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Thursday, 28 May 1942


Mr ACTING DEPUTY SPEAKER (Mr. Martens) - In what way does that matter affect the measures?


Mr CALWELL - Subsequently caucus decided that the details of the measures should -be submitted to it for discussion, and on that assurance the debate in caucus was allowed to end. Unfortunately, caucus was not shown the bills before they were presented to Parliament, and those honorable members who understood they would be permitted to discuss the measures in caucus had to come to this chamber to learn their contents.


Mr Chifley - The whole of the honorable member's statement is entirely incorrect.


Mr ACTING DEPUTY SPEAKER - The honorable member for Melbourne (Mr. Calwell) should connect his remarks with the bill.


Mr CALWELL - I am connecting my remarks with the bill, and I am following in the footsteps of the honorable member for Hunter (Mr. James) who commented on the attitude of the honorable member for Kennedy (Mr. Riordan) to the measures. I am ' stating the situation correctly so that the honorable member for Griffith and the honorable member for Kennedy, who might experience difficulty in their State because of their attitude, will not be prejudiced.


Mr ACTING DEPUTY SPEAKER - The honorable member will not be in order if he pursues that line of argument.


Mr CALWELL - I do not intend to pursue it further, except to controvert the statement of the Treasurer that my presentation of the case is not correct. My presentation of it is absolutely and factually correct. One aspect of the measures has not been canvassed by any honorable member who has so far taken part in the debate. If I judge the situation correctly, one result of the enactment of these measures, will be the payment of increased income tax by taxpayers resident in the Australian Capital Territory. They are already subject to federal income tax, but are exempt from payment of State income tax. Under this scheme °f uniform taxation, they will be subject to the legislation equally * with all other citizens of Australia. As an honorable member has remarked, by interjection, they will be "roped in".

If that is to be the result, the Government ought to consider immediately the desirability of giving to the residents St the Australian Capital Territory representation in this House on the same basis as representation has already been given to the residents of the Northern Territory, the honorable member for which (Mr. Blain), whose presence we miss, has no vote in this chamber. If the residents of the Australian Capital Territory are required to pay income tax on the same scale as other citizens of Australia, they are entitled to representation in this House. That would not be the only reason entitling them to representation, but it would give them a greater claim. I hope that the Government will give them that recognition, because they deserve it. If other Commonwealth territories are equally affected and their population is large enough to warrant similar recognition, they, too, should have representation in this Parliament. From time to time, as a layman, I have watched the effects of State legislation upon the lives and fortunes of Australian citizens. Under the Commonwealth Constitution trade between the States is supposed to be free and untrammelled. In practice, it is not. Certainly, there are no tariff barriers between the States, and no guards to see that property upon which duty should be paid is not smuggled from one State to another. Nevertheless, there is not absolute freedom of trade throughout Australia. There are differential railway freights, which are designed to encourage trade between one part of Australia and another. There are impositions under motor car registration acts which prejudice the claims of citizens who enter one State from another State. It may be said with truth that the State Parliaments themselves have infringed the Constitution. Such issues have never been decided by the High Court, but they might be taken into consideration in any discussion of a reallotment of powers and a settlement of the trouble that exists at present between the Commonwealth and the States. If the Government desired that there should not be litigation over this legislation it might have made a little more friendly approach than it did to the States. There might have been recognition of the fact that all Australians want to win the war, and that the roles which men are cast to play in different spheres of life do not make one man's claims any better than those of another, to be comsidered a good Australian. If the Commonwealth and State Governments, after t heir first differences, had endeavoured to find a modus vivendi, perhaps a lot of the acerbity which has been imported into this debate, and it has not been altogether one-sided, might have been absent from it, The Premier of Queensland has printed a pamphlet outlining his position in regard to this legislation. The main contentions that he makes ought to be placed on record. He says -

I have read with a good deal of interest the report of the committee which submitted to the Commonwealth Government these proposals for a uniform tax. Knowing the personnel of the committee,' I may say that I could have written the report myself. I do not make that statement in an offensive manner, because I hold the gentlemen concerned in high esteem, but I know their opinions. When you know the views of a man, you are able to estimate the workings of his mind upon a proposal with which he is asked to deal. In my opinion, both figures of income and expenditure have been under-estimated and the variation between receipts and expenditure will be between £4,000,000 and £5,000,000.

