Senate
30 September 1942

16th Parliament · 1st Session

  1. Senate
  2. 16th Parliament
  3. 1942

The President (Senator the Hon. J. Cunningham) took the chair at 2.30 p.m., and read prayers.

page 1121

QUESTION

LIQUOR TRADE

Senator ARTHUR:
NEW SOUTH WALES

– Will the Minister for Trade and Customs consider the promulgation of regulations to control the rentals of all hotels?

Senator KEANE:
Minister for Trade and Customs · VICTORIA · ALP

– The matter will receive my attention at an early date.

page 1121

QUESTION

NEW BUSINESS AFTER 10.30 P.M

Motion (by Senator Collings) - put -

That Standing Order No.68 be suspended, up to and including the 9th October next, for the purpose of enabling new business to be commenced after 10.30 p.m.

The PRESIDENT:

– There being an absolute majority of the members of the Senate present, and no dissentient voice, I declare the question resolved in the affirmative.

page 1121

CIVIL CONSTRUCTIONAL CORPS

Senator McLEAY:
SOUTH AUSTRALIA

– I direct the attention of the Leader of the Senate to the following press report in connexion with the fixation of the wages of members of the Civil Constructional Corps: -

page 1121

CONSTRUCTION CORPS

Sydney. Tuesday

In a reserved judgment to-day on an application for the fixation of wages at the highest rate for members of the Civil Construction Corps. transferred from other States to Queensland,Judge O’Mara declined to make any order.

He said he would inform the AttorneyGeneral that it was impossible to deal with the matter and at the same time maintain three different codes.

Remarking that it was a ridiculous state of affairs, His Honour said there were 10 different classifications of concrete workers - four at one rate and six at a rate of onefarthing per hour higher - working in Queensland for the Allied Works Council.

The classifications should he consolidated and a flat rate prescribed.

Which Minister is responsible for the muddled policy which has brought about such a state of affairs?

Senator COLLINGS:
Minister for the Interior · QUEENSLAND · ALP

– I have not read the report; but the matter referred to by Judge O’Mara is the subject of negotiations which are proceeding at present, and I do not propose to discuss it now. No Minister is responsible for the present state of affairs. It is due to the fact that seven parliaments in Australia pass industrial arbitration laws. That is one of the reasons why the Commonwealth Government proposes later to ask the people for increased powers for this Parliament. By a necessary alteration of the Constitution, it hopes to put an end to the muddle.

Senator McLEAY:

-Does the Minister think that the Commonwealth has not power to make one award to cover the various classifications of concrete workers ?

Senator COLLINGS:

– As an investigation of the matter is proceeding, I do not intend to discuss it with the Leaderof the Opposition.

page 1121

QUESTION

MUNITIONS FACTORIES

Senator FOLL:
QUEENSLAND

– Has the Minister representing the Minister for Munitions read the statement published in the press recently by a firm engaged in the manufacture of war materials to the effect that it will have to give consideration to the elimination of some of its factory shifts, because of the large number of employees who absent themselves from shift duties, particularly on Sunday night? In view of the fact that the members of the fighting services are required to serve for 24 hours a day, and are dealt with if they are absent without leave for only a few hours, will the Government consider the necessity for tightening up the industrial laws, so that the workers will not be permitted to absent themselves from the shifts without legitimate cause ?

Senator ASHLEY:
Minister for Information · NEW SOUTH WALES · ALP

– That is a matter of Government policy upon which I am not. prepared to make a statement in answer to a question.

Senator FOLL:

– Will the Government look further into the matter of absenteeism from shifts, in order that a greater output than at present may be secured from the munitions factories?

Senator ASHLEY:

– The Government has been giving attention to this problem, and an investigation has been made. The Government regards the position just as seriously as do members of the Opposition. Absenteeism in industry is not encouraged by the Government, and it is taking steps to remedy the position.

page 1122

QUESTION

WHEAT INDUSTRY

Senator UPPILL:
SOUTH AUSTRALIA

– Will the Minister representing the Minister for Commerce state whether the Government proposes to continue the present flour tax under the new wheat scheme?

Senator FRASER:
Minister for External Territories · WESTERN AUSTRALIA · ALP

– It is not customary to state matters of policy in answer to questions.

page 1122

QUESTION

POTATO INDUSTRY

Senator HERBERT HAYS:
TASMANIA

– In reply to a question asked by me a few days ago with regard to the potato crop, which the Government desires to increase by 50 per cent. above the normal yield, it was stated that the Government fully expected that a 50 per cent. increase would be realized. I have received information from a reliable source that at present the area planted is 43,000 acres below that anticipated. Will the Minister representing the Minister for Commerce make further inquiries, in order to ascertain whether the Government’s figures or mine are reliable ?

Senator FRASER:
ALP

– I have no knowledge as to the accuracy of the information referred to. The answer given to the honorable senator was supplied by the Minister for Commerce.

page 1122

QUESTION

COMPULSORY LOANS

Statement of Ms. Wilson, M.P

Senator GIBSON:
VICTORIA

asked the Minister representing the Treasurer, upon notice -

  1. Has the honorable member for Wimmera in. the House of Representatives (Mr. Wilson), who supports the Government, made a statement to the effect that he does not believe in compulsory loans or voluntary loans and that these loans will not be repaid?
  2. If so, what action does the Government propose to take to curb such statements?
  3. Does the Treasurer not think that statements of this kind militate against the war loan effort?
Senator KEANE:
ALP

– The Treasurer has supplied the following answers: - 1 and 2. During the course of recent debate the honorable member for Wimmera in the House of Representatives expressed his views in regard to government loans. Members of Parliament are entitled to state their opinions freely, subject, of course, to the Standing Orders of the chamber to which they are members, and it is not for the Government to limit their rights of speech.

  1. The Government is aware that a section of the community hold views adverse to the issuing of public loans. The expression of those views has not in the past militated against the success of war loans, and the Government does not believe that it will do so in the future.

page 1122

QUESTION

ACQUISITION OF PEAS

Senator HERBERT HAYS:

asked the Minister representing the Minister for Supply and Development, upon notice -

  1. Have all liabilities to growers and merchants interested in the production and handling of the blue and grey pea crop acquired by the Commonwealth for the year 1942 been discharged?
  2. If the answer is in the negative, when does the Government expect to complete the transactions referred to?

SenatorFRASER. - As the Field Peas Board is associated with the Department of Commerce, the Minister for Supply and Development referred the question to the Minister for Commerce, who has furnished the following replies : 1.No.

  1. As peas are still being received by the Field Peas Board, it has not been possible to complete all payments. This will be done when all peas have been sold and proceeds adjusted.

page 1122

QUESTION

FLAX

Senator J B HAYES:
TASMANIA

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

  1. What is the quantity of flax fibre produced since the commencement of the war to the 30th June, 1942?
  2. What is the cost per ton of fibre?
  3. What is the allowance made for seed, tow and waste products?
Senator FRASER:
ALP

– This matter comes within the jurisdiction of the Minister for Supply and Development, who has furnished the following information : -

  1. Until the 30th November, 1940, production of fibre was in the hands of private enterprise. The Commonwealth commenced processing the crop sown in 1940 on the 1st December, 1940, and 787 tons of line fibre were produced. Crops sown in 1941 are now being processed and 324 tons of line fibre were produced up to the 30th June, 1942. making a total of 1,111 tons of fibre to that date.

  2. For the accounting period ended on the 30th November, 1941, the cost of fibre was £381 a ton. Included in this figure are items such as -

    1. Loss on sowing seed, £28,000. This seed was purchased from the British Government at over £60 a ton and supplied to growers at £30 a ton.
    2. Payments to growers of £36,000 under the guarantee of a minimum return per acre.

Excluding this expenditure and provision for depreciation and interest on capital at £25,000 thecost was £254 a ton. This high cost was due to the fact that owing to drought conditions existing in 1940 the bulk of the straw received from the crop was of poor quality and the average yield was only 4.6 per cent. of line fibre per original ton of straw. Normal yield is in the vicinity of 8 per cent. with practically the same processing costs.

  1. For the accounting period ended the 30th November, 1941, allowance for seed was £100,253, including sales £80,413, at an average price’ of £28 a ton, and seed on hand at £19 a ton, £19,840. Allowance for tow was £41,180, being sales at an average of £34 a ton, £9,929, and stock on hand valued at £24 a ton, £31,251.

page 1123

QUESTION

ALLIED WORKS COUNCIL

Employment of Aliens

Senator BRAND:
VICTORIA

asked the Minister for the Interior, upon notice -

How many aliens at present working under the control of the Allied Works Council have, at some time or other, been interned?

Senator COLLINGS:
ALP

– The number is 49.

page 1123

QUESTION

SHIPPING FREIGHTS

Senator COOPER:
QUEENSLAND

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

  1. Is it a fact that representations have been made to the Minister by the Chamber of Commerce, Mackay, Queensland, complaining of excessive shipping freights charged for all cargoes to and from that port- estimated at £1,000 per month in excess of shipping freights on a comparable basis with other Queenslandports?
  2. If so, has any investigation been made into the statement made by the Mackay Chamber of Commerce?
  3. If investigation has been made, what is the result of such investigation? If not, will the Minister have an investigation made at an early date and advise the Senate accordingly?
Senator FRASER:
ALP

– The Minister for Commerce has supplied the following answers : -

  1. Representations have been made by the Mackay Chamber of Commerce regarding shipping freights to the port of Mackay.
  2. The Shipping Control Board has reported to me that it has investigated all the reasons given by the Mackay Chamber of Commerce in support of its application for freight reductions.
  3. The Shipping Control Board considers that, in relation to the board’s operations and having regard to war developments, the freights charged to Mackay are fair and reasonable. I have called for a. complete history of developments in regard to Mackay freights since the outbreak of war. I propose to study closely all factors affecting the issue, and I shall fully inform the honorable senator on the matter as soon as possible.

page 1123

ESTIMATES AND BUDGET PAPERS 1942-43

Order of the Day No. 2 - Estimates and Budget Papers 1942-43 - Resumption of debate - read and discharged.

page 1123

APPROPRIATION (WORKS AND BUILDINGS) BILL 1942-43

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

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

Second Reading

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

.- I move -

That the bill be now read a second time.

Following is a summary of the proposed appropriation for Additions, New

Works. Buildings, &c. : -

Details will be found on pages 308-318 of the printed Estimates. In accordance with the desire of the Government to divert all resources of materials and manpower to war purposes expenditure on civil works has been reduced to the minimum necessary to meet essential and urgent requirements. The Civil Aviation works estimate of £908,700 is largely designed to meet defence requirements. The amount of £2,800,000 for Postal works is also largely to meet war conditions and the urgent demands of the service departments and war industries. The total expenditure on Postal works for 1941-42, including £1,200,000 from loan fund, was £2,973,000. Provision of £200,000 is made for hospitals and other institutions for the Repatriation Department. The cost of military hospitals is charged to Army votes. With the curtailment of expenditure on civil works a substantia] reduction has been made in the provision for Territories of theCommonwealth. The amount included for the Northern Territory provides for the completion of essential works which are now mostly required for military purposes. Only urgent works within the capacity of available resources are provided for in the Australian Capital Territory Estimates. Expenditure is necessary for the completion of the new hospital, to be used as a military hospital, extensions to the old hospital, engineering services and the abattoirs. The amount of the proposed appropriation of £4,902,000 does not include works constructed by the States out of the Federal Aid Roads grant, which this year is estimated to amount to £1,700,000. It also excludes works for defence and war services which are provided in service votes. Certain works in progress at the 30th June last havebeen carried on by credits from Treasurer’s Advance. This bill authorizes the commencement ofa number of new works which it is desirable should be put in hand at the earliest possible moment. I trust, therefore, that honorable members will give it a speedy passage. Any details required regarding specific works will be supplied by the appropriate Ministers during the committee stage.

Senator McLEAY:
Leader of the Opposition · South Australia

– I support the bill. I know that the Government is anxious that it be given a speedy passage. I do not propose to debate it although I may ask for certain information when the measure is in Committee.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 and 2 agreed to.

Clause 3 (Issue and application of £4,902,000).

Senator DARCEY:
Tasmania

– I should like to know if it is intended to use the national credit in order to raise the sum mentioned in this clause. I protest against the raising of this money in the orthodox way. Very soon our indebtedness will be so great that we shall be unable to raise money and shall have to use the national credit. We should adopt that method forthwith.

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– This expenditure will be met from revenue. The subject of the use of national credit has already been dilated upon in the budget speech. The national credit has been used in moderation, and the Government will continue to use it as required, with discretion.

Clause agreed to.

Clause 4 agreed to.

Schedule.

Senator ALLAN MacDONALD:
Western Australia

.- The sum of £400 is allocated for equipment for the legation premises of the Australian Minister in China. Is any portion of this expenditure for effecting repairs necessitated by damage caused by enemy action?

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

.- This amount is being set aside for the purchase of furniture for use at the legation in China.

Senator ALLAN MacDONALD:
Western Australia

– Will the minister for the Interior (Senator Collings) give details of the vote of £25,000 under the estimates of the Department of the Interior in respect of Commonwealth offices and other buildings, architectural and engineering services?

Senator COLLINGS:
QueenslandMinister for the Interior · ALP

.- For security reasons, it is not desirable to give the information desired.

Senator HERBERT HAYS:
Tasmania

– I draw attention to the item, “ Expenditure under River Murray Waters Act 1915-11934- £10,000 under the control of the. .Department of the Interior. Is this a vote for the continuation of works now in existence, for new works or repairs, or for what other purpose?

Senator COLLINGS:
Minister for the Interior · Queensland · ALP

– Under the River Murray Waters Agreement, the Commonwealth Government is required to contribute, equally with the State governments of New South Wales, Victoria and South Australia to the cost of works carried out under the agreement. The programme submitted for the current financial year involves an estimated expenditure of £40,000, and the amount each contracting government will be required to make available is £10,000. The following are the details : -

Commonwealth Government’s proportion, onequarter share of estimated expenditure - £10T000.

Senator ALLAN MacDONALD:
Western Australia

– Under the heading of “War Service Homes Commission”, there appears the following item : - “ Expenditure under War Service Homes Act 1918-1941, for payment to the credit of the War Service Homes Trust Account - £25,000 “. Does this sum make provision for the building of any new homes, or make available further advances to returned soldier occupants, who have had increases in the family and require larger homes?

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

.- The amount provides for the extension of sewerage, &c. at the present homes.

Senator LECKIE:
Victoria

.- I direct attention to the item under the Department, of Civil Aviation, “Aeradio communication and navigation facilities; power generation and distribution plant; direct current and audio-frequency control lines; automatic switching equipment; aerodrome and air route lighting equipment - £726,300 “. Last year the amount expended was only £8-2,781. Over three-quarters of a million pounds seems a great deal to expend on civil aviation in the middle of a war. Will the Minister state whether the money is being spent for civil aviation in co-ordination with the Royal Australian Air Force? If not, how will it be used? Is this large increase due merely to the fact that some machinery has just arrived? Have these direct current and audio-frequency control lines to be imported, or are they now made in Australia? I am very concerned, because this amount appears in the schedule in connexion with civil aviation. Unless that branch is working in co-ordination with the Royal Australian Air Force, £726,300 seems a great deal of money to spend on civil aviation in present circumstances.

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– The Civil Aviation Department and the Royal Australian Air Force are working in close conjunction. This apparatus is imported largely under the lease-lend arrangement and is being used for the equipment of aeroplanes and landing grounds in the north of Australia.

Senator ALLAN MacDONALD:
Western Australia

– Under the heading, of “ Empire Air Services “, under the control of the Department of Civil Aviation, there are three references to the Singapore section of civil aviation. One is in connexion with aeradio communication and navigation facilities, &c, a total of £1,200, and another item is £1,700 for launches and equipment for flying-boat bases. In each of those cases the words “ Singapore section “ are added. There also appears an item of “£5,500 for buildings, works and sites including shore bases and marine facilities, fittings and furniture - Singapore section”. Is there any explanation of those items in that form?

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

.- This expenditure is for a section known as the Singapore section, and is for an Australian organization.

Senator Allan MacDonald:

– The name should be altered.

Senator KEANE:

– The honorable senator may be right, but the actual position is that it is the name of a section of an Australian service, operating in Australia.

Senator ALLAN MacDONALD:
Western Australia

– Under the Department of Commerce appears the item “ Lighthouse services - installation of equipment £1,900”. Does this proposed vote make any provision for the extension of the aeradio beams which are very essential to shipping, especially on our eastern and western coast lines?

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

.- This vote is for equipment for the lighthouse service. There is, I am informed, a very small amount for equipment for this year.

Senator GIBSON:
Victoria

.- Will the Postmaster-General (Senator Ashley) make a close investigation of what is known as the selective system of ringing in connexion with the telephone service? I know how difficult it is at present to get a telephone service installed, but I should like the Minister to see if anything can be done in connexion with the selective system, which enables ten subscribers to use one pair of lines. Any one of them may be rung without the other nine knowing, although the others can listen in if they lift the receiver. By this system, ten subscribers can .be served with only 20 miles of wire, whereas if they had a separate service for each one, 200 miles of wire would be required. The system has been adopted in some countries. I hope the PostmasterGeneral will .investigate the system in order to see whether some people, who cannot at present be connected, may receive a telephone service.

Senator ASHLEY:
Postmaster-General · New South Wales · ALP

– I shall have inquiries m>ade and supply the honorable senator with the information later.

Senator ALLAN MacDONALD:
Western Australia

– Can the Minister for the Interior (.Senator Collings) say whether the sum of £218,000 allocated to the trans-Australian railway includes provision for the air-conditioning of the passenger coaches on that line?

Senator COLLINGS:
Minister for the Interior · Queensland · ALP

– For security reasons, it is not desirable to disclose the information.

Senator ALLAN MacDONALD:
Western Australia

– The provision of £816,000 for trunk-line services represents a huge increase over the sum allocated for this purpose last year. Can the Postmaster-General (Senator Ashley) say whether trunk lines, particularly those which carry the Australian Broadcasting Commission news sessions, are to be duplicated ?

Senator ASHLEY:
New South WalesPostmasterGeneral · ALP

– Under this item is provided the whole of the additional equipment and line plant associated with the trunk-line network of Australia, including a large number of carrier-wave systems required to meet the urgent requirements of the fighting services. It also covers the proportion chargeable to capital of reconstruction jobs rendered necessary owing to trunk-line routes becoming dangerous or needing rearrangement in order to provide .adequate service.

Senator LECKIE:
Victoria

.- Provision is made for the appropriation of £50,001 for subscription to the share capital of Amalgamated “Wireless (Australasia) Limited. I should like to know the purpose of the proposed vote. Will the Commonwealth Government still he as helpless as it is at present in its endeavours to control effectively the affairs of that organization? I presume that the company also will subscribe a similar sum, and I should like to know if the control will be affected in any way?

Senator ASHLEY:
New South WalesPostmasterGeneral · ALP

– The vote referred to by the honorable senator represents the last payment of 2s. a share on. shares held by the Government.

Schedule agreed to.

Preamble and Title agreed to.

Bill reported without amendment; report adopted.

Bill read a third time.

page 1127

STATES GRANTS BILL 1942

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

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

Second Reading

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

.- I move -

That the bill, be now read a second time.

The purpose of this bill is to implement the recommendations contained in the ninth report of the Commonwealth Grants Commission which was tabled in the Senate on the 2nd September, and to provide for the payment during the current financial year of special grants totalling £2,175,000 to the States of South Australia, Western Australia and Tasmania.

The Commonwealth Grants Commission was established in 1933 to inquire into and. report upon applications from States for financial assistance under section 9.6 of the Constitution. The recommendations of the commission for the last eight years have been approved by the Government and adopted by Parliament. The grants which the commis sion has recommended for payment in the year 1942-43 compare with- those paid during 1941-42 as follows: -

I point out that the actual grants assessed and recommended by the commission for South Australia and Western Australia were £1,220,000 and £970,000, respectively. The commission recommended, however, that of these amounts, £670,000 in the case of .South Australia, and £170,000 in the case of Western Australia, be deferred until next financial year. Thus actual payments during this financial year will be £S00,000, including £250,000 deferred from 1941-42,. to South Australia, and £800,000 to Western Australia. Before explaining the reasons for these deferred payments it is necessary to mention very .briefly the principles followed by the commission. In this year’s report the commission reiterates the principles followed in the past. The commission stated -

The special grants which we recommend are based on the principle of financial needs, and are determined by the amount of help found necessary to make it possible for a claimant State, by reasonable effort, to function at a standard not appreciably below that of other States. Our methods of assessing needs are based fundamentally on comparisons between the financial position of the States, and depend, too, on the financial relations of the Commonwealth and the States.

The commission recognizes that war policy has affected State budgets unequally, and has thus created further problems in assessing special grants. The commission makes it clear that it does not consider it its function to recommend grants specifically designed to compensate a State for adverse effects of Commonwealth war policy. If, as a result of that policy, a drift occurred in the financial position of one or more of the claimant States, the commission would bring the matter immediately to the notice of this Government. Insofar as Commonwealth war policy and war finance are reflected in the budgets of the States, however, they are taken into account by the commission’s methods of assessment. In its present report, the commission states that circumstances have not yet arisen which render its methods invalid or impracticable for dealing with grants based upon the financial year 1940-41. The commission therefore decided substantially to maintain for this year its existing basis of assessment. It is important to remember that the commission’s assessments are based on the budgetary results of the States for 1940-41, the latest year for which complete information was available. The commission takes into consideration special conditions obtaining in years following that on which the grants are assessed. Thus in past years it has sometimes, by means of deferred payments or advances, made allowance for any obvious disparity between the normal calculated grants and the current needs of the States.

This year the commission recommends that £670,000 of the grant of £1,220,000 assessed for South Australia be deferred for payment in 1943-44 because the assessed grant of £1,220,000 is considered excessive in relation to South Australia’s financial needs in 1942-43. Thus the payment recommended for South Australia in 1942-43 is £550,000, which, with £250,000 deferred from last year, makes a total payment of £800,000. In 1941-42, the year following that on which the grant for this year was assessed, South Australia enjoyed- a surplus of £1,287,000, which included the special grant of £1,150,000 for that year. This improvement in South Australia’s budget in 1941-42 was due to increased revenue from railways, income tax and succession duties. In 1942-43, under the uniform taxation plan. South Australia will receive £45S,000 less than the income tax collections in 1941-42, whilst appreciable reductions of succession duties and racing taxation may be expected. Owing to Commonwealth war expenditure, the improvement in railway revenue occurred mainly in the last four months of 1941-42, and may still continue, whilst returns from primary production will be favorably affected by the increase of 15 per cent, of the price of wool. After taking these factors into consideration, the commission estimates that the payment of £800,000 should be sufficient to meet South Australia’s financial needs in 1942-43.

The commission also considers that the assessed grant of £970,000 to Western Australia exceeds that State’s current needs and recommends that payment of £170,000 be deferred until next year. In 1941- 42, Western Australia enjoyed a surplus of £1,768, after receiving a grant of £630,000. The outlook for 1942-43 is conditioned by such factors as Commonwealth war expenditure, compensation under the uniform income tax plan, the trend of railway revenue and expenditure, diversion of man-power from goldmining to war industries, the prospects for primary production and the trend of costs. After considering all these factors, the commission is of the opinion that the payment of £800,000 should meet the financial needs of Western Australia in

1942- 43.

The commission recommends that the grant of £575,000 to Tasmania should be paid in full in 1942-43. In 1941-42 Tasmania had a surplus of £1,585, after taking into account the special grant of £520,000. In 1942-43 Tasmania will receive as compensation under the uniform tax plan £222,000 less than collections in 1941-42. Other important factors are the trend of costs, Commonwealth war expenditure and railway receipts and expenditure. Therefore prospects in 1942-43 do not warrant postponing payment of any portion of Tasmania’s special grant. The following statement shows the trend of net grants paid to States in recent years : -

I shall now give a brief explanation of the commission’s assessment for each State, with particular reference to the difference between the grants, paid in 1941-42 and those recommended for 3 942-43. In assessing the grants, the commission’s first step is to calculate the norma] standard to which the claimant States should he raised. The normal standard is arrived at by averaging the adjusted budgetary results of the nonclaimant States. Ever since the commission’s inception in 1933, the budgets of the non-claimant States have shown a deficit standard, but for 1940-41 there was a surplus standard of ls. Id. per head. Since this surplus standard arose from conditions largely brought about by the stimulus of war expenditure in the non-claimant States, the commission ‘does not consider it a reasonable standard for its purpose. It therefore decided to adopt a balanced budget standard as the normal standard.

Honorable senators will note that the grant of £1,220,000 assessed for South Australia is £180,000 less than that assessed for 1941-42, although, as I have already mentioned, payment of £250,000 of that amount was deferred until this financial year. Referring to the actual adjustments made by the commission, the amount necessary to bring South Australia’s comparable deficit to the normal standard was £99,000 more than that required last year, but this was more than offset by a decline in that State’s taxation collections in 1940-41, which, when related to the position in other States, led to a reduction from £455,000 to £152,000 in the adjustment for relative severity of taxation.

The grant of £970,000 assessed for Western Australia is £340,000 more than that assessed and paid in 1941-42. The main factor causing this increase concerns the relative severity of taxation adjustment. Due largely to a decline of the relative taxable capacity of Western Australia, combined with a slight increase of that State’s taxation collections in 194.0-41, there was an increase of £266,000 in the adjustment for relative severity of taxation. In addition, there was a small increase of the adjustment designed to bring the State’s comparable deficit to the normal standards, whilst no penalty was imposed this year on account of “Road Debt. Charges “. On the other hand, an increase of Western Australia’s net expenditure per head on certain social services in 1940-41 resulted in an additional amount of £29,000 being deducted from the social services adjustment.

The grant of £575,000 to Tasmania is £55,000 more than the grant assessed and paid in 1941-42. This is due largely to an increase of £147,000 in the adjustment necessary to bring Tasmania’s comparable deficit to the normal standard, whilst in addition, the penalty for road debt charges was not imposed this year. On the other hand, there was a decrease of £126,000 in the adjustment for relative severity of taxation. This was due to a decline of taxation collections accompanied by an improvement of the relative taxable capacity of that State.

The Government is satisfied that the principles and methods of assessment followed by the commission produce reasonable results, and that the grants recommended for payment to South Australia, Western Australia and Tasmania are sufficient to meet the financial needs of those States in 1942-43. As in past years, the Government has, therefore, decided to adopt the recommendations of the commission, and I commend the bill to honorable senators. I take this opportunity to express the Government’s appreciation of the splendid work done by Sir Frederic Eggleston, who was chairman of the commission from its establishment in 1933 until November of last year, when his appointment as Australian Minister to China necessitates his resignation. The Government has been fortunate in securing the services of Professor R. O. Mills as chairman of the commission since Sir Frederic’s resignation.

Senator McLEAY:
Leader of the Opposition · South Australia

– I support the bill.

Senator DARCEY:
Tasmania

– By some unfortunate error the Treasurer of Tasmania, Mr. Dwyer-Gray, was informed that the grant to Tasmania this year would be £800,000, whereas, in fact, it is proposed to grant to that State only £575,000. The Treasurer of Tasmania was complimented hy the Commonwealth Grants Commission on the way in which he had prepared the case for that State. It can be said that the State Treasurers have tried to keep their requirements as low as possible. I know that Mr. DwyerGray is greatly concerned about the raising of money. Although Tasmania is to receive £55,000 more than was granted last year, that State is still badly situated financially. During the last financial year the population of Victoria has increased by 31,000, that of South Australia by 25,000, and that of New South “Wales by 20,000. Tasmania, on the other hand, has suffered a loss of 3,000 of its people. The grant to South Australia has been reduced from £1,150,000 to £800,000 this year. When we consider all the war work carried out in that State, necessitating considerable expenditure by the Commonwealth and a large increase of population, that reduction is justified. Indeed, the whole of the £800,000 could very well be relinquished by South Australia this year and given to Tasmania, whose railways axe conducted at a loss and are in a bad. state of repair because of lack of money to keep them in proper order. Tasmania is the least industrialized State of the Commonwealth. When war broke out Tasmania did not expect large sums of money to be expended within its territory, because it was only logical that the work should be performed in those States which could turn out the materials required most quickly. However, the war has been in progress for three years, and Tasmania is still waiting to be given its share of waT expenditure. That State has the greatest variety of metals of any country in the world, and it has also the finest hydro-electric power plant in Australia. Tasmania can supply industrial power more cheaply than can any other State.

