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Wednesday, 19 October 1910

Senator WALKER (New South Wales) . - The Senate is supposed to be the States House of Australia. We are supposed, therefore, to point out where we believe the Constitution has been broken or impinged upon. At an earlier hour in the evening Senator Cameron, when speaking on this subject, made some remarks which I hoped would draw a reply from Senator Stewart. I looked forward to a conflict between the representatives of those two great clans, the Camerons and the Stewarts, and am rather disappointed that Senator Stewart was not present to take tip the cudgels on behalf of the policy which he has so often advocated. Probably there never has been a Bill before the Federal Parliament which has caused greater perturbation in the community than this one. lt may be denned as a conglomeration of inequities. It is questionable whether in some of its provisions the Constitution has not been broken. We are supposed to be a Federation, but those who established the Commonwealth never expected that within so short a time the principles of Federation would be so seriously infringed. We hear a good deal about the so-called mandate from the electors, but I point out that the amount of taxation foreshadowed by Mr. Fisher when he secured that mandate has been exceeded by 50 per cent. Mr. Fisher, in his speech at Gympie, led the country to understand that the maximum tax would be 4d. in the £1 on the unimproved value of land.

Senator McGregor - I was with him, and he did nothing of the kind.

Senator Millen - We can only go by the reports of his speech.

Senator McGregor - He did not say that 4d. was to be the maximum.

Senator WALKER - I speak subject to correction, but am stating what appeared in the newspaper reports.

Senator Rae - The principle is the same whether the maximum be 4d. or fid.

Senator WALKER - I propose to say a few words regarding the inequities of this Bill. First, there is the arbitrary distinction between two classes of the community. That section of the community the members of which do not happen to own land of an unimproved value exceeding £5,000, are to get off scot free, whilst those who through their industry and ability have managed to get into a somewhat better position are now to be handicapped in this manner. I maintain that that is a breach of the spirit of the Constitution at the very least. Another inequity arises in respect to what is called the absentee tax. Absentee companies and individuals are alike to be penalized.

Senator Rae - The honorable senator is the first friend of the absentee to speak in the Senate.

Senator WALKER - All of us who come from the Old Country were absentees at one time, and surely it is an advantage to Australia to receive immigration. Another unfair feature of the Bill is that which makes mortgagors pay upon the unimproved value of their property which ismortgaged sometimes to the extent of 6oper cent., and in some cases higher. That is surely very inequitable. There are casesin which this tax will make a great difference in the value of the equity of redemption, and many persons will find that their income has been reduced by 60 per cent.

Senator St Ledger - I call attention to the state of the Senate. [Quorum, formed.]

Senator WALKER - Another inequity,, in my opinion, is the exemption of all ' Crown lessees. That is a most extraordinary proposal. I admit that the Federal Government have not power to tax. them, but that is another argument why this should be a State and not a Federal tax. In clause 67 there is a very objectionable provision. That clause reads asfollows: - (1.) Any person who, with intent to defraud,, in any return understates the unimproved value of any land, shall be guilty of an indictable offence.

Penalty : Five hundred pounds and an amount: equal to treble the amount of the tax which would have been evaded if the value stated in the return had been accepted as the' unimproved value of the land ; or forfeiture of the land undervalued or any part thereof.

Then comes the objectionable part - (2.) Where the value stated in the return is* less', by twenty-five per centum or more, than* the value as found by the jury, the value shall', be presumed, in the absence of evidence to the contrary, to have been understated with intent to defraud.

It is contrary to the British idea of fair play, that you must hold a man to be guilty and must take it for granted that he is guilty until he proves that be is innocent.

Senator Givens - There are scores of instances to the contrary.

Senator WALKER - I am aware that under the Customs Act the onus of proof is placed upon an accused person, but I have always protested against that as unBritish. I am sure that the honorable senator is one of those who, in private life, would not like to be considered guilty until he was found to be guilty.

Senator Givens - There are scores of examples in British law itself.

