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Wednesday, 17 December 1941

Mr PERKINS (Eden) (Monaro) . - I congratulate the Government rather than condemn it, although it has left itself open to much criticism. I do so because it has courageously changed its attitude towards a matter of policy over which it defeated the previous Government. This change of attitude shows that when the Labour party assumed office and realized to the full the danger with which Australia is faced, it was not afraid to make a volte face and do the correct and proper thing. The Government made a great sacrifice in doing this. I know that, although Australia is in jeopardy, when the people learn to-morrow that a Labour Government has imposed an extra tax upon small incomes, many ardent Labour supporters will be severely shocked. Less than three months ago, even the Prime Minister (Mr. Curtin) and his colleagues criticized .the Fadden, Government, and succeeded in defeating it, because it proposed to impose heavier taxes on the lower incomes. The right honorable member for Yarra (Mr. Scullin) submitted a good defence of the Government's change of attitude. He made an excellent contribution to this debate, as he does to any debate in which he participates, but the fact remains that Labour has abandoned principles which have been implicit in its policy ever since the party was formed. I am afraid that, at the next elections, many of its hitherto enthusiastic supporters will approach the polling booths in a new frame of mind. The Government has shown a high degree of courage, for which wo praise it, but for which many of its supporters will condemn it. Tn spite of its stand, I consider that it has not acted so wisely as it might have done. It would have done better if it had adopted the proposals submitted by th( former Treasurer (Mr. Fadden), because these would not have fallen so heavily upon the working classes. The previous Government proposed to collect large sums from the lower income groups, but much, of this money would have been treated as loans to ,be repaid after the war. Disagreeable as these imposts would have been, they would have been more acceptable to the people than the present proposal, even though it may be a more honest form of tax. I should not carp at the rate of tax proposed. The contribution of £20,000,000 a year that will be made by the lower income groups under this tax will exceed the amount of income tax paid by all taxpayers two brief years ago. The increase is indeed a severe one. One of the excuses offered by the Treasurer for the imposition of this tax was that we arc now at war with Japan, but three months ago the Fadden Government anticipated this in its budget proposals. Before the war is over, the Government will doubtless be obliged to submit proposals for a higher rate of tax. The people of Australia will meet their obligations. We cannot afford to lose the war, because it involves everything which we own and hold dear. I shall not grumble at the weight of the burden which I shall have to bear, and I know that my fellow Australians will not complain. But the people want to prevent wastage of government money. I do not now refer particularly to waste that has occurred under the administration of this Government, because much extravagant expenditure occurred under previous governments. It has been evident in every military camp throughout Australia. I hope that the Government will ensure that such waste shall not continue.

An examination of the Government's proposals shows that a man earning £40,000 a year will bc obliged to contribute through Commonwealth and State taxes, an amount of £36,000. Most of the persons who receive such high incomes derive them from property, which is also subject to municipal rates, so that, after paying all rates and taxes, they are left practically penniless. I do not know what powers the Treasurer may have in this regard, but he should investigate the incidence of municipal taxation. Many municipalities have made very little contribution to the war effort. There are some outstanding instances, of course, but they are not numerous. We have heard a great deal about the combined incidence of Commonwealth and State taxes, but most honorable members have lost sight altogether of the high rates of municipal tax which prevail throughout the Commonwealth. Whilst we all agree that the highest income earners should make the largest individual contributions to the war, we should study closely the effect of existing heavy taxation upon them. What does a man who earns £40,000 a year do when he is obliged to pay Commonwealth and State taxes amounting to £36,000, in addition to municipal taxes? He must curtail his expenditure, so he dismisses members of his domestic staff. He may have in his employ a motor driver who is over military age. He will discharge that man. He may have other servants who have been with him for almost a lifetime. He will discharge them. He will be obliged to reduce his standard of living, and as the result a number of unfortunate people will he thrown out of employment. This bill has been drafted to meet a war-time emergency. It is panic legislation. I hope that the Treasurer will heed my remarks, and also pay attention to the many letters which have been published in the newspapers recently. Some of these letters point out that, under existing rates of tax, the spending power of a man receiving £5,000a year is reduced to less than that ofa man receiving £4,000 a year, whose net income, in turn, is reduced below the level of that of a man receiving £3,000 a year. These anomalies should be investigated by the Treasurer. I am sure that the Government did not intend to put a man in receipt of a high salary in a worse financial position than that of a man earning a considerably lower salary. I have criticized the Government, but, on the whole, I believe that it has risen to the occasion. When the Labour party was in opposition, many of its members made irresponsible utterances, but to-day they are behind the scenes and they realize what is expected of them. So far asI can see, they are doing their job well. Many people believed that the Labour party's attitude towards the war-time needs of the country was twelve months behind that of the united parties on this side of the House. To-day the disparity has been reduced to three months, because the Government is adopting proposals which its predecessor made three months ago. If it continues at this rate it may become more advanced in its views than the parties on this side of the chamber. I hope that it will maintain this progress. I believe that honorable members who support the Government are as loyal as are honorable members of the Opposition, and I believe that Ministers may be trusted to prosecute the war effort to the best advantage. One of the most bitter political pills that they have had to swallow is this increase of the rate of tax on the lower incomes, and they deserve to be congratulated upon their courageous acceptance of the situation.

Amendment agreed to.

Motion, as amended, agreed to.

Resolution reported.

Standing Orders suspended ; resolution adopted.

Ordered -

That Mr. Chifley and Mr. Holloway do prepare and bring in a bill to carry out the foregoing resolution.

Bill brought up by Mr. Chifley, and read a first time.

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