6th Parliament · 1st Session
The President took the chair at 10.30 a.m., and read prayers.
page 6616
Travelling Concessions: Recall of Dr. Ramsay Smith: Effects of Deceased Soldiers : Report on Liverpool Camp : Dr. Carty Salmon : Inoculation.
– Can the Minister of Defence say whether the Prime Minister has received from the State Premiers any communication relating to concessions to returned sick and wounded soldiers when travelling on Governmentowned railways and tramways?
– I communicated the suggestion of the honorable senator to the Prime Minister.I have not received a reply from my colleague as to the result of his communication to the State Premiers, but I know that one has been sent to them.
-Will the Minister of Defence make available to honorable senators as soon as they arrive the papers in connexion with the inquiry which resulted’ in the recall of Dr. Ramsay Smith?
SenatorPEARCE. - I have not yet had an opportunity to look through the file which is here, but, as Boon as I have, I will give a reply to the honorable senator, probably at a later hour of the day.
– Has the Minister of Defence any statement to make, or has he made a statement, regarding the arrangement entered into between the Imperial authorities and J. Cook and Sons for the return of the effects of deceased soldiers ?
– I have not yet received the information, but I will endeavour to obtain it during the day - before Parliament adjourns.
– Can the Minister of Defence give the Senate an idea as to when copies of the report of Mr. Justice Rich’s inquiries into the conduct of the Liverpool Camp, together with the evidence, will be available?
– The report was laid on the table of the Senate, and-ie therefore, within its control. I have asked the Secretary for Defence to make application for a copy of the evidence. The Department has not yet been supplied with a copy, but we are endeavouring to obtain one.
asked the Minister of Defence, upon notice -
Is it true that Dr. Carty Salmon, M.H.R., has been appointed Chief of the Medical Staff at the Base Hospital, at St. Kilda-road, and given the rank of Colonel?
– The answers are -
asked the Minister of Defence, upon notice -
– The answers are -
page 6617
Cooks and Waiters : Dismissal of Ganger
– Has the Minister representing the Minister of Home Affairs yet received any information in connexion with the questions I asked yesterday about the cooks and waiters employed on the western end of the transcontinental railway?
– I am not yet in possession of the information. I am now in communication with the Department, and will do my best to let the honorable senator have the information before the Senate rises.
– Will the Minister representing the Minister of Home Affairs inquire into the dismissal of a ganger employed on the transcontinental railway, or will he make public the papers connected with the case?
– The honorable senator mentioned this case to me before the Senate met. In the Department there is no knowledge of any such incident, but inquiries are being made, and I will endeavour to expedite them. There are no papers here. Should there be any papers at the western end of the line, and should they come to hand, I will try to lay them before the honorable senator.
page 6617
– Is it the intention of the Government to pass the Conciliation and Arbitration Act Amendment Bill through the Senate before it adjourns to-day?
– I think that honorable senators know that, after the events of last night, I have not yet had an opportunity of seeing the Prime Minister, and, therefore, am not in a position to definitely answer the question. I shall be able to give the honorable senator the desired information, I hope, before the day is over.
page 6617
– I ask the Minister of Defence whether it is a fact that intoxicating beverages were supplied to- visitors and workmen on the occasion of the launching of the destroyer Torrens on Saturday? In view of the “follow the King movement,” doss he not think it advisable that an example should be shown in removing intoxicants from such celebrations during the war at any rate?
– The question affects the Navy Department, and therefore I ask the honorable senator to give notice of it.
page 6618
.- Honorable senators are aware that a call of the Senate was made for 3 o’clock to-day, but under the Standing Orders, as appears from the notice-paper, it has to be called on as the first business. I propose to move that the call be postponed until a quarter to three o’clock, as some honorable senators may wish to attend the ceremony in connexion with the interment of the body of the late Genera] Bridges. The ceremony is to take place at a little after three o’clock, and in order to give honorable senators an opportunity to attend, we shall need to have the call made for a quarter to the hour.
– But as the call is ordered for 3 o’clock to-day, can it be made for an earlier hour?
– I think so because it has been called on. I would like, sir, to have a direction on the point as to whether I am doing anything contrary to the Standing Orders:
– Some honorable senators will not know about the alteration of the call to an earlier hour.
– I understand that it must be called on to-day as the first business. At the same time it is down for three o’clock. Apparently the Standing Orders do not contemplate the possibility of a morning sitting being held on a day when a call has been fixed for an afternoon sitting. If, however, there is any very strong objection, I do not propose to press the point. I am only trying to meet the convenience of. honorable senators.
– Honorable senators who are away will not know of the alteration.
– There is a way of letting them know. I shall take steps to see that every honorable senator who is within the precincts of the building dur ing the day is made acquainted with the alteration. If there is no objection, I move -
That Order of the Day, No. 1, “Call of the Senate,” be postponed until a quarter to 3 o’clock p.m.
– Before putting the question I may point out that there is a conflict between the Standing Orders, owing to the fact that the Senate has met to-day at an unusual hour. Ordinarily it meets at 3 o’clock, and a call was made for that hour to-day. The Standing Orders provide that a call having been made for a particular day, it must be the first business called on, and having been called on, I am of opinion that it is within the right of the Senate to fix any other time it pleases, because the Standing Orders provide that it may be postponed to a future time. Further, although they provide for a call, there is no constitutional obligation to make a call.
– This is a proposal not to postpone the call, but to bring it forward.
– The Standing Orders provide that a call may be made for a certain day, but they do not say anything about a certain hour of that day. It must be the first business called on on that day, and, having been called on, I claim that it is within the right of the Senate to do as it pleases. I rule, therefore, that the Minister is within his rights in moving* for an alteration of the call to another time. Any little difficulty which may arise with regard to any honorable senators not being here at a quarter to 3 o’clock can easily be got over, because the practice is to make a call of the Senate over and over again. If any honorable senator cannot come to the first call, we can have a further call at a quarter past 3 o’clock, at half-past 3 o’clock, or two hours later. I think that no difficulty will arise, and that the Minister is in order in submitting this motion.
– In view of your decision, sir, I do not desire to do more than to express my opinion on the ill consequences which I think might flow from the adoption of a practice which, according to the ruling, is within the Standing Orders. The circumstances have arisen in a way which everybody understands, quite naturally and normally, and no one is to blame.
But the positionis that a call was ordered, and that a notice was sent out inviting honorable senators to meet here at 3 o’clock to transact business of great importance, seeing that it involves an amendment of the Constitution. Before that hour arrives, however, it is proposed to deal with the business. I submit that it will make the call a little less than futile to anticipate the hour for which honorable senators have been summoned.
– But the Standing Orders compel us to deal with the business.
– They require this business to be called first to-day, but it has always been the practice for a call to be immediately followed by taking a vote. In this case, however, the purpose in sending out the notice was not to enable honorable senators to answer to their names when the Senate was called, but to cast their votes on the proposed amendment of the Constitution. We might as well dispense with the call if we are going to proceed with the business before the hour fixed for honorable senators to answer to it. I am not questioning your decision, Mr. President, that we have power under the Standing Orders to put the hour forward, but I think the Standing Orders ought to be modified so that such a possibility cannot occur again.
– It would be much better to stand by the time fixed forthe call; otherwise we may land ourselves in difficulties and have the whole procedure questioned, because a call of the Senate is rather a serious procedure. Putting it forward hardly comes within the scope of the standing order which says that a call may be postponed. We should not run an unnecessary risk for the sake of fifteen minutes.
– There will be no risk; it is only a standing order and not the Constitution.
– There may be a risk in running contrary to our Standing Orders.
– It is too late to question my ruling on that point.
– I do not mean to suggest that your ruling is wrong.
– I gave the matter a great deal of careful consideration.
– I accept your dictum, but it is of no use to try to save fifteen minutes in a case of this kind. If we take the call at the time set down, we shall be free of any embarrassment regarding the Standing Orders or the Constitution.
– I see the danger of anticipating a matter of this sort, but your ruling, sir, is perfectly correct that if the Senate decides a week or two before that there shall be a call of the Senate on Thursday, under normal conditions 3 o’clock will be the time at which the call will have to be made. Honorable members receive their notice-paper, and may or may not be here before 3 o’clock: If not, they are not able to answer the call, but in the peculiar circumstances that have arisen, and in conformity with the Standing Orders, the President puts that business first on the paper, which is quite right. The Senate has the right to deal with its business in any way it thinks fit, and to review its own decisions if that is felt necessary ; but it would be unwise to do what is proposed in this instance, because on some future occasion, if the Senate is differently constituted as to parties, this precedent may put into the hands of certain people a power that might not be used to the best advantage of the Senate or the country. In the circumstances, I agree with Senator de Largie that we had better stick to the time for which the call was originally made. On previous occasions when a call has been made we have postponed the time for taking the vote, which was perfectly right, because honorable senators were all here, and decided the matter to suit their own convenience. To anticipate the time, however, is a very different matter, and may involve considerable danger. It might be proposed, on some future occasion, to put forward the call, not by a quarter of an hour, but by two or three hours.