Senator Allan MacDonald:

– Tasmania is not the least industrialized State.

Senator DARCEY:

– That is the view expressed by the commission. Because of its dearth of secondary industries, Tasmania’s population is being attracted to tile mainland States. That great handicap to the island State should be recognized by the Commonwealth Grants Commission. Before the war, Tasmania exported annually about 5,000,000 bushels of apples, but that State’s export trade in apples has practically disappeared, with the result that many thousands of bushels of apples are lying on the ground. Moreover, Tasmania has lost its tourist traffic, which was a valuable source of revenue. These facts should have been considered when the allocation to that State was being considered. In ^pre-war days, Tasmania received a considerable sum in respect of the patrol tax, but that source of revenue also has been lost. Public works are being held up and Tasmania’s roads are getting into a state of disrepair. The plight of Tasmania is such that a grant of £575,000 is not sufficient.

Senator ALLAN MacDONALD:
Western Australia

– Senator Darcey has made a number of misstatements, among them being his allegation that Tasmania is the least industrialized State of the Commonwealth. Tasmania has not been in that position since 1930. Apparently, the honorable senator did not listen to the figures which I cited in this chamber yesterday. A study of appendix S on page S4 of the ninth report of the Commonwealth Grants Commission will show that in 1930-31, the number of factory employees to every 1,000 of the population was 39 in Tasmania and only 341 in Western Australia. That relative position continued until 1940-41, when the respective figures were 67 and 49.

I support the bill and am pleased that Western Australia’s grant has been “increased. I am aware that that State will not get the whole of the money assessed this year, as £170,000 is to be withheld until next year. In other words, a system of deferred pay will be put into operation in respect of that State. I do not cavil at that, because the commission has given its reason. The increase of the grant from £630,000 last year to £800,000 this year is a matter for gratification. Yesterday, I gave some figures relating to the industrialization of Western Australia. To-day, I wish to deal with a factor which has greatly prejudiced the progress of -that State. I refer to the increasing interest bill, which is choking the development of all the States, but none so much as Western Australia. The position of Western Australia in respect of high interest rates and sinking fund and interest charges on State debts is worse than that of the other States, as is shown in the table on page 98 of the commission’s report. A study of appendix 20 shows that in 1940-41, the per capita charge in respect of interest, sinking fund and exchange charges was £61s. 9d. in New South Wales, £4 10s. 3d. in Victoria, £6 15s.8d. in Queensland, £818s.1d. in South Australia, £5 10s.1d. inTasmania, and £9 15s. 9d. in Western Australia. This has been going on for the last 40 years. It is obvious that such a burden must retard the progress of a State like Western Australia, whichhas a population of fewer than 500,000 people. This expenditure now amounts to £4,500,000 a year, and is constantly increasing. I had hoped that the Government, instead of adopting its system of uniform taxation, would have been more inclined to take over the interest, sinking fund and exchange charges, on the debts of all the States. It must be remembered that the State Treasurers, unlike the Commonwealth Treasurer, cannot rely upon the aid of a central bank. In view of the present easy flow of money into the Commonwealth coffers, at low rates of interest, the Commonwealth is in a much better position than the States to meet these charges. It is not to be wondered at, therefore, that some of the States are obliged to apply to the Commonwealth for special financial assistance. They have not the banking facilities to enable them to fund these debts. I support the bill, and express the hope that the budgetary position in Western Australia, at any rate, will not further deteriorate.

Question resolved in the affirmative.

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

page 1131

LOAN BILL (No. 3) 1942

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

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

Secondreading.

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

.- I move -

That the bill be now read a second time.

The purpose of the hill is to obtain loan appropriation of £200,000,000 to finance’ war expenditure from loan fund in 1942-43, and to authorize the raising of an equivalent amount of loan moneys to finance that expenditure. The subject of our war expenditure for the present year has been dealt with very fully in the budget and the subsequent debates, and I do not now propose to traverse the ‘matter again at any length. This is the largest loan bill so far submitted to this Parliament, and it reflects the tremendous increase of Commonwealth expenditure which has been brought about by the war. War expenditure from loan funds for 1942-43 is estimated at £300,000,000. The balance of loan appropriation available at the 30th June, 1942,. was £86,000,000, and that amount plus the provision in the present bill and revenue appropriation should carry us to May next. Before that date a further loan appropriation will be sought from Parliament.

In commending this measure to the Senate, I take the opportunity to refer to statements made by members of the House of Representatives to the effect that our loans could never be repaid. Honorable senators have expressed resentment of that statement. The answer supplied this afternoon to one honorable senator who asked a question on the matter did not touch the aspect with which I now propose to deal. I say, definitely, that no party in the history of this Parliament has repudiated its obligations in respect of loans. The Labour Government which was in office in this Parliament in 1929-31 experienced the greatest financial and economic Armageddon that has yet confronted primary and secondary industries in this country. Honorable senators will recall that that Government endeavoured to raise a loan of £18,000,000 under a fiduciary issue ; but at no time did that or any other Government suggest that it would not pay interest on loans. On the eve of launching a loan, whether it be small or large, it is quite wrong for any member of any political party in this country to state that the Government will repudiate its loan obligations. Such a statement is to be regretted, particularly at present, when we are asking the people to subscribe to loans in order to finance the activities of the Commonwealth.

Senator McLEAY:
Leader of the Opposition · South Australia

– In supporting the bill, I congratulate the Minister for Trade and Customs (Senator Keane) on the statement he has just made with reference to the honouring of interest payments. I heartily endorse his remarks. Any member who states that loans will not be repaid does a serious disservice to Australia. The offence is aggravated when such a statement is made by Ministers and independent members. I hope that we have heard the last of statements of that kind.

Senator SAMPSON:
Tasmania

– I take this opportunity to say a few words with regard to war expenditure and our preparations for defence generally. The Minister for External Territories (Senator Fraser) stated in a debate lastweek that I said that this country was not prepared for war. I did say, as I have been saying for the last twenty years, that the reason why our expenditure on defence is so tremendous is that we have been so wretchedly unprepared and have all failed in our duty to our country. The fact that we have to do things in a desperate hurry in a time of dire peril, when the survival of our country is at stake, is bound to entail waste, hurry, muddle and extravagance. It cannot be helped, and that is why in terms of money the expenditure is so vast. It is useless, however, going over what has brought all this about since the war of 1914-18, but if, with the help of Providence, we get through this jam, we can take warning from what happened then, and think about some of the things that we did at the end of the last war, so as to avoid repeating those deeds of folly and thoughtlessness. To find what started the whole trouble, we can go back to 1923, when limitation of armaments was agreed to under the Washington Treaty, as the result of which we stripped and sank outside Sydney Heads the battle cruiser H.M.A.S. Australia, the only capital ship we have ever possessed, as a gesture of out sincere intention to disarm. We cut down our defence expenditure to the bone from then onwards, and in fact earlier. We were war weary, and quite a number of Us seemed to think, or said, that there would be no more wars. We placed our reliance on, and our whole security and defence in the hands of, the League of Nations. That dream was rudely shattered as the years went by, because it was an ineffective and impotent instrument for preventing what has come upon us. I think that the Minister for External Territories said that the Labour party had clone a great many things during the eighteen months or so that it had been in power since the Great War, but if I remember aright the Scullin Government came into power on the 22nd October, 1929, and finished its term and handed over the reins of government to the late Mr. Lyons on the 6th January, 1932. After the Scullin Government came into power in October 1929, it was not very long before, in my opinion, by an act of criminal folly it suspended Part XII. of the Defence Act, which provided for compulsory military citizen training. After the worst of the depression was over the first Lyons Government through timidity and vacillation refrained from undoing the harm that bad been done in that way by the Scullin Government. I do not want to take credit for anything I did, but ever since I came back to Australia from Africa over 30 years ago the defence of this country has always been at the back of my mind. I had lived in a country with a very sparse white population and a tremendous native population, portion of which consisted of very virile and warlike tribes. I also had at the back of my mind what we could expect from the far north. It was inevitable, and I said so as far back as 1907 or 1908. I could see that if we were going to propound a White Australia policy, in which I have always most heartily believed, we as a people would have to do what was necessary to increase our population and prepare for the defence of our country, because in the last analysis our defence depends upon ourselves. As the years went on, time and time again in this chamber, in the party room, and privately in consultation with the Prime Minister of the day, I urged the reenactment of Part XII. of the Defence Act, which had been suspended. I advised the Prime Minister to go baldheaded for that policy. I said it was right and proper that any one who wanted to enjoy the rights of citizenship should undertake the corresponding responsibilities, because it was the duty of every able-bodied man to prepare himself for the defence of his country, and that necessitates training. I told the then Minister for Defence, Sir Archdale Parkhill, that any minister of defence or any government that sent young fellows into battle untrained deserved to be hanged as high as Hainan. I am still of that opinion to-day. The pity of it is that through our neglect in that direction we have in this war sent quite a number of men into battle improperly trained. There are no braver troops in the world than Australians, as I know from personal experience, but if they are untrained the braver they are the more bloody will be their massacre and slaughter. So it comes down to this, that if we indulge, as has been done time and again since this war commenced, in recriminations and blame as to who is responsible for the pass we were in when the war came upon us, we shall not get anywhere. It. is a war that some of us saw coming as far back as 1931, when Japan flouted the Lyttleton convention, and started in on the rape of Manchuria, and the League of Nations was unable to bring it to book. “We saw again, when the Italians went into Abyssinia, that the league was powerless. Through a policy of letting things slide, we are faced with our present difficulties. I most fervently hope that, when we have come through our troubles, as I believe we shall if we are true to ourselves and by the help of Divine Providence, we shall profit by the lessons of the past. “War is a business in which one must serve a long apprenticeship in time of peace. All one’s peace training must be training for war, otherwise it will be worthless and will not stand up to the test when the real thing is faced. Touching upon that matter, I should like to say a few words about the position in which we find ourselves to-day in regard to Australia’s Army, or perhaps I should say Australia’s two armies. We have a volunteer army, the Australian Imperial Force, enlisted for service anywhere; we also have a compulsorily enlisted army for service within Australia and Australian territories only. On the ground of economy alone, the overlapping in administration caused by this duplication should be eliminated, and the two forces welded into one, serving under the same conditions and under a single command. Until that is done, we shall not get the best results from the material that is available. The task that confronts us is great and it is common knowledge that our man-power is not so adequate as we should like it to be. I will not presume to lecture to the Senate about war and the principles of war, but for many years after the ‘Great War I served in the Australian Military Forces as a citizen soldier. For nine years I wa3 a battalion commander in Tasmania, and had I been on the mainland where there would have been more scope for promotion, probably I should have been in charge of a brigade, and I should not have had to relinquish my command when I did at the age of 4S. By studying and lecturing, one is able to encourage young men to study also. Ever since the war began, we have been faced with this terrible position : Our hastily trained enthusiastic amateurs have been put up against professional soldiers, trained in actual warfare. The bloody conflict, in Spain was a training ground for the Germans and Italians, and they made the most of the opportunity. Both those nations had large numbers of men in Spain, particularly in the air force and in armoured divisions. Those men learned many lessons. Similarly, the Japanese gained valuable battle experience in China. Enthusiastic and brave as our men were, they were not masters of their weapons, nor sufficiently versed in the technique of war, and they had to take dreadful punishment. That is one reason why the present war will be a long and bloody struggle. The voluntary system is always unfair and unjust. I receive a great deal of correspondence from men. in both the Australian Imperial Force and Australian Military Forces, and it is obvious that the feeling to-day between the two forces is not all that it should be. Until they are welded into one great fighting organization, we shall not get the best results from our Army

Another point that gives me a great deal of concern at present is that the great bulk of our forces to-day are here in Australia waiting for something to happen; waiting for action, perhaps invasion. In these circumstances, the greatest care must be taken to see that their morale and fighting ability do not deteriorate. The maintenance of a keen fighting spirit is a difficult problem in such circumstances. War is as old as man, and the principles of war, whether it be fought with stones, clubs, bows and arrows, war chariots or missiles propelled by gunpowder, are unchangeable. They are the same to-day as they were when Joshua fought the battles of the Lord in Palestine, and the Greeks, Romans, Carthaginians and Egyptians were engaged in their respective struggles. If a commander does not observe those principles, he will not succeed. Wars are lost by losing battles; battles are lost by getting there last with the fewest men and weapons; getting there last with the fewest men and weapons is the result of had planning, and bad planning is the result of attempting to muddle through without regard to the fundamental principles of Avar. Waging total war in violation of the principles of war has so far brought defeat and disaster to the democracies. Every occupation engaged in by man has its basic principles. The basic principles of war are just as important as the basic principles of carpentry. The basic principles of war are the strategic tools which have been used by all great military leaders in history since warfare has been carried on by man. Modern weapons of war such as tanks and aeroplanes have not changed the essential nature of the principles of war any more than woodworking machinery lias changed the essential nature of the adze, the saw or the square, which are the basic tools of carpentry. The combined use of all of the principles of war in skilled coordination makes for military success, whilst the use of any one of those principles without regard to the others makes for military failure. What we may call the basic principle is that of the offensive, which is obviously the final means by which wars are won. This principle has steadily and consistently been violated by the military forces of the democracies throughout the course of the present war. They have substituted for it the fatal static defensive, which is either quick or slow suicide, according to the circumstances.

The offensive, alone, may result in disaster if employed without due regard to the second principle of war, which is that of security. This is the dynamic form of the defensive and is illustrated best by the protection which an army affords to its flanks and rear, and to its air or vertical flank, when attacking. The principle of security was violated by the British in Norway, where it did not have sufficient air protection, and again in Greece. The principle of security is well illustrated in the sentence, “A strong offensive is the best defence “. The skilled commander determines a proper balance between security and the offensive by using the third principle of war, that of the economy of force. This, in essence, is the- requirement of the expenditure of minimum force upon minor objectives., in order to conserve maximum force for the major objective. This principle has been well employed by the Germans, who held minor or future objectives by a minimum of force and a maximum of propaganda and threat whilst they concentrated their main force on the chief objective for the time being. The Germans successively seized Poland, Denmark and Norway by the use of that principle. Whilst they did that, they held Great Britain, Holland, Belgium and France with a minimum force. The old rule of “ divide and conquer “ is a terse expression which illustrates at least one of the elements of that principle.

In order to determine which is the minor and which is the major task, the wise astute commander uses a fourth principle, that of the main objective, of which he must never lose sight. The main objective of a campaign is not necessarily the first objective. The first is usually the opponent who is most dangerous at the moment. The main objective may be the opponent who is most distant. He could be isolated and conquered by overcoming .each ‘barrier standing in the way. The principle of the main objective has been illustrated over and over again by Germany’s mastery of Austria, Czechoslovakia, Poland, Denmark, Norway, Holland, Belgium and France, before attempting an all-out offensive against its main objective, which was, and is, Great Britain. What may eventually prove to have been the fatal error of Germany is its switch from its main objective, ‘when it suddenly attacked Russia. The adoption of this principle appears to be ““Japan’s method in Asia. It is striving to achieve all minor objectives in the Pacific and on the Chinese mainland before- .turning its full force to what I believe to be its main objective in the north. In attacking either preliminary or main objectives, a great commander plans to have superiority of force at the point of attack. He achieves this by the successful use of the principle of concentration of forces, which has been demonstrated over and over again by Field Marshal Rommel in the Libyan Desert. It simply means that we must get immediately to our most important objective without frittering away any strength on minor objectives. Without observing this principle, we suffer dispersion of strength which is usually the result of attempts to conduct war by compromised decisions of a committee or council, instead of by the judgment of one skilled military commander. This waste of strength is possibly the greatest fault of the democracies to-day, and it is illustrated -by their attempts to be equally strong at all points, which are most important strategically. A nation cannot be strong at all points, especially when its territory is a continent as large as Australia. There have been flagrant and fatal examples of the violation of this principle during this war. In 1940, a glaring instance occurred during the battle for France. The French dispersed their power between the Mediterranean Sea and the Italian Alps, and left themselves with only about 40 per cent, of their effective aeroplanes with which to oppose the German Air Force. The Germans adopted the principle of concentrationand confronted 40 per cent, of the effective French Air Force with SO per cent, of their own air power. The British dispersed their Air Force on distant missions far from the battlefront, and retained a metropolitan force in Britain itself. The fault is an inability to determine the most important strategic place for concentration accompanied by a violation of the principle of economy of force. Unfortunately, it seems to *be an inherent fault of the allied forces because of their habitual violation of another great principle of -war, namely, the principle of co-operation. Napoleon said, “ Give me allies to fight and I will give you victory “. It is that lack of co-operation between the allies which endangers all the allied forces. The truth was illustrated in 1940 by the refusal of Holland and Belgium to hold joint staff conferences with the British and French staffs. They did not think of holding such conferences until the Germans were sweeping over their borders. It was illustrated also in Burma and in the Netherlands East Indies. But cooperation with allies is only one phase of co-operation; there must be co-operation between the branches of the armed forces of each nation. That is what I want to see in this country; I want to see our two armies welded into one. How can we co-operate with our allies if we do not co-operate inside our own forces? There must be co-operation between the Navy, the Army, and the Air Force. I regard the disaster at Pearl Harbour as a classic example of the failure of the armed forces of one country to cooperate ; there was a lack of co-operation between its air and sea forces. The disaster at Pearl Harbour shows the penalty for violating the principle of co-operation in war. That leads us to another principle. There cannot be cooperation without unity of command. In the present war this means a -unified general staff for all the United Nations, plus a greater general staff in each national force to co-ordinate their air, sea and land forces under one command. Without unity of command a nation will not get anywhere in war. Lack of this unity is one of the greatest dangers confronting us to-day. We are in danger of failing to achieve an effective degree of unity of command in relation to the United Nations and in our own armed forces until perhaps further disasters prove the necessity for it. Without unity of command and swift decisions the great advantage of the principle of surprise, which is another of the great principles of war, cannot be adequately exploited. We saw that principle successfully used by the German commander when a surprise attack was made through the Ardennes in 1940. The French High Command said that it was impossible to bring armoured forces through that territory, and consequently it had only small numbers of second-line troops defending the line. The German surprise attack was a complete success. We saw the value of surprise attack also when the Japanese attacked Pearl Harbour without warning. The use of surprise in battle is the hall-mark of the truly skilled commander. The commander who permits himself to be surprised discloses military ineptitude. Such a commander is a “ dud “. Lastly, neither surprise nor any other principle of war can be used successfully unless there is recognition of the value of the principle of mobility, which is the ability to move troops, stores and equipment rapidly. In simple terms, mobility is the footwork of the prizefighter in the ring. By rapid footwork, heavier weight, and more formidable force applied at the right time in the right place, the enemy is overcome. The democracies in this war have violated this principle in their retention of static forces behind so-called impregnable Maginot lines. They have been content to stay in the one place; they have waited for the enemy; there has been no mobility. The violation of this principle is part and parcel of the violation of the principle of the offensive to which I referred earlier. Those are the nine principles of war. They are almost as old as the world, and have been practised by commanders for thousands of years. All the talk about modern equipment and new weapons has its value, but these principles still remain. Moreover, if an attempt be made to use one without the others, failure is practically inevitable. We should do well to ponder on the number of times these principles have been violated during the course of this war with disastrous ‘results. A knowledge of the names of these principles is not sufficient; knowledge of the methods by which they should be applied marks the commander who is skilled in achieving victory. That means that our commander, whoever he may be, must have served a long apprenticeship. He should have worked up through the ranks in order that he will have stored away all those lessons. At the same time, our commanders should not be too old. As one grows old, one’s mind becomes less receptive to new ideas. Our enemies have not hesitated to use young commanders. With one or two notable exceptions, the German commanders are much younger than ours. However, we are learning these lessons gradually. The great trouble with the democracies is that we must pay for such lessons in blood, tears and sweat, and the lives of gallant young men. In the brave days of peace, we buried our head like the ostrich. I trust that the leaders of the allied nations will bear in mind the lessons we should have learned as the result of our experience in the deadly struggle of 1914-18, which cost us millions of lives, and caused untold misery in Europe. To-day, we are paying for our neglect to apply those lessons, and Australia is paying its share of the cost of that foolish neglect.

Senator DARCEY:
Tasmania

– I am aware that enormous credits must be raised in order to finance the war. Honorable senators will notice that I do not use the word “ money “. I have said more than once that wars are not fought with money. I strongly protest against the way in which these credits are to be raised. The first financial bill introduced by the present Governmentwas for the purpose of raising £50,000,000 by the sale of inscribed stock, and its second financial bill was to raise £100,000,000 by the same method. Now, the Government has brought down this measure for the purpose of raising £200,000,000. That represents a total of £350,000,000. The Government has stared on more than one occasion that it has complete control of the financial system in this country. That is not so. It is quite true that the Government has prevented the private banks from buying war bonds, or advancing money to any person for the purpose of buying war bonds. However, any one who knows anything about the banking system knows that, previously, the banks advanced money for this purpose simply to their dummies. Therefore, this reform does not effect control of the private banks at all. Indeed, nothing could please the banks so much. It is impossible for the private banking system to carry the enormous cost of this war. Consequently, the private banks are willing to let the public buy war bonds at one end of the counter, for which the public pays cash, whilst they themselves, at the other end of the counter, are allowed to buy £350,000,000 worth of inscribed stock which carries the same rate of interest as war bonds by writing cheques. If the Government really controlled the financial system of Australia, it would not need to sell £350,000,000 worth of inscribed stock. That method of raising money was adopted by the Lyons, Menzies and Fadden Governments. At the same time, one would expect that the present Government, which went to the country pledged to effect monetary reform, would refuse to carry on with the same financial system. I maintain that this money can be raised through the Commonwealth Bank free of interest.

The PRESIDENT:

– The honorable senator is not in order in indulging in tedious repetition.

Senator DARCEY:

– Since I was elected to the Senate four years ago, I have spoken mainly upon the subject of finance. It is not my fault that I have failed to convince the conservative mind of honorable senators opposite of the defects of the present financial system. I again protest against the Government’s proposal to raise this money by the sale of inscribed stock. While the banks are prevented from buying bonds, they are allowed to buy inscribed stock, which carry interest at the same rate as bonds. On this subject, I quote the following press comments which were made by the late Mr. Ogilvie, when he was Premier of Tasmania, following a meeting of the Loan Council when Mr. Casey was Commonwealth Treasurer, and Mr. Stevens was Premier of New South Wales: -

” TWEEDLEDUM AND TWEEDLEDEE.”

Major Casey and Mr. Stevens.

Premier’sViews. “ The difference between Major Casey and Mr. Stevens is the difference between Tweedledum and Tweedledee,” stated the Premier (Mr. A. G. Ogilvie, K.C.) yesterday, commenting on the criticism of the federal Treasurer concern ing the attitude of the Premier of New South Wales at the recent conference of federal and State Ministers.

The Premier said that Major Casey had condemned Mr. Stevens for what he called “ his views on the monetary policy of the Commonwealth Government”. Major Casey and his Government stood for dictation to the States of Australia by the Commonwealth Bank Board. Mr. Stevens often talked of reforms in monetary policy, but had always voted with the “ inner group “ when it came to critical divisions, and by’ his actions had indicated on numerous occasions that he, too. was not opposed to the form of dictation carried out by the Commonwealth Bank Board through the Commonwealth Bank. Mr. Stevens had always talked one way and voted the other. “ My views,” said Mr. Ogilvie, “ are well known. So long as the bank board - an instrument created by the Parliament of Australia - is permitted to dictate the amount of loan accommodation available to the so-called selfgoverning communities constituting the Loan Council according to a cut-and-dried plan decided by the bank board before the Loan Council meets, the calling together of members of the council is merely an empty farce. All we can do, under the present system, is act the part of ‘ Yes-men ‘ to our money masters, the Commonwealth Bank Board.”

I have continually maintained that the Commonwealth Bank Board is in charge of our finances. Honorable senators opposite have repeatedly stated that the Commonwealth Bank is a central bank. I have refuted that statement over and over again. No central bank exists in Australia. When Sir Otto Niemeyer came to Australia, he found that his predecessor, Sir Ernest Harvey, had separated the savings department from the ordinary banking department of the Commonwealth Bank. He hoped thereby to get his ideas of central banking put into force in this country.

Senator Gibson:

– The Labour party brought Sir Otto Niemeyer to Australia.

Senator DARCEY:

– I am not concerned with that. I am concerned with his actions, and their detrimental effect on the economy of Australia. Sir Ernest Harvey said that he came out here to help the Commonwealth Bank Board to govern Australia financially, and he did so in the first instance by separating the Commonwealth Savings Bank from the ordinary business of the Commonwealth Bank. He said, “ It is not the function of a central bank to have a savings bank department”, but what right had he to come here and tell the people of Australia how their own bank should be carried on? However, he was successful, because there was in office at the time a governor of the bank, and also in power a government, I think the Bruce-Page Government, prepared to sell this country. I am very gravely concerned about how this money is to be raised. If the present system of finance continues, it will mean financial ruin for Australia. It was stated in the House of Representatives that bank loans are not repaid. That was a statement of fact. They are simply converted from time to time. Immediately after the present Prime Minister took office, a £70,000,000 conversion loan was put before the country. The Prime Minister said on .the platform of the Sydney Town Hall, “ I advise you people to convert your money into new bonds “, and they did so to the extent of almost 99 per cent. Of course, that loan was not paid off; the money was never in existence and it was a physical impossibility to pay it off. The only way we can pay interest is by borrowing more money from the banks. All money comes into existence by loans from the banks. How do they make it? How will they pay for this £200,000,000 worth of inscribed stock? Simply by signing a cheque in favour of the Treasury for that amount. They have never paid for any government bonds in their existence. We cannot help the fanners by means of a mortgage hank, because the banks have never created £1 of real wealth from the time they started, yet they own Australia through the rotten financial system that has been allowed to grow up, and honorable senators opposite have always supported that system. I have shown them how wrong it is, and how the -war could be financed by the use of national credit. The then right honorable member for Wilmot, the late Mr. Lyons, said on the hustings, “If my Government is returned I :shall appoint a royal commission to inquire into the banking systems of Australia with a view, if possible, to improving them”. Eighteen months afterwards he set up a royal commission. I had only been in the Senate a few weeks when I asked if it was tie intention of the Government to discuss the findings of its Royal Com- mission on Banking and Monetary Systems before the Christmas vacation. That was late in November, five years ago. The answer was, “ Yes but no further inquiry was made, because an inquiry would have proved that the financial system of Australia was entirely at variance with the findings of the royal commission. Economists have told us that people in Great Britain are able to buy war savings certificates or bonds, or leave their money in the banks. There is no bar in the Old Country to buying war bonds, and the banks are finding at least 80 per cent, of the war loans. Some weeks ago, when speaking on the budget, I mentioned the profits made under the British banking system, and stated that the five big banks paid dividends ranging from 14 to 18 per -cent., without disclosing their real profits. We in Australia have unfortunately inherited the British banking system, which is controlled by the Bank of England. It has gradually but surely brought about the financial enslavement of the British people. That system has been ^established here, and we are still suffering from it. The Treasurer (Mr. Chifley) told me that the Government had .the banks so controlled that their profits could not exceed 2.9 per cent. That statement is entirely wrong because the banks are still obtaining deposits at 2J per cent., multiplying the money almost as often as they like, and lending it out at 6 per cent. That is not controlling the private banks of Australia. Until the electors bring political pressure to bear upon their representatives in Parliament, I am afraid that nothing will be done to improve our financial position. It has not taken me four years in Parliament to discover that the worst managed business is the business of governing Australia. The function of the Opposition seems to be to oppose everything. Either Disraeli or Gladstone said that the duty of an opposition is to oppose, and that principle has been adopted in every so-called democratic parliament in the world, the idea being that debates will bring out the good and bad points of any measure, but I find that the greatest orator in the world cannot win a vote under the party system. I am not the only one who is pressing for financial reform. The fight is being carried on in the House of Commons just as I am carrying it on in this chamber, Mr. McGovern, the Labour member for Shottleston, said recently -

Wo exist for the purpose of bringing relief to humanity throughout the world, and for the end of disease, poverty, unemployment and war. That can only be done by changing those ghoulish interests, those bond-holding interests throughout the Empire which are using the bodies of men to defend their interests. We demand in this country and in the House that a recognition shall dawn in the minds, hearts and intelligences of human beings that the world is pressing forward, is gasping, is in dire need of that new order. Nature has given in abundance all the materials and resources that every human being needs, but they are held by a few to the exclusion of the many, in order that they shall trade and live a life of luxury and pomp upon the servitude of the masses abroad.

