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Wednesday, 30 November 1938

Mr CURTIN (Fremantle) .- This bill is designed, with other measures relevant to it, to provide assistance to the wheat industry in a number of ways, one by the provision of a bonus over the existing realizable price; and another by making some provision for seasonal adversities. Implicit in the proposals, as I understand them, is also the intention of permanently stabilizing wheat at the home-consumption price specified in the bill. The Minister for Commerce (Sir

Earle Page) said that this price was based on an agreement arrived at between the States. As a matter of fact the first agreement made with the States was solely in respect of a home-consumption price. It was found, however, that adverse factors were prejudicing a certain section of the industry, regardless of the unprofitable price it was realizing. Another conference had to be convened at which it was recommended that so much as would be approximately £500,000 of the revenue yield as the result of this legislation, should be diverted to the relief of seasonal difficulties. I understand also that there is in contemplation Some use of the fund created from this tax for the transfer of certain growers from marginal and unsatisfactory areas. It is true that the agreement between the Commonwealth and the States suggests that the equalization levy on wheat or flour should be collected under the excise power of theCommonwealth. It is also a fact that on previous occasions this Government, or like governments - one can never be quite sure of being accurate in this matter, but it was a government led by the present Prime Minister - introduced an excise tax on flour and thus collected money for the payment of bounties to wheat-growers. The amounts collected, however, were always far less than the amounts distributed. In fact, during the years in which relief has been given to the wheat industry, approximately £14,500,000 has been paid to the growers, whereas the total yield from the flour tax has been only £3,200,000. In no one year did the yield from the flour tax approach the amount distributed by way of assistance to the wheat-growers in that year.

The Labour party agrees that a reasonable price should be paid to Australian wheat-growers.We have always stood for that, but we insist that the fair price to the wheat-grower should be established on such a basis as will ensure a reasonable price to , the bread consumer. Over the course of years reductions of the price of wheat have not been reflected in any very substantial reduction of the price of bread.

Mr HOLLOWAY (MELBOURNE, VICTORIA) - It never works that way.

Mr CURTIN - As a matter of fact, this plan contemplated that the States would legislate to ensure that there would be a reasonable price fixed for bread. I am not satisfied, however, that the legislation passed by the States does in any definite way limit the price that should be charged for bread. Legislation has been passed by the States under which their governments may do certain things, but so' far as the Commonwealth Parliament is concerned, whilst we have power under this bill to refrain from paying the bounty to the States for distribution to the growers, once the tax is imposed it must be uniform. Therefore, the position could easily arise in which there would be a failure on the part of some States to protect adequately the consumers, and this Parliament would be left without any redress. We could only penalize the wheat-growers by withholding the subsidy from the State concerned, while, as a matter of fact, the real offenders would be either the millers or the bakers.

Mr Holloway - Or both.

Mr CURTIN - That is so. Certainly not the growers. The problem which faces this Parliament is one which can best be dealt with from the point of view of this year's harvest and the difficulties associated with it. The difficulties this year are twofold. There is first of all the disastrously low price for wheat; and, secondly, there is the unfortunate widespread crop failure due to adverse seasonal conditions. I suggest to the House and to Parliament that we should deal with the problem of this year's legislation, and that problem only, leaving the general question of stabilizing the wheat industry to a legislative period early in the new year, when we would be able to apply ourselves constructively to the task of reviewing the problems of the wheat industry generally without being rushed.

Mr Archie Cameron - In other words, the Leader of the Opposition refuses to face the issue.

Mr CURTIN - I am facing the issue. Apparently, the Postmaster-General is facing the issue solely by asking breadconsumers to carry the whole burden of permanently rehabilitating the wheat industry, for that is what this bill means. The Opposition will not agree to the imposition of a tax on flour for the purpose of relieving drought-stricken areas. That would be a misuse of the proceeds of such a levy. Seasonal adversity is a problem unrelated to the low ; price of wheat, or to the fact that the return to growers is unremunerative. Seasonal adversity is a problemwhich should be met by giving assistance to those who suffer absolute loss of their crops, and no special obligation should be placed upon consumers. To deal with the problem of marginal areas by allocating for this purpose money raised from a flour tax would also be a gross misuse of sales tax legislation. I remind honorable members that in a time of grave financial emergency, this Parliament, for the first time, entered into the sphere of sales taxation and, even under the duress of that imperative necessity, the sales tax legislation exempted basic foods from its ambit. Basic foods have always been eliminated from general sales tax and, insofar as the wheat-grower is concerned, the sales tax has never been regarded by this Parliament as the exclusive source from which the money required to meet the problems of the industry would be drawn.

