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Wednesday, 14 October 1931


Mr SCULLIN (Yarra) (PrimeMinister) . - The provisions embodied in the Financial Emergency Act wore intended to protect the Common wealth Public Service from what might be described as punitive taxation that might be imposed by any State. The circumstances in which these provisions were inserted are well known. At that time it was proposed by New South Wales to impose a very high rate of tax, amounting to 5s. in the £1, for the purposeof providing for the unemployed. It will be remembered that at the Premiers Conference we discussed proposals for certain economies, and it was unanimously agreed, amongst other things, to make a reduction of 20 per cent. ofall adjustable expenditure. For that purpose each government brought down certain proposals. The unemployment tax in New South Wales of1s. in the £1 was taken into the calculations by the State Government when arriving at the reduction of wages necessary to make the 20 per cent. reduction in adjustable expenditure. It was then considered by the Commonwealth Government that, if the1s. in the £1 was to be calculated when making a. reduction of the salaries of the New South Wales public servants, it was not reasonable that, the whole of the tax should be imposed upon Commonwealth public servants residing in that State. It was not easy to adjust the matter, but in the act we took power to make a regulation that would provide what should be the amount of tax imposed upon Commonwealth public servants in excess of the taxation in operation on the 30th June, 1930. An impression gained ground that we were trying to prevent the States from imposing extra taxation, but that was not the intention. The act, of course, would prevent any increase over the taxation in force on the 30th June, 1930, until such time as a regulation was issued, but provision was made in the section for the issuing of a regulation. I notice that the Premier of South Australia has declared that we are trying to relieve members of this Parliament and Commonwealth public servants residing in South Australia from paying as much State taxation as is payable by other residents of that State.


Mr Archdale Parkhill - That is not the position.


Mr SCULLIN - No, it is not. A later statement made by the South Australian Premier was that the Commonwealth Government intended to repeal the section of the act to which he referred. We are not repealing it, but merely making it more effective for carrying out our original intention. We have to proclaim by regulation what rate of income tax should be payable, and we cannot discriminate between States. But as the Assistant Minister explained, we intend to issue a regulation setting out what the maximum in any State shall be in respect of income taxation. At present the maximum tax is being imposed in South Australia, and that will be made the maximum in the regulation. If any changes take place, adjustments will have to be made; but the Government will be able to issue an amended regulation without, any alteration to the law. We shall have to watch the position from time to time. We do not desire to make a privileged class of theCommonwealth public servants; but we do intend to protect our servants from being treated in an abnormal way, for they are already bearing their share of the general economies. The fact that the regulation will provide that the maximum tax shall be the rate at present payable in South Australiadoes not mean that that rate will become the effective rate in every other State. Commonwealth publie servants in Victoria, New South Wales, and the other States will pay the same rate of income taxation as other citizens in those States.


Mr Lyons - The rate for Commonwealth public servants will not be increased above the rate applicable to ordinary citizens of a State.


Mr SCULLIN - It will not be. No State will have the power to impose a super tax on Commonwealth public servants. There will be no discrimination against our officers. For instance, the New South "Wales 5 per cent, unemployment tax is calculated by the State Government as part of the economy plan, but we do not propose that the whole of it shall apply to our public servants, for they have been involved in other sacrifices. That is the only distinction made in the whole proposition.

The amendment in regard to the maternity allowance is to give effect to the original intention of the Government, and it will apply to every case. Recently the honorable member for "West Sydney (Mr. Beasley), in speaking to the adjournment motion, directed attention to' the case of the wife of a man on the dole, who had been refused the maternity allowance. I said at that time that it was never intended that the act should operate in that way, and that I would look into the case. I subsequently made inquiries, and found that while the husband had been in receipt of an income of more than £260 in the preceding twelve months he was actually out of work when his child was born. But a strict reading of the act prevented the authorities from granting the allowance in that case. The amendment now being effected will bring it into conformity with the old-age and invalid pensions law, under which present earnings are taken into consideration. A discretion is being left with the Commissioner, who will now be able to carry out the original intention of the Government. In the future those who are in receipt of more than the stipulated income, will be debarred from obtaining the allowance, but those who are not in receipt of it will not be debarred from receiving it. Every case that has been dealt with since the Financial Emergency Act was passed will be reviewed.


Mr Prowse - Will the Prime Minister inform me whether taxes imposed by the States will be deductible from income for Commonwealth taxation purposes?


Mr SCULLIN - The Treasurer made a statement on that subject to-day. There is an anomaly in the law which will be adjusted by an amendment of the act that the Government hopes to introduce very shortly. The Crown Law authorities have advised that unemployment taxation, such as that imposed in New South Wales, or hospital taxation, such as that imposed in Western Australia, which are collected on an annual basis, may be deducted, but that taxation of a similar character, which is collected at its source from wages, may not bc deducted. All such taxation, however collected, is taxation on income, and the Government will introduce an amendment of the act to provide that it may be deducted.


Mr Prowse - That is only fair.

Mr.ARCHDALE PARKHILL (Warringah) [3.14J. - Honorable members are indebted to the Prime Minister (Mr. Scullin) for the clear and lucid statement that he has made. The right honorable gentleman has entirely removed any objections that I may have had to the bill, and has made it clear that no" concession is being given to members of the Commonwealth Parliament or to Commonwealth public servants, but that evenhanded justice will be dealt out to all. I. arn now strongly in favour of the bill.

Mr.GABB (Angas) [3.15'| .-I, also, thank the Prime Minister (Mr. Scullin) for the clear explanation lie has given of the bill. Honorable members who have read statements which have appeared in the South Australian press to the effect that members of the Commonwealth Parliament were "bounders" who desired to enjoy the privileges of citizenship without accepting its full responsibilities in regard to taxation in South Australia, have been gratified to hear the remarks of the right honorable gentleman. I hope that a copy of his speech will be forwarded to the Premier of South Australia, Mr. Hill.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clause 1 agreed to.

Clause 2 (Constitution of committee).







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