It cannot be denied that a considerable proportion of the loans which are now being raised ostensibly for the purpose of financing the wax, are being used to pay interest on previous loans. In fact some of the money is being used to pay the debts incurred during the last war. That proves that there is not sufficient money in. exdsten.ce to repay all these loans. The banks merely created credit out of nothing and charge the nation for its use 3$ per cent. I have made that statement over and over again in this chamber, and honorable senators opposite are still unable to prove that it is wrong. Why do I have to continue this fight year after year ? For the simple reason that we have had bankcontrolled governments in power. When the right honorable member for Kooyong was Prime Minister I asked him if be was prepared to use the national credit to finance the war, and he said, “Yes, to the limit of safety”. That was a safe answer because it did not mean anything. It was an evasion. I asked what the limit of safety was, and the right honorable gentleman said that he did not know. I say that the limit of safety is the productive capacity of the nation, which last year amounted to £950,000,000. When a loan is floated through the private banks no actual money reaches the Treasury. The banks have not got the money; they are- instruments for the creation of credit. According to Treasury returns, before the war started the thirteen private banks in this country held only £13,000,000 worth’ of notes, silver and copper. Yet in the first year of the war they bought £67,000,000 worth of inscribed stock and treasury-bills. This measure proposes not only to raise £200,000,000 by selling inscribed stock, but also authorizes the Government to issue treasury-bills. If the present financial policy continues, Australia will face disaster sooner or later. The Opposition professes to have a great fear of inflation, but how does it propose to bridge the gap of £200,000,000? Obviously it is impossible to bridge it solely by taxing the lower incomes. Since the war started we have already contracted debts amounting to £500,000,000. Nobody knows how long the war will last, but the general opinion seems to be that it will not end for three or four years. In fact it might go on for ten years. The Japanese say that they are prepared to continue the fight for 100 years if necessary. Yet we are continuing to place a heavy burden of income tax upon the people of this country, simply because the Government is not prepared to take the common-sense view of the situation and use national credit as it should be used. What was the use of a royal commission investigating our banking and monetary systems if the recommendations of that commission were to be ignored? If national credit were used there would be no need for heavy taxation at all. I can quote an eminent authority to support that contention. Recently, Professor Black, who is, perhaps, one of the greatest authorities in New South Wales on financial matters, said that there was no need for these heavy imposts, and that the people were being misled by the Government into buying war savings certificates. Had National Security Regulation 42a not been repealed by the Labour Government, Professor Black probably would have been put behind bars for making such a statement. That regulation was introduced by the Menzies Government for the sole purpose of silencing those who would criticize its administration. When the right honorable member for Darling Downs (Mr. Fadden) was Prime Minister I asked him, “How long is it the intention of your Government to raise the necessary war credits through the private banks at Si per cent, interest when the same accommodation could be obtained through the Commonwealth Bank interest free?” He treated the question as a joke, and said, “ Senator Darcey, if you can tell me where I can get money without paying interest on it I shall certainly do so “. The point was that I had not mentioned the word money, and I told him that the Government would not get money from the banks. Obviously he was just evading the issue as the right honorable member for Kooyong had done. When the war broke out the national debt of Australia was double the national debt of Great Britain at the outbreak of the war of 1914-18. It was fortunate for the people of Great Britain that the 4th August was a bank holiday. During the previous four days, many people who saw that it was inevitable that Great Britain would enter the conflict, drew from the Bank of England £10,000,000 in gold. No banking system in the world could stand that. The directors of the Bank of England went to the Government, wringing their hands, and asked it to save the situation. The result was that the Government closed the trading banks, including the Bank of England, for four days, and in the meantime legislation was passed empowering the Chancellor of the Exchequer to issue fiduciary notes to an unlimited amount. He still has that power. My authority for that statement is an ex-manager of the London and Westminster Bank. No government can carry on a war with a disorganized banking system, so the Government of Great Britain printed £350,000,000 worth of fiduciary notes, which were delivered to the banks free, and the situation was saved. But when war loans had to be raised, the private banks said that they would create the credits necessary to enable Britain to finance the war, and they did so. They created £6,000,000,000 worth of credit.

Senator Gibson:

– Does not Russia obtain its war loans from its own people?

Senator DARCEY:

– The honorable senator is drawing a red herring across the trail, but, I am prepared to discuss with him the Russian financial system and also that of Germany. The great banking firm which found the money required to start the Russian revolution received the right to finance Russia’s fiveyear plan. That plan was extended for a second and a third term, and finally the Russians, squeezed by the big financial interests, could not get any more credit abroad. Dr. Schacht, the manager of the Reichsbank, desired to finance the rearming of Germany in the orthodox way by means of loans, and the greater part of the money used to finance German war loans at that time came from the Bank of England. A few months before the present war, £50,000,000 was supplied to Hitler by the Bank of England, because it was feared that bolshevism would overrun Europe. It is well known that that is what caused the break between France and Great Britain. It has been said that the power of money can make and unmake governments, and that in the final analysis the destinies of the peoples of the world are in the hands of the banks. We are told to-day that the Commonwealth Government controls the Commonwealth Bank. But that bank has as much power as ever, and that is why the war loans are being raised by means of the issue of inscribed stock, instead of by using the national credit. Is it better to pay 3 per cent. interest on £500,000,000 when we could obtain the accommodation for nothing? Neither the sneers nor smiles of honorable senators opposite will alter facts.

I strongly protest against the increased taxes that have been imposed on the people. When this bill becomes law, inscribed stock to the amount of £350,000,000 will have been authorized since the commencement of the war. During the first five months of the term of office of the present Government, the Commonwealth went further into debt to the amount of £151,000,000, although it might have avoided that by using the national credit. The reason given for the Government’s action was that it had not a majority in this chamber. Yet, last week, the Senate challenged the Government on a trivial matter and the Government stood up to that challenge. I conclude with the hope that my four years’ work in this chamber has not been in vain; but I am afraid that it has. It seems impossible to penetrate the conservative minds of the majority of honorable senators. I stated on one occasion that incompetent and corrupt governments, calling themselves democratic, had brought Hitler and Mussolini into being.

The democratic form of government, as Abraham Lincoln said, means government of the people, by the people, and for the people. I regret that no political party asks any person who desires to nominate for a seat in Parliament whether he has been trained in the fundamental principles of democratic government.

Senator AYLETT:
Tasmania

.- I am in agreement with 90 per cent. of what Senator Darcey has said. The policy of borrowing that has been adopted by governments in the past is responsible for war and the destruction accompanying it. The time is rapidly approaching when, if we are to avoid a succession of wars, we must depart from the orthodox system of finance that has operated for centuries. Germany’s strength was built up by the use of borrowed money. The only reason why money is lent is that those who lend’ it want to make profits and earn interest. No money would be lent otherwise. I should not criticize this bill if the money was to be raised interest-free. Many Australians are freely offering their lives in the service of their country.

Senator McLeay:

-Would the honorable senator lend money interest free?

Senator AYLETT:

– Yes. if I had it to lend.I am not so fortunate in that respect as is the honorable senator and some of his colleagues.

Senator McLeay:

– How much of the £200,000,000 does the honorable senator think would be raised on an interest-free basis?

Senator AYLETT:

– The Government’s war effort would not cease even if the money were not raised. Wars are fought with materials and man-power, not with money. All that has gone into fighting this war, or any other war, has been materials and men. Regardless of the response of those who have money to the appeal of the Government, the war will be carried on. The position would be the same if honorable senators opposite were in office. In 1929, however, when thousands of people in this country were starving, there was no money available to provide work and food for them, because there was no profit to be gained by lending it. Those days have passed; we are now more enlightened. 1 am concerned that the policy of borrowing millions of pounds, and paying interest is piling up debts which will be a burden on future generations. The principal moneys borrowed will never be repaid, even though, as in the past, the interest may be paid. Even that interest has been paid only by adopting a policy of further borrowing. The burden of interest on the people is growing year by year.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– The national debt at the commencement of the war was less than it was some years ago.

Senator AYLETT:

– Even should the loan be a success, I am concerned to know whether the money will eventually get back into the hands of the private banks. My reading of statements issued from time to time by bank officials and retired bankers leads me to the conclusion that the private banks are not interested in assisting the Government’s war effort. In this connexion, I propose to read a circular which was sent to all banks when they were asked to co-operate in a plan for the rationalization of banking. The circular should interest honorable senators opposite who claim that the private banks are willing to co-operate with the Government, and that without their help the country would be ruined. The circular is as follows: -

page 1141

R ATIONALIZ ATION OF BANKING

All members are doubtless familiar with the proposals and the statements of the Minister for War Organization of Industry in respect of trading banks and trading bank officers.

It cannot be denied that he has adopted an attitude hostile to both, and each individual will need to make an effort to counteract the influence that we have sheltered in a. reserved occupation and avoided our duty to the nation in its hour of trial.

Facts and figures prove our loyalty and cooperation, and our recognition of the seriousness of the position. We do not agree that the remaining 30 per cent. of males on our staff between 18 and 60 years of age will provide a great addition to the man-power requirements of the Government. It is questionable whether “ amalgamated “ banks could carry on with the numbers of staff then to remain available, and it is quite definite that disorganization of business would occur with grave inconvenience to the public.

The Minister is already reported as having complained that “serious” inconvenience has been caused by the closing of some (a few) branches.

The Government has the power to call up all mento60 years of age. If this be done the banks may be forced to close more branches, but we consider the method now being employed, i.e., a special attack on one particular industry, without the desired result being obtained, is unjust.

The banks and bank officers arc an integral part of the make up of all towns and suburbs, and those likely to suffer the loss of perhaps several banks will realize the gaps that will be made in the lives of such communities.

The real position is well known to each member. There should not be any necessity to enlarge on the information already furnished, but we enclose a list of suggestions which may help you in deciding your plan of action. Each one of us must be an avenue for propaganda to make known our outlook on the matter with a view to seeing that the Government is made aware of the unreasonable attitude of one of its Ministers in attempting to foist on the public a plank of the party’s platform, under the guise of a war-time requirement.

If a lack of interest in the past has prevented you from doing anything to protect your job perhaps a personal motive may now impel you to realize that your future is in the balance-, not only yours, but that of your fellows, more particularly that very large percentage of our staff serving their country in the armed forces.

We are trying to do something for you. It is up to you to do something for yourself and the good of the community.

Use your own judgment, read between the lines, but do it now.

Accompanying the circular were the following suggestions: -

Suggestions

Possible approach to local press.

Approach prominent men, who may write or telegraph local member.

Discuss with customers, and other bank officers.

Re-read circulars (particularly general managers of 20th March and returned soldiers’ statement, 25th March) also March Banker.

Injustice of younger Commonwealth Bank officers being included in list of reserved occupations.

Assistance rendered by trading banks in development of the country.

Earliest trading bank established 1817, latest 1858.

Further points suggested as arguments against any scheme for the rationalization of banks were -

Affecting the Community.

Loss to country towns of bankers, their families and associations.

Deterioration of premises and effect on other property.

Restriction of services to customers and delay in receiving attention from reduced number of banks.

If only one or two banks are necessary the logical conclusion is that this will also apply to grocery, drapery, and all other types of business.

Affecting Bank Officers

Possible loss of employment.

Change of occupation, lower status, smaller privileges.

Loss of pension rights.

Doubts regarding re-employment of men who have enlisted.

This does not purpose to be a complete list as it is realized that members will have many other ideas of their own.

Those suggestions were circulated among all officers employed by the associated banks as material for use in combating the Government’s rationalization scheme. From what I have read, it is obvious that these officers, while being very much concerned about their own interests, are prepared to ignore national interests absolutely. To some degree an attempt has been made to intimidate employees by emphasizing the disadvantages which would result so far as they are concerned should any scheme of rationalization be implemented. In order to give some indication of what is meant by the expression “ to read between the lines “, which was used in this document, I shall quote the remarks made by some delegates at a conference of bank representatives, which was convened by the Minister forWar Organization of Industry (Mr. Dedman), in Melbourne on the 19th June last. At that conference delegates complained that the Minister was endeavouring to force a decision upon them within a fortnight, or three weeks, and that that period was insufficient to enable them to consider the proposal properly. However, the fact of the matter was that four months previously the Ministerhad asked the private banks for any suggestions they should like to make with regard to the Government’s rationalization proposal. They made no effort to respond to that invitation. Consequently, the Minister then indicated that he would be obliged to take action completely on his own initiative if the private banks failed to submit their views on the Government’s proposal within a fortnight. At that conference one delegate, who is secretary of the United Bank Officers Association of Queensland, stated -

With regard to Mr. Card’s remarks about the delay - I might mention that it is generally considered in Queensland that the greater the delay the better the position was getting all the time for our members in this direction. In the first instance, the Minister was giving the banks two weeks to complete what we knew to be an impossibility but if by some magic stroke of the pen it was possible to have been done in two weeks and the dosing down of a large number of banks, had come into effect, consider what the position would be at the present time, a large number of our members would already be out in this much despised labour corps.

By the lengthy delays the banks have closed practically very few branches, nobody is out in the labour corps and no disruption.

Another matter I have noticed in the press is that, I think Mr. Curtin mentioned it, nationalization is not a war-time measure, but could be dealt with in peace-time.

These are the patriots who claim that they are anxious to co-operate to the greatest possible degree in the war effort. I am a little worried over the prospect that the interests which these gentlemen serve might secure a stranglehold on the Government through war loans. Tie delegate continued -

The delay has been advantageous to us, and I do not think if there was delay of another six ‘months that this would be a disadvantage, if the banks were not closed. Whilst we cannot but accept the fact that a form of rationalization may be necessary, I do not think it should be our policy to drive the Minister or try to force him to hurry it on or to bring about a radical change.

The lesser the rationalization the lesser banks close, the lesser will be our responsibilities. I think we might look at it in that light.

Although the country is confronted with the greatest crisis in its history, these great patriots claim that the longer the delay in implementing the Government’s rationalization scheme the better it will be for themselves. Yet another delegate declared -

Whilst there is one man in the Commonwealth Bank under 35 years of age, I should say that rationalization is not put into effect in the best manner. If one section of the bunking industry is going to be protected, we, as custodians of the banking industry, should consider that the Minister is not sincere.

That speaker, therefore, considered that, whilst there is one man in the Commonwealth Bank under the age of 35, rationalization cannot properly be put into effect. In other words, he wants to see every man under the age of 35 in the Commonwealth Bank taken out before one man is taken out of the associated banks. I quote those few remarks, used by prominent gentlemen who represent the interests of the banks and not of the bank officials, to show that there is no co operation by the associated banks with the Government in the successful prosecution of the war. I am afraid that if this inscribed stock is taken up, and the associated banks have the power to charge interest, we shall ‘simply come out of one war and go head first into another. Owing to lack of co-operation and the grip that the associated banks have had and wish to retain, and their merciless treatment of the people, it is the responsibility of whatever government is in office to see that the Commonwealth Bank functions so as to control the whole of the banking institutions, and all the credit required for the development of the country, the prosecution of the war, or for any other necessary purpose. The most vital factor in the nation’s welfare is the token which is a go-between between production and consumption, which is described as money and which controls production, the quantity that can be consumed, and the standard at which the nation should live. Yet the money is in the hands of private enterprise and not, as it should be, in the hands of the Government, which is supposed to control the destinies of the country. At present it is still in the bands of private individuals. That is why I say that if this loan were not fully subscribed, it would not impede the war effort. The Government would use its powers for the successful prosecution of the war, and the defence of Australia would be carried on just the same, because we would find some token as a go-between. Whether the associated banks, which operate only for profits, agree with us or not, or try to restrict us, they will not impede the war effort. They need not think for one moment, nor need honorable senators on the other side ‘believe, that in a time of war we should allow any private section of the community to bring Australia down to the condition which it reached between 1929 and 1934. That state of affairs was definitely brought about by private vested interests, which controlled the private banking institutions, not only of Australia, but also of all other countries.

Question resolved in the affirmative.

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

page 1144

PAY-ROLL TAX ASSESSMENT BILL 1942

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

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

Second Reading

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

.- I move -

That the bill be now read a second time.

The Pay-roll Tax Assessment Act became law in May, 1941. Experience of the working of the act over more than a yearhas shown that some changes in the law are desirable. In general, the scheme has operated very well, and no departure from the broad principles of the act is contemplated. It is possible, however, to liberalize the provisions of the act to some extent, to simplify the making of returns, and to dispose of certain administrative problems. These are the objects of the present bill. I remind honorable senators that under the act every person who pays wages in excess of £20 per week must register as an employer for the purposes of the act, and must furnish monthly returns of wages paid. From the wages shown in each monthly return, an exemption calculated at the rate of £20 per week is deductible. Persons who are employers for a full year, and who pay less than £1,040 in wages during the year, are entitled at the end of the year to a refund or credit of any tax paid by them during the year, i.e., the tax in respect of months in which they paid wages in excess of £20 per week. It has been found that the calculation of the statutory exemption on a weekly basis does not operate evenly over the whole field of taxpayers. In cases where the monthly pay-roll regularly exceeds £20 per week there is no difficulty; the deduction at the rate of £20 per week is regularly taken, and in the course of a year, the total exemption so allowed is slightly over £1,040. The position is different, however, where the pay-roll falls below an amount calculated at £20 per week in one or more months during the year. If that happens the exemption for the month is limited to the amount of the wages and the total general exemption for the year will consequently be less than £1,040. The amount of the exemption so lostby employers with fluctuating pay-rolls, as compared with employers with regular pay-rolls, can be substantial. For example, seasonal employers often pay out more than £1,040 in wages in the course of two or three months, but under the present law, the exemption obtained by them might fall as low as £200. Anomalies of this kind will be removed by clause 5 of the bill which is designed to ensure that if an employer is in business throughout the year, and fails, because his pay-roll fluctuates, to obtain the benefit of the general exemption to the extent of £1,040 during the year, he will get it at the end of the year, and a refund or rebate will be granted to him accordingly. If he is not in business for the full year, the amount of the exemption will beproportionately less. Clause 3 contains a further proposal relating to the general exemption. That clause is designed to simplify the work of preparing returns by fixing the amount of deduction to be claimed in each monthly return. Under the present law, the monthly deduction is calculated at the rate of £20 a week. Obviously, it would be easier for both the taxpayer and the department if the same amount were to be deductible each month. The effect of the proposed amendment is to split the annual exemption of £1,040 into twelve equal parts, and to allow it in the form of a deduction of £86 13s. 4d. in each monthly return. Where the monthly deduction of £86 13s. 4d. exceeds the wages paid in any month, the excess is to be carried forward as an extra deduction to be made from the wages of the next month. This system of carrying forward excess deductions will obviate adjustments at the end of the year, and will enable taxpayers to enjoy the full benefit of the exemption as early as possible in the year.

The Government has also given close consideration to the difficulties encountered by some taxpayers in complying with the requirements of section 18 of the principal act, viz., to furnish a return for each month within seven days after the end of that month. In the vast majority ofcases, taxpayers have no difficulty in complying with the law in this respect. It is not proposed, therefore, to relax the requirements of the law regarding lodgment of returns so far as the great majority of taxpayers are concerned.

It has become clear, however, that there are certain types of employers to whom the ordinary procedure does not apply satisfactorily. These include persons who conduct their businesses in such remote districts that they actually cannot lodge a return within seven days. There are also seasonal employers who, in the offseason, do not pay wages, but, under the existing law, are. nevertheless, required to continue lodging returns for each month if their annual pay-roll exceeds £1,040. Furthermore, there are employers who barely come within the scope of the tax, and whose monthly liability is so small as to be hardly worth paying or collecting. In these and other cases, the existing law causes unnecessary irritation to taxpayers, as well as embarrassment to the administration because of the economic waste involved in handling returns which bring in little or no revenue. With a view to removing such inconvenience, it is proposed in clause 6 of the bill to authorize the commissioner to deal with such cases on their merits. Where he is satisfied that it is unduly onerous to require an employer to furnish returns within the statutory period of seven days, he may allow further time for lodgment of the returns. Where the commissioner is of the opinion that the furnishing of monthly returns is unduly onerous, he may accept returns based on a longer period. This relaxation of the ordinary requirements of the law will not be widely applied. It will be confined to individual cases in which it. is shown that the circumstances warrant such relief, and in which it is clear thatthe revenue will not suffer as a result of granting the concession.

Those are the principal features of the bill. There are three other matters of lesser importance. Clause 4 is designed to give effect to the decision made by the previous Government, and confirmed by the present Government, to exempt pay ments made to employees who are on active service with the fighting forces. Pay-roll tax has not been collected on these payments and allowances, and clause 4 gives legal authority for the exemption.

Clause 7 provides for a drafting amendment and clause8 for the reference to the Land Tax Valuation Board of applications by taxpayers for relief from payment of pay-roll tax on the ground of hardship. This amendment conforms with an amendment of the Income Tax Assessment Act which will be placed before the Senate. It is designed to facilitate the handling of these applications for relief. The bill imposes no new liabilities or obligations upon taxpayers. It is designed simply to remove inequity and undue burdens upon taxpayers. In these circumstances I confidently commend the bill to honorable senators.

Senator McLEAY:
Leader of the Opposition · South Australia

– The last portion of the Minister’s speech describes the purpose of this bill, which is mainly to clear up anomalies that have become apparent since the original measure became operative. I support the bill.

Question resolved in the affirmative.

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

page 1145

JOINT COMMITTEE ON RURAL INDUSTRIES

Message received from the House of Representatives intimating that Mr. Marwick had been appointed a member of the Joint Committee on Rural Industries.

page 1145

BLACK MARKETING BILL 1942,

Second Reading

Debate resumed from the 29th September (vide page 1009) on motion by Senator Keane -

That the billbe now reada second time.

Senator McLEAY:
South AustraliaLeader of the Opposition

– The Opposition will support this bill. I shall not speak at length upon the second reading because the measure is highly technical, far-reaching and drastic, and it can be more effectively discussed when it reaches the committee stage. It contains some drastic clauses which should be examined carefully because I fear that great hardship may be inflicted upon innocent people. I draw attention to clause 3, which states -

For the purposes of this Act, “ Black marketing” means - (») selling or offering for sale, or purchasing or offering to purchase, or paying for or offering to pay for, any goods at a greater price than the maximum price fixed, by or under the Regulations, for the sale of those goods;

Does the clause imply that persons will have to be familiar with all prices that have been fixed? The prices of many articles in retail shops have been fixed. It would be almost a physical impossibility for citizens to be- familiar with the prices that have been fixed in shops, cafes and hotels. I suggest that persons making illegal purchases in good faith should be exempt from prosecution, but from my review of the clause it appears that one might find himself in trouble through merely offering to purchase goods at a price greater than the maximum price fixed.

Paragraph c of the same clause states -

  1. taking, causing, permitting or suffering delivery of goods upon any premises delivery upon which is prohibited by or under the Regulations;

I suggest that the addition of the words “ except in good faith “ might be considered. Sub-clause 3 of clause 4 provides -

The punishment for the offence of black marketing shall be -

if the offence is prosecuted summarily - imprisonment for not less than three months and not more than twelve months or, if the offender is a body corporate, a fine of not less than One thousand pounds and not more than Five thousand pounds; and

if the offence is prosecuted upon indictment - imprisonment for any term not less than twelve months or, if the offender is a body corporate, a fine of any amount not less than Ten thousand pounds.

Does paragraph b imply that the judge will have no option but to order imprisonment or impose a fine of not less than £10,000? It would be inequitable to imprison a trader or to impose such a severe fine for a technical offence. Subclause 4 of clause 5 states -

The offence of black marketing shall not be prosecuted without the written consent of the Attorney-General after report from the Minister administering the Regulations in relation to which the offence was committed.

I understand that when this matter was being considered in the House of Representatives, the Attorney-General (Dr. Evatt) indicated that he would be agreeable to the responsibility of authorizing a prosecution being placed upon a committee instead of upon the Attorney-General.

Senator Keane:

– Will the honorable senator draft an amendment on those lines ?

Senator McLEAY:

– I shall have pleasure in submitting such an amendment when the bill reaches the committee stage. In these days of pressure politics, when government is carried on strictly on party lines, and when we do not know what type of man may be Attorney-General, or what action a Minister may take to intervene where he should not intervene, I personally prefer that the responsibility in this matter should rest on a committee.

Referring to sub-clause 9 of clause 4, it seems that a judge would be placed in a difficult position in having to decide the meaning of “ excessive profits “. I hope that the Minister for Trade and Customs (Senator Keane) will give some information to the Senate on that point. Subclause 12 of clause 4 reads -

For the purpose of this section, “ the prescribed authority “ means a person who holds or has held the office of Justice of the Supreme Court of a State or Territory of the Commonwealth or Judge of a District or County Court or Local Court of Full Jurisdiction of a State.

Will there be any right of appeal from a decision of “ the prescribed authority “ ? I also wish to refer to clause 17. On many occasions the attention of the Senate has been, drawn to the action of the Government in reversing the onus of proof, and introducing regulations, which, in the opinion of the Regulations and Ordinances Committee, should have been dealt with by legislative enactment.

Clause 17 contains some extraordinary provisions. It reads -

TheGovernor-General may make regulations, not inconsistent with this act, prescribing all matters which are required or permitted to be prescribed, or which are necessary or convenient to be prescribed., for giving effect to this act, and, in particular, for -

declaring any act or tiling done or omitted to be done, or any conduct in contravention of the regulations tobe black marketing.

Under that paragraph black marketing may be declared “by regulation ; that is to say, the power is vested in the Executive. Having regard to the advanced views of some Ministers in the present Cabinet, the Senate should scrutinize the clause carefully.

Senator Large:

– We want advanced ideas in these days.

Senator McLEAY:

– This provision is medieval. Paragraph b of clause 17 reads -

  1. making provision with respect to the proof of any matters in any prosecution for the offence of black marketing;

That paragraph places the onus of proof on the person charged with the offence.

Senator Collings:

– Is the honorable senator trying to provide two means of escape ?

Senator McLEAY:

– I do not suggest that any person should be allowed to take advantage of war conditions to do the things which the Minister in charge of the bill says have been done. I realize that in every section of the community there are some “ black sheep “. The reason for the introduction of this provision is largely political ; it deals mainly with one section of the community. These provisions could well be extended to some of the “ black sheep “ in other sections of the community. In this connexion I draw attention to paragraph b of clause 3, under which “ black marketing “ means -

Supplying or offering to supply, or accepting or offering to accept, or paying or offering to pay for, the supply of, any service, declared, by or under the regulations, to be a declared service for the purpose of the regulations, “at a higher rate than the maximum rate fixed in relation thereto by or under the regulations.

Does that apply to unionists who are working under awards which peg wages?

SenatorKeane. - That pointhas not been considered. This bill deals with commodities and services.

Senator McLEAY:

– It is time it was considered. In time of war it is essential to deal strictly with all persons who attempt to sabotage or hinder the war effort. The criticism that I offer of the present Government is that, although for ten months it has had the power to take action in that direction, it has not done so.

Senator Collings:

– What has that to do with this bill?

Senator McLEAY:

– I am suggesting that the powers which the Government seeks in this bill should be exercised in other directions also.

Sitting suspended from 6.5 to 8 p.m.

Senator McLEAY:

– I ask the Minister for Trade and Customs (Senator Keane) whether it is intended as a general principle to apply the phrase, “ offering to pay for the supplies of any service “ to a unionist whose wages have been fixed.

SenatorKeane. - No.

