits in all capital cities, lt will go into country areas if the need arises. All the citizen has to pay is the sum of £1. If he loses his appeal he loses his £1. If he wins his case, he gets the £1 back.

Senator Cooke:

– That is the maximum cost?

Senator HENTY:

– Yes. He would have to pay the cost of employing an accountant if he wanted to employ one, but there’ is no need for him to have one. I want to take up Senator Wright on one matter. He referred to a sharing of interests by the Leader of the Opposition (Senator McKenna) and myself. Such an occurrence is a rarity. It is not nearly so rare in the case of Senator Wright whom I have seen sitting on the other side of the chamber time after time sharing interests with the Opposition. What I have done is a rarity. I admit that we share interests in regard to the matter that the honorable senator mentioned. I repeat that I have not engaged in nearly the same degree of sharing of interests with the Opposition as Senator Wright has done. Many times over the years he has shared interests with Opposition Senators in an effort to use them for his own purposes.

Senator COOKE:
Western Australia

.- The Minister has brought this debate down to a rather lower level than we have been accustomed to. Senator Wright has acted according to his own conscience and the oath he has taken as a senator. I shall do the same. I want to be with him tonight, even though on many occasions I do not agree with him. If this nation reaches the point where a senator has not enough courage to express his opinion in this place in conformity with the decencies that have been observed in the past, then I shall be very sorry indeed. I am very sorry that the Minister, in answer to a question he was asked about the protection that is afforded to the citizens of Australia, engaged in personal muck-raking and implied that when an educated man made a personal submission he was not expressing an honorable opinion. Even though I may not agree with any man on either side of the chamber, if I reached the stage where I was not prepared to stand in this place and express my opinion, I would prefer to be out of public life.

Question put -

That the words proposed to be added (Senator Wright’s amendment) be added.

The committee divided. (The Temporary Chairman - Senator Wood.)

AYES: 0

NOES: 41

Majority . . . . 38

AYES

NOES

Question so resolved in the negative.

Senator MATTNER:
South Australia

– Do I understand that we are not to deal with the second amendment that has been circulated by Senator Wright?

Senator Henty:

– Senator Wright has suggested that he is not proceeding with it.

Senator MATTNER:

– I wish that that information had been made public. I think the Senate should have at least been informed, or somebody should have told the Senate that Senator Wright did no intend to proceed with his second amendment.

Senator WRIGHT:
Tasmania

.- I had tabled an alternative amendment to that which has been defeated. The proposed amendment which has been defeated was to exempt a bona fide transaction made without any intention to evade income tax. Anticipating that the first consideration might fail, I intended to put the alternative - to exempt from the punitive tax of 10s. in the £1, a settlement reasonably and bona fide made for the maintenance or advancement of a relative of the settlor. I regret that inconvenience may have been caused to other honorable senators who were interested in the amendment. I am grateful to them .for their interest. I am aware that other honorable senators wish other business to be called on. I abandoned my intention to proceed with the second proposed amendment because I thought that there would be no further point in taking up the time of the Senate, but if Senator Mattner, who supported me when I moved the last amendment, wishes me to proceed with the second proposed amendment, I shall formally move it so that it may become a matter of record.

Senator MATTNER:
South Australia

– So long as Senator Wright withdraws his proposed amendment, I am quite happy. I believe that in this chamber proceedings should be conducted according to the Standing Orders. To me it is abhorrent that when an honorable senator does not wish to proceed with a proposed amendment the Senate is not so informed. I have followed this debate with interest. We live within the law. If Senator Henty, who represents the Treasurer (Mr. Harold Holt), wishes to take a point of order, he should do so, and I shall be quite happy. The forms of this chamber should be observed. I am quite happy with what Senator Wright has said; he wishes to withdraw the second amendment that was circulated.

Senator Wright:

– I regret that I did not announce my intention more loudly. As I appear to be chief trouble-maker in the chamber - and apparently the chief contributor to the good humour of the chamber, judging from the laughter I have evoked - I rise to announce that I have no interest in pursuing criticism of the Bill until we reach discussion on clause 43. For my part, I would be happy if all clauses up to and including clause 42 were put together. I speak only for myself.

Clause agreed to.

Clauses 26 to 42 agreed to.

Clause 43 (Amendment of assessments).

Senator Wright:

– Mr. Temporary Chairman, shall I move my amendment now, or will you allow the clause to stand and then give me the call?

The TEMPORARY CHAIRMAN:

– The honorable senator may move his amendment after the clause has been agreed to.

Clause agreed to.

Proposed new clause 43a.

Senator WRIGHT:
Tasmania

.- I move -

After clause 43, insert the following new clause - “ 43a. After section two hundred of the Principal Act the following section is inserted: - “ 200a. - (1.) Any person aggrieved by a decision or determination of the Commissioner or a Board of Review in purported exercise of any discretion conferred upon him or it by the amendments to’ -this Act made by the Income Tax and Social Services Contribution Assessment Act (No. 3) 1964 shall be entitled to appeal therefrom to the Supreme Court of a State or to the High Court or the Commonwealth Industrial Court. “ (2.) The Court shall determine whether such discretion has been exercised on any ground other that the criterion whether the relevant transaction was entered into with the intent to evade income tax and if so may declare the decision or determination of the Commissioner or Board invalid.”

Ever since this bill was introduced into the Parliament it has been obvious to every section of private and public life that it is proposed to extend the discretion of the Commissioner of Taxation so that he may decide whether a participating proprietary company should be given the full rebate of 100 per cent, on dividends to avoid undistributed profits tax, or whether it should be entitled to a rebate of only SO per cent. He has been given the discretion to say whether or not trusts involving the accumulation of income are reasonable. No more certain criterion has been laid down for the lawful exercise of his authority. I refer in this respect to the proposed new section 99a, sub-section (2.), which states that the trust provision requiring the payment of 10s. in the £1 tax on income shall not apply to any trust estate if the Commissioner is of the opinion that it would be unreasonable that this section should apply. Also, in relation to partnerships, there is a provision in the Act which states that if there is a partnership where one of the partners has not a real and effective control of his income, the share of the income attributable to that partner is taxed at 10s. in the £1 unless the Commissioner of Taxation thinks that it is unreasonable.

I have said sufficient to show that it is committed to the discretion of the Commissioner of Taxation to judge the reasonableness of the payment of company dividends; to judge the reasonableness of the creation of family or other trusts; and to judge the reasonableness of the creation of a partnership where one partner does not possess the effective and real control of his income. The whole community is concerned at the idea of the administrative enthronement of officials to decide people’s rights. The Commissioner of Taxation has a discretion to impose a tax of 10s. in the £1 if he thinks the position is unreasonable, although the rate of tax as the moment may be only about 9d. in the £1.

Everybody is concerned when an official has the right to decide whether or not these things, are reasonable. The Commissioner of Taxation has discretion to control people’s rights far beyond the ambit of most of the provisions of the income tax law as we know it. His discretion has been so advanced that I am sure that if we were to seek the judgment of the ordinary people who think they should live under the rule of law, we would find that they condemned it out of hand.

The Commissioner of Taxation has an overriding responsibility to garner for the Treasury the revenue which the Government needs in order to function year by year. He has an inescapable duty in that respect. Therefore, he is the most unfitted person to exercise an impartial discretion as to whether transactions which arc made without intent to evade taxation, but which certainly reduce the revenue yield, are unreasonable. It is true that there is ah appeal to an administrative board which usually consists of a lawyer, a member who is a former official of the Taxation Branch, and a member who is a chartered accountant. It is completely abhorrent to my ideas of nurturing family independence that my arrangements as to partnerships with my sons, by provisions of trust income for my dependants, and the arrangement of the dividends of my private companies, should be supervised as to their reasonableness and propriety, not by a truly independent official, but by the Commissioner of Taxation. People who maintain the idea that we are to be governed by law and not by men, and that our liberty is to be protected by the rule of law, contend that the final decision as to whether we are on one side of the law or the other should be made by a court whose independence is completely guaranteed by the Constitution. The rule of law is now being eroded and undermined and is to have substituted for it the administrative discretion of an official, and on appeal from him, the decision of an administrative board. Except on a question of law there can bc no appeal now to a court of law from the decision of the Commissioner in the exercise of his discretion, of from the decision of a Board of Review reviewing that discretion.

My purpose in propounding this amendment to the Senate tonight is to ask it to accept the principle that there should be an ultimate appeal to a court in a case where a person is aggrieved by the exercise of the discretion appeals. The court of law should be required to say whether or not the discretion of the Commissioner or of the Board has been exercised on any criterion other than whether the transaction has been entered into with an intention to evade the tax. If the Senate is prepared to adopt that as the criterion for the Commissioner exercising his discretion, adversely or favorably, and to give the ultimate right of decision to a court that is all this amendment seeks. It is for those reasons that I have moved this amendment.

Senator HENTY:
Minister for Civil Aviation · Tasmania · LP

.- The Parliamentary Draftsman advises that the amendment, if accepted, would give a right of appeal to a court in respect of every exercise of discretion by the Commissioner or a Board of Review under the Bill. If the court found that the discretion had been exercised on any ground other than one relating to intent to evade income tax, the decision would be invalid. It must be presumed, although the proposed new clause is not clear on this point, that the reference to the exercise of a discretion is intended to include a refusal to exercise a discretion, where the discretion operates in favour of the taxpayer.

Apart from other considerations, the proposed clause is ‘considered to be misconceived for the reason that there are a number of discretions under the Bill that are not directly related to the question of evading income tax, but are necessary to give the Act sufficient flexibility to meet the circumstances of individual cases. For example under sub-section (4.) of proposed new section 26ab, if a taxpayer who has granted a lease satisfies the Commissioner that he reasonably believed that the lessee intended to use the property for producing assessable income, and that therefore a premium which the taxpayer accepted would not be taxable, the Commissioner may treat the premium as not taxable. Here there is no question of evasion of tax, but merely a question of doing justice to a taxpayer who. accepted a premium as non-taxable, but was deceived by the lessee. If the Commissioner refused to exercise this discretion in favour of the taxpayer, and under Senator Wright’s amendment the taxpayer appealed to a court, the court would be called on to deter mine the case by considering the entirely irrelevant question of intention to evade tax. A number of other examples could be given, but what I have said should be sufficient to make the point.

My officers advise me that the amount of work of a non-judicial nature would be unmanageable for courts as we now know them. It would delay finality. Successive governments since the inception of Commonwealth income tax law have found it inappropriate to vest in . and burden courts of law with the function - a non-judical one - of sitting in judgement on the Commissioners opinion on a factual situation. Should the Commissioner, or a Board of Review, form an opinion capriciously, or on irrelevant evidence, the court under the existing law may be asked to set aside the opinion so formed. The Government cannot accept the amendment.

Senator McKENNA:
Leader of the Opposition · Tasmania

– The Opposition is not prepared to accept the amendment either, perhaps for an additional reason to those given by the Minister for Civil Aviation (Senator Henty). At the moment the position is that most of the decisions of the Commissioner are not challenged until after an assessment is made and delivered. The moment an assessment is made a taxpayer may lodge an objection with the Commissioner. If the Commissioner disallows the objection then the taxpayer has the right, within a limited time, to request the Commissioner to refer the decision either to the administrative board, to which Senator Wright referred- a Taxation Board of Review - or to treat the objection as an appeal and forward it either to the High Court or to the Supreme Court of a State.

The termination of the matter at the option of the taxpayer is either in the Taxation Board of Review - except in the appealable circumstances mentioned just now by Senator Henty - or in the Supreme Court of a State or the High Court of Australia. So the end of the matter is not necessarily a decision made by an administrative officer or a decision made by an administrative board. There is under the .present law an end result in a court - the highest courts in the land - if the taxpayer wishes to go to a court.

Senator Wright:

– The honorable senator knows that on an appeal to a court the court can have nothing to do with the discretion that has been exercised.

Senator McKENNA:

– I should think so. I think that the position is that under section J 93 the Board of Review is given exactly the same powers and functions in arriving at an assessment or a conclusion as the Commissioner is given. The Act provides that the powers and functions of the Commissioner in making assessments, determinations and decisions shall for all purposes be deemed to be the assessments, determinations, or decisions of the Commissioner.

Senator Wright:

– A Board of Review can substitute a discretion but a court of appeal cannot enter into consideration of a discretion except on the basis which the Minister mentioned, that is as to whether the decision is capricious

Senator McKENNA:

– Or that the authority refrained from exercising it. I realise that. I think that sub-section (2.) of the proposed amendment would strike down the whole purpose of this Act. lt goes back to the argument that we had on the earlier proposal. The amendment provides that a court shall determine whether such discretion has been exercised on any ground other than the criterion whether the relevant transaction was entered into with the intent to evade income tax and so may declare the decision or determination of the Commissioner or board invalid. For a start, that would strip away from the Commissioner the various obligations that are cast upon him by some sections of the Bill requiring that in exercising his opinion he have regard to factors, many of which are quite beneficial to the taxpayer.

Senator Wright:

– This appeal is only by a person aggrieved. A person does not appeal against a discretion exercised in his favour.

Senator McKENNA:

– The discretion could be exercised in his favour by the court. We come back to the original base of this legislation which is the reason why the Opposition supports it. I have explained why the Opposition is supporting a Bill in this unusual form. It seems necessary to keep on repeating it. The Bill is directed at people who, within the law, by trickery and subterfuge - to use the words of the Treasurer - have escaped taxation. The net is cast widely because of the practical impossibility of a draftsman being able to describe every conceivable circumstance that might arise. That would bc completely impossible.

This Bill is directed at the relatively few in the more affluent section of the community. However, - it does gravely concern the ordinary taxpayer who will not be taking any of these evasive or avoidance actions but who will have to pay more by reason of the people who escape the net of the Commissioner of Taxation contrary to the spirit, at least, of the laws of this country. I put it that Senator Wright is seeking to give a double appeal on the question of discretion.

Senator Wright:

– No.

Senator McKENNA:

– Well, it obviously means that.

Senator Wright:

– No. It means a final appeal to a court of law.

Senator McKENNA:

– I say a double appeal because under the present law there is the alternative appeal to the Taxation Board of Review or to a court. The honorable senator has included in sub-section (1.)-

Any person aggrieved by a decision or determination of lbc Commissioner or a Board of Review . . . on the question of a discretion, may -

Senator Wright:

– It only enlarges the base of appeal to the court.

Senator McKENNA:

– I recognise that but I just make the comment. I notice that the honorable senator includes the Commonwealth Industrial Court. That Court now seems to be the repository of all the spare bits and pieces. My feeling is that whatever merit there would be about an appeal in paragraph 1 on discretions it is completely negated by sub-section (2.) of the honorable senator’s proposal. That would, in effect, wipe out the whole purpose of the Bill and leave us back where we were on the question of whether or not the matter is within the old law. We would get right back to the jungle which this Bill is directed at. Speaking entirely for the ordinary taxpayers of this country I can say that they will be very concerned to sec that the people who have avoided taxation at the rate of £14 million a year are rounded up, and they will be no more tender in their consideration of the plight of those people than I personally am or than the Opposition is.

Senator MATTNER:
South Australia

– I said earlier that throughout the whole of the debate on this Bill I have been very perturbed with what is happening, particularly on the question of trusts and concerning the attitude that has been adopted from the very beginning in discussing these matters. I hate the words “ tax evasion “ and “ tax avoidance “. Senator McKenna said that tax has been evaded or avoided to the extent of £14 million. I do not believe it. If that is so, why have not the taxation authorities done their duty and collected this money?

I wouldlike to refer to the question of civillaw. I avoid breaking the law. I am considered an honorable citizen as long as I do not break the law. Now, during the whole of the arguments we have had on these taxation measures we have never been confronted yet with the fact that somebody has broken the law. The people have lived within the tax laws and what is wrong with that? If they have evaded their tax -and we have no proof of this whatsoever - then what has happened to the tax gatherer?

If a law needs strengthening and if we just say that we are going to tax, A, B, C or D, or a certain thing, well and good. Let us be frank about this. But when I have a look at this Bill and see the premium payable and what can happen to trusts, I am horrified. The whole thing is a worry to me because every time an honorable senator has risen and spoken he has dealt with tax avoidance as if the people concerned were criminals. Yet they have observed the law. Because of the whole atmosphere surrounding this Bill, it has not had a fair exposition of the real position right from the start of the debate. That is my opinion. Dealing with this present amendment moved by Senator Wright, I could not agree with it, although I was very happy to support his other proposals and I think that in three or four months time many senators may change some of their views.

Proposed new clause negatived.

Remainder of Bill - by leave - taken as a whole.

Senator McKENNA:
Leader of the Opposition · Tasmania

– Might I trespass for one minute only to ask the Minister for civil Aviation (Senator Henty) whether he would be so good as to ask the Treasurer (Mr. Harold Holt), at some convenient time, what is contemplated by the Treasurer regarding the implementation of recommendation No. 773 of the Ligertwood Committee’s report dealing with the matter of the taxation of friendly society dispensaries? I do not want an answer now.

Senator Sir WILLIAM SPOONER (New South Wales) [9.37]. - Might I direct the attention of the Committee to clause 46 of the Bill? If it is possible, I would like to get clear in my mind the difference between a public company and a private company for the purposes of this income tax legislation. Section 46 deals with superannuation payments as they relate to private companies. The section starts with a definition clause which states - “ private company “ means a company that is a private company under section one hundred and five of the Principal Act; . . .

The definition clause refers to section 105. Turning back to clause 30 of the Bill, it states -

Section one hundred and five of the Principal Act is repealed.

The draftsman can no doubt explain to the Minister for Civil Aviation (Senator Henty) what that means. In one clause the definition of a private company is determined under a section of the Act and the Bill then repeals that section. I have no doubt that that can be explained. I pardon the Minister from explaining the difference to me if he fails to get it clear from the draftsman. I do find it a problem to ascertain the difference between a public company and a private company and this affects the understanding of the Bill as a whole.