Senator WALKER - Relative to the spirit, if not the letter, of the Constitution being broken, section 51 reads -

The Parliament shall, subject to this Constitution, have power to make laws for the peace, order and good government of the Common, wealth with respect to : - (ii.) Taxation; but not so as to discriminate between States or parts of States.

I believe that most Democrats - and I suppose that we have a great many here - admit that the most important part of a State is its population, not merely its land. It is not, therefore, unreasonable to argue that if one part of a State is not to be differentiated from another part of it, and its population may be legitimately considered the most important part of the State's entity, one section should not be treated differently from another. That, I think, is an irrefutable argument. In this measure honorable senators on the other side are distinguishing between one part of a State and another when they provide that one section of its people shall be treated differently from another section.

Senator McGregor - Why should we make the merchants pay the Customs duties ?

Senator WALKER - My honorable friend knows quite well that Customs taxation is ultimately paid by the consumer. That the Bill is a distinct step towards Unification is quite self-evident. The ownership of land is essentially a State matter, but if the Commonwealth can control land taxation in an arbitrary manner, as I maintain it is doing in this measure, where comes in the sovereignty of the States? In the Constitution it is provided that in the Senate each State, large or small, shall have exactly the same representation, because its trainers wanted to maintain the sovereignty of the States in their ambit. But in this Bill you are not doing so.

Senator de Largie - We cannot have two sovereign powers.

Senator WALKER - In this Bill you are interfering with the sovereignty of the States. I propose to refer to the so-called mandate of the people. The mandate", I understand, was to impose a land tax of 4d. in the jQi, but it has been fixed at 6d., except in the case of absentees, who are called upon to pay 7d. Let us see who gave the mandate. If you charge a tax of 6d. in the ; £r, at 5 per cent, you are practically taking away one-half of the capital value of the property.

Senator Rae - We are leaving the other half to which they have no right.

Senator WALKER - That is a mere assertion; it is not a truth. I wish to draw attention to the mandate to show what the differences in the votes between the two parties were in regard to the Senate and the other House. The eighteen senators who were returned at the last election - and certainly that is very unique in the history of politics - received 2,021,090 votes>, whilst the other candidates received 1,997,029 votes, getting no representation. In other words, Labour had a majority of r>nly 24,061 votes. As every elector had three votes really, in individuals, only 8,020 more persons voted for the eighteen successful senators than those who voted for the rest of the candidates. With regard to the other House the figures are just the other way. The votes cast for Labour aggregated 686,842, as against 689,104, so that it was in a minority of 2,262 votes. The mandate of the people, therefore, in that regard was against this measure. Having given a taste of what I may call destructive criticism, I propose to make a suggestion in the other direction. It is easy to find fault and pull down, but not so easy to build up. Let us see if a much more equitable system could not be adopted, and one which would be less arbitrary in its incidence, and by which the Commonwealth would get the amount which it professes its wish to get, namely, ^7,000,000. There is a general impression that, so far from obtaining that amount, thev will get something like ^£2. 500.000! Presuming the population of Australia to be 4,500,000, a revenue of -£1,000.000 from this source would represent about 4s. 6d. per head. We have undertaken to give back to the States 25s. per head from the Customs and Excise revenue. Would it not be better to arrange with the States by an agreement that, in lieu of the land tax, we should take 4s. 6d. out of that 25s., giving us £1,000,000 ; and let them please themselves as to what their own land tax should be?

Senator Rae - No; that would not burst up the land monopoly.

Senator WALKER - Surely the honorable senator will admit that the States are the proper authorities to take any steps to break up any so-called monopoly in land.

Senator Rae - They will not do it. The Upper Houses object.

Senator Gardiner - The banks will not permit them to do it.

Senator WALKER - A contribution of 4s. 6d. per head from a population of 4,500,000 would come to £1,012,500. By that process, you would save all this perturbation which has been engendered by a sense of unfair treatment. Surely the population at large would like to see a measure passed which could be defended on principles of fair play. I make my honorable friends a present of that suggestion. The States would probably be very happy to meet us and let us take 4s. 6d. out of their 25s. per head, and if we should require more in subsequent years, let us have still more. By this means, every person would pay in the same way towards the revenue. I dare say that a large number of persons who have not £5,000 worth of land would not see the matter in that light. Surely those who have, through their enterprise, gained a position of comparative independence, are the best stamp of colonists whom Australia can have?