– If we can anticipate by hours, why not by days ?
– It might at least be anticipated by the whole of a sitting.
.- My motion was made only to meet the convenience of honorable senators, and I said that if there was any objection I would not press it. There is an objection, and I am, therefore, quite willing to withdraw it. By leave, I submit the motion in the following form : -
That the call of the Senate be postponed until 3 o’clock p.m.
Motion amended accordingly, and agreed to.
page 6620
Debate resumed from 1st September (vide page 6527), on motion by Senator Russell -
That this Bill be now read a second time.
.- The Minister gave as reasons for introducing this class of taxation the war and the very large public expenditure, but it must be remembered that the Labour party in this Parliament has for a long time had an income tax as one of the planks of its platform. The opposition shown by medium of the public press to this measure has been based mainly, not on the fact that it imposes an income tax, but on the incidence of the tax. It is claimed that no person in the community should escape his share of this taxation, and that every man who earns an income should pay something towards the enormous expenditure caused by the war. I firmly believe that people with small incomes have in the past paid a very much greater share of taxation than they should have been called upon to pay, and the Government would, perhaps, have been wise to make the exemption higher, but general satisfaction will be felt in the community by reason of the fact that people who have escaped taxation previously are now being called upon to bear a fairer share of the burden. It was said by the Minister that people with small incomes, such as wage earners with families, contribute very much more largely to the revenue through the Customs than do people who are very much better off. There is no disputing that fact, for the great bulk of the population pay practically the whole of the £14,000,000 derived from Customs and Excise duties. A man with a wife and family and a small income, buying large quantities of the necessaries of life, pays much more in porportion of that class of taxation than does the individual in better circumstances with a wife and family of the same size.
– A bigger percentage of their income goes in taxation.
– Yes, because that class of person is more numerous than the other class in the community, though hitherto the other class has been swaying the legislation of this country to a greater extent than the one first mentioned. It is very desirable that the people should realize what the other class has been doing, and thatthey themselves have been contributing more than their share towards the expenses of administration. The time has arrived - perhaps a little earlier owing to the disastrous war - when this kind of taxation has become possible, and I believe that it has come to stay, because, after the people have had an experience of this measure, they will undoubtedly desire to continue it.
– Will that be the feeling of those who will have to pay under this Bill?
– It will be the feeling of the majority of the people of this country.
– Ah ! Taxing other people and not themselves.
– I think that I have already mentioned - apparently the honorable senator was not listening - that the people who have paidthe taxation in the past are not the people who will be called upon to pay in the future, if I am. able to judge the feelings of the electors of Australia. I feel confident that more benefits will accrue to the country under this form of taxation, and that unless our war expenditure is very largely increased, the burden of debt will not be passed on to posterity because of the provision made to finance the war. I know that there are a good number of people - : some belong to the party of which I am a member - who think that other methods of taxation should have been employed by the Government than the one under review. My personal opinion is that the Government did the best possible thing, and adopted the most effective means of raising the necessary revenue for the war, and of financing the debts necessarily incurred in connexion with it. Some people consider that a wealth tax should have been imposed prior to the income tax, but I view it in this way: The party to which I belong, for a number of years, had an income tax on their platform, and I consider it is the duty of the Government to give legislative effect to the party’s planks before they commence dealing with other classes of taxation that are not on the platform. The Government, therefore, have been absolutely loyal .to their programme and to their party. I have no desire to take up the time of the Senate any longer by discussing the measure now before us. When we rose last night the Bill was not to hand, and since then most honorable senators, I have no doubt, have been endeavouring to get as much sleep as they could. Had it been possible to have the Bill before us for some longer time, in all probability we could have discussed it profitably in greater detail, and have reviewed it to some slight extent.
– There is no doubt that, as Senator Barnes ‘has said, the income tax is one of the planks of the Labour platform. But there are other planks, or at least there is one other, dealing with the raising of money which, in my opinion, would have been much more effective in getting the required cash at the present moment, and which’ would have had a much better economic effect on the business of this country. I think, therefore, that that is the source to which we should have applied for money upon the present occasion. Everybody knows that I refer to land value taxation, I do not propose at this stage to make any lengthy reference to it, but I merely wish to point out the essential difference between land value taxation and income taxation. Land value taxation will liberate the resources of the country, make them available to the people of the country, stimulate business, circulate money, and quicken the blood of the nation. That is (exactly what we want at the present moment. Now I desire to point out - it may seem heresy, seeing that income taxation is a plank of the Labour platform - that income taxation is essentially of the same character as Customs taxation. That may seem extraordinary to some honorable senators who have not given careful consideration to the subject. It is a fact, nevertheless, that income taxation can be passed on to the multitude; and it will be passed on, just as Customs taxation is. That is one grave objection to this form of taxation. The people ultimately will have to pay, because the various companies, which our legislators so fondly think they will “ rook “ of their ill-gotten gains, will speedily find ways and means of passing this taxation on to the great masses of the people. Another objection is that it will have a blighting effect on industry. Let us look at the position seriously. We are glorying over the fact that £13,000,000 has been poured into the Treasury to carry on the war. Very good. We want money for war, but we want money for other purposes; we want it for the development of this country. Is the development of the country to stand still while we are at war ? We hear the cry of the unemployed even now, and yet this instrument which I hold in my hand is going to turn thousands of men out of employment owing to its heavy incidence upon those who are carrying on the various industries of this country. Of course, I have no intention of opposing the Bill because it is a party measure, but, while that is the case, I think that I am well within my right in pointing out the objections to it. A party like the Labour party ought to be above this kind of thing. We ought, as I nave pointed out time and again, to decide to get the money that belongs to the people, namely the community-created values. We have a right to it. Why do we not take those values? Why do we allow them to get into the pockets of private individuals? Why is the land-owner to be the one benefited man in this country? I might hold 1,000,000 acres of land, and, except for the land tax, which is a comparatively innocuous impost, I might not be called upon to contribute a single farthing to the revenue of the country, because, if I made no income out of the land there would be no income tax to pay. And that is what is happening in a great number of cases. Men who have acquired large areas are holding them for speculative purposes, and are making no money out of them. They are holding a huge State or Commonwealth asset idle. We hear a great deal about the meat famine and the price of food generally, and we are howling at the American Beef Trust; but in Australia there is a Land Trust, which is far worse than the Meat Trust. However, we have power to deal with the Land Trust, and we have an excellent opportunity here. Not only have we opportunity, but we have the excuse. If honorable senators felt that in ordinary times they could not screw themselves up to attack the land monopolists, surely at a time like this - when the nation is at war and money is urgently wanted, and when an opportunity is given for the employment of large numbers of people, and When, also, there is a prospect that a still larger number will be out of employment in the future, owing to the incidence of this proposed tax - even a Government like the present Ministry might have taken their courage in both hands and gone to the right sources for their revenue. The system proposed is unscientific, because it places a tax on industry and enterprise, and must of necessity be an injury to the country. I do not intend to continue my remarks at any greater length. I must vote for the Bill, because it is a party measure. Perhaps the day will come when some party in power in Australia will discard all these old unscientific methods of. raising money and resort to the new and true methods of securing the community-created values of the country for the ‘people of the country.
– Senator Stewart has again displayed a keen anxiety to touch up the citizen who is so unfortunate as to own a piece of land. The honorable senator should be aware that, during the last two years, probably no investor has been more unfortunate in connexion with his investments that has the land-owner. It is quite true that we have the land monopolist in this country, and he is one of our worst pests. ‘ He has been the means of driving settlement into localities where it would never have had to go but for him. But Senator Stewart should recognise that, in the effort to eradicate that pest, he may inflict a serious injury upon citizens of another type - pioneers who are entitled to every consideration at our hands.
– It is out of consideration for the pioneer the honorable senator refers to that I advocate land taxation.
– I quite understand the honorable senator’s point of view, and I want to get at the gentleman whom he would tax as much as he does himself, for many reasons, which have been pressed upon my attention since my boyhood’s days. I still say that we need* to be verycareful that in striking at the land monopolist we shall not at the same time injure citizens who have been very hard hit as the result of unusual natural conditions which we have for so long been experiencing. The returns from the Federal land tax give the best indication of the difficulties which have beset this class of the community during the last few years. It has been shown that the alternative before the Commonwealth Government has been to extend clemency to them, or to take over their properties altogether.
– Because the land has not been put to the best use.
– That may be true in some cases, but it should not be necessary to remind Senator Stewart that many owners of land in the Commonwealth have been very hard hit as the result of bad seasons. To enforce the land tax in the case of many would be to force them off the land, and that would lead to a state of affairs worse than the present.
