House of Representatives
8 April 1930

12th Parliament · 1st Session

  1. House of Representatives
  2. 12th Parliament
  3. 1930

Mr. Speaker (Hon. NormanMakin) took the chair at 3 p.m., and offered prayers.

page 910

CUSTOMS BILL

Assent reported.

page 910

SOUTH BRISBANE TO KYOGLE

page 910

QUESTION

RAILWAY

Mr BAYLEY:
OXLEY, QUEENSLAND

– Is the Minister for Works and Railways yet in a position to make a statement regarding the progress of the construction of the South Brisbane to Kyogle railway? When will the line be open?

Mr LYONS:
Minister for Works and Railways · WILMOT, TASMANIA · ALP

– The information which the honorable member desires is not yet available.

page 910

QUESTION

CANBERRA-SYDNEY MAILS

Mr ARCHDALE PARKHILL:
WARRINGAH, NEW SOUTH WALES

– I ask the Postmaster-General whether the arrangement can be continued whereby letters posted at Parliament House before 9 o’clock p.m. may be delivered in Sydney by the first post next morning?

Mr LYONS:
ALP

– I shall consult the department with regard to the honorable member’s suggestion,

page 910

QUESTION

NAVAL CONFERENCE

Mr E RILEY:

– Has the Prime Minister received any communication from the Minister for Trade and Customs (Mr. Fenton) regarding the progress of th e Naval Conference in London ?

Mr SCULLIN:
Minister for External Affairs · YARRA, VICTORIA · ALP

– The Government has received reports from time to time, but no report of a final character regarding the decisions of the conference has come to hand.

page 910

QUESTION

CENSUS AND REDISTRIBUTION OF SEATS

Mr MACKAY:
LILLEY, QUEENSLAND

– I askthe Prime Minister whether the Government has decided to postpone the taking of the census to July, 1988. If so, will this delay interfere with the re-arrangement of federal electoral boundaries?

Mr SCULLIN:
ALP

– Owing to the financial position the Government has decided to postpone the taking of the census till 1933, and a small measure toobtain par liamentary sanction of thatcoursewill be introduced. The postponement of the census will not prevent the periodical redistribution of seats.

Mr MACKAY:

– Will the rearrangement of electoral boundaries take place during the life of this Parliament ?

Mr SCULLIN:

– I anticipate that it will. The Representation Act provides that the seats shall be redistributed in accordance with the population of the Commonwealth and the States on enumeration day, which is the day on which the decennial census is taken or any other day appointed by the Chief Electoral Offier at the expiration of five years from the last preceding enumeration day. According to the population statistics thus ascertained a redistribution of seats will take place.

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QUESTION

EXCISE TARIFF

Duty on Fortifyingspirit-priceof grapes.

Mr GABB:
ANGAS, SOUTH AUSTRALIA

– I have received a letter from a constituentwho states -

One man in charge told me the growers will get the Government price for their grapes, but the makers are only going to take from them this year 60 per cent.of the amount which the growers delivered last year. . So that makes the position very bad for the growers after all the Prime Minister has done on their behalf.

Will the Prime Minister, before allowing fortified wine to be taken outof bond at the old rate of excise, demand from the wine-makers a bond or written guarantee that they will pay the fixed price for grapes, and take the same quantity as they bought last year ?

Mr SCULLIN:
ALP

– Those wine-makers who will enjoy the bounty on the exported wine will be required to pay the fixed prices for grapes. The larger winemakers are not exporters and, therefore, are not bound to pay the fixed price; but at the conference held in Canberra last week they agreed that, if they were allowed to take their fortified wine from bond at the old rate of duty, they would pay to the growers the fixed price for grapes and take delivery of the normal quantity bought by them last year. To-day the Acting Minister for Trade and Customs (Mr. Forde) received an assurance from one of the largest winemanufacturers in South Australia that the whole of the grapes grown in South

Australia this year for wine making purposes will be purchased by the wineries.

Mr HAWKER:
WAKEFIELD, SOUTH AUSTRALIA

– Is the Acting Minister for Trade and Customs obtaining more than a verbal assurance from the winemakers that the normal quantity of grapes will be purchased at the fixed price ?

Mr FORDE:
Assistant Minister assisting the Minister for Customs · CAPRICORNIA, QUEENSLAND · ALP

– The wine-makers who conferred with the Prime Minister and me in Canberra last week gave us their word of honour that they will pay the fixed price for this year’s grapes. Until they default we shall treat them as gentlemen, and I feel sure that they will honour the definite undertaking they have given to the Government.

Mr GABB:

– Is the Prime Minister aware that two wine-makers in South Australia have displayed a notice stating that they would pay less than Government fixed prices for grapes, and that payments would be made in instalments in June, September and December? In view of that intimation before the winemakers are allowed to remove wine at old rates of excise will the honorable gentleman obtain more than a mere verbal promise from the wine-makers; will he secure from them a bond or a document? None of these gentlemen is named George Washington?

Mr SCULLIN:

– I have nothing to add to the answer previously given, and to the statement made by the Acting Minister for Trade and Customs.

Mr HAWKER:

– I ask the Acting Minister for Trade and Customs if he is aware that last year one of the winemakers, after giving his word of honour that he would pay the fixed price for grapes, did not do so at several wineries under his control. Will the Minister make inquiries, and if he ascertains that that is the case, will he obtain from the wine-makers some binding document before agreeing to allow them to remove existing stocks from bond without paying export duty?

Mr FORDE:

– If the honorable member will supply me with the name of the wine-maker to whom herefers, inquiries will be made.

page 911

QUESTION

CANBERRA GARDEN PLANTATIONS

Mr GABB:

– Turning from wine to water, I ask the Minister for Home Affairs if his attention has been directed to the fact that a number of ornamental shrubs and trees in the public plantations of Canberra are dying, and if he does not think it necessary to arrange for these trees and shrubs to be periodically watered, so that the money spent on the gardens may not be wasted, and we may retain what we have ?

Mr BLAKELEY:
DARLING, NEW SOUTH WALES

– As a result of three months of exceptionally dry weather a number of ornamental trees in Canberra have died, but watering is being carried on so far as practicable, and everything that can be done will be done to preserve the trees.

page 911

QUESTION

SOUTH AUSTRALIAN ELECTION

Mr CULLEY:
DENISON, TASMANIA

– Is the Prime Minister in a position to inform the House what political party won the recent election in South Australia?

Question not answered.

page 911

QUESTION

TIMBER INDUSTRY

Mr PRICE:
BOOTHBY, SOUTH AUSTRALIA

– I have received from Adelaide a telegram to the effect that for the first time in many years American pitch pine flooring is being imported. As the competition of this timber is detrimental to jarrah and other hardwood flooring, will the Minister investigate the matter ?

Mr FORDE:
ALP

– For some time past the Government has been considering the adequate protection of the timber industry, and the representations of the honorable member for Boothby (Mr. Price) and other honorable members and interested parties will receive due attention before any decision is reached by the Government.

Mr ARCHDALE PARKHILL:

– I ask the Acting Minister for Trade and Customs whether the conference which is now being conducted in connexion with the timber industry is an informal or an official gathering. If it is an official conference, will the Minister invite the New South Wales timber merchants - the largest interest concerned - to attend that gathering?

Mr FORDE:

– The conference that is being held is of an informal character. A number ofthose interested in the timber business decided to confer.

Representations will be received from them as well as from any other interests which the honorable member may have in mind.

page 912

QUESTION

PREFERENCE TO RETURNED SOLDIERS

Mr HAWKER:

-I ask the Prime Minister if the Government’s policy of preference to returned soldiers applies in cases of retrenchment as well as in connexion with new appointments?

Mr SCULLIN:
ALP

– The action of the Government in this respect is governed by the provisions of the Public Service Act. Preference for returned soldiers is provided for only in regard to new appointments.

page 912

QUESTION

DUTY ON TOOL HANDLES

Mr W ATKINS:

– In considering the recent tariff proposals, has the Acting Minister for Trade and Customs taken into consideration the requests which have so often been made concerning the duty on pick, axe, and other tool handles?

Mr FORDE:
ALP

– The fullest consideration is being given to the representations which have been made on several occasions by the honorable member for Newcastle in connexion with this matter.

page 912

QUESTION

TRADE COMMISSIONER IN CANADA

Mr BAYLEY:

– I ask the Minister for Markets and Transport what alterations, if any, will be made in the Government’s policy in connexion with the office of Trade Commissioner in Canada as a result of the Government’s recent tariff proposals.

Mr PARKER MOLONEY:

– As the honorable member for Oxley is aware, a trade commissioner for Canada has been appointed in place of Mr. Haines. I do not see that the appointment of that official is in any way affected by the Government’s tariff proposals.

page 912

QUESTION

DEVELOPMENT AND MIGRATION COMMISSION

Mr MACKAY:

asked the Prime Minister, upon notice -

  1. What was the total cost to the Commonwealth of the operations of the Development and Migration Commission in - (a) Australia, and (b) London, respectively, for the year ended 30th June,1 929?
  2. What has been the total cost of the Development and Migration Commission since its appointment?
  3. What is the estimated saving under the proposals of the Government in connexion with the abolition of the commission?
Mr SCULLIN:
ALP

– The answers to the honorable member’s questions are as follow : -

  1. The total cost to the Commonwealth of the operations of the Development and Migration Commission for the year ended 30th June, 1929, was - (a) in Australia, £88,547: (b) in London, £28,939.
  2. The total cost to the 28th February, 1930, was £397,870.
  3. As a result of the savings effected by the Government the total cost, including expenditure in Australia and London for 1930-31 will amount approximately to £50,000 - a saving of about £67,000 over expenditure incurred during the year ended 30thJune, 1929.

page 912

QUESTION

DEFENCE DEPARTMENT

Purchaseof Aeroplanes

Mr WHITE:
BALACLAVA, VICTORIA

asked the Minister for Defence, upon notice -

  1. Is it the practice of the department to buy aeroplanes without calling for tenders?
  2. If so, what is the value of such orders placed, also the names of the supplying companies, during the past ten years?
  3. Is the department’s future policy fur renewal of aerial mail contracts to be a matter of tender or negotiation?
Mr A GREEN:
through Mr. Beasley

– The answers to the honorable member’s questions are as follow : -

  1. The practice of the department when arranging the purchase of aeroplanes is as follows : -

    1. After deciding on the type to be purchased, if the aircraft is to be obtained from abroad, the order is placed through the Contract Branch of the British Air Ministry, with the manufacturers of that particular type. Australian requirements are usually bulked with supplies for the British Air Force, and theRoyal Australian Air Force benefits by reduced prices. Some orders for D.H. Moths and machines of commercial type have been placed direct with the manufacturers.
    2. In casesin which the department has purchased from the designers’ the necessary drawings and rights to manufacture locally, public tenders have been invited and contracts for local manufacture made.In some instances orders have been placed with local firms holding manufacturing rights from the designers without calling for public tenders. 2.The approximate value of aeroplanes, less engines, purchased during the last ten years is£286,700. The names of the supply companies are -

England -

Fairey Aviation Company, Southampton

Super Marine Aviation Works Limited, Southampton

De Havilland Aircraft Company, London

Aircraft Disposals, London

Westland Aircraft Works, Yeovil

Bristol Aeroplane Company, Bristol. Australia -

Queensland and Northern Territory Aerial Services Limited, Longreach

West Australian Airways Limited,

Perth

Australian Aircraft and Engineering Company Limited, Sydney

Larkin Aircraft Supply Company, Limited. Melbourne

  1. The Government is not committed to a fixed policy, as the main factor which will govern decision will be the necessity for reasonable economy while ensuring the maintenance of an efficient service.

page 913

QUESTION

CUSTOMS PROCEDURE

Mr LEWIS:
CORIO, VICTORIA

asked the Acting Minister for Trade and Customs, upon notice -

Whether he has read paragraph99, page 58, of the recent report of the Auditor-General, having reference to section 83 of the Customs Act, in which report he again directs attention to the necessity of taking remedial measures to prevent loss of revenue, resulting from delay in ascertaining contents of bonded packages caused by delay in production of invoices?

Mr FORDE:
ALP

– Yes. The departmental contention is that it is acting entirely within the law, and that there is no real risk to the revenue. The AuditorGeneral’s report reads as if the practice could have application to all goods placed in bond. As a matter of fact, it applies only to a relatively small quantity of goods, as to which full particulars necessary to assess duty are not to hand, and which are bonded pending the arrival of complete invoices or other documents.

page 913

QUESTION

DUTY ON CABLES AND WIRE

Mr C RILEY:

asked the Acting Ministe for Trade and Customs, upon notice -

  1. Whether his attention has been drawn to the suggestion made to the Tariff Board by Mr. D. J. Sullivan, of the Australian Industries Protection League, during the hearing of a request for an increased duty on insulated rubber cables and wire, to the effect that in the event of a deferred duty being recommended by the board, steps should be taken to protect this new industry by admitting all imports under a quota system?

    1. With a viewto giving local manufacturers an opportunity of getting a share of the trade immediately the new tariff comes into operation, will the Minister give favorable consideration to the suggestion, and consider the advisability of fixing the quota in proportion to the fair monthly average of imports for the corresponding months of the previous year.
Mr FORDE:

– The answers to the honorable member’s questions are as follow : -

  1. My attentionhas not hitherto been drawn to the suggestion, as the report of the Tariff Board has not yet been received.
  2. When the report is received, consideration will be given to the suggestion.

page 913

QUESTION

TAXATION DEPARTMENT

Re-engagement of Retired Officer.

Mr LEWIS:

asked the Prime Minister, upon notice -

  1. Whether he has seen paragraph 38, page 27, of the report ofthe Auditor-General, having reference to an officer of the Taxation Department, who, having reached the retiring age, was retired from his office, but re-engaged the following day at his former salary, plus the pension due to him?
  2. Is this officer still in the employ of the Taxation Department ?
  3. If so, is it proposed to continue his services? 4.If he is still employed, will the Prime Minister, in view of prevailing unemployment, consider the advisability of terminating the appointment, seeing that the pension accruing is sufficient for the maintenance of the officer concerned, and the vacancy would provide an opportunity for some unfortunate to obtain employment instead of giving a man already well provided for a salary on top of his already liberal retiring allowance?
Mr SCULLIN:
ALP

– The answers to the honorable member’s questions are as follow : -

  1. Yes.
  2. No. Thisofficer was re-engaged for a period of twelve months from the date on whichhe reached the retiring age, namely, 20th April, 1928. He was a valuer whose services were regarded as essential until certain valuations had been settled. 3 and 4. See answer to No. 2.

page 913

QUESTION

NEW GUINEA GOLD-FIELDS

Mr SCULLIN:
ALP

– On Friday last, in reply to a question without notice by the honorable member for Hunter (Mr. James), I promised to have inquiries made regarding a statement which bad appeared in the press that British foremen had been dismissed from the Edie Creek gold-fields in order that Italians might be engaged with a view to reducing costs of production and forcing more work out of the natives. The Administrator of New Guinea was instructed to report upon the matter, and he has now advised me that the chairman of directors in Australia of the New Guinea Gold-fields Limited, who has been on a visit to New Guinea., has informed him that there is no truth in the statement referred to. Three Australians of Italian extraction were, however, recently engaged with four other Australian miners of British nationality, but none of them had displaced any British or Australian miner. The chairman stated, further, that the company was gradually increasing the number of British employees on the field, and that the SS. Marsina, on her last voyage, had brought eleven such employees from Australia. As transport facilities improved, the. company intended to add still more to its pay roll. The undertaking was so large and native labour so unsatisfactory and unsuitable for the work that the company would have to employ more white miners to make a success of the enterprise. The Administrator adds that his information indicates that probably over 200 white men will be employed when the serious work of production is started.

page 914

QUESTION

LOAN FLOTATIONS

Mr THEODORE:
Treasurer · DALLEY, NEW SOUTH WALES · ALP

– On the 4th April, the honorable member for Moreton (Mr. Francis) asked the following questions, upon notice -

  1. What was the amount of overseas loans, other than war loans, raised by the Commonwealth Government, and each of the State

Governments, including those arranged through the Loan Council, from 1915 to 1929 inclusive?

  1. What was the amount of overseas war loans raised from 1915 to 1929 inclusive?

I am now able to furnish the honorable member with the following information : -

  1. Figures are not available, so far as the States are concerned, showing new borrowings as distinct from conversions during the period indicated. I am therefore giving the net increase that has taken place in overseas debt both for the Commonwealth and the States during the fifteen years from1914-15 to 1928-29 inclusive. These are as follow: -
  1. The gross amount raised was £103,500,317 of which £92,480,157 represented indebtedness to the British Government. The amount outstanding at 30th June, 1929, was £93,810,641, of which £82,790,481 was due to the British Government.

page 914

QUESTION

LIGHT DUES

Mr FORDE:
ALP

– On 20th March, the honorable member for Richmond (Mr. R. Green) asked the following questions. upon notice -

  1. What was the total revenue derived from Commonwealth light dues for the years 1925-26, 1926-27, and 1928-29?
  2. What was the total cost of maintaining the Commonwealth lighthouse service during the same periods?

I am now able to furnish the honorable member with the following information: -

  1. Revenue from Commonwealth light dues : -

The following capital expenditure has also been incurred: -

page 915

QUESTION

EXPORT OE AUSTRALIAN FAUNA

Mr FORDE:
ALP

– On the 1st April the honorable member for Adelaide (Mr. Yates) asked the following question, upon notice -

Will he have inquiries made into the statement published in the Adelaide press, relative to a consignment of fauna, that “Mr. A. L. Turner, of Sydney, is in charge of the consignment which includes about 100 kangaroos, wallabies and paddy melons (a typeof wallaby from the north coast districts of Now South Wales) “ seeing that the Ministerhas stated that Mr. Turner secured permission to take five kangaroos only, bred in captivity?

