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Thursday, 27 November 1941

Senator FOLL (Queensland) .- As the Leader of the Opposition (Senator McLeay) has pointed out, the Government should be extremely grateful to Opposition members in this chamber and in the House of Representatives for their constructive assistance during the discussion of its various taxation measures. As my leader has so clearly shown, it is obvious that these bills were hurriedly prepared, and were not properly digested by the Treasurer (Mr. Chifley). I can understand the reason for that; a tremendous amount of work has had to be clone, and present Ministers are new to office.

The attention of the Senate should be drawn to the different atmosphere at the close of this sessional period compared with that which characterized the close of some previous periods. The comments of members of the Opposition, both here and in the House of Representatives, have been helpful and constructive. I remember clearly that when we occupied the Government benches long speeches were frequently made by members of the Opposition concerning everything under the sun, and containing nothing constructive, with the result that bills piled up and at the end there was an unseemly rush of legislation which could not be properly considered. Because the Opposition on this occasion has been entirely constructive, we approach the end of the sessional period with bills properly considered and suitably amended in the interests of the people. The amendments have been welcomed by the Government as well as the public. The present atmosphere is much more in keeping with the dignity and usefulness of the Parliament.

I am glad that the Government has seen fit to refer certain proposals to an all-party committee, in order that any anomalies may be rectified. I have in mind particularly the position of some private companies. It has been brought to my notice that on the north coast of Queensland a private company engaged in timber production, which is well known to Senator Courtice and other Queensland senators, pays under existing conditions taxes aggregating 19s. 8d. in the. £1, and is thus left with a balance of only 4d. in the £1 with which to carry on its operations. It has to pay a flat rate of 3s. in the £1 company tax and a tax of 16s. Sd in the £1 on account of personal exertion. Although at present the products of the timber industry are in great demand, the industry is subject to great fluctuations. Senator Courtice will know that in the rainy season logs are difficult to obtain and that there is much loss through machinery being out of use. Moreover, in this industry severe damage to plant is an ever-present risk. Under existing legislation private companies are not allowed to set aside reserves which are free from tax. They should be allowed to do so, and therefore I urge that the conditions which apply to private companies should be carefully investigated. I should have spoken at greater length on this subject were it not that the Government has given an undertaking to look into it further.

I support the remarks of Senator J. B. Hayes in relation to mining and prospecting. When I was Minister for the Interior I had a good deal to do with the prospecting for oil in Australia and the surrounding territories. I know that large sums of money are necessary if the search for oil is to be conducted on anything like a proper basis and with a reasonable chance of success. Some years ago £250,000 was set aside for the payment of subsidies to companies engaged in the search, the money to be paid on the basis of £1 for every £2 expended by the prospectors. The amount was too small. The payment of a subsidy tended to encourage the flotation of companies lacking sufficient knowledge of the requirements for their efforts to be successful, and in many instances the whole of the money so advanced was lost. Except in respect to one or two companies little, if any, return was received for the money so expended. All honorable senators may not agree with me, but I am convinced that the people who are most likely to find oil in Australia, or in the adjoining territories, are those who are engaged in the search for oil in a large way. If we can encourage the large oil companies to expend their money in the search for oil, subject, of course, to proper control such as now exists owing to the greater measure of uniformity of our legislation, we are more likely to get results than if we encourage the formation of mushroom companies which have not sufficient capital to sink more than one or two bores. When the capital of these small companies becomes exhausted they cannot get any further assistance from the Government, and frequently the result is that satisfactory results are not obtained, the money expended is wasted, and the plant becomes useless. That has been our experience over a number of years. There has been a definite move by several of the larger oil companies to search for oil in Australia. In Queensland, the Shell Company of Australia Limited has taken, over a large tract of land, and has entered into an agreement with the State Government to prospect for oil on the basis that the area available to it shall diminish each year, and that should oil be found the project must be developed. The Texas Company (Australasia) Limited has floated a subsidiary company and has brought from the United States of America a geologist of considerable experience. The company is now carrying out prospecting on a fairly large scale in Western Australia. It is to be hoped that the efforts of both of these companies will be rewarded, and that oil will soon be found. It, therefore, seems a pity that the deduction which has hitherto been allowed in. respect of money expended on prospecting is to be considerably reduced. At first the Government proposed to withdraw the concession entirely, but as a result of deputations by members of the Opposition and recommendations by the all party committee that was set up, one-third of the money so expended is to be allowed as a deduction. I oan understand that an individual, or a company, which is subject to high taxation may expend money in prospecting with a view to escaping taxation, but such a position could easily be safeguarded. During the forthcoming recess the Government might well look into this matter with a view to making greater concessions to companies which are engaged in the search for oil and so encourage them to continue the search.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - This is a matter of great importance to the islands north of Australia.

Senator FOLL - That is so. Large sums of money have already been expended there in the search for oil. The Government has subdivided large areas into leases, and I am pleased to say that in some localities there are encouraging signs of oil. The job is difficult, due largely to the nature of the country and the lack of transport, but the companies concerned have done good work. One company has expended £1,000,000 in New Guinea, so far without result. I hope that the Government will not too greatly discourage these companies.

The decision of the Government not to honour 'the undertaking which was given to certain bondholders who converted their holdings during the depression is most unfortunate. At that time, many thousands of bondholders voluntarily sacrificed one-third of the income derived from bonds. In many instances that sacrifice was considerable; it was especially so in the cases of those people who were entirely dependent on that interest for their livelihood. When the Premiers plan, which laid the foundation of Australia's prosperity, was introduced, a definite undertaking was given that persons who voluntarily accepted a reduction of the interest on their bonds would not in future be subjected to additional taxes on such assets. The present Government has gone back on that undertaking, notwithstanding that after it was given the Parliament confinned it during the terms of the Lyons Administration. Honorable senators supporting the Government may say that bonds held by companies are not covered by the undertaking, but I point out that it was without qualification.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - The undertaking applied to the security rather than to the holder of it.

Senator FOLL - That certain securities are held by companies, and not by individuals, does not alter the undertaking in the slightest degree. The action of the present Government amounts lo the repudiation of a contract entered into by a previous government and subsequently confirmed by the Parliament. As the Leader of the Opposition (Senator McLeay) pointed out, this measure is one essentially for consideration in committee, and I shall therefore leave my further remarks until the committee stage has been reached.

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