Mr Nock - It has exactly the same effect as a compulsory pool.

Mr CURTIN - The honorable member knows that the total proceeds of the flour tax during the whole time ofits imposition were approximately £4,000,000, and he knows also that since the institution of the system of bounties the total amount of bounty paid to the wheatgrowers has been approximately £14,000,000.

Mr Nock - The Labour party has advocated a compulsory pool.

Mr CURTIN - We would be iu favour of a compulsory pool*

Mr Nock - This proposal has exactly the same effect.

Mr CURTIN - I put it to the honorable member for Riverina (Mr. Nock) that this legislation is purely a taxing measure for the purpose of providing a subsidy to wheat-growers for low prices; it does not remove the exploitation of the wheat-growers which is carried on by the great financial interests in Australia, it makes no attack on the unnecessarily inflated costs of production due to inflated land values in the past, and it does not overcome current problems because of the accumulated debt structure of the industry. Further, it does not overcome the fact that, at the time when wheat is yielding the lowest price for many years, this Parliament contemplates asking the consumer of bread to pay the highest price he has paid for years. Bearing in mind the sales tax on flour as imposed by the related measures to this bill in order to relieve the wheat-growers it will mean that the sustenance worker with three children will pay more to meet this grave aspect of a national problem than will the bachelor in receipt of £1,000 a year. The absolute unfairness of this proposal must be at once apparent to every reasonably-minded man. But that is not the worst side of it. Apart from that fact, (here is the inherent injustice of asking that seasonal adversity for a section of the wheat-growers shall be met by requiring the man who spends more on bread than any one else does to pay more to overcome seasonal adversities and which should be met by insurance or by some form of contribution in which the nation would contribute, having regard to the individual capacity of the citizens of the nation to contribute!

Mr Paterson - This legislation does not affect consumers ; the States are looking after that aspect.

Mr CURTIN - The honorable member knows that this legislation, when passed by this Parliament, will affect the consumer directly, because we shall impose an excise charge on flour which will he reflected in the price of bread.

Mr Paterson - It will not affect consumers in the slightest degree.

Mr CURTIN - I say to the honorable member that if this Parliament had absolute control over prices, and could fix the excise on flour, which it can, and the price of flour as sold to the baker, which it cannot, and if it could then fix the price of bread as sold by the baker to the public, which it cannot, then I should be prepared to accept his statement.

Mr Paterson - The States are doing that.

Mr CURTIN - They are not. Hero are the prices which are being charged now for bread: - In Sydney, over the counter for cash, 5d. ; delivered booked, 6d. ; Perth, over the counter for cash, 5d. ; delivered for cash, 5½d.; delivered booked, 6d.; Adelaide, over the counter for cash, 4d.; delivered for cash, 4Jd.; delivered booked, 4id. ; Brisbane, over the counter for cash, 3d.; delivered for cash, 5d. : delivered booked, 5-Jd. I am told that cash and carry shops will sell a fourpound loaf for 7d. At Hobart the prices are - over the counter for cash, 4£d.: delivered for cash, 5d. ; delivered booked, 5d. ; Melbourne, over the counter for cash. 4d. ; delivered for cash, 4£d.; delivered booked, 5d. ; New Zealand, over the counter for cash, 5£d.; delivered booked, 6d. The price of flour in New Zealand is approximately £13 7s. a ton net, and the price of wheat is 5s. 8d. The Labour Government of New Zealand is paying a higher price to the wheat-growers than is being paid in any other part of the British Empire at the present time.

Mr Archie Cameron - Because New Zealand is an importing country.

Mr CURTIN - Because it has a sound administration which believes in doing justice to producers while, at the same time, ensuring that the rights of the consumers shall not be mercilessly dealt with by those who would exploit both producers and consumers.