I am now able to furnish the honorable member with the following information : -

Inquiries have been made and ithas been ascertained that in addition to the five kangaroos mentioned previously, Mr. Turner, acting under a permit issued as far back as July last, exported twelve kangaroos and two swamp wallabies, all bred in captivity. He also exported 50 paddy melons - the last mentioned marsupials being wholly unprotected and regarded as pests in New South Wales.

page 915

QUESTION

FILM CENSORSHIP

Mr FORDE:
ALP

– On the 2nd April the honorable member for Adelaide (Mr. Yates) asked the following question, upon notice -

  1. Who are the members of the Film Censorship Appeal Board?
  2. What are the functions of the board?
  3. How many motion pictures have been withheld from exhibition by the Censorship Board during the last twelve months?
  4. How many pictures have been passed on appeal during the same period?
  5. How many pictures have been “ cut “, and the “ cuts “. allowed on appeal ?
  6. Is it a fact that one picture unanimously rejected by the Censorship Board is now being shown in Melbourne?

I am now able to furnish the honorable member with the following information : - .

  1. Professor Le Gay Brereton, Mr. J. V. Gould, and Mrs. Mary Gilmore.
  2. To deal with appeals from any decision of the Censorship Board in any matter arising under the Customs (Cinematograph Films) Regulations.
  4. 50 appeals were lodged against rejection. 23 were passed and eight allowed after reconstruction.
  5. A total of 571 films were cut. 31 appeals were lodged against eliminations, of which eighteen were allowed on appeal.
  6. Yes.

page 915

QUESTION

TRANSPORT WORKERS’ LICENCES

Mr FORDE:
ALP

– On the 4th April the honorable member for Herbert (Mr. Martens) asked the following question, upon notice -

  1. What was the number of licences issued during theyears 1928 and 1929 under the provisions of the Transport Workers’ Act, in each of the following Queensland ports: - Brisbane, Bundaberg, Bowen, Townsville,Lucinda Point, Innisfail and Port Douglas? 2. (a) What was the number of transport workers employed in each of the ports mentioned immediately prior to the operation of the Transport Workers’ Act; (6) What is the number employed in each port at the present time?

I am now able to furnish the honorable member with the following information : -

  1. Transport workers’ licences, whenever issued, are valid, unless cancelled, until the 30th June next following. During the period October, 1928 to the 30th June, 1929, and the period, 1st July, 1929 to 8th November, 1929 (when the issue of licences ceased), the numbers of licences issued at the ports mentioned were as follow: -

2.(a) and (b). No information is available in regard to the number of transport workers employed at the ports at any particular time.

page 916

LEAGUE OF NATIONS ASSEMBLY- IMPERIAL AND ECONOMIC CONFERENCES

Mr SCULLIN:
ALP

– I wish to announce that the Attorney-General (Mr. Brennan) will be the delegate to represent Australia at the Eleventh Assembly of the League of Nations, and that the Minister for Markets (Mr. Parker Moloney) will accompany me to the Imperial and Economic Conferences.

page 916

SPECIAL ADJOURNMENT

Motion (by Mr. Scullin) proposed -

That the House, at its rising, adjourn until 1 1 a.m. to-morrow.

Mr LATHAM:
Kooyong

.- I should like to ask the Prime Minister whether it was not possible to give honorable members some notice of this motion ? Arrangements have been made which will be seriously interfered with by this sudden change. I am doubtful whether it will be necessary for the House to meet at an earlier hour in order to get through the business which the Government desires to transact before Easter adjournment. It is usual to give honorable members notice of morning sittings.

Mr SCULLIN:
Prime Minister · Yarra · ALP

– I regret that I did not give the Leader of the Opposition (Mr. Latham) notice of my intention to move this motion, but I was under the impression that he expected this action to be taken. I intimated last week that we should have to push on with our work this week in order to get through our programme before Easter. The Government believed that it suited the convenience of honorable members better to be called together at 11 a.m. than to sit into the small hours of the following morning. If the carrying of this motion will seriously interfere with arrangement’s that have been made I shall give the matter consideration, and make a statement later in the day.

Question resolved in the affirmative.

page 916

PAPERS

The following papers were presented : -

War - Prohibition of use of Asphyxiating, Poisonous or other Gases, and of Bacteriological Methods of Warfare - Protocol, signed at Geneva on 17th June, 1925.

Northern Territory Acceptance Act and Northern Territory (Administration) Act - Ordinance of 1918- No. 9 - Aboriginals.

page 916

WHEAT MARKETING BILL

Motion (by Mr. Parker Moloney) agreed to -

That he have leave to bring in a bill for an act relating to the marketing of wheat and for other purposes.

Bill brought up, and read a first time.

Second Reading

Mr PARKER MOLONEY:
HumeMinister for Markets and Transport

– by leave - I move -

That the bill be now read a second time.

This bill contains the proposals of the Government for the stabilization of the wheat industry. Although it relates only to wheat, it indicates the general policy of the Government in connexion with the marketing of our great primary products. The Government’s policy is to stimulate and encourage our primary and secondary industries. In associating the two we realize that the success of our prima ry industries is bound up with the success of our secondary industries. We could not destroy our secondary industries without seriously affecting our primary industries, and, on the other hand, we could not build up our primary industries without benefiting our secondary industries.

The Government has adopted the methods set out in the bill only after the fullest consultation with those connected with the industry. Honorable members will agree with me when I say that a policy of this kind should be in continuous operation in a young country like Australia, especially at a time when it is passing through a period of great depression, as it is at present. Honorable members will agree, too, that a project of this nature should be considered in a non-party spirit. I have studiously observed this rule in all the negotiations which preceded the action that has been taken and in the preparation of the measure. Since the proposals began to take shape and before and since the conference in Canberra of the representatives of the State Governments and primary producers, I have not knowingly uttered one word which could be in any sense construed as savouring of party politics. The wheatgrowing industry is of outstanding importance to the financial stability of the

Commonwealth. I, therefore, ask for the earnest co-operation of all honorable members in the passing of this legislation, which has been designed to encourage and stimulate this great primary industry. I believe also that I shall not make this appeal in vain, for I am sure that all honorable members, irrespective of party objectives, will discuss this bill in the spirit which has led to its introduction. The Canberra conference was, so far as it was possible to make it, representative of all the organizations in Australia that are associated with the wheat industry. I was totally ignorant of the political views of those who attended that gathering, and I can say, without fear of contradiction, that the schemes which I submitted to them were considered in an atmosphere from which party feeling was absent.

The object of the bill is to regulate the export and interstate trade in wheat and flour through a board, to be known as the AustralianWheat Board, controlled by wheat producers in order to give effect to the Government policy for an Australian compulsory wheat pool. The Government will guarantee to the growers payment of 4s. a bushel for f.a.q. wheat delivered at country railway stations, plus 8d. a bushel for rail freight, and other expenses. The Australian Wheat Board will consist of one representative from each State wheat board, vested under a State law with power to acquire, on behalf of the growers, all wheat grown within the State, to hold such wheat as security against advances, and to sell it to the best advantage. There will also be a representative of the Commonwealth on the Australian Wheat Board.

Mr Gregory:

– Will each member of a State boards be a government nominee?

Mr PARKER MOLONEY:

– The State boards will consist of nominees of the producers with, I presume, one representative of each State Government; but the producers’ representatives will be in a majority on them.

Because of the limitations imposed upon the Commonwealth by the Constitution, it was not competent for this Government to bring down a scheme for a compulsory Australian wheat pool. We therefore had to seek the co-operation of the State Governments. Honorable members will gather how great are the limitations of the Federal Constitution from the roundabout method which had to be adopted. Even if a great majority of the wheat-growers of Australia approved of a compulsory wheat pool, the Commonwealth Government would be powerless to give effect to their wishes, without first calling together representatives of State Governments and securing their approval. This approval having been obtained at the conference in Canberra, the next step is to secure the passage of legislation through the Commonwealth and State Parliaments. Honorable members will appreciate the nature of the obstacles still to be encountered when I remind them that the Upper Houses of ‘State legislatures are elected on an entirely different franchise from that under which members of this House, or of the Lower Houses of State Parliaments are elected.

Mr Archdale Parkhill:

– The Constitution is not now under discussion.

Mr PARKER MOLONEY:

– I have merely made passing referenceto the matter. Surely some alteration of the Constitution is needed when so many difficulties have to be overcome before assistance can be given to one of our great primary industries.

The Australian Board will not come into existence until three or more States have appointed their marketing boards, on which the producers will have a majority of representatives. Queensland already has a marketing board, and has guaranteed the price of wheat in that State for a number of years. New South Wales has passed a Marketing Act; but a ballot of growers in that State will be necessary before a marketing board can be set up in that State.

Mr Prowse:

– Has the variation of the interests of the several States been taken into consideration?

Mr PARKER MOLONEY:

– Every State was represented at the Canberra conference, and the views of the different States were fully explained. The honorable member will find that, in either the bill or the schedule to it, most of those views have been met. It will be competent for him to move any amendment to give effect to the desire of any State when the bill reaches the committee stage.

Mr Morgan:

– Is an official report of the coherence available to honorable members?

Mr PARKER MOLONEY:

– Full publicity to the proceedings of the conference was given in the columns of the press. The Victorian Governmenthas already announced that it will take early steps to give legislative effect to the Government’s . proposals, so far as Victoria is concerned. I understand also that the Government of Western Australia is sympathetic towards the establishment of a compulsory wheat pool. In consequence of the recent election in South Australia there has been no official pronouncement of government policy from that State; but it appears that there will be a new government there which will be in sympathy with the proposals. The representative from Tasmania at the conference intimated that that State would not participate in the scheme.I am unable to say whether it is proposed to allow the wheat-growers of that State any voice in the settingup of a State board.

TheAustralian Wheat Board will have the power, in respect of wheat and flour, to regulate the oversea market and the export of those commodities from all the States; to make all arrangements with shipping companies in respect of freight; to appoint overseas agencies; to regulate the trade between the States so as to prevent the disorganization of the Australian market; to investigate and report on all matters affecting the wheat industry, including bulk handling, and also to enter into agreements with the State boards in relation to the marketing of wheat within Australia. Clause 4 authorizes the making of agreements between the Commonwealth and State Governments for a joint guarantee of 4s. 8d. per bushel. Clause 5 authorizes the Commonwealth Government to pay out of revenue its share of any losses that may be incurred. The form of agreement proposed to be entered into between the Commonwealth and the State Governments forms the schedule to the bill.Clause 8 of that agreement provides that the Commonwealth and State Governments participating in the pool may share any losses that may arise by reason of a guaranteed price for wheat. In terms of clause 9 of the schedule, the Commonwealth Government will guaranteeto the Commonwealth Bank the payments of the 4s. a bushel paid to wheat-growers, together with 8d. per bushel to cover expenses and interest. Those are the principal provisions of the bill. Honorable members will be given a full opportunity to discuss them, as well as other minor clauses, when the bill reaches the committee stage.

The bill is the result of negotiations which have extended over many months. It is an earnest attempt by the Government to encourage and protect the wheatgrowing industry along the lines suggested by wheat-growers and members of associations connected with wheatgrowing. Prior to the Canberra conference, I consulted various organizations of wheat-growers, as well as individual farmers, with a view to ascertaining the best means of stabilizing this great primary industry. Following those negotiations, I arranged for the conference which was held in Canberra in February last. I do not exaggerate when I claim that it was the most representative gathering of wheat-growers that has ever assembled in Australia. Representatives came from all parts of the Commonwealth, and engaged in debate in an entirely non-political atmosphere. Prior to the conference, the Government consulted the wheat-growers’ organizations, and the financial and legal authorities; the last named to ascertain exactly where our constitutional limitations began and ended, and the financial authorities upon the important matter of finance. Before I called the conference together at Canberra, I had the definite assurance of both the Governor and the Deputy-Governor of the Commonwealth Bank that there would be no difficulty to finance the scheme. I stress that point in answer to those who, when opposing the proposal, claimed that financial arrangements were not made when the conference was convened.

Mr E Riley:

– Have you any idea what amount of money will be required?

Mr PARKER MOLONEY:

– That will depend entirely on when and in what quantities the wheat comes in. Since the conference, matters of detail have been considered by the Commonwealth Bank Board, who have agreed to cooperate whole-heartedly with the Government. Those facts prove that neither now nor at any time since the scheme was mooted has there been any difficulty in regard to its financing.

Mr Maxwell:

-How was the figure of 4s. arrived at?

Mr PARKER MOLONEY:

– After fully investigating the proposal, the Government considered that 4s. was the limit to which it could go - and it desired to go the limit in order to help this great primary industry.

Mr Paterson:

– That figure is a good deal short of the limit set up by the honorable member forCalare (Mr. Gibbons).

Mr PARKER MOLONEY:

– It is a long way ahead of any limit set up by the previous Administration. The scheme was put before the conference at Canberra only after the Government had exhaustively considered it, and on consultation with the financial authorities, had decided upon the maximum guarantee that it could afford. One of the first points that I put before the conference was that it was not to be a government pool, but one controlled by the growers themselves; that it was a proposal to assist the wheat-growers to control their own business, by making available the necessary legislative machinery to establish a compulsory wheat pool. After a debate that lasted two clays those practical men, representing thewheat-growers of Australia, unanimously carried a motion approving of the Government’s proposal, and expressing the belief that it would be an inducement to growers to produce a considerably greater wheat crop during the coming season.

After the scheme becomes fully operative the different boards, which will be composed largely of the growers’ representatives, will be in a position to make their own arrangements each year for charters, handling, transport selling, and finance. But the Government considered that for the first year, when there was no precedent to guide the boards, it was advisable to guarantee this sum of 4s. a bushel as a first advance payable on delivery of the wheat at therailway station, plus8d. for handling and other charges, making the return equivalent to 4s.8d. a bushel f.o.b. Those guarantees are conditional upon the passage of enabling legislation by the Commonwealth and at least three of the States of the Commonwealth. The matter of any future advance will depend largely upon the recommendations of the boards. They will be fully conversant with the situation, and will be in a position to advise the Government if it is considered necessary to come to it for assistance. The Government believes that a great step has been taken towards the stabilization of this important industry. The Prime Minister stated very definitely at the Canberra conference, and the assurance has since been repeated several times, that this Government will not see the wheatgrowers of Australia let down in future years.

Mr Gullett:

– The guarantee is only for the first year, but the proposal is to operate for a number of years.

Mr PARKER MOLONEY:

– Yes ; and I can tell the honorable member why. This aspect of the matter was discussed by the representatives who attended the conference in Canberra, and notwithstanding the fact that the guarantee was to be for only one year, they unanimously agreed to the proposal. At first glance it may seem strange that a pool should be established for three years at least, while a price guarantee should he given only for the first year, but we must remember that after the board has made itself familiar with conditions it may consider that a guarantee of something other than 4s. a bushel at railway sidings is necessary. Many of the delegates to the conference expressed the opinion that in view of the great fluctuations in wheat prices during recent years it would be inadvisable to fix the guarantee for more than one year.

Mr Gullett:

– There may be another shilling put on for election year.

Mr PARKER MOLONEY:

– I am trying toset a good example to the Deputy Leaderof the Opposition by cutting out party politics from this discussion but he will not follow it. We are submitting these proposals to give the wheat-growers of Australia an opportunity to organize their industry and stabilize prices. No one will deny that the wheat-growing industry in Australia is in dire need of the application of up-to-date methods nf marketing. This view was expressed by all the delegates who attended the Canberra conference, and they were practical wheat-growers who had been associated with the industry for years. Other wheat producing countries have already taken steps to organize the industry, and Australia is lagging far behind. The representatives at the Canberra conference, men of all shades of political opinion, were unanimous that something should he done here to stabilize the industry. A few weeks after the Canberra conference a big convention of representatives of agricultural bureaux was held at Albury, and a resolution was unanimously carried favouring the Government’s proposal. Since then, as the honorable member for Wannon (Mr. McNeill) reminds me, a conference of wheat-growers, held at Horsham, also endorsed the Government’s proposal. That conference was representative of actual wheat-growers, and in that respect was unlike the conference at St. Arnaud, which was composed to a considerable extent of the friends of merchants and their representatives. I am also informed that the annual conference of the Victorian Country party, held at Benalla about a fortnight ago, unanimously carried a resolution in support of the Government’s proposals. Just before the recent election in South Australia a delegation representing 6,000 wheat-growers in that State waited upon the Premier and told him in unmistakeable language that the wheat-growers of South Australia were in favour of a Commonwealth compulsory wheat pool. The Premier did not listen to them, and he is perhaps sorry now that he did not.

