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Wednesday, 11 August 1926

Senator FINDLEY (Victoria) . - When the vote is taken some of those honorable senators who are most outspoken in their condemnation of the course which the Government is taking will be found either absent from the division or standing behind the Government to prevent the defeat of the bill..

Senator Payne - That statement is not worthy of the honorable senator.

Senator FINDLEY - Evidence is not lacking that members in another place who were very outspoken were conveniently absent when the division bells rang. I say definitely, and as vigorously as I can, that this kind of legislation does not appeal to me in any way. Lawyers have expressed the view that it is not constitutional. Some honorable senators who are not lawyers have said that, whether it is' constitutional or unconstitutional, they will support it, because their States need good roads. Three of the States are apparently prepared to accept, this Federal aid, and, like Oliver Twist, to ask for more if they think there is any possibility of getting it. Everybody is agreed that good roads and other up to date means of communication are essential to the progress and welfare of the Commonwealth. We. have been told that the Prime Minister, in his policy speech, said that the money required to enable the Federal Government to assist the States in the making and maintenance of roads would be raised through the Customs Department. I venture to assert that 999 out of every 1,000 persons who read that statement believed that the surplus which remained out of the enormously large sums that were being obtained from Customs duties would be devoted to the Government's roads policy No one believed for a moment that the Government had any other purpose in view. Yet it now proposes that a new tax shall be imposed ! I am not a believer in the imposition of a revenue duty. I am a protectionist, and if the Government came forward with a proposal that was protectionist in its incidence, and was for the assistance of an Australian industry, I should support it. The Government itself has admitted that this is a revenue duty,' imposed for the purpose of raising the money necessary to enable the Commonwealth to assist the States in the construction and maintenance of roads. According to published reports, the Prime Minister has stated that, if this additional duty is passed on by the oil companies to the users of petrol, the Government will declare war on those companies.

Senator Cox - Quite right, too.

Senator FINDLEY - Let us follow the honorable senator's contention to its logical conclusion. When Customs duties are imposed to assist Australian industries, higher prices are charged to the community. Flinders-lane merchants are no exception in this regard. The firm of Paterson, Laing and Bruce, with which it is said the Prime Minister (Mr. Bruce) is closely associated - I do not know whether that statement is correct - are large importers. That firm, as well as other firms in Flinders-lane, distributes goods on which fairly high duties have been imposed. Does any honorable senator suggest that these importing firms do not pass on the additional duties ?

Senator Pearce - Is the honorable senator attempting to justify the threat of the oil-distributing companies to put up their prices?

Senator FINDLEY - No. I am pointing out that, if the Government de- clareswar on these companies, it must, if it wishes to be consistent, also declare war on all firms which pass on Customs duties.

Senator Payne - How can that be avoided?

Senator FINDLEY - I do not think it can be; but I want the Government to be at least ' consistent. I have no -time whatever for trusts or combines, but I am surprised at this new-born enthusiasm of the Government in threatening these companies. The Government has declared war, not merely on the oil-distributers in Australia, but also on the States which will not fall into line with its proposals. We are informed that the users of roads are to meet the cost of construction; but under this proposal all the users of roads will not have to contribute. I am totally opposed to this antediluvian system. When roads are constructed in the interests of the nation, the cost should be a charge upon the whole- of the people, and not upon any one section as is now proposed. All the users of roads are not to contribute. Only those who use certain brands of motor spirit are to be taxed. The users of the Commonwealth Oil Refineries' product will not be penalized.

Senator PEARCE (WESTERN AUSTRALIA) - I am surprised at the honorable senator attacking a local industry.

Senator FINDLEY - I am not attacking the industry. I am not surprised at anything done by this Government; one never knows what it is ' likely to do or undo. For instance, the form of the bill as introduced in another place was totally different from that in which it reached the Senate. The opposition to the measure by supporters of the Government was so strong that it was amended in such a way that it can hardly be recognized as the same hill. In the first place, a duty on chassis and tires was proposed, as well as a tax on all users of petrol; but later the duties on chassis and tires werestruck out, and petrol for farm mach.inery and other appliances not' using public roads was made free of the extra tax. According to a statement made in another place by the honorable member for Wimmera (Mr. Stewart), who. was once a member of the Government, it will be almost impossible to discriminate, for Customs purposes, between petrol for vehicles which use the roads and petrol used for other purposes:

Senator Duncan - To do that effectively would cost more than the additional tax will produce.