Clause 29 of the Bill sets out the requisites for a public company. It has to be registered on the stock exchange. The clause then approaches the definition in a negative way by providing that a company cannot be a public company if less than 20 people hold three-fourths of the shares and three-fourths of the voting power. It then goes on to provide that a company in which other public companies own more than half of the share capital can be regarded as a public company. A company in which the holders of more than half the shares are public companies is defined as a subsidiary of a public company and itself becomes a public company. This, I think, is of some practical importance.

It is becoming increasingly the practice in mining and industrial ventures, in order to attract capital for development, for a company to invite public companies to take an interest. This, I think, is a good thing. It enables large scale capital expenditure. On my reading of this section, it seems that in such a mining or industrial venture the owner of the property has to part with more than half of his equity or the venture will still be classified as a private company. I cannot believe that I have read the Bill correctly or that that principle would be written into it. When public companies own less than half of the total shares in a company, is that company classified as a public company, with all the advantages under the taxation legislation that flow from being so classified, or is the decision .in the discretion of the Commissioner? I also ask: When public companies are amongst the shareholders, even though the public companies do not own more than half of the equity capital in the venture, will the Commissioner still have discretion to decide that the company is a public company?

Senator HENTY:
Minister for Civil Aviation · Tasmania · LP

– A subsidiary of a public company is itself to be treated as a public company.. Broadly, a subsidiary company is one controlled by one or more public companies. If a public company enters into a consortium with other taxpayers, the company retains its status as a public company. Does that answer the honorable senator’s question?

Senator Sir William Spooner:

– Does this mean that when a consortium of public companies enters into a new venture, it must own more than 5Q per cent, of the venture to be classified as a public company?

Senator HENTY:

– A consortium is often just a partnership of people which has no public standing at all as far as the company is concerned. That is the only answer I can give at this stage. If the honorable senator wants any further answer, I suggest that he put his question in writing, upon which we shall Obtain an answer for him.

Remainder of Bill, agreed to.

Bill reported without amendment; report adopted. .

Third Reading

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

page 1648

INCOME TAX AND SOCIAL SERVICES CONTRIBUTION BILL (No. 2) 1964

First Reading

Debate resumed from 10th November (vide page 1575), on motion by Senator Henty-

That the Bill be now read a first time.

Senator CAVANAGH:
South Australia

– I take the opportunity on a motion for the first reading of a money Bill to discuss a matter which is not relevant to the Bill. I refer to the matter of Commonwealth grants for homes which I raised in some detail in the Estimates debate. I then challenged the Government on the right to insist on receipts for the payment of 10 per cent, of the contract price of a home before making a grant. I sought information as to the authority under the legislation for limiting a person’s acceptable savings to not more than three-quarters of the total savings or £560, whichever was the greater. I commented on the fact that the legislation made a very small contribution towards assisting home building. The Minister for Defence (Senator Paltridge) representing the Minister for Housing (Mr. Bury) said that I would receive a written reply from the Department of Housing. I am still awaiting that reply. Believing that the Department will give a reply, I do not want to pursue matters that have not been taken further by subsequent events. Therefore, on the right of the Department to insist on the payment of 10 per cent, of the contract price before making a grant, I say only that this insistence is not beneficial to the poor section of home builders, that it leads to a grant being made after financial arrangements for a home have been concluded, and that it results in a grant intended for assistance in home building being spent for some other purpose.

I have received from the Minister representing the Minister for Housing a reply to my question in relation to applicants who apply before the end of this year and receive a grant on the basis that their acceptable savings are limited to not more than three-quarters of the total savings or £560; I am doubtful whether the Minister’s answer justifies the Department in not treating the whole of an applicant’s savings as acceptable, when the prescribed date is this year. 1 make a point of this because I say, first, that there is no authority in the Act to make a lesser grant than one-third of the savings, to a maximum of £250. To make a lesser grant, which is being done today, is contrary to the promises that were made when the legislation was introduced. If we accept the Department as the authority to do this, the present practice will have more serious repercussions in future years. My question on notice to the Minister was as follows -

Where in the Homes Savings Grant Act does the Minister obtain the authority to disregard as acceptable savings in any one year prior to 1965 any savings in excess of three-quarters of total savings or £560?

Senator Paltridge, the representative in the Senate of the Minister for Housing, supplied me with the following answer -

The authority for limiting the amount of acceptable savings in any savings year commencing prior to 1st January 1965, is section 20 (1.) of the Homes Savings Grant Act 1964, which leaves with the Secretary of the Department a discretion to determine the amount, if any, of a grant made under the Act.

I invite honorable senators to read section 20(1.) of the Act to see whether it does, as I assume the Department believes, contain authority for limiting the amount of acceptable savings in any savings year. Section 20(1.), which is the Minister’s authority for making a lesser grant, states -

Subject to this section, the Secretary may, in his discretion, on behalf of the Commonwealth, make a grant of moneys in accordance with this Actto an eligible person.

It will be seen, therefore, that in accordance with the Act a grant can be made to an eligible person at the discretion of the Secretary of the Department. Nowhere in that section of the Act on which the Minister relies is there any suggestion that the Secretary of the Department can make a grant of a lesser amount than is prescribed in the Act or, in other words, a proportionate payment for any moneys saved. The Minister’s reply to my question continued-

It was thought reasonable to accept some savings in excess of £250 in any of these savings years, and sub-sections (1.) (a) and (9.) of section 22, in association with section 20(1.), were designed to give the Department this discretion. It was never the intention that there would not be a limitation on the amount of acceptable savings in this early period, and this was made clear when an amendment was moved for the insertion of section 22 (9.) of the Bill as originally presented.

The reply then gives a “ Hansard “ reference to a debate in another place. I have studied this Act to learn whether there is any authority, in the combination of the sections to which reference has been made, for what the Department is doing. Before reading section 22(9.) it is necessary to read section 22 (8.) and to know that the Government does not lend on excess savings. Section 22 (8.) states -

For the purposes of this section -

excess savings of an eligible person occur in a savings year if there is an increase in acceptable savings of the person in that year exceeding £250; and

the amount of the excess savings is the amount by which that increase exceeds £250.

Therefore, according to that sub-section the Department does not make a grant for home construction on savings in any one year in excess of £250. Section 22(9.) reads -

A reference in paragraph (a) of the last preceding sub-section-

That is the one I have just read - to a savings year shall’ be read as a reference to a savings year commencing on or after 1st January 1965, and not to any other savings year.

In other words, the maximum of £250 applies to savings after 1964 and not to any other year. Honorable senators will remember that my question to the Minister related to savings prior to 1st January 1965.

Now we come to savings prior to 1965. The Department claims that under the Act it can lend on savings in excess of £250, this year acknowledging that the Act contains a provision that the Government’s total liability will not exceed £250.I remind honorable senators that section 20(1.) which I have read, gives the Secretary of the Department the discretion to make a grant of moneys but not to make a proportionate grant. We then come to what I regard as the only other pertinent section, which is section 22. It is in these terms - 22 (1.) Subject to the next succeeding subsection, the amount of a grant under this Act to an eligible person shall not exceed an amount equal to -

  1. if the prescribed date in relation to the person is a date not later than 31st December 1964 - One-third of the amount remaining after deducting from the total of -

  2. any acceptable savings of the person and his or her spouse as at a date seven years before the prescribed date; and

    1. the sum of the increases in acceptable savings of the person and his Or her spouse in savings years of those persons, the amount of any decreases in acceptable savings of the person and his or her spouse in those savings years.

When we reduce that to language that we can understand, it means that the savings of an eligible person shall be his savings seven years previously, plus any increase in savings that he has had over those seven years until the prescribed date, less any amount by which his bank account at the end of a year was less than it had been at the beginning of the year, that is,less any decrease in savings. After following that method of calculation the Department makes available an amount not exceeding one-third of the total savings.

The only consolation we have is that section 22(1.) of the Act provides that, subject to the next succeeding sub-section, the amount of a grant under the Act to an eligible person shall not exceed an amount equal to one-third of the savings. It may be said that the use of the words “ not exceed “ implies that something less than the stated amount is acceptable. But nowhere in the Act is it stated that the Secretary of the Department has power to grant anything less and it would appear that he is not to accept as savings anything but an amount arrived at under the provisions of Section 22. On that basis the Secretary of the Department may grant one-third of the amount saved.

I have discussed this matter with various persons with knowledge superior to my own and we cannot read into the legislation any other interpretation than that there should be a payment of one-third of the amount saved. While it is true that the Secretary has discretionary power under section 20(1.) of the Act to make a grant to an eligible person, he cannot use his discretion capriciously. He cannot refuse to pay the grant because he does not like the colour of a person’s tie, or his politics or religion. We think he is obliged, within some bounds, to pay the grant in accordance with the Act. But then we come to section 22 of the Act which relates to the commencement of the relevant period, and see this wording -

Subject to the next succeeding sub-section, the amount of a grant under this Act to an eligible person shall notexceed an amount equal to -

if the prescribed date in relation to the person is a date not later than the thirty-first day of December, One thousand nine hundred and sixty-four - one-third of the amount remaining after deducting from the total of -

any acceptable savings of the person and his or her spouse as at a date seven years before the prescribed date; and to

the sum of the increases in acceptable savings of the person and his or her spouse in savings years of those persons, the amount of any decreases in acceptable savings of the person and his orher spouse in those saving years; …

We sec a repetition of this section in subclause (b) providing for grants after 1964 which does not provide that the Secretary of the Department has a discretion to grant only a proportion of the amount as stated in the Act. He has a discretion to pay proportion only if we read such discretion in the words “ amount not to exceed “. When the announcement of this grant was made by the Prime Minister (Sir Robert Menzies) it was generally believed that anybody who saved £750 towards the construction of a house over a period of years and who qualified in respect of age and marital status would get a grant of £250. We find now, if there is reliance on the words “ not exceeding” to permit a proportionate payment, that we voted in this Senate, not for a grant of £250, but for a grant according to the discretion of the Secretary of the Department of Housing. It is left entirely to the Secretary of the Department to decide how much a person may receive and we find that the Act is not what we thought it was. The Department of Housing has issued a brochure entitled “A Grant’ For Your Home “. At page 1 3 it states -

The amount saved in any year of saving is acceptable up to £250. However, if a person saved more than £250 in a year of saving that began before 1st January, 1965. these savings may be accepted provided they are not more than three-quarters of that person’s total savings and not more than £560. The limit of £560 is approximately three-quarters of the maximum acceptable savings of £750. Suppose a person whose savings period ended on 25th September 1965 had saved £40, £60, £130 and £450 over successive years. Total savings would be £680. As three-quarters of this tola) is £510, the £450 saved in a year of saving beginning before 1st January 1965 would bc acceptable.

Suppose the total savings in one year were £450. This becomes an acceptable saving which the Government subsidises to the extent of one-third. But if the savings arc in excess of £650, or three-quarters of the total savings, the Government would not subsidise the total savings in excess of threequarters. That seems to be in contradiction of section 9 of the Act. This was referred to by the Minister for Defence (Senator Paltridge) representing the Minister for Housing, in an answer to me. The Minister said that this year was a transitional period and it was not intended to reduce the savings of any particular year. I ask the Minister to give us some information better than he has given us to far as justification for the statement, which does not appear at first blush to bc supported by the Act, that the Secretary has a discretion as to how much will bc paid.

The Minister gave as his authority section 20 (I ,) of the Homes Savings Grant Act. But as I have said, there is no discretionary power under section 20 (1.) as to the amount to be granted and the Minister has not given a satisfactory reply to the question. If there is any support for the Minister’s statement it must bc found somewhere else. If the Minister is relying on section 22 which states that the amount, of a grant “ shall not exceed an amount” let the Minister say so. Let him make it clear that this is not a guarantee of £250 to home builders but a grant at the discretion of the Secretary of the Department who may decide the amount himself if a person saves’ £750. I have not the time to give details of what is happening in South Australia. But in that State the Department is exercising a discretion as to whether it will or will not make a grant to those who have saved a certain amount. It is granting an amount in some cases and refusing a grant in others. lt will be necessary to take up these cases with the Department to ascertain why the applications were not granted.

In an endeavour to get some information on this matter, I wrote to an Adelaide newspaper and quoted the replies’ given by the Minister to Senator Prowse who had asked how many applications had been determined. At that time it was said that 156 applications in South Australia had been accepted and 11 had been rejected. When speaking on the Estimates I stated that this had had only a minor impact on the housing shortage because Commonwealth statistics showed that at that period 5,444 contract built houses had been commenced and 265 owner built houses. I have not the correct figures, but the biggest proportion of those houses would have been built by persons who would be eligible for grants under the Homes Savings Grants Act.

This was followed by a reply from Mr. Geoffrey O’Halloran Giles, the honorable member for Angas in another place. He said that my figures were misleading, as they applied only to the first week of operation of the scheme. He would be in a position to get the correct figures. He said that, as at 30th October, 661 applications had been approved in South Australia. He showed that the rate of approval in South Australia was a little above that of the other States. Mr. Giles’ letter seems to support my argument. Although the number of applications rejected by the Minister for Housing would seem to be low, correspondence 1 have received suggests that a number of applicants for grants are rejected at the counter without their filling in an application form.

The booklet issued by the Department invites people who think they are eligible to apply to the Department’s office in their own State, but when they go there and supply the necessary details they are told that it would be useless for them to apply because they would not qualify for a grant. Many would-be applicants do not apply simply because of the advice they are tendered -at the counter. It is very difficult to understand why these people would not qualify. Time will not permit me to do so now, but at some other time during the session I shall quote some specific cases and seek an explanation as to why the people concerned do not qualify. This scheme was announced with a blare of trumpets for the purpose of winning an election. When the legislation was introduced the Minister for Housing himself said: “If I was not the author I would not know what it was about “. Stringent conditions are being imposed by the Department to refuse en bloc a number of genuine applicants.

I ask the Department to consider the position of public servants in South Australia who, in Addition to paying into a

The only other point I raise at this stage is this: Has it ever occurred to the Minister for Housing that the deferred pay of Army personnel cannot be used for housing purposes under the provisions of the Homes Savings Grant Act? It is the desire of those who leave the Army to use their deferred pay for some particular benefit. Although deferred pay is not regarded at the present time as being part of acceptable savings for housing purposes, I ask that consideration be given to accepting it as such as a recognition of service with the Army, to which we are desirous of attracting men, and to enable the personnel concerned to obtain the benefit of it when they leave the Service.

Senator HENTY:
Minister for Civil Aviation · Tasmania · LP

– I am sorry that Senator Cavanagh did not indicate that he proposed to speak on the subject of housing during the first reading stage of the debate on this Bill. If he had done so, arrangements could have been made for the Minister for Defence (Senator Paltridge), who represents the Minister for Housing (Mr. Bury) in this place, to be present in the chamber to hear what was said. All I can say is that the honorable senator’s comments will be forwarded to the Minister for Housing with the request that he reply to them in due course. I repeat that if we had known that the honorable senator wanted to raise this matter we certainly would have extended him the courtesy of having the Minister for Defence in the chamber.

Senator McKENNA:
Leader of the Opposition · Tasmania

– I rise merely to indicate that the Minister for Defence (Senator Paltridge) did know of Senator Cavanagh’s intention. He was fully informed yesterday, I think.

Senator McKENNA:

– I merely want to put the record straight. The Minister for Defence was informed. I have no doubt that he was not here for a very good reason. I realise how busy he would be at this stage of the session. I could not let the occasion pass without putting the record straight.

Senator PALTRIDGE:
Minister for Defence · Western Australia · LP

– I must formally confirm what the Leader of the Opposition (Senator McKenna) has just said. I regret that other commitments prevented me from beingin the chamber when Senator Cavanagh was speaking.

Senator HENTY:
TASMANIA · LP

– I withdraw what I said. I was not aware of what had happened earlier. I am very happy to accept what has been said by Senator McKenna.

Question resolved in the affirmative.

Bill 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.

The purpose of this Bill is to amend the Act declaring’ the rates of income tax payable for the financial year 1964-65. As I stated last night when introducing the major bill to amend the Income Tax Assessment Act, some provisions of that Bill relating to certain income of superannuation funds are to be effective as from 23rd October 1964. These provisions relate to income of superannuation funds derived from dividends from private companies or from transactions with a person with whom the fund is not dealing at arm’s length. As I have already explained in my remarks on the Bill to amend the Income Tax Assessment Act, where income of these kinds is not exempt from tax it is to bear a rate of 10s. in the £1. This rate is to apply to each £1 of the income irrespective of the net amount that is derived.

This Bill formally declares the rate of tax payable for the financial year 1964- 65 on such income of superannuation funds that is derived in the period of that year, commencing on 23rd October 1964. More detailed explanations are provided in an explanatory memorandum made available to honorable senators. I now commend the Bill to the Senate.

Question resolved in the affirmative.

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

page 1653

INCOME TAX (INTERNATIONAL AGREEMENTS) BILL 1964

Second Reading

Consideration resumed from 10th November (vide page 1575), on motion by Senator Henty -

That the Bill bc now read a second time.

Question resolved in the affirmative.

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

page 1653

PAPUA AND NEW GUINEA BILL 1964

Second Reading

Consideration resumed from 10th November (vide page 1576), on motion by Senator Gorton -

That the Bill bc now read a second time.

Question resolved in the affirmative.

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

page 1653

EXPORT PAYMENTS INSURANCE CORPORATION BILL 1964

Second Reading

Debate resumed (vide page 1603).