When we compare our inactivity with what is being done in other countries in the way of orderly marketing methods the need for action becomes even more apparent. It is evident -that if Australia decides to remain where she is in regard to this great primary industry, wheat-growers here may be squeezed out of the industry altogether. We have heard much of the Canadian wheat pool, and those who ‘are opposed to the principle of wheat pools here have pointed to the temporary difficulties being experienced by that pool as a reason why we should steer clear of a. pool altogether. Such persons omit to point out, however, that the Canadian wheat pool controls only 60 per cent, of the wheat produced in Canada. The issue of a compulsory versus a voluntary wheat pool in Canada is becoming a national question there. After being in operation for a number of years, the Canadian pool is now experiencing what I believe to be temporary difficulty. It is receiving powerful support, however, and three provincial governments in Canada have placed their guarantee behind the pool in an endeavour to maintain prices. The Canadian pool has to contend with two difficulties : the first is that it controls, as I have said, only 60 per cent, of Canadian wheat, and it is obvious that such an organization, faced with the fact that 40 per cent, of the country’s wheat production is free to be thrown on to the market in any way and at any time, must bo seriously handicapped in its attempt to stabilize the market. That, is one of the difficulties besetting the Canadian pool. Oil the other hand we have ample evidence of the machinations of great financial combinations in their endeavour to bring about its destruction. An extract from a recent cablegram received from the Canadian pool reads as follows: - “Determined efforts have been made on several occasions recently to force the pool to liquidate, and in Chicago, to test the Farm Board position.” (

The Farm Loan Board of the United States of America has been set up to stabilize the primary industries of the States. Honorable members can imagine what will be likely to happen if the Canadian pool has not a sufficient measure of control to enable it to save itself from the onslaughts of these great financial combinations which are controlled by the grain merchants in other parts of the world.

Mr Hill:

– The Canadian pool saved not only itself but also Australian wheatgrowers.

Mr PARKER MOLONEY:

– To a great, extent it did. I am citing the setting up of the Canadian wheat pool and the Farm Loan Board of the United States of America to indicate the great change that has taken place all over the world in the matter of governmental effort to stabilize primary industries. The governments of the progressive countries of the world to-day recognize that it is necessary for them to assist the primary producers to organize their industries. The functions of the Farm Loan Board of the United States of America were outlined the other day in a very interesting statement by the chairman of the board. He said - 1 he Fin-in Loan Board has extensively financed large holdings of wheat, nuri has itself bought surpluses off the market. Generally speaking, thu policy of the board lias been to enable growers to get a stable price internally.

And one of the methods adopted by the Farm Loan Board to secure a stable pi-ice internally is apparently to dump the surplus product at any price on the world’s markets. The chairman of the board also indicated that the objective of his board was to limit the production of wheat in the United States of America to domestic needs, with an artificial price, for internal needs independently of world fluctuations. Normally the major portion of the production of wheat in the United States of America is marketed internally. Australia’s wheat values have hitherto been governed by world values, and it can easily be seen that if America dumps its surplus, small though it may be when compared with the amount used internally, that must have a considerable influence on the price of wheat in Australia. As honorable members are aware, highly speculative grain markets have developed in New York and Chicago. . The speculative grain transactions on the Chicago wheat market are estimated to be 40 times larger than the actual sales of wheat. The recent “Wall-street crash has shown us the dire results that follow overspeculation in stocks and shares, and if a similar crash takes place on the speculative wheat markets we can imagine the effect they are likely to have on Australia, particularly in regard to the price of wheat. I do not claim that control in Australia will enable us to control the world’s wheat market, or that it will have any great effect on the price of wheat all over the world. But organization in Australia will greatly assist our wheat-growers to withstand any shock brought about by speculative grain transactions overseas, and above all will enable the Australian control to join hands, if necessary, with similar controls overseas in order to withstand the machinations of speculative interests which to-day are trying to stem the evergrowing tide of better organization and stabilization of primary industries apparent in every progressive country in the world.

I pass from Canada and the United States of America to the Argentine. No pool operates in the latter country: three national grain firms control over SO per cent, of the wheat crop. These firms have understandings regarding: prices and policies that are almost as effective as though a pool were in operation; but the benefit of that control is not enjoyed by the growers to any great extent. We had an opportunity recently of noting thegreat effect of even the present measureof control in the Argentine, when put into operation at a favorable timeWhen the Canadian pool decided to hold its wheat, these three firms rapidly depleted their stocks by rushing theirwheat upon the world’s market.

Mr Gabb:

– Organization in the wheatbusiness, when it is carried out by themerchants, is regarded as beneficial.

Mr PARKER MOLONEY:

– That isso. There is much objection shown; by merchants to farmers’ pools; but “ honorable understandings “ and mergers among merchants themselves must not be criticized. Why should not thegrowers, who have to bear the ‘heat and? burden of the day, come together in a pool, and enjoy the benefits- of organization among themselves? Last weekw’e read in. the press that the BritishGovernment is contemplating a purchasescheme for British home-grown wheat, under which it is proposed that, prior toeach planting season, the Government shall state the price that it will pay thefarmers for the crop of a given year’sseeding. This shows that, even in countries that have no wheat for export, action that was not thought of years agois now being taken. Continental countriesthat do not produce sufficient wheat fortheir own requirements still exert an influence on world prices, and we find a> new set of conditions obtaining in the wheat market to-day. Germany, France, and Italy have inaugurated bounty systems, and in one way or another they have adopted an extreme form of protection of their wheat industries. In practically every progressive country there is a movement to bring assistance to this primary industry.

There is another aspect of the matter. World importation conditions have undergone a great change since the late war. Formerly it was the custom for importing countries to hold large stocks; now we find, all over the world, that these stocks are very much smaller than they were, and that concentration in buying is practised to a large degree. About 60 per cent of the wheat consumed in Great Britain is bought by three great combines. This shows that, from all points of view, the conditions in the trade have changed. If Australia does not adopt some method of organization, its wheat farmers will be at the mercy of the overseas combines and market manipulators.

Mr Thompson:

– These would fix the world’s parity, too.

Mr PARKER MOLONEY:

– Yes. It must be disquieting to everybody who takes ah interest in the wheat position in Australia to realize that, while such conditions obtain overseas, the growers in Australia are disunited. I remarked upon this fact at the wheat conference recently held at Canberra, and all the representatives of the industry assembled here agreed with me. Everybody connected with the growing of wheat in Australia recognizes that up to the present time the producers have not had an opportunity to organize themselves. Owing to the limitations imposed by the Constitution, effective organization can be brought about only with the aidof the Government.

Mr Prowse:

– The farmers in Western Australia are well organized.

Mr PARKER MOLONEY:

– While I realize that good work has been done by the pool in that State, I think that it would have been far more effective if the whole of the wheat produced in Western Australia had gone into the pool. It is not too much to say that we in Australia have been paying too much attention to

State boundaries, and acting in a somewhat parochial spirit. The wheatgrowers have been too individualistic, and have been ignoring the great collective movement that has spread throughout the world. I say definitely that our growers cannot afford to shut their eyes to that world movement. Tremendous overlapping obtains to-day in the chartering, insuring, and selling of Australian wheat; it is observed at every stage of the marketing process. That, and many other things, will be rectified by an Australianwide pool, which will enable Australian wheat-growers to speak with one voice.

Mr Hill:

– We have not only overlapping, but also intense competition between the States.

Mr PARKER MOLONEY:

– That is so; one State is pulling against the other, when all should be pulling together. Our wheat is sold abroad as Australian, yet we have a multiplicity of sellers in the world’s market.

Mr Hill:

– But not a multiplicity of buyers.

Mr PARKER MOLONEY:

– That is true. The buyer likes to be able to treat with many sellers, and it must be realized that one seller is in a much stronger position than are several sellers competing with each other in the same field.

Mr Gullett:

– We export only 3 per cent. of the world’s wheat supply.

Mr PARKER MOLONEY:

– I have already said that we do not expect that a federal pool will be able to control the world’s market, but we believe that if the wheat-growers are organized they will be better able to withstand the shock of overseas combinations, and to co-operate with other countries that are organizing and stabilizing their industries. In any case. Australia’s contribution to the world’s supply of wheat is much greater than 3 percent.

I turn now to another aspect in regard to which there has been much misrepresentation; Critics say that the establishmentof the pool will involve an increase in the price of bread. That story emanates principally from the merchants.

Mr Lacey:

– Those who say that are not much concerned about the price of the workers’ bread.

Mr Gullett:

– Ministerial members are not much concerned about it now.

Mr Lacey:

– We are more concerned than the honorable member has ever been.

Mr PARKER MOLONEY:

– From one-third to one-fourth of the Australian wheat crop is milled locally; in other words, of the 52,000,000 bushels of wheat gristed by Australian millers, Australia consumes about 32,000,000 bushels in the form of flour, and the balance is exported. Obviously, the price of wheat affects the price of flour, but the price of wheat is not reflected in the price of bread. In some seasons wheat prices fluctuate as much as 25 per cent., but we do not see similar variations in bread prices.

Mr Price:

– That is worth examining.

Mr PARKER MOLONEY:

– The formation of a federal pool will afford an opportunity to examine it. I have known wheat to be 4s. a bushel, and bread to be no cheaper than when wheat was 7s. a bushel. The prices of flour, bran and pollard are fixed by the flour millers’ associations, but some of the millers are very bad unionists and break away from organized control.

Mr M Cameron:

– Not very often.

Mr PARKER MOLONEY:

– They do, and that is the subject of serious complaint by the associations. I have met representatives of the millers lately, and theyhave told me that if the pool is formed great advantages will accrue, not only to the wheat-grower and the consumer, but also to the millers, by enabling the price of flour to bestabilized. At present some millers undercut the association rates. The price of bread is supposed to be based upon the flour prices fixed by the associations, but to my knowledge the consumer does not get the benefit of the cut prices in the form of a cheaper loaf. It is obvious, therefore, that cut prices for flour mean either that “the miller pays the farmer a lower price than need be for wheat, or that he allows for such price cutting by charging too much for some of his flour output,or that he is working for practically no profit. Certainly, the miller does not forgo his profit, and it is safe to assume that neither the consumer nor the grower getsthe bene fit. Another interesting phase of the miller’s operations is thatflour is sold to bakers under contracts which include what are known as “fall” clauses. Under these clauses the baker contracts for a given quantity of flour to be delivered over a certain period, with aproviso that he shall get the advantage of any fall in flour values, but shall not have to pay any increase of price if the market rises. Here again it is doubtful whether a consumer gets the benefit of these “ fall “ clauses. There is no indication that when the price of flour falls below the figure at which the baker has contracted to buy, he passes the benefit on to the consumer in the form of cheaper bread.

Mr Arc hd ale Parkhill:

– What does the Minister propose to do about that?

Mr PARKER MOLONEY:

– I have discussed this matter with groups of millers in various States, and they consider that the benefits to be conferred by the pool, and the agreement for which this bill provides, will be such that better relations between the bakers, millers and consumers will be possible. It is clear that at present abuses exist in the middleman trade which are prejudicial to both producer and consumer, and we are hopeful that the agreements set forth in the schedule of the bill will overcome those evils, and remove many conditions that operate to the disadvantage of the wheatgrower and the general community. Both will be better protected against speculation than at present.

In drafting this measure the aim has been to provide for the wheat-growers’ representatives being constituted in the Australian Wheat Board as. a corporate body,and to enable the pool so constituted to function effectively and to do everything necessary to be done. The Australian Wheat Board will be composed of representatives of the Stateboards, and we are providing for very great elasticity in the agreements that will be drawn up between the Central Board and the State boards. Probably the Federal and State boards will mutually agree as to their respective functions, some being left to the State boards, and others to the central body. Accordingly, provision has been made for the devolution of certain functions, by agreement, uponthe

State boards. Thus the bill is enabling, permissive, and alternative, rather than arbitrary and mandatory.

Mr M Cameron:

– Must legislation be passed by all the State Parliaments ?

Mr PARKER MOLONEY:

– Such legislation must be passed by at least three States in order to set up the necessary boards.

Mr Hill:

– And also to take a ballot of the growers.

Mr PARKER MOLONEY:

– A ballot must be taken before the boards can be appointed.

Mr M Cameron:

– What would be the position if some of the States failed to come into the scheme?

Mr PARKER MOLONEY:

– If for instance, Queensland, New South Wales, and Victoria-

Mr Bell:

– What would be the position if those States refused’ to come into a pool?

Mr PARKER MOLONEY:

– A satis- factory Australian wheat pool could not very well be established if important wheat-producing States such as New South Wales and Victoria declined to be associated with the pool. At least three of the big wheat-producing States must consent to these proposals before a Commonwealth pool can be established. Federal legislation, as the bill indicates, will confer upon the Federal board power to own assets, and State legislation will confer similar power upon the State boards. It is anticipated that there will be complete co-operation between the Federal and State boards that will enable them to work expeditiously within their own spheres. There is no reason to contemplate any clashing of interests.

Mr Hill:

– Who is to make the appointments from the State Boards to the Federal board ?

Mr PARKER MOLONEY:

– On each State board there will be a majority of producers’ representatives, who will make the appointments to the federal board.

Mr Bell:

– The guarantee will not aPply *° growers in a State which is not a member of the pool.

Mr PARKER MOLONEY:

– No. The bill is designed to give the wheatgrowers of Australia a wide and comprehensive charter. I have endeavoured, in the limited time at my disposal, to place before honorable members the latest in formation I have been able to gather of a world-wide movement in the direction of stabilizing the wheat industry. I have also endeavoured to show the trend of all progressive countries in organizing their industries in an endeavour to meet price fluctuation, and I have also tried to show the danger that must threaten Australia if we fail to keep in step with other great primary-producing countries. I have shown how detrimental it will be to the wheat-farmers of Australia if they stand still while this great world-wide movement is gathering force and momentum. The Australian wheat-growers cannot afford to disregard the action that is being taken in other countries. Under these proposals the wheat-growers will have an opportunity to organize the industry with the legislative and financial backing of the Government. As I have endeavoured to place these proposals before the House in a non-party spirit, I appeal to the House to treat them in the same manner. I believe that the announcement some weeks ago of a guaranteed price has done a good deal to encourage wheat-growers to respond to the Government’s appeal to grow more wheat. The wheat-growers of Australia are manifesting a splendid spirit, and, as a result of the Government’s offer, a very much larger area of wheatwill be placed under crop during this coming season. It is time that a genuine effort was made to prevent this great industry from being the plaything of persons who do not own a bushel of wheat and whose only interest in the wheat industry is on paper. The Government’s proposal in this respect will, I am sure, materially assist in stabilizing the wheat industry, and I am pleased to be in a. position to facilitate the establishment of an all- Australian wheat pool. The wheatgrowers should no longer be mere hewers o”f wood and carriers of water-

Mr Morgan:

– Has any estimate been made of the cost of production per bushel of wheat?

Mr PARKER MOLONEY:

– It would be very difficult to arrive at an estimate of the cost of production, because the conditions vary considerably in the different States. I invite the co-operation of all parties in the passage of this bill which is designed to assist a large section of our primary producers to whom we are appealing to help Australia out of the economic difficulties which at present surround her.

Debate (on motion by Mr. Latham) . adjourned.

page 925

LAND TAX ASSESSMENT BILL

(No. 2).

Second Reading

Debate resumed from 4th April (vide page 902) on motion by Mr. Theodore -

That the bill be now read a second time.

Mr LATHAM:
Kooyong

.- This is the second attempt of the Government to deal with one aspect of our land tax legislation. When a Land Tax Assessment Bill was introduced about a fortnight ago, the members of the Opposition contended that its effect was to make a radical and important alteration of the basis 011 which land taxation is assessed. That contention was disputed by the Minister in charge of the bill. A further amending measure has now been introduced which Ave are informed has been framed to give effect to the representations of honorable members on this side of the chamber, and to remove the uncertainty which existed as to whether the amending legislation allowed the clearing of land and similar operations to be included in the definition of “ improvements.” In order to bring about that result, a new definition of “ improvements “ is embodied in this bill, and so far as I can see, it successfully attains the objects which it is designed to achieve. In these circumstances, I shall have nothing further to say on that point.

I direct the attention of honorable members, however, to the fact that provisions have been left in the bill which though suitable to the measure in its original form, are not suitable to it in its present form. For example,, the definition of “unimproved value” applies to unimproved value in relation to improved land; but in the final clause the words “Assuming that at the time . . . the improvements did not exist “ are used. In the act as it stands at present, the words “ assuming that the improvements had not been made “ are used. The words “ had not been made “ are apt to cover all cases in connexion with the clearing of land; the words “ did not exist “ cannot cover such an improvement as may be effected by the clearing of land. It is very difficult to say that the improvements as defined in paragraph a of clause 2, which, for example, include suckering can be regarded as not existing.. It could be regarded as never having been accomplished - as never having been done; but it is a misuse of language to say that it “ did not exist “. Unless the Treasurer (Mr. Theodore) has some very good reason for the alteration, he should give consideration to this matter, as it is not desired, I assume, to retain these words to effect an alteration of the law.

I come now to a much more important matter, and that is the effect of the proviso upon the definition of “ unimproved value “. The proviso reads -

Provided that the unimproved value shall in no case be less than the sum that would be obtained by deducting the value of improvements from the improved value at the time as at which the value is required to be ascertained for the purposes of this act.

That proviso’ is in the same terms as the definition in the amending measure recently introduced, but it differs from the proviso in the existing act, which reads -

Provided that the added value shall in no case exceed the amount that should reasonably be involved in bringing the unimproved value of the land to its improved value as at the date of assessment.

No reason has been given why the existing wording should be altered.

A very important issue has arisen through the insertion of this proviso, and the further proviso to the definition of “ value of improvements “ in paragraph c of the same clause. It is laid down that the - “ ‘ Value of improvements,’ in relation to land means the added value which the improvements give to the land at the time as at which the value is required to be ascertained for the purposes of this act irrespective of the cost of the improvements :

Provided that the added value shall in no case exceed the amount that should reasonably be involved in effecting, at the time ns at which the value is required to be ascertained for the purposes of this act, improvements of equal utility to the existing improvements.”.

