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Wednesday, 3 June 1942

Senator SPICER - New South Wales is not now required to meet the cost of child endowment.

Senator ASHLEY - The honorable senator made an excellent speech this afternoon, but he had a bad case to argue. The cost of social services in New South Wales in the financial year 1939-40 was £7,074,031, and the cost in Victoria was £2,387,612.

Senator Spicer - The expenditure in New South Wales was due largely to unemployment relief, which cost £5,000,000 in that period.

Senator ASHLEY - The cost of unemployment relief in New South Wales was not £5,000,000. It was £2,007,962, and the expenditure on food relief was £1,7"91,000.

Senator Spicer - The total cost of those two services totalled nearly £5,000.000.

Senator ASHLEY - The total amount of the two items, according to the figures that have been furnished to me, is not £5,000,000. When the cost of social services in New South Wales and Victoria are compared, I do not think that it is improper that New South Wales should receive £15,356,000 as compensation under the terms of this legislation and Victoria should be paid £6,517,000. I am sure that every honorable senator will agree with the view that the requirements of the nation should be paramount in time of war. There is no limitation in regard to the defence of any one State of the Commonwealth, and, therefore, in the matter of defence we are one. The same principle should apply to the raising of money for the defence of Australia. Honorable senators opposite suggested this afternoon that the field of income tax has not been sufficiently exploited over the lower range of incomes. Advocacy of that sort is not unusual by honorable senators opposite. They have suggested that all persons in receipt of more than £3 a week should pay income tax, and that even those receiving up to £400 a year, should pay higher taxes. I would point out that every person in that income field pays indirect taxation.

Senator Leckie - As do all taxpayers receiving higher incomes.

Senator ASHLEY - Taxpayers on the higher incomes are better able to afford the payment of direct and indirect taxes.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - What indirect tax does the person on a low income pay?

Senator ASHLEY - He pays indirect taxes on most of the articles that he buys. The proposal has been put forward that girls earning £3 a week should be brought into the income tax field. I do not agree with that proposal. I think that Senator Spicer said that persons earning £3 a week are not subject to income tax because of the possible political effect if they were taxed. I would point out that many people earning £3 a week are under 21 years of age, and, therefore, not having the right to vote, they have no political influence. Prior to the war these people and their parents in many instances were living on the dole. Honorable senators opposite have referred frequently to the thrift of Victoria, but they should not forget that that State has benefited during the last few years in respect of defence expenditure. For several years I have complained of the high rate of defence expenditure in Victoria as compared with other States. Honorable senators representing Queensland have commented on the small amount of defence expenditure in that Statu. In the financial years 1939-40 and 1940-41 the Commonwealth Government contributed substantially towards the increased revenue of the State of Victoria. As a result of the vast volume of employment provided in war industries, the revenue of that State has increased considerably. It is true that taxes in Victoria have been reduced in the last few years hut other States might find it possible to reduce their taxes when their revenue is substantially improved as a result of increased expenditure of Commonwealth money on war industries within their boundaries. I do not intend to pit myself against .Senator Spicer on the question of the constitutionality of these measures. The honorable senator quoted several eminent legal authorities in support of his view that the legislation is unconstitutional. One authority was a King's Counsel, of Adelaide, and another was the right honorable member for Kooyong (Mr. Menzies), whose opinion must be respected. However, Senator Spicer did not quote another eminent King's Counsel, the honorable member for Warringah (Mr. Spender). .Speaking on the constitutional aspect of these proposals, Mr. Spender said-

I imagine that the Government concerned, before introducing the legislation, would satisfy itself as to the constitutionality of the measure to he brought forward.

Senator Spicer - Did the Government satisfy itself?

Senator ASHLEY - Yes.

Senator Spicer - Then produce the evidence. (Senator ASHLEY. - It is not usual for a government to lay documents of that character on the tabic of the Senate. I shall continue the quotation -

If that be done, and the Government is convinced that its proposals are constitutional,, it is a matter of little consideration for this House; but if obviously the constitutionality of a measure is doubtful, it is a matter which is properly debatable here. It is somewhat improper to engage in a long legal dissertation on the subject of whether a measure is or is not constitutional. My own view is that in respect of this measure there can be no doubt whatever that it is constitutional, both upon the ground of the' power of the State to tax and upon the basis of the defence power of the Commonwealth. I advance my views with the same degree of hesitation as any lawyer advances a view. The right honorable member for Kooyong (Mr. Menzies) has expressed the view that, in respect of both the power to tax and the defence power, he is satisfied that it would come under the taxation power, but he doubts whether it can be said to come under the defence power. I desire to have it recorded, for what it is worth, that my view is that if the constitutionality of this measure were ever assailed, the matter would be settled beyond all dispute in favour of its constitutionality.

Two eminent members of the legal fraternity. Mr. Menzies and Mr. Spender, are in conflict on this question and I am sure no honorable senator will venture to say which is right. The Government has had advice which coincides with the view of Mr. Spender. I doubt whether any test will be made of the legislation in the High Court or the Privy Council. Statements that the legislation will be challenged are merely threats by opponents of the measures to endeavour to stampede the Government. Every judge, .1 should say, must give some consideration to war conditions.

Senator SPICER - A judge can only apply the law as it is.

Senator ASHLEY - A judge can apply the law sympathetically or unsympathetically. His duty is to interpret the law as it stands, but his decision can be influenced by prevailing conditions. 1 should welcome any proposal for an effective formula for the simplification of taxation measures. No suggestion has been made, although I believe that Senator McBride said that one would be made at a later stage. I assure honorable senators opposite that if a proposal were made, although it could not be adopted at present, consideration would be given to it when the budget was being dealt with in August. Like other honorable senators, [ desire that there should be a uniform taxation system throughout the Commonwealth. We have not got it to-day because of the wide variations in the different States. Otherwise, a more acceptable formula might have been provided now. The formula on which this legislation is based was drawn up by the special committee which investigated uniform income taxation. Surely nobody will question the qualifications of members of that committee. The right honorable member for Yarra (Mr. Scullin) is an ex-Prime Minister, and has been a student of finance all his life. When he speaks on measures of this kind he is listened to with respect by members of all parties. Another member of the special committee was the honorable member for Robertson (Mr. Spooner), a former Treasurer of New South Wales, and a man who has had extensive experience in financial matters. I am confident that nobody questions the ability of the chairman of the committee, Professor Mills, who is a professor of economics at the University of Sydney, and is also chairman of the Commonwealth Grants Commission. The recommendations of such men cannot he ignored, and I pay a tribute to the work that they have done. They have accomplished an excellent task by endeavouring to draw up a formula to overcome the many vexatious problems encountered by people in every walk of life under the existing complicated system of multiple taxation. I commend the bill to the Senate and trust that it will have a speedy passage.

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