In my opinion, there is no fairer source of revenue than an income tax, because it is imposed only upon those who are able to bear it. If a man has no income he pays no taxation. If he has a moderate income, he pays a moderate income tax, and if he is fortunate enough to have a large income, the tax he is called upon to bear is increased in proportion. An income tax is an equitable tax, because it is imposed in proportion to the taxpayer’s ability to pay it. One thing connected with the imposition of this income tax has caused me some concern. During this trying time, we have heard a number of people boldly proclaiming their patriotism and their readiness to sacrifice themselves to the limit in order to see this war through. We have heard expressions of inflexible determination to put forth the last effort to successfully prosecute the war. Yet when an effort is made by the. Commonwealth Parliament to obtain the sinews of war by the most equitable means that could be suggested, we find that these people who have proclaimed their patriotism set themselves up in practical rebellion to the Government for having made this proposal. If we consider what has been don© in other parts of the British Empire, we must come to the conclusion that the people of Australia are exceedingly fortunate -in being citizens of this Commonwealth, since they are called upon by this taxation to meet such a small proportion of the huge bill which must be incurred in carrying on the war. The professing patriots to whom I have referred, and their press organs, are not now squaring precept with example. Judging by the experience of the past, the rich nien of this country have not shown the same spirit of loyalty and patriotism as has been shown by some who have little or no wealth, and have been prepared to sacrifice their lives. I am not going to say that the people in the humbler walks of life are doing more than their proper share in the ranks in connexion with the present war. I believe that our Expeditionary Forces are made up of a fair proportion of all sections of the community. No special credit is, in my opinion, due to any particular section of the community in connexion with the unexampled effort which the people of this country are putting forward in the actual conduct of the war at the present time. But we are neither blind nor deaf, and we cannot fail to recognise that the press organs of the wealthier sections of the community have shown a disposition to defeat this proposal for raising revenue tor the conduct of the war, which is not in keeping with their professions at the time the war started. We are now engaged in finding ways and means to carry on the war. Without money it cannot be carried on. We have high authority for saying that money is the great weapon bv which success in the field may be secured. The Minister in charge of this Bill gave a number of illuminating examples to show that the tax in the United Kingdom on incomes derivable from personal exertion is, in many cases, four times as high as the tax here proposed.
– What is the highest figure in Great Britain ?
– Five shillings and twopence or 5s. 4d. in the £1.
– Not the flat rate.
– No; the flat rate with the” super-tax added.
– The fact remains that, in the case of moderate incomes, the tax in the Old Country is considerably higher than the tax here proposed upon similar incomes. We only reach the point at which the rate of taxation becomes about the same in the case of incomes of £8,000 a year. When we come to consider the taxation on incomes derived from property, we find the taxation in the Old Country represents a burden seven times as great as that which will be imposed under this Bill.
– The honorable senator should not forget the obligations which the Old Country has incurred because of past wars. The taxpayers of the United Kingdom have to bear the burden not only of the present war, but of a long succession of wars for the preservation of the interests of the Empire.
– That is so. As the honorable senator has referred to the fact that British taxpayers have to bear the cost of previous wars, I may say that I have hero some figures of a startling character, which show that the people of the Old Country have in the past stood up manfully to the task of bearing the cost of war during its currency. A study of the matter makes it quite clear that those who will be called upon to pay income tax here will bear a much lighter measure of taxation than people enjoying similar incomes in the United Kingdom. We have read in the Melbourne press that the Government are proposing to raise too much money. It has been suggested that it is something in the nature of an outrage to propose to raise a revenue of £4,000,000 under this Bill, and that that amount is far more than is required to pay the interest on the war bill. Including interest on loans to be raised, the war bill for this year will amount to no less than £45,000,000. That is a huge indebtedness for a small community like ours to incur in one year. Of that amount the Government propose by this measure to raise about one-eleventh. Senator Bakhap has happily reminded me of what the people of Great Britain have done in the past in the way of raising money to meet the indebtedness incurred to carry on wars during the currency of those wars. I have here some interesting figures, which throw light on the way in which our forefathers in the United Kingdomadjusted the burden of war between the generation engaged in it and generations following. Quoting from the Imperial Hansard of 1900, I find that the Peninsular War - the greatest in which the Empire was ever engaged - cost £1,013,000,000. Of that huge total the British taxpayers of the day carried the burden of no less than £391,000,000. The loans borrowed in connexion with the war at the time amounted to £622,000,000. So that of the total war bill for carrying on the greatest war in British history, the taxpayers of the day shouldered a burden of no less than £1 in £3.
– Without questioning the honorable senator’s figures, he ought to state his authority.
– I am quoting from a statement by Sir Michael Hicks-Beach, when Chancellor of the Exchequer. These figures are calculated to give a mild shock to persons who regard the tax to be imposed under this Bill as a severe one. I find that an income tax at the flat rate of 2s. in the £1 was paid for a period of thirteen years by the people of the United Kingdom to finance a portion of the indebtedness incurred to carry on the Peninsular War.
– What was the exemption 1
– I am not aware of what the exemption was in those days, but the exemption under the British Income Tax to-day is £160, which is slightly higher than is proposed under this Bill. In this country, of infinitely greater resources and in which the people may secure a very much better reward for their efforts, it is proposed to impose a tax of only 7£d. in the £1 higher than the rate of tax imposed in Great Britain during the progress of the Peninsular War, and further, the British taxpayers agreed to defray the expenditure upon that war to the extent of £1 in every £3 which it cost, whereas the Commonwealth Government are being severely criticised because they propose that the taxpayers of this country shall contribute to the extent of about £1 for every £11 of the cost of our participation in the present European struggle. This circumstance proves conclusively that a hundred years ago the people of England were willing to manfully shoulder the burden imposed upon them by the Peninsular War, and had no desire to pass it on to posterity.
– The honorable senator must recollect that a good deal of the cost of that war was never paid.
– My point is that the British taxpayers wiped off £391,000,000 of the debt which was incurred as the result of that war.
– They were not satisfied to pay interest alone.
– Exactly. They paid the proportion stated, and the balance they passed on to posterity. The Crimean War, we all know, was a very much smaller affair. Its total cost waB £67,000,000. At the time of its out break Mr. Gladstone was Chancellor of the Exchequer, and his acknowledged policy was that the nation should bear the cost of a war, because he regarded that as the most salutary check which could be imposed upon the inclination to make war. Out of that £67,000,000 the people of Great Britain paid in taxation £35,000,000, and passed on to succeeding generations only £32,000,000. In other words, for every pound which was paid by them in that connexion, only 18s. was passed on to posterity. Half the cost of that war was borne by the British taxpayers during the currency of the struggle. Under this Bill, it is proposed that the people of Australia shall contribute only about one-tenth of the cost incurred by us in this great European war, and yet our opponents object to it on the ground that the taxation involved is excessive. The figures relating to the Boer War show that on that occasion, too, the people of the Old Country faced the financial position in, a very manly way. The cost of that war was £230,000,000; the amount raised by taxation, £75,000,000; the proportion borne by taxation being about one- third.
– That war increased the Imperial indebtedness by more than £200,000,000.
– That is so. According to the official records available, the Russo-Japanese War cost the Japanese nation £198,000,000. Out of that sum there was raised, by transfer of surpluses, by the sale of articles, by land taxation, and by other special efforts on the part of the Japanese people, no less an amount than £83,000,000, or 42 per cent. It will be seen, therefore, that the objection which is urged to this Bill on the ground that the taxation which it seeks to authorize, is excessive, has not a very solid foundation.
– Where did the honorable senator obtain all these figures?
– I have been at some pains to get them. It is manifest, therefore, that in this Bill we are proceeding upon very moderate lines. I welcome the measure as one which affords us a very fair means of raising the necessary funds to enable us to carry on the war. I deplore the necessity for its introduction, but we have need to steel ourselves to the task which lies ahead of us, and to impose the utmost strain upon our finances in order that the struggle in Europe may be pushed to a successful conclusion. We all hope for the triumph of our arms, but, in my judgment, we are not doing as much as we might to insure that triumph. In this connexion I refer particularly to the methods that are being employed for recruiting our Expeditionary Forces. I believe that we need to do much more than we are doing if we wish to avoid the suspicion that we are shirking our obvious duty. The means proposed in this Bill for the raising of the necessary revenue, suit my purpose fairly well, although I hope that next year a more reliable method will be adopted to enable us to defray the cost of the war to a still greater extent. We are not doing sufficient by raising £4,000,000 annually. If we wish to hold the balance evenly as between the present and future generations, we require to shoulder a greater share of the financial obligations that will be involved in the prosecution of the struggle to a victorious issue.