Senator KENNELLY:
Victoria

– The Bill before the Senate is designed to make a number of amendments to the existing legislation which governs the ac tivities of the Export Payments Insurance Incorporation. I suppose the main amendments are those which give the Corporation power to issue guarantees of payments to banks and other lending institutions, and to provide finance for certain types of export transactions. The amendments also increase the maximum contingent liability which the corporation may assume from £50 million to £75 million. The Opposition supports the Bill.

It is well known that the Corporation is concerned with insuring risks which are not normally taken up by private insurance companies. The risks relate to various matters, among which is the non-payment by overseas buyers of amounts due to Australian exporters. The problem of nonpayments can arise from a variety of factors, apart from commercial failure, and can include such matters as currency restrictions, political upsets and any other disturbance in the country of the purchaser of the goods that could militate against payments to the exporter in this country. It is rather remarkable that the Corporation has had such success. One wonders why private industry has not entered this field. I wonder whether the Government would care to foster a two insurance company policy, as it fosters a two airline policy.

Senator Henty:

– Would the honorable senator like to be co-ordinator?

Senator KENNELLY:

– I think I could do a very fair job, if I were put to it. It is rather interesting to me that the Government has not received representations from private industry to curtail the activities of the corporation. I have read the report of the corporation. It is not only satisfactory to me, but it must also be very satisfactory to the Government and to Australian exporters that it has over the years reduced its premiums and by that means encouraged the export of goods to countries in circumstances where the risks may have been thought to have been great. I understand that private insurance companies have not similarly reduced their premiums.

In its 1963-64 report the Corporation announced a reduction in its rates from ils. 9d. to 9s. 2d. per £100 worth of goods. insured on a short term basis. For this year it has also anounced a further reduction of 10 per cent.

Senator Wright:

– Can the honorable senator give the Senate any information about its loss ratio?

Senator KENNELLY:

– I have not the report with me. I read it, but it would be wrong for me to make a guess about that matter without having the report before me. As 1 said earlier, the report states that since 1959 the Corporation has introduced four new types of policies, it has modified three existing types to meet the special needs of exporters, it has reduced the average short term rates from lis. 9d. to 7s. per £100, and it has increased the cover for political risks. This shows what can be done by an organisation that operates efficiently and solely in the national interest. What is remarkable is the fact that it can provide insurance at a cheaper rate than would apply if this class of insurance were covered by private insurance companies.

Another amendment envisaged in the Bill is one to increase the maximum liability to £75 million. It is interesting to note that when the Corporation was established the maximum liability was fixed at £25 million; in 1959 it was increased to £50 million; and now, as I have stated, it is to be increased to £75 million. Again referring to the annual report of the Corporation we can see the large increase which has taken place in the value of the business carried out by the Corporation. For example, in the last year of operation, additional business of £19.3 million was secured, which brought the total volume of turnover to £63.7 million, although the maximum contingent liability under these policies was £33.3 million. The Minister for Civil Aviation (Senator Henty) in his second reading speech said -

E.P.I.C. has made outstanding progress. in this field and has now firmly established itself on the export scene. In 1957-58, its first full year of operation, E.P.I.C. insured some £11 million of exports for v3 policy holders. In 1963-64, six years later, E.P.I.C. insured some £64 million of exports for 436 policy holders.

That statement clearly shows the use that exporters have made of the Corporation.

There is no doubt that it is playing an important role in gaining export markets for this nation. One could rightly assume that if the business of the Corporation is to expand in the future - and let us hope that it will because it helps this country greatly to increase the volume of exports - it will not be long before we will have another bill before the Senate to raise the maximum liability of the Corporation.

I was somewhat chary of this legislation when it was originally introduced, although we gave it our blessing. Because private industry would not touch the insurance, I said: “What does this mean?”. But as in Great Britain, where legislation of this kind originated, the establishment of the Corporation has helped our export trade. Let us hope that the Government extends the Corporation’s powers so that at some future date it can handle other insurance in which private insurance companies are not interested. Of course, that raises the question: By what means can the Corporation accept new business? Must it consult any organisation before it can accept the business of an exporter? If anyone comes along to the Corporation and wants to insure his exports, is the Corporation entitled to accept that business although its officials may consider that it was not originally intended to cover that type of risk?

There is a further provision in the Bill which gives the Corporation the right to pay a certain salary to its officials without referring the matter to the Minister. The amount involved is £3,500. The officers of the Corporation will be able to fix their own remuneration. One wonders whether they will meet the criticism which has been voiced in other circumstances.

I think that everyone must congratulate the originator of the Corporation. Whilst it may. bc said that the idea was copied from Great Britain, the Minister for Trade and Industry (Mr. McEwen) is entitled to acept the credit for originating the Corporation. It has proved to be a success. By the amount of coverage it has provided, it has helped our overseas balances. We wish the Bill a speedy passage.

Senator HENTY:
Minister for Civil Aviation · Tasmania · LP

– I want to say only one thing and I am sure that Senator Kennelly will be interested to have this information. In 1963-64, 32,763 claims were made. Business written in that year was to the value of £63.7 million. The loss ratio was about 0.05 per cent.

Question resolved in the affirmative.

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

page 1655

COMMONWEALTH EMPLOYEES’ COMPENSATION BILL 1964

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 Bil] be now read a second time.

The purpose of this Bill is to increase the monetary benefits provided by the Commonwealth Employees’ Compensation Act 1930-1.962 and introduce a new form of benefit in respect of the dependent children under 16 years of age of a Commonwealth employee whose death is due to a com.pensatable injury or disease, thereby further increasing the total compensation that is paid in the tragic circumstances of a widow being left with young children. In determining the new rates of compensation for Commonwealth employees set out in the Bill, the Government has had regard to the changes that have occurred since the existing rates were fixed in 1959.

The increased benefits provided by the Bill include benefits payable upon death. The Act at present provides a basic lump sum benefit for the dependants of a deceased Commonwealth employee of £3,000. Under the Bill that amount is increased to £4,300, a figure which compares favorably with the various State provisions.

The Act also provides for an addition of £100 to the lump sum benefit in respect of each dependent child under the age of 16 years. Because the Act has imposed an obligation on the Commissioner for Employees’ Compensation to determine the manner of payment of the lump sum for the benefit of the persons entitled, portion of it has been invested, in these circumstances, to enable trustees to make weekly payments for each child until the age of 16. Although a weekly payment of £1 2s. 6d. is provided for each child of an incapacitated employee, an amount much greater than £100 would have to be set aside out of the total lump sum payable on death to provide a weekly payment of £1 2s. 6d. Obviously, this capital sum will vary with the age of the child and, for several young children, it would represent a very substantial part of the total lump sum benefit. The Government therefore decided that, in future, the lump sum of £4,300 should be supplemented by the same weekly payments that are made for the children of an incapacitated employee in substitution for the existing additional lump sums of £100. This will provide a considerable increase in the cash benefits for the widow who is left with a young family of children. At the same time, in order that no one will be disadvantaged by the change, for example with a child who is approaching the age of 16, the Bill also provides that the weekly payment shall be subject to a minimum total payment of £100 Ibr each child.

I come now to the proposals in respect of lump sum benefits for specified injuries. The present maximum lump sum benefit is increased by the Bill from £3,000 to £4,300, consistently with the movement in the death benefit, with proportionate increases for other specified injuries.

The Act prescribes a maximum amount of compensation which may be paid in respect of any one accident to an employee who is not totally and permanently incapacitated. In accordance with past practice, the Bill also increases the existing maximum from £3,000 to £4,300.

In reviewing the rates of weekly payment, on this occasion the Government has decided that the rate of total weekly payment for a married employee with one child should be £15 8s. per week which is equivalent to the current six capitals Federal basic wage. The amount payable to a single employee is fixed by the Bill at £11 lis. per week, or 75 per cent, of the basic wage figure of £15 8s. per week and represents an increase of £1 lis. on the existing rate of £10 per week. The balance of £3 17s. per week payable to a married employee with one child will represent £2 14s. 6d. per week for the wife and the existing rate of £1 2s. 6d. per week for a dependent child under 16 years of age. The new rate of weekly payment for a minor will be £8 13s. 3d., representing 75 per cent, of the rate applicable to an unmarried adult employee.

I come now to the minimum payment in respect of death where certain payments have been made to the employee before death. The Act provides that, subject to a specified minimum payment, currently £400, the lump sum payable upon the death of an employee shall be reduced by the amount by which any lump sum paid to him before his death exceeds the total of all weekly payments which would have been payable had he continued to receive weekly payments until his death. The minimum payment figure is seldom applied but, as it has not been varied since 1954, it is increased by the Bill to £700.

The Bill increases from £350 to £500 the aggregate of medical expenses and associated ambulance and travelling expenses which may be paid on their own responsibility by delegates in departments throughout the Commonwealth and without the need for review by the Commissioner for Employees’ Compensation. The discretionary power provided in the Act for additional payments over and above the £500 limit will be maintained.

In conclusion, I wish to say that, arising out of various suggestions that have been made from time to time both in the Senate and in another place, in representations to the Treasurer (Mr. Harold Holt), and from experience in the administration of the Act, the Treasurer has under consideration a number of administrative amendments to the legislation. Unfortunately it has not been possible, as was hoped, to complete - consideration of these matters in sufficient time for their inclusion in this Bill. These further amendments cannot now be introduced in this sessional period but the Government did not wish to delay for that reason the introduction of these new monetary rates of compensation which were announced in the Budget Speech. I commend the Bill to honorable senators.

Debate (on motion by Senator McKenna) adjourned.

page 1656

SEAMEN’S COMPENSATION BILL 1964

Bill received from the House of Representatives.

Standing Orders suspended.

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

Second Reading

Senator PALTRIDGE:
Minister for Defence · Western Australia · LP

– I move -

That the Bill be now read a second lime.

We have before us a Bill to amend the Seamen’s Compensation Act to provide for increases in rates of compensation for seamen for injuries and illnesses arising out of their employment. The increases are similar to those proposed for Commonwealth employees under the Commonwealth Employees’ Compensation Act, as it is customary to maintain, as far as possible, uniformity in the monetary benefits payable under the two Acts.

The main basic increase under the Bill is an increase from £3,000 to £4,300 in the maximum amount of compensation payable in respect of any injury or injuries caused by any one accident, except where injury results in death or total and permanent incapacity. It is proposed to increase proportionately the amounts payable for the various injuries specified in the Third Schedule to the Act together with appropriate increases in the various weekly rates payable during incapacity in respect of a seaman and his dependants. The limit of £350 now placed on the amount an employer may be required to- pay for medical treatment and ambulance services in respect of an injury to a seaman, is to be increased to £500 except where, in special circumstances, the Minister for Shipping and Transport considers the payment of a larger sum to be warranted. I believe this to be a very desirable Bill and that it merits, and will receive, the full approval of the Senate.

Debate (on motion by Senator McKenna) adjourned.

page 1657

SALARIES (STATUTORY OFFICES) ADJUSTMENT BILL (No. 2) 1964

Bill received from the House of Representatives.

Standing Orders suspended.

Mill (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.

The purpose of this Bill is to provide for increased salaries for the occupants of the statutory offices of Public Service Arbitrator, Senior Commissioner, Commissioners and Conciliators of the Commonwealth Conciliation and Arbitration Commission and the Chairmen and Members of the Taxation Boards of Review. The new salaries will be effective from’ 1st November 1964. On 28th October 1964 in the second reading speech on the Bill leading to the Salaries (Statutory Offices) Adjustment Act 1964 the Minister for Defence (Senator Paltridge) said -

The salaries for the remainder of the offices not within the jurisdiction of the Public Service Board will he individually reviewed by the Government and the appropriate increases applied as from 1st November 1964. Because the salaries are pro vided from special appropriations, legislation covering the offices of the Public Service Arbitrator, the Senior Commissioner, Commissioners and Conciliators of the Commonwealth Conciliation and Arbitration Commission and the Chairmen and Members of the Taxation Boards of Review, with effect from 1st November in each instance, will be introduced before the end of the present session of Parliament.

The reasons which led the Government to determine the new salary levels for Permanent Heads and holders of statutory offices were traversed in that second reading speech and appear at page 1390 of the “ Parliamentary Debates “. The effect of the Bill is to increase as indicated the salaries of the holders of the statutory offices appearing in the First Schedule. As to the Chairmen and Members of the Taxation Boards of Review, the effect of the proposed amendment will be to provide a salary of £6,250 for each of the three Chairmen and a salary of £5,400 for each of tha six Members. I commend the Bill to the Senate.

Debate (on motion by Senator Cohen) adjourned.

page 1657

APPROPRIATION BILL (No. 2) 1964

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.

In the course of his speech on 28th October, the Prime Minister (Sir Robert Menzies) informed the House of the Government’s decision to increase, with effect from 1st November 1964, the salaries of Permanent Heads. This Bill provides an appropriation for that purpose and amends the salaries for First Division officers of the Commonwealth Public Service -that are shown in the Schedule to the Appropriation Act 1964-65. I commend the Bill to the Senate.

Debate (on motion by Senator McKenna) adjourned.

page 1658

AUSTRALIAN CAPITAL TERRITORY SUPREME COURT BILL 1964

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 main provision in this Bill ensures an appropriate right of appeal to persons who, after pleading guilty to criminal charges before a magistrate in the Australian Capital Territory, come before the Supreme Court on the committal for sentence procedure, and are sentenced by that Court. The Act presently provides for appeal to the High Court by “ a person convicted on indictment before the Supreme Court “, and leave of the High Court is necessary where a person so convicted seeks to appeal only against sentence. The High Court recently held that a person sentenced by the Supreme Court after plea of guilty and committal for sentence was not “ a person convicted on indictment”, and that therefore the High Court had no jurisdiction to entertain his appeal. Since this decision, the Attorney-General has adopted an interim practice of signing ex officio indictments in cases of committal for sentence. This ensures that, even though there is a plea of guilty, there is a conviction on indictment which is appealable. This Bill will provide a permanent remedy by operating directly to preserve the appeal rights in cases where there is no indictment at all because the ordinary committal for sentence procedure is used following a plea of guilty.

Also in the Bill is a provision to put beyond doubt that the judges of the Sup reme Court of the Australian Capital Territory may hold judicial appointments in other Territories without affecting the validity of their Australian Capital Territory commissions. The Supreme Court Act at present deals with the position so far as the “ permanent “ judge is concerned but not the “additional” judges. The Bill before the Senate closes that gap. It also brings the relevant section - 8a - up to date in another respect by omitting its existing provisions that a judge may hold the office of Judge Advocate-General of a part of the defence force and that he may hold other non-judicial office, not being an office of profit, with the approval of the Governor-General. In recent times a judge has not held the appointment of judge Advocate-General and it is probably undesirable that he should do so because it is not a judicial appointment. Regarding a judge holding other non-judicial office, the Acts creating other Federal and Territory courts do hot contain provisions permitting it, and it would be consistent to omit provision in the Australian Capital Territory also.

The remaining matter dealt with in the Bill is the matter of appointment of court officials such as the Registrar, Deputy Registrar, and the Sheriff. There is need to permit the appointment of additional deputy registrars and of deputy sheriffs. The Bill provides for this. It also provides that all court officials will in future be appointed by the Attorney-General instead of by the Governor-General. The Attorney-General appoints court officials in the Northern Territory, and there seems to be no reason why the Governor-General should be required to appoint them in the Australian Capital Territory. I commend the Bill.

Debate (on motion by Senator Cohen) adjourned.

page 1658

CRIMES (OVERSEAS) BILL 1964

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

.- 4 move -

That the Bill be now read a second time.

This Bill has been made necessary by certain arrangements entered into by the Commonwealth Government with the United Nations with regard to Australian members of the United Nations Force in Cyprus. The immediate purpose of the Bill is to give effect to these arrangements; as 1 shall explain presently, the Bill goes beyond this immediate purpose.

When the United Nations commenced its peacekeeping operations in Cyprus earlier this year it sought police from a number of member nations to fill roles which the Commander of the United Nations Force thought would be better filled by civilian police. Australia was asked to supply 40 policemen. The Commonwealth agreed to do so, and with the ready assistance of the States a contingent of 40 Australian policemen was provided. The contingent arrived in Cyprus on 25th May 1964, only three weeks after , the request was received. This was a unique venture; it was the first time police from all States, from the Australian Capital Territory and the Northern Territory and from the Commonwealth Police, had joined together in an enterprise of this kind.

The Australian police have acquitted themselves ably in Cyprus, and they have been well received by both Greek and Turkish communities. Their duties have included accompanying local police at vehicle check points; observation of searches by local police at road blocks; manning United Nations posts in sensitive areas; street patrols in towns and villages in sensitive areas; dealing with missing persons and other duties of a police nature. They are in constant liaison with the local Greek and Turkish Cypriot police. As well as Australians, there are police from Austria, Denmark, New Zealand and Sweden in the United Nations Force.

The United Nations concluded a status of forces agreement with the Republic of Cyprus. This regulates the presence in Cyprus of the United Nations Force. Under this agreement members of the Force are not to be subject to the criminal jurisdiction of the Cypriot courts, whether in respect of matters arising during the course of their duty or during off-duty periods. Honorable senators will be familiar with this kind of agreement. They will recall that Australia concluded a status of forces agreement with the United States some little time ago in respect of United States personnel in Australia and legal effect was given to this by the Defence (Visiting Forces) Act passed by the Parliament last year. The Government of Cyprus has acted to give effect to its agreement with the United Nations, and in doing so has, of course, made substantial concessions in favour of the visiting force.