Senator McLEAY:

– I cannot understand why the Government should frame a measure along such rigid lines as this bill to deal with black marketing on the part of certain sections of the community, when it has failed to exercise the powers it already possesses under the National Security Act to deal with many abuses which really constitute black marketing. On previous occasions, honorable senators on this side have drawn attention to the abuse of absenteeism in war factories. Whilst the Government has power to prescribe a fine of £100, or imprisonment for six months, in respect of such offences, it has failed to take action to deal with persons who wilfully absent themselves from work. Strikes have occurred on the waterfront because certain workers have refused to work on Saturdays, knowing that they will be paid at the rate for double time on Sundays. I also ask the Government why it has not taken action against strikers in the coal-mining industry. During the term of office of the previous Government, many ships which put into Newcastle for coal were unable to obtain any, because the miners were on strike. In spite of the Government’s talk about the damage which strikes do to our war effort, and in spite of its promises to put an end to strikes, it has failed to take action in that respect, Are we to anticipate, therefore, that whilst it is prepared to give promises with respect to the application of the penalties asked for under this measure, it will not act similarly when strikers are involved? I draw the attention of the Senate to an abuse of the kind about which I now complain, and in respect of which the Government has so far failed to apply penalties, although it has long had power to do so. The facts I am now about to give reveal a glaring instance of black marketing or “ red “ marketing of the worst kind. When the dredge Matthew Flinders was to be moved from Melbourne to Fremantle, the Government entered into the following agreement with the appropriate union : -

  1. In respect of the voyage from Melbourne to Fremantle, eachemployee shall be paid a minimum of three months’ wages inclusive of war risk, bonuses and all other conditions provided in awards and agreements.
  2. Upon the termination of the voyage, i.e., midnight on day of arrival at Fremantle, each employee shall have the right of repatriation to Melbourne at the expense of the Commonwealth by the first available train.
  3. Victualling allowance provided in award shall be paid while awaiting commencement of return voyage.
  4. Wages are to be paid from the time of termination of voyage to Fremantle up to and including the day of arrival in Melbourne.

Wages were also paid while the men were returning to Melbourne. A crew was picked up on behalf of the Commonwealth under the terms of the agreement to which I have referred. I shall now compare the amounts that were actually paid by the Commonwealth Government under that agreement, with the award rates that should have been paid. In all cases the award figure is on a monthly basis and includes the 33 per cent. war risk loading. The master was paid £186 4s., whereas his award rate is £4611s. The wireless operator was paid £86 10s., whereas his award rate is £21 12s. 6d. Ordinary seamen were paid £48, whereas their award rate is £121s. 6d. The chief engineer was paid £184 4s., whereas his award rate is £461s. The greaser was paid £86, whereas his award rate is £21 10s. The chief steward was paid £94 10s., whereas his award rate is £23 12s. 6d.; and the first and second cooks were paid £86 10s. and £65 10s., respectively, whereas their respective award rates are £21 12s. 6d. and £16 7s. 6d. Those payments were made in respectof a period of a fortnight. I am more than justified, therefore, in asking that the Government apply penalties for black marketing all round, and not simply in respect of any particular section of the community. Whilst we are prepared to afford the Government every opportunity to deal effectively with black marketing, we must also be assured that the provisions of this measure are justified. As another instance of black marketing, I remind honorable senators that when the Prime Minister (Mr. Curtin) appealed to certain men to work during the Easter holidays, the men who responded to that call, and attended duty on those days, were subsequently fined by their union for having done so. The Government has refused to take action in such cases. To-day, five coal mines are idle. The stoppage at one of those minesis simply due to the fact that the Prime Minister declared that daylight saving was necessary.

The PRESIDENT (Senator the Hon J Cunningham:
WESTERN AUSTRALIA

– I ask the honorable senator to confine his remarks to the measure.

Senator McLEAY:

– The penalties prescribed under this measure should be rigidly enforced in respect of all sections of the community which seek to gain any advantage by the application of the principle of black marketing. The Opposition supports the general principle of the bill. In view of its technical nature, we shall be able to discuss it more effectively at; the committee stage.

Senator COURTICE:
Queensland

– I was at a loss to know what attitude the Leader of the Opposition (Senator McLeay) intended to adopt on this measure until he stated that, generally speaking, he would support it. He hardly directed his attention to the provisions of the measure at all. Nobody knows better than the honorable senator that the Government does not approve the exploitation of the community on the part of any section.

Senator McLeay:

– What action has the Government taken to deal with absenteeism ?

Senator COURTICE:

– Any one who absents himself, or goes on strike, at a time like the present, if every opportunity is afforded for the redress of grievances, is doing a very great disservice to the country.

Senator McLeay:

– What action has the Government taken to deal with such offenders ?

Senator COURTICE:

– The Government has taken every reasonable step to maintain the production of coal. If it has not succeeded to the degree it desires, the Opposition, certainly, has not given it much assistance. This measure is designed to deal with exploitation of the community in the form of black marketing. It seeks to prevent activities on the part of people who, despite our present peril, are prepared, in order to gain some advantage for themselves, to impair our war effort. Every provision of the bill is necessary. The price-fixing authorities have done a good job. We know that they have been greatly handicapped. For instance, after prosecutions have been launched, and have succeeded, magistrates have failed to impose penalties sufficiently drastic to fit the crime. Consequently, the Government has no alternative but to introduce this measure. I feel sure that no honorable senator will oppose it. Its primary object is to prevent the exploitation of the community. We cannot allow any one to take from the common pool something to which he or she is not entitled. There are various forms of exploitation. Senator Darcey, for instance, is very much concerned with exploitation by the private banks. People, some of whom are advocates of the Douglas credit system and loudly denounce the existing financial system, are able to secure very high rentals for their properties which could easily lead to exploitation. I know from first-hand experience of the resolute efforts which have been made by the price control authorities to keep prices down to reasonable levels. However, it is a big job. It is impossible to employ staffs of the size which would be required to police the system perfectly. This measure is designed to ensure the maintenance of prices at fair levels. Consequently, I regard the speech of the Leader of the Opposition (Senator McLeay) as a smoke screen. He said that, generally, he supported the bill ; but he ran true to form, and indulged in criticism which is not at all helpful. He dealt with occurrences in respect of which it would be impossible to make provision under a measure of this kind. I remind him that the Government holds no brief for people who encourage absenteeism, or strikes, in the present emergency. The honorable senator does not render any service to the Parliament in trotting out arguments of that kind at every opportunity. The Government is anxious to maintain the production of coal. If it has not been so successful as it should wish, it will continue to strive to improve the position. It has no sympathy whatever with any section who attempts in any way to exploit wartime conditions for their own profit. I support the bill.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

.-I wish I could agree with Senator Courtice that this is a very simple measure. It is one of the most complicated and complex with which this chamber has been faced. The British Parliament has also found it so. It is one of the most difficult matters to administer, and one of the most difficult pieces of legislation under which to obtain convictions in respect of the offences aimed at. The Government has had twelve months to deal with this problem, which has been to the detriment, not only of the general public and the Avar effort, but also has been having a bad effect on the small shopkeeper. Is it any wonder that he does not understand his position under the thousands of regulations that have been promulgated? He is already afraid, with the limitations under the pricefixing regulations, to engage in trade at all. The whole of the trade of this country is being driven into the hands of the huge emporiums, which are at least able to guard themselves by employing people to watch the regulations. The volume which I hold in my hand is just a sample of what a man carrying on the ordinary business of a shopkeeper in the suburban areas has to provide himself with, and this is only a selection. It is interesting to remember the derivation of the term “ black marketing “. It has been applied always in the past to dealings in the exchange of currency in various countries. Those who have been across the seas have encountered in every port of call unscrupulous people who endeavour to cheat them of their good Australian or English£1 notes, or sovereigns, at a rate which will prove exceedingly profitable to them. That is a “black market”; but in the ordinary market one finds the stabilized rates of exchange prevailing between countries. I believe the term is now applied to overcharges on goods, and, as the Minister has pointed out, services as well. When I was listening to him introducing the bill I thought how easy it was to fall into a trap, be convicted, and walk into His Majesty’s gaol for three months. Only on Saturday last I met a friend who had been fortunate enough to return from overseas. I invited him to lunch at a well-known hotel. Knowing that he was not very well after his journey, I suggested that he should have a dozen oysters, and the attendant said to me over my shoulder, “You will have only 6d. left “. Apparently, the charge for the luncheon was limited to 4s., and the oysters were to cost 3s. 6d. How can we expect people to know the laws under which they are living? I have spoken repeatedly to the Leader of the Senate about this matter. There are to-day, under the National Security Act, 654 statutory rules and 7,050 orders, and the orders are embodied in this bill, as I shall presently show. The Government has out-Heroded Jeffreys in this measure. It is so extravagant in what has been attempted that I, much as I dislike to say it, suspect the sincerity of the Government for two reasons. One is that the evidence on which it relies is the evidence of an accomplice, because the offering and accepting are both offences. No jury, judge or magistrate will ever convict on the uncorroborated testimony of an accomplice. That, apparently, has been lost sight of. The House of Representatives, in its enthusiasm onFriday, allowed the measure to go through without that consideration which is due, not only to the people, but also to the Government. As Senator McLeay has pointed out, the Government, having waited twelve months, has belatedly broughtthis measure forward. We are all anxious to stop bad practices if we can, but the measure is unjust, entirely unworkable, and will utterly fail.

Senator Cameron:

– What does the honorable senator suggest as an alternative?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I have a number of suggestions which I shall make on the appropriate occasion in committee. Under this measure, which I say is fiercer than the law administered by Judge Jeffreys, the innocent may be punished.

SenatorCourtice. - We have the power now to prosecute under the pricefixing regulations.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– What has the Government done?

Senator Courtice:

– It prosecuted 200 offenders, and the magistrates failed to convict them.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Because the magistrates knew as well as I do that those unfortunate wretches did not know the law under which they were living. Of course, ignorance of the law is no excuse, but in at least one case the overcharge or profiteering amounted only to 2d. an article. How was the unfortunate purchaser or the shop assistant to know whether 4s. or 4s. 2d. ought to have been charged ? The Minister said that the magistrates had taken a very lenient view of the offences, and imposed in almost every instance most trifling pecuniary penalties. He cited two bad cases, and then told us that, since the outbreak of the war 168 separate firms had ‘been charged under the National Security (Prices) Regulations and that 319 separate offences had been committed. One charge was withdrawn, nine were dismissed, and convictions were secured in the remaining 309. Is it any wonder? I marvel at the small number, with 7,050 orders and 654 statutory rules in existence, about which the people know nothing. A short time ago regulations were amended making retrospective to the month of August a provision that mortgages could not be given for over a certain amount after a certain date. Mortgages had been signed and were awaiting registration in the Lands Titles Office. There were several hundreds of them in Melbourne awaiting registration, and it was necessary to date them as on the date on which the transaction was entered into. The Treasury in Canberra then permitted them to go through, and the Lands Titles Office allowed the documents to be registered. It is useless Parliament trying to shirk the fact that the people of this country do not know the laws under which they are living. I shall show thatthe Government proposes to impose on people, who may be acting in all innocence, crushing and. vindictive penalties which, I venture to think, the courts will refrain from imposing, if ever they can get a conviction at all under this legislation.

Senator Ashley:

– Would it be possible for a court to refrain from inflicting the penalty prescribedby the bill?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– That is a point I shall put to the Minister in charge of the bill. He has gathered in under clause 3 a most comprehensive definition of “ black marketing “. It is provided that for the purposes of this measure black marketing means -

  1. selling or offering for sale, or purchasing or offering to purchase, or paying for or offering to pay for, any goods at a greater price than the maximum price fixed, by or under the regulations, for the sale of those goods ;
  2. supplying or offering to supply, or accepting or offering to accept, or paying for or offering to pay for, the supply of, any service, declared, by or under the regulations, to be a declared service for the purpose of the regulations, at a higher rate than the maximum rate fixed in relation thereto by or under the regulations;
  3. otherwise than in accordance with the regulations,selling or disposing of, or supplying, or offering to sell, dispose of or supply, or acquiring or offering to acquire goods declared to be rationed goods or otherwise rationed by or under the regulations, or supplying orcarrying on or offering to supply or carry on or accepting or offering to accept, any service so declared to be a rationed service or otherwise so rationed;
  4. in contravention ofthe regulations, supplying, distributing, selling, dis posing of or parting with the possession or custody of, or offering to supply, distribute, sell, dispose of or part with the possession or custody of, or acquiring or taking into possession or offering to acquire or take into possession, goods or any thing whatsoever the supply, distribution, sale, disposal, parting with the possession or custody, acquiring or taking into possession of which is prohibited or subject to restrictions or conditions (including conditions as to price) by or under the regulations ;
  5. taking, causing, permitting or suffering delivery of goods upon any premises delivery upon which is prohibited by or under the regulations;
  6. otherwise than in accordance with the regulations, producing, manufacturing or treating any goods or thing the production, manufacture or treating of which is subject to restrictions or conditions by or under the Regulations;
  7. otherwise than in accordance with the regulations, moving, or purporting to sell or supply or to offer for sale or to supply, or purporting to acquire or take into possession or to offer to acquire or take into possession, any goods or any tiling whatsoever vested in the Commonwealth by or under the Regulations;

I should have thought that was ordinary larceny. Then -

  1. otherwise than in accordance with the regulations, using or dealing with any licence, ration ticket, ration document or ration coupon issued under the regulations; or

Then this is the climax -

  1. in contravention of the Regulations, making or uttering any counterfeit or forged licence-

Surely the forging of a licence is forgery and is already an offence under the law. That is embodied in the bill as sheer window-dressing. It goes on - ration ticket, ration document or ration coupon or doing any other act or thing in relation to any licence, ration ticket, ration document or ration coupon issued under the regulations, or in relation to any counterfeit or forged licence, ration ticket, ration document or ration coupon,

Such transactions are regarded as black marketing, although they are well provided for in the law already. Then we come to the masterpiece of this legislation in the f ollowing words : - and includes any other act or thing done, or omitted to be done, or any conduct, in contravention of the Regulations, which is declared, by regulations made under this act, to be black marketing;

The Government is asking the legislature to do something that will redound to its discredit. We are to give to the Government power to pass regulations and then it can declare that anything done in contravention of such regulations is black marketing. Is that the way in which we have attempted to administer the Crimes A.ct or to deal with crime generally? Is that the way in which a legislative body should deal with criminal offences, under which the subject’ is deprived of his liberty, or, if the offender is a corporation, is deprived of a very large sum of money? The clause concludes - and the regulations “ means any regulations made (whether ‘before or after the commencement of this act) under the National Security Act 1939 or under Unit act as subsequently amended, and includes any orders made under any such regulations.

There are 7,050 orders, and I venture to suggest that the public knows very little about them. I am asked repeatedly to press for the adoption of a satisfactory method of publishing of such matters. The Melbourne daily press erred by publishing the regulation relating to mortgages. The newspapers announced that it would become effective upon a certain date, and it was not until the Treasury was communicated with by the Lands Titles Office in Melbourne that it was ascertained that the regulation was antedated. I do not agree with the principle of ante-dating regulations. It may have been necessary in that case, ‘ but I am sure that every honorable senator on this side of the chamber, particularly those whom I have heard vociferate against the rigidity of penalties for certain criminal offences, will join with me in deploring the fact that an attempt was made to legislate in respect of a regulation, the purport of which was not known. T have no objection whatever to black marketing being made a punishable offence and I have no objection to heavy penalties being provided, but I deprecate the fact that, in the absence of what is known in law as a guilty mind, an individual, who is quite unaware that he is committing an offence, may be prosecuted for some trifling breach. If, for instance, a customer pays 2d. more than he should for a pocket handkerchief, a heavy penalty can be imposed under this legislation. I admit that there are certain safeguards, but whether they are real or not I am not quite clear. Clause 4 of the bill provides -

  1. The punishment of the offence of black marketing shall be -

    1. if the offence is prosecuted summarily - imprisonment for not less than three months and not more than twelve months or, if the offender is a body corporate, a fine of not less than £1,000 and not more than £5,000; and
    2. if the offence is prosecuted upon indictment - imprisonment for any term not less than twelve months or, if the offender is a body corporate, a fine of anv amount not less than £10,000.

It may be that some of the penalties imposed by Judge Jeffreys in the cases to which reference was made la3t week, were justified, but to -punish a man who pays 2d. more than he should for a pocket handkerchief is unthinkable.

Senator Collings:

– There is no possibility of anything of that kind happening.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– That is the law.

Senator Collings:

– Prosecutions have to be authorized.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Does the Leader of the Senate suggest that we should permit a “ racket “ in respect of prosecution under this measure? Does he suggest that the type of malpractice that has been occurring in Victoria recently should be permitted in the administration of a Commonwealth law? Does he believe that the Attorney-General will do less than his duty? I admit that the Attorney-General has the final word in these matters, but the Leader of the Senate apparently is overlooking the procedure which is followed in every criminal indictment. The Attorney-General has before him the evidence taken in the lower court, and also the statement of the accused person, if such a statement was made at the time of his summary prosecution. The Attorney-General then becomes the equivalent of a grand jury in England. If he considers that an offence has been committed he is duty bound to file the indictment. Incidentally, my opinion is that no prosecution would succeed because the. Crown would have to rely upon accomplices of the accused person. However, we are not concerned with the actual proceedings. We are concerned with the fact that an innocent man who has no intention of committing a crime may be charged summarily or indicted, and have these vicious penalties imposed upon him. The law in England, complicated and far-reaching as it is, gives some avenue of escape for those who have not a guilty mind. I realize that it is difficult to apply that principle, hut to-day we have more than 7,050 orders and 654 statutory rules, and terror has been struck into the hearts of small shopkeepers. I understand that hundreds of small shopkeepers in Melbourne are closing down their businesses because they are afraid to carry on under the National Security Act, which prescribes light penalties compared with those provided in this measure.

Senator Foll:

– Did the honorable senator say that the Attorney-General must prosecute an offender regardless of the nature of the offence?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I am suggesting to the Government that there should be some modification of that provision. Order No. 666, for instance, is almost impossible to understand. I challenge any honorable senator opposite to tell me what it means. It was promulgated on the 15th April, 1942, and so far as I can judge, the Prices Commissioner is able to modify it from time to time either in favour of, or against the interests of a trader. This method of ascertaining gross profit, and the price at which a trader may sell his goods, will be destructive of all small businesses which have not skilled assistance. There can be no escape. The adverse effects of trading restrictions have already been felt, and this measure, with its huge penalties, will be a new terror which will drive many more hundreds of small traders out of business.

Senator Large:

– Is the honorable senator opposed to this measure?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I should be ready to support an effective measure of this kind, but this bill is mere window-dressing brought down at the eleventh hour. It was passed by the House of Representatives with acclaim from all sides, but I suggest that we should examine it more thoroughly. We should endeavour to make it a measure which will be of some value to the Government, and which, without harassing the people of this country unduly, will permit successful prosecutions to be launched when the Attorney-General considers that such action is necessary. Order No. 666 was made by an eminent gentleman who can be regarded as clearheaded and efficient, but under this measure price control will extend over the whole field of trading, with no provision for appeal or redress. Upon the ipsi dixit of one man, an unfortunate trader may be forced out of business or may be obliged to obtain skilled assistance.

Senator Collings:

– He will have to be honest or go out of business.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– He may be as honest as any honorable senator, yet he may fail to satisfy the requirements of one of the 7,050 orders or 654 statutory rules.

Senator Courtice:

– The small business men are not complaining.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Surely the Government does not intend to wait until some of these men are crushed out of business before taking action. We should look a little way ahead and endeavour to protect these people. Under this measure a man may be prosecuted for committing a trivial offence of which he has no knowledge. How can he know ? The Government has not done anything to assist him in that direction. I defy any man on the treasury bench, with the exception perhaps of the Attorney-General, to tell me the meaning of Order No. 666. A senior wrangler of the University of Cambridge would be required to construe the meaning of this bill, and to understand the position of an unfortunate trader under it, yet persons could be sent to gaol for offences that had been innocently committed.

Senator Large:

– Is not the attitude of the honorable senator, who is a legal man, somewhat unusual ?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– It is unusual to seek vengeance against an unfortunate individual who has been driven out of business because he has been trying to earn an honest living. The law should be administered with evenhanded justice, but apparently it is now to be administered in a manner that leaves much to be desired.

Another provision of the ‘bill enables some persons who purchase goods at a price above the maximum fixed price to escape punishment. The Government must depend on these persons for the evidence for the prosecution. They will be required to induce traders to break the law. I suppose it was imagined that this would help to increase the number of convictions, but a man who turns King’s evidence is still an accomplice, and no criminal court will convict a person on the uncorroborated testimony of an accomplice. This measure is being blazoned from one end of Australia to the other, and every body is shouting that the Government is doing a good job, whereas, if this bill be given effect, it will administer a crushing blow to small traders throughout the community. From the 1st January to the 16th September, 1942, the present Government has promulgated 22S statutory rules and 5,152 orders under the National Security Act. That has been regarded by some people as a great piece of work? The intricacies of Order No. 666 are such that I defy any member of the Government to tell me, in plain language, -what it means. Some of the provisions of this measure are even foreign to the modern British criminal law. For an. offence against this legislation, which may be committed in all innocence, a person is to be placed, metaphorically speaking, in the stocks. He is to have his action blazoned over the broadcasting network, and he must pay for it. He must erect a notice on the front of his shop to the effect that he has been convicted.

Senator Collings:

– People were branded on the forehead at one time.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– That kind of punishment does not appeal to me. This bill is mere windowdressingLet men be punished and pay heavy penalties, but do not let us resort to the semibarbarous methods that are practised in certain countries to-day. As the result of a thunderstorm, the electric lights in this chamber are flickering. Nature itself is revolting against the savagery of this legislation j No measure bo savage as this has been passed in a British country during the last couple of centuries.

I am glad that the approval of the Attorney-General has to be given to prosecutions of this kind. I hope that no Attorney-General would ever be brutal enough to resort to such a practice, and I do not believe that the present AttorneyGeneral (Dr. Evatt) will. Sub-clause 4 of clause 5 provides -

The offence of black marketing shall not be prosecuted without the written consent of the Attorney-General, after report from the Minister administering the regulations in relation to which the offence was committed.

We can thank God for that. A prosecution can be made only with the sanction of the Attorney-General. If he exercises the function that is intended under this measure, he must be guided by something. In criminal cases, both in State and Commonwealth courts, he has the advantage of having the depositions before him. He is in the .position formerly occupied by a grand jury; but, unless he is given some data with regard to a proposed prosecution, under this bill it will be difficult for him to determine how to act. I consider that it would be an improvement to the measure if the Attorney-General were able to form his opinion on some facts other than the report of the Minister administering the regulations in relation to which the offence was committed. The heads of the departments concerned might he able to furnish reports that would guide the AttorneyGeneral as to whether a prosecution should be launched. Whilst the Crimes Act is anathema to honorable senators opposite, its terms are mild in comparison with the savage penalties that would he inflicted on, perhaps, innocent persons under this measure. I understand that the Attorney-General indicated in the House of Representatives that he would accept an amendment to provide for the appointment of a committee, which I think would be of considerable assistance to him. It would enable the facts of cases to be placed before him by disinterested persons. A woman may purchase an article for 15s., the price demanded by a shopkeeper, although the price has been fixed at 12s.

What does she know about the regulations? She would have to obtain a copy of them and then seek the assistance of a senior wrangler in mathematics to work out the price. Even a person with the quick intellect of the Leader of the Senate would have some difficulty in arriving at the exact position. The trader may be guilty, but under this legislation the woman would be just as guilty. Should the ‘Attorney-General decide to prosecute the trader, he would be in a difficult position with respect to the woman. In the department which will administer this legislation there will be men above suspicion who could deal with such cases. They could stand in the position of a magis’trate, except that the magistrate hears sworn evidence and the AttorneyGeneral sees a transcript of the evidence. If we had something along the lines suggested I think that it would be a help to the Attorney-General himself. Technically, both the trader and the woman may have committed an offence, but the Attorney-General, while deciding to prosecute the trader, could decline to prosecute a woman who did not know anything about the regulations. Members of the public do not always know the prices that should be charged for the goods that they purchase. The Opposition supports the bill, but in committee an endeavour will be made to improve it.

Whilst it would appear that these minimum penalties would have to be exacted in the event of a conviction, the point arises whether this legislation does not conflict with the ordinary jurisdiction of a Court of Summary Jurisdiction, and even with the judiciary itself, because for certain reasons, the judiciary has been empowered to mitigate the rigours of penalties provided by the legislature. That is a point which should be cleared up. In my opinion, the penalties prescribed in the bill are far too savage in character. Perhaps I should not say it, but it is easier to defend a man charged with murder than to secure his acquittal when the Crown has been shrewd enough to indict him for manslaughter.. There is reluctance on the part of juries to accept the responsibility for a man’s life. I admit that, in some instances,, that re luctance may amount to a dereliction of duty. Judges, too, hesitate to pronounce the death sentence. I know of judges who have become ill soon after pronouncing sentence. Unless the guilt of the parties is undoubted, I do not think that the Minister will ever get a conviction.

Senator Keane:

– We do not want convictions. We want the penalties to be so drastic that offences will not be committed.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I want a bill which will result in the conviction of guilty persons. I do not want any window-dressing. If a company extorted from the people excess profits amounting to £250,000 it should have been prosecuted.

Senator Leckie:

– It probably did not knowingly commit any offence.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I do not think that it did. Nor do I think that the people who bought the goods at excessive prices committed any offence; if they did do so, they were- not aware of it. I do not want a sham bill. There should be some elasticity in legislation of this kind, so that justice may be done to a man who is not really guilty in that he had no intention to defraud. Where there is no evidence of guilty intention, there should be some means of escape.

Senator Keane:

– The British act provides for imprisonment for a term of fourteen years.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Why not, if he is guilty? Under this bill an innocent man may be imprisoned. I favour strong legislation, and do not like hollow shams or window-dressing. We are engaged in discussing a serious piece of legislation designed to protect the war effort of this country. It was wrong for the Minister for Trade and Customs to say that the Government does not want convictions. That profiteering and black marketing is being practised was shown clearly in connexion with firewood supplies in Melbourne. The same thing is true of potatoes, with the result that every man with a backyard is planting potatoes for his own requirements. Nevertheless, the Government is guaranteeing the price of potatoes. It may be that when the crop is harvested, the price will be only one-quarter of what it is to-day. Improper practices should be checked, and theref ore we need legislation which will enable convictions to be obtained. Otherwise, the racket will continue. I shall not vote to throw out the bill, but I desire that it be improved. If it be enacted in its present form, the Government will not get the convictions for which it ought to look.

Senator COLLINGS:
QueenslandMinister for the Interior · ALP

– To say that I was astonished at the speech of Senator A. J. McLachlan is to put the position mildly. His speech to-night, like many others that he has delivered in this chamber, is evidence that he is in the forefront of his profession. He has the capacity to make things appear exactly what they are not, so that any person who has not some sense of logic, or does not possess analytical faculties, is likely to be carried away by his special pleading. The honorable senator said that he is in favour of the bill. He ought to be ashamed to be in favour of a bill which he has so enthusiastically condemned, clause after clause. Either this bill is a proper piece of legislation, which he should support, or it is what he says it is, in which event he should be ashamed to support it. The Government does not ask for his support of the bill if he thinks that it is a sham. To-night the honorable senator talked glibly of the unfortunate woman who might innocently commit an offence against this legislation. In my opinion, it is reprehensible that, whenever the legislature proposes to stop anti-social acts, the effect upon the “ poor lone widow “ or the “ helpless orphan child “, or some other person similarly unfortunate, is stressed in this chamber. We have been told that this measure is sheer window-dressing. What does that mean?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Its provisions are so drastic that the Government will never get a conviction.

Senator COLLINGS:

– The honorable senator accuses the Government of having designed the bill merely as so much window-dressing.

Senator McBride:

– That is often done.

Senator COLLINGS:

– Previous governments, in which Senator McBride was a Minister, exhibited a wonderful capacity for window-dressing. Even if this bill could come under the description of window-dressing, it could be said that the present Government has some goods in the window to which attention is drawn. What incentive has the Government to introduce a bill of this kind if it be, in fact, so much window-dressing?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– The Minister for Trade and Customs said that the Government did not expect convictions, and did not want any.

Senator COLLINGS:

– At the moment I am dealing with the remarks of Senator A. J. McLachlan. He said, “ If the Government had any sense of the fitness of things, it will not dress its window with something of the savage character of this bill “. Whom will the Government placate by its window-dressing - if the honorable senator’s description of this bill be correct? He referred to the poor woman who pays 2d. more for a handkerchief than she ought to pay.

Senator Spicer:

– The Government does not intend to prosecute such persons, although the bill makes provision for that to be done.