– So far, the Labour party has never expressed an opinion in favour of the imposition of an income tax for Federal revenue purposes. But, despite that circumstance, the Government have submitted this Bill with a- view to the taxation of incomes. In doing so I believe that they have correctly gauged, not only the views of a majority of this Chamber, but also of a majority of the electors. Direct taxation for the purpose of defraying the naval and military expenditure of the Commonwealth, to which the Labour party is pledged, was undoubtedly intended to convey the idea of ‘direct land-values taxation. The principle underlying the imposition of an income tax is a very old one, so old that it is almost impossible to ascertain when it was first adopted in Great Britain. But in that country we know it has been most tenaciously adhered to for the purpose of raising revenue, with a view to keeping the Treasury full, and thus avoiding the necessity for compelling the land-owners there to make an adequate contribution to the services of government. That, however, may not be the idea which underlies the introduction of this Bill, although I believe that there is a consensus of opinion amongst the people of Australia that the levying of an income tax affords one way in which we can compel wealthy men to contribute their fair share towards the national revenue. To my mind, the present occasion is an extraordinary one,, and we may yet have to resort to methods of taxation even much more unscientific than is the one which we are now adopting. We have been told that we ought to impose a tax upon tea. Only the other day we were informed that something like 40,000,000 lbs. of tea are annually imported into the Commonwealth. It is an easy calculation to ascertain how much a duty of 3d. or 6d. a pound on that quantity would produce. But, fortunately, public opinion outside Parliament, and I believe here, too, is, so far, directly opposed to the taxation of that commodity. Therefore, there is nob the slightest possibility of that form of taxation being imposed, at any rate for a considerable time. It will be satisfactory to a very large number of persons to realize that the Commonwealth is rapidly bringing its national taxation into line with that of Great Britain. This measure is a further step in that direction. The national receipts of Great Britain for the financial year ending 31st March, 1915, totalled £198,323,445. That total included the following sources of taxation : -Customs, £35,568,580; Excise, £39,657,957; estate duty, £27,165,123; stamps, £9,983,363; land tax, £690,007; house duty, £1,994,401 ; property and income and super tax, £47,240,771; and land value duty, £734,893, making, under those headings, a total of £163,035,095. The non-taxation revenue amounted to £35,288,350, making a grand total, as I said before, of £198,323,445. The revenue from Customs in the Commonwealth has been gradually advancing from the establishment of Federation. Sometimes the yield has receded slightly and sometimes it has advanced, but it has steadily advanced from £S,811,174 in 1904 until it stood at £15,110,635 in 1914, showing that, notwithstanding the alleged great difference of fiscal opinion in the two countries, Australia is rapidly assimilating her method of raising national revenue to that of Great Britain.
– There is no comparison between the tax on land in England and the tax on land in Australia.
– The returned value of land in the Commonwealth is £196,000,000. We have been assured by some honorable senators that the landowners have been exceedingly hard hit, and that they will find it most difficult indeed to pay the small amount of land tax now imposed. So far we have no record of the land values of Great Britain, and, to my mind, we have no reliable record of the land values of the Commonwealth; but, no doubt, we shall get them in the near’ future when the plans now in progress are completed. But, ‘ while we do not know what the values of the lands in Great Britain are, we know how much the British Government derive from house duty, property, income and super tax, and land value taxation. I admit that those four headings are somewhat vague, but in a general way they will apply directly to land values or to incomes; mainly, in my opinion, to the latter. An income tax will not open up a single fresh avenue of employment. It is not intended to do that. It is intended to tax a man who is responsible for the production of an income. It is intended to tax a man in proportion to the value of the money which he employs in reproductive works.
– That is nob the intention of this Bill, remember; it may be the intention in your mind, though.
– That will undoubtedly be the effect. The intention of the Bill, in my opinion, is to compel the people who are best able to bear taxation to do so. My trouble about the tax is that it will not have that effect. It has not had that effect in Great Britain. It it a matter of common knowledge that the wealthy people in that country did not offer any more opposition to the imposition of income taxation than they did to the imposition of Excise or Customs taxation. Where they have always shown the strongest possible opposition has been to a proposal to tax them in proportion to the land values which they monopolize. I think it is about time that a definite principle of taxation was adopted, and I venture to say that Henry George laid down that principle in a way which has not yet been successfully controverted. It is admitted by most persons that, so far as Canberra is concerned, the Commonwealth is doing quite the correct thing in appropriating for national purposes the entire rental value of the 1,000 square miles of land which it possesses there. And, in a similar way, it is admitted by the provisions of the Federal land tax that the Commonwealth has a right to appropriate some of that value for national purposes. In most of the
States, taxation in that direction is also imposed. In Queensland and New South Wales, the taxation of land values for local purposes, with the exception of one or two cities - probably Sydney is the only exception in those two States: - is established by law, and is working very well. There can be no doubt that this form of taxation will have the effect of very considerably increasing the number of officials who will be required to collect the tax. It is not a particularly expensive tax to collect, but, still, it entails a good deal of expenditure. It is supposed by some honorable senators that this is a war tax, which will only remain in operation during the currency of the war. To my mind, it will remain on the statute-book for many a long year after the conclusion of the war, because, while it will not be imposed upon those who, in my opinion, are best able and ought to be called upon to pay taxation, it will be imposed upon those who employ labour, invest their own capital, and do their utmost to advance the best interests of this country. I recognise that there is no possible chance at the present time of securing an increase in the progressive land value tax - that is the direction in which taxation ought to go - and in view of the almost unanimous opinion of Parliament on this question, I do not wish to offer further objection to the measure. But I shall watch its operation with some degree of interest, feeling quite confident that it will not open up a single fresh avenue of employment, and that it will be passed on, to a very great extent, to those who are least able to bear the impost.
– A good deal of objection has been taken to this measure on two or three grounds. One objection is that it entrenches very severely on the State preserve with regard to taxation. I do not know but that there is very serious ground for that objection. But, in excuse for that, we may put up this proposition, that, whatever honorable senators may feel with regard to the result of the Bill, the necessity of it has been brought about by the calamitous war in which we are engaged. Then an objection is taken with regard to its stringency. It is said that it is practically duplicating taxation, and that those who have to bear it will also have to pay State income tax. -But it is practically the only avenue which is open to us at the present time. Combating some of the arguments advanced by Senator Grant, I would point out that an increase in. the land tax could neither yield the amount required nor meet the purpose in view to-day. That drives us back to the proposition of finance. Our financial dealings seem to me to be on a very shifty, if not unsound, foundation. We ought to have been in a position, had we grasped the opportunity, to finance the war entirely through our banking institutions. I do not blame those who, having the opportunity, seized it in order to deal with the finances of the Commonwealth for private purposes. In the circumstances, they were justified in so doing. Finance is the foundation of all legislation and of all government. As the old saying has it, government is finance and finance is> government. Even when we have achieved the purpose aimed at by this Bill, we shall not yet have reached the ultimate goal of our expenditure, and if we are to continue on the same lines there will be open to us only a duplication or triplication of the same means as we are adopting to-day. It is about time we faced the serious problems of nationhood and put affairs on & firmer basis, so that we may really grasp the whole question and determine the exact lines on which we are to move forward. 1 take very little exception to the Bill as a tentative measure, but as a national proposition it stands condemned as being merely a duplication for Federal purposes of what the States have hitherto done for State purposes, and therefore a lessening of their power. This system will mean impoverishing the States to enrich the Commonwealth, and is hurrying us towards other calamities that we have not paused to consider. We are forcing Unification at a terrific rate.
– How would the financial position be bettered in any sense if we had Unification 1
– Unification in itself would not better it. It must be bettered altogether irrespective of whether we have a unified system or six sovereign States. If we are simply to go along the old lines, we shall not be approaching the question with a full conception of the possibilities of the Commonwealth or of the nation of which we form a part. We shall fail to realize the opportunity that lies to our hand of laying down stronger foundations for the whole of our Commonwealth concerns. We should consider seriously the tremendous significance of what Australia did yesterday. It showed us that its wealth could, if appealed to properly, very largely negotiate its own loan needs, so that we are propelled towards the conclusion that, in times of stress, there remain to us opportunities of dealing with the financial question on lines entirely different from those we are following today. Our Commonwealth Bank, for instance, has done good service, but it has done the service simply of a child, when it should have done the service of a man. The consolidation of the note issue is, after all, only the beginning of its possibilities, and that Bank should be to-day a bank of issue and deposit as well as simply a bank of currency or exchange. It would then have before it an even wider field of usefulness.
The DEPUTY PRESIDENT.- The honorable senator is out of order in discussing on this motion the possibilities of enterprise of the Commonwealth Bank. This is a taxation measure.
