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Wednesday, 31 July 1946


Sir EARLE PAGE (Cowper) .- I 'sympathize with and support the views, expressed by the honorable member for Darwin (Dame Enid Lyons) as to -the desirability of including the first ' child in the benefits of the child endowment scheme. Very grave consideration would have to be given to the subject in order to bring about that desirable result in the best possible way. We should, at all costs, make certain that any liberalization of the child endowment payments shall be permanent. We have no desire to bring about a repetition of the factors which ultimately broke down the child endowment system in New South Wales. In the original Child Endow-, ment Bill, brought down in this Parliament by the honorable member for Fawkner (Mr. Holt), then Minister for Labour and National Service, the first child was excluded from benefit because the basic wage was deemed to provide for the needs of a man, his wife and one child. I believe that the time has now come when the basis on which the basic . wage is determined should be altered to cover the' requirements of a man and his wife only, and that all children should be brought within the scope of the child endowment scheme. At the same time, I urge that the regimen on which the basic wage is computed should be reviewed. In stead ..of the basic wage . being computed on the basis of 40 or 50 items, 'we might very well adopt the New Zealand system, in which 110 or 120 items are taken into account, including the items mentioned by the honorable member for Darwin. Investigation and review along those lines is long overdue. The only way in which provision for such a change could be made in the bill now before us would be to wipe out some of the benefits the Government has included in it, in order to provide sufficient money in the National Welfare Fund for the payment of child endowment in respect of all children. The Government is not likely to adopt that course. The only other way would be to introduce an .entirely new bill. I should like to see established a self-contained child endowment fund. When the original legislation was introduced by the honorable member for Fawkner, approximately 90 per cent, of the contributions to the fund were derived from the pay-roll tax, and the balance, to cover anomalies which were discovered as experience was gained of the operation of the scheme, was to be met from general revenue. In my view, all social service funds should be made as self-contained as is possible. If they are made too' much dependent upon contributions from general revenue, sooner or later the benefits will have to be scrapped or reduced because of the diminution of tax receipts in days of financial stringency. I am totally opposed to the imposition of taxes earmarked for special purposes, as is done in connexion with the National Welfare Fund, unless adequate steps are taken to ensure that the funds so raised are sufficient, to carry out the purpose for which they are provided, without reliance on other budgetary assistance. As instances of sound schemes of that kind I cite the Commonwealth Superannuation Fund and the Federal Aid Roads Fund. Reference to the last budget papers submitted to the Parliament shows that the contributions to' the Commonwealth Superannuation Fund are invested in Com-, monwealth Consolidated Stock, the New South Wales Rural Bank, and debentures issued by the Sydney County Council, all of which return an interest rate of 4 or 5 per cent. The moneys placed to the credit of the National Welfare Fund, however, are largely invested in treasurybills, or what may be described as Government IOU's. In the one case the assets are realizable on the market, whereas in the other they merely represent a changeover from one compartment of the public purse to another. I am especially opposed to reliance on taxes imposed year by year for social services of this nature. The danger in this system is that in any sudden upset of our national economy taxes may not be able to be levied and services may consequently have to be diminished at a time when their continuance is of the highest national and individual importance. In my opinion, the proper way to finance social benefits is by means ofa contributory scheme, not subject to a means test, that would build up in good years a fund, unassailable by the Treasurers of the day, which would be able to meet the pinch of lean years.


Mr Rosevear - Would not such a fund fall in bad years just as the receipts from taxation would fall?


Sir EARLE PAGE - No; the assets in the fund would be available just as are the assets of insurance funds and the Commonwealth Superannuation Fund, the beneficiaries of which are paid in the years of depression just as they are in the years of plenty. Australia has had very striking lessons' in that regard.Mr. Fisher first introduced the maternity allowance without a means test. A Labour Treasurer, Mr. Theodore, on the 10th July, 1931, however; reduced the long-standing maternity allowance from £5 to £4, and brought in a law which provided that the allowance would not be paid in cases where the income of the claimant and her husband during the preceding twelve months exceeded £260. It has taken fifteen years to restore the maternity allowance to a proper basis.


