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Wednesday, 3 June 1942

The PRESIDENT (Senator the Hon, J Cunningham (WESTERN AUSTRALIA) - Order! The honorable senator addressing the Senate is entitled to be heard but the chorus of interjections makes that impossible.

Senator SPICER - 1 am grateful for the admission from some honorable senators on the Government side of the chamber that the effect of this scheme will be to extract from a taxpayer in Victoria more taxes for Commonwealth purposes than will be paid by a corresponding taxpayer in Queensland. It will be admitted that to do that directly would be contrary to the Constitution. Why does not the Government act in a straightforward way? If it believes in discrimination between individuals in different States, why does it not submit a taxation measure which provides in plain language that it is proposed to take 5 per cent, from the citizens of Victoria and only 2£ per cent, from the citizens of Queensland ? The Government will not do so because, apparently, its legal advisers have said that that would be directly contrary to the provisions of the Constitution.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - If some of the contentions of the Government he right, it could do so.

Senator SPICER - The only ground upon which it is suggested that this scheme is valid is that, the nation is at war, and that it is supposed to be an exercise of Commonwealth powers in relation to the defence of this country. If that argument be sound, it would justify an act which expressly discriminated in the tax which it imposed on the citizens of Victoria and that imposed on the citizens of Queensland. But the Ministry has no real faith in that argument; it is not prepared to tie itself to an argument of that kind. The Ministry has been told that reliance on the defence power of the Commonwealth will not enable it to avoid that difficulty, and therefore, the only chance it has to get a way with its proposals is to hide behind a smoke screen.

Senator Collings - The Government never received advice to that effect.

Senator SPICER - It would be interesting to know what advice the Ministry did receive. I now suggest to the Leader of the Senate (Senator Collings) that this chamber is entitled to see the legal opinions on which this scheme is based. Those opinions have been obtained with public money for a public purpose, namely,, to assure the Commonwealth Go vernment that its proposals are a valid exercise of its power under the Constitution.

Senator Cameron - The honorable senator will next ask that the Senate should be supplied with various reports and recommendations made to Cabinet.

Senator SPICER - I invite the Minister to lay on the table of the Senate the opinions that have been obtained.

Senator Ashley - That is contrary to established practice.

Senator SPICER - It is not. In a matter concerning which there may bt some dispute as to the facts, as when all the circumstances may not be known. 1 could understand the Ministry saying that it would not lay on the table the opinions it had obtained before prosecuting a particular individual in respect of an offence. But what is the justification for withholding from the responsible representatives of the people in this chamber opinions which have been obtained on the purely legal question as to whether this scheme is, or is not, a valid exercise of Commonwealth power? Is not the Senate entitled to be guided in this matter by the legal opinions on which the Government relies?

Senator Allan MacDonald - How does the honorable senator know that the Government obtained any legal opinion ?

Senator SPICER - I suspect that legal advice was obtained by the Government, because I do not think that the Government itself is capable of the ingenuity which this scheme reveals. One can see the hand of the lawyer in it. I have suggested that the provision in regard to discrimination between States and citizens of different States cannot be overcome simply by reliance on the defence power of the Commonwealth. The Constitution provides that the Commonwealth shall not discriminate between the citizens of different States. Evidently the Ministry is not prepared to introduce a measure which did that directly. Does any honorable senator seriously believe that, if the Commonwealth passed legislation which provided that a citizen of Victoria should pay ten times as much in taxes as a citizen of Queensland, that it would be a valid exercise of the defence power? Yet, that same result might be achieved by imposing what is nominally the same lax. and handing back to the taxpayers of Queensland, under another name, some portion of the money which they have contributed. Would the Government and its supporters say that that action would be in accordance with the provision of the Constitution?

Senator FRASER (WESTERN AUSTRALIA) - That would be camouflage.

Senator SPICER - I agree; but it would be no more camouflage than is this bill.

Senator Collings - There is a difference.