– Taxation involves finance. I was endeavouring to point out that we were practically only on the seaboard of the question instead of dealing with the continent itself, and to show what steps we should take to prevent the need of duplication such as we are now indulging in. New occasions should teach new duties. We ought to be able to grasp the wider, broader, deeper, and more eternal principles to-day instead of simply dealing with the ephemeral as we are doing. The objections taken to this measure in some quarters are scarcely justified. The patriotism that has been displayed has been eulogized, but” that patriotism is costly, and the Bill partly represents the price we have to pay for it. If that spirit of waving the flag and crying “ Glory Hallelujah !” to everything we do has anything more in it than hot air, I should expect such a proposal as this to prove that the words of the people who indulge in those practices are not merely idle. If we expect the man who has only his life to offer for his country - and that is the biggest sacrifice of all - to respond to our call to defend the nation’s interests, those of us who cannot make the same offer can at least take up our share of the burden of taxation without any grumbling. If the Australian, when asked to enlist, had refused on the ground that the sacrifice was too great for him to make, we should have thought him lacking in that spirit of nationhood which, fortunately for this country, has been amply manifested in his exploits at Gallipoli; hut whilst we are glorying in his manifestation of that spirit, have not we, too, who remain at home, the duty to take up our own burden in the same cheerful spirit, and to do it just as manfully, thoroughly, and unstintingly as he has done? I therefore deprecate the utterances to bo read in many newspapers that claim to be leaders of public thought, but that seem to have entirely lost sight of the perspective of the question. They fail to see where they should stand, and the arguments they have advanced must do a great deal to discourage those who have so willingly gone forward to defend their country. The greatest objection I take to the Bill is that we have, unfortunately, no time to give it the very serious consideration that it merits. Whenever we approach a question of this kind, especially under existing conditions, we seem to do so under new difficulties. The measure demands from the Senate, not only its most serious and careful consideration, but a great deal more time than we have at our disposal. It comes to us in almost the closing moments of this portion of the session, and yet it is fraught with the utmost importance to the nation as a whole. The tax will bear heavily in its incidence on some, whilst others may be relieved to find they are being so lightly dealt with. Being here to do the business of the country we ought to consider this measure in that clear light which its importance demands. At the same time, I hope that its passage will not be retarded because of its dilatory entrance to this Chamber, and that we shall give it the fullest consideration possible, with such results as will make it effective in meeting in a great degree the exigencies for which it is put forward. If it does that, Australia will have cause to look back on this era with a feeling of pride that she rose to the occasion, and showed herself to be no unworthy daughter of the proud nation from which she sprang. We scarcely realize to its full depth the meaning of the call that has been made to us, if we grumble about the price we have to pay to retain the great heritage we have received from the Old Land. If we rise to that fine spirit of patriotism which should animate us in this period of crisis, we can accept this Bill, although it may, perhaps, impose a burden on some persons, very cheerfully remembering all that the Motherland has given to us in times past, and the rights and liberties that it has taken up arms to defend.
– As my statement that I was willing at all times to do everything to assist the Government in the successful prosecution of the war was no mere lip service, I have no hesitation, in a general way, in supporting the measure. I do not concede that an income tax is an unscientific method of raising revenue. It is immeasurably superior to the oftsuggested wealth tax, which is always discredited because in its incidence it is most inequitable, wrongly derived, and constitutes a hurden on the people which has to be removed at the earliest possible date.
– Where was the wealth” tax tried ?
– In several of the middle western Stales of America.
– Was it tried in Tasmania?
– No. It was suggested in Tasmania, but, fortunately, the legislators of that State had too much sense to impose it. Some of them, however, had the moral courage to say that the necessities of a State required the imposition of an income tax which touched incomes as low as £80 a year, thus bringing home to the people the serious position in which the State found itself during the early years of Federation. I regret that we are not able to give more time to the consideration of this measure.
– Take time, then. We can sit here till Christmas.
– We have arrived at the second-reading stage, but I have just received the Bill as it left the other Chamber, and, therefore, I have not had time to peruse it carefully, because I have had to pay the necessary courtesy of listening to those who have spoken before me. So, while I have a general idea concerning its provisions and the amendments of the other House, I have not the slightest idea as to how those amendments affect the details of the Bill.
– They improve the Bill; they do not alter the general principle.
– I suppose the general principles have not been altered. Senator Lynch produced some very useful figures for the purpose of making comparisons of the way in which the income tax is levied in the Old Country and the income tax as it is applied in Australia. I do not impugn the accuracy of his figures in the slightest degree, but I think I am correct in saying that income taxation in the Old Country found its genesis in the necessities of war. It has always been regarded there as a war tax, and very often the imposition of an extra penny or two was sufficient to meet the needs of the Empire in the prosecution of those small wars in which the Mother Country has been engaged during the course of her development. I would, however, remind Senator Lynch that the British Empire is in a somewhat different position from that of the Government of the Commonwealth. The British Empire, largely in consequence of the wars it has waged, has for a long time had practically a monopoly of the carrying trade of the world. The British Empire has also been the world’s banker. It has had passed through its banking marts the whole of the world’s financial operations.
– Not the whole of them.
– Practically the whole of them. The honorable senator who interjected knows that nearly all the banking exchange is transacted in London, and all settlements effected there.
– A very considerable portion in Paris, I think.
– Almost any bill drawn in Australia, or any other part of the world, has its settlement effected on the gold basis in the city of London. I make that statement without any qualification.
– You say that, because Great Britain is a rich nation, it was justified in raising a large portion of its war expenditure by taxation.
– What about Japan? She is a” debtor nation.
– I am not arguing against the measure at all. I am only regretting that we have not had more time to consider it. We have had the Insurance Bill before us for a long time, and we have remasticated it and redigested it, and some honorable senators who are specialists in insurance matters have contributed to our knowledge on that subject. But this measure, which is of supreme importance, reached us only in the early hours of this morning, and it was suggested that we should carry it through practically forthwith. In the interests of this Chamber and of the nation we ought to give as careful consideration to this proposal as we did to the Insurance Bill. I admit, of course, that income taxation is no new development in regard to finance.
– Would you expect the Minister to explain this measure clause by clause, as he did Che Insurance Bill?
– Why not? Why should not the Minister be expected to explain many of the amendments made by the other Chamber?
– I dealt with the principal amendments in my speech last night.
– Probably, in its general features, there is no very great divergence between this Bill and income taxation measures on the statutebooks of the various States, except that we may be in a little superior position. But the same could be said of the Insurance Acts of the several States, and honorable senators seemed to think that that Bill required the most careful consideration.
– The whole of this Bill is practically machinery for the administration of the tax.
– I am aware of that, but, if we pass it, we shall be accepting the whole of the machinery, which will then be put in motion.
– We shall require another Bill to put it in motion.
– What caused the Bill to occupy so much attention in another place, and why should we be expected to dispose of it in a few minutes ?
– I take exception to the statement that those who criticise some of the provisions of the Bill are hostile to the present Administration, and wish to hamper it in the prosecution of this war. The contention that taxation of too heavy a nature would prevent the development of the nation’s resources, and indirectly, if not at once, cripple the development of that financial strength which is essential to the prosecution of a long war, is genuine, honest, and legitimate criticism.
– Where do you develop the idea about resenting criticism ? I think no one has spoken against the Bill in this House.
– Senator Lynch, for whose opinions on various matters 1 have every respect, said that almost as soon as the Administration started to finance the war, those people whose interests were preponderant in Australian development commenced criticism in a spirit of hostility.
– Read the Melbourne papers any day.
– The honorable senator’s criticism is not justified by the facts. It is legitimate to point out that the nation may be like a horse engaged in a race, and require a lie Lit weight for a long distance. Senator Lynch himself stated that Mr. Gladstone regarded the imposition of heavy direct taxation as one of the factors that deterred nations from entering upon war. But we are in this war, and if the taxation we impose at the outset is too heavy, it may have that deterrent effect which Senator Lynch has mentioned, and may, perhaps, paralyze or somewhat dull the efforts of the people to prosecute this struggle inflexibly to a successful conclusion. Senator Lynch has spoken of Japan. Undoubtedly, Japan did, to a very large extent, by direct taxation, finance her expenditure during the war with Russia.
– With an income tax that was 60 per cent, on an income of £10,000.
– The Japanese income tax also went down as low as £30 in search of revenue with which to carry on the war.
– It was particularly heavy on the wealthy classes, and took £6-000 out of a revenue of £10,000.
– The Japanese people anticipated that they would be able to get an indemnity from Russia, and it was a well-known fact that when they went into conference at the instigation of President Roosevelt, at Portsmouth, the Japanese representatives stood out for the payment of an indemnity. But, unknown to the rest of the world. Japan’s financial resources had been practically exhausted; and, therefore, although the Russian diplomats were not disposed to concede the demand, the Japanese delegates quite unexpectedly accepted the peace terms. They did so because Japan was financially exhausted. The inroads upon the capital of the nation had been too heavy, and to-day Japan is suffering from a lack of capital, for she drew too extensively, in the way of taxation on wealth, upon the nation’s resources, which otherwise would have been devoted to the development of industrial enterprises.