The importance of the proviso in the definition of “ unimproved value” is that. it directs that the unimproved value may be ascertained by deducting the value of improvements. ‘ That makes a radical and fundamental change in the law. I direct the attention of honorable members to the case of Toohey Limited v. The Valuer General, 1925 A.C. 439, in which’ certain words in the New South “Wales Valuation of Land Act, were involved. There was a definition of “unimproved value “ in that act, which was in these terms -

Tlie unimproved value of land is the capital sum which the fee-simple of the land might be expected to realize if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that the improvements, if any, thereon, or appertaining thereto, and made or acquired by the owner or his predecessor in title, had not been made.

That is, practically, the definition in our own act. In that case the facts were that there was a hotel the value of which, with the land upon which it stood, was agreed to be £24,100. The value of the buildings was £10,840. The valuer or the taxation officer deducted the value of the improvements, that is, the hotel building, from- the total improved value of £24,100, and thus obtained an unimproved value for the land of £13,260. This value obviously included the value of the licence as part of the unimproved value of the laud,- That was not the intention of the legislation. Their Lordships of the Privy Council said in that case -

It is with the latter of the two sections that the valuer has to do. Now what he has to consider is what the land would fetch as at the date of the valuation if the improvements had not been made. Words could scarcely be clearer to show that the improvements were to be left entirely out of view. They are to be taken not only as non-existent but as if they never had existed.

That is a further reason for altering the words “did not exist” to “had not been made.” Their Lordships went on to say :-

It is ‘therefore to approach the question from a completely wrong point of view to begin with the valuation which takes in the improvements and then proceed by means of subtraction of a sum arrived at by an independent valuation in order to find the required figure. What the act requires is really quite simple. Here is a plot of land; assume that there is nothing on it in the way of improvements, what would it fetch in the market ?

Later, they observed -

The valuer has not applied himself to the only questions presented to him by the act and it is his business to do so. But, as already said, the result obtained is not only contrary to the method permitted by the act, but is demonstrably fallacious. Proceedings are begun by the taking of a figure for the subject as it stands as licensed premises. It is obvious that this figure is composed of three ingredients; first, the bare land itself; second, the buildings themselves constructed for, and appropriate for, licensed premises; third, tlie enhanced value due to the fact that the land and buildings in question are not only suitable for licensed premises but are in fact licensed premises.

When, however, the subtraction sum is entered upon, it is only item 2 that is subtracted from the total figure; the result being that item 3 is all included in the unimproved value. From this follows the extraordinary result that the land is enhanced by the value of a licence which could only be granted in connexion with buildings - for’ a licence such as this cannot be granted to sell liquor without premises - in a calculation in which you are told to assume that no building is there.

The effect of the approval of Parliament to this proviso will be that the value of licences in the case of hotels, will be included in the value of the land and will be subject to taxation. Surely that is not seriously intended by the Government. Many other examples could be given of the unfair working of such a proviso. In the case ‘ of any running business, the value of the premises, such a3 the shop, store or factory, could be substracted from the total value of the business and the remainder could be taken to be the unimproved value. That is not the intention of the act. In the case of Jowett v. The Federal Commissioner of Taxation, 38, C.L.R., Mr. Justice Rich, referring to a submission by Mr. Owen Dixon, now Mr. Justice Dixon, who was appearing as counsel, said -

I agree with what Mr. Owen Dixon said that from a process of ascertaining what the improved land as it would be improved under proper conditions, is worth and deducting the cost of improving it, you cannot find what the unimproved land would fetch.

He added that to apply such a rule would be really to include the value of the business, apart from the building in which it was conducted, in the value of the land. That would have very far-reaching results. The somewhat similar provision in the present act has not, up to the present, produced the results that I have indicated; but having regard to the definition of “ value of improvements “ which appears in this measure, those results must follow.

I now ask the attention of honorable members to another point which arises in connexion with the proviso *to the definition of “value of improvements”; I refer particularly to the words “ improvements of equal utility to the existing improvements.” Apparently a limit is to be imposed on the value of improvements by requiring a calculation to be made of the value of improvements of “ equal utility “ or usefulness to the existing improvements. Let us take a simple case to see what might happen under a provision of this kind. A house which cost a certain sum may be standing on a piece of land, but a house of equal usefulness might be built for half the money. I should like the Treasurer to explain why this idea of “ equal utility “ is brought into this definition, unless it is intended to “draw a distinction between the value of the actual improvements on the land and the value of improvements which could be described as of “ equal utility.” A man may have on his farm a six-wire fence and the valuer may come along and say that a three-wire fence on that farm would be of “equal utility.” The proviso really says that the added value is to be limited by a consideration of the cost of effecting improvements of equal utility to those existing on the land. Apparently “ equal utility “ is the only thing to be considered- A man who might have on his property a dam well finished with stone, cement, and the like might be debarred from claiming deductions in respect of it because it might be possible to obtain an equally serviceable water supply by merely making a hole in the ground. If the words do not mean that consideration is to be given to “improvements of equal utility to the existing improvements “ they do not mean anything.

The words “ equal utility “ mean something or they mean nothing, and I assume that they are significant. It is of no use to tell me that they do not mean anything. Either in applying this proviso the valuer is to consider the cost of effecting improvements of equal utility to the existing improvements, or he is not to do so. If he is not to do so, the words should be eliminated. It appears to me that the words can be there only for the purpose o’f setting up a standard of cost. I do not think that they are put there for the purpose of assisting the taxpayer. They are there, it seems to me, solely for the purpose of determining the measurement in money, or the maximum value, to be allowed for existing improvements. That, maximum is to be determined not by what it cost to effect the improvements in particular cases, but by the cost of effecting improvements of equal usefulness. In other words, the measure of value is to be a measure of usefulness. A telegram which I have received from a constituent in Melbourne puts the matter clearly. It reads -

There are grave fears that equal utility will lead to increased assessments. No allowance is possible for other than strictly utilitarian improvements of plainest design and cheapest material.

It seems to me that the words “ equal utility “ are to be read in relation to the profit-making capacity of the land. They must mean something, and that appears to be their obvious meaning. If they do not mean that, I should like to hear what it is supposed that they do mean and why, indeed, there is any reference in the definition to “ equal utility.”

Dr EARLE PAGE:
Cowper

.- I congratulate the Treasurer upon having accepted the view which honorable members expressed in the debate on the previous Land Tax Assessment Bill. As the honorable gentleman said in bis second-reading speech, the altered definitions meet the views that were put forward in the previous debate. It was the desire of honorable members that, in cases where the land had been allowed to depreciate in value, the money actually expended by a new owner in improvements should be taken into account in determining the unimproved value. I take it that the words now used in the bill mean what the Prime Minister and Treasurer said the words in the previous bill meant, namely, that if such land had no unimproved value in the first place, it would have no unimproved value through the expenditure of money by the new owner in improving it. “While congratulating the Minister on being able to satisfy honorable members on this side on that particular point, I wish to express my sympathy with him. As one who has had much to do with taxation legislation, I am well aware that when an attempt is made to deal with a certain aspect of taxation problems, not infrequently other problems, not then foreseen, present themselves.

I hope that the Minister will give careful thought to the representations made by the Leader of the Opposition (Mr. Latham) in connexion first of all with ascertaining the unimproved value under the proviso. I do not wish to add anything to what the Leader of the Opposition has said on that point, but I purpose devoting attention, for a few minutes, to the subject of “ equal utility.” It seems to me that something should be done to put beyond doubt the use which will be made of this provision. The proviso to paragraph c reads: -

Provided that the added value shall in no case exceed the amount that should reasonably lie involved in effecting, at the time as at which the value is required to be ascertained for the purposes of this act, improvements of equal utility to the existing improvements.

Consider first of all the cost of fencing. The owner of a property may take the view that 6-inch posts are necessary to properly fence his land, but the valuer may be of the opinion that if 4-inch posts had been used improvements of equal utility would have been effected. In such a case as that it would be an injustice if, in determining the unimproved value, the actual cost of improvements were not allowed. The same argument may be applied to the construction of a dam. The owner may consider that a permanent dam is necessary and may carry out the construction in concrete. Surely an improvement of a permanent nature should be regarded as a valuable asset as compared with a dam of inferior construction which might call for expenditure year after year to maintain it in an efficient condition. Our aim should be to encourage owners of land to carry out permanent rather than temporary improvements. To deal justly with all taxpayers the department should allow the actual cost of improvements to be deducted from the improved value in ascertaining the unimproved value of property. If value is added to land over and above what the taxation, authority considers necessary, it gets an advantage in connexion with its improved value. The Government surely cannot expect to have it both ways. If deduction is not allowed in respect of actual value -improvements, even if the valuer considers that improvements of equal utility could have been effected at a lower cost, the Government will not be meting out fair even-handed justice to the taxpayers, which I am sure the Treasurer (Mr. Theodore) wishes to do, by his wording of the section. When considering legislation of this nature the definition clauses should be examined with extreme care so as to avoid injustice being done to a section of taxpayers. The Government, I am sure, is just as anxious as are honorable members on this side of the House to deal fairly with landowners. In the discussion on the previous measure the Treasurer showed a conciliatory spirit, and by submitting certain amendments, met objections that had been raised by honorable members on this side. I hope he will be prepared to meet us in regard to these points as well. It is not for me to argue as to what these words mean. That is a matter for members of the legal fraternity and the draftsman of the bill. What I am concerned with is to make certain that in determin-ing the final form of this particular proviso, the principles of equity and justice will be established. If the Treasurer can assure us that, in its present form, the bill will operate equitably, I am prepared to accept it, but there appears to be a great element of doubt about it.

Mr PROWSE:
Forrest

.- Honorable members are indebted to the Leader of the Opposition (Mr. Latham) for having raised these points. It is a pity that the provisions of this amending bill are .of such a complex nature. I should like to impress upon the Minister the fact that considerable areas of land could not be sold for the cost of the improvements put upon them. Our object should be to encourage owners to make substantial improvements. If, through ignorance of the view taken by the taxation authorities, a man spends a considerable sum in improving his property, in ascertaining its unimproved value he should be allowed to deduct the cost of such improvements. The taxation authorities should not have the right to determine the nature of the improvements which an owner should put upon his land. To guard against the fire risk, he may decide to use stone for the building of his woolshed, and he may consider that a five-stand shed is required, whereas a departmental valuer may hold the view that a woolshed of four stands and built of timber would meet his needs; regardless of the fact that a wooden building might be burned down during the following summer. When people decide to go upon the land they should be unrestricted in their choice of improvements which they consider desirable. For instance, a man may resolve to build a modern home with all modern conveniences. Because he lives in the country he should not be denied the comforts enjoyed by dwellers in our cities, if he is in a position to provide them. Yet I know of cases in which the Taxation Department has declined to allow deductions of more than one-half the value of such improvements. Treatment such us this discourages people living in the country from carrying out improvements ‘which otherwise they might decide to have on their properties. I hope that the Treasurer will give careful consideration to the amendment suggested by the Leader of the Opposition (Mr. Latham), so that this measure may become a permanent part of our statutes, and not require amendment from time to time.

Mr E RILEY:
South Sydney

– While we all desire to deal justly by land-owners in the country, we should see that the revenue is adequately protected. It is no secret that if a man wishes to evade taxation sometimes he spends an undue amount upon improvements. Proprietors of picture theatres in our capital cities have expended huge sums on the « recti on of palatial buildings with a view to hiding their profits and escaping taxation. This is not fair to other sections of taxpayers. I agree that some injustice might result from the interpretation of this amending bill, but the Government’s purpose, I take it, is to protect the revenue. I do not say that farmers deliberately spend more than is necessary on improvements, but I am sure all honorable members will agree that the taxation authorities should be able to exercise discretion in ascertaining the unimproved value of a property.

Mr PATERSON:
Gippsland

.- I wish to stress the point raised by the Leader of the Opposition (Mr. Latham) as to the desirability of reverting to the phraseology of the act. Paragraph.?) of clause 2, referring to “ unimproved value” in relation to improved land, mentions the value which it would have “ assuming . . . the improvements did not exist”. The Leader of the Opposition has argued that the words “ assuming . . . the improvements had not been made” are preferable. It seems to me that ‘ the word “ exist “ might be so construed as to exclude altogether consideration of improvements which were not visible. For example, trees may have been cleared ofl land, and there may be no tangible evidence that they had ever been on the land. I also direct attention to paragraph c of clause 2, dealing with the value of improvements. This reads: - “‘Value of improvements,’ in relation to land, means the added value which the improvements give to the land at the time as at which the value is required to he ascertained for the purposes of this act irrespective of the cost of the improvements:

Provided that the added value shall in no case exceed the amount that should reasonably be involved in effecting, at the time as at which the value is required to be ascertained for the purposes of this act, improvements of equal utility to the existing improvements.”

The Leader of the Opposition has already dealt with the phrase “ improvements of equal utility”, and I do not wish to merely repeat his observations on that particular point. In the paragraph’ quoted it seems to me that the taxation authorities are really playing with a double-headed penny. Let me give a concrete illustration. A man might spend £4 an acre in improving his property and yet increase its value by only £2 an acre. Another man might spend £2 an acre in effecting improvements by which the value of the property would be increased by £4 an acre. The practice of the department is to allow the owner, in the former case, to deduct only the actual value of the improvements irrespective of their cost. There is no objection to that ; but the same principle of sticking to actual value of improvements and disregarding cost should be maintained right through. This is not clone, because in the case of a man who by a wise expenditure of £2 per acre increases the value of his property by £4, the department values the improvements at only £2 an acre. If the man who has spent more on his property than the amount by which its value is increased is allowed to deduct only the actual value of the improvements, then the- other man should also be allowed to deduct the actual value of the improvements irrespective of their cost he has effected, notwithstanding that the amount spent by him was less. The department should not be able to have it both ways; it should not, as at present, play with a doublebeaded penny.

Mr ARCHDALE PARKHILL:
Warringah

– When the previous bill dealing with this matter was before the House we were told that it could not be altered because the best legal opinion in the community had been invited in order to ensure that the definitions should state exactly what the department meant. Apparently, that view was incorrect, for in another place that bill was amended. Now we have before us a bill which, while free from the objection referred to, contains other attempts by the department to increase its revenue at the expense of the taxpayers.

Mr Theodore:

– This bill contains nothing that was not originally intended, or was not in the earlier bill.

Mr. ARCHDALE PARKHILL.Were the words “ did not exist “ in the previous bill?

Mr Theodore:

– The words “of equal utility” were not in the earlier bill; it contained the words “ of a nature and efficiency equal to.”

Mr- ARCHDALE PARKHILL.- I have always protested - and I protest now - against the department being the adjudicator in these matters, forcing taxpayers to be for ever engaged in argument with the departmental officers. The ordinary taxpayer has no chance whatever against the department, for, in order to establish his claim, he must take extraordinary measures and incur heavy costs. The law should be clear; this discretionary power should not be- vested in any departmental officer. Should a taxpayer dispute the ruling of the department, the commissioner may take the case -,to the court. In that case, while the taxpayer has to defend himself at his own expense, the commissioner fights the case with money provided by the taxpayers generally. In some instances, cases have been taken from court to court. That should, not be so; it is unfair. It would appear either that Toohey’s case has not been considered, or that the department is deliberately seeking to include this provision in the bill in order to override the decision in that case, as has been done on numberless occasions before. It is unfair to include the value of a licence in the unimproved value of any land.

Mr Theodore:

– I entirely agree with the honorable member.

Mr. ARCHDALE PARKHILL.Then the position ought to be made perfectly clear. There are not many cases of > taxpayers endeavouring to evade payment of taxation by effecting unnecessarily extravagant improvements; and, therefore, it is unfair to add the words “of equal utility to the existing improvements.” The inclusion of those words places too much power in the hands of the department. Let us take the case of David Jones & Company of Sydney. That firm pays in land taxation about £24,000 per annum. The tax is, naturally, passed on to the consumers in the shape of increased prices for their goods. The firm has built a new store replete with all the latest hygienic inventions and conveniences for the benefit of its employees. Should the firm say to the Commissioner that it had expended its money in erecting a building -which would provide proper accommodation for its employees, the Commissioner could say that while that may be so, a store of equal utility could have been built at much less cost. In that event’ the firm would be penalized for having given consideration to the comfort of its many hundreds of employees. I stress the advisability of omitting the words “ of equal utility to the existing improvements “ in order to permit of the actual cost of improvements being deducted when ascertaining the unimproved value of any land.

Mr GULLETT:
Henty

.- I urge the Treasurer to revert to the wording of the original bill -

Provided that the added value shall in no case exceed the amount that would reasonably be involved in effecting, at the time as at which the value is required to be ascertained for the purposes of this act, improvements of a nature and efficiency equivalent to that of the improvements on the land at that time.

The words “of a nature and efficiency equivalent to that of the improvements on the land at that time “ are far more elastic than are the words “of equal utility to the existing improvements “ in the bill before us.

Mr Theodore:

– I should not mind reinstating the words of the old bill were it not that in the redraft the definition of “ improvements “ contains the word “utility,” and there might be some difficulty if different language were used in the two definitions.

Mr GULLETT:

– The words “ of equal utility “ make the valuer a far more arbitrary authority as to the class and quality of the improvements than did the words in the original bill. I realize that the Treasurer must receive revenue by way of taxation; but it is more important that no obstacle shall be placed in the way of improving our rural lands. It is conceivable that, should valuers challenge improvements on the ground that they are unnecessarily extravagant, land-owners might be diffident about effecting the improvements which otherwise they would make. For instance, a valuer might not agree with an owner as to the extent to which subdivision should be carried out. He might say that it would have been sufficient to divide a holding into five paddocks instead of ten. Or a valuer might say that, considering the rainfall of a district, a dam of 6,000 cubic yards capacity would be sufficient when the owner had constructed a dam with a capacity of 8,000 cubic yards. Again, a landowner might spend money in providing plantations, either as shelters for his stock or for the decoration of the countryside, and the valuer contend that, in the latter case, the money was not spent on improvements. I submit that the collection of land tax was never intended to militate against the making of legitimate improvements, or even against effecting improvements which enhance the attractiveness of a property. I recognize that the department must protect itself against the making of improvements in order to conceal profits, or improvements which might properly be regarded as extravagant or fanciful.

