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Friday, 19 March 1926

Senator FINDLEY (Victoria) . -This is the most important clause in the bill, and it deserves the serious consideration of every honorable senator. During the recent war Australian citizens were told that no sacrifice could be too great to win the war and to make the world safe for democracy. But it is common knowledge that many who spoke in that manner did not practise what they preached. The shareholders of many companies in Australia got back in three years by way of profits the whole of their capital investments, and, in addition, they received substantial dividends and big. bonuses. So great did the profits become that many of the companies started a watering-down process. No restrictions were placed on them in that respect.

Senator Crawford - Does the honorable senator say that a transfer from reserves to capital account is ' ' watering ' ' ?

Senator FINDLEY - That all depends on what the Minister means. If money that would otherwise be paid away in dividends is placed to reserves, and is afterwards utilized for the purpose of issuing bonus shares, I should say it is a roundabout process that can have only one explanation. The object is to avoid taxation.

Senator Crawford - It was done for half a century in Australia before there was any income taxation.

Senator FINDLEY - 'Half a century ago there was no Federal Parliament, and what happened then has no application to the subject we are considering. A number of these companies well watered their stock, and from time to time issued bonus shares. Those associated with companies have frequently told working men and working women that they ought to make provision for a rainy day. What provision did the companies make for a dry season ? They certainly never looked seriously into the future. There is evidence of that in the stock and share register. Honorable senators who live in the atmosphere of the government benches know that what I am saying is correct. Companies which a few years ago were on a high financial level are not so well " circumstanced to-day, and the explanation is that their stocks have been too much watered.

Senator Crawford - The explanation is that their reserves are not good.

Senator FINDLEY - How is it possible for them to have good reserves if, in times of prosperity, they pay out all their profits. Some of them recouped all their capital in three years.

Senator Sir Henry Barwell - Does the honorable senator oppose the bill ?

Senator FINDLEY - I do. It is wrong to refund taxation which, according to the Government, was justly paid. It was paid under an act which Parliament passed. Many cases have been decided by the High Court in the last few years, and too large a proportion of them have been decided against the Government and the community. It is time that we looked into the matter from an £. s. d. point of view.

Senator Crawford - The proposal contained in the bill was settled when the 1922 act was passed.

Senator FINDLEY - This Government does not settle constitutional matters; the High Court settles them, and, occasionally, also " settles " the Governnent. The Minister explained the bill in a manner characteristic of him. He has a genial way of submitting business to the Senate. He has a pleasing personality, and is not disposed to annoy or ruffle any one unnecessarily; but, in justice to himself and his Government, he ought not to have been so brief. I know there was some anxiety to get the bill through before the dinner adjournment. He simply told us that it was a validating bill. The Treasurer in another place gave an explanation that was historical, but the Minister here says in effect that it is "a mere matter of form . " It is not going to be " a mere matter of form " with me. I shall endeavour to ascertain from the Minister the amount of taxation refunded to companies, or to persons associated with companies, and I am also anxious to know the names of the companies.

Senator Crawford - Nothing has been refunded to companies.

Senator FINDLEY - I refer to the individual members of companies. There is no material distinction. The refunds are made to the shareholders. Where are these companies, and who are their shareholders? The Minister might also inform us how much those shareholders contributed to the funds of the Nationalist party during the recent election.

Honorable senators interjecting,

Senator FINDLEY - There is no need for honorable senators opposite to get angry or indignant. It is 'well known that a war cannot be waged without money, and that that statement embraces the " war" that finished last November. We know that the money for the election was provided from somewhere, and I ask, by whom ?

Senator Reid - Does the honorable senator imagine that the Nationalist Government would descend to that kind of thing?

Senator FINDLEY - In any case, the party managers would not let the honorable senator know. The Government should accept some responsibility for the drafting of bills. It hits every facility for obtaining the best legal advice, and if those in charge of the Law Department had done their work as well as we have a right to expect of them, this bill would not be before us. Similar validating legislation has been submitted to us in the past. It is a serious thing to exempt any section of the community from what the Parliament has decided is a just responsibility. The average person is never too eager to pay taxation, and we can assume that those associated with companies will secure the services of the best legal luminaries in Australia in an effort to evade the law. On several occasions citizens of this country have successfully contested the validity of acts of this Parliament.

Senator Sir Henry Barwell - The Government acted on the advice of Crown Law officials.

Senator FINDLEY - They are liable to make mistakes, and have, in fact, made more than one mistake.

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