The pamphlet proceeds -

The Commonwealth desires to peg the revenues of the States, but how can we peg their expenditure? Last year, as the result of Commonwealth legislation, Queensland had to find approximately £700,000. Sometimes Commonwealth expenditure increases State expenditure, but does not increase State revenue to the extent estimated by the Treasurer. Under this scheme the revenues of a State would remain static.

No provision is made for any share by the States in buoyancy of revenue or for any increase of expenditure due to increases of population, disaster or other cause. We had a cyclone in Queensland in 1918 in my electorate. It resulted in the loss of 36 lives and in the destruction of produce worth £1,000.000. Such a disaster might overtake any tropical country.

In such circumstances would we be expected to come as mendicants to the Commonwealth Government and ask for assistance, or should we have the right to do as we did then?

We sent a Minister into the area to take charge of allrelief operations and to help rehabilitate the stricken people. That method is much more effective than any other I can think of.

I am prepared to say that the Queensland Government can obtain as much from its expenditure and get as good value for the expenditure of a pound as any other govern ment in Australia, not excluding the Commonwealth Government. In support of my statement, I am willing to have an examination made over the last ten years.

I am tired of the cry we often hear against the States to the effect that they are extravagant and spend money too lavishly, and that the Commonwealth Government only are heaven-born financial geniuses, and in fact that all such geniuses sit on the benches of the Federal Parliament House.

Such statements are absurd and are not borne out by anything that has been said this afternoon.

I shall now examine the justification put forward for this scheme. I agree that the winning of the war and the saving of this country transcends every other interest at present. I have looked at these proposals in a detached way, having regard to the principle which I definitely advance that the onus of proof rests upon the Commonwealth that this scheme is necessary to save the country. I have shown that according to the Treasurer's own figures the Commonwealth Government will get little more money under this scheme than if the States were allowed to manage their affairs in their own way.

Noreply in arithmetical terms, which' any honorable member could understand, has been made to the assertion of that gentleman. It is important, also, that the position in regard to the State of Victoria should be placed on record. In this connexion, I read the following : -

Apart altogether from the fact that the proposals deprive the States of their taxing powers, and therefore the right to administer their affairs in their own way, they discriminate against Victorian taxpayers in a most inequitable manner.

1.   The proposals would have the effect of compelling taxpayers of Victoria, the lowest taxed State, to contribute towards the cost of services in other States. Expenditure in other States is not to he reduced, and thus a premium is to be placed on past extravagance.

That view was advanced by a body which made representations to the Treasurer, through me. The Treasurer, in his reply, attempted to answer its contention. He said -

It is true that taxpayers in Victoria will pay something more under the uniform scheme than they have been paying hitherto, but it is also true that they have received greater benefits from war expenditure than have the people of other States.

That contention is not admitted, because no one can tell what may be the effect of the letting of contracts, no matter in what State the contract may be signed. The materials for many of the contracts let in Victoria naturally are drawn from New SouthWales. Inthis connexion, I need refer only to iron and steel, and coal. In other instances, contracts let in Sydney were given to subcontractors, who obtained their supplies from Victoria. In the final analysis, supplies of boots for which contracts were let in New South Wales were probably obtained from Victorian factories. .'No analysis has been made of expenditure by any department that would prove conclusively the ultimate destination of money expended in the war effort. I have made numerous inquiries in this respect, but to no avail. However, I do not accept the contention that the people of Victoria have received greater benefits than have the people of other States. The Treasurer's reply continued -

The need for money to conduct the war is mo urgent that the Commonwealth must have available to it all the surplus taxable capacity of its citizens. The fact that Victorian governments have not entered into the income tax field to the same , extent as has been done in other States provides a greater taxable capacity for war .purposes. I do not agree that the taxpayers of Victoria will have to make a special contribution to other States.

