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Thursday, 28 May 1942


Mr SPOONER (Robertson) (6:11 AM) . - The amendment does not actually give the whole story, and for reasons which I shall explain to the committee, I am opposed to it. Victoria estimated that, for the year 1941-42. revenue from income taxation would amount to £6,410.000. The compensation payable to Victoria based upon the years 1939-40 and 1940-41 is £66,666,000. subject to adjustments, its administration expenses and widows' pensions. Thus Victoria is to receive £256,000 more than the estimate of income tax revenue for 1941-42. I remind honorable members that it was necessary for the committee to find some basis for compensation. Considerable criticism has been voiced in regard to the basis adopted, but those who criticized it were not able to offer an alternative, except a per capita basis, and I think that enough has been said to show that it would be impossible to adopt such a basis.


Mr Holt - It was suggested that the matter could be handled by the Commonwealth Grants Commission.


Mr SPOONER - I point out to the honorable member that the chairman of the Commonwealth Grants Commission was also the chairman of the special committee on taxation. The committee must suggest something definite to the Government in regard to the payment of compensation. The Commonwealth Grants Commission considers the position of the various States year by year, and makes grants in the light of changing conditions, but this fixed annual grant for vacating the field of income taxation is in the vicinity of £35,000,000. It is necessary that there must he specific sums and a definite formula provided as to how these sums are arrived at. The honorable member for Parramatta (Sir Frederick Stewart) asked why it was proposed to give Victoria £256,000 more than that State budgeted to receive in 1941-42. The answer is that if the Government of Victoria thinks that its entertainments tax or its land tax is too high, if it thinks that the £3 per head which it collects in taxes other than income tax is too much, then it can use that £256,000 in order to reduce taxation. It is proposed to give New South Wales £15,356,000, which is £1,300,000 less than the Government of New South Wales budgeted to receive from income tax for the year 1941-42.


Sir Frederick Stewart - Does that justify New South Wales in budgeting for an extra £2,000,000 when its commitments are £5,000,000 less than they were in the previous year?


Mr SPOONER - When the States prepared their budgets in September, they did not know that a uniform taxation scheme was to be brought in. Had they known it, and had they known that the amount of compensation which they were to receive for vacating the income tax field would have some relation to their taxation receipts for the previous year, they might have budgeted differently. As they had no such knowledge, it must be assumed that these figures are bona fide estimates.


Mr Francis - But it is proposed to give New South Wales £5,000,000 more than it has any need for.


Mr SPOONER - The figure is £1,300,000. It is necessary to have a formula, and we must accept the results of the formula. New South Wales is to lose £1,300,000 by comparison with its estimated receipts for 1941-42. If we were to deduct a further £1,300,000 New South Wales would, in effect, be paying for child endowment twice. This might have the effect of embarrassing the Government of New South Wales, and turning its estimated surplus into a deficit.


Sir Frederick Stewart - Will the honorable member say what obligations New South Wales has assumed which would justify it in retaining its 1940-41 income although its expenditure on unemployment relief has declined by over £6,000,000?


Mr SPOONER - The .special committee on taxation did not set out to say how the States should expend their revenue. The honorable member may, if that is possible, move for the appointment of a royal commission to go into the matter, but he cannot have the investigation made under cover of this bill. Supposing that there were some merit in what has been suggested, and we went back for a year or two to the time when the Commonwealth took over certain services on behalf of the States. We might then find that the Commonwealth would be obliged to make large deductions from the payments of Victoria and South Australia because those States have been able to avoid unemployment relief payments due to the fact that the Commonwealth has expended large sums of money on defence undertakings. New South Wales has, for twelve months longer than other 'States, been left with a heavy unemployment burden. If we are to be retrospective in regard to child endowment in New South Wales, then let us be consistent, and examine the expenditure of the other States. If we do that, some honorable members may be surprised at the result.

The honorable member for Parramatta declares that railway revenue in the States is soaring. That is true, but he may be surprised to learn that, for the seven months which ended on the 31st January, whilst New South Wales railway revenue increased by £1,100,000 as compared with the corresponding period of the previous year, railway expenditure increased by £1,700,000. When I inquired the reason, I learned that the work which the railway departments are doing for the defence services is, in many instances, uneconomic. They cannot make up proper trainloads; they must take the material when and where it offers. Moreover, the cost of labour and coal have increased considerably.







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