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Tuesday, 15 December 1914


Senator MILLEN (New South Wales) . - I think that I am entitled to enter a protest against proceeding with the measure less than five minutes after it was introduced at this hour to-night. There is no desire, nor so far as I am personally concerned has there ever been a desire, especially towards the end of a session, to prevent the Government from concluding their business. But I do submit that it is making a farce, and lowering the standard, of the Senate to bring measures here with the anticipation that they will go through as a matter of form. It is all very well for the Minister of Defence to assume that I have sufficient knowledge of this subject to present my arguments. But there is in the measure a very sharp conflict between Federal and State interests. I had hoped to present to the Senate some details as showing how it will work out, but without any notice on the businesspaper that this legislation would be pressed forward, I did not come armed for the task which is thrown upon me, and so I do not propose seriously to debate the Bill. Seeing that the Government consider it right to bring in their measures at this time, and think so lightly of the Senate as to assume that we have merely to pass them through and give formal assent to work approved elsewhere, they must accept the responsibility for what I think is a deadly affront to this branch of the Parliament. There is just one aspect of the Bill to which I should like to direct attention. It seems to me, quite apart from the merits of a tax upon property of this kind, that my honorable friends are in this legislation sowing the seed of very serious trouble between the Commonwealth taxing authorities and the land policies of the States. In my own State, it has been a part of the policy of the country to offer leased lands at admittedly less than their economic value. That has been done of set purpose in order to encourage people to take them up. I will not take the case of big holdings, because, this proposal is going to cover a class of selectors who, I venture to say, the Government never contemplated would be touched by it. I take the case of small holdings, such as settlement leases, many of which range from 2,500 to 10,000 acres in extent. They are being offered at the present time in New South Wales to intending settlers. They are the subdivided blocks of larger areas, and are designed for the purpose of small grazing farms. The Government of New South Wales admittedly offers these leases at a rental value fixed at 1£ per cent, upon their capital value. This is done, not because it is supposed that this is their full value, but because the State, in order to encourage more people to take up these blocks, give for 3d. what, upon a 5 per cent, basis - the basis of this measure - they know to be worth ls. This is done as a part of the fixed land policy of New South Wales. My honorable friends opposite come along, and say now that, in proportion as the State Government has been generous to settlers, they will undo that attempt at generosity by taxing the difference between the economic value of the property and the rent which the State Government are content to receive. The effect of this Bill, quite apart from its effect as a taxation measure, will be to absolutely destroy that portion of the New South Wales land policy which is designed to offer a special inducement to smaller settlers to occupy these lands. Let us reduce this to figures. I understand, from what has appeared in the press and what has been stated elsewhere, that it is proposed, under this Bill, to proceed on a 5 per cent, basis - that is, to assume that the annual value of a leasehold is worth 5 per cent, of the capital value. I take a by no means uncommon case in New South Wales of a block of 5,000 acres, let as a settlement lease, and valued at from £1 to 30s. per acre. I take the case of a block of 5,000 acres, which the State land officials value at 30s. per acre. Under this Bill, the economic rental will be ls. 6d. per acre. But the State of New South Wales, in order to encourage occupation of these lands by smaller settlers, has been willing to forego that economic rental, and permit a settler to occupy the land at 3d. per acre. That is to say, the State Government voluntarily give up ls. 3d. per acre per year for this land. Now the Commonwealth Government come along with this measure and levy on that ls. 3d. That is not only a distinct inroad upon the proper functions of the State, but it will have this serious consequence: If the State Government of New South Wales discover that their generosity to their settlers will merely mean putting money into the Commonwealth Treasury, and will not in any sense help the settler, who will be taxed upon the full economic rental, the only difference being that he will pay a portion to the Commonwealth and a portion to the State, they will say, " We might as well amend our law, and claim from these tenants the full economic rental ourselves," in which case the Commonwealth Government obviously will not get anything from these leases. That is the position in which this Bill will place the State and the tenant. It is quite clear that even the most ardent advocate of land value taxation has never claimed the right to take the full economic rental. It is proposed by this Bill, however, to tax so much of the full economic rental as the State Government has not collected. The effect of this will be to absolutely destroy, so far as New South Wales is concerned, that part of her public policy which has been designed to encourage settlement upon these lands. I am quite free to admit that there is a value which the tenants do not pay. That is the difference between the actual economic value and what they pay aa rent. The Federal Government now propose to tax that. It will add. something to the Commonwealth