– What was her alternative - to leave her debts unpaid ?
– Her alternative was to raise loans, the payment of which would be distributed over a much longer period of time than would be possible by heavy and drastic direct taxation. That is the only argument that has been advanced against this measure. It is legitimate criticism, which has found favour amongst Ministerial supporters, who hold the view that the imposition of this heavy taxation will imperil the development of Australian resources, which it is essential should proceed contemporaneously with the prosecution of the war.
– We have paid no war debts out of revenue yet.
– This is the first time we have incurred any war expenditure, and it is admitted that the only comparison we can make with this income tax is the war taxation of the United Kingdom, imposed to defray, not only the cost of the present war, but to assist in meeting accumulated expenditure consequent upon a long series of historic wars. I do not intend to labour the question, for I am supporting tho measure, and I tell the capitalists of Australia, without the slightest hesitation, that they have to assist us in the successful prosecution of this war. I know that many of those capitalists who may have contributed to the war loan will pay heavy income taxation in the various States, for I venture to say that the exemption under the provisions of the War Loan Act will not enable them to escape their obligations in respect of State income taxation.
– The Federal income tax goes lower in its search for revenue than the South Australian Act, in which the exemption is fixed at £200.
– And it is higher than in Tasmania. Very few people who will have to pay under the Federal income tax will escape the State income tax. That is my point. In practically every case the person who will be called upon to pay this Federal income tax will have to pay State income tax as well. This is heavy taxation for a beginning. I recognise that had the Commonwealth loan been subscribed to the extent of £20,000,000 it would only meet our war expenditure for twenty weeks. Fairly heavy taxation will be necessary to meet the interest bill on the loans which we must borrow for the prosecution of the war. Human nature is human nature, and, as I have said before, a politician needs to be somewhat of a philosopher. It is always wise to accustom people to new taxation in homoeopathic doses. Whilst I am willing to give a general support to this measure, and am prepared to assume to the fullest extent my responsibility as a member of the Senate, in assisting to place it upon the statute-book, I believe it would have been wise for a start if Ministers had been content to impose about 50 per cent, of the taxation it is designed to impose under the complete scheme of income tax which will be provided for by this machinery measure and the Income Tax Bill fixing the rates. There is a difference of opinion amongst people in this community as to whether, in connexion with our first war expenditure of any magnitude, it is wise to impose taxation up to the most drastic imposts of other countries, or whether we should” impose, say, only 40 or 50 per cent, of the taxation imposed elsewhere, and so permit the liberated capital to be employed, as it undoubtedly would be, in the development of the resources of the Commonwealth. If the wealth of the Commonwealth is to be increased year by year, as no doubt the war will be waged year by year, it is absolutely essential that there shall be concurrently the greatest possible development of our resources in order that, as the national wealth is dissipated in the conduct of the war, there may be a continuous and increasing fund of new wealth built up to enable us to successfully prosecute the great conflict in which we are engaged. I shall give this measure support in a general way, and I hope the Senate will occupy a fair amount of time in the investigation of its details. There is no hesitation in the expression of my desire to assist the Ministry in the successful prosecution of the war, or in my assumption of full re- sponsibility, as a member of the Senate, for the placing of this Bill upon the statute-book.
.- My remarks on this measure will be brief. I desire first of all to express my pleasure at the manly utterances of my Tasmanian colleague, Senator Bakhap, and my appreciation of the generous support which, as I expected, he is prepared to give to this Bill. In approaching the consideration of a measure of this kind we have first of all to remember that we must incur very serious liabilities in taking our part in the war. What they will ultimately amount to none of us can say. Up to the close of the last financial year our indebtedness on account of the war amounted to between £10,000,000 and £12,000,000. This year it is estimated that our war expenditure will closely approach £50,000,000, and if it continues to increase at the same ratio we must expect that by next year it will have reached enormous proportions. Aa honest men we have to face the position. The money necessary to carry on the war must be found, and the only honest way in which to get it is to borrow it. There is another way, and that is confiscation, which I do not propose just now.
– Will the honorable senator do so later on?
– A condition of affairs might arise which would justify even the confiscation of a certain portion of the wealth of the country for the purpose of carrying on the war.
– It might be said that all taxation is confiscation.
– In a sense it is, but not in the usual acceptation of the term. To be honest, we must meet at least the interest charged on the money we shall be compelled to borrow, and I am glad that the Government propose to secure enough for that purpose, and a little over. There may be room for a difference of opinion as to the best means of securing the money we require. At a time like this one hesitates to say all that he thinks. It is clear that at such a time we should try to avoid the imposition of undue burdens on the people. It may be said that the man has not yet been born who can devise a tax that “would be perfect in its incidence.
– The honorable senator is mistaken. What about Senator Grant?
– I am sure that the honorable senator does not claim to have devised a tax which would be perfect in its incidence.
– Land value taxation falls with mathematical accuracy upon those who have to pay it.
– We are not discussing land value taxation now, but the honorable senator will allow me to disagree with him. Income taxation is almost universal in the British Empire. Senator Bakhap referred to the income taxes in the different States, and particularly in Tasmania. The exemption in that State is as low as £80. It is presumed that £100 is exempt in the case of a single person, but if his income exceeds £100 he has to pay the tax on all of his income over £80.
– Wages are so low in Tasmania that it is said very few men can earn more than £80 a year there.
– Some people claim that Tasmania is the best State in the Commonwealth for good wages, but, unfortunately, our statistics do not bear that out.
– The Tasmanian people subscribed well to the war loan.
– They did; and, according to population, better than did the people of any of the other States. The representatives of Tasmania are very proud to know that the people of their State have done their share in subscribing to the war loan. I have looked up statistics to discover the position in regard to the taxation of incomes in the different States. Senator Bakhap has said that practically no person who will be called upon to pay the Federal income tax will escape the State income taxation. That is hardly correct, because I find that in New South Wales the amount of income exempt from taxation is £300.
– No, £250. It was reduced recently.
– I have given the amount as set out in the last issue of Mr. Knibbs’ statistics. Even if the amount be £250, there is a considerable difference between that and £156, which is the amount exempted under this Bill. In almost all the other States, with the exception of Tasmania, the amount exempted is £200. There is, therefore, only one State in the Commonwealth in which the amount exempt from income tax is less than the exemption provided for in this Bill.
– Do the States grant the same deductions in respect to children as are provided for in this Bill ?
– In Tasmania a deduction for children is allowed, but it is somewhat less than that provided for in this Bill. In Tasmania, however, a distinction is drawn between married and single persons, and, by the way, I may say that I regard it as a defect in this measure that it contains no similar provision. Subject to Senator McDougall’s correction, I find, according to Knibbs, that in New South Wales the income tax is 6d. in the £1 on incomes ranging from £300 to £500, and the scale goes up “to 7d., 8d., 9d., 10d., lid., and ls. in the £1 on different incomes. In Victoria the exemption is £200, and the tax 3d. in the £1 on incomes from £200 to £500, 4d. in the £1 on incomes of from £500 to £1,000, and 5d. and 6d. on incomes above £1,000. In Queensland the exemption is £200, and on incomes from £200 to £500 the tex is 6d. in the £1; £500 to £1,000, 6d.; and 7d. and 8d. in the £1 on incomes over £1,500. In South Australia the exemption is £200. and on incomes up to £800 the tax is 4 1/2d., and on incomes over that amount 7d. in the £1. In Western Australia the exemption is £200, and on incomes over that amount the tax is 4d. in the £1. Tasmania has a more elaborate scale of taxation than has any of the other States. The exemption is presumed to be up to £100 in the case of a single person, and £125 in the case of a married person. Whilst this distinction is made, if a married man receives an income of more than £125 he has to pay the tax on all over £80, the same as the single man. The tax rises from 4d. in the £1 by many gradations until it is ls. 4d. in the £1 on incomes of over £2,000. Briefly stated, the position is that New South Wales exacts in the form of income tax from 6d. to ls. in the £1, Victoria from 3d. to 6d. in the £1, Queensland from 6d. to 8d. in the £1, South Australia from 4Jd. to 7d. in the £1, Western Australia 4d. in the £1, and Tasmania from 4d. to ls. 4d. in the £1. I have here some figures showing how the income tax works out per head in the various States. From these I gather that in New South Wales it represents 14s. Id., in Victoria 7s. 4d., in Queensland 14s. 3gd., in South Australia 10s. ll£d., in Western Australia 10s. 10£d., and in Tasmania 16s. l£d. It will be seen, therefore, that Tasmania is paying nearly 5s. per head more than is any other State by way of income tax.