The consequence is that there exists what might be aptly termed a legal vacuum with respect to Australian police who are members of the United Nations Force in Cyprus. They are not subject to the criminal jurisdictions of the Cypriot courts; in the absence of special Australian legislation they are not subject to the jurisdiction of Australian courts. In agreeing to meet the United Nations request for police for Cyprus we undertook that we would ensure that our nationals were subject to the jurisdiction of Australian courts in respect of any offences which they might commit while in Cyprus. The immediate purpose of this Bill is, as I have said, to give effect to this undertaking. We are dealing with the reverse position to that with which wc were concerned last year in passing the Defence (Visiting Forces) Act; here we have to provide for the exercise of jurisdiction over Australians serving abroad.

But the Bill also has a wider purpose. When the Government came to consider the legislation necessary to give effect to our undertaking in relation to Cyprus, we thought it desirable to provide for the possibility of future ventures of this kind. Honorable senators will notice, therefore, that the Bill makes no reference to Cyprus; it is drawn in quite general terms to apply in respect of any Australian civilians serving overseas, whether as police or in other capacities, as part of a United Nations Force in respect of which there is a status of forces agreement exempting members of the Force from the criminal jurisdiction of the courts of the country in which they are serving.

The Bill, it will be noted, is not concerned with members of the defence force. The laws applying to members of the defence force serving abroad are already of a kind that would enable us to take advantage of status of forces agreements of the kind I have been discussing. Honorable senators will see, therefore, that members of the defence force are excluded from the definition of “person to whom this Act applies “ in clause 3 of the Bill.

There are two more things which should be said by way of a general introduction to the Bill. The first is that we would hope, and indeed expect, that Australian civilians serving with a United Nations force would conduct themselves with dignity and responsibility. The Bill is not brought forward in any sense of expectation that resort will have to be made to its provisions. But it is necessary, as honorable senators will realise, that we on our part should have done all that is required to meet the concessions already made by the Cypriot Government and to give effect to our undertaking to the United Nations. The second thing I want to say is that if there is some transgression by an Australian serving overseas in the circumstances to which the Bill relates, the person concerned will have the very real safeguard of trial in an Australian court in the same way as if the act or omission occurred in Australia.

Broadly, what the Bill does is to make it an offence for a person to whom it applies to do anything in the place in which he is serving which would be an offence if it were done in the Australian Capital Territory. Although, as in the present case, it is likely that Australian members of the forces would be drawn from different States, it is for obvious reasons necessary to apply a single law, and the law of the Australian Capital Territory has been selected for this purpose, as it was in (he Crimes (Aircraft) Act passed by the Parliament last year.

The Bill provides for an offender to be returned to Australia and there charged with an offence. It further provides that the law of the State or Territory where a person is charged with an offence shall apply in respect of matters such as bail, and in respect of proceedings brought against that person. Jurisdication to deal with offences is conferred on the courts of the States and’ Territories. The intention is that an offender would, as far as practicable, be charged and dealt with in his own State or Territory. This concludes my survey of the Bill. I am pleased to commend it to the Senate.

Debate (on motion by Senator Poke) adjourned.

page 1660

REPATRIATION BILL (No. 2) 1964

Bill received from the House of Representatives.

Standing Orders suspended.

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

Second Reading

Senator ANDERSON:
Minister for Customs and Excise · New South Wales · LP

– I move -

That the Bill be now read a second time.

The purpose of this Bill and of those associated with it is to give effect to a number of desirable machinery changes in the repatriation legislation. In addition, arising from recent legal advisings and administrative difficulties in relation to medical treatment which has long been provided foc non-war-caused . disabilities, appropriate amendments are being made to section 124 of the Repatriation Act which authorises the making of regulations. The amendments proposed continue the Government’s practice of making adjustments to legislation in the interests of ex-servicemen and their dependants as the need for adjustments is brought to notice in the normal course of administration. Details of the proposals follow. ,

Appeals to War Pensions Assessment Appeal Tribunals may be made where pension is granted but the pensioner is not satisfied with the rate of pension allowed, or where a disability is accepted as due to war service but in the opinion of the Repatriation Board or the Repatriation Commission the degree of incapacity does not warrant a pension assessment. In the former category, the tribunal, if it allows the appeal, can give effect to the increase from the same date as the commencement of the pension assessment appealed against; that is, three months before the lodgment of the claim. In the latter category, the earliest date it can fix is six months prior to the date of lodgment of the appeal, and, because of the time taken to process claims, it happens in some cases that this is later than the date the Board or Commission could have fixed. The amendment proposed to section 78 will remove this anomaly.

The second proposal concerns the treatment of medical sustenance for service pension purposes. Medical sustenance is paid where a war pensioner or claimant is prevented from working because of the necessity for treatment of an accepted disability, or while he is undergoing medical investigation in connection with a war pension claim. Sustenance is regarded as income in assessing a service pension under the Repatriation Act, and its payment therefore leads to pension adjustments. Because sustenance is paid for relatively short periods, the adjustments to pension are temporary, but can involve reduction or even suspension or cancellation of the service pension. These temporary adjustments cause a good deal’ of administrative inconvenience, and, moreover, cancellation or suspension of the service pension can result in temporary loss of eligibility for associated medical and- other Commonwealth benefits and for other benefits provided for these pensioners from public and private sources. The- Bill therefore provides that, for service pension purposes, medical sustenance will not be regarded as income. Passage of this legislation will enable any necessary adjustment in total payment to be made to the sustenance allowance instead of to the service pension.

The Repatriation Act does not define the term “step-child”. It has hitherto been thought that the expression includes only the child of a former marriage dissolved by death. Legal advice however, is that the expression may include the child of a marriage dissolved- otherwise than by death - for example, by divorce. In principle it seems that a war pension should not be paid in the latter case unless the step-parent “member” has accepted responsibility for the child’s maintenance, or unless, after the member’s death, his widow has accepted that responsibility. The Bill will insert a definition of “step-child” Which will give effect to this principle.

There have always been provisions in the Repatriation Act and in associated legislation which require the amount of war pension payable under the law of another part of the Queen’s Dominions to be taken into account in assessing the rate of Australian war pension payable. As a result of some countries ceasing to be part of the Queen’s Dominions, war pension payable by those countries will no longer be taken into account unless an appropriate change is made in the relevant legislation. The present Bill will make this change.

Three changes are being made in service pension, provisions. The first will remove the present means test as to the child’s own means in the case of the first or only child of a service pensioner if he is in the custody of his parents. This will bring the service pension provision into line in this regard with the comparable provision for child’s allowance payable under the Social Services Act to the wife of an invalid pensioner who has custody of a child. The position of a child not in its parents’ custody will remain unaltered. A further amendment will remove any doubt regarding eligibility for payment of the higher rate of 15s. per week service pension to a younger child where the pension of an older child ceases and, in such a case, for payment of the lower rate of 2s. 6d. per week to any younger children not exceeding three in number. The third amendment in the service pension area relates to payment of service pension during the temporary absence overseas of the pensioner. Under the Repatriation Act a service pension may be continued during the temporary absence of the pensioner from Australia for a period of up to six months irrespective of which country the pensioner visits. Under the Social Services Act, a social service pension may, in similar circumstances, be continued generally for a period of up to 12 weeks. However, in consequence of reciprocal arrangements with the United Kingdom and New Zealand, social service pensioners visiting those countries may have their pensions continued for an indefinite period.

The Repatriation Act is being amended to enable the Commission to extend the period of payment for visitors to the United Kingdom and New Zealand, on the lines of the arrangements for social service pensioners, while retaining the existing policy of six months limitation for visitors to other countries.

Under the repatriation regulations, medical treatment may be provided for the widows of deceased members of the forces as well as for certain other dependants. In consequence of a recent legal advising, it appears that there may be some doubt about whether this provision in the regulations is sustained by the regulation making power in section 124 of the Repatriation Act as it presently stands. An amendment to section 124 included in this Bill will put ths matter beyond doubt.

The Repatriation regulations also authorise medical treatment for disabilities not due to war service for certain ex-servicemen who are. seriously disabled as a result of war service, for war nurses of 1914-18 war and for member service pensioners. Regulations in force since 19.43 have authorised the Commission to recover the cost of such treatment where the patient has a right of recovery against some other person by way of damages or compensation. Doubts have recently been expressed about whether the regulation making power authorises the provisions for charge and recovery in these cases and there have been difficulties in proving the cost of treatment where this has been disputed. The opportunity is therefore being taken in this Bill to confirm that the regulations may provide for the recovery of the cost of treatment insuch cases and that the regulations may authorise an appropriate scale of charges in these circumstances.

Certain of the amendments I have mentioned will also need to be applied to other repatriation legislation. The Bills accompanying this measure give effect to these requirements. They are the Interim Forces Benefits Bill, the Repatriation (Far East Strategic Reserve) Bill and the Repatriation (Special Overseas Service) Bill. In the case of the Repatriation (Far East Strategic Reserve) Bill, the opportunity is being taken to insert a provision validating certain payments under that Act which were made prior to the making of the regulations. As I have indicated, the Bills make a number of changes in the interests of the welfare of ex-servicemen and of commonsense administration and I commend them to the Senate. This second reading speech also covers the Interim Forces Benefits Bill, the Repatriation (Far East Strategic Reserve) Bill and the Repatriation (Special Overseas Service) Bill and I suggest that the second reading debate on these Bills be made concurrently.

Debate (on motion by Senator Hendrickson) adjourned.

page 1662

INTERIMFORCESBENEFITS BILL1964

Bill received from the House of. Repre sentatives.

Standing Orders suspended.

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

Second Reading

Motion (by Senator Anderson ) pro posed -

That the Bill be now read a second time.

Debate (on motion by Senator Hendrickson) adjourned.

page 1663

REPATRIATION (FAR EAST STRATEGIC RESERVE) BILL 1964

Bill received from the House of Representatives.

Standing Orders suspended.

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

Second Reading

Motion (by Senator Anderson) proposed -

That the Bill be now read a second time.

Debate (on motion by Senator Hendrickson) adjourned.

page 1663

REPATRIATION (SPECIAL OVERSEAS SERVICE) BILL 1964

Bill received from the House of Representatives.

Standing Orders suspended.

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

Second Reading

Motion (by Senator Anderson) proposed -

That the Bill be now read a second time.

Debate (on motion by Senator Hendrickson) adjourned.

page 1663

SEAMEN’S WAR PENSIONS AND ALLOWANCES BILL (No. 2) 1964

Bill received from the House of Representatives.

Standing Orders suspended.

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

Second Reading

Senator ANDERSON:
Minister for Customs and Excise · New South Wales · LP

.- I move-

That the Bill be now read a second time.

During the debate in the Senate in September last on the Seamen’s War Pensions and Allowances Bill 1964, my colleague the Minister for Defence (Senator Paltridge) indicated that the Act would be amended a second time during this session of Parliament. This is the Bill now before us for consideration. The purposes of the Bill are twofold. It makes certain administrative adjustments to the existing Act which are covered in clauses 3 to 5, and clause 6 provides an additional benefit of medical treatment at Commonwealth expenses to certain mariner pensioners.

It has been found to be necessary in the light of recent legal advice to insert in the Act a definition of step-son and stepdaughter and this is covered by clause 3. The definition will ensure that for the purposes of the Act “ step-child “ will be confined to a step-child of a mariner where the previous marriage of the mariner’s spouse has been dissolved by death, or otherwise than by death and the child is in the custody, care and control of the mariner, or is being maintained by him, or in the case of his death was in his custody, care and control or was being maintained by him at the time of his death, or after his death is in the care, custody and control of his widow. Appropriate wording is included to cover cases where the mariner is a female. Clause 4 ensures that in cases where the marriage of a pensioner under the Act is dissolved otherwise than by death, the wife of the pensioner ceases to be eligible for payment of pension uder the Act.

Section 53a of the Act requires that where a mariner or any of his dependants is entitled to receive a war pension, etc., under the law of another part of the Queen’s dominions the amount involved is to bc taken into account in assessing the rate of war pension, etc. payable under this Act. Clause 5 amends the Act to provide that such amounts should continue to be taken into- account where the country concerned ceases to bc a part of the dominions of the Crown, so that there will not be the advantage in such cases of such payments not being taken into account in the assessment of entitlement under the Act.

Clause 6 proposes the provision of medical, hospital and surgical benefits at Commonwealth expense for illnesses suffered by mariner pensioners who are receiving the full general, 100 per cent., rate pension, or a higher rate of pension, where such illnesses are not directly attributable to war injury, to the same extent as is now provided to ex-servicemen. It also inserts a power authorising the recovery of the cost of medical treatment for disabilities not due to war service for certain classes of seriously disabled mariners where the mariner has a right of recovery against some other person by way of damages or compensation. As well as effecting minor administrative amendments the amendment will provide substantial medical benefits for seriously disabled mariner pensioners. I commend the Bill to all honorable senators.

Debate (on motion by Senator McKenna) adjourned.

page 1664

CELLULOSE ACETATE FLAKE BOUNTY BILL (No. 2) 1964

Bill received from the House of Representatives.

Standing Orders suspended.

Bil] (on motion by Senator Anderson) read a first time.

Second Reading

Senator ANDERSON:
Minister for Customs and Excise · New South Wales · LP

– I move -

That the Bill be now read a second time.

It is proposed to extend the operation of the Cellulose Acetate Flake Bounty Act 1956-1964, under which bounty will cease to be payable after 31st December 1964, for a further maximum period of three months to 31st March 1965. The purpose of the Bill is to implement this proposal.

The Tariff Board is at present reviewing the industry and is investigating the question of what assistance should be afforded the production and sale of cellulose acetate flake and related products. The current Act has already been extended for a period of six months to 31st December 1964 pending the completion of the Board’s report, but it still appears unlikely that the report will be received by the Government in time to study and act upon it before the expiry of the extended Act. The delay in finalising the Board’s report has been due largely to the wide scope of the reference. The Board completed its public inquiries in this matter in April 1964.

This Bill extends the current cellulose acetate flake bounty legislation for a further period of three months to 31st March 1965 or to a date to be proclaimed, such date to be not later that 31st March 1965 and not earlier than the date of proclamation. This action is being taken in order to allow sufficient time for the Government to receive, to consider and to take appropriate action on the Tariff Board’s report, and meanwhile to maintain the present level of assistance to the industry. I commend the Bill to honorable senators.

Debate (on motion by Senator Drury) adjourned.

Sitting suspended from 11.29 p.m. to 12.5 a.m.

Thursday, 12th November 1964.

page 1665

MEAT INSPECTION ARRANGEMENTS BILL 1964

Second Reading

Debate resumed (vide page 1604).

Senator COOKE:
Western Australia

– The Opposition notes that the purpose of this Bill is to enable the Commonwealth Government to enter into an arrangement with a State or State meat authorities to enable Commonwealth meat inspectors to undertake the inspection of meat for consumption in Australia. It would appear that this Bill has been introduced to satisfy the desire of South Australia to have its meat inspectors under the control of the Commonwealth Government: Many factors point to this being a most satisfactory arrangement. Up to the present time co-operation has been good. Commonwealth meat inspectors and State meat inspectors have co-operated, and from that point of view a good job has been done with a degree of overlapping.

Although it may not be effected by this Bill, as an individual I should like, after the qualities of meat have been determined by a meat inspection, for knowledge of. those qualities to be passed on to the person who may consume the meat. In the presentation of the meat for sale the quality of the meat as determined by the inspector - whether he be Federal or State - might be marked and offered for sale to the consumer with the quality and standard thereon. This is a matter to which the Government could pay attention at some future date.

Is the Minister in a position to indicate to the Senate the attitude of the other States to this legislation? Is there any objection to it, any difficulties, or any obstacles to be overcome in establishing a uniform method of meat inspection under the Commonwealth Government? Is there any reason why Western Australia, Victoria, New South Wales and Queensland could not enter into such an arrangement with the Commonwealth Government,, particularly as the Minister has . referred to the need to satisfy the requirements of the American market? The Minister said that one of the import conditions applied by the American authorities was, to quote his words, that “ the control of meat inspection must be under a service organised and administered by the National Government “. If this is the position, why does not this meat inspection service to be provided by the Commonwealth apply to the other States? My colleague, Senator Drury, has had discussions about this matter with the parties affected in South Australia and he will place before the Senate the South Australian view of this legislation. I am sure he will do this capably. However, a few other factors might be taken into consideration, and I think the Senate has a reasonable right to request that the Minister provide information to honorable senators.

I understand that there are about 690 Commonwealth meat inspectors and that into their ranks will be taken the permanent and temporary meat inspectors of South Australia. If this scheme is agreed to by the other States it will ultimately lead to the absorption of all State meat inspectors. In Western Australia health inspection comes into the matter of meat inspection, and veterinary officers are also involved. Quite a few of those concerned are permanent officers, but there are several temporary officers concerned with meat inspections, particularly those employed by local government authorities and others.

Although the Bill may have been discussed in the South Australian Parliament, apparently it is not satisfactory to the majority of the States because, at this stage, most States have not elected to come within its provisions. If it is necessary to remove an impediment to the legislation, I think the Senate should know about it so that there may be set up an effective system of meat inspection to conform to the requirements of overseas trade, and to maintain a uniform standard of inspection of meat for home consumption. As the Commonwealth has gone so far as to draft this legislation, it should endeavour to arrange for a complete Commonwealth inspection, or should allow the States to agree upon a coordinated standard between themselves.

Quite a few conditions in relation to officers affected by the legislation are contained in the Bill’ before us. It provides for the appointment as Commonwealth employees of persons who at present are operating as State inspectors, permanent or temporary, in South Australia. It seems that the Commonwealth Government has given a fair amount of consideration to this aspect. I would like the Minister to inform the Senate whether South Australian temporary employees who enter the Commonwealth service will carry their seniority with them. I should also like to know whether they will be provided with housing, if they are required to shift their place of residence to take up employment with the Commonwealth. Perhaps the Minister could also inform the Senate whether they will be engaged on a permanent basis in the Commonwealth service and thus be entitled to the superannuation benefits that apply to Commonwealth public servants. If these mcn are not to be employed as permanent public servants, will the Minister inform the Senate whether they are to bc offered a contract of service which will ensure for them continuity of employment? Details of the basis upon which seniority is to be fixed would also be appreciated.