Senator COLLINGS:

– There is nothing in the bill to that effect. If I had the ability of Senator A. J. McLachlan, I should be prepared to guarantee to secure the acquittal of any guilty person in. the country, so long as I was given a jury amenable to sophistry, crocodile tears and emotional talk. I wonder how many guilty persons Senator A. J. McLachlan, in the course of his eminent legal career, has successfully defended by making them appear to be innocent. He admitted that it is easier to secure the acquittal of a person charged with murder than one charged with manslaughter.

Another criticism of the bill made by the honorable senator was that it is the work of one man. There would be nothing wrong with the bill, even if the statement were true, that it was the work of one man; but the honorable senator knows that it is not the work of one man.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I did not say that the bill is the work of one man. I said that Order No. 666 is the work of one man.

Senator COLLINGS:

– The honorable senator spoke about the faulty drafting of the bill. I suppose that he is not ignorant of the fact that the AttorneyGeneral (Dr. Evatt) assisted in drafting it. I presume, also, that he is not ignorant of the fact that the AttorneyGeneral, prior to his successful advent into She political arena, was a distinguished member of the High Court Bench. Yet the honorable senator has the temerity, and audacity, to talk about a bill which is so badly drafted and to say that we shall never be able to obtain a conviction under it. He makes those statements knowing perfectly well that honour and decency would cause him to say that it was prepared by one of the most brilliant intellects in this country.

Senator McLeay:

– According to instructions from caucus!

Senator COLLINGS:

– The Leader of the Opposition (Senator McLeay) knows something about caucus instructions. When he was Leader of the Senate, we felt like chaining him to his seat because he, and his colleagues, like rabbits scurrying in and out of their burrows, were continually running out of the chamber to attend caucus meetings. Finally, they got into such a hopeless muddle that they were relieved of office. We have heard sufficient about caucus instructions.

Senator Sampson:

– And now we are hearing something from the soap-box.

Senator COLLINGS:

– If Senator A. J. McLachlan had anything like a decent soap-box education he would not attempt to “ put over “ an assembly of intelligent men the sophistry he’ has voiced to-night. He needs a little more “ nous” and a little less legal knowledge; then he would be more human.

We have heard something about 7,050 statutory rules and 654 orders. Senator A. J. McLachlan held up a bulky volume, and declared “this unfortunate woman does not go round clasping such a bulky volume to her bosom “. He knows the reason for the present flood of regulations. What are the reasons for this bill? How honorable senators opposite can even look like being prepared to condone the offences which have made this bill essential, I cannot understand. On many occasions in this chamber we have heard talk of the crime of “ Dedmanism “. Honorable senators know what happened when the rationing of clothes was introduced. The Government may, or may not, have been wise to declare beforehand its intention to introduce clothes rationing. Clothes rationing came in after the most unseemly exhibition from one end of the Commonwealth to the other of what people will do in the way of unsocial conduct once they are afraid that there is going to be a shortage of the goods they require. All honorable senators know that, since that time, there has been a series of serious robberies of clothes and clothing materials from various establishments. There has been definitely established in connexion with clothes, beer and spirits, and a number of other commodities, a black market, which, if it be allowed to continue, will reduce the Commonwealth and its war effort to sheer futility. That is the reason for this bill.

Senator Leckie:

– No provision is made in this measure in respect of the sale of stolen goods.

Senator COLLINGS:

– The measure has been introduced for the express purpose of stopping racketeering and black marketing, which is going on in the community to-day, and which honorable senators opposite, judging from their present attitude, are apparently prepared to condone. They contend that the penalties prescribed under this bill are too savage. If any one should tell me that any of the punishments prescribed under this measure, the.final result of which will be to stamp out these evils, is too savage, I shall certainly be surprised. If this bill errs at all, it errs on the side of leniency. Let us consider some ordinary offences. Let us begin with a simple offence which is very common, but which constitutes a frightful crime, namely, the adulteration of milk, which is the food of the babies and invalids of this country. What happens when an adulterator of milk is convicted in our courts to-day? He is let off with a fine of £1 or £5, although the Bench knows perfectly well, when inflicting the fine, that within one week the adulterator will be able to recoup the amount of the fine tenfold. In addition, we know that drunken persons who are convicted of various crimes put forward the plea that they were drunk at the time of the commission of their offences. Those offenders are fined a mere 10s. When we come to offences of the kind dealt with under this measure, which are sapping the very lifeblood of the nation, and, if they are not prevented, will render it difficult forus to carry on our war effort in a whole-hearted manner, such leniency cannot be tolerated. Yet honorable senators opposite say that the penalties prescribed under this measure are too savage. We have been told to consider the penalties prescribed for these offences in the Old Country. I ask honorable senators opposite to study the hill based as it is upon information which the AttorneyGeneral obtained in the various allied countries on this matter. I ask them not to imagine that this bill was drafted in ignorance, but only after it was decided that these things must be scotched, and after the Attorney-General, and his advisers, had ascertained how these antisocial evils were being stamped out in other allied countries. Our penalties are modest compared with those imposed in other countries in respect of similar offences.

Senator Spicer:

– Our penalties are much harsher than those prescribed under the British legislation. Maximum and not minimum penalties are prescribed: in Great Britain.

Senator COLLINGS:

– What is the maximum?

Senator Spicer:

– It is left to the discretion of the court.

Senator COLLINGS:

– Yes ; it would be imprisonment for fourteen years. The severity of the penalties to be imposed under this measure is left to the discretion of the Minister, and the AttorneyGeneral.

Let us now examine the argument that many innocent people will be penalized under this measure. Does any honorable senator opposite imagine for one moment that any one would recommend the prosecution of a woman who went into a store, and, in ignorance, paid 15s. for an article which should have been sold at 12s. 6d.? That was one of the instances given in this respect; but it is not quite so silly as another instance, which was also cited, namely, an unfortunate woman who pays 2d. more for a handkerchief than the legitimate price of that article will be liable to prosecution under this measure. Any attempt to launch a prosecution in cases of that kind would be so farcical that the whole system would be brought into ridicule. Yet these arguments are raised in a serious debate in this chamber. Any sane persons, who were entirely uninformed of the real provisions of the bill, and had only the remarks of honorable senators to guide them, would come to the conclusion that although black marketing existed in the community, the Government was so insane as to draft a bill under which it could launch a prosecution against an unfortunate woman who ; paid 2d. more for a handkerchief, or 2s. 6d. more for some article in a hardware store than she should have paid.

Senator Spicer:

– Does the Government allow political considerations to influence it in deciding whether prosecutions should be launched?

Senator COLLINGS:

– If the honorable senator can show me that any provision in this measure, by any stretch of his fertile imagination, can be said to contain one word of political activity, I shall admit that I am in the wrong. Let us do a little sane thinking on this measure. There is an evil abroad in the community, and honorable senators know it. It stalks by night, and must be scotched. It is sapping the very vitals of Australian manhood and womanhood. The selfishness inherent in the average individual, because of the vicious system under which we live, which makes selfishness a virtue and unselfishness a fault, is forced on every one of us, more or less, because of the continued fear of unemployment and economic insecurity. We are all, therefore, more or less inclined to take advantage of a black market if we can do it undetected or, if detected, can escape severe punishment. It. is in that atmosphere that this bill was drafted and will be operated. There is the safeguard that both the Attorney-General and the Minister for Trade and Customs must consent to and launch the prosecution. If honorable senators opposite are not satisfied with that, it can only be for the reason that they want to make this law, like most other laws, with a loophole of escape for these dangerous social malefactors. The Government and the framers of the bill are determined that so far as they are able there shall be no loophole of escape for anybody who comes within its terms. Honorable senators opposite know the reason for it. They know the sophistry of the gentleman who has attempted to trade on our emotions by talking about the poor woman, and about the other fellow who is going to be made & participant in a crime of which he has no knowledge. Those are not the people that this bill is designed to reach. Those it is aimed at know what they are doing. They possess some of the keenest intellects in the community. They exist in every country during a war. They are there when conditions are normal, but war, and the difficulties which it creates, present to them opportunities for black marketing which do not exist in normal times.- Behind all this legislation is the fact that we are at war, and that every 24 hours brings it nearer to us. .Senator A. J. McLachlan, who said that he believes in the principle of the bill, then proceeded to damn it from Dan to Beersheba. I would not have spoken if I had not felt it essential to pin down that one speech, at any rate, while yet it was fresh in the memory of all who heard it. I have attempted to do that, probably feebly, but very earnestly. I ask honorable senators not to close their eyes to the fact that this great evil must be scotched. Honorable senators talk sometimes about sacrifices. We all remark what a wonderful job the boys are doing here and overseas. We all listened at 12.30 to-day and at 7 o’clock to-night to the news that came over the air of something that looked like success in the Solomons and New Guinea. We were all overjoyed, but can we then coane here, into the calm atmosphere of a deliberative assembly, and allow to go unchallenged statements which, if they were true, would mean that somehow or other we were prepared to condone the very crimes that the bill is intended to prevent, and to punish if it cannot prevent them ? I appeal to honorable senators not to believe that the evil is only imaginary, or that the penalties are too savage, but to support the bill whole-heartedly, because it is an essential step forward in the protection of the community, and will bring help and succour to those who are making the supreme sacrifice on behalf of their country.

Senator SPICER:
Victoria

.- -I am one of those who are very much disturbed by the terms of the bill.

Senator Large:

– Is that unusual ?

Senator SPICER. It is very unusual for me to be disturbed over the form of a bill submitted to the Senate. I want to discuss, I hope calmly, but at the same time quite seriously, some of the implications which lie behind this measure. I join with every one else in this chamber in the desire to see black marketing wiped out of the community. When I speak of black marketing I do not think in terms of the individual who purchases something above the fixed price across the counter of a shop. I think of what the. Leader of the Senate (Senator Collings) was speaking of when he told us that goods which had been declared were being stolen and collected into warehouses, and that the people who stole them then proceeded to carry on a tremendous racket by disposing of them at something above the declared price. I can understand that sort of thing being described as black marketing, but it is most extraordinary that in this bill, which makes so many acts offences, the circumstances to which the Leader of the Senate referred are not included, although they are to be found in perfectly plain language in similar legislation in Great Britain. We were told that the draftsman of the bill had ransacked the world to find precedents that he should follow. He has perused the legislation of Great Britain and America, and, apparently, of all the other democrat!” countries, but he evidently did not study the provisions of the British act, which expressly provide for the case of a person who steals a controlled article. Honorable senators will not find in this bill anything dealing with that particular action, but many other ^offences are provided for and dealt with under the very heavy penalties here imposed. Fundamentally my objection is not to legislation against black marketing hut to the form the bill takes, in that it includes far too many things within its scope, and applies to them a rigid penalty which a court must impose whether the offence be serious or trivial. It is useless for the Leader of the Senate to laugh off the suggestion that the woman who purchases something in a shop above the declared price is brought within the bill. There is no doubt that she is. Certain of the clauses which apply to the person who offers to purchase, or purchases, cover her.

Senator Large:

– But she would not be prosecuted.

Senator SPICER:

– -That is exactly what I am coming to, and it is fundamental to my view of this legislation. My idea of criminal law and criminal offences is that the legislature should prescribe them, that when the executive finds that an offence has been committed its duty is- to prosecute, without fear and without favour, the person who appears to be guilty of committing the offence, and that it is the duty of the court to determine the proper penalty to be applied, and to apply it in open court, with the full knowledge of every one in the community who seeks to ascertain it. The Government seeks to meet the criticism of this bill by saying, “ Oh, yes, it covers a host of offences, but the AttorneyGeneral (Dr. Evatt) and the Minister for Trade and Customs (Senator Keane) are going to decide who shall be prosecuted. They will determine, behind closed doors, whether a man shall be imprisoned for three months or not, and whether a particular company shall or shall not pay a fine of £10,000”.

Senator Courtice:

– The Prices Commissioner now determines whether there shall or shall not be prosecutions.

Senator SPICER:

– I do not believe, taking it by and large, that he or the Attorney-General approaches his job from the point of view that in respect of most offences a prosecution will not be lodged. Surely that is not the proper angle of approach. If an offence is, to his knowledge, punishable, and he can prove it, his responsibility is to lay the facts before the court. Only by that means can we ensure the even-handed administration of justice without fear or favour.

Senator Collings:

– “We are not getting it now from the black marketeers.

Senator SPICER:

– Whether we are getting it or not, I see very grave evils coming into being as the result of this measure. In Victoria a commission has been inquiring into the Licensing Act, and some of the evidence has disclosed just what one would expect to arise in relation to cases where a court must, impose a minimum penalty. For certain offences under the Licensing Act an hotel may lose its licence, and the court has no option in the matter. As the result of that provision, it has been admitted in police evidence that in effect the licensing branch undertook the administration of the law and determined whether in particular cases it would or would not prosecute, having regard not merely to the evidence but also to the fact that it might be hard for the licensee if it did prosecute. This is all removed from the public view, so that in effect the penalties are, or are not, being imposed by some one, probably a Minister or a police official, without the full publicity which proceedings in a court of law necessarily ensure. That is most undesirable. It leads in its turn to other evils. It is not inconceivable by any means that at some time there might be in the Prices Branch - I am not suggesting that this is the case now - an inspector who would not be averse from accepting a bribe. Should such an inspector find that a trader has committed an offence, he might point out to him that he is liable to a heavy penalty, and ask, “What is it worth?” That is just an illustration of what could easily occur.

Senator Collings:

– I am glad that I have not a nasty mind.

Senator SPICER:

– Neither have I a nasty mind; but I do not shut my eyes to realities. It is ‘the duty of those who are responsible for the passing of legislation such as this to face up to realities, and see that they are not encouraging the kind of evil which I fear may come into existence. Not only could this measure lead to bribery, but also it could lead to blackmail. For instance, a shopkeeper in a country town may know that a rival trader has committed an offence and may threaten to give information which would lead to a conviction.

Senator Collings:

– There is nothing wrong with that if the trader is guilty.

Senator SPICER:

– There are two things of which I complain. First, the scope of the offences is too wide, and, secondly, the penalties are vicious, and particularly objectionable because they are not left to the discretion of the courts.

Senator Courtice:

– The discretion of the courts has not been very satisfactory so far.

Senator SPICER:

– I remind the honorable senator that the Government’s administration of the existing law has not been very satisfactory so far. Under the existing legislation, should the Government decide to take a particular line of procedure, there would be no limit to the penalty that could be imposed. Honorable senators opposite complain that, although serious offences have been committed, magistrates have not imposed sufficiently heavy penalties. If the Government has knowledge of a serious offence, it should not merely launch a prosecution in a court of summary jurisdiction ; it should indict the offender. Under the National Security Act, if an offence is prosecuted upon indictment, the penalty is a fine of any amount or imprisonment for any term.

Senator Courtice:

– Why did the honorable senator not recommend that procedure as chairman of the Joint Committee on Profits ?

Senator SPICER:

– The first report of the Joint Committee on Profits dealt with this matter, and drew particular attention to that section, pointing out that those were the provisions of the law, and it was a matter for the courts to determine the penalties. It is not true to say that the penalties set out in this measure are anything like the corresponding penalties in Great Britain. No minimum penalty is provided in Great Britain. As a matter of fact, our National Security Act goes further than the British legislation, because it does not even prescribe a maximum penalty. There is no limit.

Senator Courtice:

– The maximum can also be the minimum.

Senator SPICER:

– The maximum does not necessarily become the minimum. Under the British law, the courts are quite free, except that they cannot go beyond a certain limit. We are informed that the gentlemen who drafted this measure searched legislation all over the world for a precedent, which eventually was found in Great Britain. The penalties that have been imposed are quite beside the point. I am dealing with legislation, and my concern is whether that legislation should itself impose the penalties, or whether they should be left to the discretion of the courts. As I have already said, under the National Security Act there is no limit to the penalty that may be imposed if a prosecution be launched upon indictment. The fines which were imposed in Great Britain could have been imposed under the National Security Act by a court in this country.

Senator Large:

– Does the honorable senator believe that determination of penalties should be left to the courts?

Senator SPICER:

– I do. If the Government wishes to make an example of a particular case it should proceed upon indictment. It would experience no difficulty in obtaining the penalty which it sought. If a minimum penalty is to be prescribed, then it should be appropriate to the offence. My complaint about the fixing of a minimum penalty in this case is that it will apply to a multitude of offences of varying degree. For instance, a man who deals in stolen goods in a big way, and stores them in a warehouse, may be sentenced to three months’ imprisonment; but the same minimum penalty is prescribed for an offender who, perhaps, has sold only a few articles and made very little profit on them. Let us look at this matter from the point of view of equality. Take, for instance, the case of a small trading company with a capital of, perhaps, £2jP00. Should such a company commit an offence under this legislation, it may be fined £10,000, or five times its capital, and so be forced, out of business. If the same offence were committed by a big company, with a capital of £1,000,000, the fine would , be the same,but the company would not be forced out of business. In other words, this matter suffers from all the “vices of a penalty which is imposed without regard to the character of the offence that is committed, and without regard to the condition of the individual who commits the offence. There is no comparison between the imposition of a fine of £10,000 upon a small private company with a capital of £2,000, and the imposition of a similar fine upon an organization such as the Myer Emporium Limited, for instance. Obviously, the provision is not equitable. There is another reason why I object to the prescribing of penalties of this kind : When, minimum penalties of that magnitude are fixed, they become also maximum penalties, because obviously no court would exceed them. It would be only with the greatest difficulty that one, could induce a court to register a conviction in some of these cases; but, having done that, I do not believe that any court would exceed the prescribed minimum penalty. There is only one way in which that matter can be dealt with satisfactorily, and that is to leave the penalties to the discretion of the courts. Why do we appoint magistrates and judges if not for the purpose of weighing evidence, determining whether offences have been committed’, and imposing penalties in accordance with the offences? For the reasons that I have stated, I am disturbed about some of the provisions ofthis bill. I have seen a good deal of the work of the Prices Branch. I have a high respect f or the Prices Commissioner and his staff, and for the work that they have done in very difficult circumstances. That branch has been assisted in no small measure by the willing co-operation of the commercial community. I am not alone in that belief. That was the considered view of the Joint Committee on Profits, which investigated these problems. Referring to this matter, the committee stated in its second report -

We entertain some doubts whether the seirous nature of offences against the regulations is fully appreciated throughout the community, and we think that this is reflected in the comparatively small penalties which at times are imposed. We again stress the view expressed’ in our first report that deliberate breaches of: the regulations should not be regarded lightly, and. we think heavy penalties are necessary to ensure that unscrupulous traders do not benefit at the expense of their rivals and the community by evading the obligations imposed on them by the regulations. We think it is fair to say that the trading community in general has displayed a readiness to co-operate with the Commissioner and his staff which is commendable and has contributed in no small measure to the smooth working of an extremely difficult undertaking.

There is a grave risk of destroying that spirit of co-operation which has been extended to the Commissioner by the trading community as a whole ‘by imposing vicious penalties of the kind proposed over a tremendous range of offences.

Senator Collings:

– Such as the cooperation of the Myer Emporium Limited!

Senator SPICER:

– I suspect that no offences Bad been committed by the Myer Emporium Limited. If not, why did not the Government prosecute that company ?

Senator Collings:

– The honorable senator knows why.

Senator SPICER:

– I do not. The only reason I. can suggest is that the company had not committed any offences. A person has not committed a legal offence under the National Security (Prices) Regulations unless he has been guilty of selling goods that have been declared. As to the bulk of the operations of the Myer- Emporium Limited, I suspect that they were not sales of declared1 goods. Only after the Prices Commissioner had made his investigation, and found that according to the company’s method of operations, it had departed in some measure from the principles applied by the Commissioner, did he say, “ I shall declare this firm “. Then, for the first time, the Myer Emporium Limited became subject to legal prosecution in relation to the commodities which it was selling previously. If the fact is that the firm was selling, thousands of articles contrary to law, the Minister for the Interior should be ashamed to admit that no prosecution was launched against the firm.

Senator Collings:

– It refunded £250,000. That was a sufficient penalty.

Senator SPICER:

– I have said sufficient to indicate that in my view this bill, in order to be satisfactory, requires drastic amendment. If the amendments are not made, the evils which will arise as the result of the operation, of the law, will he as bad or even worse than the evil which it seeks to destroy.

Senator CAMERON:
Minister for Aircraft Production · Victoria · ALP

– Senator Spicer would leave the court to decide what penalties should be imposed in the event of any person being convicted of black marketing. That sounds well in theory, but it would not work out in practice. Judges and magistrates are known to have had money invested in certain private undertakings, and it is only human that men are influenced, to a degree, by the way in which their economic interests are advanced or affected to their detriment. A judge might sit in judgment on, say, a wages case, and, if he had the best of reason for believing that his investments would be jeopardized by granting an increase of wages, and that he would cease to obtain any profit, we can quite understand how his mind would be affected. Magistrates are affected in a similar way. In the processes of the law, very few, if any, rich men go to gaol. Those who have the most money are in a position to brief the most able lawyers to protect them and use all the facilities provided by the law in an effort to prove them to be innocent, or to keep them out of gaol. In probably 99 cases out of every 100 the inmates of the gaols are members of the poorest section of the community, mainly because they lack the wherewithal with which to have their cases conducted as effectively as those of rich men. Knowing these things, the Government is justified in saying, “ We shall fix penalties which impose a duty on judges and magistrates which they dare not ignore “. I am not drawing on my imagination. These things happened when a certain firm was prosecuted for selling firewood at a price in excess of the fixed price, and a very nominal penalty was imposed by the magistrate. The Government, influenced by experience, is justified in laying down the penalties.

Senator Spicer and Senator A. J. Mclachlan, who have been trained as lawyers in the art of either achieving or checking predatory fraud and who have cultivated a certain amount of barbarian astuteness, referred to a number of hypothetical cases. Senator Spicer said that the inspector or the policeman in a prosecution might take a bribe, implying that this bill should not be passed because policemen and inspectors cannot be trusted, and that others who will be charged with the duty of administering the law cannot be trusted. Experience has shown that, whilst some inspectors and policemen cannot be trusted, the majority of them are trustworthy. We should not be able to administer the law as it is administered in other directions if such officials could not be trusted. As some honorable senators opposite have said, the Government is in a difficult position, and is therefore justified in making an attempt to do something which may be unprecedented. Black marketing has its origin in the inequality of the incomes of the people. The majority of the people of this country derive their incomes from wages, which are not sufficient for their needs, whilst others have incomes in excess of their needs. If there were equality of incomes, and a complete system of rationing, under which every person, irrespective of his income, obtained so much food and clothing, a black market would be practically impossible. But where men and women have money with which to pay exorbitant prices for the commodities that they need, those articles will be sold at excessive prices. If people have not the money to pay excessive prices for goods, there will be no black markets. But the abolition of black markets would necessitate a re-organization -of our internal economy, under which men and women would receive food, clothing, shelter and the amenities of life, in accordance with either their legitimate needs or the policy laid down. That is the only way in which black marketing could be abolished. The Government does not suggest that this bill will entirely abolish black marketing in Australia. The legislation in operation in Great Britain has not abolished black marketing there. In Great Britain, numbers of people who draw incomes greatly in excess of their needs, from all sorts of questionable sources, are living in hotels under conditions of luxury similar to those which existed in pre-war days. lor obvious reasons, the British Government has not attempted to suppress black marketing so far as illicit trade by publicans and those behind the publicans are concerned. That Government is loath to attack the causes of black marketing; its activities are directed against the effects. Were the Government of Great Britain to deal effectively with the causes of black marketing, persons now living in luxury in palatial hotels would have to live under conditions similar to those which apply to the average worker and the soldier. Even if it wanted to re-organize the internal economy of this country, the Government could not do so and at the same time carry on the war successfully. It could do so effectively if we were not at war; but, so long as we are, the internal economy of the country cannot be re-organized without holding up essential production. In the circumstances, the Government can only do its best. No government can do more than that. But because the present Governmen does its best, legal gentlemen sitting opposite would have us believe that we are living under conditions similar to those which operate in times of peace. I was interested in Senator A. J. McLachlan’s remarks regarding publicity being given to every law on the statute-book and every regulation that is promulgated. When I was a member of the Regulations and Ordinances Committee I was influenced by the eloquence and the arguments of Senator A. J. McLachlan. The government of the clay was opposed to such publicity. But even if every regulation promulgated were given the widest publicity, we should still have to face the position which we are facing to-day. Because of the limitations of our language and the peculiarities of the legally trained mind, it is practically impossible to set down in plain English what any regulation means. When formulating a policy in the interests of the people generally, we must rely to-day more than ever before on the common sense and goodwill of the average citizen of Australia. The honorable senator knows that the average person in the community is concerned mainly with the day-by-day problems which arise in his life, and has no time to devote to the understanding of those things which the legal gentlemen profess to understand, but which, in fact, they do not understand. The present Government is relying on the common sense and goodwill of the people. It says to the common people that, so far as the law permits and its ability makes possible, it will protect their interests in this desperate war-time situation, and will see that they get a fair share of the food, clothing, shelter, medicine and other things which are available. If the position were submitted to the people, these learned gentlemen could plead until they were black in the face about the technicalities of the law, about justice in the abstract, about hypothetical cases, and no one would listen to them.

I was also interested in the remarks of Senator A. J. McLachlan in relation to men conducting small businesses. He said, in effect, that these people were being frightened out of business and terrorized by the number of regulations that were being promulgated. But what are the facts? We know that such men were being driven out of business before the war, and that as they went out so the big business interests established themselves -more strongly. That kind of thing was going on long before any of these regulations were promulgated by the present Government. The proof of that statement is seen in the existence of such big businesses as the Myer Emporium Limited, which overcharged its customers £250,000. Yet honorable senators try to convince us that the mere issue of a number of regulations is destroying small businesses. Such businesses were being developed as the result of the competition of these huge emporiums, which have such large resources that they are able to sell goods almost at a discount, and yet can show a working profit. Others cannot operate on that basis. Unless something bp done to cope with the situation, we shall find, after the war, that Australia is owned lock, stock and barrel by a handful of people who control emporiums similar to the Myer Emporium Limited. We shall find that the nation’s resources will be owned by a handful of monopolies, and, that, on paper, at least, the bulk of our population will be mortgaged body and soul to these interests. That, is the trend of events. That was the trend before the war, and before any regulations were issued by this Government. Yet, honorable senators opposite ask the people to believe that the small business people are being driven out of business by these regulations. The reason for these regulations should be perfectly obvious. In a time of war, the Government must act from clay to day. When it has no opportunity to consult the people who should be consulted, and, when it is impossible to enact legislation on the principle of consultation and agreement, the Government must be prepared to act promptly on its own responsibility, and to stand or fall by its decisions. Of course, that is not the case in peace-time. However, in a time of war, when black marketing springs into existence almost overnight, and all sorts of things are done to the detriment of the nation, the Government must act promptly, or it will not be able to carry on, and, deservedly, it will be displaced. When Senator A. J. McLachlan was speaking I had the temerity to ask by way of interjection if he had an alternative to offer to this measure. He refused to answer my question. Honorable senators opposite can offer no alternative to this bill. Senator Spicer’s best attempt was to suggest that we should allow the courts to fix the penalties. Such criticism is merely destructive. It is not enlightening. It does not add to our knowledge on the subject. Such a suggestion reflects the attitude of men who simply do not like the brand of Government from which this measure emanates, and who merely rationalize their personal, or political, prejudices. I say that, because, when I asked them to suggest an alternative, I received no answer. Black marketers are people who capitalize the war situation at the expense of the poorer section of the community. There is no doubt about that. In most instances, they are not serving any useful purpose. They are not workers in industry, or fighters in the front line. They merely capitalize the situation as they find it; and that situation is this : The great majority of the people have not sufficient money to purchase what they need, whilst, at the same time, other people who have a surplus of money are prepared to pay exorbitant prices for goods. The latter will be just as well off, and, in many instances, a great deal better off in a time of war, than they were in peace-time. While the nation is at work and fighting, and concentrating upon building up resistance to the enemy, these people, behind the scenes, are helping themselves to the food, clothing and shelter which should be in the possession of the workers and soldiers, and their dependants. In these circumstances, we are justified in imposing drastic penalties for black marketing. If an appeal to patriotism, or to the finer human attributes, could succeed with these people, we should not find it necessary to impose any penalties. However, it is because our appeal to these people to do the right thing has failed, that penalties must be imposed. That is the object of the bill. I trust that it will be passed.