Senator SPICER - Let us see what the difference is. Let us suppose that the Commonwealth Government were to say to a taxpayer in Victoria, " You are to pay £10 in taxes, £3 of which represents your State taxes, and £7 taxes for Commonwealth purposes " ; and that to a citizen of Queensland it said, " We intend to impose on you taxes amounting to £10. For Commonwealth purposes we shall retain £3, and we shall hand back to you £7, out of which you will be able to pay £3 to the State." The Minister for External Territories (Senator Fraser) admits that that would be merely camouflage, and I agree with him.

Senator COLLINGS - Why make the suggestion?

Senator SPICER - I do so, because the scheme before us provides for that operation, except that it is shortcircuited. In these proposals the Commonwealth Government does not say to the taxpayer in Queensland, " We shall not hand the money back to you for you to pay to the State ". It says, "It will save you trouble if we short-circuit the operation and pay to the State Commissioner the amount which, under the other scheme, you would have to pay ". It is just for that reason that this scheme is camouflage. I believe that it is contrary to the express provisions of the Constitution. 1 may be wrong - lawyers differ - but, even if the scheme can be justified by some legal argument as a strict compliance with the language of the Constitution, 1 still hold that it is diametrically opposed to the spirit of the Constitution. For that reason alone it should be rejected by the Senate. But do not let us be too confident about the legal position. I have no desire to read the opinions of various legal authorities on this subject.

Senator COLLINGS - That would be just as interesting as anything else that the honorable senator is likely to say.

Senator SPICER - As such opinions may be informative, even to the Minister, let us hear what the highest tribunal in the British Commonwealth of Nations - the Privy Council - had to say in respect of a similar matter. Only a couple of years ago, a case was taken to the Privy Council in which our flour tax legislation was challenged as being unconstitutional. Some features of that legislation were not dissimilar to the fundamental ideas underlying this legislation.

Senator Crawford - Was that legislation passed in war-time?

Senator SPICER - No; hut it was passed with the consent of all the States. I am concerned only with what the Privy Council had to say upon the subject of giving a colour of legality to a scheme of this kind. It said that we had to look at all the acts associated with the scheme in order to see what the substance of the scheme was. The Privy Council did that in the flour tax case. In respect of this legislation, it will not take each measure separately, and say, for instance, this is a tax measure, and this is another measure providing financial assistance to the State, and therefore both are good. It will look at the scheme as a whole. That i3 what it did in the flour tax case. I take the following quotation from the judgment of the Privy Council in that case reported in 63 C.L.R. at page 349 -

In coming to this conclusion, their Lordships wish to make it clear that, as at present advised, they do not take the view that the Commonwealth Parliament can exercise its powers under section 96 with a complete disregard of the prohibition contained in section 51 (ii), or so as altogether to nullify that constitutional safeguard.

Section 52 (ii) prohibits discrimination between the States. The judgment proceeded -

The prohibition is of considerable importance; and the Constitution should be construed, bearing in mind that it is the result of an agreement between six high contracting parties, with, in some respects, very different needs and interests. Cases may be imagined in which a purported exercise of the power to grant financial assistance under section 96 would be merely colourable. Under the guise or pretence of assisting a State with money, the real substance and purpose of the Act might simply be to effect discrimination in regard to taxation. Such an act might well be ultra aires the Commonwealth Parliament.

Senator Keane - It might he.

Senator SPICER - Yes; the Privy Council did not decide the matter.

Senator FRASER - In that case, the Privy Council's judgment rested largely on the fact that Tasmania, which is not a wheat-growing State, had been refunded an amount from the flour tax revenue.

Senator SPICER - There was more to it than that. As I said before, the scheme with which the Privy Council was dealing was a scheme carried out with the complete concurrence of each State. That concurrence is absent on this occasion.

Senator Keane - But the Privy Council left the matter undecided.

Senator SPICER - I agree; it said that such action might be ultra, vires the Constitution. I have not been able to find anywhere else a better description of these four measures than that which I have just read from the judgment of the Privy Council. If this is not a colourable scheme for the purpose of bringing about discrimination in taxation, I do not know what such a scheme is.

Senator Arthur - "What about the Braddon blot?