I submit that at all times a generous view should be taken of improvements when deductions are being considered, and I strongly urge the Treasurer to modify the new phrasing, if he possibly can.

Mr THEODORE:
Treasurer · Dalley · ALP

– A great deal of attention has been given to the drafting of this bill, which supplements another measure that recently was the subject of contention here, the main desire being to put its provisions into a form which will re-establish the law as it has been administered for many years, and to meet some of the bona fide objections that have been raised in this chamber and in another place, to the wording proposed to that end. There was no wish, as may be suggested by some critics, to . work in new principles of definition that might enable the department to raise taxation that was never originally intended to be imposed.

The Leader of the Opposition (Mr. Latham) called attention to the words “ of equal utility “ which appear in the proviso defining “ value of improvements,” and said that they did not appear in the previous bill. They were put into this measure at the suggestion of the Solicitor-General, in order to bring the proviso into conformity with other definitions in which the term “ utility “ is used - of course for a more restricted purpose. This term is used there to define more clearly what was intended in regard to that class of improvement, such as clearing or suckering of land, which is. to. be taken into account in determining the unimproved value of the land. The Solicitor-General has used the words “ of equal utility “ in the proviso instead of the term originally employed; but I am quite willing to reinstate the original words if, as has been suggested, they will be more satisfactory to honorable members generally.

I quite agree with the Leader of the Opposition that fortuitous circumstances, such as the value of a hotel licence, should not be taxed as part of the unimproved value of the land on which the hotel is situated, which was the issue in the Toohey case. Intangible property, such as a licence or goodwill, which has been bought, or has accrued, should not be taken into account in such a way as to add to the unimproved value, and I am confident that the present definitions will not require that to be done.

Mr Latham:

– What is the combined effect of the two provisos?

Mr THEODORE:

– I am informed by the officers of the Crown Law Department that in all cases between 1913 - when certain judgments were given in regard to definitions in which it was held that the definitions could not be separated, but had to be read together - and the judgment of the High Court in 1929, in which it was held that the definitions ought not to be regarded as relative, but applied separately, the unimproved value of land has been arrived at by deducting the value of the improvements on it from the value of the whole property. Frequently the unimproved value of land can only be guessed at, because there have been few or no recent sales of land in an unimproved state in the area under review, and it is essential, therefore, to have some formula by which the department can arrive at a reasonable and bona fide unimproved value for taxation purposes. The desire of the authorities is to establish such a formula, and I can do no less than accept the assurance of the legal advisors of the Government that this bill does not provide that, in arriving at such a formula, the value of a licence or goodwill shall inflate the unimproved value of a property. I am not speaking on my own authority as to what is the legal meaning of these words; the matter must necessarily rest with highly trained technical men.

Mr Prowse:

– What of the case where a man puts a £3,000 house on his property and the department thinks that it should only have cost £1,500.

Mr THEODORE:

– The department will not act in a way contrary to the requirements of the law. A man might spend a large sum of money upon something which, in his view, improved the land, but which was really of little use, and, therefore, did not greatly increase the capital value of the property. If a man has spent £10,000 on such a work, he would not be entitled to deduct £10,000 for improvements, if its sale value to a willing purchaser was less than £10,000. The department must be allowed to assess a value that bears some relationship to the real value of the improvement to one who wishes to purchase.

Mr Prowse:

– The department may want to assess the work at what they think it ought to have cost.

Mr THEODORE:

– It is rather straining the interpretation, of the proviso to suggest that the department will arbitrarily declare what ought to have been paid instead of what was paid.

Mr Hawker:

– What about the cost of finding water. As the bill now reads, if the improvements did not exist, it would be impossible to make any deduction for the cost of finding water on a property.

Mr THEODORE:

– The honorable member is touching upon another point which was discussed by the Leader of the Opposition (Mr. Latham). To substitute for the words “ did not exist “ the words- “ had never been made “ would practically restore the position set up in the recent McGeoch case. That is the very difficulty we are endeavoring to overcome. In trying to arrive at the unimproved value of land, we cannot go back to the time before there was any improvement at all, and the land formed part of an absolute wilderness. That was not the intention when the original law wa9 passed.

Mr Latham:

– What is the intention of the act if you are not to endeavour to imagine the land without improvements on it?

Mr THEODORE:

– You can arrive at the valuation without imagining the land as never having been improved, or affected by improvements.

Mr Latham:

– No trouble arose over the words “had not been made” in the McGeoch case.

Mr THEODORE:

– The McGeoch case concerned land that was liable to infestation with prickly pear ; land upon which it was necessary to expend certain sums annually to prevent the encroachment of pear.

Mr Latham:

– I agree that that expenditure should come under the head of “ maintenance “.

Mr THEODORE:

– That land was purchased with the knowledge that money would have to be expended annually to prevent re-infestation by pear. Whatever may have been expended originally, or later, in ridding land of a pest, such as prickly pear, provided that the work has been done efficiently and at reasonable cost, may be allowed for. If it is desired by honorable members to amend the second proviso suggested by the Deputy Leader of the Opposition, I shall be glad to consider the proposal in committee.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clause 1 agreed to.

Clause 2-

Section 3 of the principal act is amended -

by omitting the definition of “ Unimproved value “ and inserting in its stead the following definitions: - “‘Unimproved value,’ in relation to unimproved land, means the capital sum which the fee-simple of the land might be expected to realize if offered for sale on such reasonable terms and conditions as a bona fide seller would require. “‘Unimproved value,’ in relation to improved land, means the capital stun which the fee-simple of the land might be expected to realize if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that at the time as at which the value is required to be ascertained for the purposes of this act, the improvements did not exist:

Provided that the unimproved value shall in no case be less than the sum that would be obtained by deducting the value of improvements from the improved value at the time as at which the value is required to be ascertained for the purposes of this act.”; and

Mr LATHAM:
Kooyong

.- I do not wish to repeat what I said in my second-reading speech. The proposed amendment makes a substantial change in the law as it has always been understood. The proviso to proposedparagraphb is entirely new. A method of arriving at unimproved value which has been condemned as wrong by the Privy Council and by the High Court is being introduced. I shall read from an opinion given by Mr. Ham,K.C., and Mr. Fullagar, of the Victorian Bar, in reference to the proviso to the definition of “ unimproved value “ -

The mere deduction of the value of improvements from improved value results, of course, frequently in imputing to the value of the land as part of its unimproved value, the result of the exercise of human judgment and effort in the creation of a land-holding which is suitable for a commercial use, i.e., as a money-making machine. For example, take the case of a station property on which buildings, fences, dams, and so on have been con structed, all with a view to putting the property to commercial use as a station, but which may have depreciated in value themselves. The mere deduction of value of improvements from improved value will clearly result in imputing a fictitious unimproved value to the. land. The methods of calculation referred to in the proviso may be useful in many cases as setting an outside limit beyond which a buyer would not go for the land, but it generally includes something more than the unimproved value of the land. It has hitherto been recognized that this mere deduction of value of improvements from the improved value is not itself a proper method of arriving at unimproved value. It is directly contrary to what was laid down in Toohey’s case (supra) which both Mr. Justice Isaacs in his dissenting judgment and the Commissioner profess to follow. See Jowett v. Federal Commissioner of Taxation 38, C.L.R., 325. This method would clearly result in many cases where the cost of clearing and improving land has been greater than the value of the improved land in imputing a fictitious unimproved value to land which in fact had none.

Iam adding the weight of counsel’s opinion to what I have said myself in order that honorable members may fully realize that there is something of serious import behind what I have submitted to the committee.

Mr Theodore:

– But it is not suggested that this sets aside the Toohey case in such a way as to compel the taking into account of the value of a licence.

Mr LATHAM:

– It even goes as far as that. The opinion I have read was given in respect of the last bill. A further opinion has been given in respect of this bill by Mr. Fullagar, who says -

The marked passages, in the opinion of Mr. Ham and myself, apply to the new bill as much as they did to the old bill.

I have already quoted these marked passages. One of the alterations made in this bill is of a nature not generally realized. In the act as it stands at present, there is a definition of unimproved value; there is also a definition of value of improvements, but not of improvements. There is nothing in the present act to justify any one in saying that unimproved value is to be ascertained by deducting the value of improvements from the improved value. The phrase “value of improvements” in the act, occurs only in section 48, and is used for one specific purpose only. Section 48 provides that if a taxpayer makes a return for hisland which is 25 per cent. below the proper value, the Commonwealth may acquire the land at the unimproved value placed upon it, plus an allowance for the value of improvements.

Mr McTiernan:

– Is that section intra vires?

Mr LATHAM:

– I am inclined to think it is, but the point does not arise hero. In the existing act, value of improvements is defined only for the purpose of arriving at a resumption price when a man has, perhaps fraudulently, undervalued his land. In this bill, something entirely new is being done. Here value of improvements is being re-defined, subject to this proviso about equal utility with which we are dealing at present, and “ value of improvements “ is used in the proviso to the definition of unimproved value. The result is that what may be generally a perfectly good rule-of-thumb method of ascertaining unimproved value is erected into a standard for the purpose of fixing the minimum unimproved value. In the case of a licensed house, such a standard would operate unjustly. For a suburban house situated on a block of land, a practical method of arriving at the unimproved value would be to take the improved value and deduct the value of the house, having regard to depreciation, and what it would cost to build a similar house. That is probably a good practical method ; but to make that a universal rule for the purpose of fixing the limit of unimproved value is a different thing. I am concerned with the effect of applying such a rule generally. What I have said about a licensed house applies in the case of any business being carried on upon premises. I therefore suggest that the safest thing to do in order to avoid upsetting our system of land taxation is to omit these two provisos, and put in one proviso to the definition of “value of improvements “ in the same terms as in the existing act. The alteration of these definitions has nothing to do, so far as I can see, with the object of the bill, which is to make a just allowance in respect of improvements of a capital nature, such as the clearing of land, including clearing land of prickly pear, but to exclude consideration, for land tax purposes, of operations on the land in the nature of maintenance. Allowance for that is made in assessing income tax, but not in assessing land tax. With that I agree. The first of these alterations will result in altering the whole basis of our present system as declared by the High Court and the Privy Council, and that result is produced by the new definition of value of improvements as incorporated into the definition of unimproved value.

I ask the Treasurer to reconsider the point I raised about the words “did not exist.” If the words “had not been made,” are inserted in lieu of them, there cannot be any contention that maintenance expenditure is to be regarded as an improvement, because the definition of improvements itself excludes that. Improvements include destruction of vegetable growths, subject to the conditions set out. From the point of view of good English only, it is not right to say “ assuming that . . . the improvements did not exist “, because that really means, as the definition is worded, “ assuming that the destruction of vegetable growths did not exist.”

Mr Theodore:

– Of course it means “ assuming that the destruction of vegetable growths had not been carried out.”

Mr LATHAM:

– That is what is meant, but as the sentence is constructed, that is not what it says. To leave the wording unchanged is simply to invite trouble. Personally, I am inclined to think that the definition of improvements is so clear on this point that such a difficulty might not arise. It is better, however, to employ the words “ had not been made “ because it is a phrase able to cover not only the presence of what is ordinarily called an improvement, but also the absence of a detriment.

Mr Paterson:

– Would not the phrase “had not been effected” imply what is meant, better even than “had not been made”?

Mr LATHAM:

– It would convey the meaning, certainly, but “ made “ is a good old Anglo-Saxon word, which includes to do things, to achieve them or to accomplish them, and has. many other synonyms. Therefore, I move -

That the proviso in paragraph b be omitted.

That would leave matters substantially as they are. The act would then provide that unimproved value is to be arrived at by assuming that the improvements were not there.

Sitting suspended from 6.12 to 8 p.m.

Mr HAWKER:
Wakefield

.- There are two cases not mentioned by previous speakers, in which the bill will inflict hardship and even injustice. It was my intention to mention them on the second reading but anticipating that the Treasurer (Mr. Theodore) would be open to suggestions in committee, I refrained from doing so. According to legal advice secured by graziers in South Australia, this bill will deprive some people of allowances they have previously been able to claim in making their land tax returns. The land tax assessment legislation which the Treasurer has introduced, is designed to overcome two recent decisions of the court. In one case, the court has decided that there is no improved value if a lease is subject to reappraisement or resumption either in whole or in part. Provision was made in the bill passed a fortnight ago to overcome that decision. The second decision of the court, in regard to land taken possession of by noxious weeds adjoining hind on which the owners, by the expenditure of money, have been able to keep their property clean, has been covered by paragraph a of the clause now before the committee. In the past improvements unwisely effected have been used as a means of reducing assessments because they happen to be on the land assessed; but paragraphs b and c of the clause ensure that extravagant improvements may not be so used.

According to the bill the portion of tho price of the land attributable to improvements must not exceed either the cost of effecting those improvements, or the added value which they give to the land, but I propose by quoting one or two examples of how the act operates, to show how thoroughly the rights of the Commissioner of Taxation are already safeguarded without the two phrases which the Leader of the Opposition (Mr. Latham) regards as objectionable features of the present bill. If in waterless country, by the discovery at a low cost of an Underground supply of water, the value of land is raised from almost nothing to possibly thousands of pounds, the revenue is already amply safeguarded, as it would be under the bill, even without one of the objectionable phrases referred to, because the value of the improvement effected is greater than the actual cost of effecting the improvement. If, on the other hand, a bore put down at a heavy cost succeeds in finding only a small supply of fresh water which slightly increases the value of the land, the cost of putting down a well and equipping it is greater than the improvement effected to the land, and the revenue is also amply protected, because the allowance made must not exceed the added value given by the improvement to the land.

Mr Prowse:

– The revenue gets it both ways.

Mr HAWKER:

– According to the legal advice I have, which has been reinforced by that of the Leader of the Opposition, the clause now under consideration goes further than the mere securing of revenue in both ways; it cuts out certain allowances which could previously be deducted. The most striking example brought forward this afternoon was the Toohey case, in which the goodwill or value of a hotel licence was affected, and the Treasurer said that the opinion of the Taxation Department was that anything intangible of that description would not be taxed as unimproved value. I accept that assurance; but, reverting to the subject of water, I wish to point, out that in the leasehold areas of Australia there are millions of acres which can be provided with water at a cost; and the principal cost is incurred in prospecting for that water. In some cases it is necessary to put down a bore and then sink a well on the site of the bore, but according to the opinion given to the graziers of South Australia, the words “ did not exist “, which this bill proposes to substitute for the words “ had not been made “ deprive the leaseholder of the right to claim an allowance for the full expenditure involved in finding water, because the bore will not exist once a well is sunk on top of it.

Mr Theodore:

– But the total improvement will exist. There is no doubt that in the case mentioned allowance will be made for the cost of the bore.

Mr HAWKER:

– Will allowance be made for putting down two or three prospecting bores?

Mr Theodore:

– If they bring about the improvement that permits the improvement of the whole property, they will undoubtedly be allowed.

Mr HAWKER:

– There are tracts of country where a few pockets or streams of fresh water occur among vast underground supplies of salt water, and it is often necessary for several bores to be sunk unless the leaseholder is extraordinarily lucky in striking a supply of fresh water every time he bores. At one time no allowance could be claimed on the land tax return for the cost of that prospecting work, but recently, under the phrase “ had not been made “, allowance has been made for it.

Mr Theodore:

– The change of words in the bill will not have the effect of disallowing what has already been allowed in practice in respect of that particular class of work in improving property.

Mr HAWKER:

– I thank the Treasurer for his assurance on that point. There is another case in which there is something intangible which sometimes is not very easy to assess as an actual concrete visible and material existence on the land. In many farming districts there are fully improved farms with patches of scrub country. In most of these cases the value of the unimproved scrub country is much below that of the improved farm land less the value of its improvements. The Treasurer mentioned this afternoon cases in which it was necessary to take the value of the improved farm less the cost of the improvements to arrive at the unimproved value in cases where there were no sales of unimproved land. I am not contesting that point at present, but there are cases where there are sales of unimproved land alongside improved land, and the price it brings is much below the conventional unimproved value at which the Commissioner of Taxation assesses the improved farm land adjoining. The difference in that case is probably due to various intangible causes, because of the risk of getting a poor crop when the land is half cleared, because it is necessary to get a good stubble burn to check the shoots, or possibly because of the wear and tear of pioneering work. Another factor to be taken into consideration is the additional cost incurred in clearing the first block in the district. The first settlers who go into a . district have to pay decidedly more for their cartage and for most of their labour. Possibly, they may have to pay for carting water and horse feed. Everything is more expensive to the pioneer. He has to put up with infinitely more discomfort than the people who come later. In the course of time the actual record of all that additional expenditure is lost. There is, however, alongside the improved land of the pioneer, unimproved land which sells in certain cases for very much less than the conventional unimproved value which the Commissioner of Taxation by this bill, and until quite recently under the existing law, is compelled to place upon the improved farm. I take it that this case would be covered as it has recently been covered by the omission of the words “ equal utility “ and by the substitution of “ hud been made “ for “ did not exist “. The phrase “equal utility” is dangerous in assessing the value of improvements. There may be cases where land is used for a specific purpose. In order to use it for that purpose, the holder may have overimproved it for the average use to which laud in that particular district is put. I have made it clear that the revenue is amply protected in the definition and that under the bill as it stands there would be a decided risk of some of the improvements being taxed.