Senator Rae - That description would apply to -a burglar.

Senator WALKER - I have heard the honorable senator make that allusion before. Surely he will not say that persons who work hard day and night, and pay 20s. in the £1, are to be looked upon as burglars?

Senator Rae - No; but your description would apply.

Senator WALKER - It was never intended, when we accepted the Constitution, that the jurisdiction of the States should be interfered with in certain matters. Section 51 enumerates thirty-nine matters which belong to the Federation, including defence,

Customs duties, currency, old-age pensions, marriage, immigration, quarantine, and External Affairs. In all other respects, the powers of the States, failing an amendment of the Consitution, ' were to remain as they had been. Each State was to have control of its land, railways, education, public works, police force, &c. If my honorable friends take away -these powers one by one, what will remain but Unification? They will take away the right to tax land, one of the most important rights which the States have. If more direct taxation is needed, why not impose an income tax? Unfortunately, many a man has a large property; but, owing to droughts, floods, and labour troubles, his income is often a minus quantity. I likethe principle of an income tax. It is an honest tax which a man with an income can afford to pay. The land tax will injure me much less than would an income tax. Now, is the land tax going to have the effect of subdividing estates? I do not believe that it will. la a Sydney newspaper, I read a letter in which Mr. Horsfall pointed out that the first effect no doubt would be to reduce land values, that so many properties would b*: sold at less than their ordinary value, and that those that were fairly well to do would have a chance to buy them for much less than they otherwise could do. So that in a sense, in place of cutting up estates, the land tax may ultimately have the effect of increasing the size of many estates. Under the Constitution, we cannot differentiate between town and country lands. I propose to give one or two instances to show the unfairness of this tax with regard to town properties. All these inequalities go to prove that this is a matter for the State Parliaments and not for the Commonwealth Parliament. I have said that before, but it cannot be repeated too often. Every instance of an inequality in the incidence of the tax is an argument in support of the contention that it should be left to the State Parliaments.

Senator de Largie - To the State Legislative Councils.

Senator WALKER - It is all very well for the honorable senator to say that, but I remind him that in Western Australia, South Australia, and Victoria the State Legislative Councils are elective bodies. In the case of city land, it will be impossible in many cases to say what more can be done in the way of improvements. We have ample proof of that in the city properties of Melbourne and Sydney.

Senator de Largie - We are not going to tax the improvements.

Senator WALKER - The Government propose to tax the unimproved value of city, as well as of country, land. They profess that their object is to secure the subdivision of large properties. Large pro.perties in our cities cannot be subdivided, and this is a still further argument for leaving this matter to the State Parliaments. I direct the attention of honorable senators to an example: At the corner of Collins and Elizabeth streets, in Melbourne, the Equitable Insurance Company of New York have a property for which they paid £2,000 a foot for the Collinsstreet frontage.

Senator Rae - Who made the land worth that price?

Senator WALKER - The company has been largely instrumental, by the expenditure of their own money, in increasing the value of surrounding properties. In Sydney, the same society bought land at the corner of George-street and Chisholm-lane, and paid ,£1,500 a foot for the Georgestreet frontage of the land. The society has spent on these two properties between £350, 000 and £400,000 in buildings. How are these properties to be subdivided ?

Senator Mcdougall - We do not wish to subdivide them.

Senator WALKER - My honorable friends have proposed a graduated land tax with the object of securing the subdivision of property, but their proposal to apply it to city as well as to country properties is absolute folly. The Equitable Insurance Company of New York is a foreign company, and consequently must pay a higher rate than if it were an Australian company. Surely the effect of such legislation must be to prevent capital coming into the country, and to induce many persons possessing capital to clear out of it.

Senator de Largie - How much capital did the Equitable Society of New York bring into the country?