– The honorable senator should also compare the land tax in the other States with the land tax which is operative in Tasmania.
– The income tax is practically universal in its application. It is operative in every State of the Commonwealth. In theory the tax is considered to be perfect, but in practice, although it approaches more nearly to perfection than does any other form of taxation with which I am familiar, a great many anomalies of necessity arise. Indeed, in connexion with any tax that we may impose anomalies will exist. The income tax, I maintain, approximates more nearly to justice in its incidence than does any other tax. What we seek to attain is equality of sacrifice. Since I was a boy I have never forgotten the first canon of taxation laid down by Adam Smith, namely, that a person ought to be taxed in accordance with his ability to pay. But throughout the British Dominions no attempt has been made to attain that ideal. We have never sought equality of sacrifice. This is all the more peculiar in view of the circumstance that the masses of the people in Australia contribute very much more than their fair proportion to the revenue of the country through Customs taxation. It is an old rule that where a tax presses unjustly upon a section of the people we should endeavour to afford relief to that section, with a view to securing something like equality. Seeing that the people of Australia are annually paying £3 ls. 6d. per head in taxation through the Customs, and that they thus contribute practically as much as do the wealthier classes, we ought, when we are imposing a tax on income, to endeavour to relieve those who have hitherto been overburdened.
– Who are they?
– They are the persons who are paying taxation on income over £80 a year. The honorable senator will surely admit that a man who has to pay taxation on income in excess of £80 a year, and who has to maintain a wife and family, is entitled to some relief.
– But that taxation was not levied for a specific purpose.
– As I stated at the time it was being imposed in Tasmania, it is most unjust in its incidence, and it practically taxes the food out of the mouths of children as well as the boots off their feet. Travelling in the midst of winter through that State quite recently I saw children without boots going to school when the frost was lying on the ground.
– I have seen children doing that in South Australia as a matter of preference. They carried their boots round their necks.
– If the honorable senator would do that sort of thing he would stand alone. Nobody would emulate his example. A comparison has been instituted in Tasmania between the position of a man in receipt of £100 a year, and that of an individual whose income is £1,000 a year. Roughly, the former pays in taxation from all sources nearly twice as much as does the latter. These figures have been confirmed by the Commonwealth Statistician.
– Taxation should bear only on that portion of a man’s income which is in excess of his living expenses.
– Exactly. My contention is that if a man who receives only £100 a year contributes ls. in taxation, he makes a bigger sacrifice than does the man who receives £.1,000 a year, even though the latter pays £100 by way of taxation. The man with £1,000 a year will never be in want of a breakfast, but the former - if he has to maintain a wife and family- may be deprived of the necessaries of life. Some six or 3even years ago I took part in a meeting which was held at Cressy, Tasmania. I went there with the secretary of the Australian Workers Union. Before Ave entered the hall two men approached us and inquired whether we could do anything for them. Upon being asked the nature of their trouble, one of them said, “ I have to rise at 4 a.m. daily to go to my work, and I do not get home until 8 o’clock in the evening. I have to rent a house in Cressy in order to provide shelter for my wife and children and I receive a wage of 12s. per week.” As a matter of fact, an employer in that district had openly boasted that he had never paid more than 12s. per week. My answer to the man who complained to me was, “ God help you, but you will have to help yourself a little bit first.” It is when instances of this kind are obtruded upon one’s attention that one feels inclined to insist upon these unfortunate men being granted some measure of relief.
– Did not the authorities in Tasmania want immigration at that time?
– At that time the nativeborn population of Tasmania were leaving it in such numbers that the departures exceeded the birth-rate. Fortunately, things have changed since then. The people of Tasmania have thrown over their old political leaders, and have put a new party into power. All the revenue that is required to meet the present needs of the Commonwealth can be raised without inflicting material harm upon anybody. As evidencing how the tax under this Bill will operate, I may mention that a mau with a taxable income of £300 a year - and we must not forget that every man will be allowed to deduct whatever he pays in State land and income tax, in addition to his life insurance premiums and his contributions to friendly societies, from his taxable income, so that, roughly speaking, if he enjoys an income of £500 a year his taxable income will be only about £300 a year - will be required to pay £5 3s. Id. He will thus have £294 16s. lid. left. The individual with a taxable income of £500 a year will be called upon to pay £10 3s. Id., so that he will have £489 16s. lid. left. The man with a taxable income of £1,000 a year will pay £28 2s. 6d., and will have left £971 17s. 6d; whilst a person with a taxable income of £2,000 a year will contribute £87 10s., and will have £1,912 10s. left. An individual with a taxable income of £4,000 will pay £300, and will have £3,700 left. A man with a taxable income of £6,000 a year will contribute £637 10a., and will have left £5,362 10s.; whereas a man with a taxable income of £10,000 a year will pay £1,609 7s. 6d., and will have left £8,390 12s. 6d. These are the persons who are complaining of the incidence of the tax. It is amusing to read the Melbourne Argus in this connexion. Its statements would make a Scotchman laugh, and it is said that Scotchmen are devoid of humour. But the driest Scotchman could not fail to laugh at the funny things which appear in that newspaper.
– Did the honorable senator ever meet a dry Scotchman ?
– I have met a good many of them. The objections to this Bill which are urged by the Argus are exceedingly amusing. We are gravely informed by that journal that if we tax the class to whom 1 have just referred we shall prevent all the poor persons in the community who wish to raise mortgages from securing them.
Sitting suspended from 1 to 2.80 p.m.
– At the suspension of the sitting I was referring to the feverish appeals made in the press to this Parliament to stay its hand in putting on this taxation, especially at the higher rates included in the schedule. I mentioned that I had seen in the press a number of letters and articles, nearly all in the same tone, pointing out that if this Parliament persisted in imposing such taxation, ,it would rob the country of its. wealth, prevent capital from being used in the employment of labour, and stop poor persons from raising mortgages. Indeed, it would appear from the general tenor of the letters and articles that “ blue ruin “ was going to overtake Australia if the measure were enacted. I have no fear of that result following upon the imposition of the tax. I have noticed, too, that a few of those who are politically opposed to an income tax have indorsed the measure. One of the surprises I had almost immediately the enactment of an income tax was spoken of w.as the receipt of a series of letters from a so-called Liberal candidate in Tasmania, the son of a respectable old man whom I admired, but who in politics was a Tory. I refer to Mr. Edwin Best, who in a letter laid down a scheme of taxation to meet the present position without knowing what the main principles of this Bill would be - in fact, before it was circulated. He proposed to raise more revenue than is provided for by the Bill, to tax up to the rate of 5s. in the £1, and to impose that, rate on a lower taxable amount than is laid down on the measure. It was a surprise to me to get a letter of that character from a man who professed to be a Liberal, who is the son of a Liberal, and who has opposed our party in Tasmania. He thought that this was a fair policy. I had another surprise. In the northern part of the State there is a journal which we always call a Tory newspaper. It is a common saying among the followers of the Labour party that if a supporter of that party was found to coincide with the Launceston Examiner it was time for him to go home and examine himself, for there must he something wrong with him. I notice that in a leading article last week it practically supports this measure. It finds one objection - and on that point I agree with the writer - and it is that a distinction has not been made between a married man and a single man. There we have another confirmation of the justice of this measure. These commendations are coming in from all quarters, not merely from our own people, but also from opponents. If anything, it will tend to lead us to think that the exemption might possibly have been made a little higher than is the case. I should have been content if we had allowed an exemption of £156, but let that be for a single man only. It must be obvious to every honorable senator that if we adopt as a basis the first canon of taxation I referred to previously - that laid down by Adam Smith - we ought to levy the tax in proportion to the ability of a person to pay.
– That is for general purposes.
– It is exploded.
– The honorable senator may think so, but I do not.
– If it is for general purposes, it is also for a special purpose.
– Quite so. Surely my honorable friend does not want to make the sacrifice unequal because it is for a special purpose? It must be obvious to every honorable senator that if a married man is able to pay, and it is just to impose on him certain taxation, it is more reasonable that a single man should pay more taxation. According to Knibbs, our Customs taxation amounts to £3 ls. 6d. per head of the population. A single man pays £3 ls. 6d.. but as a married man has to pay double that sum, he pays considerably more through the Customs than does a single man. There is a justification, I think, for allowing a larger exemption to a married man than to a single man. In the past throughout the Empire it has been so usual to heap the burdens of taxation on the poor that it comes somewhat as a surprise to find anywhere a political party who are game to levy the tax on the principle of equality of sacrifice. And so it is that our opponents are fighting to the last ditch in the endeavour to prevent the enactment of that which is just and fair. I am prepared to admit, as I said before, that anomalies will be found. A tax has never been imposed yet which has not been found after a little experience to contain some anomalies. Therefore. I recognise that possibly we shall have to make amendments in this measure in the near future, but they will not affect its main principles. I believe that although this tax is being put on temporarily for war purposes, it has come to stay. In view of the obligations imposed on the National Parliament to construct railways and develop the country generally, as it is trying to do, there will need to be found additional sources of income. I forecast that this tax, perhaps not necessarily in its present form, has come to stay. I have not had time to read the Bill as it is now, but one of its principles is to tax companies. In the past the profits which have accrued to various companies, and which we can follow up if we like, have not been disclosed, and I fear have not been subjected to taxation as they ought to have been. This measure proposes to tax companies. In its original form I observed one little anomaly which, I am inclined to think, has been adjusted.