Senator SPICER - At the moment we are concerned with what I heard one honorable member of the Parliament describe as the " Spooner smudge ". First, I submit that this is a colourable scheme for the purpose of discriminating between the taxpayers of different States. For that reason, to put it at its lowest, there are grave doubts about its constitutionality. In any event, as I said before, so far as this chamber is concerned, it is a clear device to defeat the real meaning and spirit of the Constitution. That, in itself, is a very strong reason why we should refuse to pass these measures. What, after all, will he the result if this scheme be upset by the High Court or Privy Council? In these days, is it desirable that we should throw the country into confusion in respect of taxation measures when such confusion can well he avoided by refusing to go on with a scheme of this kind ? However, that- is not the only ground on which I submit that these measures are unsound. I submit two other legal grounds; and I propose to deal with them briefly. First, this scheme is not a proper exercise of the powers of this Parliament, because it is a scheme whereby this Parliament proposes to impose taxes, not only for Commonwealth but also for State purposes. We have no right to do that.

Senator Courtice - That is a new one.

Senator SPICER - No; other people have said the same thing ; and, as I understand it, that is the way the scheme works out. We say, in effect, to the States: " If you will not impose an income tax, we shall raise by our taxes the revenue which you require for the purpose of carrying on your services ".

Senator Courtice - That is one way of putting it.

Senator SPICER - Yes ; and it is the truthful way of putting it. What is the money that is to be paid out in the form of grants?

Senator Collings - Money which the States themselves previously raised by income tax.

Senator SPICER - Yes ; and my complaint is that this Parliament is now being asked to pass measures 'to enable the Commonwealth to raise taxes for the States. How can any one say that a sum of money raised under legislation of this Parliament for the purpose of financing services for the States is money raised for federal purposes? Of course, one can advance a spurious legal argument about the matter. You can say that we are raising this money in order that we can make grants to the States; and those grants are made out of Commonwealth revenue. But that is not the reality.. The reality is that this Parliament is passing this scheme-

Senator Courtice - To raise more revenue for defence.

Senator SPICER - I shall deal with that aspect later. This Parliament is being asked to adopt this scheme in order to enable the Commonwealth Government to raise State taxes, and having raised those taxes to hand the revenue to the States. If necessary, I could quote a number of authorities to indicate the unsoundness of such a proposal; but I do not wish to labour the subject with lengthy, legal quotations. However, I take the following quotation from a judgment by Mr. Justice Evatt in the case of West v. The Commissioner of Taxation. In his judgment, Mr. Justice Evatt quoted with approval the following opinion that had been expressed by Sir Robert Garran: -

The draftsman was evidently scratching around for a peg on which to hang the bill; hut taxation was certainly a forlorn hope. The power of the Commonwealth Parliament as to taxation ib a power to make laws "for the peace, order and good government of the Commonwealth " with respect to " taxation, but so as not to discriminate between States or parts of States ".

It can hardly be questioned that these words refer only to Commonwealth taxation, uniform throughout the Commonwealth, for Commonwealth purposes and do not cover control of State taxation. Nothing in any decision of the High Court suggests a doubt of this; and indeed the principles of interpretation laid down by the court make doubt impossible.

That is a fairly strong authority for the proposition that I have been putting. The Minister for Aircraft Production ('Senator Cameron) stated, by interjection, whilst I was quoting Sir Robert Garran's opinion, that he was not giving his view of this scheme but of something else. That is true, but Sir Robert Garran was stating general propositions which are just as applicable to this scheme as they were to the one to which he was referring. If there is that fine distinction between this scheme and that on which Sir Robert Garran and Mr. Justice Evatt expressed their views I have no doubt that those fine points are indicated in the legal opinions that the Government has obtained. I may add that it would assist me and other honorable senators on this side of the chamber if those legal opinions were laid on the table of the Senate.