I refer now to clause 9 (2.), which states -

Where the eligibility ot a person for the grant of leave of absence for recreation is for a number of days in excess of thirty, such number of those days as exceeds thirty shall be disregarded for the purposes of the last preceding sub-section.

I would like to know whether the State Government has agreed to allow the men who wish to transfer to the Commonwealth to clear any leave that may have been accumulated, or to pay the men in lieu of allowing them to take such leave. I should also like to know what is to happen in respect of superannuation. Are the men to enjoy superannuation coverage equal to that which applied to them in State employment? If not, is compensation by way of a lump sum to be offered to the men and are they to make a fresh start by contributing to the Commonwealth scheme? Alternatively, is the Commonwealth prepared to accept the responsibility of offering superannuation and compensation rights equal to those enjoyed by the men in State employment? I understand that the men are covered by an insurance scheme to which employees and employers contribute. I would like to know the extent to which the Government thinks it will be able to operate its scheme, having in mind that some States have indicated that they will have nothing to do with it. In these circumstances docs the Government envisage that it will obtain uniformity in relation to this matter of Commonwealth inspection of meat?

Senator CORMACK:
Victoria

– I know that honorable senators may tend to be irritated at this early hour in the morning when we have a vast stock of bills on the slips.

Senator Wright:

– I do not think the honorable senator is entitled to reflect on the equanimity of the chamber.

Senator CORMACK:

– I thank Senator Wright for his reminder. While waiting to return to the Senate after the suspension for supper I was thinking about the origin of these late sittings and the way in which bills about which the Government may feel sensitive from time to time always seem to pile up. I think it is probably a tradition inherited from the House of Commons where the government of the day would wait until reports began to seep in from the shires and the country indicating that conditions for hunting were good and that the foxes were getting good thick coats. At about that time members would get itchy feet and proceed to drift away until such time as the Government could get its bills through without difficulty.

The Leader of the Government (Senator Paltridge) reminds me by the determination with which he is bringing in these bills tonight that he has an historical precedent for his action. I think he is behaving like an 18th century Prime Minister. However, all that is by the way. I must turn my attention to the Bill.

I suggest that it is a curiously deceptive Bill. Looking through it one gains the impression that it is a simple Bill designed to ratify an agreement between the Commonwealth and South Australia. The Bill concerns the transfer of some 24 meat inspectors from the employment of South Australia to Commonwealth employment. The Bill relates, I imagine, to a couple of small exporting works in South Australia, ohe near Port Lincoln and another at Gepps Cross. I do not know whether it is a coincidence, but honorable senators may have noticed that this morning a dozen camels were found wandering around the Gepps Cross killing works. This may be the reason why the Commonwealth is anxious to get these 24 meat inspectors in South Australia on to its pay roll.

I pass on that information simply to get honorable senators, or at least some of them, into a good humour for what I am about to say. This is a deceptive Bill for the reason that I now make plain. In the last session honorable senators will recollect that we passed a bill to establish the Commonwealth Meat Board. One of the things that concerned me at that time - I am sure it concerned other honorable senators as well - was how the Government would be able to control the Board. I do not have the slightest doubt that this Bill is one of the first examples of the influence exerted within the Commonwealth by this newly established Australian Meat Board. One reason given for the establishment of the Board was that it was to meet conditions laid down by the United States of America for the admission of meat into that country. The United States had stipulated that it would not permit the entry of any meat from overseas unless it carried a certificate that it complied with standards of inspection laid down by the United States. I am not grumbling about that because the level of the inspection in Australia of meat for export has always been the responsibility of the Department of Primary Industry and Commonwealth meat inspectors. So if the standard of Commonwealth inspecting has been reaised it has been done as a result of insistence on the part of the United States that certain standards should be maintained. This is an interesting exercise in the use of the Commonwealth’s power under section 51 of the Constitution - the external affairs power.

Not only has the attention of the Commonwealth been engaged in relation to the export meat pact, but it has now turned its attention towards the examination and the inspection of meat for domestic consumption in Australia. It began this operation first by trying to persuade the Australian Agricultural Council to agree on some uniformity about this matter. Not being successful in obtaining this uniformity, it has now set about trying, through the back door, to extend the Commonwealth’s jurisdiction to the inspection of meat, both for export and for domestic consumption. On the face of it, this pursuit of uniformity may look a good thing, but I shall put the other side of the case in a moment.

The interesting thing is that the only State that has consented to follow this procedure is the State of South Australia, where there are 24 meat inspectors. I may be corrected on this point by Senator Wright, but I think the Commonwealth has always carried out meat inspection for the State of Tasmania. However, the circumstances in the States of Western Australia, Queensland, New South Wales and Victoria are not the same. When one deals with the problems of Victoria - and that is the State that I represent in the Senate - one is dealing with meat inspectors under the supervision of the Health Commission in Victoria. There are over 250 meat inspectors in Victoria, not 24 as there are in South Australia. For example, the matter raised by Senator Cooke about fitting the 24 meat inspectors from South Australia into Commonwealth employment as regards seniority is going to be a vexed problem when one attempts to fit 250 inspectors from Victoria into the Commonwealth employment. Perhaps there are 300 or 400 meat inspectors in New South Wales. I do not know how many there are in Queensland. This is not an easy problem to solve. Clause 5, sub-clause (1.) of the Bill provides -

The Commonwealth may enter into an agreement with a State or with a State meat authority with respect to the inspection of meat for or on behalf of the State or the Slate meat authority ….

It does not confine its ambit to South Australia by any manner of means at all.

The problem of inspecting meat for export and the problem of inspecting meat for domestic consumption are quite different. In addition to an inspection of the viscera and a few other requirements laid down by the United States of America, meat for export from Australia has to conform to certain standards laid down by Australia itself. For example, the meat shall not bc bruised and there. shall not be any cuts in it. Also, lymphatic glands of one sort or another should not be in certain meat. For example, if there are lymphatic glands in lamb, that meat is not fit for export. It is also true that this meat is not fit for domestic consumption unless it is properly inspected.

The point is that any State is entitled to lay down requirements for meat for domestic consumption and to have its own supervision, not the supervision of the Com?monwealth or the standards of the Commonwealth. As it seems to me, the States are entitled to lay down the standards for meat for domestic consumption themselves and they should be able to inspect it themselves, which, in fact, they do. One can appreciate the expressed reluctance on the part of Victoria to allow itself to be manoeuvred into the situation where the Commonwealth meat inspectors, under the control of the Department of Primary Industry, will take over the inspection of its meat.

As I said before, there are over 250 meat inspectors in Victoria. The problem of meat inspection is not the same with meat for export as it is with meat for domestic consumption. For example, the meat inspectors in Victoria have to hold a certificate from the Royal Health Society for meat inspection. This is up to the level of, if not higher than, the requirements demanded of meat inspectors by the Commonwealth Government.

This is an interesting story which honorable senators might care to bear in mind: When the United States laid down the conditions for meat inspection, a great number of meat operators began to come in and take advantage of this remunerative market in the United States. So the curious situation arose where the meat works in Victoria and Queensland, which were concentrating solely on the production of meat for domestic consumption, began to operate on the export market. That necessitated the intrusion at that point, and properly so, of Commonwealth meat inspectors, but it caused a problem for the meat operators. They were being forced into the position of first putting stock through for killing for domestic consumption and then putting another run of animals through for killing for export. This meant that there were two sets of inspectors, some being employed at one stage and others being employed at another stage. In order to overcome the problem, the various State Ministers for Health and Minister for Agriculture agreed with the Commonwealth Government upon a rationalisation system. They agreed that in order to maintain the throughput of animals State meat inspectors would be allowed to carry out the inspection of export meat under the supervision of the Commonwealth veterinary officer and that Commonwealth meat inspectors could do some of the inspection of meat killed for domestic consumption, again under the supervision of the Commonwealth veterinary officer.

This situation is now beginning to be distorted unilaterally, because it is obvious from the Bill under discussion that the Commonwealth intends, if possible, to take over all meat inspection for the whole of Australia. I think that is a dubious affair. One honorable senator opposite, speaking on another matter the other day, referred to what he described as a classic illustration of Parkinson’s law. This is another Parkinson’s law job. We shall have an enormously large Commonwealth meat inspection system before very long. I do not know whether this should be called an operation of Parkinson’s law. Perhaps we might more aptly take a phrase out of the report of the Commonwealth Scientific and Industrial Research Organisation, which I mentioned during the debate on the Estimates. This might be compared with the feed back mechanism in rabbit increase. Another way to put it is to say that, watered or showered with Commonwealth revenue, you get ovulation. I think that was another phrase that was used in the report. The more rain that falls on the grass, the faster the rabbits breed. This is going to be another operation of that sort. I suggest that that is the background to the situation.

Things start off in a small way. This started off with an agreement with the United States of America. Then came the gradual extension of the foreign affairs power of the Commonwealth to a matter which was totally unrelated to that power Now the Commonwealth is extending its grasp to take control of the entire meat production of Australia. Having said that; I have said all I propose to say except that I do not know how we are going to feed into the system another 500 or 600 meat inspectors in New South Wales, Queensland and Victoria. The problem is not merely one of absorbing the 24 meat inspectors in South Australia.

Senator DRURY:
South Australia

– I am interested in this Bill because of the effect it will have upon the meat inspectors of South Australia. First let me say that I disagree with Senator Cormack’s assertion that we have only two small abattoirs in South Australia. We are very proud of our abattoirs in South Australia. I am sure that if all the abattoirs throughout Australia had been of the high standard of the South Australian abattoirs there would have been no need for the American Government to impose its present requirements with relation to the inspection of meat.

The South Australian Government is in agreement with this proposal. We all know that that Government co-operates as far as it possibly can with the Federal Government at all times. We in South Australia agree with this proposal because we feel that it might be of some benefit to our State. I point out, however, that the South Australian Government will have to bear its share of the cost of meat inspection. We are not getting out of this entirely free of cost.

The Bill before us provides for the making of arrangements wilh the State authorities in respect of meat inspection. It also relates to meat inspectors now working for the Stale authority in South Australia and who are to be transferred to the Department of Primary Industry as Commonwealth meat inspectors. On transfer these men will enter the Commonwealth Public Service. The negotiations for this changeover have been going on for a number of years, and grave concern has been felt by the inspectors in South Australia. They believe that the Department of Primary Industry has not taken them sufficiently into its confidence and has not explained what their position will be after the transfer is implemented. They appointed a deputation which visited the Commonwealth Parliament offices in Adelaide last week and saw Mr. Sexton, the member for Adelaide in another place, and myself. They put before us, both in written form and verbally, their inquiries regarding the position in which they will be placed after the changeover. I will touch on that matter later.

The Minister for Primary Industry (Mr. Adermann) has pointed out that while this Bill has application to South Australia it is designed to enable other States to take action similar to that which has been taken by the South Australian Government and also by the Metropolitan and Export Abattoirs Board in South Australia. It seems to mc that if this scheme is to be fully effective - and this is where I believe something more concrete should have been done - it should have Australia- wide application.

We should ask ourselves whether the advantages flowing from the proposal will be as great as has been claimed, in view of the fact that the proposal applies to one State only. The Minister has told us that the Australian Agricultural Council has failed to find a solution to the problem and that this is a matter of concern. The Minister for Customs and Excise (Senator Anderson) said in his second reading speech -

The problem associated with CommonwealthState inspection has been considered by the Australian Agricultural Council over a lengthy period, but an acceptable solution to cover all States has not been found. It has been generally agreed that there would be considerable advantages in having meat inspection under one authority in each State, but it has been recognised that a number of difficulties such as disease control, seasonal conditions affecting transfer of staff, salary differentials, &c, must be overcome in achieving this objective.

Surely this body, which specialises in agricultural matters, should have been able to evolve a formula which could have general application throughout Australia. No doubt problems relating to State rights and other related matters have played a major part in inhibiting the preparation of a plan acceptable to all States. The Australian Labour Party agrees that it is desirable to have a single inspection service. This desirability is emphasised by the recent conditions imposed in respect of meat imported from Australia by countries such as the United States of America, in which Australia finds one of its main markets. I fear that the Government must take some responsibility for this protracted discussion which has been going on for quite a number of years.

As I said previously, my colleague in another place, Mr. Sexton, has been trying for some considerable time on behalf of meat inspectors in South Australia to obtain some clarification as to what is intended in the proposed changeover and, in particular, to ensure that the rights and conditions of these inspectors will not be affected. He has tried to see that their interests will be safeguarded. Although the South Australian meat inspectors are not opposed to the changeover, they are not happy about it at this point of time, because they have been kept more or less in the. dark as to what is going on. They told us that they have made several attempts to obtain a clear picture of the proposals that will be used in the changeover, but have always been met with the promise that they would be consulted before finality was reached in the matter. As I said, it was as late as last week that Mr. Sexton and I met these gentlemen, and they put their case to us. They are opposed neither to this legislation nor to the changeover, but there are certain points that they want clarified.

I will refer now to one of the letters that Mr. Sexton received from these people. They say that since February of 1960 they have been trying to get answers to the question of this transfer but, as yet, have obtained nothing either from the Metropolitan and Export Abattoirs Board or the Department of Primary Industry. They were given to understand by the General Manager of the Metropolitan and Export Abattoirs Board that this transfer of authority in meat inspection control was necessary to comply with American import regulations. That is understandable. They went so far as to write to the American Attache” in Canberra for verification of this. I believe that the reply they received was that such regulations did apply in America, but that what foreign governments did about this matter was their own concern. Economy was another reason that was given to them by the General Manager of the Abattoirs Board. These inspectors readily admit that hygiene in any abattoirs is a very great problem with which care must be taken. But they say that to more than double the inspection staff to do the same amount of work does not add up to economy. They also claim, as I said, that when they made inquiries the usual reply that they received was that the matter was still under discussion and consideration and that they would be fully informed when finality was reached.

The fact that no satisfactory reply has been received by the inspectors is causing them a great deal of concern in regard to their position. I suggest to the Minister that an explanatory document could be produced and given to these men setting out the conditions of employment of State meat inspectors together with the conditions of employment of Commonwealth meat inspectors. I am firmly convinced that it would enable the State employees to study the overall position and would be of great assistance to them in arriving at a decision as to their future. One of the matters exercising the minds of the inspectors is that under the terms of their employment in South Australia their travelling is confined within the borders of the State, but in the event of their transfer to the Commonwealth Public Service they may be required to work part of the season in South Australia and part of the season outside the State. Will these men have the opportunity to volunteer to go outside of the State or will they be compelled to do so? Some of them are reaching rather mature years and it may be difficult for them if they are compelled to travel outside the State.

I know that when a person joins the Commonwealth Public Service he has to be prepared, if necessary, to go out of the State in which he lives. If he complains about this requirement he can be told that one of the conditions of the Service is that an officer may be sent to places where he is needed. One of the things that is exercising the minds of the inspectors is that they may be sent on temporary transfer at short notice at any time to any part of the Commonwealth. They feel that that would be an imposition as they have established their homes near their place of employment, and many of them have other commitments.

The honorable member for Adelaide discussed this matter with officers of the Department of Primary Industry as far back as 1961. I should like to refer to page 2735 of “ Hansard “ of the House of Representatives where a report about the selection appears. Mr. Sexton said that he had discussed the matter with officers of the Department and as a result he wrote to the representative of the meat inspectors in South Australia as follows -

The Commonwealth employees would have the right to volunteer for seasonal employment in other States and in the event of non-sufficient volunteers some employees may be required to go interstate for these seasonal duties involving export killings, etc.

I should like the Minister to clarify the position and state whether the information that was received by the honorable member is still applicable to meat inspectors in South Australia.

There are other matters about which the men are concerned. One is sick leave. I should like to mention these matters to the

Minister now rather than at a later hour in the morning. The meat inspectors have informed me that they enjoy three weeks leave per annum which is allowed to accumulate, and 50 per cent, of the annual sick leave allowance, or 60 hours per year, may be accrued and the inspector paid for it on retirement or resignation. They inform me that if they were to lose this privilege it would be a great financial loss to them as the inspectors of the Department of Primary Industry do not enjoy those conditions.

Another matter that has been raised is superannuation. The men do not come under the South Australian Superannuation Scheme but they are provided for by way of insurance policies. They feel that if they have to pay into two schemes it would be far too costly, especially for an inspector over the age of 45 years. The men believe that it would cost them between £5 and £6 a week. Another alternative would be to let their contributions to the present superannuation scheme lapse. This would mean losing most of the monetary gain they would expect to receive, and accepting a much less rosy retirement.

Another point exercising the minds of these men concerns their right to long service leave. They want to know whether they will be paid for their long service leave entitlement with the Metropolitan and Export Abattoirs Board, or whether their entitlement will be transferred to the Department of Primary Industry and paid for by that Department. The men cite as an example the question whether an inspector who decided that he was not happy in the Commonwealth Public Service after one month with the Department, would get the money due to him for his long service or would he be obliged to work for a certain period before he could collect it. I believe that the qualifying period for long service leave with the Metropolitan and Export Abattoirs Board in South Australia is 10 years and in the Department of Primary Industry it is 15 years.

The men were also concerned about promotion and want to know whether they would be given the same opportunities of promotion as officers already in the service of the Department. This is something that ] think they arc rightly concerned about. These men would be much happier if they were given a full explanation of their conditions when they transfer to the Commonwealth. Seniority is something about which they are very concerned. They want to know whether they will retain their seniority or whether they will be at the mercy of the Commonwealth Public Service Meat Inspectors Association or the Department of Primary Industry.