This legislation does nothing to restrict the operations of the great army of speculators who have already bought wheat forward in Australia. It does nothing to protect the grower of the crop who has already sold it forward to the speculators of this country. Apart from the very inherent injustice of placing the whole burden for both the seasonal adversities and the low price of wheat on the consumers of bread - and that is what this legislation does because of the absence of constitutional power for this Parliament to safeguard the consumers and because the legislation passed by the States does not safeguard them, though the State legislation contains clauses providing that certain things may be done for which there is no guarantee that they will be done - there is the danger of the consumers of bread being exploited. We know the notorious hostility of the upper Houses of Western Australia, South Australia, Victoria and Tasmania, and, I say also now, of New South Wales,to any system of price-fixing. We can be assured that those upper Houses which have rejected appeals for price-fixing in the past will not protect the present consumers. I put it that with the present price of flour which results in the workers of Sydney now having to pay a price of 6d. booked for bread it stands to reason that the imposition of a levy on flour of approximately £5 a ton more would bring about a rise of the price of bread in Sydney. I am not saying that the present price of bread is a just price.

Mr Anthony - Is the honorable member afraid it is going to rise beyond 6d. ?

Mr CURTIN - I say that, in any event, if the wheat-grower is to get for his whole crop, as he will from this plan, approximately 2s.8d. - that is the return I understand he will receive, taking export and home consumption in conjunction - and if the workers are to have to pay1s. for a 4-lb. loaf in order to give the growers that return, it is a monstrous injustice and an absolute outrage upon all relativity.

Mr Wilson - Whose fault will that be?

Mr CURTIN - It will be the fault of the system which makes both the primary producers and the consumers the victims of the vested interests which have supported every anti-Labour government in this country.

Mr Anthony - How would the honorable member raise the price to 4s. 8d.?

Mr CURTIN - I shall show the honorable member presently. I shall submit a constructive proposition to operate for a number of years for a flat price from next year for all wheat delivered to a pool.

Mr Archie Cameron - Why not put it forward this year?

Mr CURTIN - It could not be done in the time available. It would need a new agreement with the State governments.

Mr Archie Cameron - It would also need a compulsory pool.

Mr CURTIN - Arrangements could bo made to deal with the situation that would arise when world pricesrose above the price fixed by the pool.

Mr Archie Cameron - That is the catch, is it?

Mr CURTIN - There is no catch in it. Surely, the Postmaster-General does not think it would be unfair for the Government to say to the wheat-growers : " We are prepared to give you now a price for wheat which will remain in force for a period of years, and which is much higher than could be obtained for wheat sold in the ordinary way, and adjust matters when world prices rise to a higher level than that now offered."

Mr Archie Cameron - That is actually what this bill does, in effect.

Mr CURTIN - Yes; but the money needed for the purpose is to be provided by a tax on the consumers of bread. The Minister for Commerce (Sir Earle Page), in the course of his secondreading speech, said in reply to a question I asked him -

If the price of wheat remains at 2s.6d.a bushel, itsat present, the amount of tax that will have to be obtained will vary between £3,500,000 and £4,000,000.

I favour the payment of 4s. 8d. a bushel for wheat at country sidings to enable a home-consumption price to be fixed for wheat for this season, which is what the Government's plan does in one part; but I am not prepared to provide that the money shall be obtained by the imposition of a sales tax on flour, which is, in fact, a bread tax, which is what the Government's scheme provides in another part.

Mr Archie Cameron - Where would the honorable member obtain the money to pay 4s.8d. a bushel at country sidings?

Mr CURTIN - Out of the Consolidated Revenue Fund.

Mr Archie Cameron - "We are now budgeting on an expenditure of nearly £100,000,000.

Mr CURTIN - I put it to the PostmasterGeneral flatly that he nas seen our expenditure in respect of only one department increase by more than £4,000,000 this year. I understand that the Government is now proposing to introduce plans for additional expenditure by the same department of £3,000,000.

Mr Archie Cameron - Does the Leader of the Opposition think that that kind of thing can go on indefinitely?

Mr CURTIN - The PostmasterGeneral has to make a choice as to what he will do and what he will not do. In any event, I say to him that if it is possible to obtain £3,500,000 or £4,000,000 by means of an excise duty on flour, which will oblige the consumer of bread to pay more than he is now paying, then it is equally possible to obtain the money by means of a re-arrangement of the incidence of taxation. The proposed tax is. to be collected by this Government. The Labour party disagrees with the kind of tax to be imposed. It will not endorse the collection of .£3,500,000 or £4,000,000 by means of a bread tax. It regards that as an outrageous proposal. As a consumer of comparatively little bread during the week, because I am able to afford a wider menu, and bread is not the staff of life for me, any more than it is for. other honorable members of this Parliament or for any persons in the community whose incomes range from £500 to £1,000 a year, I shall have to pay less for each £1 of income under the Government's scheme than will the man who is earning the basic wage; or any amount not much in excess of it. Honorable gentlemen opposite know that this is so. Even sustenance workers, who have no income in the proper sense of the word, will have to contribute to this tax. and they will do so at a greater rate per capita .than even the Minister* for Commerce himself. I regard this method as most disproportionate, and as a. totally unsatisfactory means of providing for the needs ' of the wheat industry. In order that honorable mem bers opposite may consider our case clearly, I move -

