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Friday, 24 August 1923

Mr SCULLIN (Yarra) .- I agree with the Leader of the Opposition (Mr. Charlton) that the Bill is one that can be best dealt with in Committee, but some aspects of it I propose to discuss at this stage. Only one of the agreements in regard to the amalgamation of Departments has been placed on the table, and that is the one between the Commonwealth and New South Wales. I am rather interested in the agreement to be made with Victoria, but as it is not before us we know nothing of what it contains, nor how it will affect the employees to be transferred from the Commonwealth Taxation Branch in Victoria to the State Taxation Office. To-day, a number of amendments to the Bill have been tabled, and as we have not had a chance to consider them we are seriously handicapped in discussing the Bill. This proposal is a fearful " come-down " from the promises made by the Government to the country when it called Parliament together in the early part of this year. We were told that the reason that the Government had no business to bring before Parliament was that a Conference between Federal and State Ministers was to be held, at which wondrous things would be done. In due course, the mountain laboured and brought forth a mouse. Many Conferences were held, one after another, and after the members of this " business " Government had put their heads together to reform the whole taxation system of- Australia, what proposal did they submit to the Conference? They proposed a scheme that was derided by every taxation expert in Australia, namely, that the field of income taxation should be divided between the Commonwealth and the States, the Federal authority taxing all incomes above £2,000, and the States all incomes under. Apparently the Commonwealth Government did not realize that it was opening up a most wonderful field for dispute between the Federal and State authorities. I can imagine a taxpayer returning his income at £1,990, and the State authorities assessing it at that figure, and the Commonwealth authority claiming that the income was £2,000, and a battle royal taking place between the two as to which should pluck the pigeon.

Mr Paterson - The honorable member misunderstood the proposal. The State would tax the income -whether it was under £2,000 or over £2,000.

Mr SCULLIN - Not under the original proposal, which was that incomes under £2,000 should be taxed by the the States.

Dr Earle Page - No; the Commonwealth was to evacuate the field of taxation in respect of incomes under £2,000, but the States could tax all incomes.

Mr SCULLIN - That proposal was discarded. Then the Commonwealth produced -a second, which, was hailed as a wonderful discovery. Only companies were to be taxed by the Federal authority, and all other income taxation was to be handed over to the States entirely. And the proposition of the Federal Government was that it should tax the companies at a flat rate of 2s. 6d. in the £1 irrespective of the number of shares held by any taxpayer. A person drawing £10,000 or £12,000 per annum from shares would pay 2s. 6d. in the £1, and a person drawing merely £10 or £12 would be subject to the same rate of tax - the most unjust and inequitable proposal ever put before the country. Its sole purpose was to relieve the big man of taxation and pile it on to the small man. I very- much fear that that will be the trend of other negotiations between the Commonwealth and the States. That scheme, however, was not adopted, and the next that was proposed is embodied in the hotch-potch measure now before us. It is a composite arrangement, typical of the Government itself. The much-vaunted elimination of duplication is a myth. , There will still be a Federal Department for the collection of income taxation, whereas, if the Government had made arrangements with the States for the Commonwealth to be the sole collecting authority, which was the natural arrangement, duplication in "every field and form of taxation would have been eliminated entirely. I do not know why the Federal Government proposes to surrender to subordinate authorities the right of collecting taxation - for the States are subordinate, and as time goes on and as the intelligence of the people is applied to our system of government, the States will become still more subordinate to the national Parliament. The Government's proposal, however, is building up the authority of the States and making more absolute their sovereign rights. I shall never permit, without protest, any surrender of the Commonwealth's powers and rights to a subordinate authority. That is the policy of the State-righters, and it leads to duplication in every shape and form. There can be uniformity and lack of duplication only when the Federal authority is the sole collector of taxation.

Dr Earle Page - When does the honorable member expect to get that arrangement ?