My third objection to this scheme as a taxation measure is that it destroys or penalizes the States' inherent right to tax. There is no provision of the Constitution authorizing the Commonwealth Parliament to penalize a State because it exercises its taxing power. The right of the States to impose taxation is just as clear as that of the Commonwealth. The Commonwealth does not possess any exclusive power of taxation except in relation to customs and excise. Its power to impose income tax is a concurrent power similar to the power of a State.

Senator Courtice - But the power of the Commonwealth is supreme.

Senator SPICER - One section of the Constitution is relevant to that proposition. Section 109 of the Constitution provides in a case such as this that if there is a conflict between a law which the Commonwealth Parliament has properly passed in accordance with its powers and an act of a State parliament, the Commonwealth act shall prevail, but that supremacy does not empower the Commonwealth to go outside its field of taxation and penalize a State for imposing taxes itself. On this particular question Mr. Justice Evatt in his judgment in The State of Victoria and others v. the Commonwealth of Australia, reported in 5S C.L.B... at page 638, states-

It is unnecessary to examine the concept that, if the Commonwealth Parliament "intends to cover the field", section 109 is attracted. Ordinarily, the intention of the Commonwealth Parliament in such matters is by no means conclusive because, as I have previously suggested, a direct statement by the Commonwealth that it intended that the State should, or could, no longer act, may only raise the question whether such a statement does not invalidate the particular Commonwealth enactment.

In other words, that expression of judicial opinion means that in the event of the Commonwealth seeking to exercise its power by saying to the States, " We shall tax and you shall not", that exercise of power does not give to the Commonwealth act any supremacy, but it renders it very doubtful whether the Commonwealth act itself is a valid piece of legislation. For these reasons, I submit that on legal grounds, there is the gravest doubt concerning the constitutionality of this measure. The only justification for its constitutionality that has been suggested by anybody is the fact that we are at war and this legislation is necessary for defence purposes. In the first place, I deny that as a statement of fact. No evidence has been brought before this chamber or submitted anywhere else proving that it is necessary to introduce this scheme in order that the Commonwealth shall be able to obtain the revenue that it requires for war purposes. So far it has been suggested that the maximum amount of additional revenue that the Government will obtain from the operation of these measures is £12,000,000, but when one examines the position, it appears that that sum will go into Commonwealth revenue not as the result of this scheme but in consequence of the increased incomes of individuals as the result of Commonwealth expenditure for war purposes. That was the ground upon which the case was put by the Treasurer (Mr.Chifley).Whether this scheme is or is not introduced, there will be an increase of income in the community and whatever scheme of Commonwealth taxation is brought in the fact that incomes have increased will be reflected in the taxation returns of the Commonwealth.

Senator Courtice - And in the revenues of the States.

Senator SPICER - Yes ; it is false for the Government to declare that it is going to obtain £12,000,000 additional revenue as the result of this scheme when that sum of money will flow into Com- monwealth revenue because of the increase of individual incomes as a result of war expenditure. I propose now to turn from legal problems, and to examine this matter as a practical proposition.

Senator Cameron - What is the difference?

Senator SPICER - There are some differences, although I agree that the scheme is bad legally and practically.

Senator McBride - And politically.

Senator SPICER - Yes. In the first place the scheme is unfair and inequitable in its incidence, and for that reason it should be rejected by the Senate. It is called a uniform taxation scheme, but I doubt whether any measure ever introduced into this chamber has been so misnamed. It is not uniform taxation for Commonwealth purposes at any rate, because the effect of the scheme will be to increase the contribution of the Victorian taxpayers to Commonwealth revenue by £4,000,000 annually. That addition represents £10 10s. per head of the taxpayers of Victoria.

Senator Cameron - Does the honorable senator object to making that contribution to help the war?

Senator SPICER - I do not object to paying anything to help the war effort, but citizens in all parts of the Commonwealth should be called upon to make the same contribution.

Senator Cameron - They are making it.

Senator SPICER - They are not; that is the whole point. Victorian taxpayers already pay more, in terms of money, to help the war effort than do the citizens of any other State.

Senator Large - What do they pay for social services?

