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Friday, 29 November 1935

Senator E B JOHNSTON (Western Australia) . - In view of the comparatively small number of days on which the Senate has sat this session, and particularly in view of the fact that the Senate did not sit at all last week, I regret that the Government has found it necessary to suspend the Standing Orders to enable a more speedy consideration of the annual Appropriation Bill, which contains no fewer than 254 pages and involves an expenditure of £23,759,770. I cannot refrain from drawing a comparison between the haste with which legislation is approved and Standing Orders are suspended in the Senate today, with a very different attitude that was taken when the Scullin Government was in office; at that time practically every line of every bill and every item of expenditure were most carefully scrutinized and weighed. The Senate might well spend more time than is proposed now in examining the expenditure of nearly £24,000,000. Yesterday, when I was addressing the chamber on the subject of excessive taxation imposed by this government, which like previous governments in the Commonwealth, every year takes more money out of the pockets of the taxpayers, I was limited largely by the fact that, under the Standing Orders, my remarks had to be confined to income taxation. Although some small exemptions from sales tax and a small reduction of one rate of tax have been granted by the Government this year, the Commonwealth is actually taking more money from the pockets of the taxpayers year by year. The estimated returns from taxes for this year have only once in the history of federation been exceeded. The terrific scale of federal taxation, both direct and indirect, constitutes a burden on Australian industry which it is no longer able to bear. It was hoped that the inclusion of representatives of the Country party in the Ministry would at least bring about that repeal of excessive emergency taxation, which is essential to the recovery of industry and the restoration of men in employment. Yesterday, I quoted remarks from Dr. Earle Page's policy speech, with which I cordially agreed, in which he said that the Country party particularly favoured the abolition of the whole of the emergency taxation. To-day his party shares the responsibility of government; therefore, it behoves him and his colleagues to proceed to the abolition of these taxes. If the Government will do that it will receive liberal sup- port, not only from the majority of honorable senators, but also from the electors who, having in mind the promises that taxation would be substantially reduced, enthusiastically returned the Government to power fifteen months ago. Up to date this year very few concessions in the direction of reducing taxation have been granted. The Government is actually collecting over £14,000,000 from emergency taxation, which was imposed by the Scullin Government during the depth of the depression and which, of course, was accepted as necessary by a majority of honorable senators, despite the fact that they were notassociated with that Government. If they had witheld their support, the emergency legislation would not have become law. This year it is estimated that the Government will collect £8,850,000 from the sales tax, which was a purely emergency measure.

Senator J V MACDONALD (QUEENSLAND) - That is equal to the amount which the retiring

Auditor-General said the Government has in various trust funds.

Senator E B JOHNSTON - Apparently this enormous collection of £14,000,000 from emergency taxes is deemed necessary, despite Mr. Cerutty's statement that, on the 30th June last0 the Government had £8,000,000 to the credit of its various trust funds, thus more than providing for the present financial requirements of the Commonwealth; and this sum represents taxes collected during depression years.

It is amazing that the Government should collect so much from primage duties. The amount estimated for this year is £4,079,000, being £400,000 in excess of the amount received from this source in 1931-32, when the rates were higher and the range wider than it is to-day. The following table shows how the burden of taxation has increased during the last five years, despite reductions of rates that have been made from time to time by successive governments : -

I shall be very much surprised if the estimated surplus is not very greatly exceeded, in view of a statement made by Mr. Manning, the Attorney-General of New South Wale3, in the Legislative Council last week,, that, as a result of the discussion between the Premier of New South Wales and Federal Ministers during the preceding week-end, the wheat bill, to implement the Federal Government's policy for the assistance of wheat-growers, would not operate for this harvest. Mr. Manning's statement was inconsistent with answers given by Ministers to some questions which I have addressed to them in this chamber. I have examined the Hansard report of the debate in the New South Wales Parliament, and I discovered that, whilst the bill, as introduced, was made applicable to the 1935 harvest, it was decided as the result of a discussion between Mr. Stevens, the Premier of New South Wales, and Commonwealth Ministers, that the relief should not be available until next year. I have read press statements that the Federal Government feared that it would not be able to apply its wheat legislation to this year's harvest, because the Governments of Western Australia and South Australia had not introduced the necessary complementary measures. Mr. Collier, the Premier of Western Australia, who attended the Loan Council meeting in Melbourne, returned to Perth on the 19th November, the day on which Mr. Manning made hia statement in the New South Wales Parliament that it had been decided that the wheat legislation for New South Wales would not operate during this harvest. Two days later Mr. Manning moved an amendment to make the legislation operative for the 1936 harvest, instead of, as originally intended, for this year's harvest.

Senator Collings - That was because there was a row on in the party rooms.

