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Thursday, 28 May 1942


Mr HARRISON (Wentworth) - I begin with the premise that the taxation proposals contained in this measure are necessary for the successful prosecution of the war, and that the war is not being fought by the several States bat by Australia as a whole. Then I consider the position that confronts the Government in its desire to bring about a maximum war effort, and my mind goes back to the circumstances that obtained at the beginning of the war, when the Menzies Government had to face the problem of placing Australia on a war footing. The Fadden Government had also done valuable work in drawing up a war budget. Those governments were confronted with the serious problems inseparable from building up the necessary organizations for the provision of munitions and the establishment of the foundations essential to a maximum war effort. At that time, the war was being fought in Europe, and this country was not committed entirely to total regimentation, but the war is .now at Australia's gates. Whereas previously we might conceivably have shown some apathy with regard to the war effort in Australia, the time for apathy has long since past, and it is imperative that the whole of the resources of this country should be marshalled for war purposes.

The Opposition is proud of the fact that when it was in office it budgeted for a record revenue. When the honorable member for Warringah (Mr. Spender) introduced his first budget, it aroused considerable comment. The credit of the country has been used to a marked degree in financing the war effort, and taxation has been increased tremendously. But as the war proceeds the need for increased revenue is paramount. That was explained by the figures made available by the Treasurer (Mr. Chifley), who said that for the first three years of the war the expenditure had amounted to about £515.000,000. Then he drew attention to the fact that it was quite possible that for the coming financial year the expenditure would reach the huge sum of £360,000,000. When the Opposition was in office, it recognized the necessity for longrange planning. The problem presented itself to the then Treasurer in a way that caused him to plan ahead in order eventually to take from the people of Australia sufficient money by means of taxes to provide largely for war needs. He approached the States and asked them to give approval to the introduction of a scheme of uniform taxation. Whether he eventually intended to superimpose upon that scheme post-war credits, or whether he put forward a plan for post-war credits, is entirely beside the point. The fact is that he approached the States in the first place, and suggested what he considered was the best scheme - one of uniform taxation. With one exception, the States refused to adopt the plan, and strangely enough most of the objection to-day to this legislation comes from the representatives of the particular State which originally approved of it. The Opposition, when in power, made extensive use of the credit of the country in financing the war effort, and because of the effect which that policy obviously had on prices and the general economy of the country, the State revenues became buoyant. We- found that the States were competing with the Commonwealth with regard to services and resources, and therefore I think it was wisely proposed by the then Treasurer that he should approach the States and point out why they should relinquish the field of income taxation, giving to the Commonwealth Government an opportunity to obtain the maximum amount of tax from the people, in order to increase the funds available for the war effort. Legislation has been placed on the Commonwealth statute-book to make it possible for the Government to prosecute profiteers, but I suggest that States as well as individuals are capable of profiteering. If they indulge in wasteful expenditure and maintain services that are not essential in time of war, they are merely profiteering at the expense of the Commonwealth. I instance the increased social services which have been provided in certain States. Quite recently, for instance, the widows' pensions provided by the Government of New South Wales were increased. The problem is whether the Commonwealth or the States shall benefit from buoyant revenues. Should the increase of .revenue be used by the Commonwealth for war purposes, or by the States for parochial, political bargaining, and the maintenance of unessential services? There can be only one answer. If our desire to achieve a maximum war effort be genuine, we must extract every possible advantage from buoyant revenues.

I do not wish to discuss the constitutionality of this legislation because, frankly, I am not qualified to do so; but like the honorable member for Newcastle (Mr. Watkins) I consider that the Prime Minister (Mr. Curtin) and the Treasurer would not have given certain assurances to the House unless they had satisfied themselves that the measures were constitutional. I realize that lawyers differ upon these matters. Doctors: differ, and the patient dies. Lawyers differ, and their clients ultimately die. but first they go bankrupt. As has been made perfectly clear to the House, this measure does not prevent the. States from entering the field of income taxation. If that contention can be substantiated, it will dispose of the criticism that, the bill is ultra vires the Constitution.


Mr Menzies - I should like to hear the honorable member substantiate it.