Senator WALKER - One reason why they have put up these great buildings is that under their constitution they are not at liberty to invest money out of the United States except upon the erection of business premises, and, further, they wished those who assured with them in Australia to know that they had some property in this country. That is a remark able instance of the unfairness of this socalled graduated land tax. This society has been instrumental in enhancing, by its very large expenditure, the value of the land in the neighbourhood of its properties. It is all nonsense to suppose that the whole of the increment on the value of land is due to population. A great deal is due to the expenditure of money in its neighbourhood.

Senator Guthrie - Public money to a large extent.

Senator WALKER - Not necessarily. The honorable senator does not suppose that the Equitable Society of New York spent public money on their buildings?

Senator Guthrie - No; but the city corporations of Sydney and Melbourne have spent a lot of money in the neighbourhood of their buildings.

Senator WALKER - I am one of those benighted individuals who believe that a land tax ought to be a local tax. Where that is so, those who pay the taxation have some say in the spending of the money on roads, bridges, and other improvements in the district in which they live. Under this Bill it is proposed that a comparative minority shall provide revenue by taxation which is to be spent for the benefit of others.

Senator Guthrie - No; for the defence of their own property.

Senator WALKER - Not more than £1,000,000 will be required for defence, and what do the Government propose to do with the other £1,500,000 which will be derived from this taxation? I am satisfied that they will not return it to the people who will be called upon to pay it. I come now to deal with another portion of this Bil], which I regard as absolutely monstrous. It is proposed that people shall be asked to value their own properties. Can honorable senators imagine anything more unfair? Every man has a sentimental feeling for the property which he calls his home, and this Bill proposes to induce a man to over-value his property in order that he may secure his own home. Honorable senators opposite profess to desire to see people settled down in Australia, and they submit legislation which is calculated to make people disgusted with Australia. A man is asked to assess the value of his own property, and when he does so some person who may have a grudge against him will be in a position to cause him to suffer. I submit that a better plan to adopt would be to accept the local assessment of properties, even though it should be considered necessary to add from ro up to 25 per cent, to the local valuation, rather than permit an unfortunate man to be subjected to a penalty because, in the opinion of some other persons, he may have under-valued his property. It is a very important matter to consider what is really the market value of a property. It is generally- assumed that the true market value of a property is what it would bring at public auction, but the more modern definition differs from that. A has a property.- An adjoining property, owned by B, is put up for sale. It is of greater value to A than to any one else because its acquisition would enlarge his property and enable him to work it more economically. C bids a considerable sum at auction for B's property. A makes a higher bid and secures the property. What is its market value? It is not the price whicli A has paid for it, because he had a special reason for buying it. The modern definition of the market value of that property is half-way between the offers made for it by A and-C.

Senator McGregor - The market value is the reserve price put on it by the seller.

Senator WALKER - No. I have known many cases in which the seller has put on his property a reserve lower than what he hoped to get for it. I could mention one or two amusing instances of this kind in connexion with the sale of an entire horse. Under this measure it is proposed to permit three men to decide whether, in hard cases, the Government should not forego the tax. I think that these three persons should be appointed a Court and cai led "upon to report to the Minister. It is possible that such a thing as backstairs influence might be exercised ; and it would, in my opinion, be far better if these three persons were called upon to report to the Executive Council, and the Council were to accept the responsibility of foregoing the tax in a hard case. When the Bill gets into Committee, I shall probably suggest a number of amendments. I have received many communications concerning it from a number of persons. I might mention that quite recently Sir John Madden, who is well known as the witty Chief Justice of Victoria, made a somewhat humorous statement in reference to the provision requiring a man to be the valuer of his own property. He said that if he made a mistake, his hearers knew what the conse quences must be. On the other hand, if he employed a man to make a valuation, and the valuer made a mistake of say, 25 per cent., to quote the words of a character in Paul Jones, he might say, " He, the valuer, gets all the glory, and I get all thequod."

Senator Pearce - The Chief Justice of Victoria is paid to leave politics alone.

