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Wednesday, 3 June 1942


Senator KEANE (Victoria) (Minister for Trade and Customs) (4:40 AM) . - in reply - .When one realizes that there have been 27 speakers on this bill, it can be appreciated that the subject has been well debated. The discussion has been mainly on the legality of these proposals. I assure the Senate that the Government took every precaution to ensure that the measures were constitutional. I emphasize that, on matters such as this, it is virtually impossible to get unanimity of opinion amongst legal minds. Senator Spicer himself admitted that when a similar case was taken to the Privy Council no decision could be obtained. If urgent legislation is to be held up merely because some doubts are expressed by legal luminaries such as the right honorable member for Kooyong (Mr. Menzies), the right honorable member for Barton (Dr. Evatt) when a member of the High Court Bench, or Senator Spicer, who, after all, are expressing only their own opinions, it will be a sorry state of affairs. I have no faith in any of them because I saw evidence of their inconsistency in proceedings in which I appeared over a number of years. Senator J. B. Hayes suggested that this legislation should be submitted to the High Court, but an experiment of that kind was made in 1920 in the case of the Judiciary re and v. the Navigation Act, and the High Court declared the procedure to be invalid. I do not wish to discuss at length the legality of these measures, but as Minister in charge of this bill, I say that if the High Court is to be permitted to interfere with the considered decisions of the elected representatives of the people in this Parliament, the position will have to be reviewed. A bench of five men should not be permitted to dominate the Commonwealth Parli.ment. Such a position arose in the United States of America and honorable senators know what happened there.

Comment was made in regard to the number of officers whose services would be made available for other duties with the introduction of a uniform income tax scheme. The Government still contends that the special committee's estimate of 1,000 is a reasonable one. A detailed survey of this matter cannot be made until a single taxing authority is established, but from information which it has received the Government expects that the saving of staff expected by the committee will be substantially realized.

There has also been considerable argument in regard to the Treasurer's statement that an additional £12,000,000 or £15,000,000 will be obtained under the uniform income tax scheme. The explanation is that the higher earnings of the people will be responsible for that increase. That matter was clearly explained to the Senate by one or two speakers on the Government side of the chamber. Senator Brand, Senator Spicer and Senator Leckie referred to requests received from the Victorian Public Service Association.


Senator SPICER - And a number of other organizations also.


Senator KEANE - That is true. A number of requests were submitted which are largely covered by clauses 4, 5 and 6 of the bill. The first request was that all officers, permanent and temporary, of the State taxation departments, serving with the armed forces, be transferred to the Commonwealth. The reason given for the request was to protect the promotion rights of officers. Advice received from the Attorney-General's Department is to the effect that such an amendment would bring the validity of the bill into question. The rights which any permanent State officer who is at present serving in the armed forces, would have in regard to promotion in the State service will not be affected. Promotion of transferred officers in the Commonwealth service will be temporary only. An assurance is given that the bill in its present form will permit the taking over of any officer who was previously on the staff of a State taxation department, and who, subsequent to the commencement of this legislation, is discharged from the forces. The Government will use every endeavour to collaborate with the States to ensure that the interests of officers serving with the armed forces are not jeopardized. The second request reads -

That an officer of the State service shall be eligible to he transferred or promoted to the Taxation Office while it is under Commonwealth control in all respects, as if he were * transferred officer within the meaning of the act.

It is not necessary to amend the law to give to officers of the State service eligibility for transfer or promotion to the taxation office of a State, but those transfers or promotions could not, of course, be put into actual effect while the staff was temporarily transferred to the Commonwealth. Since the bill provides only for the temporary transfer of officers connected with the assessment or collection of taxes upon incomes, a transferred officer not so connected, would be outside the scope of the bill. It would be subject to the same constitutional objections as the first request. The relative positions of officers of the State service not transferred, and transferred officers, would be consistent. If a transferred officer were promoted to a State department, other than the Taxation Department, he would not be permitted to take up actual duty in the position to which he was promoted while a transferred officer. The third request reads -

That all officers who at the time of th« commencement of the act were engaged, on income tax duties and who became redundant because of non-transfer to the Commonwealth, be compensated if they are not absorbed by the State, the compensation to follow the line, of the Income Tax Collection Act 1923.