Another point is that overtime rates in South Australia are different from those applying in the Commonwealth Public Service. I believe that the Department has a ceiling rate for overtime which is less than the ordinary rate of pay of these men and that they get time and a half for three hours and double time for all other overtime. In South Australia I believe that they receive double time for all overtime. The men are also concerned about the permanency of employment. Are they to be permanent officers or temporary officers with the Department of Primary Industry? At the present time there are five temporary meat inspectors employed by the Metropolitan Export Abattoirs Board. What is going to happen to these inspectors? Honorable senators can see that the men are concerned about their position when the transfer comes into operation. I think that they have a just case. In the other place when the Minister for Primary Industry (Mr. Adermann) was replying to Opposition speeches regarding these men, he said that they would be much better off under the new scheme because they would receive a higher salary; but at no time did the Minister state what the salary was to be. If the Minister for Customs and Excise cannot let me have the figures now, could he let me have them later on so that they can be supplied to these men? This is what the Minister for Primary Industry said in another place, when discussing this Bill, as reported at page 2738 of the House of Representatives “ Hansard “ of 10th November -

I have tried to answer the queries put to me and I assure honorable members that, to my mind, the State inspectors will benefit if they choose to transfer to the Commonwealth. It is their choice of course. If they choose to transfer they will receive a significant rise in salary, their rights and seniority will be protected and they will be taken over as permanent public servants.

I again ask the Minister for Customs and Excise whether it would be possible to supply to me figures on the salaries. If he cannot supply them now, will he let me have them later so that 1 can give them to the inspectors? I believe that once they know just what will happen to them, they will not be concerned about the transfer. As I said earlier in my speech, they are not condemning the transfer. They think that it is a step in the right direction. They are concerned to ensure that their rights will be safeguarded and that they will be given the same or almost the same conditions as they enjoy at the present time. I say here and now that the Labour Party does not oppose this Bill.

Senator PROWSE:
Western Australia

– At 10 to 1 - and I am not referring to odds - it is apparent that we have the whole of the day - and I mean Thursday - ahead of us. I was not too sure whether Senator Cormack was supporting or opposing the Bill. He certainly did not tell us whether he was supporting or opposing it. I say at the outset that I am supporting the Bill. Despite the doubts cast upon the need for this legislation, some considerable importance attaches to it. As honorable senators know, the primary reason for it is the rapid development of our meat export trade. It is interesting to note what our meat export trade is worth. In fact, last year it was worth £104.66 million, and included £70 million worth of beef sent to the United States of America, which is only one of our customers. It is important to know how largely the United States market looms in our total meat export trade.

There is a saying that in matters of trade the customer is always right. I believe that in this instance this customer deserves special attention to its requirements, particularly as they are not unreasonable. They involve a definite advance in our handling of meat for export. However, they have resulted in the establishment of two standards - the standard required for the States and the standard required for export. lt is very undesirable that we should have two standards. I do not think it is good enough to accept a lower standard in respect of meat for home consumption.

Senator Cormack:

– What do we do with meat that is not up to export standard?

Senator PROWSE:

– At this time of the morning, I do not propose to go into points of that sort. I maintain that it is important that meat for human consumption should be subject to rigid inspection in order to ensure that it is fit for human consumption and of the best quality. This situation of dual inspection has created problems and will continue to create problems as long as it exists. The matter was brought before the Australian Agricultural Council. The Bill is an attempt to overcome some of the problems. I notice that there has been specific reference to South Australia, but I cannot see the name of the State of South Australia in the Bill. It has been drafted in permissive terms. The clauses arc in no respect compulsory. They have been designed so that not only South Australia but also the other States may go into the uniform inspection scheme voluntarily.

I think that there is a great deal of merit in the Bill. Senator Drury has outlined a number of possible difficulties. I believe that within the Bill there is ample scope for overcoming the problems that he mentioned and resolving the doubts that he expressed. The importance of the export of our meat warrants careful consideration of a Bill of this sort. I hope that the meat employees not only in South Australia but also in other States will find it’ possible to solve any problems, because this industry is important to everyone - producers, workers in the industry and consumers of meat. This is very sound legislation aimed at attaining some measure of uniformity in meat inspection. I wholeheartedly support the bill.

Senator ANDERSON:
Minister for Customs and Excise · New South Wales · LP

– in reply - It is not long since I read the second reading speech on this Bill and I do not want to traverse its purposes again. After all, it is a fairly simple Bill. The main purpose is to make provision for the transfer of inspectors of the South Australian Department of Agriculture and of the South Australian Metropolitan and Export Abattoirs Board, to the Commonwealth Public Service, bringing with them their State rights. I lay some emphasis on the fact that the number of inspectors involved are three from the Department of Agriculture and 25 from the Metropolitan and Export Abattoirs Board.

I gather that the Bill in the broad receives the approbation of the Senate. It is true, as Senator Prowse said, that we were in some doubt as to Senator Cormack’s views but I give Senator Cormack the benefit of the doubt and assume that he will support the Bill. I enjoyed very much his excursion 1.. history and economics. At one stage J was not quite clear as to whether Parkinson’s law had got into the history section or the history had got into Parkinson’s lay. He built up an edifice of his own and then proceeded to knock it down. In fact, no State is obliged to come into the scheme at all. Nobody would know better than Senator Cormack the way in which the States preserve their sovereignty in all fields. The only possible way in which the States could be involved in this scheme would be by their agreement to participate. There is no substance in the suggestion that the Commonwealth will be usurping State powers. In South Australia the authorities have elected to come into the scheme, and the authorities in Queensland have elected to have the Commonwealth meat inspectors perform certain functions. The same applies to a certain extent in Tasmania. In each case the transfer of the functions is by arrangement and by consent.

If I may digress to state an analogous situation, honorable senators know of the tremendous amount of work that is required by the Commonwealth, the States and primary producers to evolve stabilisation schemes. They know how difficult it is to draw all the elements together to produce such schemes. In the second reading speech, on behalf of the Minister I drew attention to the difficulties that were being experienced by the Australian Agricultural Council. Senator Drury referred to those difficulties in the course of his remarks. I remind the honorable senator that it is necessary for the States to come into this scheme voluntarily and there can be no suggestion of duress. In fact, under the Constitution there can be no duress in bringing the States into the scheme. Senator Cooke referred to the position of the other States, and I believe that my answer in the broad covers the point that he made. He asked why the other States were not participating in the scheme. The reply is that the other States have chosen not to come into the scheme, for a variety of reasons. It is their decision.

The honorable senator referred also to temporary employees. My advice is that no temporary employees will be involved in the transfer of meat inspectors from the South Australian authorities to the Com.monwealth. 1 believe that Senator Drury also referred to a number of temporary employees. I repeat that my information is that no temporary employees in South Australia will be involved in the transfer. Senators Cooke and Drury said that South Australian inspectors had worked under conditions applying to Commonwealth officers in the same field which meant that they would be subject to the normal Commonwealth law in relation to seasonal transfers. I believe that that goes hand in hand with normal transfer to the Commonwealth service. The seniority of State inspectors will be based on their service with the State or with meat authorities as meat inspectors, and service will be calculated on the basis that would apply in their State employment.

Senator Cooke:

asked about the accumulation of recreation leave, and I believe Senator Drury raised this issue also. Where officers have accumulated recreation leave in excess of 30 days we presume that the States will adjust the leave credits.

Senator Cooke:

– r-For the amount of leave in excess of 30 days?

Senator ANDERSON:

– Yes. It is assumed that the States will adjust leave credits at the time that the officers transfer to the Commonwealth. All State officers who transfer will be entitled to join the Commonwealth Superannuation Fund. Senator Drury asked a whole series of questions and I have noted eight or nine of them. I do not promise to supply all the information that the honorable senator sought, but his speech will be referred to the Minister and if any points have not been resolved an effort will be made to obtain the information and make it available to him.

The Department of Primary Industry feels that it is of advantage to have at least one State operating under the Commonwealth’s proposals. As I have already indicated, this Bill also provides the machinery so that if any other State elects to come within the Commonwealth proposals the legislative form is available for it to do so. There is no suggestion that, as Senator Cormack said, this is the first shot in a big effort to seize power in this field from the States. I merely repeat that while the legislation was designed to accommodate South Australia it was made sufficiently wide to encompass other States if at some future date they decide to come into the scheme.

I have said, the Bill provides what are considered to be the normal conditions to cover all aspects associated with the transfer of the officers concerned. South Australian inspectors, if they elect to transfer to the Commonwealth service, will be transferred after receiving notice in the proper terms. I do not think anyone can object to that procedure, which we regard as normal.

Senator Drury mentioned sick leave. Under the State conditions South Australian inspectors may be paid 60 per cent, of the value of sick leave which has not been used. Such sick leave provisions are not part of the Commonwealth scheme, so they cannot continue after transfer. In other words, when the officers transfer to the Commonwealth they will be placed on the same basis as other Commonwealth servants. The conditions will be equal for all members of the Commonwealth service.

Superannuation was another matter raised by the honorable senator. South Australian inspectors joining the Commonwealth service will be required to contribute to the Commonwealth Superannuation Fund. He also mentioned long service leave. The inspectors will carry with them their long service leave entitlement and the Commonwealth will accept responsibility for payment in that regard. However, payment will not be made for furlough taken by officers under 60 years of age unless they have completed 15 years’ service. Promotion will be based on seniority and efficiency in accordance with the pattern in the Commonwealth service.

The honorable senator raised the question of overtime rates. The inspectors will be paid overtime at the rate of time and a half except for overtime worked on Sundays, Christmas Day and Good Friday. Taken in the broad sweep, the Commonwealth conditions are as good as those in the State. As to the matter of salary which he also mentioned, the information I have is that State officers will receive an increase in salary. As mentioned by the Minister in another place, the salary paid to the inspectors will be, on balance, higher than that paid in the State. We will make the details available.

Senator Drury:

– Would it be possible to get the amount.

Senator ANDERSON:

– 1 am not in a position to give it to the honorable senator at the moment but it will be made available to him. Pending transfer, the abattoir is paying inspectors the same salary as that paid to inspectors in the Commonwealth service. In other words, during the transition period they will receive the salary applicable to the position in the Commonwealth.

I do not suggest that all the answers I have given are comprehensive, but in the circumstances I think I have covered most of the questions that were raised. I appreciate the remarks of honorable senators who participated in the debate. I conclude on the note that while this is a bill to meet the requirements of South Australia, it has been so drawn that should other States elect voluntarily to come into the scheme the legislative machinery is available for them to do so.

Question resolved in the affirmative.

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

page 1674

TELEVISION STATIONS LICENCE FEES BILL 1964

Second Reading

Debate resumed (vide page 1606).

Senator COHEN:
Victoria

– Mr. Deputy President, I suggest that it would suit the convenience of the Senate to debate this Bill, the Broadcasting Stations Licence Fees Bill 1964 and the Broadcasting and Television Stations Licence Fees Repeal Bill 1964 together, and I ask whether that may be done.

Senator Anderson:

– I am agreeable.

The DEPUTY PRESIDENT (Senator McKellar) - There being no objection, that course will be adopted.

Senator COHEN:

– I address my remarks to all three Bills, Mr. Deputy President, and I intend to propose an amendment to the motion for the second reading of the Bill that has been called on. The purpose of the three measures is to increase the licence fees payable by broadcasting and television stations. I think that, when we examine the present situation, the reasons why this legislation is required will become immediately apparent. Since the passage of the original Broadcasting and Television Act in 1956 to provide for the commencement of television transmissions in that year, the general licence fee payable by each television station has been £100, plus 1 per cent, of the gross earnings of the station in respect of the televising of advertisements or other matter. In 1962-63, when the net profits of the commercial television stations totalled £2,996,777, and their total revenues £18,785,974, the licence fees payable by all the companies totalled £112,896. So the licence fees represented a mere drop in the ocean compared to the enormous total revenues of the companies and their substantial profits. The present scale of licence fees was laid down when television was in its infancy. Indeed, in 1956-57, in the first year of the operation of the principal Act and of the application of the present scale of licence fees, the commercial television stations lost altogether £551,214. By 1959- 60, the losses had been turned into net profits totalling £1,564,726. By 1962-63, as I have already mentioned, the profits totalled £2,996,777. The total revenues of the stations had risen from £1,190,950 in 1956-57 to £15,785.974 in 1962-63.

The Minister for Customs and Excise (Senator Anderson), in his second reading speech, very properly conceded that the present scale of licence fees was unrealistic and that changes are justified. Whatever one thinks of this Bill one can echo the sentiment that the present scale of rates is unrealistic. Our proposition is that the proposed changes are unrealistic that they fail to levy a sufficiently high licence fee on those stations which are best able to pay higher rates.

Shortly I shall move an amendment to the motion for the second reading which will make plain two points upon which the Opposition relies in discussing this legislation. The first is that on gross earnings from advertising in excess of £1 million there should be a higher rate of licence fee than that proposed in the Bill. Our second point is just as important. It is that the whole of the proceeds from the licence fees should be paid into a special fund to be used solely to assist in the production of Australian television programmes.

Let me state briefly what the Bill now provides. It provides that on gross earning from advertising up to £500,000, a licence fee of one per cent, shall be paid rising to two per cent, on advertising revenue between £500,000 and £1 million, three per cent, between £1 million and £2 million and four per cent, on revenue over £2 million. It is estimated that on this basis the total income from licence fees payable by all the television stations would amount to about £400,000. The revenue from licence fees paid by broadcasting stations would rise from £109,000 to £125,000. From one point of view, of course, this is a step in the right direction but the Opposition believes that having regard to all the circumstances, the stations should pay a considerably higher licence fee where the earnings exceed £1 million and that applies of course to all metropolitan stations. We say this having regard to the very high rate of earnings of the companies concerned and, secondly, having regard to the critical position occupied by the licensees in the field of mass communications. They have the special privilege of a licence conferred upon them by the community after a hearing before the Australian Broadcasting Control Board. In these circumstances it is appropriate that the higher earning stations in particular should pay higher fees.

We say that the Bill is unrealistic because it provides for only a modest increase in the licence fees and does nothing else. At this point it is relevant to refer to the Select Committee on the Encouragement of Australian Productions for Television, which was set up by the Senate, and which reported just over 12 months ago. It is highly significant that this debate should take place in a week when we have paid solemn and respectful tribute to the Chairman of that Committee, the late Senator Seddon Vincent. He performed a task of exceptional magnitude for this Parliament and the nation in his chairmanship of that Committee. By way of paying a personal tribute, I want to say as one who had the honour of serving on that Committee that Senator Vincent’s leadership, enthusiasm and inspiration will long be remembered as will the work he left behind. I hope that eventually the report of the Committee - aptly called the Vincent Committee - will find recognition as a major contribution to the advancement of television in Australia. Senator Vincent had the strongest possible feeling for the development of an indigenous Australian culture, not ina narrow and negative way but as part of a broad cultural pattern. He felt very keenly that something more was required of the television medium, both national and commercial, and that Australia should set its sights higher in this field of endeavour. 1 believe that the Parliament and the community will be the richer for the contribution he made to elucidating the many problems to be found in this field.

Having said that, Mr. Deputy President, I want to make the point on behalf of the Opposition that this Bill fails completely to recognise that there ought to be an Australian content in television programmes. This is being treated as though it were a mere revenue matter - the raising of a modest extra sum by way of licence fees from the television companies. It is not being treated, as it ought to be treated, on the basis that here if ever there is an opportunity for the Government and for the Parliament to say that when licence fees are being exacted from the commercial television companies, some collateral attention should be paid to the problem of the Australian content of television programmes. The Select Committee made a most exhaustive inquiry into this problem. It is just over 12 months since it reported to the Senate. The Government has had more than a year to consider the report, but we have not yet been given any indication of the Government’s views. Judging by this Bill, the Government has an extremely negative approach to the problem. If its approach were otherwise, we would expect to see some action such as that proposed in the Opposition’s amendment.

The Committee considered many ways of encouraging the development of an Australian content in television programmes. It recognised that a good deal of money would have to be found to implement its recommendations. A majority of the Committee - there was one exception - recommended that some of the money should come from Consolidated Revenue. The whole of the Committee recommended that some of the money should come from the industry itself. I shall refer to some passages in the report of the Select Committee to show that the view of the Committee was that the commercial stations themselves should provide some finance to encourage the development of the Australian content in our television programmes. At paragraph 118 of the report of the Select Committee, the following passage appears -

But notwithstanding the responsibility attaching to the Government -

This had been dealt with in the previous paragraph of the Committee’s report - the Committee feels that there is also a degree of responsibility which should be accepted by the television industry and eventually by the film industry itself. The television industry clearly has a national obligation to share in the financial burden of providing an adequate Australian content in its programmes. Licensees with monopolies of public television services can and must expect to assume the public responsibilities commensurate with such privileges.

It is accordingly Recommended -

This recommendation was unanimous - that the annual licence fee payable under section 4 of the Broadcasting and Television Stations Licence Fees Act 1956 be increased in the following manner: -

The Select Committee said -

This is even then a very small charge upon revenue compared with the rates introduced in Britain as a result of the Pilkington Report of 1962 and implemented by the Television Act 1963 which prescribed the following rental payments by programme contractors -

The Committee then expressed its belief in this way -

The capacity of the Australian industry to bear the recommended charges is demonstrated by its profit history up to date. 1 have already dealt with that. Nobody suggests that the scale of charges should be as high in Australia, in different conditions and perhaps with different factors operating, as it is in Great Britain. If the Committee had thought so, it would have so recommended. In fact, it recommended rates substantially lower than those operating in Great Britain but very substantially higher than those operating in Australia in the case of profits over £500,000 and substantially higher than those which are set out in the Bill now before us.