Senator SPICER - I shall come to that in a moment. Social services are mainly the concern of the States, and at the moment I am dealing with something which is the concern of the Commonwealth. In effect, the Constitution says to me as a citizen of Australia, "Your liability to Commonwealth revenue shall be the same as the liability of any other citizen in a similar position". But now the Government tells me that I have to pay more towards Commonwealth revenue than the citizens of Queensland. Ever since the war started, citizens of Victoria have paid more per head in taxation than have the citizens of other States. The question with which we are concerned is how much is paid to the Commonwealth, and I repeat that Victorian taxpayers have paid more per head to the Commonwealth than the taxpayers of other States. And why?

Senator Ashley - Because Victoria has had most of the defence work.

Senator SPICER - That is not so. My contention is that since the war started a taxpayer in Victoria in receipt of £1.000 per annum has paid more towards the war by way of taxes than has a taxpayer in Queensland receiving a similar salary. The reason is that State taxes are deducted when estimating the income which is to be taxed for Commonwealth purposes. Because the State taxes of Victoria are lower than those of Queensland, a higher taxable income is left in the hands of Victorians for taxing by the Commonwealth. Consequently, the Victorian citizen pays more, and has paid more all the time, than the citizen of any other State. But we are not complaining about that, and we never have complained. Surely it is not a matter upon which the Commonwealth has any cause for complaint that Victoria has been careful with its revenues, has not indulged in mad-cap schemes that have been suggested in other places, and has not found it necessary to raise so much for State purposes as have other States. That is the position to which no one in Victoria has any objection; what we do object to i3 that the Commonwealth proposes to take an .additional £10 10s. per head from Victorian taxpayers in order to reduce the amount of taxes paid by the citizens of Queensland. This money is not entirely for war purposes. The uniform tax scheme is designed to effect a reduction of the taxes paid by Queenslanders.

Senator Keane - "Who is objecting in Victoria ?

Senator SPICER - Most people are objecting.

Senator Keane - Through what organizations?

Senator SPICER - I am not concerned with organizations. I am concerned with citizens who understand these proposals and object strongly to them. The more they get to know about them the more they will object. I wonder if the citizens of Victoria will be very pleased when they realize that this extra taxation is not all for war purposes, but is to be used, in part, for the purpose of subsidizing the rich State of New South Wales, because that is what it boils down to. Let us examine what has happened in connexion with the grant to New South Wales. That State is to receive approximately £15,000,000, despite the fact that it is one of the richest States in the Commonwealth. In other words, it is to receive two and a half times the grant that is to be paid to Victoria. We are told that these figures have been arrived at on a certain basis, but obviously it is a basis which is peculiarly favorable to .Yew South Wales. I wish to discuss that matter for a moment, because I put it to the Minister seriously that when the citizens of Victoria realize what is happening, they will have something to say to the individuals responsible for this measure. The grants have been arrived at on the basis of collections during the financial years 19,39-40 and 1940-41, and it is proposed to give to New South Wales an amount equivalent to the average income tax collections in those years. But how was it that New South Wales collected more than £15,000,000 in those years? What were its obligations?

Amongst other things, New South Wales was obliged to raise £1,300,000 for its child endowment scheme, and that sum was raised by means of taxes. Now, New South Wales has been relieved of that obligation, and therefore is better off to that degree, yet, under this scheme, it is proposed to pay the whole of that sum to New South Wales. Why? Surely it is not right merely to take the figures for 1939-40 and 1940-41 and say to New South Wales: "You raised this amount in those two years, therefore we shall continue to pay that sum to you, despite the fact that by act of this Parliament we have relieved you of the responsibility to pay £1,300,000 out of your revenue for child endowment purposes ".

Senator Arthur - New South Wales has additional war obligations.

Senator SPICER - That is not so. The financial obligations of that State to-day are materially less than they were in 1939-40 and 1940-41. During that period, according to the figures referred to by the Leader of the Opposition, New South Wales had a heavy obligation to its unemployed. In those two years it raised approximately £6,000,000 annually for the relief of unemployment. That State has nothing like the same financial responsibility for unemployment relief to-day as it had then. Its responsibility in that regard to-day as compared with those two years is practically negligible. Yet the Commonwealth is to pay to New South Wales a sum for the relief of the unemployed, although there are practically no unemployed to be relieved.