Senator WALKER - According to the Labour party, all public servants should be politicians. This, however, was not a political speech. The Chief Justice was merely making a little joke. " Quod," I suppose, means prison. As there is always a demand nowadays for names whencases are mentioned. I propose to give all the particulars of a case in which clause 27 will operate very harshly. I am informed' that Mr. E. T. Newell was solicitor for the late Mr. John Harris, of Sydney, who, as a recognition of past services, granted* him a lease for ninety-nine years from 1st December, 1877, of certain allotments at Ultimo, at what would now be considered an almost nominal rental, namely, £200- per annum, the tenant undertaking to pay all rates and taxes, whether municipal or parliamentary. After the death of Mr. JohnHarris, the land was sold, and purchased for a trust under a settlement, and was assessed by the Commissioners of Taxationfor New South Wales, at £10,250. I do not know if it is intended to insert in the Bill a provision to determine the proportions in which landlord and tenant will pay the taxation to be imposed, but in any case a very awkward position will be created.

Senator McGregor - The matter is already dealt with in the Bill.

Senator WALKER - The provision in the Bill is difficult to understand. If the landlord has to pay the whole of the tax, and is a man possessing large landed interests, it will probably absorb more than he receives from the tenant, while if the latter has to pay, the tax will probably come to more than the rent. Honorable senators will see that the clause needs careful consideration. I have already suggested that the Commissioner and his associates should be compelled to report to the Executive Council, whose members will be above suspicion. It should not be in the power of a mere official to ruin a citizen.

Senator Millen - In a matter of this kind, I would sooner trust the officer appointed to administer the Act than any political body.

Senator WALKER - Ministers are in duty bound to do what is right and just between man and man, and should be the last persons before whom cases should come.

I understand that about thirty petitions have been presented against the Bill, and if any person thought proper to move that it be read this day six months, I, for one, should feel justified in voting for the motion. Senator Ready has referred to the New Zealand tax. Let me tell honorable members what the New Zealand provisions are. I have got extracted the information from the New Zealand Official Year-book, for1 909. According to that authority, where the total unimproved value of all the land of any taxpayer is not less than £5,000. but does not exceed £7,000, the tax is, not1d., as under the proposal we are considering, but i-i6d. in the £1.

Senator Givens - There is, in addition, a flat-rate tax.

Senator WALKER - At what rate?

Senator Rae - At the rate of id. in the £1.

Senator WALKER - The New Zealand graduated tax on unimproved values is as follows -

Exceeding £7,000 and not exceeding £9,000. 2- i6d. in the £1.

Exceeding £9,000 and not exceeding £11,000, 3- i6d. in the £1.

Exceeding £11,000 and not exceeding £13,000, 4- i6d. in the £1.

Exceeding £13,000 and not exceeding £15,000, 5- i6d. in the £1.

Exceeding £15,000 and not exceeding £17,500, 6- i6d. in the £1.

Exceeding £17,500 and not exceeding £20,000, 7- i6d. in the £1.

Exceeding £20,000 and not exceeding £22,500, 8- i6d. in the £1.

Exceeding £22,500 and not exceeding £25,500, g-i6d. in the £1.

Exceeding £25,500 and not exceeding £27,500, io-i6d. in the £1.

Exceeding £27,500 and not exceeding £30,000, n-i6d. in the £1.

Exceeding £30,000 and not exceeding £35,000, 12- i6d. in the £1.

Exceeding £35,000 and not exceeding £40,000, 13- i6d. in the £1.

When the unimproved value reaches £40,000, the rate is 8s. per cent... and for every additional £1,000 of land value, the rate is increased by one-fifth of is., the increase of each graduation being chargeable on the total land value owned. The rate reaches its maximum at £200,000, all estates of that value, and over, paying at the rate of £2 per cent, on the total land value. A rate of 2½ per cent, is equal to 6d. in the £1, while 2 per cent, would be equal to about 5d. On and after 31st March of this year, the rate for estates whose value exceeds £40,000 is to be increased by 25 per cent, in the case of all land except land used for business premises, which is defined as land included within the area of a building used for business purposes, together with such additional land as immediately adjoins the building, and is used and occupied in connexion with it, and does not exceed in extent the area of the building. A building is deemed to be used for business purposes if it is exclusively or principally used, whether by the owner or occupier, or occupiers, for the purposes of any business, trade, or industry. The graduated land tax is increased by 50 per cent, in the case of absentees. They are as unfair to absentees as we are, or, if anything, rather worse. It is made clear that the absentee tax does not apply to companies. I hope that provision will be included in our Bill. I draw special attention to this -