The honorable gentleman, therefore, contends against the opinion expressed by the Government of Victoria, that a premium is ' by this legislation being placed upon the past extravagance of other States. I make the following further quotation from the Victorian case: -

2.   Victorian taxpayers will be involved in an additional annual payment of £4,000,000, or an average of approximately £10 10s. per taxpayer, over and above the amount they arc now contributing. ( Independent estimates made by the Victorian Treasury and the Commissioner of Taxes, Mr. Chenoweth, confirm this figure. ) Tasmania made - a similar estimate,

3.   The additional contribution by Victorian taxpayers makes possible a reduction in the rates of taxation in other States.

4.   The proposed basis of compensation to the States provides for unfair discrimination, in that while taxpayers throughout Australia will pay income tax at a uniform rate, the amount to be paid to the States for vacating the field of income tax is based on their present level of expenditure. In other words, the State with the most extravagant ideas and the highest expenditure will receive more generous treatment. New South Wales, with a population of 2,812,000, will receive from the Commonwealth Government by way of grant two and one-half times the amount that Victoria will receive with- a population of 1.054,000.

[60]


Mr Rosevear - How do social service benefits in New South Wales compare with those in Victoria at the present time?


Mr CALWELL - Such a comparison is, of course, all in favour of New South Wales. [Extension of time granted.] I do not disagree with anything that the honorable member for Dalley (Mr. Rosevear) or any other honorable member has said in criticism of successive Victorian governments for their failure to increase social services to the same degree as New South Wales and Queensland, but the trouble in Victoria is that there is an Upper House, elected on a restricted franchise, which has acted as a Westinghouse brake on the wheels of progress. If New South Wales had had to contend with such an Upper House in the past, I am sure that its progress in the social field would not have been so great. The statement continues -

Queensland, with a population of 1,041,000. will receive within 10 per cent, of the total Victorian allocation. The following table sets out the amounts that the States would receive if compensation were on a population basis, compared with the proposals under the bill : -

Thus, on a per capita basis, Victoria would receive as compensation a sum of £9,170,000, compared with the sum of £6,520,000 proposed by the Commonwealth, an increase of £2,650,000. The proposal to compensate the States on the basis of the average collections from income tax in the two financial years 1939-40 and 1940-41 thus provides for discrimination of the worst type. Where a State has provided very lavish social services, and expended money in every conceivable direction and far in excess of any other State, It will receive compensation according to its expenditure. Thus Victoria, which has not provided many of the social services which exist in other States, and has stood for prudent administration, will receive a much lesser amount. j he States which have provided these services will receive compensation .to enable them to retain these services and continue their high expenditure, whilst another State, which has not already provided these services, will he penalized and will not now he able to bring its services into line with those of other States, although its taxpayers will be called upon to bear the same rates of taxation.


Mr Morgan - Could not that State increase its expenditure on social services ?


Mr CALWELL - It will he limited in its expenditure by this scheme to the average of the previous two years. If it desired to increase its expenditure, it would have to go before the Commonwealth Grants Commission and make a case, and if the Commonwealth Grants Commission, which consists of gentlemen outside of Parliament, decided that the State could not be given any more money because of war requirements and the difficulty in raising finance, it would not be able to raise its social services.


Mr Rosevear - It might not have any intention of raising them.


Mr CALWELL - It is not a question of what it might have intended in the past ; it is a question of what it might want to do in the future. If it wants to bring social services up to the level of those existing in other States, it should not be precluded from pursuing it» very laudable desire.