Senator Keane - What is Victoria doing with its unemployment relief money? The unemployment relief tax is still in operation in that State, although there are no workless people.

Senator SPICER - Victoria has been reducing the tax consistently year after year. The estimate of the sum to be received this year by Victoria from the unemployment relief tax was a little over £1,000,000. That was £500,000 less than the sum which was collected in the previous year, and the amount collected in that year in its turn was less than the sum obtained in the year before that. If Victoria had kept the level of the unemployment relief tax up to £2,000,000, instead of £1,000,000 a year, it would, on present calculation, have got another £1,000,000; but because Victoria has acted properly, and has reduced its tax as the number of its unemployed has dwindled, it is to receive less, and New South Wales is to get more. These are very serious matters.

We are told that uniform taxation will be provided under this measure, but the bill provides for an unfair discriminatory tax on the citizens of Victoria to provide, in part, a subsidy of about £5,000,000 to New .South Wales. If a proper examination were made of the obligations of New South Wales to-day, compared with 1939-40 and 1940-41, in relation to child endowment, unemployment and widows' pensions I believe that it would be found that that State is being overpaid by not less than £5,000,000. If the allowance as proposed to be made under the bill were reduced as it should be, having regard to the relative populations and wealth of Victoria and New South Wales, from £15,000,000 to £10,000,000, we might be nearer the proper figure. Not only is the Victorian taxpayer being dealt with unfairly, but I suggest that Victoria, as a State, is being most unfairly treated. We have already been reminded that Victoria raises only about one-half of its revenue from income tax, whereas New South Wales and some of the other States raise two-thirds or more of their revenue from income tax. Considering this proposal from the point of view of equity, we must regard it as a whole. Victoria, because it receives only one half of its revenue from income tax, will have only one half of its revenue provided for it by way of the Commonwealth allowance. It has already exploited the land tax and other imposts, because those are the sources from which it gets over 50 per cent, of its revenue. In New South Wales and Queensland, however, two-thirds or more of the revenue is obtained from income tax, and therefore two-thirds of it will be provided by the Commonwealth allowance. If New South Wales still wishes to add to its revenue by imposing fresh taxes, it has unexploited fields to which it may resort. It can take the grant from the Commonwealth, and it can also impose a land tax.

Even then, its citizens will not be so badly off as the citizens of Victoria.

I believe that this scheme has been resorted to by the Government to raise revenue because it is not prepared to propose measures to which it should resort in order to supplement the revenue needed for war purposes. I have said before, and I repeat, that it is desirable that we should tax more heavily than before incomes under £400 a year. I say that, not because I desire to see anybody deprived of whatever little income he or she may have, but merely because that corresponds to the reality of the situation to-day. Honorable senators are aware that the capacity of this country to produce the things which contribute to the standard of living is not the capacity we had in peace-time. We cannot take men out of industry by hundreds of thousands and put them into the armed forces, and still be able to maintain the real standards of living of the community. In the process of doing that, we distribute throughout the community a tremendously increased purchasing power. Persons with incomes under £400 a year will contribute under this scheme less than they were contributing before, and I cannot see any justification for that. The Government says that it is forced to introduce this scheme, which will upset the whole constitutional structure of this country, in order to get £12,000,000 or £15,000,000 and at the same time it claims that it will thus reduce the tax payable by some people in this country. I have never been able to see any sound reason why a single woman, without responsibility, who earns £3 a week as a typist should not contribute something to the nation's war effort. [Extension of time granted.} Nor have I heard of a valid reason why a lad, without responsibility, who receives £3 a week should not pay a small amount in taxes. Until I became an adult I did not receive anything like £3 a week, but there are plenty of young fellows in this country to-day receiving at least that amount. The only reason why the Government does not require these persons to contribute to the revenues necessary for the prosecution of the war is that it is more concerned about the popularity of its proposals than with the need for raising revenue for war purposes. Under this scheme, an additional £12,000,000, or perhaps £15,000,000, is to be extracted from the taxpayers of Australia; but, as I have pointed out on other occasions, at least £28,000,000 could be obtained if the Government would adopt the system of taxation in operation in New Zealand.