Senator E B JOHNSTON - I do not know about that; but the Government of Western Australia should not be blamed for inaction. I have not yet had a satisfactory explanation of the reasons which actuated the New South Wales Government in amending its bill to make its provisions apply to next year's harvest.

Senator ALLAN MACDONALD (WESTERN AUSTRALIA) - The major reason was the inactivity of the State Governments of Western Australia and South Australia.

Senator E B JOHNSTON - The honorable senator may say that, but I am not satisfied that that statement is fair or accurate, because, as I have explained, Mr. Manning made his statement on the day that Mr. Collier arrived in Perth after attending the meeting of the Loan Council in Melbourne.

Senator Sir George PEARCE - The honorable senator has ignored the announcement made by the Prime Minister (Mr. Lyons), subsequent to Mr. Manning's statement, and he should know that statements of Commonwealth policy are made by the Prime Minister, not by a State Minister.

Senator E B JOHNSTON - I have not ignored the Prime Minister's statement, but I am surprised that, before members of this Parliament heard anything about it, Mr. Manning was in a position to announce that the flour tax would be continued. The Prime Minister declared that it was the intention of the Commonwealth Government to assist the wheat industry this year, and, in view of recent developments, I should like to know definitely what form that assistance is to take. Also, what measure of assistance the

Government proposes to give to wheatfarmers, who are in such distress as the result of partial drought conditions. I do not overlook what the Prime Minister has said; but I am unable to reconcile his statement with that made by Mr. Manning.

Senator Sir George Pearce - Who is the mouthpiece for the Commonwealth Government ?

Senator E B JOHNSTON - The Prime Minister should be.

Senator Sir George Pearce - Well, the Prime Minister made his statement of Commonwealth policy subsequent to the statement made by Mr. Manning.

Senator E B JOHNSTON - The position of the wheat-farmers has been very much confused by the action of the New South Wales Government in making its wheat legislation apply to the harvest of 1936 instead of this year. I have asked for information, but so far I have not had a satisfactory explanation of the Federal Government's change of policy in this matter. No one knows what its policy will be for this harvest, and no provision has been made for any assistance to the industry.

The figures which I have quoted show that the total estimated to be received from income tax this year is only about £S00,000 below the amount which, the retiring Auditor-General states, has been placed in various trust funds, and is available for expenditure by the Government without any further parliamentary authorization. Over £1,000,000 is estimated to be received this year from the land tax, despite the definite promise made by the Prime Minister to an influential deputation which waited upon him, that this levy would be removed so soon as Commonwealth finances made it possible. I give the Government credit for having reduced the super tax on income from property by 50 per cent., but I think it should be entirely abolished. Despite the fact that the Auditor-General reported recently that £8,000,000 is held in the trust fund, and that no provision is made in the Estimates for a renewal of the payment of £4,000,000 paid to the wheat-growers last year, the Government proposes to collect from the Australian taxpayers this year no less than £59,050,000. The excessive burden of the taxes imposed is illustrated by the figures disclosed in the Commonwealth and State budgets for the year 1934-35. During that financial year the collections were -


Although the production of Australia last year was valued at £355,000,000 the huge amount of nearly £94,000,000 was collected in taxes. The tax collections of all Australian governments during 1934-35 exceeded all previous records. Notwithstanding all the pious talk of tax remissions the various governments in the Commonwealth are now collecting a larger amount in taxes than has ever been collected previously. While the amount of federal taxes collected does not constitute a record in the history of the Commonwealth, it is a burden that could be justified only during a boom period. The present high rate cannot be justified at present, particularly when primary and secondary producers are striving to emerge from the devastating effects of the depression. If their efforts are to be assisted and not hindered the deadweight load of taxes must be lightened. A serious factor which is apparent in the national finances is the tendency to allow revenue to mount higher and higher each year. The Commonwealth taxation figures for the last five years in round figures are -


That, of course, represents only federal taxes.For the present financial year taxes amounting to £59,000,000 are estimated to be collected. No provision whatever has been made in the Estimates for a grant to the wheat-growers, who last year were paid £4,000,000. I again ask whether the Government proposes to provide for the payment of a similar amount this year. If that amount is not to be paid during this financial year why has the amount of taxes to be collected not been reduced by £4,000,000 instead of it being increased to a total of £59,000,000? These figures should be compared with a modest amount of £11,000,000 collected in taxes in 1910-11. Beyond minor fluctuations federal taxes have increased steadily from year to year, and it would appear that unless a firm stand is taken the peak has not yet been reached. With the exception of the entertainments tax no field of taxation entered by the Commonwealth has ever been vacated. A depressing fact is that over £14,000,000 in the form of emergency taxes alone is to be taken from the pockets of Australian taxpayers. By merciless taxation the Commonwealth Government has, during the last four years, accumulated surpluses aggregating £6,873,474. Emergency taxation imposed in the darkest days of the depression still continues at the same exorbitant rates, and £8,000,000, representing taxes collected years before they were required has been placed into a trust fund for later use. It is interesting to note that the taxes collected during the last financial year exceeded the estimate by no less than £4,904,524. After making allowance for meagre remissions of sales tax, and the property tax, it is proposed to collect a further £300,000 in emergency taxes during the present financial year. It is only natural that, with improvement in business conditions generally, revenue from taxation will continue to increase if the old rates are retained. In these circumstances, the Government cannot claim any credit because taxes have not been increased, and, in view of the increasing receipts from other taxes, little credit is to be gained from making infinitesimal reductions. Figures quoted in the British House of Commons early this year gave the per capita burden of taxation in various countries for 1935 as follows -