The present proposals are not comparable with the circumstances which arose in 1923 when an arrangement for all practical purposes of a permanent nature was entered into for the collection of State and Federal income taxes by one authority in each State. The present proposals are temporary only - for the duration of the war - and it seems inconceivable, in the light of existing staff shortages, that the State will not absorb any officers not temporarily transferred to the Commonwealth. If the State does not absorb its excess officers, the matter of compensation appears to be one to which it should give every consideration. The fourth request reads -

It should be made clear that while a transferred officer is still serving in the Commonwealth Public Service, that length of service should be regarded as service with the State for the purpose of any rights which accrue to him by virtue of length of service.

Sub-clause 2 of clause 5 of the bill is designed to safeguard the rights of an officer after re-transfer to a State, and to ensure that his service as a temporary officer with the Commonwealth shall be taken into account. With regard to any rights which may accrue to the officer while serving as a temporary officer with the Commonwealth, those rights can be protected by regulation. It is not clear what rights it is sought to cover, but if, for instance, the association has in mind the matter of extended leave or furlough, an assurance is given that this will be provided for. The fifth request was -

That a transferred officer shall not be deprived in any respect of any rights, privileges, or advantages, present, accruing or prospective, appertaining to bis employment, office or position in the State service which be possessed immediately prior to his transfer.

The objects of the provision in the bill covering this matter are -

(o)   To ensure that transferred officers who enlist for active service will continue to have the difference between their civil and military pay made up in accordance with the conditions existing in their respective States.

(6)   To enable the transferred officers to retain State conditions where they are favorable as well as State remuneration where it is favorable.

Both of these matters are proper subjects for consideration in the formulation of the prescribed conditions of employment, referred to in sub-clause 1 of clause f> of the bill.

An indication is given that the proposal that transferred officers who enlist for active service while with the Commonwealth will have the difference between their civil and military pay made up in accordance with the conditions existing in their respective States, will be considered. The proposal that officers' State conditions should be preserved while serving in the Commonwealth should, it is thought, be refused, since Commonwealth conditions of remuneration will no doubt be adopted. In some States the hours of duty and the number of days worked weekly are less than those worked by Commonwealth officers. The sixth request reads -

That the organization to which the transferred officer belongs at the time of transfer shall have the same right of access and the same privileges which exist at present for organizations registered under the Arbitration Public Service Act 1911-1029.

This is a matter which it would be appropriate to deal with in the regulations to be made under sub-clause 1 of clause 6 of the bill prescribing terms and conditions of employment of transferred officers. The proposal will be favorably considered. The seventh request is as follows : -

That provision should be made to meet the case of ex-Commonwealth officers now with the State who are entitled to retire under the law of the Commonwealth.

As the agreements from which the exCommonwealth officers derive the right to retire in accordance with Commonwealth Public Service conditions are merely suspended, and will come into force again when the measure under discussion ceases one year after the end of the war, no rights are taken away. However, it may be necessary to consider the effect upon Commonwealth officers who reach the retiring age during the currency of the suspension of the agreement. The Commonwealth could give an assurance that whatever steps were necessary to protect the rights which exCommonwealth officers derive under the agreements would be taken to preserve those rights during the period of the suspension of the agreements. The eighth request was -

That provision should be made for the nonsuspension of agreements so far as officers who were transferred to the States from the Commonwealth but who are now not transferred officers.

It is considered that it would not be practicable to suspend portion of the agreements, but the objective sought in this request can be achieved in the regulations, and an assurance is given that it will be done.

I appreciate the general tone of this debate, which was of an informative nature. The main point at issue is the doubt as to the legality of the proposals of the Government, and as to whether a fair deal will be given to all of the States. The suggested payments to the States show that taxpayers in all of the States, except Victoria, decidedly benefit as a result of the measures. A perusal of the proposals shows that an honest effort has been made to bring about a uniform system of income taxation. Taxpayers in South Australia will experience considerable gain. Those in receipt of incomes amounting to £200 and who have been paying £18 4s. in tax, will pay under this scheme £7 18s. Those who have been paying £47 10s. on incomes of £300 will now pay £31 10s., and on salaries of £6,000 the tax imposed will represent a saving to the taxpayer of £66. This shows that an effort has been made to make the taxes uniform. Taxpayers in Victoria, where low income taxes have been imposed, will suffer a loss. Without wishing to disparage the State of Victoria, in which I have lived all my life, I admit that, owing to economical governmental management, certain social services have not been received by the people of that State. I admit that the Labour party, Because of its alliance with the Country party, has helped to keep the present Government in office in that State, but, if the Labour party held every seat in the Legislative Assembly of Victoria, it could not get one bill passed through the State Parliament, because of the hostile Legislative Council in which Labour has only six members.