We make the point that those two matters must be considered together. That basically is the purport of the Opposition’s amendment. I move -

That the following words be added to the motion: - “ but the Senate is of opinion that: -

the rates of licence fees on gross earnings from advertising receipts in excess of £1,000,000 should be substantially increased and

provision should bc made so that all the revenue from the licence fees is paid into a special fund and used solely to assist the production of Australian television programmes”.

In view of the lateness of the hour, in view of the fact that the broad content of the report of the Select Committee is or ought to be known to every honorable senator, and in view of the fact that the case which makes clear the inadequacy of Australian content in current television programmes both as to amount and quality has been documented up to the hilt on many occasions in the Committee’s report and in the annual reports of the Australian Broadcasting Control Board, I do not want to dwell on that aspect of the matter.

I bring this important point to the notice of honorable senators: If ever there was an opportunity for us to demonstrate some sincerity about the Australian content of television programmes, that opportunity is now available to us. The Senate now has an opportunity to declare that, whatever is the attitude of the Government in relation to the recommendations of the Select Committee, there should be a nexus between the levying of licence fees on the television industry as such and the carrying out of some work to encourage Australian productions for television. If we do not make that clear during the debate on this Bill, we will be failing in our duty as a Senate.

We set up the Select Committee to investigate and report upon this matter. It was an all party committee; it was not a committee consisting of members of the Opposition. The majority of its members came from the Government side. The Committee was led with great distinction by our late friend Senator Vincent. On this Committee was a great deal of harmony and unanimity. There were some minor differences, many of which were largely resolved within the Committee’s discussion. The report that was eventually submitted had the broad consensus of all members.

Why should we let such an opportunity go by? If we believe in the system of select committees of the Senate, and if we believe that they perform a valuable duty in informing the Parliament and the public on matters of substantial moment, we should not let such an occasion as this pass without proclaiming our faith in the system and without doing something to back up the recommendations of the Committee.

We have moved this amendment in very broad terms. I dare say argument will be addressed to suggest that the amendment should be more specific, particularly in relation to the application of the fund. I do not conceive it to be the duty of the Senate to lay down with great particularity the precise objects of the fund’s positive interest. We know there are a score and more specific recommendations about the encouragement of Australian dramatists, musicians, scriptwriters, theatrical performers, producers and playwrights. In all these ways practical assistance could be rendered to the film industry and to those attempting to enrich the cultural life of the nation at this level by training for performance generally and for television in particular. It is not, as I conceive it, our function to set out the blueprint of everything the fund would do or precisely how the fund should bc administered.

If we were introducing a completely new Bill we might then have moved for the appointment of a television advisory council such as is recommended in the Select Committee’s report, but on this occasion the Opposition contents itself with giving some direction of policy to the Government by saying: “ If this is accepted, any responsible Minister should be able to work out some coherent practicable scheme of assistance to the indigenous Australian worker and artist in the television fields”. This is not the responsibility of the Senate or of the Parliament because these are matters of administration. Further, I do not think the principles would be difficult to set down or to apply. I hope I will not be met by the argument that we might have been more specific about the precise method of administering the fund and the objects of its endowment. The important thing is to recognise the need and to do something to meet it.

The Minister in another place, when dealing with this whole subject of Australian productions, was inclined to belittle the Australian effort. In relation to the problem of Australian production he said -

I believe that the principal problem is the shortage of scriptwriters. I do not think we have many good scriptwriters in Australia nor do I believe that we have people in Australia who can teach others to be good scriptwriters. We have not many good actors in Australia. You do not find people who will practise, practise, practise to become good actors unless they have some worthwhile instruction. . . . We have not producers and we have not directors of high quality in Australia at present.

My first observation on the remarks of the present Minister is that what he said was contradicted by the great body of evidence before the Senate Select Committee. The Committee did not accept the proposition that there are no good script writers, actors and so on. But more importantly, if what the Minister says is true, it is time we started to develop the machinery to obtain good actors, producers, writers and dramatists. The only way to do that is to offer positive encouragement at the level of government. What better opportunity has there ever b :en, what better opportunity will there ever be, to set a legislative seal upon that policy? That is what we hope to achieve by moving the amendment.

First, we think that the scale of licence fees proposed may be adequate in relation to stations with earnings of less than £1 million, but is inadequate in relation to stations with a greater income. Much more revenue could be gained by the imposition of a steeper rate of licence fee for stations with earnings above £1 million. The Opposition does not attempt to tamper with what is proposed for stations with earnings below £1 million. Secondly, the Opposition believes that this is not really a revenue measure.

The Government is salving its conscience because of the special treatment it has given to some commercial television stations. In view of the very high earnings and profits of television stations the revenue derived from licence fees at the present level is miserable. So the Government has proposed a modest and insufficient increase in the rate of licence fees, but it has failed to seize the opportunity to relate the whole problem to the broad findings on which the Senate Select Committee set its seal.

I ask the Senate to carry the amendment which I have moved, because I believe that to do so would be a forward step in the development of an indigenous Australian television industry.

Senator BUTTFIELD:
South Australia

– In expressing my views on the Bill before us I wish to say at the outset that although I do not disagree with it in principle I think it has been introduced at the wrong time. I also believe that the levy to be made and the effect of the legislation are wrong. I quite agree with the Minister that the Bill sets out to solve some of the injustices resulting from the method of assessment of licence fees which gave rise to stations underestimating by up to 30 per cent, the amount of revenue on which the licence fee is based. I believe that the legislation will not encourage the inclusion of Australian productions in programmes, but will have the opposite effect. I am sure that all honorable senators want to see Australian material of good quality included in television programmes.

I shall refer now to some of the comments made by Senator Cohen. He said that, judging by the present position in the television industry, the legislation is well called for. I maintain that it is not. The Minister, in his second reading speech, and Senator Cohen have both quoted the amounts of profits earned by television stations during 1962-63. It seems to me that profits of this magnitude are no longer available, perhaps because of the imposts on the television industry, in taxes and otherwise. Profits earned by commercial television stations are falling. I shall deal with some of the reasons why there is a downward trend in the profits of commercial television stations. The rate of company tax has risen by 6d. in the £1. The greatest effect has come from the allocation of a fourth channel. As far as I can see the allocation pf a fourth channel has upset the present licensees in three ways. Firs?, they will have to share their advertising revenue three ways. Obviously the amount of advertising revenue formerly available to commercial stations will be reduced. Secondly, the advent of a fourth bidder has helped to raise prices being paid for American productions. Admittedly, because the stations sought to obtain Australian rights for overseas productions they began to bid high prices for them, but I assume that that was normal business practice if one wanted the Australian rights to a production. Bidding against each other for those rights caused the upward trend. But the real increase in the price of American films has occurred since it was announced that a fourth channel would be allocated. It has been evident in the last year that the cost of the best American productions has risen threefold.

Senator Hannan:

– Does the honorable senator mean 300 per cent.?

Senator BUTTFIELD:

– I mean threefold. The cost has increased by three times from, say, 1,000 dollars to 4,000 dollars. That is not quite 300 per cent., I think.

Another factor associated with the allocation of a fourth channel is that owing to the shortage of technical and professional people the stations are now forced to bid against each other for the services of these people. Naturally, the increase in the basic wage has affected the stations. Performing right payments for the use of music have risen enormously in the last year. In the case of a station in Adelaide those payments have increased from £1,200 to £7,500 in one year. In the case of the larger stations in Melbourne and Sydney they have risen from £5,000 to £25,000. That is an enormous increase simply for the right to use music. Now comes this latest imposition of an increase in the licence fee. Perhaps the increase, in itself, is not large but it amounts to an increase of 400 per cent, in the case of the larger stations. Coming on top of all the other increases in costs this increase in licence fees is a heavy blow to the stations. That is why I say it has come at the wrong time. I am not opposed to increasing licence fees but I think, the increase should have been announced after next year’s profits had been announced so that we could see the real position of the stations and whether by increasing the licence fee we were imposing difficulties on them.

Senator Cohen:

– Perhaps we should have reduced the fee.

Senator BUTTFIELD:

– No, but I think the Government should have waited until details of this year’s profits are available. Senator Cohen said that in view of the fact that station revenues have risen considerably the licence fees should be increased, but the Australian Broadcasting Control Board, in its latest report, points out that as profits have risen so the licence fee payable has risen. The total licence fees paid have risen from £7,325 in 1956 to £112,000 last year. The licence fee has risen with the rise in revenues.

We cannot get away from the fact that we did agree when the stations were licensed that a certain fee would be charged. Now we are saying that we want more revenue from the stations and that we will alter the method of charging licence fees. Unfortunately, in calculating the revenue on which the licence fee will be paid this Bill will add the revenue derived from the sale of advertising time to revenue derived from the sale of programmes. This is already having the effect of reducing the Australian content of programmes. This is the aspect which disturbs me so much. The most expensive programmes to produce are the Australian programmes. I admit that stations cannot sell all their programmes because sponsors simply will not pay the prices asked in many cases but sponsors will now have to pay more for the programmes that they do buy. Obviously they will reduce the amount of money that they spend on the production of Australian programmes, which in turn means that the better type of Australian programme is likely to be cut back. None of us wants to see that happen.

Very briefly I want to reply to some of the points made by Senator Cohen. He related the licence fee in Australia to that in the United Kingdom. He did say it was not expected that we should impose a similar fee here. But he did not say that the significant difference in the United Kingdom is that there is no competition between the commercial stations. In no area are two commercial stations televising at the same time. That makes a big difference and, in addition, the Independent Television Authority owns the equipment and merely rents it out to the programming companies. Therefore, they do not have anything like the capital cost that the stations in Australia have. All that they are expected to do is to sell their programmes. Therefore, their return is much more profitable.

I want to refer to the quantity and quality of programmes, which was mentioned by Senator Cohen. At page 103 of the report of the Australian Broadcasting Control Board for the year ended 30th June 1964, the Australian content of programmes is dealt with. The Board points out that 46.7 per cent, of the television programmes on commercial stations consist of light entertainment programmes, which include talent programmes and variety, the latter occupying 10.2 per cent, of the time. At the bottom of the page is the statement that 1 per cent, equals 171 hours. So, taking the two items which I have mentioned, that is, the talent programmes and the variety programmes, together they occupy 1,881 hours on all stations in Australia That is not a bad figure, but I would like to see it improved, I would also like to sec the quality of the programmes improved. My main concern is: How do we improve the quality of the programmes?

Senator Henty:

– By putting on “ Whiplash “.

Senator BUTTFIELD:

– Let us have “ Whiplash “ then. For 39 half-hour episodes this programme cost £750,000 to produce. This works out at about £20,000 per halfhour programme. What station or what sponsor can afford to put on a programme which costs that amount of money? It is a good programme, I agree, but it is economically impossible for a station or a sponsor to spend that amount of money on a half-hour programme. “ Whiplash “ is being shown overseas but it will be years before it shows a profit. It is not reasonable to expect Australian producers to put on that type of programme which costs so much money. We are able to afford variety programmes and I think that we should encourage more of them. Unfortunately, with the trend in television as it is now, stations are getting rid of at least part of their orchestras, their ballets, their choirs and their children’s programmes which are put on locally. All of these things have been cut back. This is what disturbs me when we suddenly announce in the Budget that we propose to put on this additional impost, amounting in some cases to a 100 per cent, increase in licence fees. For that reason I foreshadow an amendment which I Shall move at the committee stage.

I do not agree with the first part of Senator Cohen’s amendment. For the reasons 1 have stated I do not think that we should raise the licence fees to the extent that he proposes. The second part of the amendment suggests that all the fees should go into a special fund to be used solely to assist the production of Australian television programmes. I do not believe that this is the way to achieve what we want. I think that it is quite reasonable to expect the fees to go towards the payment of the cost of the Australian Broadcasting Control Board. But do not let us forget that half of the fees will be sufficient for that purpose because fees are also paid by the broadcasting stations. I do not think that the establishment of a fund to be operated by the Government is the way to achieve an improvement in the quality of the Australian content of programmes. I believe that the station itself, or some form of private enterprise, should set up a school for the purpose. I agree that there should be some way of training actors and technicians, but I think it would be far better if this were done by private enterprise and not by the Government. For that reason, I do not support the amendment as proposed by Senator Cohen.

Senator Cohen:

– Do you want to see all of the proceeds go into Consolidated Revenue?

Senator BUTTFIELD:

– I would like to see them go into subsidising private enterprise to establish some sort of school. If half of the revenue could be used in that way it would be a constructive and positive step.

Senator Cohen:

– Then why not support my amendment?

Senator BUTTFIELD:

– I have explained why I do not support it. I think it is reasonable that half of the fees should go towards the cost of financing the Australian Broadcasting Control Board, and I would like to see the other half used to subsidise private enterprise for the establishment of a school of some sort. The honorable senator’s amendment implies that the Government will conduct such a school. I think it sufficient to say that 1 do not support the amendment in its present form although I appreciate that Senator Cohen is endeavouring to correct the present situation. I propose moving an amendment which I suggest offers a better solution of the problem. At this stage, I foreshadow that when the Bill is being discussed in Committee 1 shall move that clause 4 be amended by adding the words - provided that if the licensee satisfies the Minister that any such earnings have been received in connection with the televising of, or the provision by him of, musical, dramatic or other artistic material wholly produced or originating in Australia, as defined by the Australian Broadcasting Control Board in its categories of programmes, then only one-half of those earnings shall be included in the gross earnings of the station.

In other words, I shall be proposing that the station be allowed to retain part of the fee as an incentive.

Senator Ormonde:

– That is about the same idea as is suggested by Senator Cohen.

Senator BUTTFIELD:

– No . I shall be offering my proposal as an incentive to the station itself to produce a better quality Australian programme. The incentive will be provided by a rebate of part of the fees to be used for the production of such programmes.

Senator HANNAN:
Victoria

– I support the Bill before the Senate and shall oppose both the proposed amendments. First, I should like to congratulate Senator Cohen upon his splendid address to this chamber. I find myself in complete agreement with vast areas of what he said. The difficulty with his amendment is that it does not do anything. It is simply a reference tacked on to the end of the Bill. As he himself has anticipated, the major criticism of it is that even if it were written into the legislation it would be vague, indefinite and ambiguous and would require too much additional administrative machinery to police it. This is not the way in which to add such an important legislative provision. I should like to congratulate the honorable senator also on the splendid tribute which he paid to the late Chairman of the Select Committee on the Encouragement of Australian Productions for Television, Senator Vincent.

I appreciate the intention of the proposed amendment, but it seems to me a great pity that this small Bill should be used as a shuttlecock or battledore for this important principle. I listened with interest to Senator Buttfield’s proposed amendment and feel that I must give it some attention also. It involves a rebate of one half of fees applicable to the production of artistic Australian material. The artistic Australian material now shown, according to figures given by the Australian Broadcasting Control Board, takes up 2 per cent, of programme time. Consider purely as an example, a programme costing £1,000. In the case of those stations that are paying the 4 per cent, fee, the 2 per cent, would amount to £20. This would work out, on the amount of Australian material that is shown, at about £25 a week or about £3 a day. I do not think even Senator Buttfield seriously contends that a rebate of £3 a day is likely to encourage in the slightest any worthwhile Australian production. As I recall it, Actors’ Equity rates are £2 5s. an hour for minor characters, with a minimum engagement of two hours.

Senator Henty:

– Is the honorable senator sure of his figure of £3 a day?

Senator Buttfield:

– His calculation is quite wrong.

Senator HANNAN:

– If honorable senators wish to challenge my mathematics I am prepared to debate that aspect of the matter with them. If this amendment is seriously intended to confer a benefit on either the employing side of the industry or the employee side, I say to my colleague, for whose motives I have the greatest respect, that it will do no such thing. The mere amount of the pittance suggested is more likely to cause the people concerned to feel insulted. The way to tackle this problem - and it is a problem - is the way suggested by the Postmaster-General in another place. You do not offer a small rebate and expect to provide major encouragement for a major industry. Mr. Hulme said in another place yesterday -

I am very sympathetic towards those grappling with the problems associated with Australian television production, but as yet I have not had time to look closely at the problems. However, I have a couple of bodies looking at the problems for me and during the next few months I hope to have a careful look at them myself. I say to the Committee that this proposal does not give a solution. It does not represent any real contribution towards the solution of (he problems.

With those sentiments I am completely in agreement, although I would like to take this opportunity of dissociating myself completely, absolutely and entirely from the remarks of the Minister concerning Australian talent.

Let me now mention other aspects of the matter to which I think the Senate should briefly advert and which have been partly traversed by Senator Buttfield. The fees charged at present raise £112,000 a year. The operation of the Australian Broadcasting Control Board costs £393,000 a year. Admittedly that covers radio stations also, but on the basis of the present fees it is quite clear that the taxpayer is subsidising a very profitable industry to the tune of about £290,000.

Senator Buttfield:

– Subsidising?

Senator HANNAN:

– Subsidising.

Senator Buttfield:

– Prove it.

Senator HANNAN:

– I have just shown that that is so. Even Senator Buttfield would not suggest that such a complex industry should be operated without a controlling body. The Control Board is costing £393,000 and the people whom it is controlling are contributing only £112,000 towards that control. If this does not result in a subsidy I wouldlike to know what does.

Senator Buttfield:

– What about the radio stations?

Senator HANNAN:

– I said that I realised that the Control Board covers radio stations as well.

Senator McClelland:

– The Board is not exercising much control.

Senator HANNAN:

– That may be a matter for debate at another time and place. I do not propose to enter into an argument on that score at this time. I do not think that any senator in this chamber is likely to accuse me of a lack of interest in encouraging the production of Australian television programme material. I am as anxious as anyone else to see successful licensees and successful television stations. I am anxious also to see reasonable employment given to actors, actresses and technicians in this country. This matter is far too big and far too important, as I said earlier, to be tacked on to the tail end of a mild revenue-raising measure. I want to see the full blooded remedies proposed by the Senate Select Committee introduced after the Postmaster-General has had a chance to investigate them. As he has pointed out, owing to a variety of reasons the opportunity for considering the learned and weighty proposals put forward by the Committee has not yet been presented to him.

