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Wednesday, 26 November 1941

Mr HUTCHINSON (Deakin) .- 1 find it very difficult to work up enthusiasm for this particular tax, whether as an emergency measure or otherwise. As the honorable member for Fawkner (Mr. Holt) has said, it was introduced many years ago in order to effect the subdivision of many of the larger properties in Australia. Throughout its history, it has not succeeded in doing that, but has been maintained purely for the raising of revenue. If it ever had any value in compelling the subdivision of estates, an increase for that purpose to-day would prove disastrous to this country, because the problem at present is not to find land for those who wish to cultivate it but to prevent: those who are on the land from leaving their holdings; consequently, anything which may tend to accelerate the drift from the country to the city should not be encouraged. The Government expects to obtain from this tax additional revenue amounting to . approximately £459,000. That is not, a very great amount. Although the income tax is not. to be raised in respect of many persons who are earning reasonably high incomes, the Government proposes to increase the land tax, which is directly a capital tax.

Mr Holt - Irrespective of whether a profit is earned or not.

Mr HUTCHINSON - Irrespective of whether any profit is made. We have the peculiar situation that persons with incomes ranging between £500 and £1,500 a year are to be exempt from additional tax, yet the tax of others is to be raised, whether income is earned by them or not. Very little additional tax would need to be imposed on persons receiving between £500 and £1,500 a year in order to raise an extra £459,000. The largest part of the land tax is collected in respect of city properties. Much of the tax is passed on in the charges that, are made for goods and services. Where prices are not controlled and rents are not pegged, the tendency will be still further to increase costs in those directions. An investor in city property will either have 10 apply to tlie rent-fixing authority for permission to increase his rents, or be unable to recoup himself.

I am mainly concerned at the probable effect on primary industries. The land tax is levied, in respect of country properties, almost solely on the wool industry, which is of first-rate national importance. Since the outbreak of the war, an average price of 13-M. per lb. has been received for our wool. In 1932, the Government of the day ordered the very closest investigation to be made of the cost of producing wool in Australia. The findings of the investigating body disclosed that, allowing for a reasonable return on capital invested, the cost was I4d. per lb. As costs are greater to-day, with wool at 13$d. per lb. the industry is not in a flourishing condition. In certain favoured localities, in which rainfall is fairly assured, or where dairying or fat lamb raising is carried on in conjunction with wool-growing, the position of the producer is somewhat better. Costs to-day are tending ever upwards. For example, the cost of shearing sheep by contract has increased bv approximately Ss. 4d. a hundred during the last twelve months, and undoubtedly will go still higher. All other wage costs have the same tendency. Unless arrangements can be made with Great Britain, the price of wool will remain constant. Therefore, this tax should not be levied on certain properties, even for emergency purposes, particularly as much better means could be adopted in order to obtain the amount required. The land tax is graduated. In 1932, the committee found that on some properties, owing to graduation, the tax amounted to no less than 2s. 6d. per sheep per annum. This large tax is paid mainly by the great stud properties of Australia, which have built up the standard of Australian wool to the highest point it has ever reached, and thus have undoubtedly assisted to establish the splendid standard of living which . is enjoyed in Australia to-day. The position, is well exemplified by one of the leading studs of Australia, which will be iu a much worse position when the additional tax is levied. Over a tenyear period, the income of this company has shrunk by £50,000, and it has suffered accumulated losses amounting to £17,000; yet it has paid in land tax no less than £80,000! It is no good saying that the property could be sub-divided, because there are no people waiting to take up land at this time. It is most difficult for production to be maintained even in existing circumstances, but the position will be made definitely worse for our leading studs when the increase is applied.. I fail to understand why, in such circumstances, any honorable member should regard as acceptable this means of raising money. The Government could quite easily exploit a more legitimate field. I hope that what I have said is sufficient to make honorable members realize that an additional burden is to be imposed on an industry which is- the mainstay "of Australia's economy, and that consequently tlie right way to raise the revenue is not being adopted. The report published in 1932 estimated that 45,000,000 of the 108,000,000 sheep in Australia' were grazed on properties on which land tax was paid; therefore, a great bulk of the wool production comes from laud which pays the tax. A levy which is imposed without any regard to income earned is based unsoundly and should, not in any circumstances be tolerated. With rising costs and a set price for its product, the wool industry will shortly have to be seriously considered by this Parliament. Unless a higher price can be obtained, for this, our greatest product, considerable damage may be done to the entire Australian economy. There is another line of government action which runs somewhat parallel to this. From time to time, the Taxation Department reviews the valuations of country properties, and in most instances the valuations are subsequently raised. I do not pay land tax, therefore I have no axe to grind ; but many taxpayers will have to pay the higher rate o" increased valuations, despite the fact that their incomes are fixed and their other costs are rising. The Government might very well withdraw the bill, and adopt other means to raise the additional amount required. I suggest that it do so.

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