Senator LECKIE:
Victoria

.- I am anxious to see this measure in operation because I am anxious that black marketing be stamped out. However, I am afraid that the bill as drafted will not accomplish that objective. Indeed, I am inclined to think that it will generate more rascality and blackmail in the community than has previously existed. The measure makes no provision for many eventualities. The Leader of the Senate (Senator Collings) stated that it makes provision in respect of stolen goods. That is not so. So long as goods, including stolen goods, are not sold at prices above the prescribed prices, no offence is committed under this measure. Of course, penalties for stealing are provided under our criminal law. The Leader of the Senate is absolutely amazed at his “own clemency. He declared that in Germany black marketers would be hanged. Let us consider several instances in which innocent people will be penalized if the provisions of this measure are enforced in their entirety. My wife may ring up her grocer, and tell him to deliver to her home various articles of groceries. Some of those articles may be priced on the invoice at higher than the prescribed prices. At the end of the week, she will pay her bill. Should she pay a price higher than the prescribed price for any of those articles, she will be liable, under this measure, to imprisonment for three months. In addition, the grocer will also be liable to imprisonment for three months. That is the minimum, penalty. Any Minister who conscientiously administers this measure will not be able to make exceptions. He must ensure that the minimum penalties are enforced. In addition, a magistrate or judge may decline to convict an accused person in certain cases because he thinks that the prescribed penalty is too harsh. How, therefore, can. the Leader of the Senate say that the measure draws an exact line between offences in which a prosecution must be launched, and those in which a prosecution should not be launched? Under this measure, no employer, big or small, will be safe. He aoe,0 not know when he goes to sleep one night whether he might be sleeping the next night in gaol under a sentence of imprisonment for twelve months. He will be at the mercy of an unscrupulous or vindictive employee. One can imagine how easy it would be for an employee to engineer an offence of the kind which is dealt with under the bill ; and, after “ putting away “ an employer, to blackmail him. He could come along to his employer and say : “ You are up for twelve months, because you have charged more than the prescribed price for a certain article. If I disclose that fact, you will be sentenced to imprisonment for twelve months without the option. What about it?” The employer might say: “Will £50 or £100 suit you ? “ or “ Will you be satisfied if I take you into the .business ? “ One can easily imagine a vindictive employee blackmailing an employer in that way. In view of the fact that honorable senators have not had an opportunity to study the provisions of the measure fully, I urge the Minister to refer the bill to a small committee of the Senate for further consideration. Every honorable senator desires to make the bill workable. As has been pointed out, it will be very difficult to secure a conviction under this measure. The degree of guilt varies. A judge might say to himself: “If I convict this accused, the lowest penalty I can impose is imprisonment for three months “. In some cases, the lowest penalty is imprisonment for twelve months. He might take the view that the minimum, penalty is out of all proportion to the degree of guilt, and, therefore, decline to convict. Magistrates and judges will require overwhelming proof of guilt in all cases. Consequently, the Crown will find it very difficult to secure convictions. As Senator A. J. McLachlan pointed out, their general source of information will be some one who has helped in the criminal act and turned King’s evidence. I hope that honorable senators opposite realize that we are absolutely in earnest in wishing to make a success of the bill. We have shown that there are in it loopholes that will most likely defeat the Government’s object and lead to racketeering and blackmailing evils to a degree that we have never had to face before. I am scared to death of the bill. Any measure in which the penalties are made as savage as these are must undoubtedly react against itself. Clause 17 provides that anything may be declared under the regulations to be black marketing. It is a very serious matter to allow a Minister to declare an act one of black marketing by means of a regulation. The Minister quoted the black marketing legislation of

Great Britain, but did not emphasize the fact that a maximum of twelve months’ imprisonment on summary conviction, and fourteen years’ penal servitude on indictment, was prescribed. It must be remembered that those are maxima. If the Government fixed the maximum penalty and left it to trained judges to decide the degree of criminality, there would still perhaps be objections, but not nearly so many as there will otherwise be. I am afraid that the Government and the Senate, with the best of intentions, wanting to stamp out a great and serious evil, are going the wrong way about it, and will discover that they have not succeeded, but have created more criminality, blackmailing, and racketeering than any previous legislation that I have ever seen. The desire to stamp out black marketing as we know it has our whole-hearted support, but there are provisions in the bill which I hesitate to agree to. What is meant by “ service “ in paragraph d of clause 3? Is labour a service? If service means labour, I am willing to accept the provision, but I can suggest one or two services which would come under the term of black marketing, although I am sure the Government does not intend them to do so. A union secretary or organizer goes to an engineering concern, and is told by the foreman that he could do with two more skilled men. He promises; to try to get them, and goes to a factory in the next suburb. He tells some of his members who are working there at £7 a week that he can get them a job at £8 a week. The men say that is good enough for them, and some of them leave their shop and go to the other establishment. Would that come under black marketing of service?

Senator Keane:

– That comes under the- man-power regulations.

Senator LECKIE:

– The term used in this clause is “ service “’. Will the Minister interpret service in the same way as he does goods ? I hope that he will decide whether labour is a service or is to be exempt from any penalties of this kind, should racketeering occur in the labour ranks. The bill might easily impose a penalty on a man who takes work at a higher wage than is laid down by the Arbitration Court. I am sure that the Government did not intend that, but I think a judge would probably say that it was a service, the same as anything else. The Leader of the Senate made a great feature of the sale of stolen goods, and mentioned the dilution of milk and other commodities. This bill1 does not cover such offences, so long as the goods are sold at the specified price. What the Minister spoke of would come under the Pure Foods ActSenator Collings. - The offender gets off with a 5s. fine there, but we make sure under this bill that he does not escape so lightly.

Senator LECKIE:

– This bill will not catch him. The sale of stolen clothing, to which the Minister referred would, in our view,, be black marketing, hut it is not touched by the bill, so long as the goods are sold at a price not exceeding that prescribed by the regulations.. If those selling them obtain them for nothing, they can afford to charge the price at which the shops are selling; and can usually sell at a good deal less. The Leader of the Senate said that be wanted to leave no loophole of escape for the offenders at whom the bill was aimed. Senator Spicer and others showed what offences the bill covered, and: the Minister replied that a loophole of escape was to be provided by the

Attorney-General. That is a contradictory attitude to take up. A declamatory speech, asserting that there is to be no loophole of escape for offenders, makes a nice cliche which sounds well over the air, but its effect is spoiled when the speaker says that a loophole of escape is to be provided, because the AttorneyGeneral will not prosecute in many cases. I suggest that the Minister should be satisfied with the second reading of the bill to-night. He could then call one or two from this side and the other side of the chamber together for a quiet talk about amendments to improve the bill. In that way the Government would ‘be assured that the bill effected what it wanted,, and we on this side would be willing,, not only to back it up, but also to tell the people of Australia that, although the bill might seem harsh, the Government had to enact it,, because the evil it was. aimed at was growing. I suggest that minimum penalties should not be fixed, because the bill will, be administered, not .by police magistrates, but by trained judges. The Government does not even give- those charged under it the benefit, of trial by jury. It transgresses every principle of equity and justice which I have always thought characterized British law.

Senator AYLETT:
Tasmania

– I welcome the bill because it is leng overdue’. The black marketing and racketeering that have been going on at the expense of the general public since the war began have continued far too long, and have impeded the successful prosecution of the war, and the smooth working of the national effort.. It is time something was done to put a stop to excessive overcharging. Something is needed to put the fear of the law into people who are guilty of racketeering, so as to deter them from continuing their evil practices. The way matters are proceeding, it will be necessary to add to the army of inspectors and the Prices Commissioner’s, staff to an enormous degree, even to police the existing price-fixing regulations and protect the general publie. The Minister said that the number of firms prosecuted was 168, and the number of charges 309. The members of the Opposition complain about the severe penalties imposed by the bill, but where penalties were imposed, the fine was less than £10 in 249 cases and less than £5 in 158. Such small penalties do not affect the profits which are made by offenders, who will continue to profiteer until they are caught again, but a penalty of three months’ imprisonment, and the possibility of a placard being put up on the front door of their business premises would cut out at least 90 per cent, of such cases. Severe penalties, therefore, will save labour to a considerable extent in policing the regulations. So far I have listened to two of the most stupid arguments from the Opposition that I ever heard in this chamber. The first was put forward by Senator Leckie, who suggested that a woman could be sent to prison for three months merely because she rang up her grocer, ordered some potatoes, and her little girl who went to collect them paid a halfpenny a pound too much for them. On th>other hand, the honorable senator claimed that it would be almost impossible to secure a conviction under this legislation. What a contradiction ! Senator Leckie went on to illustrate how an employed could “ frame “ his employer, and then blackmail him into granting a gift of £50 or £100. Apparently, the honorable senator, and his colleagues who agreed with him by way of interjection, believe that such practices would be a common occurrence. If that be so, I do not think much of the company they keep. Obviously, they must be speaking from their own personal experience, otherwise they would not be so definite in their statements. If it is to be so hard to obtain a conviction under this legislation, as has been suggested by Senator A. J. McLachlan, Senator Leckie, Senator Spicer, and others, it is strange that speakers from the Opposition side of the chamber have spent most of their time drawing attention to the simplicity with which an innocent person could become involved in a prosecution. They know perfectly well that the Prices Commissioner anc! his inspectors would not deliberately launch prosecutions against innocent men. women or children, whose only offence had been to pay id. a lb. too much for potatoes. Yet that is the whole basis of their arguments. I contend that in many cases the public gener- ally is being deliberately exploited by some business firms. Honorable senators from the southern States know that in the past there has been a difference of as much as £40 a ton between the price paid to the growers for potatoes and the price that the same potatoes have realized upon the retail market. The “ racketeering “ continued until the Prices Commissioner took action and rectified the matter. Black marketing and exploitation has been going on in regard to many other commodities, but honorable senators opposite have not cited these cases. They have not mentioned, for instance, that the Myer Emporium Limited robbed the public of £250,000. Obviously, that would not have occurred had the management of that concern been faced with the prospect of serving three months in gaol. To have launched prosecutions against the Myer Emporium Limited under the existing law, it would have been necessary to get every Tom, Dick and Harry who had .paid a few extra pence to give evidence. Even had such prosecutions succeeded, what fines would have been imposed? I venture to suggest that it would not have been possible to have secured the imposition of a fine of even £5 in any individual case in which a customer had been overcharged Id. But customers of the Myer Emporium Limited number many thousands, and the overcharging totalled £250,000. As it was impossible to deal with the matter satisfactorily by means of prosecution, the firm was penalized by being forced to refund £250,000 to the public by means of reduced prices. But those reduced prices gave the firm a further advantage because it was able to compete unfairly with other traders. It is to prevent a repetition of that state of affairs that this measure has been introduced. This bill will make business people fear the consequences of breaking the law, and they will hesitate to rob the general public as they have done in the past. I congratulate the Government upon bringing down a bill which will at last put a stop to the racketeering and black marketing that has been going on for so long. I am surprised that honorable senators opposite have suggested that either the present Attorney-General (Dr. Evatt) or some future Attorney-General might not implement this legislation fairly. I am sure that prosecutions would be launched in all cases where such action was warranted. I do not agree that the bill will foster blackmailing or racketeering. Any one who suggests that it will has an evil mind and, no doubt, keeps bad company. After all, the Prices Commissioner and members of his staff are human beings and not callous hard-hearted brutes, as one may have gathered after listening to honorable senators opposite. I am confident that they would not deliberately set out to prosecute innocent people, yet that is the assumption upon which the Opposition has based its objection to this measure.

Senator McBRIDE:
South Australia

– We on this side of the chamber are equally concerned with honorable senators opposite about the prevalence of black marketing. Indeed, we have watched the increase of this nefarious trade with growing concern. We realize also that, the Government, by its refusal to do certain things which are necessary in the interests of this country, is making possible an extension of black marketing. So long as there is substantial spending power in the pockets of the people, a field for black marketing will exist, and as we have just dealt with the Government’s financial proposals, we see a very real need for action to eliminate black marketing. Consequently, it is not with any idea of preventing such action that we have the temerity to criticize this bill. Tiidecd, the fact that we have this measure under discussion to-night is clear evidence of the fact that the Government has fallen down on a very important job. I say that with a full realization of the tremendous task that confronts the Government at present. Honorable senators on this side of the chamber were amazed when the Leader of the Senate (Senator Collings) made it perfectly clear that he does not understand the powers which are already invested in the Government by the National Security Act, and which are very nearly as great as those set out in this bill. This legislation follows very closely upon national security regulations which have already been issued and are in operation. Whilst the Government has from time to time taken action against certain individuals who have infringed the prices regulations, so far as I know it has not yet used the extensive powers that it has under the National Security Act to launch prosecutions upon indictment. Up to date, all prosecutions have been launched in courts of summary jurisdiction. Consequently, if the Government believes that magistrates have taken too lenient a view of offences, the remedy is to lay charges upon indictment. Here again we find that a condition about which the Government complains is due largely to the action, or rather, inaction, of the Government itself; it is due to a set of conditions to which the Government has largely contributed. It is clear evidence that the Government has a rigidity of mind which makes it incapable of handling ever-changing problems. Further evidence of that rigidity of mind is to be found in the Government’s economic proposals. Obviously, the Government does not realize the full import of its proposals. Whilst the Opposition was able to secure a vital amendment of one of the Government’s earlier proposals, the Government was more adamant on a later proposal, namely, the limitation of profits to 4 per cent. The Prime Minister (Mr. Curtin) made definite statements as to the policy of the Government on that matter, and although members of this Parliament and people outside pointed out what the results of such a limitation would be, the Government did not admit its mistake until some time later.

Senator Armstrong:

– So it was not. rigid with regard to its policy.

Senator McBRIDE:

– It was rigid up to the point that, not until it saw the probable political repercussions, did it depart from its original proposal. Now, we have before us a bill which is designed to stamp out black marketing; but, when members of the Opposition suggest that the very basis of the measure will prevent it from having the desired effect, we hear cheap gibes from Ministers.

We have been told that those who drafted this bill have studied the experiences of many countries in order to obtain guidance, but so far as I am aware no country, apart from those occupied by the Axis powers, has passed legislation quite so drastic as this bill. I am sure that this Government, with all its egotism, does not suggest that it is the sole source of wisdom. There is a good reason why such a bill as this has not been submitted in other countries. The reason is that experience has shown that magistrates and judges endeavour to fit the penalty to the crime. It is much easier to get a conviction for manslaughter than for murder, and, as Senator Spicer indicated, it is much easier to obtain a conviction when the penalties are not extreme, than when the court has not full power to determine the penalty. This bill places the person who is to be called upon to make the vital decision as to whether a prosecution shall: be launched in a similar position to that of a court.

The Attorney-General will have to decide whether, on the evidence submitted, the person charged with an offence under this legislation is guilty, and, secondly, whether the offence justifies the imposition of the extraordinarily heavy penalties provided in the bill. “When, in the opinion of the Attorney-General, the evidence suggests guilt, but the nature of the offence is such that the infliction of the penalties provided would be outrageous, I suspect and, indeed, I hope, that the Minister will not agree to prosecutions. If the bill is administered in that way, it will constitute class legislation of an extreme character. People will be able to commit offences under this measure so Ions; as the crimes are not very serious or are not repeated. Members of the Opposition believe that anybody who infringes the law should suffer a just penalty. Therefore, we do not consider that the big men should be charged with offences, and that the small men should go free. Yet, under this measure, that will be the position. I ask the Government to consider the bill from that point of view,, and realize that, if a decision is made to prosecute, and if in the opinion of the judge the offence is trivial, and does not justify the imposition of the minimum penalty that must be imposed under the law, the judge will be loath, in the circumstances, to return a verdict of guilty. Therefore, this measure, as now drafted, would lead to the conditions which I believe honorable senators on both sides of the chamber desire to remove. The Opposition desires to assist in stamping out black marketing. The maximum penalty should be imposed where the offence justifies- it, but I claim that the desired objective cannot be achieved by means of this bill.

Senator ARMSTRONG:
New South Wales

.- I congratulate the Government, and particularly the AttorneyGeneral (Dr. Evatt), on the introduction of this measure. It is long overdue, and it adds lustre to the already great prestige of the Attorney-General. He has taken a step which required boldness on his part. The- measure is designed to deal effectively with those who are not prepared to play the game, but try to exploit the people for their own. financial benefit. This problem was side-stepped by the last Government, and I believe that the measure now under consideration might have the desired effect without a single prosecution. There are already indications that the proposal has had a most salutary effect. The Sydney staff of the Rationing Commission had many investigations pending, with a view to dealing with infringements of the rationing regulations. Both ‘Commonwealth and State investigation staffs have been spreading a net which they were ready to draw,, but as soon as this bill was introduced in the House of Representatives, abuses ceased. If people are convinced that the Government means to act vigorously, black marketing will be largely eliminated. Many of the investigations concerned refugees who have arrived in Australia within the last five, or six years. These people should have been most appreciative of the fact that they have been permitted to live in this country when other countries have refused to admit them. Instead of being most anxious to help Australia,, which had helped them, many did quite the reverse. Now they understand what the effect of this hill will be, and they are not likely to commit offences with regard to the sale of food or clothing,, or in the provision of services. The job of curtailing, black markets will be practically accomplished by the passage of this bill. I am afraid that, had the Government not provided for heavy penalties for offences against the law, the evil of black marketing would not be stamped out. I am convinced that the evil will disappear immediately this measure becomes law. I commend the bill to honorable senators, and hope that it will be passed without amendment.

SenatorKEANE (Victoria - Minister for Trade and Customs) [11.29]. - in reply - Whilst I frequently handle legislation in this chamber on behalf of other Ministers, on this occasion the bill under discussion concerns my department more than that of any other member of the Government, seeing that it deals with the Prices Branch, the rationing scheme, the restriction of imports, and the procurement of imports. If Senator McBride had been Attorney-General, he would have conferred with the legal officers in the preparation of a bill of this kind. The officers of the Attorney-General’s Department had a tremendous task before them, and they have inserted certain dragnet clauses because of the tricks resorted to in order to evade the effects of the fixation of prices. Loose trading has become more pronounced than ever, and methods of evasion of the law are devised by men with a considerable amount of ingenuity. A general clause is necessary. Any Attorney-General would do what has been done. The argument that minimum penalties are not necessary is not borne out by the experience of the Prices Branch, which has been dealing with this matter. As the result of its investigations, hundreds of prosecutions have been instituted, but for some unknown reason magistrates have almost laughed at the department. As examples of the ridiculous penalties imposed on traders convicted of offences, I instance the following -

Hibbert and Company, Alphington, Victoria, fuel merchants. - Prosecuted on the 17th April, 1942, and fined £3 on each of six charges. This was a typical example of black-marketing, because of an acute shortage of firewood. . After the prosecution the firm actually advertised wood for sale at excess prices. It was then declared, because prosecution had appeared to be ineffective.

Henry Reymond Gobbert, Inverell, New South Wales.- Convicted on the 22nd October, 1940, on seven charges for sale of, and for offering to sell, cornsacks at excess prices. A total fine of £120 was imposed although the firm had exploited wheat-farmers during a period of great shortage of cornsacks caused by the war.

Evan Evans Proprietary Limited, Melbourne. - Convicted on 19th December, 1940, on one charge relating to the sale of hessian and fined £5.

Hessian was in short supply, and there was no doubt that the firm had obtained increased profits. Yet a nominal fine was imposed.

  1. Donaldson and Company, jute merchant. Melbourne.- Convicted on the 19th November, 1940, for giving false information and for sales of hessian at excessive prices. Convicted and fined £5 on each charge. This was a thoroughly bad case, involving invoicing of goods at a fictitious price to evade prices regulations as well as giving false information. The goods were actually bought in India before the war. The sentence appears to have been grossly inadequate.

Atherton and Company Proprietary Limited and L. A. Wilkinson (Northern) Proprietary Limited, Brisbane. - Prosecuted on the 19th March, 1941, for refusing to give information, and each company fined £5. Again, on the 11th September, 1941, Atherton and Company Proprietary Limited was fined £15 for selling olive oil at excess prices. L. A. Wilkinson (Northern) Proprietary Limited was fined £15 for a similar offence. Both companies had attempted to cover up transactions in olive oil which was in short supply.

Certain Tamworth traders were prosecuted at Tamworth on the 9th February, 1942, for sales of common articles like tea, matches, butter and sugar, at excess prices. They all pleaded guilty, and the magistrate imposed a fine of £2 in each case. On this occasion, the fines were obviously inadequate, and the Attorney-General was compelled to issue a public statement suggesting that far too lenient a view was being entertained in cases of serious profiteering.

  1. Gilpin Limited, Melbourne. - Imported large stocks of piece goods prior to the war. and sold a portion of these at prices in excess of those prevailing pre-war. The company admitted the sales at excessive prices, and proceedings were launched against it on the 21st May, 1941. Six charges were made, but many more could have been sustained. After two charges had been proved, the magistrate asked if it were intended to press for penalties on the other four charges, stating that, in his opinion, there could have been hundreds of charges, and that no matter how many convictions he entered it would not influence the total combined penalty. On the 4th June, 1941, the company was fined only £25.

Senator A. J. McLachlan and others who have criticized the hill on the ground that heavy penalties may be inflicted on persons who have no intention to break the law are under a misapprehension concerning it. The measure has been drafted to deal with serious and deliberate cases only. Senator McBride could not have heard his leader (Senator McLeay) suggest this afternoon that a committee should be appointed to assist the AttorneyGeneral in arriving at proper decisions in cases of hardship or those in which the minimum penalty appears to be too severe. An amendment to give effect to his suggestion will be moved in committee. I assure the senator that no innocent person will be punished, but that the penalties are intended to apply only to deliberate attempts to flout the law.

The Government has been criticized for having been in office a year before introducing this legislation. The pricefixing organization was established by a previous government. With its establishment I have no fault to find. That government had similar experiences of profiteering, but it did not take any drastic action to deal with the problem although the price-fixing authorities, in addition to having a hostile public to contend with, received no support from magistrates.

A point to which early consideration will be given was raised by Senator A. J. McLachlan when he stressed the necessity for greater publicity being given to the vast number of regulations which are promulgated in war-time. The National Security Act, which was introduced by a previous government, was a necessary piece of legislation. Under it, the promulgation of large numbers of regulations from time to time is imperative. I agree that greater publicity should be given to some of the regulations, so that the community generally may know of them. Some time ago the present Government introduced fair rent regulations which apply to all States except South Australia and Western Australia. Under those regulations the tenant of a house, or of a room, may get immediate relief without cost. Previously the cost of bringing a case before the court was about £8, and the result was that many eases of injustice were allowed to pass rather than incur that expense in bringing the matter to court. Those regulations, although of great interest to large numbers of people, are not generally known. The need for greater publicity is recognized by the Government. The present legislation is imperative for reasons which have already been given. The penalties, although severe, are not so drastic as are imposed by the legislation in operation in Great Britain. I confess that I expected that the measure would pass through the Senate without much discussion, because I am convinced that every honorable senator believes that its underlying principles are sound. Drag-net clauses are necessary because of the difficulty of providing otherwise for every case that could arise.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 and 2 agreed to.

Clause 3 -

For the purposes of this act, “black marketing” means - and includes any other act or thing done, or omitted to be done, or any conduct, in contravention of the regulations, which is declared, by regulations made under this act, to be black marketing; . . .

Senator SPICER:
Victoria

.- This clause contains a definition of black marketing, and ‘as I indicated in my second-reading speech, its scope is extensive. From a reading of the clause it would appear from paragraph h that I should be guilty of an offence if I were to enter a grocer’s shop to buy a pound of tea and cut out the coupons myself instead of passing the book to the grocer for him to detach them. For that offence I could be imprisoned for three months. Having gone to those lengths to define the crime of black marketing, the Ministry was still not satisfied, because at the end of the clause numbers of other acts which at present are not defined, but which obviously the Minister contemplates defining in the future, will also be offences against the law. 1 move -

That the following words be left out: - “ and includes any other act or thing done, or omitted to be done, or any conduct, in contravention of the regulations, which is declared, by regulations made under this act, to be blackmarketing : “

It. is dangerous to leave with the Minister power to declare any other act to be black marketing, and, by that means, to make what he so declares to be black marketing - and it could be anything - subject to the minimum penalty of imprisonment for three months. Should the necessity arise later to add to the large number of offences, it will be easy to effect such an amendment. My request is reasonable.

Senator Keane:

– Believing that the clause as it stands is necessary for the reasons I have already given, I cannot accept the amendment.

Question put -

That the words proposed to be left out (Senator Spicer’s amendment) be left out.

The committee divided. (Chairman - Senator G. Brown.)

AYES: 15

NOES: 15

Majority . . . . Nil

AYES

NOES

The CHAIRMAN:

– The numbers of “ Ayes “ and “ Noes “ being equal, the question is resolved in the negative.

Clause agreed to.

Clause 4 - (1.) Any person who does any act or thing, or is guilty of any omission or conduct, which constitutesblack marketing within the meaning of the last preceding section shall be guilty of the offence of black marketing. (3.) The punishment for the offence of black marketing shall be -

  1. if the offence is prosecuted summarily - imprisonment for not less than three months and not more than twelve months or, if the offender is a body corporate, a fine ofnot less than One thousand pounds and not move than Five thousand pounds; and (4.) The offence of black marketing shall not be presecuted without the written consent of the Attorney-General after report from the Minister administering the regulations in relation to which the offence was committed.
Senator SPICER:
Victoria

.- I move -

That, in sub-clause (1.), after the word marketing”, second occurring, the following words be inserted: - “ unless he proves that he did not know and had no reason to believe that the transaction or any part thereof constituted such an offence “.

This clause provides for all of the offences which are declared to be offences under the measure. We have been assured by the Minister in charge of the bill (Senator Keane), and also by the Leader of the Senate (Senator Collings), that it is not intended that this bill shall apply to other than flagrant offences. Having regard to the severe penalties imposed, I wish to make that position as clear as it can be made in the bill itself. I move my amendment in order to protect against prosecution any person who may commit any of the offences quite innocently. A precedent for the form of my amendment exists in the British act. I agree that it is unusual in relation to criminal offences to go so far as I suggest; but this is an unusual measure, which provides unusual penalties. For that reason, we require unusual provisions for the protection of individuals who are not morally guilty of the offences prescribed. The British act deals with the case of a person who receives a commission in respect of a transaction, which, or part of which, constitutes a breach of the control. I have adopted the language of the British act, and applied it to this clause.

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– Insofar as the proposed amendment concerns the innocent purchaser, it cannot be contended, in view of the safeguard that proposed prosecutionsbe first reviewed by a committee, that this safeguard is necessary. Insofar as it concerns the trader, it is clearly his duty to know what prices have been fixed. In his case, ignorance of the law is so flimsy an excuse as to excite immediate suspicion as to his bona fides. It would not be too much to say that it is an incitement to traders to keep themselves uninformed in regard to prices and so escape liability. I cannot imagine a more destructive provision. The amendment is not acceptable to the Government.

Senator SPICER:
Victoria

.- The Minister for Trade and Customs (Senator Keane) seems to have overlooked the fact that my amendment does not grant relief to a person who merely proves he did not know it was an offence. The accused has to go further. He has to prove that he did not know, and had no reason to believe, that the transaction was an offence. A trader would find it difficult to satisfy a court that he had no reason to believe that the transaction was an offence. A person who is obliged to prove to the satisfaction of the court the two things I have set out should not be brought within the purview of this measure, whatever his liability might be under the National Security Act.

Amendment negatived.

Thursday1, October 1942.

Senator LECKIE:
Victoria

– I move -

That, in sub-clause (3.), the words “not less than three months and” be left out.

I was rather astonished to hear the Minister in charge of the bill (Senator Keane) and others say that they did not want to obtain convictions under it, and were not seeking any. The argument of the Leader of the Opposition (Senator McLeay) and Senator Spicer was that it would be hard to secure convictions, because the minimum penalties were so high. This is different from all other legislation, and our aim should be to make the punishment fit the crime. The court should be trusted to decide the degree of criminality. If the maximum penalty were twelve months’ imprisonment, it should be within the discretion of the court to impose a shorter term. Whether it intends to do so or not, the Government will make it almost impossible to obtain convictions under the bill, but if it accepts my amendment, it will get convictions.