I do not think it is necessary for me to traverse some of the matters which arose during the remarks of the two earlier speakers. I simply say that it is grossly unfair to talk of the “ Whiplash “ endeavour as being the only type of production capable of being made in Australia.

Senator Henty:

– There is nothing wrong with that programme. It is a very good programme.

Senator Buttfield:

– At a price.

Senator HANNAN:

– I am not criticising “ Whiplash “. I watched most of the episodes in the series. All I am saying is that the cost of production of “Whiplash” was out of all proportion to what might normally be undertaken in a country of this size and with the viewing audience that a programme might reasonably expect to have. On the information available to me, although that programme cost in the vicinity of £750,000 to produce, it is now, despite what my colleague, Senator Buttfield, says, earning a small profit, having been syndicated in the United States of America by the owners who come from England.

The production of Australian dramatic series costing £750,000 is not, I think, envisaged by any thinking person in Australia. The shot is just not on the board. As Senator Buttfield knows, the money for the production of “ Whiplash “ did not come from Australia. “ Whiplash “ was not produced by Australians. It was not directed by Australians. The star of the production was not an Australian. For these reasons, although agreeing with the good motives behind Senator Cohen’s and Senator Buttfield’s proposals, and giving them full credit for good intentions, I feel myself constrained to say that both their amendments must fail because they will undoubtedly have no effect whatsoever on the purpose which they seek to implement.

Senator ANDERSON:
Minister for Customs and Excise · New South Wales · LP

propose to canvass the provisions of the Bill again. I point out that the amendment put down by Senator Cohen is, apart from its mechanics, identical with an amendment which was moved in another place. The Postmaster-General (Mr. Hulme) would not accept the amendment. On his behalf in this place, I have to inform the Senate that the Government is not prepared to accept the amendment. I think that Senator Hannan was very much to the point when he said that in fact the adoption of the amendment in its present form would add nothing to the Bill. Senator Cohen said: “ Of course, we are not going to put an amendment down with particularity.” Acts of Parliament do in fact have particularity. That is the very purpose of an act of Parliament. It came as rather a surprise to me to find Senator Cohen moving an amendment to an act of Parliament and saying: “ In terms of particularity this does not mean very much, but it is an earnest of an idea.” Acts of Parliament may not be amended in that way, as the honorable senator perhaps knows better than most people because of his calling.

For the reasons already indicated the Government is not prepared to accept the amendment. I do not propose to canvass the matter any further even though paragraph (b) of the amendment refers to the Australian content of programmes. Senator Buttfield has foreshadowed an amendment she proposes to move at the Committee stage dealing with the Australian content of programmes. Rather than say what I have to say twice I think it would be appropriate to confine my comments to the occasion when the amendment is dealt with in Committee.

The DEPUTY PRESIDENT.- Is the amendment seconded?

Senator McClelland:

– I second the amendment.

Question put -

That the words proposed to be added (Senator Cohen’s amendment) be added.

The Senate divided. (The Deputy President - Senator G. C. McKellar.)

AYES: 18

NOES: 22

Majority … . . 4

AYES

NOES

Question so resolved in the negative.

Original question resolved in the affirmative.

Bill read a second time.

In Committee.

The Bill.

Senator BUTTFIELD:
South Australia

– I refer to Clause 4, which reads in part - (1.) In this Act- “ gross earnings “, in relation to a commercial television station in respect of a period, means the gross earnings of the licensee of the station during that period in respect of the televising from the station of advertisements or other matter, including the gross earnings of the licensee during that period in respect of the provision by him of, or otherwise in respect of, matter televised from the station, not being earnings from the production and recording on photographic film, or the recording on photographic film, of matter consisting wholly of an advertisement;

I request the following amendment -

In the definition of “ gross earnings “, after “ advertisement “ add - , provided that if the licensee satisfies the Minister that any such earnings have ‘been received in connection with the televising of, or the provision by him of, musical, dramatic or other artistic material wholly produced or originating in Australia, as defined by the Australian Broadcasting Control Board in its categories of programmes, then only one-half of those earnings shall be included in the gross earnings of the station “.

I noticed that when a similar amendment was moved in another place the Postmaster-General (Mr. Hulme) asked what it meant. He could not understand what “ musical “ and “ Australian content “ meant. It is very simple to answer those questions - obviously, the words mean anything of a dramatic nature, if it is performed by Australian artists; anything of a musical nature, wherever it is composed, if it is performed by Australian musicians, lt is my intention that they should all be included.

Senator Henty:

– It includes Australian musicians performing in England, does it?

Senator BUTTFIELD:

– We do not receive a licence fee from there.

Senator Henty:

– The programme is performed there.

Senator BUTTFIELD:

– Is the honorable senator confusing the issue? Is the hour too late for him? We are not asking for licence fees for anything done in England.

Senator Henty:

– But the honorable senator is referring to the programmes.

Senator BUTTFIELD:

– So long as the material is defined by the Australian Broadcasting Control Board I would be agreeable to it. The Postmaster-General also asked what the word “ artistic “ meant. It is very easy to answer the question, although I will not take time to do so now. One has only to look at the dictionary. Well, since honorable senators laugh I will quote what an artistic production is. The word “ artistic “ means -

Of or pertaining to artists or art; befitting an artist. Or characterised by taste discrimination, judgment and by art and skill.

Senator Gorton:

– Now define art.

Senator BUTTFIELD:

– Very well, I will define art. An artist is one who follows any pursuit or employment in which skill or proficiency is obtainable by study or practice; one who practises or is skilled in an art. Honorable senators can have a look at the definition of “ art “ as well. I will not take up any more time. I want to answer one or two remarks made by Senator Hannan who said that £3 10s. would be the return-

Senator Henty:

– It was £3.

Senator BUTTFIELD:

– Very well, £3. It only goes to prove that it is good to have a few practical people in the Senate in addition to lawyers when these things are being computed. First, there are very few good Australian programmes that can be produced for £1,000, as the honorable senator quoted. Secondly, if he has read the amendment carefully, he knows that it 1 refers to any such earnings in connection with the televising of such programmes, which would bring it to a great deal more than that amount although it is not a large sum. The proposition contained in the amendment would not be insulting to the stations. It would be a gesture indicating that the Government appreciates their problem and wants to give them an incentive to continue producing good Australian programmes. I believe that it would be a way of saying: “We intend to look at this matter. This is our thinking. We will see that incentives are provided for this sort of thing “.

Senator Henty:

– I do not want to be rude; but if the figure is not £3 a day, what is it? Does the honorable senator want us to vote blindly?

Senator BUTTFIELD:

– At this stage I cannot give the exact figure. How can I? I do not know what the cost of the programmes will be. I do not know how much the advertising will cost. It is impossible for me to estimate the figure. All I am saying is that it will be more than £3 a day. I hope that the Committee will give consideration to this matter, because I am quite convinced that the stations will take this proposition in the way it is meant; namely, as an incentive to produce good programmes, which is what we are all seeking.

Senator CORMACK:
Victoria

– I enter this debate as a grammarian and not as a lawyer. As I see the amendment moved by Senator Buttfield, it seems to leave the field open to all sorts of judgments. I do not believe that it is good enough to be inserted in an Act. The amendment reads -

  1. . provided that if the licensee satisfies the Minister that any such earnings have been received in connection with the televising of, or the provision by him of, musical, dramatic or other artistic material . . »

The words “ musical “, “ dramatic and “ artistic “ are adjectives, but surely they are meant to be nouns. What the honorable senator is doing is suggesting that this amendment will be an incentive for the televising or provision of material. It does not make sense to me and I suggest that it would not make sense to anyone else. The amendment continues - . . material wholly produced or originating in Australia, as defined by the Australian Broadcasting Control Board in its categories of programmes. . . .

The material has to be defined in the Broadcasting and Television Act and, as far as I can see, it is not defined in the Act. So I am not willing to support the amendment.

Senator WRIGHT:
Tasmania

– Apparently we are not seeking the donkey vote, although we aire sitting at the donkey hour.

Senator Henty:

– Well, do not bray about it.

Senator WRIGHT:

– I was trying to force an interruption of the braying that was going on while Senator Buttfield was trying to speak.

Senator HENTY:
TASMANIA · LP

– Join the mob.

Senator WRIGHT:

– If I may have silence instead of the braying that is now going on while I am trying to speak, I will speak. I am amazed at my colleague, Senator Cormack, clutching at the point that he tried to make in order to defeat an amendment just because it does not come from the Government. The grammar of the amendment is all right. We all know that the words “musical”, “dramatic” and “ artistic “ are adjectives and that the word “ material “ is the noun. Those words describe the content which would entitle a licensee to the proposed deduction.

Those honorable senators who find these matters difficult of interpretation, such as some of the interjectors who try to force things down Senator Buttfield’s throat when she speaks, ought to read the reports that arc presented to us by the Broadcasting Control Board. People who can read those reports with understanding can read this amendment. The language in the reports and the amendment is very much the same. In that context the amendment has a definite meaning. It is time the Committee arrived at a state of maturity. I suggest that an amendment, although it does not emanate from the Government, should be considered on its merits.

Senator ANDERSON:
Minister for Customs and Excise · New South Wales · LP

– The argument that I used in relation to Senator Cohen’s amendment applies to the amendment moved by Senator Buttfield. This amendment is virtually identical with one that was moved in another place, and the Postmaster-General (Mr. Hulme), on behalf of the Government, declined to accept that amendment. It should not be overlooked, of course, when we talk in terms of Australian content, that it is the right of every viewer to chose his own programme. If he wants to look at imported programmes, it is his right to do so. There have been indications in the debate tonight which would rather suggest that we were to force on the viewing audience willynilly a degree of Australian content regardless of its absolute merit.

The Government, the Postmaster-General and the Australian Broadcasting Control Board recognise that it is desirable to encourage Australian content. It is an historical fact that they have been insisting upon an increase in Australian content to 45 per cent, and that as from next year the figure will rise by 5 per cent, to 50 per cent. It is an historical fact that they have insisted upon a certain percentage of these programmes being shown in the peak hours which are the popular viewing times. Those are acts which are directed towards an objective. It would be fatal to suggest that the result that Senator Buttfield wants and that the Select Committee had in mind could be obtained by a form of interference in the whole structure of payment of licence fees. The Postmaster-general in another place gave the assurance to which Senator Hannan referred. He said that he was making an examination of all the problems, that he was not unaware of the desire to encourage increased Australian content but that this was not the way to do it. He also pointed out that the amendment would yield an insignificant amount of money for the purpose of encouragement. The Government is not prepared to accept- the amendment.

Senator COHEN:
Victoria

– The Opposition will support the amendment, although it will not achieve all that we had hoped to achieve. We had hoped that the Committee would rise to the occasion and direct the Government on a central issue of policy. But the amendment does make the point that some differential treatment is to be given by way of small concessions to stations in respect of that part of their transmissions which involves the production of Australian programmes. That being so, we are prepared to support the amendment, it being understood that the amendment does not really meet the whole of the case that we put.

I think I should inform the Committee that when this matter was being debated in another place inclusion of the words “ as defined by the Australian Broadcasting Control Board in its categories of programmes “ was suggested by way of amendment moved by the Opposition, it being felt that without those words an amendment in identical terms to that now proposed by Senator Buttfield would lack teeth and would allow the commercial stations to cut loose on their definition of what was artistic, musical or dramatic. With the inclusion of the words “ as defined by the Australian Broadcasting Control Board in its categories of programmes”, the matter is brought into sharper definition. To the extent that it meets our point of view, we support the amendment.

Senator HANNAN:
Victoria

– Before voting on this amendment, we should realise some of the practical difficulties that are involved in it. As money is involved in the determination of these figures, I wonder Who is to monitor the percentage of time in which this material is transmitted. Is it suggested that the Broadcasting Control Board should appoint an officer to monitor each transmission of each station each week in this particular category? The Broadcasting Control Board has monitors for the general operation of the powers and duties which were given to it by the parent legislation, but inasmuch as such a large amount of money will be involved - about 60s. a day - I presume that some form of confirmation of transmission times and percentages will be required.

Senator Prowse:

– Is the honorable senator referring to Australian art?

Senator HANNAN:

– Speaking of Australian art, I noticed that one earlier speaker asked whether “musical” related to works of Australian composers or works of nonAustralians performed in Australia. Is it intended to embrace jingles, incidental music or background music? Does “ dramatic material “ relate to the work of Australian writers? Must it be indigenous Australian drama?

Senator Wright:

– Look at the report of the Senate television committee.

Senator HANNAN:

– I regret to say that the report of the television committee is not embodied in the Bill. If it were, many of my objections would cease forthwith. I remind the Senate that if such a proposal as this is to have any merit, it must be capable of practical administration. Quite apart from the 60s. to which I have already referred, I believe that the cost of extending monitoring services to bring about the benefit which it is alleged will be conferred would be out of all proportion to whatever benefit would actually accrue.

Senator BUTTFIELD:
South Australia

– I should like to answer the honorable senator by reminding him that in the Minister’s second reading speech he will find it stated that filmed advertisements are already exempted from the revenue. If programmes are already monitored for one thing, it would not be any more difficult to monitor the item to which I have referred. When Senator Hannan repeated the figure which I have already proved is inaccurate, he seemed to me to be proceeding on the basis that if you repeat a thing over and over again people will believe it.

Question put -

That the words proposed to be inserted (Senator Buttfield’s request) be . so inserted.

The Committee divided. (The Temporary Chairman - Senator K. A. Laught.)

AYES: 21

NOES: 19

Majority ….. 2

AYES

NOES

Question so resolved in the affirmative.

Bill reported with a request; report adopted.

page 1687

BROADCASTING STATIONS LICENCE FEES BILL 1964

Second Reading

Consideration resumed (vide page 1606).

Question resolved in the affirmative.

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

page 1687

BROADCASTING AND TELEVISION STATIONS LICENCE FEES REPEAL BILL 1964

Second Reading

Consideration resumed (vide page 1606).

Question resolved in the affirmative.

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

page 1687

BROADCASTING AND TELEVISION BILL (No. 2) 1964

Second Reading

Consideration resumed (vide page 1606).

Senator COHEN:
Victoria

.I wish to make a few brief remarks on this measure, Mr. Deputy President. It will give effect to a number of suggestions not overwhelmingly important in character, and it makes provision in some detail for the tidying up of certain features of the principal Act. We offer no opposition to its provisions. I rise briefly to make the point that, this being a bill covering the fields of broadcasting and television, the Opposition seeks some information about the promise made last May by Sir Charles Davidson, who was then Postmaster-General, to consider amending the Act to deal with transactions in the shares of a television company resulting in the transfer of effective ownership from one person or group to another. I refer particularly to the scandalous case of the licence for the . third Brisbane commercial television station. After the Australian Broadcasting Control Board had rejected the Ansett application for the licence, the Ansett interests acquired 49 per cent, of the shares in Universal Telecasters Queensland Ltd., the company to which the licence had been granted. I do not propose to go over the ground again or to describe the extraordinary indignation that the situation aroused. But when the situation was brought to the notice of the present Postmaster-General (Mr. Hulme) he took the view that what had been done was within the terms of the Act and was not subject to any action or discipline by the Minister. The PostmasterGeneral did undertake in May last to act in this matter and he said, as reported at page 1496 of “Hansard”-

I have occupied the office of Postmaster-General for only a few months and it is a portfolio which has many implications. I am giving consideration to this matter, and I hope before very long we shall have before us an amendment which will help to clarify situations such as this.

We have not had the amendment yet, or any indication of an amendment, except that in another place yesterday the Postmaster-General, in reply to a question, indicated that he would not be able to do anything about the matter prior to the House rising, and he added -

Perhaps, in the next session of the Parliament, we may be able to have a look at the matter.

That is not good enough from the point of view of the Opposition, and in a general way, we take this opportunity to ask for some much more definite assurance from the Minister that legislation will be forthcoming to deal with this matter.

Senator ANDERSON:
Minister for Customs and Excise · New South Wales · LP

– in reply - Senator Cohen sought some assurances from the PostmasterGeneral (Mr. Hulme) and then read the assurances on this matter that the Minister had given in another place. I cannot add anything to them. I thank the honorable senator for reading the Minister’s assurances.

Senator Cohen:

– When is the Minister going to carry out those assurances?

Senator ANDERSON:

– I can only say that the Minister has indicated that he has had tremendous pressure on him during this sessional period through this legislation and other matters. He has said that he is currently looking at the question raised by Senator Cohen.

Question resolved in the affirmative.

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

page 1688

ADJOURNMENT

The Senate

Motion (by Senator Paltridge) proposed -

That the Senate do now adjourn.

Senator McKENNA (Tasmania - Leader

Leader of the Government in the Senate (Senator Paltridge) in a position to say anything about the filling of the casual vacancy in the Senate? I understand that the Premier of Western Australia indicated in the State Parliament yesterday that he had had no advice on this matter. Is the Minister able to state whether any decision has been reached in the meantime?

Senator PALTRIDGE:
Minister for Defence · Western Australia · LP

– in reply - No. I referred to the Minister for the Interior (Mr Anthony) the question that was asked on the matter yesterday morning and asked him for information. I have not yet received it. I shall inform the Leader of the Opposition as soon as I have the information.

Question resolved in the affirmative.

Senate adjourned at 2.45 a.m. (Thursday).

Cite as: Australia, Senate, Debates, 11 November 1964, viewed 22 October 2017, <http://historichansard.net/senate/1964/19641111_senate_25_s27/>.

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