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Wednesday, 28 July 1920

Mr HUGHES - The answer to the honorable member's question is as follows : -

It is not considered that debits for (a) State and. Federal income taxes, and (b) war-time profits tax, are legitimate charges against cost of production in a private trading concern, and it isnot proposed to inflate Government factory costs by the inclusion of any such charges. Under ordinary circumstances, charges on account of rates would be incorporated in the factories' accounts, but, as the Commonwealth is exempt from such charges, no amount can he included under this heading in the accounts of any factory. The amount, if included, would not materially affect the cost of production. Payment for water and sanitary services are, however, paid in Government factories. As a matter of policy, the Commonwealth carries its own risk of loss through contingencies which, in private enterprises, are ordinarily covered by insurance. Should any such loss occur in the case of factories, the amount of the loss is borne by the factory concerned. As regards depreciation, interest on capital, and advances, all charges on these accounts are duly brought into factories' accounts. All charges which arc definitely incurred on behalf of any factory, including cost of audit, are debited to the factory, but it is impracticable to assess, with any degree of accuracy, a charge on account of departmental costs. In any case, the amount would be so small that the effect on factories' costs would be negligible. It may be added that the form of balance-sheet in use in the Defence Department was designed by the Advisory Accountant to the Royal Commission on Naval and Defence Administration in consultation with the Treasury, and is considered to fully reveal the actual position' of the respective factories.

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