Mr THEODORE:
Treasurer · Dalley · ALP

– Two or three points have been raised, first by the Leader of .the Opposition. (Mr. Latham), and supported by other honorable members, to which 1 desire to reply. The most important mentioned by the Leader of the Opposition is that in which he infers that a complete change in the principle of the law is made by giving a new significance to the definition of “value of improvements “ by importing this phrase into the definition of “ unimproved value.” 1 carefully followed the honorable member when he was speaking on that point, and I shall endeavour to answer his argument. The practice of arriving at the value of improvements and deducting the value arrived at from the improved value of property, in order to ascertain the unimproved value, is not so new as the honorable member assumes. It appears that it has been the practice of the department. The question arose in certain cases before the High Court, and, if judgment were not given upon the point, at any rate legal comment was made upon it. I find that in the case of Kiddle v. The Deputy Federal Commissioner of Taxation, heard before the High Court on the 25th November, 1919 - the judgment is recorded in one of the appendices to the report of the Commissioner of Taxation - Chief Justice Knox said -

I propose, therefore, to deal with these appeals by finding the “ improved value,” as defined by the act, of the whole area, and deducting from that amount the sum which represents the “ value of improvements “ as defined by the act.

Eis Honor then proceeded to arrive at the unimproved value in the very way which it is proposed in the bill now under consideration shall be the statutory practice. This point was not overlooked by counsel, who specially advised the department with respect to the proposed bill, when it was under consideration subsequent to the decision in the McGeoch ease. Mr. Jordan, in submitting his fldvi.ee, made this reference -

Until Toohey’s case, 1925, A.C., 439, it bad been universally assumed that a legitimate method of ascertaining the unimproved value of improved land was to ascertain the improved value and deduct therefrom thu value of the existing improvements.

There, counsel laid it down that it had been the universal practice, until the Toohey case in. 1925, to proceed upon those assumptions and to arrive at the unimproved value by that process, which, to any reasonable man would seem to be the only practical way to ascertain it, so long as provision is made to exclude from consideration, those extraneous influences that might otherwise inflate the unimproved value, such as the intangible values of which the honorable member for Wakefield (Mr. Hawker) has been speaking. These intangible values certainly are of great importance, because we do not want the department to follow a practice that would establish a fictitious value for unimproved land - a kind of legal fiction that assumes for taxation purposes a value that does not exist. We do not want to do that. Speaking a9 Treasurer and for the Taxation Department - and I presume, also, for this committee - I say that what we want to arrive at as the basis of taxation, is the real unimproved value of land, as nearly as we can ascertain it. To do that we have to provide a measure that authorizes the department to proceed in a certain way. I frankly admit that we want to avoid the possibility of interpretations that would lead to fictitious unimproved values, “and, therefore, in view of the points that have been raised, it may be desirable -to make an amendment to prevent this class of intangible values being taken into account. Mr. Bonniwell, of the Crown Law Department, has prepared the following memorandum dealing with hotel licences : -

It has been the practice to treat the licence as being attached, not to the land, but to the person of the licensee. This view has, from time to time, hod the support of lawyers, so apparently no amendment is really necessary. To resolve the doubts raised by the Leader of the Opposition, I suggest that the present practice be recognized by a declaratory statement in the bill.

After the word “ improvements,” page 3 of the bill, end of line 3, he proposes the addition of these words - “ including in such added value the value of any hotel licence or other similar interest the value of which has been included in the improved value.” Of course, where the value has not been included it is immaterial for the purpose, but where it has been then that must be taken into account. That amendment would seem to meet the point raised.

Mr Hawker:

– Only with respect to hotel licences.

Mr THEODORE:

– All the other intangible values of which the honorable member has spoken are covered by the practice to date. In the case where a well has been sunk at great cost and has failed to produce any considerable volume of water, the full cost will be allowed before the unimproved value is arrived at for taxation purposes. I assure the honorable member that that practice has been followed by the department and will be continued. As to whether the value of an hotel licence would be taken into account without an amendment of the act the following advice was tendered by the late Mr. Castles, Crown Solicitor, subsequent to the Toohey case in 1925 : -

It is difficult for me to see how a licence can either increase or decrease the value of land, except, possibly, to the extent to which it reveals the suitability of the land for the licensed purposes. But a licence, so far as I know, is always personal, although some licences may bc restricted to a particular piece of land.

An hotel licence is, so far as my knowledge goes, always personal, and is granted* in respect of approved premises which consist of a definite piece of land and of buildings suitable for the purposes of an hotel. The site may be to some extent material, but the suitability of tho buildings and of the licensee are the main considerations. T think that the idea of an hotel licence for land without buildings is practically inconceivable. It may be possible that an hotel licence may be provisionally granted in respect of vacant land where plans of a proper building have been approved, but I believe that in practice, the licence in such a case would not actually be issued until the buildings had been erected and had been approved by the licensing authority.

Mr Archdale Parkhill:

– The licence does not follow the individual. It remains with the land.

Mr THEODORE:

– But it is granted to the individual.

Mr Latham:

– To the individual in respect of premises.

Mr THEODORE:

– But not in respect of a piece of land, although the premises may have to be on a particular site or in a particular location. The whole point is that the licence itself is something that is personally granted, and, therefore, is not taken into account as part of what can be calculated as the value of the improvements on that land. That being so, it can have no effect in determining the unimproved value. That is the view of the department, but, to clear the matter up, I suggest the addition of ‘the declaratory phrase mentioned. That will place it beyond doubt that that class of value will not be taken into account. There is also the question regarding the words “did not exist.” As I mentioned earlier, in reply to the second-reading debate, there is no doubt that those words, although a simple phrase, contain tho essence of something to be achieved by this bill, and that is to restore the practice and what was recognized to be the state of the law prior to the McGeoch case. To substitute for those words the words “ had not been made “, would be to defeat the intention of the bill. It would entirely upset the practice followed in relation to that class of improvements that are so difficult to define, such as the eradication of vegetable growths and animal pests, and calculating the amount that ought to be allowed with respect to improvements of that kind. I reiterate that if we had to assume a condition of things with regard to improved land quite dissimilar from what actually exists, for the purpose of arriving at the unimproved value, we should have to assume that the improvements had never been made - that the land had been allowed to remain in its virgin state. We should have to assume a condition that would make it difficult to arrive at a correct basis for the presentday unimproved value of that land for taxation purposes. Mr. Bonniwell has submitted the following memorandum in answer to the contention of the Leader of the Opposition that the new definition of “improvements “ makes those words unintelligible, in that it is not sensible to state that the destruction of animal or vegetable pests “ did not exist “ : -

It is submitted that the words “ did not exist” cannot be objected to on the ground stated. In the case o’f clearing, the improvement which “ exists “ is the ‘’ destruction of pests to the extent to which the destruction retains its utility” (see definition of “improvements “ ) . The word “ exist “ corresponds to the word “ existing “ in the last line of the clause.

This is a bill for lawyers and not for plain sensible men, and any difficulties which the committee is experiencing may fairly be attributed to the legal men who construct the law, presume to explain it in Parliament, and later interpret it in the High Court.

Mr LATHAM:
Kooyong

.- I should like to be considered a plain lawyer and also reasonably sensible. I still think that the wiser course would be to omit the proviso, but the responsibility forits inclusion rests with the Government, and I do not propose to press the amendment. The Treasurer has indicated that he proposes to move an addition to the definition of “value of improvements.” It. is impossible for the committee to study the effect of such an amendment after a mere verbal explanation, but possibly we shall have an opportunity to consider it later before the bill is finally disposed of. The Treasurer has invited the committee to approve of the practice of the Commissioner. The practice of the Commissioner is an indefinite and variable quantity: it cannot be defined. The duty of Parliament is to make its legislation as dear as possible, and the authoritative interpretation of it is the function of the High Court and not of the Commissioner. Whilst I have the greatest personal respect for the Commissioner, and appreciate the difficulty of his task,I amnot prepared to bind myself to support his practice. I am not convinced that the amendment foreshadowed by the Treasurer meets the case I stated. For purposes of illustration, I cited a hotel licence - a plain example which every honorable member will understand - and the Treasurer has promised an amendment that will deal with such licences and “ other similar interests “. As a selfregarding lawyer, I welcome that phrase “ other similar interests “. If I should be sufficiently well advised to abandon the political arena and return to the practice of my profession, I would regard the phrase as a gift. I can imagine myself arguing its meaning before another tribunal with more success than is attending me here, and with results much more satisfactory to my personal fortunes. I look forward to reading the reprint of the bill after it has been amended, when possibly further opportunities for reconsideration will be afforded.

Mr WEST:
East Sydney

.- The taxation of unimproved land values was introduced about 40 years ago to penalize those people who held in idleness land that could be put to productive use. It was not the intention of the legislators to unduly tax the man on the land. I realize that the pioneers of virgin land have to expend upon it much labour that is not immediately productive and does not add to its value. There has always been, however, opposition to the taxation of leasehold, although in certain circumstances leasehold is of greater value than freehold. I understand the difficulties with which the Commissioner of Taxation has to contend. Everybody tries to evade taxation and the Commissioner is always running counter to one of the ingrained prejudices of human nature. I have introduced many deputations to him, and I have always found him ready to give good reasons for the actions of his department. As I understand the practice of the department, it taxes not the improvements but only the increased value that land attains through being put to use and the increased value added by the expenditure of public money. Improvements may make the land productive, and it is the increased value that results from greater productive capacity that is taxed. Full allowance is made for the expenditure on such improvements as bores, wells, fencing, clearing, and pest eradication. That applies equally to leasehold and freehold. It is all very well for the Leader’ of the Opposition to say that bills should be so framed that even the man in the street will understand them. Acts of Parliament merely lay down general principles to which effect is given by regulations. I do not think it is possible to frame a taxation law that will satisfy everybody and obviate disputes.

Amendment negatived.

  1. by omitting the definition of “Value of improvements “ and inserting in its stead the following definition: - “ ‘ Value of improvements,’ in relation to land, means the added value which the improvements give to the land at the time as at which the value is required to be ascertained for the purposes of this Act irrespective of the cost of the improvements :

Provided that the added value shall in no case exceed the amount that should reasonably be involved in effecting, at the time as at which the value is required to be ascertained for the purposes of this Act, improvements of equal utility to the existing improvements.”.

Mr THEODORE:
Treasurer · Dalley · ALP

.- I move -

That after the word “improvements.’’ paragraph c, line 10, the following words be inserted: - “including in such added value the value of any hotel licence or other similar interest the value of which has been included in the improved value “.

I shall have an opportunity to consider the warning given by the Leader of the Opposition regarding the phrase “ other similar interest “ before the bill is dealt with in another place.

Amendment agreed to.

Mr PATERSON:
Gippsland

.- At a later stage I intend to move that the proviso to paragraph c be deleted. It appears to me that it is not only unneccessary and unjust, but that it violates the salutary principle laid down in the clause to which it is a proviso. Paragraph c of clause 2 reads - “Value of improvements”, in relation to land, means the added value which the improvements give to the land at the time as at which the value is required to be ascertained for the purposes of this act irrespective of the cost of improvements.

That lays down a very definite principle that the value of the improvements is to be taken into account irrespective of their cost. Therefore, if a land-owner unwisely spends £6 per acre in endeavouring to improve his land and succeeds in improving its value only to the extent of £4 per acre, he is entitled, under this clause, to deduct from the improved value of the land only the £i by which the land is considered to have been improved. He is not allowed to deduct the full amount for the improvements, but merely the value of the. improvements, irrespective of the cost. That is a perfectly sound principle. The proviso reads -

Provided that the added value shall in no case exceed the amount that should reasonably be involved in effecting, at the time as at which the value is required to be ascertained lor the purposes of this act, improvements of equal utility to the existing improvements.

We may take the illustration a little further. I said a few moments ago that if a land-owner spends £6 per acre and by so doing succeeds in improving the value of his property to the extent of only £4, he is allowed to deduct the £4 per acre as the actual value resulting from his expenditure, which is a wise provision. On the other hand, another land-owner may spend only £2 per acre, but, as the result of experience and the manner in which the work is carried out, may improve his property to the extent of £4 per acre, or to the extent secured by another person who had spent £6 per acre. Such a person is not allowed to deduct £4, but only the actual cost of the improvements. The principle of adhering to the actual value of improvements irrespective of their cost should be carried right through. If bv the expenditure of £2 per acre, a man succeeds in improving his land to the extent of £4 per acre, he should be allowed to deduct the £4 per acre, irrespective of the cost. I maintain that the proviso violates the principle laid down in the clause of which it is the proviso; that it is inconsistent, unjust, and unnecessary.

Mr THEODORE:
Treasurer · Dalley · ALP

– In reply to the arguments adduced by the honorable member for Gippsland (Mr. Paterson), who has given notice of an amendment to this clause, I may say that exactly the same principle is embodied in the Land Tax Assessment. Act of 1910-2-7, in which the proviso to the definition clause reads -

Provided that the added value shall in no case exceed the amount that should reasonably be involved in bringing the unimproved value of the land to its improved value as at the date of assessment.

Mr Latham:

– What is the difference between that proviso and the present proviso ?

Mr THEODORE:

– The difference is obvious. The one proposed in” this bill is a great improvement.

Mr Latham:

– -But what is its effect?

Mr THEODORE:

– We are not introducing a new principle. All we have been doing in connexion with these amending land taxation measures is to re-declare the law as we have understood it for many years. That is the object of the bill. If we were fundamentally amending the law, consideration could be given to the suggestion of the honorable member for Gippsland (Mr. Paterson), but we are not doing that at this stage. The committee is not being asked to consider a revision of the whole of our land tax legislation. If the committee were asked to do that, the Government would introduce a more comprehensive measure. The bill, which was brought forward a few weeks ago, was introduced for the purpose of redeclaring the law as a result of certain decisions of the High Court. I move -

That the words “equal utility” in line (i of the proviso to paragraph (c) bc omitted, with a view to insert in lieu thereof the words “ a nature and efficiency equivalent.”

The proviso will then read - -

Provided that the added value shall iu no case exceed the amount that should reasonably be involved in effecting, at the time as at which the value is required to be ascertained for the purposes of this act, improvements of a nature and efficiency equivalent to the existing improvements.

I think that that is an improvement, and I am grateful to the Deputy Leader of the Opposition for suggesting the amendment.

Mr LATHAM:
Kooyong

.- In this case it is proposed to change the terminology of the proviso; but, apart from a general statement by the Treasurer (Mi1. Theodore) that it is an improvement, no reason has been given for the change. The proviso in the existing law reads -

Provided that the added value shall in no case exceed the amount that should reasonably be Involved in bringing the unimproved value nf the lami to its improved value as at the dato of assessment.

That proviso has given satisfaction ever since it was first embodied in our land, ta.x legislation.

Dr Earle Page:

– Has it ever been tested ?

Mr LATHAM:

– I am unaware of its phraseology ever having caused any difficulty. Instead of referring to the expenditure that would be involved in bringing the unimproved value of the land to its improved value, it is proposed to amend the proviso which, so far as I am aware, has not caused any substantia] difficulty or litigation, so that it will read -

Provided that the added value shall in no case exceed the amount that should reasonably be involved in effecting at the time as ut which the value is required to be ascertained for the purposes of this act improvements of a nature and efficiency equivalent to the existing improvements.

This appears to me to be an entirely gratuitous alteration, and I can welcome it. Only in the interests of my profession. I am unable to understand why it has been made, and the Treasurer certainly has not given any reason. I fear- that the honorable and esteemed profession of which I am a member, may find that there is some difference in the meaning of these words and may consider it its duty to illumine the dark horizon at the expense of those concerned. I am quite unable to . understand why it has been made. No reason has been advanced for the change, and, relying upon the arguments I adduced during the second reading of the bill, I intend to support the amendment which the honorable member for Gippsland (Mr. Paterson) proposes to move for the deletion of the proviso.

Mr BELL:
Darwin

.- Every member of the committee must appreciate the efforts made by the Treasurer (Mr. Theodore) to meet the wishes of honorable members, who can see the risks of further litigation in consequence of the unsatisfactory method of assessing the unimproved value of land. The Minister has tried to meet the objections raised by honorable members and at the same time to safeguard the revenue of the Commonwealth. What we have been doing is only further evidence of the fact that the more we . try to improve this legislation the more we become entangled. It is practically impossible to define the unimproved value of laud, particularly when money has been expended on its improvement over a period of years. I support the amendment foreshadowed by the honorable member for Gippsland (Mr. Paterson) because I cannot see any justification for the proviso. The honorable member for Gippsland has directed attention to the unfair method of arriving at the unimproved value of land in disallowing the whole of the expenditure upon improvements in one case, and, in another, not allowing for the full value of such improvements. It appears to me that a valuer or assessor should, if he is competent, be able to assess the actual value of the improvements, without having to calculate their cost. A practical and experienced man would effect improvements at a much lower cost than an inexperienced person, and therefore an assessor should not have to take into account the actual cost. It appears to me that all that is necessary is to ascertain the value of the improvements to the land. The actual cost of such improvements is, in my opinion, beside the question. Improvements which may cost one landowner £5,000, may cost another landowner only £3,000. But the value of the improvements would be precisely the same, and that is what has to be taken into account in ascertaining the unimproved value of the land. The Commissioner of Taxation or his officers have to try to interpret the will of Parliament, but the fault is with the system. The blame for any ambiguity in the meaning of these provisions must rest ultimately with the Parliament responsible for a system of land taxation that cannot be definitely and satisfactorily defined by them, for the High Court has only to determine the meaning of the words Parliament adopts. So far as I can see, we could eliminate the proviso without any serious consequences. If that were done the value of improvements could be deducted, irrespective of their cost. Surely we have officers competent to estimate the value of such improvements. If they are given a free hand to assess the land with which they have to deal, they are more likely to arrive at a fair unimproved value - if there is such a thing - than if they are tied hand and foot to instructions contained in an act of Parliament.