– Only the undistributed profit of that year is to be taxed.
– Quite so. Originally the Bill contained no provision that a profit which had gone into a reserve fund and on which the company had already paid a tax, and which was subsequently distributed, would not be taxed again.
– That is so.
– I believe that that has been adjusted.
– It will not be taxed.
– I am glad to hear that an amendment has been made there. The Bill contains a provision for taxing the house a man may live in to the extent of 5 per cent, on its capital value when owned by the occupier. At first sight it seems somewhat unfair, but I am forced by my sense of fairness to say that, so far as I can see, it is just in the circumstances to tax a man at the rate of 5 per cent, on the capital value of the house he lives in ; otherwise a great disparity would be created. There is no doubt that the general mass of the community have to pay rent. If a man who happens to own his own dwelling is to escape taxation, as is the case in Tasmania now, and the man who is paying rent for his dwelling is not able to deduct that amount from his ordinary income, it will create a distinction which to me seems very unfair, and so I must support the proposal in the Bill as it is. I hope, however, that we shall not have any need to increase the tax. We do not know what the necessities of the future may be. I stated just before the suspension of the sitting that the war expenditure had increased enormously in one year, and if it goes on increasing in the same ratio for one year or more it is certain that we shall have to raise further income to meet the necessities of the position. I do not desire to take up further time now. I had intended to refer to some of the companies in Australia, the profits they had made, and how they had got out of paying their just share of taxation, but I will reserve those remarks for a future occasion. For the time being I indorse and support the Bill, and believe that it will go through. I think that it will have the approbation of the community from one end of Australia to the other.
– I desire to say a few words because I do not approve of this kind of taxation being imposed by the Federal Parliament. I look upon this proposal as an . encroachment on State rights to a very large extent. Generally speaking, I do not approve of that kind of legislation, but having regard to the position we are in to-day and the obligation to carry on the war in which we unfortunately are engaged, it is not to be taken as a precedent that I am not found opposing the measure. I realize that in the exigencies of the situation the Government have to look somewhere for additional revenue, and believing in the principle that a man who is best able to pay should be taxed, I think that the imposition of an income tax is the proper way of levying additional taxation, and imposed on a gradu ated scale, I have not the slightest objection to it in the circumstances. I wish to draw attention to paragraph * of clause 18, which allows a deduction of - five per centum of the total amount paid in the year in which the income is derived in respect of calls on the shares of a company.
I point out to the Minister that calls are not income but capital. If it is intended to impose a tax on foreign capital as well as on income we shall have to alter the title.
– There is an amendment coming along to allow the calls paid to mining companies to be deducted from the dividends.
– Calls should be exempt from taxation under a Bill of this kind.
– They are exempt altogether in mining companies, but not in other companies.
– They are not income, but capital, and I fail to see the sense of imposing taxation on all but 5 per cent, of them.
– It is income invested, although it becomes capital. In any case, that is a point which can be dealt with in Committee.
– So long as the Minister sees the point, I am satisfied. I see no other great objection to the Bill in its present form.
– All things considered, we are in a very favorable position financially to-day as compared with the other parties to this great war - a fact which proves beyond doubt that we are reaping the benefit of the common-sense methods of finance adopted some time ago by the Labour party, especially when we remember the enormous sums that have been fired away in death-dealing agencies. We are facing ari expenditure for the current year of something like £50,000,000, whereas formerly we regarded a total expenditure of £5,000,000 as enormous. At the same time, the United Kingdom is spending £1,000,000,000 where formerly it was called upon to spend only £50,000,000. These figures are a striking indication of the enormous sums that are being spent at the present time. Seeing that we have been able to meet this tremendous expenditure with very little apparent hardship, we can safely say that we stand in a very favorable position Up to the present we have spent very little money other than that which has been paid into the public coffers by means of the Australian note issue, and, according to the Treasurer, the war so far has been practically financed from that source, although, of course, he was speaking in a round and general way. If we have done so well out of the Australian Notes Act, it is a striking evidence of the wisdom and foresight of the Labour party in passing it. We cannot, however, expect the note issue to be an endless source of revenue, and must look for other sources in the future. We have been practically informed by the financiers of the Old Country that we must depend on our own resources to raise further money for war purposes, and this will cast upon our collective efforts a greater strain than we have ever yet faced, because most of our great expenditures have hitherto been met out of money borrowed in London. We started the war with a loan, but we have been informed that we can expect no more from the London market. Instead of Great Britain being able to play the part that she did in the Napoleonic wars, when Pitt, the Prime Minister of the day, was able to finance her Allies to such an extent as to make victory over her great enemy certain, on this occasion, although she is undoubtedly helping some of her Allies with money, she cannot be expected to do it to the same extent as she did then. We inthis country are, therefore, thrown on our own resources, and must be prepared to finance ourselves by our own efforts. This can be done only by borrowing from our own people or by means of taxation, and, therefore, we have had to take the action which this Bill indicates. I am pleased that the loan we have floated has resulted so satisfactorily, but it is not possible to expect the whole of our share of the war cost to be financed out of loan. This income tax has, therefore, to be imposed, and is necessary if this generation is to do its share towards shouldering the financial burden. It is an opportune tax, well suited to our present necessities, for an income tax, when framed on progressive lines, places the greater burden on those with the larger incomes, which is as it should.be, seeing that those incomes are for the most part enjoyed by people who possess property, and, consequently have most to defend. All that we are doing is to ask them to pay a larger national insurance premium because of the larger amount of property which has to be protected for them. This is such a fair, reasonable; and logical tax that there should be very little objection to it. I ask leave to continue my remarks.
Leave granted ; debate adjourned.
page 6637
Motion (by Senator Pearce) agreed to-
That the Senate, at its rising, adjourn until Thursday next.
page 6637
Call of the Senate.
– I have received the following letters: -
I have the honour to inform you that owing to the fact that my eldest son is undergoing an operation early next week, I am compelled to go to Queensland ; and beg therefore to submit my apology for enforced absence from the special call of the Senate.
Yours faithfully,
J.R. Maughan.
I much regret that I will be detained in Sydney this week upon important business; 1 therefore trust that my non-attendance in response to the call of the Senate for the 2nd prox. may be excused.
Yours truly,
J. Gould.
In addition, Senator Lt. -Colonel O’Loghlin could not attend to-day, because he did not receive the call, being absent on military duty.
Motion (by Senator Pearce) agreed’ to-
That, in view of the fact that Senator Lt.-Colonel Sir Albert Gould and Senator Maughan, who arc absent from the call of the Senate, have sent apologies, and that Senator Lt.-Colonel O’Loghlin is absent on leave, they be excused for failure to answer such call.
Names of senators called by the Clerk.
The following senators were absent: -
Senators Bakhap, Gould, Maughan, and O’Loghlin.
Motion (by Senator Gardiner) put -
That this Bill be now read a third time.
– In view of the constitutional provisions requiring that a Bill of this nature shall have an absolute majority of the whole Senate voting for it, and the question having been put with no call in the negative, I declare that the Senate has unanimously agreed to the third reading of the Bill. I therefore declare the motion carried.
– I draw your attention, sir, to the fact that I called “No,” but I did not wish to proceed to a division.
– In that event there must bo a division.
– But my call was the only “ No.”
– I cannot distinguish in this matter. If the Senate is not unanimous there must be a division, to enable me to ascertain whether there is an absolute majority voting in the affirmative, as required by the Constitution for the passage of the Bill.
Question put. The Senate divided.
AYES: 29
NOES: 1
Majority…. 28
AYES
NOES
page 6638
The following papers were presented : -
Memorandum regarding Missions to Abori gines in Queensland, Western Australia, and the Northern Territory.
Ordered to be printed.
Naval Defence Act 1910-1912. - Regulations amended, &c. - Statutory Rules 1915, No. 149.
Quarantine Act 1908-1912. - Regulation amended - Statutory Rules 1915, No. 145.
Senateadjourned at 3.14 p.m.
Cite as: Australia, Senate, Debates, 2 September 1915, viewed 22 October 2017, <http://historichansard.net/senate/1915/19150902_senate_6_78/>.