A person is deemed to be an absentee unless he has been personally present in New Zealand for at least one-half of the period of four years immediately preceding the year in and for which he is assessed for graduated land tax :

Under this Bill an absentee is, apparently, a* man who is away for six months, unless he happens to have a residence in Australia, but under the New Zealand Act a man must be absent for two years or thereabouts before being considered an absentee. That represents a great advantage as compared with this provision. Some of our senatois are contemplating a trip to the Mother Country next year, and if they are away for more than six months, I suppose they will be deemed to be absentees. It is also stated that -

Provided that no person who has acquired land in New Zealand within the said period of four years shall be deemed to be an absentee if be has been personally present in New Zealand for at least one-half of the period which has elapsed between the time when he first acquiied any land and the commencement of the year in and for which he is assessed for graduated land tax.

If an absentee taxpayer is liable to be assessed for graduated land tax jointly with another taxpayer who is not an absentee, they shall be assessed and liable jointly as if neither was an absentee, and the absentee taxpayer shall also be separately assessed and liable for absentee land tax on his share of the property.

It will be noticed that up to £40,000 the tax is i3-i6ths of a penny, as against 3d. in the £1 under this Bill. In Committee, I shall have several suggestions to make, and may have to draft some amendments; but I am not anxious to do that if the Ministry will treat us fairly. Sir Henry Wrixon, the late President of the Legislative Council of Victoria, a man universally respected, a barrister and King's Counsellor, has issued a little address on the bursting up of land. I shall quote from it a few questions, to which I hope honorable senators will supply their own answers -

1.   la it a constitutional use of the Commonwealth power of taxation to impose a tax, not for revenue purposes, but for the purpose of controlling the tenure of land in the States? Technically il may be within the law, but is it so in sincerity rind truth ? Certainly, the States, when agreeing to the Commonwealth Bill, never thought such a thing possible. And is there 'not reason for this objection? What can more especially belong to a State than the control of its own land policy? It is impossible to have' a fair land policy or a fair tax for the whole. A tax which would be just in Victoria would be tyranny in Queensland. One which might suit little and fertile Tasmania would be ruinous in the vast wilds of West Australia. I am sure our legislators would bc unwilling to use the mere form of law for the purpose of enacting its substance.

2.   Is it wise to strike a blow (even though nol so designed) at the greatest of the industries of Australia - the wool industry? It has taken years of skilled management and millions of money to carry on this industry to its present height of perfection. It has taken, in some cases, one or two generations of workers to secure the right breed of sheep, and to grow that wool which is now unrivalled in the markets of the world.

3.   Are there people ready to go on the burstup land and to work out similar results? Is there the capital at hand - is there the continuity nf workers in prospect?

Think of the Australian Workers Union, who want to be bosses ! They, apparently, do not want to work. I feel that I have trespassed somewhat on the time of the Senate, but my constituents have a right to know my views on this question, and I should not be afraid to go before them tomorrow. If they think I am not good enough, I should be satisfied to remain behind. I hope that even at this eleventh hour the Government will take my suggestions into consideration, and allow us to make a few amendments in Committee. If they only want £1,000,000 per annum,they must surely be unjustifiably greedy if they take £2,500,000. I am not a pessimist. I believe in this country and its future. I believe it will progress in spite of disastrous legislation, impregnated with strong exclusive class bias, such as this is. More especially do I believe in the future of this grand country if we give encouragement to a fine, continuous stream of Euro pean immigration. Let us remember that we are still in our Federal political infancy, and are consequently in what may not inaptly be called the measles and whooping-cough stage of our existence as a Commonwealth.

Debate (on motion by Senator Clemons) adjourned.

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