Senator FINDLEY - It would be very difficult. The honorable member for Wimmera said that the power for some of the work performed on his farm - T think it was chaff-cutting- was provided by a motor vehicle.

Senator Pearce - The South Australian Government had no difficulty in collecting a similar tax.

Senator FINDLEY - That may be so, but I hope the Government will have great difficulty in getting this bill passed. . A few years ago a motor car was considered more or less of a luxury, but to-day very- few people keep motor cars purely for pleasure. With the passing of time thousands who never anticipated being the owners of cars now possess ' them, and nearly every- business man realizes that if he is to successfully compete with his opponents his transport work must he undertaken by motor - vehicles. The' enterprising man, under this bill, will be at a disadvantage when compared with one who remains in the old groove. Those who have horse-drawn vehicles use the roads but will be free of this tax, whereas those who use motor vehicles will have to pay it. If they use other than the Commonwealth Oil Refineries brand of petrol they will be penalized to the extent of 2d. per gallon. To-day Melbourne is being more or less transformed. Where a few years ago there were but small establishments we now see immense edifices extending up to ten stories. The material for these modern structures is conveyed in most cases not by motor lorries, but by horse-drawn vehicles, which do considerable damage to the roads. I do not, however, approve of horse-drawn vehicles being specially taxed, although I believe . they do as much damage to the roads as" other ' vehicles. If a comparatively small section of the com.munity has to provide the revenue for national roads, where is this principle likely to stop? I do not intend to sup- port the Government in a policy under which all the money necessary for the construction of national roads is to be raised by a special tax on motor users.

Senator Crawford - Five hundred thousand pounds is to be found out of general revenue.

Senator FINDLEY - Why did the Government propose in the first place to come to the aid of the States in this way? Not because it was concerned about the operations of the companies, which it is alleged are associated with the Standard Oil Trust - that octopus, whose tentacles stretch to every part of the world. Not because it was solicitous concerning the progress of the States. The Ministry was associated with a party that believed in high revenue duties. Consequently it had more revenue than was necessary, and therefore made representations to the States that it was prepared to assist them in the making and maintenance of national roads. The States, finding it .more difficult than was the case prior to the war to obtain money for essential needs, naturally did not object to the Commonwealth coming to their assistance. When the Commonwealth Government announced its intention to vacate certain fields of taxation, involving a loss of over £1,000,000 a year, its supporters were led to believe that- it did not intend to impose taxation in another form. Certainly they did not anticipate that the Ministry would levy a special tax on petrol to provide the money for its roads proposals. The more I examine this bill the more convinced am I that if Government supporters were free and untrammelled, it would not pass its second reading. Many of the States have large areas to develop, and because, unlike the Commonwealth, they have not overflowing treasuries, developmental schemes cannot be proceeded with. Naturally, they 'are not indisposed to accept further aid, but it is wrong in principle to tax a certain section of the community to provide good roads for all the people.

Senator Crawford - That is not being done. Expenditure under these proposals will represent only a small proportion of the total amount spent on roads throughout the Commonwealth.

Senator FINDLEY - But money obtained under this scheme will be spent on what are considered to be national roads. Assuming that the roads to be constructed under this scheme will be national highways for defence purposes, how can it be argued that a limited section of the people who use a certain class of motor spirit should be called upon to maintain them?

Senator Elliott - If they wear the roads out they should pay.

Senator FINDLEY - This is an entirely now doctrine. Would the honorable senator apply that principle to the railways of the Commonwealth, and argue that the losses on the railways should not be borne by the community ?

Senator Thompson - There should not be losses in the operations of our railways. Before a Labour Government came into power in Queensland the railways in that State showed a profit.

Senator FINDLEY - Some railways, it is believed, will not pay for a considerable number of years. Any losses incurred in the running of our railways should be borne by the people generally. The same argument should be applied to our national roads. It is manifestly wrong to require the users of our roads to pay for them, because, as a rule, they are used not for pleasure, but for business purposes. There is an enormous volume of business traffic over all roads leading to the wharfs and railway stations in our capital cities. Is it seriously suggested that the people who use these roads should be specially singled out for taxation to pay for them?

Senator Foll - Does the honorable senator believe that it was wrong to impose a heavy tax on motor buses in Melbourne recently?

Senator FINDLEY - I have my own views in regard to that matter. I do not propose to open up that interesting subject now, except to remind the Senate that if owners of motor vehicles use Commonwealth Oil Refineries Limited motor spirit, they may cut our roads to ribbons and not be called upon to contribute a penny of the special tax imposed for the maintenance of those roads.