Senator SPICER - The Government is making it impossible by this legislation.


Senator KEANE - I am not concerned with the fate of the States. The retention, after 42 years of federation, of thirteen legislative chambers in Australia is an outrage. Senator Sampson seems to be under the impression that, if unification were introduced, the States would suffer as a result of it. The honorable senator knows that the elimination of State Parliaments would mean greater representation in the House of

Representatives and in the Senate, together with the establishment of State provincial councils which would attend to some of the detailed work which the Parliaments of the States are now doing. The corollary of federation was to have been one people and. one Parliament. I remember when the vote was taken to determine whether the federal union should be consummated, and I recall clearly that the average man and woman . believed in 1901 that the establishment of the Commonwealth Parliament would result in the gradual elimination of the Parliaments of the States. That was the propaganda published in the Melbourne newspapers at the time.


Senator Sampson - The Constitution itself is the reply to that.


Senator KEANE - All of us are agreed that, after the war, a review of the Constitution should be made, more particularly with a view to granting increased industrial powers to the Commonwealth. It may be news to some honorable senators when I inform them that similar legislation to that now proposed is in force in Canada, although similar objection to that raised in this chamber was taken in Canada. The fact that the preamble of the bill has been criticized does not deter the Government from proceeding with the measure. I admit that the preamble is an elaborate one, but, when analysed, it is seen to be sound. The main reason for- the introduction of this bill is known to all honorable senators. At the conference of Commonwealth and State Ministers, held on the 22nd April last, the Prime Minister (Mr. Curtin), said - " If the States would accept the principle of one taxing authority I should say: 'Let us get down to tin tacks and see what we can do '. But the States have rejected it. proclaiming it to be an invasion of the .sovereignty of the States and said that it took the heart out of State governmental structure. The States do not give us any hope of doing other than going to the Commonwealth Parliament a,nd saying: 'Gentlemen, yours is the responsibility for making the requisite financial provision for the conduct of the war; here are the proposals which the Government lias formulated \ "The -proposal which the Commonwealth Government has placed before this conference is that the States shall suspend the right to impose income tax for the duration of the war and twelve months thereafter, and that the Commonwealth will pay to the States for that period the amount that they broadly received in the two years during which the States' affairs were examined, so that a fair figure could be secured. What every body leaves out of account is that, as the resultof the increased Commonwealth expenditure on the war by £120,000,000, comparing the year 1940-41 with 1939-40, there has been a great increase of the taxable capacity of the country. The proposal of the Commonwealth is that the States shall not share that increase, which will be made available to the Commonwealth Government for the prosecution of the war. " The Commonwealth has to cope with many commercial shipping and transport problems, not only external, but also internal. There has been a tremendous increase of army expenditure for transport, some of which is not wholly related to the movement of troops, because of the deficiencies of therailway systems compelling us to use roads and provide trucks. All that goes into the war cost. I put it to you, without any political ideas whatsoever, as a cold and, I believe, a rational way to look at the problems of this nation. That is as much your concern and your interest as it is mine or that of my colleagues. "The fact is that this nation has not expended enough money on preparations for war, with the result that we now have to improvise, which is always more costly than a carefully considered plan. I do not know how the States will be able to look electors and parliaments in the face and say : ' We have rejected this principle of uniform taxation because it strikes at the sovereignty of the States '. The sovereignty of the nation calls for a reform of this nature during wartime for the purpose of conducting the financial obligations of the national government rationally.

That sets out clearly the main reasons for the introduction of this legislation. Honorable senators know that whenever a conference with the States takes place, obstacles are raised to the proposals of the Commonwealth. As an instance of what happens when attempts are made to secure the co-operation of the State, I mention that last November the ports of Melbourne, Sydney and Adelaide were congested with shipping. In the port of Melbourne there were 63 ships. The Government decided to issue certain regulations relating to the handling of cargo, but immediately the harbour authorities became frantic. They forgot that this Parliament had made available £214,000 to meet harbour charges in Sydney and Melbourne, and that, later, an additional £1,000 was paid to the Melbourne harbour authorities. The Premiers of South Australia, New South "Wales and Victoria communicated with the Prime Minister and practically held up opera tions. That is an example of the way in which the States act when the Commonwealth tries to help them.

The second reading of the bill has been fully discussed, and although I have not answered all the points which were raised during the debate I shall, if necessary, do so in committee.

Question put -

That the bill be now read a second time.







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