I had intended to read other statements in connexion with this matter, but I think that the one which I have read summarizes the bulk of public opinion in Victoria. Victorians have always been good supporters of federation. In fact, the activities of quite a number of societies in Victoria played an important part in bringing federation about. The very idea of federation was first mentioned in the Victorian Parliament in the late fifties or sixties of last century by a gentleman who subsequently became Premier of Victoria, Sir Charles Gavan Duffy, the father of the late Chief Justice of the High Court of Australia. I refer to Sir Frank Gavan Duffy. It is true that Wentworth had his conception of what would be a great Australia, and that Parkes played a magnificent part in bringing federation to ultimate fruition although, unfortunately, he did not live to see his dreams realized. It is Parkes that we have to thank for a phrase which has lived since his death, and I am sure will continue to live for many years - "The crimson thread of kinship runs through us all ". Victorians have no reason to be ashamed of the part they have played in federation, and I am confident that if a referendum were taken, as has been suggested by the honorable member for Reid (Mr. Morgan) and the honorable member for Hunter (Mr. James), on the question of granting additional powers to the Commonwealth, at least SO per cent, of the people of New South Wales and Victoria would register an affirmative vote. And, after all, of the 7,000,000 people in this country, 5,000,000 live in those two States. Unfortunately, we have a limitation in the Constitution which requires that a majority of the people in a majority of the States must approve of any proposed constitutional change. The difficulties in the way of making changes are very great; still, great changes are being made by means of this legislation.


Mr ACTING DEPUTY SPEAKER - Order! I am afraid that the honorable member is rather wide of the subject now under discussion.


Mr CALWELL - There are four bills in this series, all dealing with the subject of uniform taxation, and I am afraid that in the course of this debate, other honorable members have wandered back through the corridors of time, and even projected themselves far into the future. If I imitate their example, and conjure up a few possibilities, surely I am as much in order as they were, or perhaps I should say no more out of order. It becomes a matter of the delimitation of State and Federal powers. To-night we are participating in an historic incident. We are considering legislation which, if passed, will fundamentally affect the future of Australia, because it will inevitably result in the destruction of the States as we know them. They might linger superfluous a little longer, but if they lose their right to impose income tax, they will become mendicants existing upon the bounty of the Commonwealth. They will, in effect, be on the dole, and for practical purposes they will cease to exist as States.

As regards the contents of the bills themselves, some of the provisions relating to rebates seem strange to me. For instance, a rebate is allowed in the case of an only child, or in the case of an elder child, or the eldest of several children, of £70 a year. For the next, and subsequent children, a rebate of £30 is allowed. I cannot understand how the draftsman should have made such a distinction between the various children. Again, a maximum of £20 is allowed in respect of funeral expenses. The cost of dying is even higher than the cost of living these days, and if funeral expenses come to £40, and the taxpayer receives £20 from a society in respect of the burial, he cannot claim the balance. No undertaker to-day will bury any one for £20. Therefore, an allowance of £20 in respect of a funeral is not reasonable. An amount should be allowed representing the difference between the aggregate paid and the amount recouped, provided such amount did not exceed £20 in respect of any funeral. Provision is also made for a taxpayer to receive a rebate in his assessment of 2s. for every £1 of interest derived from bonds, stocks, &c. We are becoming very tender in our treatment of persons who live wholly or partly upon the proceeds of rent, interest and dividends. Where is the pristine fervour of those ex-Socialists amongst us who were formerly so much opposed to the taking of interest in this way, and who thought that Karl Marx spoke with prophetic vision upon the doctrine of surplus value? I conclude by suggesting that clause 4 of the States Grants (Income Tax Reimbursement) Bill be omitted, and the following clause substituted therefor : -

In every financial year during which this act is in operation in respect of which the Treasurer is satisfied that a State has not imposed a tax upon incomes, there shall be payable by way of financial assistance to that State an amount equal to the aggregate amount that would have been received by that State by way of income tax in such financial year if the law of that State for the assessment of income taxation and the rates of tax thereon which was in force at the time of the passing of this act had continued and was in operation in the State in the financial year.


Mr ACTING DEPUTY SPEAKER - The honorable member's time has expired.







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