Senator Pearce - Would the honorable senator approve of an excise duty on Commonwealth Oil Refineries Limited spirit?

Senator FINDLEY - The right honorable the Minister does not know what is running through my mind. I have stated my" objections to the bill. If the argument is sound that the users of the roads should pay this tax, it seems anomalous that road users should be able to escape it by using a certain brand of motor spirit, especially in view of the statement that the Commonwealth Oil Refineries Limited cannot supply more than one-tenth of the petrol required in Australia. I intend to vote against the . second reading of the bill.

Sitting suspended from 12.57 to 2.30 p.m.

Senator Sir HENRYBARWELL (South Australia) [2.30]. - Speaking on the budget, I mentioned various objections that I had to this bill as part of the road proposals of the Government. Apart from the fact that I considered the scheme to be unconstitutional, I mentioned that there had been no reference of this matter to the Tariff Board, as required by the Tariff Board Act, section 15, which reads -

The Minister shall refer to the board for inquiry, and report the necessity for new, increased, or reduced duties, and shall not take any action in respect of those matters until he has received the report of the board.

My second point was that the tax would be imposed on the users of a great deal of petrol that was not consumed in road . transport. I notice, however, that that defect has been rectified in the present bill. The third objection that I raised - and it has been mentioned by Senator Findley - was that the tax was not to be imposed on all road users. It does not apply to steam-driven, electricallypropelled, or horse-driven vehicles. Another matter that was also referred to by Senator Findley was that motorists using Commonwealth Oil Refineries Limited petrol would escape the tax. That seems the very height of injustice. If there is to be a tax on petrol in connexion with a roads policy, in order that those who use the roads shall contribute towards the cost of their construction and maintenance, surely everybody using the roads ought to pay the tax. Any other system would be unfair. The more I look at the Government's proposal, the more convinced I am that this is not in the nature of a national roads policy, but is an invidious tariff proposal for the purpose of bolstering up a State enterprise into which the Commonwealth Government launched for war purposes, and which it should have relinquished long ago.

Senator Findley - If it wants to build up that enterprise, why not do it in the proper way by means of a Customs tariff?

Senator Sir HENRY BARWELL - I have no doubt that the honorable senator would encourage such an enterprise, because he is a State socialist; but I am not. At a time of war, there might have been some excuse for the Government embarking upon such an undertaking; but it has no excuse for continuing in this business at the present time. The users of petrol which is not consumed on the roads are to be exempt from the tax. I agree with Senator Findley when he says that the payment of rebates will occasion much difficulty. The Minister interjected that South Australia is doing this at the present time. I believe that that State does it through its Income Tax Department; the rebates could be more easily made through that department than through the Customs Department. The Income Tax Department has personal accounts which it can credit with payments by way of rebates of duty. Of course, some of those who use petrol other than on the road are quite small users; but there is a tremendous number of them, and the work of making the necessary rebates will be difficult and costly. It will probably mean the establishment of a separate department. The duty is now to be imposed on petrol only, and it is therefore a class tax. This bill is simply an attack on importers of petrol, with whom the Government, having entered into the business, are in competition. The States are already taxing road users by means of vehicle and petrol consumption taxes. Three of the States, which have rejected the roads agreement - New South Wales, Victoria, and South Australia - use a large percentage of the petrol that is required in Australia for road transport. I suppose that those States would take five or six times, possibly seven or eight times, as much petrol as the other three States combined. South Australia has more motorists per head of the population than any other State - it has one motor vehicle to every nine persons. I believe that Victoria has one to every seventeen of the population, New South Wales having the next largest number. But those three States refuse to have anything to do with the agreement. The

Government proposes to allocate the grant on the basis of population and area, and it imagines that the States which are now standing out will eventually accept the scheme.

Senator Ogden - Perhaps the Government will hand back to the States that have rejected the proposals the money collected by way of this special petrol tax.

Senator Sir HENRY BARWELL - I am afraid that it will not. The Government blames the importing oil companies for the opposition to its proposal, but its attitude is unjust. It seems to me that it is attempting to cover the losses of the Commonwealth Oil Refineries Limited, whose operations in 1925 showed a loss of £53,000 - a result similar to that of other State enterprises.

Senator Thompson - We are told that it is now making a profit.

Senator Sir HENRY BARWELL - I have quoted the latest figures available.

