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Wednesday, 16 March 1927

Senator MCLACHLAN - There were others who. wanted to abolish them.

Senator NEEDHAM - Yes; but having a longer vision than that of Dr. Earle Page, they did not persist with their foolish ideas. Unlike the honorable senator and his leader, they realized that to persist with them would result in the downfall of their Government. In July, 1910, Sir John Quick said -

I think that the leaders of parties in the Federal Parliament should set a good example, aiia should not sanction anything like a war against the States, because the State Parliaments, as well as the Federal Parliament, are representatives of the Commonwealth.

I desire to emphasize the words " a war against the States." Despite the assurances of the Prime Minister and the Leader of the Government in this chamber, this bill is a war against the States. The various State Governments, and the people of all the States, regarding it as an aggresive act on the part of the Commonwealth, and are wholeheartedly against it. It would be useless for me to appeal to the Government to withdraw the measure.

Senator Ogden - I am afraid the Government has the numbers.

Senator NEEDHAM - I echo Senator Ogden's fear. If honorable senators were true to their principles, the bill wOUld be defeated; but the party whip has been cracked and-

Senator Pearce - Has it not been cracked in the Labour party room ?

Senator NEEDHAM - No ; the Opposition is not in charge of this bill. I repeat that, if it were a question of principle and not of party, the bill would be defeated. It is unfortunate that honorable senators should be more concerned about party than about- principle. Perhaps Senator Chapman, who I notice is smiling, may succumb to the crack of the party whip.

Senator Pearce - There is wonderful unanimity among the members of the Opposition.

Senator McLachlan - Solidarity !

Senator Findley - And sacrifice.

Senator NEEDHAM - This bill, if passed, will result in increased Customs duties, to which Senator Chapman and his party are opposed.

Senator Ogden - The Country party has buried the tariff issue; Dr. Earle Page is now a high tariffist.

SenatorNEEDHAM. - Senator Pearce yesterday, when referring to resolutions passed by the National Federation, endeavoured to persuade the Senate that that body was in favour of the abolition of the per capita payments.

Senator Pearce - I said that the National Federation rejected a motion that the per capita payments should not be discontinued.

Senator NEEDHAM - The honorable senator's speech to the National Federation was, like the Prime Minister's policy speech, full of vague generalities.

Senator Pearce - How does the honorable senator know ? Was he under the table listening to me?

Senator NEEDHAM - I listened to the right honorable gentleman yesterday. I have been associated with him in gatherings in the Labour party room in earlier years, but should not like to be with him at any gatherings such as that to which I was referring. He has been trying to convince us that the National Federation, the organization behind his party, has endorsed the bill.

Senator Pearce - No.

Senator NEEDHAM - It has not I saidthatI would endeavour, in the time at my disposal, to put the case for Western Australia, and I shall proceed to tlo so from information which has been furnished to me from an authoritative source. If the Government evacuates the field of income taxation to the extent of 40 per cent. of its present col lections, the amount of revenue released will not compensate the States to the extent that the Government believes it will.

Senator Pearce - Why did not the States put their case when they had the opportunity?

Senator NEEDHAM - The States did not have a chance to do that at the last conference.

Senator Pearce - They were specifically invited to do so time after time.

Senator NEEDHAM - I am inclined to think that the Commonwealth Treasurer was determined to have his way.

Let me now put the case for Western Australia, so far as the land tax is concerned. Dr. Earle Page has estimated that Western Australia would receive £80,588, but the authority to whom I have referred estimates the amount at £65,000.

Senator Pearce - Whose estimate is that?

Senator NEEDHAM - It has been furnished by a competent authority. It is very evident, according to this authority, that Dr. Earle Page has made his estimate on the maximum aggregate calculation, and 1 think I will be able to show that it is not possible for the State to calculate on that basis. Moreover, Dr. Earle Page has made no allowance for other factors which would reduce the amount collectable in Western Australia. Dr. Earle Page said that in the last year for which final figures were available, 1922-23. the actual assessments of Federal land tax for Western Australia totalled £81,823, and he therefore claimed that his estimate of £80,588, as the amount likely to be collected by Western Australia, was substantially correct. From the Federal point of view it may be; but from the State point of view it cannot be. He obtained his figures from a rate based on an aggregate assessment. In the event of his proposals being carried, however, that basis would not exist for the individual States. They would have to assess on land within the borders of the State only. If Western Australia had to impose her own land tax as a set-off against the abolition of the per capita payment, obviously the State Treasurer could only collect tax on land for which assessments were made within the State. The Federal Treasurer added head office assessments to 'his figures, and I desire to show how unfairly his calculations applied to this State. First of all, if Western Australia had to operate on the Federal exemption basis, it would be necessary to maintain the existing exemption of £5,000, and land of any value up to that amount Would not be taxable. To-day, however, if a person residing in Western Australia owns land in this State, and land in another State also, and the aggregate value exceeds £5,000, he is liable to be taxed, and is taxed. We thus get this position : A person residing in "Western Australia who owns land ot an unimproved value of £5,000 or under is exempt, but if that person owns land of £5,000 value in Western Australia, and land in one or more of the other States of the Commonwealth, say, of an unimproved value of £20,000, he would be assessed for land tax, not on the value of the land owned in Western Australia, but on an assessment of £20,000 (that is £25,000 less the £5,000 exemption), and, what is important, at the rate of tax applicable to land valued at £20,000. The State Government, of course, could not do that. It could tax on any amount over £5,000, but not at a Tate applying to land worth £25,000, less the exemption. It could not invade any other State to innate the ratio of tax. Therefore, the rate of tax in Western Australia, in order to secure an equivalent of the amount now collected by the Federal authority and proposed to be surrendered to the State, would have to be increased.