During the same year, Commonwealth taxes amounted to £8 9s. 6d. per capita, while Commonwealth and State taxation combined amounted to £13 13s.1d. per capita. These comparisons reflect very little credit upon Australia. In a young country it is urgently necessary that as much of the national wealth as is possible should be left in the hands of private enterprise and the people generally for developmental expansion and to provide employment. The expenditure of various governments has become such a burden that it is unreasonable to expect the people to carry it with any degree of willingness. While citizens are prepared to bear their fair share of the legitimate costs of government, they insist that those costs shall not be any greater than they can reasonably afford to meet. Are the needs of the Government to be placed before those of the people? During the last few years, taxpayers have been forced to reduce drastically their expenditure and to practice the most rigid economies. Should not the same policy be adopted by Parliament? The Auditor-General, in his latest report, stated " Private enterprise is dominated by two questions: - First, is it necessary? Second, can we afford it ?" Parliament must decide these questions before this bill is passed. The magnitude of public expenditure is staggering when it is realized that, during 1933-34, the latest year for which complete figures are available, the aggregate expenditure of Federal and State Governments and local governing authorities amounted to £237,354,000, equivalent to £650,285 a day or £451 a minute. The whole of this sum has to be provided by taxpayers.

Senator Sir George PEARCE - How much of that is Commonwealth expenditure and how much State expenditure ?

Senator E B Johnston - I shall give the figures in detail. The details of this expenditure are: -


These figures have been extracted from Finance Bulletin No. 25 prepared by the Commonwealth Statistician. The amount for local government expenditure is not complete, as it does not include loan expenditure by many authorities such as water and sewerage boards. The evils of exorbitant taxation are twofold: first, it reduces the spending power of the people as a whole; and secondly, it destroys the wealth from which future production, and incidentally future taxation must come. Funds that might have been invested in factories, industrial undertakings, the development and improvement of country properties, the working of new gold-mines, and in other activities productive of widespread employment, have gone, and still are going, through, taxation, into the bottomless pit of wasteful governmental expenditure. Overseas investors and our own citizens to-day hesitate to finance enterprises in- Australia owing to the huge burden of taxation and the discriminating taxes levied upon the whole of the taxpayers. I am informed that there is substantial British capital available for investment in Australian country lands and in Western Australian gold-mining enterprises, so soon as the onerous Federal Land Tax is abolished and federal income taxes are reduced. It is in the national interest that overseas investors and our own people should be encouraged to invest in Australia; thus the development of both public and private resources would be encouraged. Under present conditions there is little to induce an investor to bring, his capital to Australia -and many of our. own citizens, because of the heavy taxation on industry, prefer to invest in Government bonds instead of in the development of primary and secondary industries. In his Canons of Taxation, published more than 100 years ago, Adam Smith said -

The purpose for which any tax is to be raised ought to be clearly of more advantage to the community than the money would be if not collected.

How many of our taxes to-day could measure up to this standard?

Senator DUNCAN-HUGHES (SOUTH AUSTRALIA) - Hughes. - The secondary industries ought to be renamed the primary industries.

Senator E.B. JOHNSTON They certainly receive the first consideration from the Federal Government in its tariff policy, whilst the great primary industries have to bear the main burden of tariffs and other forms of taxation. Experience has shown that, in the final analysis, economic recovery can be achieved only through private enterprise. The improved business conditions apparent to-day indicate that industry is recovering despite the handicap of excessive taxation. That this improvement could be greatly accelerated by relieving industry and the people generally of the severest of the present taxation burdens is beyond dispute. Seduction of taxation has always resulted in an expansion of industry out of all proportion to the loss to the public revenue. The time has come when the emergency taxes imposed during the years of depression must be removed. Freedom from these taxes would add greatly to the' spending power of the whole community, would leave more wealth in the hands of industry to provide for future expansion, and would engender that further confidence which is needed to achieve complete economic rehabilitation. Continued imposition of the existing huge taxes will inevitably react to the detriment of the whole community.

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