That alt the words after " That " be omitted with a view to insert in lieu thereof the following words: - " the bill be withdrawn and redrafted to provide grants for the States to enable a homeconsumption price for wheat of 4s. 3d. at country sidings, and to permit of adequate relief being given to wheat-growers suffering seasonal adversity, the financial provision to bc effected out of the Consolidated Fund of the Commonwealth."

This amendment, if agreed to, will impose no injustice upon the wheatgrowers. It provides for the payment to them of the same amount as is provided for in the Government's scheme ; but our plan is. to be distinguished from that of the Government in that it negates the proposal for a sales tax on flour, which may also fairly be described as a bread tax, and substitutes for it the provision of the money from Consolidated Revenne The Consolidated Revenue Fund may be supplemented in a variety of ways. A sales tax on flour may be imposed for the purpose, as is suggested in this bill. The amount could also be provided by an increase of the percentage rate of sales tax, under existing legislation. It appears to be extraordinary that, while the price of flour is now approximately £8 a;ton, this commodity is to be taxed by approximately £5 a ton. Put in another way, this will mean that, whereas the sales tax on commodities generally is at the rate of 5 per cent., the sales tax on flour will bc at the rate of 66 per cent. This is a most extraordinary anomaly to suggest. I am not arguing that the imposition of a sales tax is the right way to obtain this money. In my opinion, the fairest -way would be to increase the rate of tax on incomes. However, I acknowledge that difficulties would be occasioned if this course were adopted, because of the inevitable delays that would occur in the collection of the tax. At the same time, I believe that the Government could make arrangements with the Commonwealth Bank for the issue of bills to" advance the amount until the tax could be collected. The money could also be provided by the imposition of a special income tax to be known as the Wheat Industry Relief Income Tax. By identifying the tax in this way we should make a clear acknowledgment that the money, is intended for a particular purpose. Moreover, all persons with a taxable income would be called upon to make some definite personal contribution towards the fund required to assist the wheat-growing industry.

Mr Beasley - Where would the owners of city properties come in? This Government has reduced the rate of land tax by 50 per cent.

Mr CURTIN - That is true. The land tax method might also be adopted, because it is a form of direct taxation. It appears to be inherently unjust that this money, which is to be allocated under a complex system, partly on a bushelage basis, because of the low prices prevailing, and partly on acreage basis, because of seasonal adversity, and partly on an unspecified basis, to enable certain farmers to be transferred from uneconomic wheat-growing areas, should be drawn largely from a class of the community which can least afford to provide it. The Country party entirely misapprehends the incidence of an excise duty on flour if it assumes that the burden will not ultimately add to the load being carried by the export industries of Australia. I remind them of the analysis made some time ago by Professor Giblin of the incidence of the flour tax, in which he pointed out that ultimately, when the period of adjustment passed, the primary producers would pay 50 per cent. tax, the Government 30 per cent., and other parties concerned the remaining 20 per cent.

Mr Hutchinson - Surely that is a reply to the argument that the Leader of the Opposition is himself advancing.

Mr CURTIN - It is not. The primary producing class referred to by Professor Giblin includes the woolgrowers, and also many exporters of other primary products who will receive no benefit whatever from the excise duty on flour.

Mr Nock - Professor Copland used to take that view at one time.

Mr CURTIN - If the honorable member for Riverina (Mr. Nock) agrees with this proposal and accepts it because it is to his present advantage-

Mr Lane - That is his main argument.

Mr CURTIN - Then he will no longer be able to allege that the primary producers bear the main burden of our tariff policy. If the honorable gentleman supports this proposal, he will not be able to squeal in the future as he has so often done in the past about tariff increases adversely affecting the primary producers, for we shall be able to reply to him that this incidence of thecustomsas levy is, as to price levels, precisely as the incidence of the sales tax.

Mr Anthony - Does the Leader of the Opposition agree with Professor Giblin's view?