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– The absence of minimum penalties has made this legislation necessary. If I accepted the amendment, we should have the same experience that we have had so far under the National SecurityRegulations. They prescribe a penalty of £100 or six months or less, but only the lower penalties have been imposed, with the result that offenders have been laughing at us. I cannot accept the amendment.

Senator SPICER:
Victoria

– The Minister is apparently unaware that the National Security Regulations provide for any term of imprisonment and any fine, so long as he proceeds by indictment and not for summary conviction. He has complained about individual traders not being fined heavily enough, and seems to have had a couple of shots at them. If he was dissatisfied with the fines on the first occasion, why did he not proceed by indictment in the second instance? If he had, the case would have been tried before a jury, and imprisonment for an unlimited period could have been imposed on conviction. The Minister complains of the smallness of the penalties in circumstances of which he is not in a position to judge. The most that he can say is that, in general, it looks as though the penalties have been too light. He cannot say that a penalty has been too light in a particular case, and is not in a position to criticize the magistrate. The only one who could do so is the man who heard all the evidence and knew all the circumstances.

Amendment negatived.

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– Sub-clause 4 of clause 4 is as follows: -

The offence of black marketing shall not be prosecuted without the written consent of the Attorney-General after report from the Minister administering the regulations in relation to which the offence was committed.

I move -

That, at the end of sub-clause (4.), the following words be added : - “ and advice from a committee appointed by the AttorneyGeneral and consisting of a representative of the department administered by that Minister, a representative of the Attorney-General’s Department, and a representative of the branch of the Department of Trade and Customs known as the Prices Branch”.

That amendment is in consonance with an undertaking given in the House of Representatives, and asked for by honorable senators early in the debate.

Amendment agreed to.

Clause, as amended, agreed to.

Clauses 5 to 8 agreed to.

Clause 9 (Evidence).

Senator SPICER:
Victoria

– I wish to express briefly my opposition to the clause, a feature of which is that the averment of the prosecutor shall be prima facie evidence of the offence. It does not say so in those words, but that is how it works out, because the Prices Regulations provide that, in any proceedings for a contravention of or failure to comply with any of their provisions, or any order made in pursuance of them, the averment of the prosecutor contained in the information shall be prima facie evidence of the matter or matters averred. This bill picks up that provision by clause 9,. and enacts, in effect, that anything which is evidence for the purpose of a prosecution under the Prices Regulations shall be evidence for the purpose of a prosecution under the bill. Having regard to the seriousness ofthe offence, and the severity of the penalties prescribed, this goes a long way too far. Once we really believed that under British law a man was innocent until he was proved guilty. Here we go to the length of saying that all that the prosecutor need do, in order to establish that the accused is guilty of one of these offences, is to say that he is guilty.

Clause agreed to.

Clauses 10 and 11 agreed to.

Clause 12 (Notice of conviction to be displayed in or outside shops).

Senator LECKIE:
Victoria

– I should like a more adequate explanation of the clause from the Minister. The bill provides for penalties which are equally binding upon the party who purchases and the party who sells, but only the party who sells is to be subject to the penalty prescribed by this clause. I wonder how a purchaser who has no place of business can be dealt with under it. Is the scarlet letter to be imprinted on him, or is he to he otherwise branded, so that he will no longer be a cleanskin? The Government should delete the clause. It is archaic, and seems to be a survival from the Dark Ages. If the man is convicted, he will be in gaol all the time, and every body will knowit, so that the proposed placards will have no effect. If the Attorney-General (Dr. Evatt) thinks that the man is not sufficiently punished by imprisonment, he can instruct the Australian Broadcasting Commission to broadcast an account of the crime, or the newspapers to publish it. This and the next clause introduce a new principle into ordinary everyday Australian law. Our ordinary practice is not to kick a man. when he is down, and surely, if he is in gaol, he is down. I hope that the Government will show a little more sanity, and, not be so intoxicated with power as it appears to have been in preparing this measure.

Sitting suspended from 12.15 to 1 a.m.

Senator HERBERT HAYS:
Tasmania

– There can be no doubt that the wording of this clause is in accordance with the intention of the Government. I suggest that we might well consider clauses 13 and 14 in conjunction with clause 12 because they all relate to the same matter. I am sure that all honorable senators wish to see adequate punishment meted out to law breakers’, but the penalties provided in this and subsequent clauses are entirely without precedent. If honorable senators opposite believe that the penalties applicable to the wrongdoer himself are not severe enough, they should be increased, but, in the interests of humanity, we should not inflict punishment upon his wife and family. Yet that is what the effect of this clause would be. Innocent people would have their source of livelihood taken away from them. I am surprised that the Government should countenance a proposal such as this. Let the penalty fit the crime by all means and, if necessary, let it be sufficiently severe to act as a deterrent to other would-be wrongdoers, but surely there is no necessity to penalize innocent people. This measure reminds one of the Dark Ages, when wrongdoers were branded for life. There is no justification for such vindictive and spiteful sentences. Just because a man is sent to prison for breaking the law there is no reason why his wife and family should not be permitted to carry on a business inhis absence. A provision such as this would be a blot upon our statute-book, and 1 for one shall not support it. It savours of Gestapo methods, and I am amazed to think that a democratic government would consider it. Let us look at the matter fairly without letting our feelings towards those nefarious individuals who indulge in black marketing outweigh our judgment and discretion. When a man has paid the penalty of his crime, let him be a free man. The punishment which he has undergone may make him a better citizen. Penalties which may be imposed upon individuals for breaches of liquor licensing laws are much less severe than those provided in this bill, despite the fact that such offences may result in the ruin of thousands of people. The principle contained in these clauses is entirely wrong and I should be ashamed to support it.

Senator AYLETT:
Tasmania

– I contend that the penalties are not severe enough. Thieving from poor people is the most cowardly of all crimes. In any case unless it were proved that an individual had deliberately flouted the provisions of this legislation, he would not be convicted. Any business man who wilfully steals from his customers shouldbe very severely dealt with. In fact, he should be declared “ black “ for all time. Iwould favour making such offenders exhibit the placard proclaiming their offence for twelve months instead of three. If a person who is starving steals food to keep body and soul together, he is liable to be sent to gaol for three months, so why should those conducting black markets be dealt with leniently?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– It seems to me that we are losing hold of ourselves entirely when legislation such as this is proposed. If we pass this bill we shall be stamped as a retrogressive people. These proposals carry us back to the days of thumbscrews and the branding of criminals. The penalties provided in these clauses are the very essence of cruelty. Senator Aylett has referred to business men wilfully thieving from their customers, but I point out that quite innocent traders might lay themselves open to prosecution through ignorance of the law. The word “ wilful “ does not appear anywhere in this legislation. Senator Spicer attempted to secure the inclusion of a provision which would have met the point raised by Senator Aylett, but unfortunately his proposal was rejected. Obviously it would be extremely difficult to prove that any one wilfully committed an offence. This reversion to barbarism shocks me, especially as it comes from a party which preaches the doctrine of decency and humanity, and the Christian principles of democracy. I have heard criticism of the most violent and virulent character levelled against certain provisions of the Crimes Act which pale into insignificance when compared with the penalty clauses of this measure. I shall not support such a damnable piece of cruel legislation.

Senator LECKIE:
Victoria

– Have honorable senators opposite nothing to say about this clause? It is not an essential part of the bill, but even if it were, surely the wording would require some further attention. It provides that an offender may be sent to gaol for twelve months, and also that he must put up a notice outside his business premises indicating that he has been guilty of a serious offence. If he does not do so, he is guilty of a further offence, and can be imprisoned for a further twelve months. But how can a man who is in gaol put up a notice on his business premises? The clause also provides that if a man refuses or fails to comply with the provisions of this clause - it is quite understandable that he might fail to do so - the sheriff or marshal, or some other officer, shall put up the notice for him. In the meantime, however, the unfortunate man is liable to be imprisoned for a further twelve months on a second charge. The notice must be displayed for three months, and if, while the convicted person is in gaol, somebody removes it overnight, he shall again be deemed to be guilty of the offence of black marketing. Surely the Government is not dead to all sense of fair play. I realize that there is a precedent for legislation of this kind in Germany, where, if a man has committed the crime of being a Jew, he must wear a yellow band on one of his sleeves. The Government is starting out on a career of vindictiveness which is almost appalling. Suppose a man is cast into prison for twelve months for black marketing. Would he be released from gaol to enable him to exhibit the notice of conviction in or outside his shop? Is the Government so intoxicated with power that it ignores British fair play? It has fixed a higher penalty under this bill than has ever been provided in any other measure. Surely it will not be a party to this piece of legislation, which will be known as the “ Branding Bill “. I cannot imagine that the Government’s adviser in this matter, who, I presume, is Professor Copland, would advocate a measure of this kind. 1 have regarded him as a rather kindhearted man. Will the Minister in charge of the bill inform the committee on whose advice this inhuman penalty was evolved ? The Government is prepared to jump with hobnailed boots on a man who has already been ruined for life. For no other crime in the calendar from arson to manslaughter has such a penalty been provided.

Senator CAMERON:
Minister for Aircraft Production · Victoria · ALP

– The worst offenders in black markets are not small business men, but rich companies. Hence the tears almost of blood from honorable senators opposite over this clause. The rich companies have not only robbed the poor during the war, but they were robbing them prior to the war. On the outbreak of the present struggle, there were ample stocks of goods, but those companies seized an opportunity to build up their bank balances at the expense of the wageearners and small business men whom they had at their mercy, and up went prices. Thosepeople should be advertised for exactly what they are. It is not generally known among the unsophisticated section of the community that they are exploiters and robbers, and that they depend on exploitation and robbery from month to month and from year to year to build up the economic power which they wield. The Crimes Act, to which reference has been made, is directed against the man or group of men who would have the temerity to withhold their labour-power with the object of getting a reasonable wage. That act was intended to be used against the poorer section, but this bill is designed to he employed against the rich. Honorable senators opposite boast of what they are prepared to do to help returned soldiers, but the returned men are expected to pay interest in perpetuity to help rich men to increase their profits. The Government proposes to show the public exactly what those people are. The time has long passed when they should be allowed to pose as ultra-patriots and public benefactors. A contribution by them of £1,000 to charity is more than offset by a slight increase of the price of a commodity. It seems to me that those who drafted this clause have been rather leniently disposed towards those against whom it is directed.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I make a final appeal to the Government, although it has a sufficient number of supporters in this chamber to enable it to have this bill passed. Under this clause, the magistrate or judge is bound to require the person convicted of black marketing to exhibit a notice at his place of business giving particulars relating to the conviction. The clause provides: “The court shall require that person to exhibit “, &c. Is the Minister in charge of the bill prepared to move to alter “shall” to “may”? Such an alteration would, I think, modify the feeling which some honorable members of the Opposition have that this is a vindictive measure which may react on, not only the persons convicted of the offence, but also others to whom Senator Herbert Hays has referred. In the case of companies, this clause will affect the unfortunate shareholders, who may know nothing about the offence.

Senator HERBERT HAYS:
Tasmania

– The Minister for Aircraft Production (Senator Cameron) asserted that this clause is aimed at exploiting companies and combines which rob the people, but the opening phrase of the clause is: “Upon the conviction of any person “. There are thousands of small business people, and I suppose that the big companies would not form more than a per cent. of the traders in the community. I imagine that the Minister has misinterpreted the intention of the Government. Does the Minister in charge of the bill share the views expressed by the Minister for Aircraft Production? A man in charge of a business who indulges in black marketing should be punished, but the punishment should fit the crime. No man should be branded for life for anything short of murder. This provision goes beyond the guilty person, for it extends to his wife and children. It is harsh and cruel. I am not attempting to excuse racketeers. If the penalties set out in the bill are not considered to be a sufficient deterrent, let them be made heavier; but there is no precedent fortreating even the worst criminal in this way. It is a reversion to the days of the stocks and the thumbscrew. Let the penalty inflicted on the guilty person be as severe as the Government thinks necessary, but do not cause innocent persons to suffer for the guilt of others.

Senator ASHLEY:
New South WalesPostmasterGeneral · ALP

– If the suggestions of honorable senators opposite were adopted, the fundamental principles of this bill would be entirely destroyed. Drastic penalties have been provided in order that they may act as a deterrent against improper practices. The cases cited by the Minister for Trade and Customs (Senator Keane) demonstrate how unwise it would be to give a discretion to magistrates. I know of no instances of small traders being guilty of racketeering.

Senator Keane:

– The small traders are just as bad as the bigger ones.

Senator ASHLEY:

– So much has been said about the poor woman and the child, that I expected to hear honorable senators opposite make a plea on behalf of Indian hawkers. At a time when the nation is in danger, no punishment can he too severe on a person who indulges in profiteering.

Senator Herbert Hays:

– Why punish his wife and family for his offence?

Senator ASHLEY:

– In what way would the Myer Emporium Limited be affected other than by publicity being given to its offence?

Senator Herbert Hays:

– Why did not the Government prosecute that company?

Senator ASHLEY:

– Forty million separate transactions were involved, and, moreover, great difficulty would have been experienced in securing a conviction. The Government hopes that the . severity of the penalties will result in there being no need to prosecute any trader. I believe that the Opposition also does not desire that any case which would warrant a prosecution should arise. The Government is determined to stop black marketing.

Senator Herbert Hays:

– The Opposition is anxious to help the Government.

Senator ASHLEY:

– I repeat that no penalty is too great to impose on individuals who would take advantage of existing circumstances to exploit their fellow men.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– The PostmasterGeneral (Senator Ashley) said that he did not know of any small traders who hadbeen guilty of profiteering,but the Minister for Trade and Customs (Senator Keane), in his second-reading speech, gave a number of instances of small traders who had offended. The Government was not game to prosecute the Myer Emporium Limited, and its excuse that millions of separate transactions were involved is so much “bunkum”. Hibbert and Company, fuel merchants, of Alphington, Victoria, who were fined £3 on each of six charges, is not a big firm. Other small traders have been prosecuted. The provisions of the bill are too drastic. I cannot understand such -clauses being included in any legislation. The Minister for Aircraft Production (Senator Cameron) gave the reason why this legislation had been introduced, when he said that in the past the poor had been robbed. It would appear that the Government is acting in a spirit of vindictiveness. That is not the spirit in which laws should be framed.

Clause agreed to.

Clause 13 (Particulars of conviction may be broadcast) .

Question put -

That the clause stand as printed.

The committee divided. (The Chairman - Senator Brown.)

AYES: 15

NOES: 14

Majority … 1

AYES

NOES

Question so resolved in the affirmative.

Clause agreed to.

Clause 14 agreed to.

Clause 15 (Exemption from prosecution of witness who has made full disclosure).

Senator LECKIE:
Victoria

– Is this a clause which the Government has overlooked, or has it been inserted deliberately in order to encourage one party to an offence to give evidence against his accomplice? Under this clause, either the seller or the buyer involved in an offence can escape punishment by making a full confession, and giving evidence against his accomplice. Is that the sort of thing that we wish to encourage in matters of this kind? Honorable senators should be given an opportunity to study this measure fully. For years we have heard denunciations of “ scabs “ and “ rats “. This provision will encourage such persons. It will encourage the “ rat “, who will put away his companion in crime. A person who turns King’s evidence may receive a pardon; but he is not entitled to such treatment under the law.

Senator Cameron:

– What about

Senator LECKIE:

– This provision will encourage that class of person. A man may persuade another person to sell an article at a price higher than the prescribed price. Then the former need only give evidence against the seller to escape punishment. If that is the Government’s conception of fairness, all I can say is that I am disappointed.

Senator ASHLEY:
New South WalesPostmasterGeneral · ALP

– Senator Leckie appears to be under a misapprehension concerning this clause. He has referred to “ scabs “ and “ rats “. In some cases, the authorities will experience considerable difficulty in obtaining evidence for the purpose of launching a prosecution. Senator Leckie would not suggest that offences under this measure are as serious as murder, or other major crimes. When it is believed that more than one person is involved in a major crime, the authorities often advertise a free pardon to any person who is prepared to turn King’s evidence, provided he or she has not actually committed the crime. This course is followed because of the difficulty of securing evidence. Obviously, this provision will be applied only when, owing to lack of evidence, it is impossible to launch a prosecution.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I suggest to Senator Leckie that this provision is almost indispensable to the authorities in handling this class of crime in which two or more persons are involved. It is designed to cover such persons as Senator Cameron has described as agentsprovocateurs. Admittedly, it is a most undesirable business; but such procedure is essential in the case of offences which cannot otherwise be proved. My objection to the clause is that it may not prove effective, because many tribunals refuse to have regard for the evidence of an accomplice. However, in view of the fact that a similar provision already applies in respect of our criminal law, I suggest to Senator Leckie that we should not oppose the clause.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– Earlier in the debate on this hill, Senator A. J. McLachlan pointed out that courts generally decline to act upon the evidence of an accomplice to a crime, unless that evidence be substantiated by independent evidence. I presume that this provision has been made in order to get over that d difficulty

Clause agreed to.

Clause 16 agreed to.

Clause 17 - lue Governor-General may make regulations, not inconsistent with this Act, prescribing all matter? which are required or permitted to he prescribed, or which arc necessary or convenient to be prescribed, for giving effect to this Act. and, in particular, for -

  1. making provision with respect to the proof of any matters in any prosecution for thu offence of black-marketing; and
Senator SPICER:
Victoria

– I move -

That paragraph (f<) be left out.

Earlier, I circulated this amendment, together with another amendment designed to omit, paragraph a of this clause. I have already tested the feeling of the committee with respect to a provision similar to that contained in paragraph a. and I do not propose to repeat that attempt. Under another clause, power is left with the Minister to prescribe additional offences under this measure: and under this clause he can, by regulation, prescribe the evidence which will establish an offence. That means that the Minister can say that a particular matter shall be proved in a particular way, and the proof he prescribes in regulations shall be sufficient proof of a particular fact. I do not think that the Minister should have the right to make regulations for that purpose.

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

.- The Government cannot accept, the amendment.

Senator ARTHUR:
New South Wales

– In considering the amendment, it is necessary to examine the clauses already agreed to by the committee, and to correct, some of the misstatements made in the debate. For instance, Senator Leckie said that under clause 12 a person could be convicted and imprisoned and would not be able to exhibit the necessary public notice. He omitted to tell the committee that if the convicted person failed to do so, as he might well do if he were in gaol, it could be done by the sheriff, marshal or a member of the police force of the Commonwealth or a State. Paragraph b. of clause 17 is needed to enable the Attorney-General, or the Minister administering the act, to ensure that the necessary proof is available. On Friday in Sydney I purchased at Coles Stores for ls. a pair of sleevelinks for a friend. On the following Monday I bought for another friend exactly similar links at a certain place in Swanstonstreet, Melbourne, and was charged 3s. 6d. I took them and the receipt to the Prices Commissioner’s office, and stated what had happened. Four days afterwards I was told on the telephone that the matter had been looked into, but there was no ground on which to proceed. Paragraph b enables regulations to be issued to cover any cases that may crop up. New regulations may become urgently necessary in order to deal with certain people who have evidently been trying to induce the Senate to protect them in their dealings with the community. They may bo unconvicted criminals, and, if they are, they should be exposed. The activities of certain magsmen, confidence men, whisperers and urgers, who call themselves big business men, may have to be disclosed. Yesterday Senator Allan MacDonald spoke about what he called the Fascists of the Trades Hall. Perhaps under this provision the much more dangerous class of people I have mentioned will be detected. If necessary, I could name certain big business men who are associated with large companies throughout Australia. We frequently see them displaying themselves, clad in the dress suits of flunkeys, robbing the poor and making themselves rich, although their balance-sheets would not, stand examination by an honest costing or public accountant. Such people are making money out of the community be overcharging, and regulations are urgently needed to enable whatever government is in power to deal with them.

Senator LECKIE:
Victoria

– Senator Spicer has described in legal terms what the clause means. In plain, blunt language does it mean that the Attorney-General or the Governor-General in Council may prescribe that all the proof that is necessary against a man is that he has been accused of the crime? Then, if the Government cannot get a conviction in any other way, all it has to do is to make such a regulation, and that can be done under this paragraph. Carried to its logical conclusion, it will be the end of ordinary justice and fair play in Australia. It the Government accused a man of a crime, the judge would have to convict him, and imprison him for at least twelve months. Under present conditions, without this bill, evidence sufficient to convince the judge that the man is guilty must be forthcoming.

Senator ASHLEY:
Postmaster-General · New South Wales · ALP

– I take if that the sub-clause covers cases analogous to that of a burglar who is caught with the booty on him, and is therefore naturally assumed to be guilty. The clause may also give extra protection to an accused person, because the regulations may make necessary a much greater volume of evidence before a conviction can be recorded. Everything will depend upon the way the regulations are framed. I have sufficient confidence in the AttorneyGeneral’s Department to believe that they will be drafted with the greatest possible degree of equity.

Senator CAMERON:
Minister for Aircraft Production · Victoria · ALP

– Paragraph b is necessary. The validity of the act may be contested, and the High Court may rule that some provision in it is deficient. Such a decision may defeat the purpose of the Government, which is to suppress black marketing. This paragraph will then give to the Governor-General in Council the right to make regulations to remove the defect, whatever it may be. The draftsman must, have had in mind what was likely to happen when it came into force, and evidently regarded a provision of this kind as a necessity to guard against untoward happenings.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I cannot see why the paragraph is necessary. Senator Spicer referred earlier to clause 9, by which the Government seems to have excelled itself in establishing proof, because under it the averment itself is proof. Therefore, I cannot imagine what this paragraph is directed at. I see no reason why the m atter should be carried any farther than it has been in clause 9, which the Committee has already agreed to. The wording of paragraph b of clause 17 is curious. It reads - (b)making provision with respect to the proof of any matters in any prosecution for the offence of black marketing;

I cannot see how we could get anything wider than clause 9. This provision seems to me to be entirely unncessary. If it is an attempt to alter the substantive law in regard to evidence it should not be passed.

Senator FRASER:
Minister for External Territories · Western Australia · ALP

– The retention of this clause is essential, and I hope that it will be agreed to. It has been ascertained that the Commonwealth Government is being charged excessive rates by the private owners of certain transport services for the carriage of war material. Without this clause, it wouldbe impossible to prove that over-charging is taking place. At present, I doubt if we have even the power to compel refunds of the amounts over-charged, but if this clause be agreed to it will be possible, not only to obtain refunds, but also to make over-charging an offence. I have been carrying out a check of some of our private transport companies which are carrying war material, and as the result it has been possible to have freight charges reduced from 7.75d. a ton mile to 3½d. a ton mile, thus effecting a substantial saving to the Government. If this clause were not included, it is possible that the transport companies to which I have referred would escape punishment. Paragraph b of this clause provides for the framing of regulations for “ making provision with respect to the proof of any matters in any prosecution for the offence of black marketing “.

Senator Leckie:

– What proof does the Minister want?

Senator FRASER:

– We want the proof that is essential to secure a conviction. Under this clause, that can be provided for by regulation.

Senator LECKIE:
Victoria

– The Minister for External Territories (Senator Fraser) apparently is concerned only with securing a conviction, and does not care about obtaining proof of the offence. He has made quite plain his interpretation of the objects of this clause. I should like to know, however, whether the Minister’s interpretation is the correct one? Is his interpretation in accordance with the advice of the legal men who were responsible for drafting this measure? If so, it seems that we have a penalty in- search of a crime, which apparently is to be provided by means of regulations, without any proof being required.

Senator FRASER:
Minister for External Territories · Western Australia · ALP

– ‘Senator Leckie has not correctly stated my interpretation of this clause. The words I used were “ making provision with respect to the proof . . . “. Obviously, an accused person would be either convicted or acquitted on whatever evidence was available.

Senator HERBERT HAYS:
Tasmania

– The committee has had two interpretations of the meaning of this clause - one from the Minister for External . Territories. (Senator Fraser) and the other from Senator Leckie. Are they both right or are they both wrong? Will the Minister for Trade and Customs (Senator Keane) say just what this clause does mean?

Senator KEANE (Victoria - Minister for Trade and Customs) [2.26 a.m. - An example of the manner in which this provision could be used may be found in clause 12, sub-clause 5, under which a person convicted of black marketing may be required to print particulars of his conviction on his letterheads. Surely there is nothing unfair in prescribing that letterheads bearing a man’s name and address shall be prima facie evidence that they are his. The amendment moved by Senator Spicer is substantially the same as the one which was defeated earlier, and is not acceptable to the Government.

Senator SPICER:
Victoria

– This amendment is not the same as that which I moved earlier. It is a different matter altogether. The part of this amendment which was the same as that which I moved earlier has been left out. This amendment deals with a matter, which so far as the bill is concerned, is either meaningless, or suggests hidden dangers which I do not understand. In clause 10 there is a provision which, in effect, provides that the averment of the prosecutor shall be prima facie evidence of an offence. In addition to that the Government wishes to enable the Governor-General,, by means of regulations, to make other provisions about the proof of the offence. If the Government wishes to include a provision that letterheads having a man’s name and address shall be prima facie evidence that they are his, then it should do so. It should not be left to the GovernorGeneral to prescribe, by means of regulations, the evidence that is required to prove an offence which the Minister himself is going to create.

Amendment negatived.

Clause agreed to.

Clause 18 agreed to.

Title agreed to.

Bill reported with an amendment; report adopted.

Bill read a third time.

page 1182

INCOME TAX ASSESSMENT BILL (No. 2) 1942

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

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

Second Reading

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– I move -

That the bill be now read a second time.

This measure, which proposes to amend the Income Tax Assessment Act, is a rather unusual piece of income tax legislation, in that its main object is to acknowledge in the income tax law of the Commonwealth the additional wartime obligations imposed upon industry and commerce, and to provide special concessions designed to grant relief to the taxpayers concerned. In particular, the bill provides special allowances in respect of plant, machinery and buildings used for war purposes; special concessions to mining companies producing metals and minerals required for use in, or in connexion with, the prosecution of the war; and also further concessional allowances to members of the Forces. The bill contains several other amendments, but they are of a machinery or technical nature and may best be considered in committee. This measure has been favorably considered by the Special Taxation Committee, whilst the principal amendments have also been the subject of report by the Taxation Advisory Committee.

One of the more important amendments embodied in the bill is designed to provide concessions to the metalliferous mining industry. The ‘Government, as honorable senators are aware, is constantly urging mine-owners to increase the production of metals and minerals which are required for war purposes. It has also established a Commonwealth Minerals Committee to render assistance in this respect, and also to deal with the prices of minerals. The burden of taxation is, of course, an important factor in estimating the returns that the mining community may receive from accelerated war-time production. The mineral deposit is the principal asset of a mining company. It is, however, a wasting asset; consequently, increased production accelerates the rate of exhaustion of the mineral deposit and thus shortens the life of the mine. Moreover, as war-time taxation will absorb a considerable portion of the profits derived from these operations, neither the company nor the shareholder will receive a fair return from the enterprise unless some form of compensation is granted by the Commonwealth. The bill, therefore, proposes that 20 per cent, of the profits- derived from the production of those base metals and rare minerals which are specified by regulation as required, for use in, or in connexion with, the prosecution of the war, shall be exempt from income tax. However, to meet those cases where an exemption of 20 per cent, will not afford reasonable compensation for the depreciation of a mine resulting from the increased production undertaken for war purposes, the bill further provides that the percentage may, in certain circumstances, be increased. If a taxpayer considers that he is entitled to a higher exemption than 20 per cent., he may apply to a board of referees constituted under the War-time (Company) Tax Assessment Act for an increase in the statutory percentage, and the board will have power to grant such additional exemption as it considers just. It is also proposed that the exemption shall extend to dividends paid wholly and exclusively out of the profits exempted by the above-mentioned provisions. In order that shareholders may receive the benefit of the intended exemption, there is a further provision that, where a metalliferous mining company has paid dividends during the year ended the 30th June, 1943, 20 per cent, of those dividends shall be deemed to have been paid out of exempt mining profits, and, to that extent, exempt from tax in the hands of the shareholder recipients.