For Federal taxation purposes, Federal valuers are engaged in each State of the Commonwealth valuing land, and where the taxpayer has land, or interest in land, in two or mora States, the values are forwarded to, and aggregated at, the head office, whence the assessments are subsequently issued at the aggregate rate o'f tax. But where the taxpayer owns land and has an interest in land in one State only, he is assessed in that State. The method is absolutely unjust and inequitable to Western Australia, because it has to be remembered that the unimproved value of city and suburban lands in this State is considerably less than the value of similar land in other States. It will thus be seen that, when Dr. Earle Page argues that Western Aus tralia would receive an amount approximating the value of total assessments issued, he is ignoring a vital factor which operates detrimentally to the interests of that State. I submit that £65,000 would be the maximum which Western Australia could expect to collect from the land tax. I have shown that the Federal Treasurer has made no allowance for a very important difference in the basis of calculations, and I wish further to show that he has made no allowance for other factors which would necessarily affect the amount of revenue likely to be collected by the State. Federal land tax, unlike the State land tax, is levied on the unimproved value of freehold and leasehold interest in land, interest in land under wills, trust deeds, agreements, See., and shareholders' interest in lands owned by incorporated companies. Further, every increase in the unimproved value of land, or interest in land owned by any one State, has the effect of increasing the unimproved value and the rate of tax on the whole of the land owned by the taxpayer. Especially does this apply to Western Australia, because many of the large business houses of this State are owned by firms and companies domiciled in other States, where they have large interests in freehold and leasehold lands, the unimproved value of which is considerably in excess of the unimproved value of similar lands in Western Australia. Again, if Western Australia is to enter the field of land taxation now held by the Federal Government to make good the loss of revenue arising from the abolition of the percapita payments, it will be necessary to spend a considerable sum annually in the appointment of valuers and clerks to value annually the unimproved value of land and interest in land, and to collect the necessary data. ' All this increased expenditure would have to be set off against the amount of tax collected.

Senator McLachlan - Is there no State land tax in Western Australia?

Senator NEEDHAM - There is.

Senator Thompson - It is a very mild affair compared with the Queensland land tax.

Senator NEEDHAM - The Federal Treasurer has apparently taken the gross amount of tax assessment and has not apportioned any part of the cost of valuing, assessing, and collecting.

Let me come back to the Treasurer's estimate of £80,588, which he says Western Australia would be able to collect. The Treasurer takes the assessment for one year only, 1922-23. I will deal with figures for that year and for the two previous years in order to obtain an average. In 1920-21 the value of Western Australian assessments, according to the ninth annual report of the Commissioner of Taxation referred to by Dr. Earle Page, totalled £47,757; in 1921-22 the value totalled £64,478; and in 1922-23, the year quoted by Dr. Earle Page, the value totalled £50,960. The value of the average total assessments issued in that State for those three years was £55,732. To the amounts quoted the Treasurer has added head office assessments on his aggregate basis - a basis which I claim is not permissible to individual States. Of course, allowance has to be made for land in Western Australia valued at over £5,000 not assessed there, but dealt wife in the aggregate at head office. I calculate that amount at approximately £10,000 per annum, a figure reached by taking the unimproved value in Western Australia and calculating the appropriate rate of tax on that value. I think I have shown that my basis of calculation is the right one, and, in fact, the only one that can be applied to the States if they are to take over the land taxation field proposed to be vacated by the Federal Government.

Senator Pearce - Does not the honorable senator see the flaw in the whole of that argument ? Fancy a man going back three years for an average and taking that as a basis of calculation in a rising State like Western Australia !

Senator NEEDHAM - That was the argument used by the honorable the Treasurer. I do not admit the correctness of the Minister's reasoning. Dr. Earle Page, in order to appear in the role of a State benefactor, has had to bolster up his case at the expense of the States. His budget was a weird bit of juggling, and it did not relieve the taxpayers of Western Australia of one penny of their financial burden. Actually, he proposed to make it impossible for the State to avoid imposing further taxation. Therefore, whilst he sits grandly at the Customs House, scooping in money he does not want and ladling it out in doles, the States will be forced into the position of beggars waiting for his favours. [Extensionof time granted.'] I have here tables showing the difference between the first proposal of the Government, which was embodied in the schedule to the bill as originally introduced, and the second proposal, which appears in the schedule to the bill as amended. The first of these deals with the comparative position of all the States, and shows the available margin : -


The second table shows how Western Australia would fare under this scheme : -


I also submit the following criticism of figures by a leading authority: -


I have endeavoured to cover the whole field during the course of my remarks. Every honorable senator will admit that the bill deals with a matter vast in its importance and complex in its nature. I consider that I have said suf ficient to convince honorable senators that it is necessary to exercise great caution. It we pass the bill we shall abolish for all time a system that has been of very great financial assistance to the States. Had the bill been introduced as the result of a conference between the Governments of the Commonwealth and the States I should not have minded. But as the existing payment to the States will be withdrawn, and they will have to accept whatever is offered to them, I am opposed to the measure. I deplore the haste with which the matter is being decided. Honorable senators should remember that, according to tradition, the Senate is the guardian and protector of the rights, the interests, and the functions of the States. This bill applies the acid test to honorable senators, and if it is passed at the dictation of the Government the Senate must abandon for all time its claim to be a States House, and the protector of their rights and interests. I ask honorable senators to reject the measure.

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