Mr CURTIN - I do, and I have always agreed with it on this point.

The problems of this industry are not restricted to the price of wheat, and I put it to the Parliament that we should not, in the hurry-scurry of this emergency situation, involve the country in a permanent plan. The whole subject should be considered in a much more comprehensive, and a much more analytical way, than is possible in the circumstances in which we find ourselves. If the Parliament agrees to draw upon the Consolidated Revenue Fund this year for £4,000,000 for this purpose, which I think will probably be necessary to meet the circumstances of the case, we shall be able next year to review the whole scheme, and to make arrangements to guarantee 3s. 6d. a bushel f.o.b. for all wheat delivered over a period of years to a wheat pool. That would assure to the wheat-growers more than they will get if this scheme is agreed to forthis season.

Mr Archie Cameron - Had the Government proposed such a plan the Leader of the Opposition would have said that it was dealing with the matter on a hand-to-mouth basis.

Mr CURTIN - If some pooling arrangement were made,such as I have in mind, we should be able to eliminate a great deal of the spiral of costs which must mean that the price of bread will become unduly high. If the price of wheat were stabilized at 3s. 6d. a bushel it should be possible to obtain 4s. a bushel from millers, and that should permit bread to be sold throughout Australia at a reasonable price of 3½d. a loaf, or at the very most, 4d. a loaf.

Mr Anthony - Are the figures which the Leader of the Opposition has just given in accordance with those of the Gepp report?

Mr CURTIN - Yes. I contemplate continuing that return on the basis I have proposed for a period of years so that the wheat-growers will know over a period what price they will receive. I say as one who knows something of the industry, that if wheat cannot be grown year after year at a price that will return 3s. 6d. a bushel for all wheat produced, then the problems of the wheat industry are insuperable.

Mr Gregory - But the honorable member said a little while ago that he agreed to a price of5s. 2d.

Mr CURTIN - Yes, that is what the price will be for the present season on the present plan for home-consumption wheat. Does not the honorable member know that the exploitation which takes place as between the grower, the miller and the baker before the bread reaches the consumer represents a pyramid of excessive costs? The millers throughout Australia at the present time are getting £2 a ton more for flour than they ought to get. The honorable member for Swan (Mr. Gregory) laughs. He will see the returns set out in a reply furnished to me by the Minister for Commerce in answer to a question I asked this week. The millers in "Western Australia charge the highest price of any in Australia. They do not charge on the cost of production, plus a fair profit; they base their price on the cost of flour at Adelaide, plus the cost of shipment from Adelaide to Fremantle. They are a close corporation, and because of that they have been able to do far better than the wheat-growers, the bakers or the consumers.

Mr Gregory - That would sound well in theWestern Australian State Parliament.

Mr CURTIN - It is true.

Mr Gregory - I know it is.

Mr CURTIN - The honorable member for Swan, whom I have known for many years as a man prepared to face the facts, will admit that what I have said is perfectly true, namely, that the millers ofWestern Australia are a close corporation, and that they use their position to exploit the public.

Mr Gregory - Is it not the job of the State Parliament to alter that?

Mr CURTIN - It has been tried, but the conservative upper house stands in the way.

Mr Archie Cameron - Has the Labour party tried?

Mr CURTIN - Yes. The Legislative Assembly passed a prices regulation bill, but it was rejected by the upper house. We agree that an amount of approximately £4,000,000 should be found this year to place the wheat industry in a sound position. With that proposal we are in complete and absolute agreement, and we are willing to vote for a variation of general taxation so that the Consolidated Revenue Fund will be able to meet that disbursement, but we are opposed to the sectional taxing process which this plan contemplates; that is, to place the whole burden on the consumers of bread. Our objections to singling out bread for this tax are -

(1)   That bread will be taxed at a higher rate than any other commodity subject to sales tax;

(2)   That the tax, in its nature, will fall most unfairly on the family man with a small income ;

(3)   That it will exempt very substantially the well-to-do with small families and large incomes; and

(4)   That it represents a failure to place the burdens, incidental to the meeting of national obligations, upon the citizens in proportion to their capacity to bear them.

If any one says that we are unwilling to give the wheat-growers a fair price, I give that statement an absolute denial. We are in favour of giving the producers this season the return contemplated in this measure. Our quarrel with the Government and the bill is that it is proposed to put a levy on bread; we believe that the money should be raised by a levy on the individual incomes of the citizens.

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