Mr HARRISON - I shall not attempt to do so; but the excellent speech which the honorable member far Warringah (Mr. Spender) delivered convinced me that the legislation was constitutional. Even if any doubt existed about the constitutional limitations, what should we do? It is acknowledged that we must enter the field, of direct taxation to a greater degree than we have done in the past. We must utilize the full resources of the country. Honorable members who ere opposed to the bill have declared with one accord, that they believe in the- principle of uniform taxation and that the Commonwealth, must, in order to achieve a maximum war effort, enter all fields of taxation. If the only thing that prevents them from supporting this legislation is their doubt about the constitutional limitations, are they prepared to allow the States to go ahead with wasteful expenditure, or do they suggest that a referendum should be taken upon the subject? Surely they would not be so foolish as to advocate that a referendum should be held in this period of national crisis.


Mr Menzies - The honorable member prefers the bill to the Fadden budget ?


Mr HARRISON - Yes. I believe that the first attempt which the right honorable gentleman made to secure uniformity of taxation was the best. The subsequent proposal, involving post-war credits, was the- next best thing. But if

I had to choose between a scheme of uniform taxation and post-war credits, I should without hesitation select the former. Some opponents of the bill, when driven into a corner, have asserted that the Commonwealth (government should be the sole taxing authority. A few minutes ago, the honorable member for Fawkner (Mr. Holt) was challenged upon this point. He was opposing the bill to the best of his ability when he was asked whether he would support a scheme of uniform taxation. Thereupon, he stated that he preferred a uniform taxation scheme to a uniform income taxation scheme. That is the general attitude of honorable members who' are opposing the bill. I subscribe whole-heartedly to that view ; but I believe that this legislation is the first step towards unification. Because of that I wish, to take that initial step. The opposition of honorable members from South Australia goes deeper than their mere objection to the principle of uniform taxation. They fear unification. During a referendum campaign, a slogan appeared in Sydney : "Are you a little Stater or an Australian ?" The honorable member for Melbourne (Mr. Calwell) reminded me to-day of that slogan. We are justified in asking certain honorable members whether they are South Australians, Victorians or Australians.

This legislation will remain in operation ostensibly for the duration of the war and for twelve months thereafter. I venture to suggest that once the people experience the benefits of uniform taxation, the acts will never be repealed. As I stated,, these bills are the first step towards complete unification. It is a matter, not of legal argument, but of plain common sense. The problem is whether the Commonwealth Government shall possess sovereign rights to enable it to conduct the war, or whether the States shall have the right to superimpose their sovereignty upon the Commonwealth. There should be no disagreement on that issue. The war has caused many drastic" changes in the economic budget of the individual, of business, and of governments. Parliament realizes that this is the natural sequence in the rapid change of events, and has to decide whether the present system of income taxation is better than a uniform scheme. All honorable members who have had business experience know that the present system is wasteful to the extreme, and is entirely inequitable as between State and State, and as between the Commonwealth and the States. Because of the political set-up of the various States, the taxation system has been used as a great medium for political bargaining. Under existing conditions, the States are free to enter any field of taxation, and they may very easily become a threat to the security of the Commonwealth. When I first entered this Parliament, legislation was introduced for the purpose of circumventing the activities of the then Premier of Now South Wales, Mr. J. T. Lang, in exploiting the field of taxation in that State. At that time our constitutional limitations were not stressed although the action of the Commonwealth Government of the day in endeavouring to restrict the activities of the State was open to challenge. As T have pointed out, the present system of taxation, as employed by the Commonwealth and the States, may well be used by a State, which has no sense of responsibility, in a manner that may imperil the security of the Commonwealth. On the other hand, a scheme of uniform taxation will succeed in centralizing finance. As the honorable member for Warringah Indicated, that would be most desirable, because it would permit the utilization of the full resources of the country for the conduct of the war. Unless a uniform system of taxation is introduced in the near future, the Commonwealth Government will not be able to regiment the whole of the national resources for the purpose of achieving a maximum war effort. The proposal of the Government, if adopted, will put a brake upon wasteful expenditure by the States. In a time of national danger, no State should have the right to indulge in wasteful expenditure upon unessential services, and in granting unnecessary social benefits.


Mr Archie Cameron - The honorable member should preach that text in Macquarie-street, Sydney.







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