Dr EARLE PAGE:
Cowper

.- On almost every occasion when Parliament has attempted to amend the language of the principal acts that it has passed in respect of different subjects, loop-holes have been made which have led to litigation. “We are dealing now with a sub-section that has been in operation for about twenty years without any litigation arising from it. I suggest that if the proviso is to be retained it should be in its original form, though I would delete it if it were possible.

Mr Theodore:

– It is not possible, because of the original definition of “ unimproved value “. If it is deleted the administration of the act will be. suspended in mid-air.

Dr EARLE PAGE:

– If it cannot be deleted I shall support the retention of the original wording, though I still feel, with the honorable member for Gippsland (Mr. Paterson), that it can be eliminated without any serious results.

Mr PROWSE:
Forrest

.- I cannot see any reason for the retention of the proviso. The definition makes it quite clear that the value of improvements is to be considered, irrespective of the cost of them. Surely that gives the Commissioner of Taxation a wide enough scope. It is true that the cost of some improvements may be unnecessarily high, but in such cases the Commissioner could deal with the matter on an equitable basis. A mau may improve his land by degrees over a long period of years, and it might be impossible for him to indicate definitely the cost of the improvements. An owner with little capital may, by periodically running fires through his property, effect improvements of considerable value. The provision in the definition would cut both ways. A man may not be able to say in pounds, shillings and pence what his improvements have cost, [f a settler spent money unwisely he could hardly expect it to be taken into consideration to the full extent. The definition without the proviso would give the Commissioner of Taxation ample scope to deal equitably with the taxpayers.

Mr Bell:

– I rise to a point of order. If the Treasurer’s amendment is put first the committee will be placed at a disadvantage. If we vote first on the foreshadowed amendment of the honorable member for Gippsland, and it is defeated, as will certainly happen if the voting is on party lines, we shall then be able to vote for the Treasurer’s amendment, which is an improvement on the wording of the bill.

Mr Theodore:

– The honorable member can vote for. my amendment and still vote for the deletion of the proviso if he desires to do so.

The CHAIRMAN (Mr. McGrath).If the course suggested by the honorable member for Darwin (Mr. Bell) were adopted and the foreshadowed amendment of the honorable member for Gippsland carried the committee would have no opportunity to vote upon the amendment of the Treasurer.

Amendment agreed to.

Mr PATERSON:
Gippsland

.- I move -

That the proviso to paragraph c. as amended, be omitted.

I consider that the proviso is inconsistent with the clause to which it is attached, and a violation of the principle of the definition, which states that the “ value of improvements “ means -

The added value which the improvements give to the land at the time as at which the value is required to be ascertained for the purposes of this act irrespective of the cost of the improvements.

I submit that the definition is perfectly sound, but that the proviso cuts directly across it. The only way to make the procedure in arriving at the value of improvements consistent is to debate the proviso. The committee has been reminded by the Treasurer that these words, or words very similar to them, have been in the Laud Tax Assessment Act for many years ; but that is not necessarily a sound argument for the retention of them. That is no reason why they should remain in the measure any longer if the committee considers that they are unsound.

I shall suite a simple sum to the committee to show how ridiculous the proviso is. If a man buys a piece of land, the unimproved value of which is £4 per acre, and spends £2 per acre upon it so wisely that he increases the value of it by £4 an acre, the land is then worth £8 an acre improved value. If this proviso is allowed to remain, the Commissioner of Taxation would allow a deduction of only £2 per acre in respect of the improvements, and the man would be robbed to a large extent of the value which had resulted from the wise expenditure of his money. By what process of reasoning can it be shown that the unimproved value is increased from £4 to £6 an acre? The difference between the value of the improvement and the actual cost of the improvement has not come about as the result of increased population near at hand or the building of a railway or anything of that kind. In the case quoted the increased value has been given to the land as the result of the efforts of a particular individual. That individual should enjoy to the fullest extent the value of improvements for which he is responsible. If we strike out the proviso it will simply mean that improvements will be valued at the “ added value “ they give to the land irrespective of the cost of them.

There is one other argument that I will advance in support of the amendment, though it may be regarded as a rather flippant one. The Leader of the Opposition has said that the more words that are put into a bill of this kind the greater will be the opportunities for legal battles. I suggest that that constitutes a sound argument for the removal of any provision that is unnecessary.

Mr BELL:
Darwin

.- Let me make another appeal to the Treasurer to agree to the elimination of the proviso. We should look at this as practical men who understand the cost and value of improvements. Surely we are able, without the aid of experts in the phrasing of legal provisions, to say what we mean. Will the Treasurer say definitely whether he considers that this provision is necessary, and if so, why?

Mr THEODORE:
Treasurer · Dalley · ALP

. -I certainly think that it is necessary to retain the provision. A similar provision has been in the statute for very many years.

Mr ArchdaleParkhill:

– But it is now proposed to alter it somewhat.

Mr THEODORE:

– But the principle will remain. In the existing act - “ Value of improvements “ in relation to land means the added value which the improvements give to the land at the date of valuation irrespective of the cost of the improvements.

Mr Paterson:

– I agree with that provision.

Mr THEODORE:

– It has been in the act for twenty years. Then there is this proviso -

Provided that the added value shall in no case exceed the amount that should reasonably be involved in bringing the unimproved value of the land to its improved value as at the date of assessment.

Mr Paterson:

– That is what I want to remove.

Mr THEODORE:

– Has the honorable member only just awakened to the need for removing it?

Mr Paterson:

– We are being given an opportunity to improve the law, and I suggest that this would be an improvement.

Mr THEODORE:

– The Land Tax Assessment Act was amended a number of times by the Government of which the honorable member for Gippsland (Mr. Paterson) was a member. The righthonorable member for Cowper (Dr. Earle Page), when Treasurer, brought down several amending bills, but retained in all of them the definition and proviso that I have just read. The same reason that existed for retaining them then exists now. Very heavy expense may have been incurred in effecting improvements to land which cannot possibly be taken into account in arriving at the unimproved value of the property, because the cost of the improvements is not fully represented in the value that remains from it. If the commissioner were compelled to take into account the full cost of all improvements there would, in many cases, be no taxable value left, although the land might have a real unimproved value. Further, an adjoining piece of land might have an unimproved value for taxation purposes.

Mr Bell:

– Did not the Treasurer say that in such a case there would be no unimproved value to begin with?

Mr THEODORE:

– Not in the kind of case that I have just described. The honorable member referred to the cost of clearing a piece of land, and additional expenditure in successive years for suckering and other things which must be allowed for in arriving at the value of improvements for the purpose of striking the unimproved value. That is permissible under this definition and will be the practice. But it is not difficult to envisage a case in which the value given to land by expenditure upon it has not been commensurate with the amount of the expenditure. In such a case no prospective purchaser would think of paying the full cost of the’ improvements. Honorable members must know that foolish expenditure is often made upon land, the full amount of which cannot be recovered in the event of the land being sold. A willing purchaser gives for land an amount equivalent to its unimproved value plus what he regards as the then value of the improvements upon it.

Mr Paterson:

– That is what we are all agreed upon.

Mr THEODORE:

– The clement which would have to be taken into account would be the price which a willing purchaser would give as the present-day value of the improvements. That is the value which the Commissioner must allow.

Mr Prowse:

– The clause without the proviso does that.

Mr THEODORE:

– No. The honorable member for Oxley (Mr. Bayley) asks the reason for the changed phraseology. We have changed the basis of the valuation, and consequently the phraseology must be altered. The term “unimproved value “ is used in the existing law. There- is no attempt to depart from the practice of the department, or to import into this law something in the nature of an experiment or an incursion into new fields of taxation.

Amendment negatived.

Clause, as amended, agreed to.

Clauses 3 and 4 agreed to.

Title agreed to.

Bill reported with amendments, and, by leave, passed through its remaining stages.

page 944

CONSTITUTION ALTERATION (POWER OF AMENDMENT) BILL

Second Reading

Debate resumed from 4th April (vida page 908) on motion by Mr. Scullin -

That the bill be now read a second time.

Mr MCTIERNAN:
Parkes

.- In- the discord of opinion which these bills for the alteration of the Constitution - particularly the first - have caused to break upon this House, there was one tuneful note discernible which has relieved the stridency of the debate. That tuneful note was the recognition by honorable members that some substantial measure of constitutional reform is urgently necessary. In reviewing the fate of previous attempts to reform the Constitution, honorable members displayed a feeling of pessimism. It was apparent that they regarded the existing methods of amending the Constitution as being unable to achieve any satisfactory measure of reform. The Government has, therefore, introduced the first bill, the object of which is, in effect, to install in the Australian Constitutional workshop, a new effective, and economical machine for improving the Constitution. The bill does not propose to jettison the existing machinery, although it has proved both cumbersome and expensive, and has, indeed, been an obstacle to the progress of Australian legal development. The principles which will control the operations of this new machine are the conventions and usages of responsible representative government. The Treasurer (Mr. Theodore) made a forceful point of that in his argument.

Honorable gentlemen opposite have speculated more upon the abuse to which this new’ machinery might be put than upon the beneficial uses which might be made of it. The right honorable the Leader of the Country party (Dr. Earle Page) described the bill as an attempt to hand an open cheque to the government, of the day. The Leader of the Opposition (Mr. Latham) said that the result of the passage of this bill would be to bring popular issues into this House. I submit that to argue in that way is to express distrust in the existing system of parliamentary government. It is not characteristic 1 of communities like oura to abuse parliamentary power. The British Constitution, although it contains no rigid fundamental laws, has been well described as the very mirror of political liberty. Those principles of responsible parliamentary government - those conventions and usages to winch I have already referred - although unwritten, have proved to bc powerful safeguards not only against revolution, but also against provocative reaction. The new machine by which the Constitution will be reformed from time to time will bp under the control of the elected representatives of the people, and they, by force of the rules of parliamentary government, will be ultimately responsible to the electors for the manner in which this trust is administered.

Rights and interests, more precious and vital than even the written form of many sections of our Constitution, have been well safeguarded by those principles of responsible representative government to which I have referred. At the present, time, the States, and even the Commonwealth within its limited sphere, hove shown no disposition to abuse the very great powers which are exercisable by them under our existing constitutional system. The existing methods of amending the Constitution have proved to be totally inadequate for the needs of the Common-wealth. .Considering that the elec to rs of the Commonwealth are identical with the electors of the States, that 97 per cent, of the people of Australia are of the same stock, that there are no serious historical antipathies between the people of the States, that it was the recognition of an identity of destiny and of common interests that drew the people of Australia into a Commonwealth, I am disposed, in the present state of Australia’s development, to regard State rights, which have been so much referred to in this debate, as mere abstractions, as incorporeal things, departed legal spirits, which now have no actual bodies to inhabit, to which they can impart any definite or distinctive personalities. Having regard to the history of Australia prior to federation. I regard federation as having been a bridge between union and unity; and it is my view that that bridge has long since been crossed. In these circumstances, we should endeavour to make constitutional reform correspond with the accomplished fact of our national unity.

It is important to appreciate that the Commonwealth, whose Parliament needs more power, is not a mere piece of constitutional machinery,- established for the convenience of the States for united action on certain enumerated matters. The Commonwealth is a political community comprising all the people residing in the Australian continent and Tasmania. That was declared as early as 1903 in a despatch by the British Secretary of State for the Dominions, lt is quoted by Professor Harrison Moore in his work. The Constitution of the” Common-wraith of Australia -

By the act a new State or nation »ucreated, armed with paramount power, nol only to settle the? more important internal affairs relating to the common interests of the united people, but also to deal with all political mutters arising between them and any other part of the Km pi re or (through His Majesty’s Government) with any foreign power. That appears to me the obvious meaning of section iii of the act, which declares that on and after a day appointed by proclamation the people . . . shall be united in a federal commonwealth under the name of the Commonwealth of Australia. On that day. Australia became a. single entity and no longer six separate States in the family of nations under the British Crown, and the external responsibility of Australia vested immediately in the Commonwealth, which was armed with the paramount power necessary to discharge it.

Thus it will appear that the Commonwealth is not a mere governmental arrangement. During the last 30 years the Commonwealth has grown in stature, in prestige, and in power, but I think that it will be admitted by all Australian citizens that it is at present within a legal straight-jacket that is unnaturally restricting its growth and development. This bill proposes to set the Commonwealth free. The Commonwealth, to which we seek to give this power is the national unit, which in its own right, and not as a delegate of the States, participates as a member of the British Commonwealth of Nations in the councils of the nations. It does not appear to me that there is any reason peculiar to Australia why the present distribution of. political power in this country should continue in such a condition that the Commonwealth has less political power than its sister dominions, Canada, South Africa, and New Zealand. The Commonwealth goes into conference with Great Britain and the dominions in imperial and economic conferences. Is it not a most anomalous and unsatisfactory condition of affairs that the representative of the Commonwealth should be discussing at those conferences, land settlement, marketing, and other subjects over which the Commonwealth has no power, or only limited power. It is true, as was stated by the Leader of the Opposition, that the purpose of federation was to give to the Commonwealth power with respect to national problems, and to leave matters of local concern to the States. But plainly the Commonwealth has not power in respect of all Australian national questions. Here is an opportunity for the fulfilment of those purposes of federation which were referred to by the Leader of the Opposition.

It is not my intention to embark upon a long discussion on the evil of the multiplicity of political institutions which today prevail in Australia. The question is, what course should be taken to give effect to the present need for constitutional reform. It is useless to take the old courses, which have been tried and have ended in a stalemate. It is obvious that the present condition of affairs cannot be permitted to continue. Professor Burgess, in his book Political Science and Constitutional Law. volume 1. at page 151, has written -

Development is us much a law of State life as existence. Prohibit the former and the latter is the existence of the body after the spirit has departed.

The difficulties in the way of altering the Federal Constitution have proved to be so real that the position is almost the same as though amendment had been prohibited. In these circumstances I submit that it becomes the duty of this Federal Parliament, which is the first institution in the land, and the most important instrumentality of the Commonwealth, to give a lead to the people and to direct the Commonwealth out of the morass of legalism in which it appears jr.o have foundered. A somewhat similar position in other countries is discussed by Professor Harrison Moore, in his book, The Constitution of the Commonwealth of Australia. He wrote at page 621 of the 2nd edition of that work -

It is the experience of federal government in the United States, in Germany, and in Switzerland, that the national government tends to grow in power as compared with the State governments. In the United States the development has been by way of judicial construction, rather than by formal amendment, a construction given under a deep responsibility which came from the knowledge that the decisions of the court were in face of the difficulty of amending the Constitution, for all practical purposes final. Combining, in Marshall’s phrase, the lawyer’s rigour with the stateman’s breadths of view, the Supreme Court for more than a century has had to reconcile the needs of national strength with the claims of provincial autonomy and of individual right. For long the steady course of judicial interpretation not only satisfied the American spirit, but shared the veneration which belonged to tho Constitution itself. There are indications that this satisfaction is passing away before the needs created by the expansion of the scale of business operations, which have no regard to artificial State boundaries, and yet may not be “ commerce among the States.” In America, too, as elsewhere, the citadel of national right has been stormed, and the securities demanded by the citizen of the 18th century against the impairment of his liberties are likely to be more and more regarded in the 20th century as hindrances to social welfare. In these circumstances, tho difficulty of altering the Constitution gives cause for anxiety, and not least to those who fear that the demand for a new interpretation may lead the courts to interpret opinion rather than law.

In Australia we cannot ask the High Court to articulate the political wishes of the people. It is a fundamental principle among our people that a court shall interpret law and not public opinion. It is true that in 1920 the High Court, in the Engineers’ case, eliminated an exotic doctrine from the constitutional system of Australia. That doctrine was to the ‘effect that there must be read into the Constitution of the Commonwealth implied restrictions on the full exorcise of powers expressly given, so as to protect; State instrumentalities from interference by Commonwealth legislation, and thus to save the federal compact from being set aside in effect- by the operation of federal legislation. But in the Engineers’ case the court has decided that it will not consider political exigencies arising from the existence of the States in interpreting the Constitution; that the Constitution must be construed according to the rules which have been established for the construction of statutes, and that any power that is given by the Constitution to the Commonwealth will be considered to be fully given, subject only to such limitations as can be gathered from the Constitution itself.

By a parity of reasoning,’ political exigencies will not cause the High Court to invent any new powers for the Commonwealth. The High Court has emphatically declared in the Engineers’ case that it will interpret the law of the Constitution only, and not political exigencies. In these circumstances there is more need than ever for this Parliament to give consideration to the matter of constitutional reform, and to place in the Constitution some effective means by which it can be amended to meet the changing needs and conditions of the Commonwealth.

Honorable members opposite would contribute more to the discussion if they applied their minds to a consideration of the beneficial manner in which these new powers might be used, rather than by speculating as to the manner in which they might be abused. The proper question for the consideration of honorable members is whether the proposal before the House, contained in this- bill, is one which will be beneficial to the people of Australia. I propose to give a number of instances in which the exercise by the Commonwealth Parliament of such a power as is sought by this bill, would be manifestly desirable and beneficial to Australia. These instances will illustrate certain gaps or interstices in our constitutional system’ which should be filled or bridged.