funds, but I venture to say that this will be found to be only a short-lived source of revenue. It will strike at the very class of settlers that every one of us presumably desires to see multiplied. I had prepared, as I thought, a rather comprehensive series of tables supplying examples from different kinds of tenure which the Government of New South Wales offer to intending settlers. I am without those tables, as I did not expect that the Bill would be proceeded with tonight. I have stated the general proposition as it affects New South Wales. I might give another instance of what would happen under this Bill in that State. In our western division, a large portion of which is very similar to the adjoining country in Queensland, the rentals, a few years ago, were higher than those prevailing to-day. As a result of the high rentals and drought the western division was practically upon the point of breaking down. It was financially bankrupt. The State Government, rather than see large portions of that division abandoned, introduced special legislation greatly reducing the rentals then paid. The leases in that part of the country are subject to re-appraisement. I assume that this Bill becomes law, as, no doubt, it will. In the meantime those leases have undoubtedly increased in value. Wool has fetched a higher price. There have been good seasons, and general and, in many respects, universal prosperity. This has given to those leases a value which they did not have when the rents were reduced. But we are approaching the time when there is to be a re-appraisement. The Federal Government claim to levy a tax upon the difference between the value which the tenants are paying and the actual economic value which those leases have to-day. Suppose the tax is fixed for this year or next year, what will happen when the rents paid by these lessees are re-appraised the year after? The State Government will not stand by and say, " We shall, in the future, as in the past, treat our tenants leniently and generously, although it is quite clear that if we do not collect from them the full economic rent it will be subject to taxation by the Federal authorities." They will, therefore, themselves collect every penny of the economic rental. In the case of these western leaseholders, who may be described as big land-holders in the sense, of occupying broad areas, that may not be an ill-effect in the view of my honorable friends opposite, but it will destroy the effect of this measure, so far as the collection of Commonwealth revenue is concerned. I refuse to believe that any State Government would be so absolutely foolish as to refrain from collecting an amount from one of its citizens when they know that that amount will have to be taxed anyhow. This measure will create some little disturbance in the first few years of its operation, and may, during that time, contribute something to the Commonwealth revenue, but it must be remembered that most of the leases in New South Wales are subject to re-appraisement, and the result will be that at each re-appraisement the State rentals will be so largely increased as to cover the full rental value, and then the Commonwealth will not be able to collect a single penny from this source. Whilst the Commonwealth will not benefit from this legislation, what will be the effect upon the settler? He will have to pay the increased amount, but he will pay it into the State Treasury, and the Commonwealth Government, who will have been responsible for imposing an additional burden upon the occupiers of these lands, will not receive a single penny in return. It will be a serious thing if the Commonwealth, by means of this legislation, should succeed in destroying the very generous impulse which lies behind the land policy of New South Wales. If I turn to Queensland I find that the same thing will operate there. In connexion with grazing and agricultural farms and other forms of tenure in Queensland, the same principle has been followed. The State Government has never attempted to collect the full rental value from the people whom they have invited to settle upon their lands. Their desire has been to encourage settlement. The people who acquire these lands are in most instances making their first effort to occupy land on their own account: The Government of Queensland, like that of New South Wales, have recognised that the best and most practical way to get men upon the land and keep them there is not to demand the full rental value from them. Here, again, a State which, so far as I can judge, has greater opportunities in the next few years of multiplying the number of its land occupiers than has any other State in the Commonwealth is going to have its land policy torn up root and branch. It is inconceivable that a State Government should adopt the only other alternative to help their settlers in the future. They cannot help them by letting their lands to them at less than the economic rental, because, in proportion as they keep the rentals low, the Commonwealth will levy upon them. The only other thing they could do would be to grant their settlers a bonus. That is. unthinkable, and mav be discarded. The effect of this Bill, so far as these leaseholds are concerned, will, therefore, be to add greatly to the burdens of the smaller leaseholders without returning to the Commonwealth Treasury any perceptible amount of revenue. I feel that, whatever may be the merits of land-value taxation, and however great may be the financial needs of the Commonwealth to-day, they cannot justify the Government in levying upon this laud-occupying class. To levy a tax of this kind upon leaseholds is to aim a deadly blow at the special and praiseworthy efforts of the Governments of the various States to induce their people to occupy their lands by giving them those lands at less than their market value.







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