Senator Crawford - At the present time, and for some time past, it has been showing a profit.

Senator Sir HENRYBARWELL.The Prime Minister (Mr. Bruce) pointed out that the petrol trade of the world was in the hands of three groups - the Royal Dutch, the Standard Oil, and the AngloPersian Oil Companies. He made reference to the dividends being paid by some of those companies, and referred with much wrath to the operations of the British Imperial and Vacuum Oil Companies, as well as to their oversea connexions, both real and imaginary. But he did not say a word adverse to the Anglo-Persian Oil Company and its" parent company, the Burmah Oil Company, which owns one-eighth of the shares in the former company. The Commonwealth Oil Refineries Limited is a branch of the Anglo-Persian Oil Company. The Burmah Oil Company paid dividends at the rate of 30 per cent, in 1923, and 35 per cent, in 1924 and 1925. For the year ended 31st March, 1924, the Anglo-Persian Oil Company paid a 10 per cent, dividend on ordinary shares and carried forward a balance of £1,750,000. The chairman, Sir Charles Greenway, in his report for the year ended 31st March, 1924, stated - .

As to our financial policy and administration. I claim we can show a record unequalled by any other company in the same period of time. "Since 1914- only ten years ago- we have provided out of our earnings a total of no less than £19.000.000, in addition to paying out the sum of £9.250,000 in dividends and debenture interests.

For the year ending the 31st March, 1925, a dividend of 12£ per cent, was paid on ordinary shares, leaving a balance of £2,072,799 to be carried forward. When moving the adoption of the 1925 annual report, Sir Charles Greenway stated -

A simple calculation would show that if, as a result of the board's conservative policy, their shares appreciated in value during thenext five years to the extent of 100 per cent. - a not at all improbable assumption - the average return, even on the basis of the present dividend, would be equivalent to a dividend of about 52t per cent, per annum, which would be far better than getting an immediate return of, say, 20 per cent.

That is the company with which theCommonwealth Government is connected,, and of which it is practically a member, by reason of its connexion with the Commonwealth Oil Refineries Limited. I point out that Sir Charles Greenway is a director of the Burmah Oil Company Limited, 'and also chairman of directors of the Anglo-Persian Oil Company Limited. The profits earned by the Anglo-Persian Oil Company Limited, and also by the Burmah Oil Company Limited, afford ample proof that the Anglo-Persian Oil Company obtains a satisfying profit from the oil that it sells to the Commonwealth . Oil Refineries Limited. The Anglo-Persian Oil Company is on velvet, even if it does not get any dividends out of its shares in the Commonwealth Oil Refineries Limited, as it gets a profit on crude oil, and also on freighting the oil from Persia to Melbourne.

Senator Graham - What percentage of the capital of the Commonwealth Oil Refineries Limited belongs to the Commonwealth?

Senator Crawford - A little over onehalf of the total capital is held by the Commonwealth.

Senator Sir HENRYBARWELL.The amount invested by the Commonwealth in the Anglo-Persian Oil Company Limited, by reason of its connexion with the Commonwealth Oil Refineries Limited, is 'infinitesimal. The Commonwealth Oil Refineries Limited cannot land crude oil in Australia at less than the world's market price. The only oil company which has Australia in its grip is the Anglo-Persian Oil Company Limited, with which the Commonwealth Govern- ment is associated, because that is the only company which has the right to supply the Commonwealth Oil Refineries Limited with its requirements for the next fifteen years. The Minister said that the Commonwealth Oil Refineries Limited is making a profit. The latest figures available to me show that it is making a loss of £53,000 per annum.

Senator Crawford - Those figures apply to the period when the company was working only part time. It is now working three shifts, and is making a profit.

Senator Sir HENRY BARWELL - The fact remains that, until recently, the company was making a loss, and even now its profits are not great.

Senator Crawford - All new industries have their initial difficulties.

Senator Sir HENRYBARWELL.That is true. This industry will experience many difficulties if the Prime Minister's threat is carried out. The Prime Minister has threatened that if the additional duty of 2d. per gallon, which was originally intended to be paid by the road users, is not paid by the oil companies, the Government itself will import refined oil. Anxious, apparently, to hit the companies which are in competition with the Commonwealth Oil Refineries Limited, and to bolster up a state enterprise, the Government has lost sight of the very purpose for which the tax was originally intended. It will, therefore, be seen that this is not really a national roads policy at all, but an invidious tariff proposal to injure the oil companies now operating in Australia and to bolster up a State enterprise. I do not see how the Government will be able to carry out its threat to import refined oils and pay to the Anglo-Persian Oil Company the world's price for petrol. The Commonwealth Oil Refineries Limited will have to go in for bulk distribution of oil, a policy which would involve the expenditure of at least , £1,000,000, if it is to compete successfully with the British Imperial Oil Company and the Vacuum Oil Company. It is clear that the Government cannot import and distribute petrol more cheaply than can private enterprise.