Mr SCULLIN - Not until a strong Government is in power. In the per capita payments the Commonwealth Government has in its hands an all-powerful weapon, but it has never used it. It has made no serious attempt to bring the States to a realization of their responsibility in regard to duplication, but that will be done when there is in power a Government strong enough to apply the power it has got. When it does so, the people will support it. The Government boasts of having got rid of duplication in the collection of taxation, notwithstanding that the Federal Income Tax Department' will continue. I predict that there will be no economy in the head office; there will, be no dismissals of highly-salaried officers at headquarters. The economy to be effected will be the throwing out into the cold of the smaller-paid men, who will find it difficult to get other employment under present conditions. I am not certain that economy is real when it means the saving of expenditure by throwing people out of work, and rendering them unproductive for a long time. Hearing the Government boasting that it was getting rid of duplication, one would think that it would start upon the worst form of duplication - that in connexion with land taxation. There duplication is found, not only in the assessments and collections, but also in valuations. The work of valuing is expensive, and variations give rise to many disputes. The Federal authority, the State authorities, and the municipal authorities are separately engaged in the work of valuation, and in some places other subordinate bodies such as Closer Settlement Boards and Savings Bank Commissioners are covering the same field, and very rarely do any two valuations agree. There was further scope for the elimination of duplication in connexion with the entertainment tax and probate duties. We should be seeking carefully for some real reform instead of rushing into illconsidered plans like this. The Federal authority should collect all the taxes. Under a proper system of co-ordination the services of the men and women who are at present employed in the various Taxation Departments could be gradually absorbed in other branches of the Public Service. There should be no need to throw them out into the cold world. To do so is to injure the Commonweath, and more particularly the people themselves. We shall deal further with this question in Committee. The Government has circulated some amendments to the Bill which I have been very glad to see, hut they do not by any means cover all the points which honorable members on this side of the House will raise. The Government has talked a good deal about giving preference to soldiers. It will have an opportunity to prove its sincerity ir. dealing with the soldiers who are temporary employees in the Taxation Department. We do not regard as adequate the compensation to be paid to these and other employees who are not soldiers. I hope that when we reach the Committee stage the Treasurer will be ready to adopt some suggestions for more generous treatment. Equal consideration should be given to employees whether they are returned men or not, and whether they are permanent or temporary employees. Many of the men who are technically termed temporary employees have been in the Service for four, five, and six years, and, whether they have passed an examination or not, have as much right to compensation as other employees who are regarded as permanent. We want all-round justice for the employees. I shall stress this aspect in Committee. The compensation which is to be paid to some of the lower-paid officers, whose salary ranges from £70 up to £250, is much too small. The majority of the lower-paid employees have less than eight years' service, but many of them have been in the Service for six years. Do honorable members consider it fair that such employees should be turned out into the world with only about £90 compensation? These people had a right to believe that they were in the employ of the Government for life. A great difference is apparent between the treatment to be meted out to these employees and that accorded to the persons retired under the Defence Retirements Act. No fifth class officers were dismissed from the Military Department. The lowest grade of employees dismissed belonged to the fourth class. Honorable members will remember that the " brass hats" were generously treated. Under this Bill nobody will be treated as generously as they were. At least twelve months' salary should be given to the lower-paid officers who will be retired from the Taxation Department. I suppose the same old cry of interference with the appropriation will be made by the Treasurer when we suggest this in Committee, but I am giving him warning of the intentions of this side of the House. We will not agree to the dismissals of persons who are on the bread-line, uness they are given adequate compensation. Very few of them have been able to make provision for such a happening as this, because their salaries have been too small. What compensation is halfayear's salary to a man who is receiving as little as £250 a year? I cannot congratulate the Government on the agreement it has made, nor can I congratulate it on the proposals in this Bill. These are simply stop-gap proposals. Much confusion will occur in trying to adjust the Commonwealth and States Taxation Departments, and the various methods of assessing and collecting income tax. We shall still have to maintain Commonwealth and State Departments, and the changes made under the Income Tax Amendment Act, and the rebate arrangement will be costly. The administration will be most difficult. I believe that the Government, will be very disappointed next year because so little economy has been achieved; and even that economy will be at the cost of much hardship to the lower -paid employees at present in the service.

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