Mr Conelan - Did not the right honorable gentleman vote for its reduction?


Sir EARLE PAGE -I did not. If honorable members will read the Hansard record they will find that in 1932 I solidly voted for the retention of the invalid and old-age pension in this chamber through the whole of a long all-night sitting. In 1931 I was in bed with appendicitis for two months, and was not in the House during the period when the proposal to reduce the maternity allowance was discussed. The records of the Parliament will prove the truth of that statement. As then Leader of, the Country party I said, as I say now, that the best means of lifting people out of the effects of troublous times is not by increasing but by diminishing the burden of taxation. When I was able to return to active politics following the death of my son in 1933, I supported every move which would enable the country to return to a state of prosperity. In 1931 invalid and oldage pensions were reduced by a Labour Treasurer by 2s. 6d. a week. In the following year a similar reduction was effected because of the difficult position that had arisen as the result of the failure of the Government to collect the desired revenue from taxation. The Labour Government also reduced the permissible income of applicants for the invalid and old-age pension from £84 10s. to £78 per annum, and war pensions were for the first time treated as income for the purpose of calculating the social pension. An abortive attempt was also made to treat the value of the pensioner's home over and above £500 as property. These reductions were made despite the fact that the Labour Government had introduced a new tax, the sales tax, which touched the people in the lower income groups to a greater degree relatively than those in the higher income groups. The obvious alternative to this system, which was so subject to a downward alteration with depressed conditions, was a national contributory scheme to cover the whole field. Such a scheme was introduced by me in 1928, and by a subsequent Treasurer, Mr. Casey, in 1938; but on both occasions the Labour party strenuously opposed it. As a very unsatisfactory alternative, the present Treasurer, in February, 1943, established the National Welfare Fund, ostensibly for the purpose of making the future safe for the recipients of the benefits. On the 11th February, 1943, he proposed to pay into this fund out of general revenue an amount of £30,000,000 a year, or a sum equal to onequarter of the total annual collections from the income tax of individuals, whichever was the less. In order to finance this fund, he increased the income tax on individuals by an amount of £43,000,000, and reduced the income tax exemption from £156 to £104 per annum. He also made the personal exertion rate commence at 6d.inthe £1 on £104 and rise to a maximum of 18s. 6d. in the £1 on incomes in excess of £5,000 per annum. In effect, this permanently fixed Commonwealth income tax collectionson individuals at £120,000,000 per annum at the least. It also fixed for all time a permanent income tax on the lowest scalesof wages and salaries. He admitted disguising the volume of this tax by increasing the number of instalments from 40 to 52 each year. On the 29 th September, 1943, the Treasurer took pride in this accomplishment when he said that, as an important contribution to the budget, the Government had obtained the approval of the Parliament in the previous March to increase the rates and widen the field of income taxation on individuals. The right honorable gentleman said-

The increased yield is expected to exceedlast year's collection by£43,000,000, and this will cover the requirements of the National Welfare Fund and make some provision for other expenditure.

In his budget for 1943-44, the Treasurer showed the first payment into the fund as £29,750,000, and in the succeeding year, a payment of £30,000,000, even though very few payments were being made out of the fund owing to the failure by the Government to obtain parliamentary endorsement for, or to implement, the necessary legislation. The Leader of the Australian Country party has shown conclusively that this fund has been used for other purposes, and that the balances that remain are represented only by treasury-bills. In the financial year 1945-46, the Treasurer realized that this original tax was not quite sufficient to meet the position, and effectively prevented any lightening of the income tax burden on individuals. In his budget for that year, he said that a new approach was essential, and that he would " charge all health and social services to one fund - the National Welfare Fund - and impose a social services contribution at a flat rate on all incomes from the lowest up ". He estimated that a tax of 18d., as a flat rate, would return £46,000,000 per annum, and that expenditure in 1945- 46 would amount to £65,000,000. In his financial statement for 1946-47, he esti mated that the income of the National Welfare Fund would be£61,000,000, and that expenditure would amount to £77,000,000, leaving a deficiency of £16,000,000.


The CHAIRMAN - Order! The right honorable member's time has expired.







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