Senator Crawford - Private enterprise is working on a big margin.

Senator Sir HENRYBARWELL.The Government will not improve that position by importing refined oil.

Senator Pearce - Who said that the Government intended to import refined oil?

Senator Sir HENRYBARWELL.The Prime Minister said so.

Senator Pearce - No.

Senator Sir HENRYBARWELL.The Prime Minister has been credited with having said publicly that, if the oil companies themselves do not pay the 2d. per gallon tax, the Government will import refined oils.

Senator Pearce - The Prime Minister said that, in that event, the Government would take such action as would protect the motor users.

Senator Sir HENRYBARWELL.I have a distinct recollection of having read that the Government would take steps to import refined oil. The imposition of an additional duty of 2d. per gallon will have three results. In the first place, the duty will be paid, not by the companies, but by the road users; in the second place, the roads policy of the States will be interfered with; and, in the third place, an unfair advantage will be taken of the oil companies. In any case, the public will suffer. The Prime Minister also said that the price of petrol in Australia was inflated. He stated that, whereas petrol cost ls. 9d. a gallon in Australia, it could be obtained in the United Kingdom for ls. 5d. a gallon, and for lid. a gallon in the United States of America. That i3 an unfair comparison, because it does not take into consideration the cost of importation and distribution in a field where the consumption is comparatively small and where transport is expensive. The difference between the prices charged for petrol by the Commonwealth Oil Refineries Limited and the importing companies was also mentioned by the Prime Minister. It is true that the Commonwealth Oil Refineries Limited receives ls. 9d. a gallon for its petrol, whereas the importing companies receive ls. 10½d. a gallon; but, if the matter is investigated, it will be found that that ls. 10-Jd. a gallon represents ls. 9d., plus Id. duty and the £d rebate allowed to the retailers who hire pumps from the importers. Thus it will be seen that there is really no difference between the prices.

Senator Crawford - Why did the importing companies increase the price of their petrol by 2d. per gallon a few months ago?

Senator Sir HENRY BARWELL - Because of the advantages under which it operates, it should be possible for the Commonwealth Oil Refineries Limited to sell petrol at a lower price than that charged by the importing companies. This legislation proposes to confer further advantages on the Commonwealth Oil Refineries Limited, which should be on exactly the same basis as its competitors. Owing to the absence of plant to handle petrol, excepting in Melbourne, the Commonwealth Oil Refineries Limited at present supplies only about 8 per cent, of Australia's petrol requirements. If this additional duty of 2d. per gallon is not to be passed on to the consumer, nine small importing companies now operating in Australia will have to go out of business. I have some figures here, which show that 2d. per gallon is equal to approximately 10 per cent, on turnover, or approximately 30 per cent, of the capital invested. It would appear that the investment of the taxpayers' money in this business will be attended by considerable risk, for not only will the Commonwealth Oil Refineries Limited have to incur considerable expense iri installing plant for -bulk distribution, but there is. also a possibility of bad debts. . 1 have been informed that one importing oil company has considerably over £1,000,000 outstanding at the present time. If the taxpayers' money is not to be used, then the Anglo-Persian Oil Company Limited will control, not only the capital, but also the sales of the Commonwealth Oil Refineries Limited. There are many other aspects of this question upon which I could touch, but I do not propose to do so now. With some of them I dealt fully the other day. I wish, however, to point out that the present proposals will mean that, in the smaller States, and in the country districts where Commonwealth Oil Refineries spirit is not procurable, motorists will have to. pay 2d. a gallon more than in the cities, and that merely to enable the Government to fight the importing oil companies.. I am not in favour of that discrimination. I am not in favour of the Government's road proposals as a whole, with which this proposal is closely related. I consider that the roads legislation is unconstitutional; but, apart from that, I oppose it for- the reasons which I "have already set out. Even if I were prepared to grant that the road proposals were constitutional I should still offer strong opposition to the petrol tax, which is a purely class tax, and has very many objectionable features.

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