Senator Cameron - The honorable senator is concerned only with protecting the wealthy taxpayer.

Senator SPICER - No ; he has already "got it in the neck ". for be may be taxed up to 18s. in the £1. The people about whom I am concerned, and about whom the Government will have to be concerned, are not those who are paying taxes at the rate of 18s. in the £1, but the people in the middle ranks with incomes of between £500 and £1,000 a year. Most of the people in this income group already have heavy responsibilities, but they are being forced by the Government to carry a heavy additional load. To their credit, it can be said that they carry it cheerfully; but they would carry it even more cheerfully if they knew that those who enjoy 70 per cent, of the income of the community were making some contribution to the nation's needs.

I wish now to refer in some detail to the provisions of the bill providing for the transference of State officers to the Commonwealth service, for the purpose of carrying out this scheme. I am particularly concerned about officers of the State Income Tax Department, who are temporarily absent on war service. Under the conditions which govern their employment in the State, they are regarded as applicants for any higher positions which may become vacant during their absence from their departments. Should an absent officer be selected to fill a vacancy, some other person will temporarily carry out the duties until his return.

Senator Ashley - That is the position.

Senator SPICER - In effect this scheme is designed to take over the State income tax departments, and for the period during which it will operate those departments will be conducted as Commonwealth departments. There is noth ing in this legislation to preserve the rights of State officers serving overseas. I am concerned about those men.

Senator Keane - The point raised by the honorable senator is now being examined.

Senator SPICER - I am glad to have that assurance from the Minister.

There are other aspects of the situation which require consideration. In respect of some of them the Minister has been communicated with.For instance, under existing conditions, officers in other State departments may apply for transfer to the State Taxation Department. With this scheme in operation, what will be their position should vacancies occur in the ranks of taxation officers ? That is a matter which requires consideration.

Senator Large - Is the honorable senator in favour of reducing overhead expenses ?

Senator SPICER - Yes; but no evidence has been presented to show that this scheme will have that effect. It has been said that the Government's scheme will release 1,000 men in the taxation departments, but I cannot see how that can occur.

Senator Cameron - That was stated by the committee in its report.

Senator SPICER - I am not astonished that the Minister is not prepared to support that estimate. Probably he has learned, as I have, that the maximum saving in Victoria will be 43 men.

Senator McBride - There will not be any great saving of men in New South Wales.

Senator SPICER - Should the position be as stated by the committee, what is the intention of the Government in respect of those officers who would become redundant ?

Senator Allan MacDonald - There will not be many redundant officers.

Senator SPICER - So far as I can see, these matters have not been given consideration by the Government.

Senator Keane - They have been considered.

Senator SPICER - If the Commonwealth Government, having embarked upon this scheme, intends to see it through, it must make provision to meet the problems which I have mentioned. I cannot see in this measure any provision to meet the cases of public servants who may have certain rights, or of those who may become redundant.

Among the other matters to which reference could be made is the fact that these State officers are now members of State public service organizations. The scheme before us is for a limited period only. Will those State public servants who are to be taken over by the Commonwealth have access to the Commonwealth Public Service Board ; and, if not. how will matters affecting their rights be determined? I urge the Government to give careful consideration to all that has been said by the public servants in relation to these proposals; and I hope that, before we go into committee, the Minister in charge of the bill will be able to give an assurance to me in relation to the matters State public servants have raised, and in respect of which they are entitled to every protection.

The Senate has a very special obligation in relation to these measures. The Senate, as we have been so often reminded, was created as a States House in order to preserve not merely the letter but also the real spirit of the Constitution. For that reason, honorable senators owe a special obligation to the people of Australia in exercising their vote on these measures to ensure that nothing shall be done by the Senate that will destroy the real foundations of the Constitution of the Commonwealth of Australia.

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