On the recommendation of the Taxation Advisory Committee, the Government also proposes to insert in the law special provisions regarding the allowance of depreciation of plant and buildings installed or erected for war purposes. Before explaining the Government’s proposals regarding depreciation of war plant, I should perhaps first advise honorable senators that the Commissioner of Taxation has ruled that depreciation may be allowed at treble the normal departmental rates in those cases where, for example, plant is worked three shifts. This ruling of the commissioner will, it is believed, in most instances, enable just and adequate depreciation allowances to be deducted in the assessments of taxpayers. It is recognized, however, that the determination of the actual depreciation allowable is an extremely difficult task, and that cases will, therefore, arise which have not been, or cannot be, fairly dealt with under the existing terms of the law. It is, therefore, proposed that if a taxpayer considers the depreciation allowance granted by the commissioner inadequate, he may make application to have the question determined by the Wartime (Company) Tax Board of Referees after the war. This board will have power to fix the rate of depreciation allowable in respect of the war period. Power is also to be given to the commissioner to amend any war-time assessment for the purpose of giving effect to these decisions of the Board of Referees. The present law, as honorable senators are aware, makes no allowance for depreciation of buildings except where the building forms an integral part of the plant housed therein. The bill, however, contains a special provision permitting a deduction in respect of any depreciation, or loss on sale or disposal, of buildings acquired or erected, after the 30th June, 1938, for war purposes. This deduction also will be allowed by means of a postwar adjustment of the taxpayer’s wartime assessments. Taxpayers desiring such a deduction will be required to establish before the “War-time (Company) Tax Board of Referees that the value of the buildings as at the end of the war is less than cost, or that either prior to, or within two years after, the termination of the war, the buildings had been sold for less than cost. “‘Cost” is defined to include, amongst other things, any loss arising from the abandonment of any old premises in consequence of the construction of the new buildings. This deduction will extend to alterations, additions and extensions made, after the 30th June, 193S, to existing buildings, for war purposes. Applications for these deductions regarding war plant and buildings will not be required to be lodged until after the Avar, but a condition of the concession will be that each application shall be accompanied by a certificate obtained from the appropriate Commonwealth department not later than six months after the commencement of the act. “If the plant or building is installed, erected or acquired after the commencement of the act, the certificate must be obtained not later than six months after the date of acquisition or erection of the plant or building. In order to assist the Board of Referees in the difficult task of determining the deductions which should be allowed under the proposed provisions, it is also provided that the board may, if it so desires, be assisted in its deliberations by expert advisers who, however, shall act only in an advisory capacity.

Special provisions in the bill relate to the treatment, in the assessments of the taxpayers concerned, of insurance moneys received upon the loss or destruction of plant or machinery in respect of which depreciation is allowable. Under the present law, if the insurance moneys ex- ceed the depreciated value of the property lost or destroyed, they are included in the taxpayer’s assessable income to the extent of the amounts previously allowed as depreciation of his income tax assessments. Thus, any loss of revenue resulting from excess depreciation allowances is recouped to the Commonwealth. These provisions, though quite reasonable in normal times, operate inequitably in periods of high taxation. In many instances, deductions will have been allowed in years when rates of tax were low, whilst the amount of assessable insurance moneys will be included as income in a year when rates of tax are high. A further inequity is that, in some cases, the insurance moneys will have been so reduced because of the amount of tax imposed thereon, that the taxpayer may be left with insufficient funds with which to replace the lost plant. It is proposed, on the recommendation of the Taxation Advisory Committee, that if depreciable assets are lost or destroyed during the present war, the assessable portion of the insurance moneys should be relieved of tax, and the amount on which future depreciation should be allowed, reduced by a corresponding amount. The bill, therefore, provides, that if the plant is replaced during the year of loss, the value of the new plant may be reduced, for depreciation purposes, by the amount of assessable insurance moneys. If it is not replaced during that year, the assessable insurance moneys may be applied in reduction of the depreciated value of any other depreciable assets of the taxpayer. These provisions will grant immediate relief to most of the taxpayers concerned. However, in order to meet those cases where the plant is not replaced during the year of loss, and the whole or a part of the insurance moneys is not applied in reduction of the depreciated value of other assets, there is a further provision that, if in such cases the plant is replaced at any time within two years after the termination of the war, the amounts so included as assessable income may be excluded from the taxpayer’s assessment, and the depreciated value of his new plant reduced by a corresponding sum.

Clause 12 of the bill provides for the allowance of a deduction in respect of enemy raids precautions expenditure incurred for the purpose of protecting persons employed, or premises used by the taxpayer for the purpose of producing assessable income. It is proposed, however, that in determining the deduction allowable, the amount of such expenditure shall be reduced by the value of any enduring benefit created thereby, and, in addition, by any amount recouped to the taxpayer by any government, authority, or other person. The deduction will not extend to expenditure incurred by the taxpayer on his private residence. As cases may arise in which there is difference of opinion between the Commissioner and the taxpayer as to whether the expenditure has resulted in an asset of an enduring value, and also as to the value of any asset so created, it is also proposed that a taxpayer who is dissatisfied with the decision of the Commissioner upon any such question shall have a right of reference to the War-time (Company) Tax Board of Referees.

The Government has also decided to adopt the recommendation of the Taxation Advisory Committee with regard to funds established by medical practitioners, and other professional persons, to assist those members of their profession who are engaged on war service. Clause 15 of the bill, therefore, proposes that provisions similar to those embodied in the New South Wales Income Tax Management Act be inserted in the Commonwealth law. The effect of these provisions will be that amounts paid to the fund by members in accordance with the agreement will be allowable deductions, whilst amounts received from the fund wil] form part of the assessable income of the beneficiaries. By clause 12 of the bill, it is proposed that income tax paid outside Australia on ex-Australian dividends that are included in assessable income shall be an allowable deduction to the taxpayer. The clauses relating to gifts and donations have been inserted in the bill in consequence of the representations made to the Government by various bodies. It is now proposed that gifts and donations made during the year ended the 30th June, 1942, shall be allowed as a deduction from income as formerly. In regard to gifts made during subsequent years, the bill provides that in the case of companies the allowance by way of a deduction from incomes will be continued. In the case of individuals, however, the allowance will be made by way of a tax rebate.

It is also proposed to give to public companies the same right of election as is given to private companies to deduct, in arriving at undistributed income, Commonwealth ordinary income tax payable in respect of the income of the year of income, instead of Commonwealth ordinary income tax paid during that year, lt is proposed also that the right of election should be extended to war-time company tax payable in respect of the company’s income of the year of income, instead of the war-time company tax paid during that year. Private companies are not liable to pay war-time company tax. When this right of election was given to private companies last year, the right was not extended to public companies largely because there was no evidence that, at that time, the deduction of Commonwealth taxes paid, in lieu of Commonwealth taxes payable, operated inequitably as in the case of private companies. Since last year, however, evidence has accumulated that there are some cases of public companies with rising profits and correspondingly increased taxes, mainly war-time company tax, which are adversely affected by being denied the right to deduct Commonwealth taxes payable in lieu of Commonwealth taxes paid. It is proposed, therefore, to insert in the provisions of Part IIIa. of the principal act, which imposes the tax on the undistributed income of public companies, a similar right of election to that given to private companies last year.

The bill further provides that where a company so elects to deduct, for the purpose of ascertaining its undistributed profits of the year ended the 30th June, 1942, or substituted accounting period, Commonwealth taxes payable in lieu of Commonwealth taxes paid, Commonwealth ordinary income tax payable in respect of the financial year 1942-43, shall be calculated at the rate of 4s. in the £1 instead of at the full rate of 6s. in the £1. Under the uniform income tax plan, the Commonwealth rate of ordinary income tax payable by companies was increased to 6s. in the £1. This rate of 6s. represented, in effect, the existing Commonwealth rate of 4s. plus an average rate of 2s. to replace the State income tax formerly payable by companies. In the great majority of cases the State income tax assessed for the financial year 1941-42 would be paid by the companies during the year ended the 30th June, 1942, or the accounting period substituted for that year. Under the existing law such amounts would be allowable deductions in arriving at the company’s undistributed income of the year ended the 30th June, 1942, or substituted accounting period. The effect of the proposed provision, therefore, is that in arriving at the company’s undistributed income of the year ended the 30th June, 1942, or the substituted accounting period, a company which elects to adopt Commonwealth ordinary income tax payable in respect of the income of the year of income, in lieu of Commonwealth ordinary income tax paid during that year, would be entitled to receive deductions in respect of State income tax paid during the year, and also Commonwealth ordinary income tax payable in respect of the income of the year calculated at the rate of 6s. in the £1. Accordingly, unless some adjustment were made, the company would receive a double deduction in respect of State income tax; first, the State income tax paid during the year ended the 30th June, 1942, and, secondly, the equivalent of the State income tax payable in respect of the income of that year. It is therefore proposed by this amendment that the calculation of the Commonwealth ordinary income tax payable shall be based on a rate of 4s. in the £1 instead of 6s. in the £1, thus excluding the equivalent of the State income tax payible in respect of the income of the year ended the 30th June, 1942. This adjustment will be made in arriving at the company’s undistributed income for the year ended the 30th June, 1942, only. For subsequent years the deduction for Commonwealth income tax payable will be calculated at the full rate. The right of election provided in the bill is to be exercised in respect of the year ended the 30th June, 1942, before the 31st December, 1942. The Commissioner has a discretion to extend this time.

The law already gives private companies a right of election to deduct Commonwealth taxes payable in lieu of Commonwealth taxes paid, for the purpose of arriving at the amount of undistributed income. The law also permits a private company to deduct State income tax paid during the year of income in respect of the financial year 1941-42. The effect of this, therefore, is that a company which has elected to adopt Commonwealth ordinary income tax payable, will also receive a double deduction in respect of State income tax in its private company assessment for the financial year 1942-43. This concession is not justified and, for the reasons which I have already given in regard to public companies, it is proposed that in ascertaining the undistributed income of the year ended the 30th June, 1942, of a company which elects, or has elected, to deduct Commonwealth taxes payable, the Commonwealth ordinary income tax payable in respect of the income of the year ended the 30th June, 1942, or the company’s substituted accounting period, will be calculated at the rate of 4s. in the £1 in lieu of 6s. in the £1. For subsequent years the Commonwealth income tax payable will .be calculated at the full rate. As some private companies which have already exercised the option given to them under the existing law may desire to revoke that election, the Commissioner of Taxation has stated that, under the authority already given him by the law, he is prepared to permit any such private company which so desires to revert to a “ taxes paid “ basis. It is proposed to require a private company to furnish notice of its election on or before the date of the furnishing of the first return to which the election applies. If, however, a private company has already lodged its return of income for the year ended the 30th June, 1942, or substituted accounting period, it is to be allowed until the 31st December, 1942, in which to exercise its option.

The bill also gives effect to the recommendation of the Taxation Advisory Committee to amend the provisions re- lating to the assessment of overseas film companies. At present, 30 per cent. of the gross income derived by these companies under their contracts with their subsidiary Australian distributing companies is deemed to be taxable income. The overseas company, however, has the right to have this percentage reduced if it satisfies the Commissioner that its Australian net profits represented less than 30 per cent. As these provisions have proved difficult and unsatisfactory to administer, and as the income tax yield from these overseas companies over a series of years has proved to be abnormally low, it is proposed to reduce the percentage to 10 per cent., and to withdraw the right given to the companies to have the percentage still further reduced. As a result of the representations made by the companies, however, it has been decided that where customs duties or sales tax is paid directly or indirectly by the overseas company, on films imported into or printed in Australia, out of its share of the gross income arising under the contract, such share shall be reduced by the duties and sales tax, and the 10 per cent. will be calculated upon the net amount.

In view of the representations made by the Life Offices Association, the Government has also decided to amend the provisions relating to the method of ascertainment of the “ mutual income “ of a partly mutual life assurance company. “ Mutual income “ is taxed at the concessional rate of 5s. in the £1, whereas tax is levied on the “ non-mutual “ income of such a company at the full company rate of 6s. in the £1. Under the terms of the present law, the amount of “ mutual income “ is ascertained by comparing the profits divided among policyholders for the year of income with the total profits derived by the company during the same year. The Government is convinced that, because of the necessity to create special reserves during wartime, this provision may operate unfairly, as only a relatively small proportion of the profits may actually be divided among either policy-holders or shareholders. A more appropriate method would be to compare the profits divided among policy-holders with the total profits divided among both policy-holders and share-holders. Clause 23 proposes that this formula he adopted.

The concessions proposed in regard to members of the forces take the form of a special deduction which is to be allowed to those on the lower income ranges. There will be no liability to income tax where the net income of the member of the forces does not exceed £250. The amount of tax payable on £251 will he 10s. The special deduction is gradually reduced until it vanishes at £355.

The other amendments, as I have already indicated, are machinery or technical amendments which may best be dealt with in committee. I commend the bill to honorable senators.

Motion (by Senator Spicer) negatived -

That the debate be now adjourned.

Senator SPICER:
Victoria

– I am astonished at the conduct of the Ministry in introducing a complicated taxation measure containing 33 clauses, which, so far as I know, no member of this Senate apart from the Minister for Trade and Customs (Senator Keane), Senator Courtice and myself has seen previously, at half-past two o’clock in the morning, and asking honorable senators to proceed to pass it through all stages.

Senator Collings:

– Honor able senators opposite have had all day to see the possibilities ahead of them.

Senator SPICER:

– We did not know that this bill was being brought forward.

SenatorCollings. - Honorable senators opposite wasted all the afternoon.

Senator SPICER:

– I repeat that we did. not know that this bill would be brought forward. We have all day to-morrow, and Friday, and if we so desire, all next week, to deal with the Government’s legislative programme. The action of the Minister makes an absolute travesty of parliamentary procedure. I suggest that even the Minister who introduced the bill does not understand it; I say that out of no disrespect for him. I have some understanding of the complicated provisions of this measure, as has also Senator Courtice.

Senator Collings:

– All its provisions are concessions.

Senator SPICER:

– The Senate is entitled to sufficient time to study the bill and to deal with it clause by clause, so that honorable senators may be convinced that the concessions are fair; but we shall not have an opportunity to do so. Indeed, we have not had an opportunity to read the bill, let alone study it. I am convinced that the Leader of the Senate (Senator Collings) could not pass an examination in a single clause of this measure. He does not know what it provides. In the circumstances, I shall not pretend to deliver a second-reading speech.

Senator Collings:

– There has been pretence all day.

Senator SPICER:

– No. But this action of the Minister in forcing an important measure through the chamber in the early hours of the morning is a pretence of parliamentary government. The Minister has said that he intends that the bill shall be passed through as quickly as possible.

Senator Collings:

– I have not said anything of the kind. Honorable senators may take their time to discuss the measure.

Senator SPICER:

– I asked for an adjournment, but it was refused. I ask now that the debate shall be adjourned until 11 a.m.

Senator Collings:

– No.

Senator SPICER:

– The Leader of the Senate refuses my request. He has discovered that he has a majority, and he will use it, even if by so doing he destroys the right of the Senate with respect to this bill. He proposes that the Senate shall be turned into a machine to force this measure through. I shall not go through the farce of attempting to deliver a second-reading speech. The whole procedure is a farce. My only comment in relation to the bill is to say that not every provision in it was approved by the taxation committee. The whole bill was not accepted by that body.

Senator Collings:

– No one said that it was.

Senator Aylett:

– The committee does not govern the country.

Senator SPICER:

– At least, the Minister is determined that honorable senators shall be ignored. I repeat that the bill as a whole has not been approved by the taxation committee.

Senator Collings:

– No one said that it had been.

Senator SPICER:

– Then let us have a look at it.

Senator Collings:

– Go ahead !

Senator SPICER:

– I direct attention to the provision in respect of the exemption of soldiers’ pay from taxation. It is put as an exemption which is extended to soldiers; but it is limited to soldiers whose incomes do not exceed a certain amount. There is much to be said for the view that an exemption from income tax which is granted to men on the basis of their service in the armed forces should be extended to all members of the armed forces, regardless of the amount of their income. In that respect, this provision was not recommended by the committee.

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– in reply - The objection taken by Senator Spicer to the Government’s decision to proceed with this measure forthwith has some substance. However, I remind him that some days ago, proposed amendments to this measure were circulated among honorable senators, whilst amendments effected in the House of Representatives were distributed to honorable senators last evening.Consequently, it cannot be said that the proposed amendments have been sprung on honorable senators. I repeat that the Government is very anxious to passits financial and taxation measures. Prior to this evening, honorable senators have not been asked to sit after 1.30 a.m.

Question resolved in the affirmative.

Bill read a second time.

Motion (by Senator McLeay) put -

That it he an instruction to the Committee of the Whole on the bill to consider an amendment to Section 23 of the Principal Act.

The Senate divided. (The President - Senator the Hon. J. Cunningham.)

AYES: 12

NOES: 14

Majority . . . . 2

AYES

NOES

Question so resolved in the negative.

In committee:

Clauses 1 to 13 agreed to.

Clause 14 (Deduction for member of defence force).

Senator COLLETT:
Western Australia

– I should like the Minister to explain the definition of a member of the Defence Forces in respect of this clause.

Senator Keane:

– The only definition I can give is any member of the Defence Forces. The term is all-embracing.

Clause agreed to.

Clause 15 -

After section one hundred and two of the principal act the following section is inserted in Division 6: - “ 102aa. Where, under the terms of an agreement in writing, a taxpayer carrying on a business has undertaken to pay part of the proceeds of that business to the trustees of a fund ….

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– I move -

That, in proposed new section 102 a a, the words “ in writing “ be left out.

This amendment is being made at the suggestion of the Leader of the Opposition in the House of Representatives. Its purpose is to extend the scope of the provision for the deduction of contributions made to those funds which have been established for the benefit of persons who are engaged on war service and their dependants. Under the provision, as it stands at present, the deduction is allowable when the payment to the fund is made under an agreement in writing. The Leader of the Opposition in the House of Representatives (Mr. Fadden) Las represented to the Government that there are cases where the payments are not made in terms of agreements in writing but under parole arrangement. This amendment will bring the payments made under parole agreements within the ambit of the provision and will provide a deduction to the taxpayers making those payments. Receipts from the funds will be assessed as income from personal exertion in the hands of the beneficiaries.

Amendment agreed to.

Clause, as amended, agreed to.

Clauses 16 and 17 agreed to.

Clause 18 (Application of division to primary producers).

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I should like an explanation of this clause. At first glance it would appear that it introduces a. new principle in respect of the averaging of incomes of primary producers.

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– The proposed amendment is designed to overcome an unintended effect of the averaging provisions of the principal act. The intention of the law in regard to averaging was that, after the year ended 30th June, 1937, the averaging provisions were to apply only to income derived by primary producers. If, after that date, say, during the year ended 30th June, 1940, a person became a primary producer for the first time, or a former primary producer re-engaged in primary production, it was intended that the averaging provisions should apply to the income of the year ended 30th June, 1940, as if he had never been a taxpayer before. It was not intended that a taxpayer whose income was averaged before the year ended 30th June, 1938, and who after 30th June, 1937, became a primary producer for the first time, should pay tax at the rate applicable to his average income for the five years ending with the year in which he commenced primary production. This, however, is the effect of the averaging provisions.

Clause agreed to.

Clauses 19 to 22 agreed to.

Clause 23 (Undistributed income of company) .

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Representations havebeen made to me that this amendment of the law will operate with great injustice to those companies which are partly mutual and are deriving larger sums from interest earnings than some of the other companies which have ‘been longer in existence. Have the representations of those companies been taken into consideration by the Minister? It seems to me, in view of the facts placed before me, that even-handed justice has not been dealt out as between the various classes of companies.

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– This amendment was made at the request of the life assurance organizations, and confers a concession on them, as it reduces the rate from 6s. to 5s. It provides that a life assurance company which, by its memorandum of articles of association, specifies that a certain proportion of the profits shall be distributed to policy-holders shall not lose its partly mutual characterby refraining from declaring a bonus to policy-holders so long as it refrains at the same time from declaring any dividendor benefit to shareholders.

Clause agreed to.

Clauses 24 to 33 agreed to.

Title agreed to.

Bill reported with an amendment; report adopted.

Bill read a third time.

page 1190

INCOME TAX BILL (No. 2) 1942

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

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

Second Reading

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– I move -

That the bill be now read a second time.

The amendments contained in this measure are complimentary to those included in the Income Tax Assessment Bill altering the basis of calculating the amount of “ mutual income” derived by a partly mutual life assurance company. As I explained in my speech on the Income Tax Assessment Bill, the “mutual income “ of a partly mutual life assurance company is assessed at the rate of 5s. in the £1, whilst the “non-mutual income “ is assessed at the rate of 6s. paid by all companies. This “mutual income “ is also relieved from liability to super tax and undistributed profits tax. There is no need for me to repeat the reason which I have already given for the proposed amendment of the definition! of “ mutual income “ contained in the Income Tax Assessment Act. The bill will ensure that in the case of a partly mutual life assurance company the concessional rate of 5s. and the freedom from super tax and undistributed profits will apply to the “ mutual income” as ascertained in accordance with the proposed definition.

Question resolved in the affirmative.

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

page 1190

WAR-TIME (COMPANY) TAX ASSESSMENT BILL 1942

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator Keane) read afirst time.

Second Reading

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– I move -

That the bill be now read a second time.

The principal amendment which thebill makes to the War-time (Company) Tax Assessment Act implements the proposal to allow State income tax paid during the accounting period as a deduction in arriving at the taxable profit on which war-time company tax is assessed. As honorable senators are aware, the Income Tax Assessment Act was amended in June last to withdraw the deduction previously allowed in respect of State income tax. Prior to this amendment State income tax paid during the company’s year of income was allowable as a deduction in arriving at the taxable income and as the taxable income forms the basis for the ascertainment of the taxable profit this deduction was automatically allowed in the war-time company tax assessment. The immediate effect of the amendment to the Income Tax Assessment Act is that State income tax assessed for the financial year 1941-42 which would ordinarily be paid by a company during the year ended the 30th June, 1942, or the company’s substituted accounting period is not allowed in arriving at the company’s taxable profit for that year. The Government considers that for war-time company tax purposes the allowance of the deduction for State income tax paid during the accounting period should be continued, and provision for this allowance is accordingly made in the bill. The act already allows a deduction in arriving at the taxable profit, for Commonwealth income tax payable in respect of the taxable income of the accounting period, and the proposed allowance for State income tax paid necessitates an adjustment in calculating the Commonwealth income tax payable in respect of the taxable income of -the year ended the 30th June, 1942. It will be recalled that when the uniform taxation system was introduced the rate of tax on the income of a company was increased from 4a. to 6s. in the £1. In effect, the increased rate of 6s. represents 4s. Commonwealth income tax and 2s. State income tax. If a company is allowed a deduction in its war-time company tax assessment for the financial year 1942-48 of the amount of State income tax paid during the year ended the 30th June, 1942, or the substituted accounting period, and is also allowed a deduction of the full amount of the Commonwealth income tax payable in respect of the taxable income of that year, it will receive, in effect, a double allowance in respect of State income tax. Provision has, therefore, been made for the deduction for purposes of the war-time company tax assessment for the financial year 1942-43 only, for Commonwealth income tax payable to be calculated at the rate of 4s. in the £1. For subsequent years the deduction for Commonwealth income tax will be calculated at the full rate. Life assurance companies, the profits of which are wholly divisible among the policy-holders are exempt from war-time company tax. There is, however, no provision in the present law for the exemption of that part of the profit of a partly mutual life assurance company which is divided among the policy-holders. For income tax purposes the “ mutual income “ of a life assurance company which is not a wholly mutual company is taxed at a lower rate than its non-mutual income. Further, the “ mutual income “ of such a company Ls not liable for super tax or the tax on undistributed profits imposed under the Income Tax Assessment Act. It is proposed, therefore, to exempt from war-time company tax the “mutual income “ of a partly mutual life assurance company. The “ mutual income “ as assessed for income tax purposes will be the amount which will be free from war-time company tax. As the “ mutual income “ will not be subject to war-time company tax, it follows that the capital employed in the production of that income should be excluded in ascertaining the capital employed by the companies concerned. The bill contains a provision to enable this to be done. The law provides that a company may, in certain circumstances, claim a greater statutory percentage in respect of the class of business carried on by it, or apply for an increase in the capital employed, but there is no time limit within which the claim or application may be lodged. It is considered that a time should be specified, otherwise claims and applications may be received years after assessments have been made. The bill provides that a claim affecting a class of business may be made up to the end of the first financial year to the assessment for which the claim relates. The time specified for the lodgment of other claims and applications is consistent with the time allowed for lodgment of objections, viz., within 60 days after service of the notice of assessment. The reason for fixing the time to the end of the financial year in respect of claims affecting a class of business is that claims of this nature may be made by an organization representing a class of business, and, therefore, it would not be appropriate to connect the time for lodgment of claims with the service of the notice of assesment. A company which has been assessed for previous years will be allowed up to the 31st December, 1942, in which to make a claim or an application in respect of those years. The act authorizes a company, which has preference shareholders, to deduct a proportion of the war-time company tax which it has paid or is liable to pay from the preference dividends payable to those shareholders. Legal opinion has been submitted by interested companies to show that the law in its present form is defective, in that a company may deduct the appropriate proportion of tax only from the preference dividends which are paid out of the taxable profit on which the tax has been assessed. This means that a company which is desirous of making the deduction authorized by the law must delay the payment of the preference dividend until the tax has been assessed. It was not intended that the provision should operate in such a manner as to cause delay and inconvenience to companies and their shareholders. The bill accordingly provides that a company which has paid or is liable to pay war-time company tax may deduct a proportion of the tax from dividends subsequently paid to preference shareholders. It is necessary to amend the provision of the act relating to its duration. As the law stands at present the act will operate for six months after the end of the financial year during which the present war terminates. After that date the Commissioner of Taxation will not have power to complete any assessment or to give effect to any decisions upon objections. He may even be precluded from collecting any outstanding tax. In order to remedy this defect provision has been made in the bill for the tax to apply to taxable profit derived by a company up to the end of the financial year during which the war terminates. Under this provision the department will be able to complete all assessments and collect all tax in respect of each year to which the act applies. The bill contains a definition of the term “ present war “. In this definition no reference is made to any particular nation with which this country is at war. I wish to inform honorable sena tors that the bill was referred to the Special Taxation Committee consisting of representatives of the Government and of the Opposition, on which this chamber was represented, and the provisions of the bill received the approval of that committee.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 to8 agreed to.

Clause 9 (Dividends payable to preference shareholders).

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

.- I should like some explanation from the Minister for Trade and Customs (Senator Keane) in regard to this clause. I understand from his second-reading speech that it is competent for directors of companies to deduct some amount from the dividends payable on preference shares. I should like to know in what circumstances that is permissible, and what is the object of the clause?

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– The present law provides that where a company has preference shareholders a proportion of the war-time company tax which the company has paid or is liable to pay, may be deducted from the dividends payable to the holders of the preference shares. According to legal opinion which has been submitted by interested companies, the Jaw is defective. It has been pointed out that the act authorizes a company to deduct the appropriate amount of tax only from the preference dividends which are paid out of the taxable profit on which the tax has been assessed. If this opinion is correct, then a company which has preference shareholders might be unable to pay a dividend to those shareholders until the wartime company tax payable by the company has been assessed. It was not intended to limit the deduction to dividends paid out of the taxable profit on which the tax was assessed, or to cause delay and inconvenience to companies and their shareholders. It is proposed, therefore, to delete the present section and to insert the provision contained in clause 9. It will be noted that this clause enables a company which has paid or is liable to pay war-time company tax to deduct a proportion of the tax from dividends paid to preference shareholders subsequent to the tax being paid or becoming payable.

Clause agreed to.

Clauses 10 and 11 agreed to.

Title agreed to.

Bill reported without amendment; report adopted.

Bill read a third time.

page 1193

HOUR OF MEETING

Motion (by Senator Collings) agreed to-

That the Senate, at its rising, adjourn to 2.30 p.m. this day.

page 1193

PAPERS

The following papers were presented : -

Excise Act - Regulations - Statutory Rules 1942, No. 387.

National Security Act -

National Security (General ) Regulations -

Orders -

Beef (Restrictions on Sale and Consumption ) .

Control of -

Sale of Meat.

Stock.Foods and Remedies.

Simplification of Meals.

Orders by State Premiers - Queensland,

Western Australia.

National Security (Supplementary) Regulations - Orders by State Premiers - New South Wales (2), Victoria, Western Australia.

Senate adjourned at 3.40 a.m. (Thursday).

Cite as: Australia, Senate, Debates, 30 September 1942, viewed 22 October 2017, <http://historichansard.net/senate/1942/19420930_senate_16_172/>.

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