In the first instance, it will enable Parliament in a prompt, economic and effective manner to take action in any matter of Australian-wide concern, requiring constitutional alteration, upon which it has received a mandate from the people. I cite the case of the last election, which was fought, inter alia, upon the issue of State or Federal arbitration. The whole matter was more thoroughly discussed in the constituencies than if a referendum ware being taken on that issue. But the Commonwealth Government is powerless to give effect to the obvious mandate of the people. It is necessary to submit a referendum to the people to obtain their approval on a matter upon which they have already overwhelmingly given their approval. Because of the absence of this power from the Constitution, the country is involved in the additional expense, delay, disturbance and inconvenience occasioned by another campaign and the voting itself.

This matter of industrial powers is preeminently a case which demonstrates the need for the Commonwealth Parliament to have the power which the Government seeks to obtain for it. Had that power existed, this Parliament would before now have passed an Industrial Arbitration Bill to give effect to the mandate of the people. The presence of such a power in the Constitution would also ensure that no part of that bill could be attacked upon the ground that it was beyond the powers of the Commonwealth. Thi3 method of constitutional re-construction has some merits which are not possessed by the system of holding constitutional conventions. In the case of a constitutional convention, there occurs first of all the election of the delegates, and then the convention itself. Then there is the submission of the resolutions of the convention to this House. “When those resolutions are adopted by the Parliament in the form of proposed laws, they must be submitted to the people by way of referendum. The amendment proposed by the Government would make the procedure more simple and less cumbersome. To amend the Constitution there would be an election of members with a mandate for constitutional alteration and the passage of a bill through this House to give effect to thi. mandate for constitutional reform. We would save the country from a deluge of campaigning, from a duplication of campaigns, and the attendant expense, inconvenience, and turmoil of so many appeals to the people.

In the second place, if this power were granted to the Federal Parliament, it would be able to protect its own legislation, and that of the States as at present constituted, or as subsequently reorganized, from attacks which are at present frequent. It would enable this Parliament to establish certainty -where doubt exists as to the extent of the powers of the Commonwealth Parliament, arid of the State Parliaments on matters which are obviously committed either to the jurisdiction of the Commonwealth or to the jurisdiction of the States by the existing constitutional law. Even during this session we have had an illustration of the harassing conditions under which the Federal Parliament carries on its work because it has not the power to remove entirely such difficulties1 and doubts as to the extent of its powers. During the discussion on the bill to regulate the transfer of gold overseas the Leader of the Opposition (Mr. Latham) pointed out in quite a helpful way that there might be some doubt as to the validity of the bill. If this power which we seek existed, it would have been possible for this Parliament to have removed that doubt and difficulty altogether. There could be given a security and certainty to legislation which, perhaps, it does not possess to-day.

Numerous instances could be quoted of attacks upon the legislation of the Commonwealth and the State Parliaments, and those attacks have been launched, not for the purpose of vindicating any constitutional principle, but by private individuals personally affected by legislation passed for the public benefit. For example, the Commonwealth Bank itself has been attacked on legal grounds in the courts of this country. The Interstate Commission was successfully attacked. Sections of the federal taxation laws have been attacked on constitutional grounds. The Industries Preservation Act, which was passed for the purpose of suppressing injurious trusts and combines, was attacked with partial success. The legislation of the State Parliaments has also been attacked. I instance the attacks on State laws passed for the purpose of preventing the infection of stock by ticks. Cases have arisen out of statutes of that kind by which States have endeavored to protect their herds and plants from contamination by preventing diseased stock or plants coming in from other States which are infested with tick and other things. Such attacks have caused very serious embarrassment to the Governments of the States.

There is no need to refer at length to the mischief which arises from the uncertainty of the power of the Federal Parliament or of the State Parliaments to enact any particular section of a bill. The liability to this attack harasses Federal and State legislators alike. It causes them to spend much time over merely technical difficulties which have nc relation to the actual merits of the legislation. We know that round about the line where State and Federal powers appear lo meet there is a. twilight zone. The dim area of power cannot be exactly marked out. While this condition of affairs exists, these legislatures will not feel powerful enough resolutely to go forward with legislation on things which appear obviously to be entrusted to their jurisdiction. I submit that the rigid, formal definition of constitutional limitations is foreign to the legislatures of British communities. If this constitutional amendment is passed it will do much to mitigate some of the evils which flow from this rigid formalism. Professor Berriedale Keith has shown the danger of precise constitutional formalism. In his book. Sovereignty in tha British Dominions, he says, at page 3 -

Tt is the distinctive feature of the British character to recognize the danger of the effort to define precisely constitutional relations. The merits of the British Constitution are closely related to its fundamental elasticity, which permits change by peaceful evolution and offers no encouragement to revolutionary attack … It is significant that, whenever, for special reasons, a departure has been made from this sound principle, confusion has been the result. Among the many causes which have impeded the successful working of the reformed Constitution given to India by the Government of India Act 1919, importance attaches as Sir John Simon lias not failed to note, to the rigidity imported by the plan of legal definition which has hampered the growth of constitutional conventions and the adaptation of the British system of responsible government to Indian conditions. . . Most fortunately for imperial relations, the temptation to regulate them by formal constitutional law has been resisted’.

There is a third instance of the use to which this power which we seek might

In.- put. lt might be used to remove anomalies from the Constitution, and to cure minor defects in draftsmanship and substance. Upon such matters it would be entirely absurd to hold a referendum, because the questions are such that the people would not take any interest in them, nor would they endeavour to understand them. I refer honorable members to the report of the Royal Commission on the Constitution in which special reference is made to anomalies, particularly in connexion with the judicial system of the Commonwealth. I also invite honorable members who so stoutly defend the rigidity pf the present Constitution to note the provisions of section 92 of the Constitution, and to road the opinions of the Commission on the Comstitution upon that section. The commission pointed out that it is incredible that the members of the Federal Convention ever intended that section 92 should be cast in the form in which it now is. It has been the cause of much litigation, and the High Court has been puzzled over the manner in which it has been drafted. If this Parliament had the power which the Government is seeking it could hold a consultation with the States, and, without the’ expense of a referendum, it could, by an act. of this legislature, put reason and simplicity into section 92, and draft it in the manner which must have been intended by the Constitution Convention itself.

Fourthly, I invite the attention of honorable members to a further very important and beneficial use which might be made of this power. I submit that it is necessary, in the interests of the Commonwealth, that there should be in reserve a power which can be exercised in time of emergency for the safety of the people of Australia. In war-time, the Defence power springs into life, and the federal authority is empowered to take such action as it deems expedient for the protection of the Commonwealth. During the war, Australia was practically living under a system of unified government. One can readily imagine that the emergencies of peace may be just as great and serious as those of war. Take for instance the present crisis through which Australia is passing. Although it is necessary for the Commonwealth Par liament to take serious action for the purpose of limiting imports to this country, it is entirely powerless to take any effective action to prevent profiteering.

Mr Archdale Parkhill:

– The Government is not asking for such power in this bill.

Mr MCTIERNAN:

– It is seeking such power under the bill dealing with trade and commerce.

Mr Archdale Parkhill:

– That will not confer the necessary power.

Mr MCTIERNAN:

– Yes it will ; and this bill also. It is intolerable that the Commonwealth Parliament should not have, in time of peace, power to take action in emergencies for the welfare of the people of Australia because of certain irritating artificial and unreasonable constitutional restrictions.

There is yet a fifth case in which, in my opinion, this power which we seek might be employed for the benefit of Australia. I. submit that it might well be used even though no specific mandate exists for a particular amendment, when such amendment is obviously necessary and expedient, and there is no doubt that, if put to the people, it would be overwhelmingly approved. If it were found subsequently that the people did not approve of the amendment, this power could be exercised to withdraw the amendment. One could find instances of desirable amendments to the Constitution which might be so effected. The Royal Commission on the Constitution has referred, for example, to aviation and navigation. It appears absurd that complete power should not reside in the Commonwealth Parliament with regard to those two subjects. Furthermore, it is repugnant to common sense that, in order to grant power to the Commonwealth Parliament over these two matters, we, a. practical people accustomed to democratic government, should be forced to go through the ritual of a referendum with its artificial prescriptions and its expense and attendant turmoil.

Mr Archdale Parkhill:

– Does the honorable member believe in the referendum?

Mr MCTIERNAN:

– Yes, in certain cases, but in the case I am mentioning, the people would not require a referendum to be taken.

Mr Archdale Parkhill:

– Do not the remarks of the honorable member constitute a wholesale condemnation of the principle of the referendum?’

Mr MCTIERNAN:

– There are matters which it is obviously unnecessary to submit to a referendum because common sense tells one that the people would approve of them, and I suggest that the two instances I have given relate to legislation which would not entrench upon party politics.

I have given five instance’s of practical uses to which this power could be applied if it were placed in the Constitution and there is no need for honorable gentlemen opposite to exhaust all their ingenuity in endeavoring to speculate upon the abuse which might be made of that power. The proposal in this bill is nOt strange to our own written Constitution or to our political experience; it is indeed an extension of a principle of flexibility already contained in the Constitution, because about 40 sections contain the provision that a condition established by the Constitution shall remain until Parliament otherwise provides. Those provisions affect Parliament itself, the executive, the judicature and matters relating to the financial and commercial affairs of the Commonwealth and States. The bill before the House is simply to add to the list of enumerated powers of Parliament the power to amend the balance of the sections of the Constitution which at present it may not amend.

The bill does not propound a principle which is repugnant to a federal system of government. On page 600 of the first volume of the 1929 edition of his Constitution of the United States, Willoughby says -

To the author of the present treatise, the fundamental error of all those who have sought to place inherent limitations upon the amend ing power as provided for in the Federal Constitution is that they necessarily start with the assumption that the Constitution is in the nature of an agreement or compact between the States, or that it implies an understanding between them, or between them and the National Government, that the allocation of powers, as provided for in the original instrument, shall not be changed in any of its more important or essential features. It is surprising to the writer that this theory which since the civil war has been so decisively rejected by the American people g,nd by the courts, should again be brought forward to support a constitutional argument.

Mr Bayley:

– What standing has Willoughby ?

Mr MCTIERNAN:

– He is one of the leading commentators on the American Constitution. The honorable member will not dispute the authority of Bryce, one of the leading British jurists, in whose monumental work, The American Commonwealth, will be found in Vol. 1, page 259 of the 1910 edition, the following: -

Those err who suppose that the functions above described as pertaining to the American Courts are peculiar and essentia] to a federal government. These functions are not peculiar to a federation, because the distinction of fundamental laws and inferior laws may exist equally well in a unified government, did exist in each of the thirteen colonies up till 1776, did exist in each of the thirteen States from 1 770 till 1789, does exist in every one of the 44 States now. Nor are they essential, because a federation may well be imagined in which the central or national legislature should be theoretically sovereign in the same sense and to the same full extent as is the British Parliament. The component parts of any confederacy will no doubt lie generally disposed to place their respective State rights under the protection of a compact unchangeable by the national legislature. But they need not do so, for they may rely on the command which as electors they may have over that legislature, and may prefer the greater energy which a sovereign legislature promises to the greater security for State rights which a limited legislature implies. In the particular case of America it is abundantly clear that if there had been in 1787 no States jealous of their powers, but a united nation creating for itself an improved frame of government, the organs of that Government would have ‘been limited by a fundamental law just as they have in fact been, because of the. nation, distrusting the agents it was creating, was resolved to fetter them by reserving to itself the ultimate and overriding sovereignty.

That is a most illuminating statement in support of the Government’s proposal, demonstrating as it does that it is not repugnant to a federal system of government that the people should prefer the greater energy which a central legislature promises to a greater security over State rights which a limited legislature implies and that though the people may give this power to the federal legislature, its exercise will be controlled by the principles of responsible, government.

If the Government’s proposal means unification honorable members opposite do not enhance the attack upon it by saying that unification means centralized government. Unification does not imply a denial of local autonomy. Federation does not imply the existence of a proper measure of local government. Local government is not necessarily inconsistent with unification, nor is it necessarily consistent with a federal system of government. Under the federal system existing in Australia to-day there have been complaints that defined parts of the States with distinct community interests are denied the measure. of local autonomy to which the people of those places believe they are entitled. The basis of the policy of the Country party, for the creation of new States, which, of course, the party has not seriously attempted to carry into effect, is the discontent of people in defined areas with the amount of local government which they possess under the federal system of government.

Mr Bayley:

– How much more would that discontent exist under unification ?

Mr MCTIERNAN:

– If this proposal is adopted the Federal Parliament will be empowered to work out the details of efficient schemes of devolution and decentralization, and to improve them from time to time. It will have sovereign legislative power to do it, and the people who desire the creation of new States will not be subjected to the harassing restrictions which are at present imposed upon the powers of the Commonwealth Parliament to grant devolution and centralization in areas of the Commonwealth where the people are entitled to a measure of local autonomy.

Furthermore, this power will enable Parliament to modify the provisions of the Constitution, wherever it can ‘be shown that they are unjust to the people of any State. The Constitution contains a provision that duties of customs and excise shall be uniform, and complaints are made by some States that the uniform imposition of duties causes injustice which is peculiar to certain localities. If the Parliament were given power to amend the Constitution from time to time, it could relieve ‘ these conditions, and vary the incidence of federal taxation in any area where it was found just to do so. We know that this Parliament has not been deaf to the special appeals of certain States for consideration; assistance has often been given in cases where the Parliament has power under the Constitution to grant it.

We have had 30 years’ experience of our Constitution, with its narrow enumeration of powers, combined with artificial restrictions, and definite rigidity; but, notwithstanding our experience, these artificial limitations remain a baffling phenomenon which is foreign to the political genius and constitutional traditions of our people. Politically, Australia is a dominion of the British Crown. Animadversions have been frequently heard because of the fact that in recent years we have been developing as provinces of “ the American dollar.” But, strange it is that, since we copied much of our Constitution from America, little has been said of the undoubted fact that we have been disciples of American constitutionalism.

I support the principle of this bill, because I believe that the people of Australia, speaking through this National Parliament, should have power to bring their own political and national genius to bear on the construction of a Constitution suitable to their needs and changing conditions. That is the manner in which the British Constitution was fashioned, and has been moulded from time to time. I prefer that the characteristics of our Constitution should be redolent of the genius and political traditions of our own people. This bill proposes to endow the Commonwealth Constitution with that quality of flexibility which is the dominant characteristic of the British Constitution. I have the profoundest respect for the culture a-nd achievement of American jurists, but I do not agree that America is a constitutional workshop superior to

Great Britain or our own country. The fact that much of our Constitution has been copied from that of the United States of America is no guarantee of its democratic character. Professor J. Allen Smith, who occupied the chair of political science in the University of Washington in 1907, remarked in his book, The Spirit of American Government -

It is thu general belief, nevertheless, that the Constitution of the United States is the very embodiment of democratic philosophy. The people take it for granted that the framers of that document were imbued with the spirit of political equality, and sought to establish a government by the people themselves. Widely as this view is entertained, it is, however, at variance with the facts.

At another place he wrote:-

Accordingly. the efforts of the Constitutional Convention wen.’ directed to the task of devising a system of government which was just popular enough not to excite general opposition, and which at the same time gave to the people as little as possible of the substance of political power.

I wish to direct attention to one other important matter arising in connexion with the first bill. A provision such as that we are now discussing may come before the next Imperial Conference. The Imperial Conference of 1926 issued a declaration regarding the status of the self-governing dominions, and a committee of constitutional experts was appointed to make recommendations with a view to reconciling this new status with the powers of the parliaments of the self-governing dominion’s. At the present time the parliaments of the dominions are in certain respects in a condition of subordination, due to the operation of certain imperial statutes. One is the Colonial Laws Validity Act of 1S65 which provides, in effect, that if a statute of the British Parliament is made applicable expressly to a dominion, any statute of that dominion which is repugnant to the imperial statute will be void. The constitutional committee considered how the repeal of the Colonial Laws Validity Act would affect the constitutional position in . Australia, the Federal Parliament of which ha3 no power to amend the Commonwealth Con- stitution, which is a British statute. The committee has recommended that if the Imperial Conference decides in favour of the repeal of the Colonial Laws Validity Act, a condition shall be enacted in the repeal that the Commonwealth Parliament shall not have power to amend the Federal Constitution. We can only speculate as to what the Imperial Conference will decide in that regard, but I submit that the condition recommended by the constitutional committee would not be consistent with the self-governing rights of the Australian Commonwealth, and would stereotype the existing Constitution and make it more rigid. If the proposal is that the legislative powers of the Australian people shall be made consistent and harmonious with the new constitutional powers of the Commonwealth, no limitation should be placed upon those powers in Australian affairs, and the Commonwealth Parliament should have iii respect of its Constitution power equal to that which, theoretically, the Imperial Parliament has today’. ‘

I invite honorable members to consider the questions I have enumerated as matters to which this proposed power could if granted be applied. If they will speculate less regarding the possible abuses of that power, they will realize that it is one that may reasonably be granted to this Parliament. and that its application will at all times be regulated by the firm but unwritten provisions of the Constitution - the usages, conventions, and principles of representative parliamentary government. The legislators who will be in control of this new constitutional power, will, on all occasions, recognize their ultimate responsibility to the people for the manner in which they administer the greater trust reposed in them.

Debate (on motion by Mr. Paterson) adjourned.

page 952

HOUR OF MEETING

Motion (‘by Mr. Scullin agreed to-

That the House at its rising adjourn until tomorrow at 2..’J0 p.m.

House adjourned at 10.21 p.m.

Cite as: Australia, House of Representatives, Debates, 8 April 1930, viewed 22 October 2017, <http://historichansard.net/hofreps/1930/19300408_reps_12_123/>.

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