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Tuesday, 15 December 1914

Senator BAKHAP (Tasmania) . - -No one who understands anything of the conditions which surrounded the Federation at its inception will deny that the full power of taxation is given by the Constitution as a corollary of the function of national defence, which was committed to this Parliament by that national instrument of government. I am not going to deny that the Commonwealth Parliament, in time of war and for the purpose of national defence, may exhaust to the uttermost farthing every source of taxation; but that action must always be conditioned, when our necessity is not extreme, by the proper observance of the maxim which fell from the lips of one of the wisest of the ancient emperors. He said, " The good shepherd, wishing to have the wool off his sheep, shears them, and takes great care not to skin them." The war is likely to continue, I am sorry to say, for a considerable time. Any one with the most elementary foresight must recognise that, at its conclusion, Australia may have to face a war debt of perhaps £50,000,000 or £60,000,000. I admit that those responsible for this scheme of taxation have a right to challenge their critics who condemn it by inquiring, " What would you substitute for it?" I accept the challenge, and I am prepared to indicate a way in which the expenditure upon this war may be met. Of course I cannot do that in discussing this Bill, but I promise that when the Estimates are under consideration, I will deal with the matter in a comprehensive way.

Senator Grant - Why not do it now?

Senator BAKHAP - Because our Standing Orders prevent me from doing so. But I pledge myself to accept the challenge, and to outline a better method of conducting the affairs of the Commonwealth than is embodied in this proposal to impose taxation which is avowedly almost of a confiscatory character. I am a Liberal, but temporising and too great conservatism are just as objectionable to me as is a predatory democracy. I believe that taxation should be imposed at this juncture; but, seeing that the whole of our war indebtedness will probably have to be funded at the end of the war, and that it will probably take half a century to liquidate liabilities, surely it cannot be contended that we are imposing sufficient taxation to meet our war expenditure. The statement of the financial position shows that the cost of our rendering assistance to the Empire will land us in an expenditure of £10,000,000 or £12,000,000 at the end of the current financial year. That being so, all that was necessary in the way of extra taxation was to provide sufficient money to meet the interest on our war expenditure over the period covered by the duration of the war.

Senator Senior - Does the honorable senator call that sound finance?

Senator BAKHAP - Does Senator Senior dare to say that he is in favour of taxation proposals which will yield sufficient money to meet our war expenditure ?

Senator SENIOR - That is no answer to my question.

Senator Millen - The answer is that the Government are borrowing the money with which to pay even interest on our war expenditure.

Senator BAKHAP - They have had to borrow to meet our war expenditure. No Administration would dare to impose sufficient taxation to meet from year to pear the whole of our expenditure in this connexion.

Senator Lt Colonel O'loghlin - We could have managed if it had not been for the States.

Senator BAKHAP - I have never questioned the power of the Commonwealth to impose taxation to meet war expenditure. The Imperial Government - our creditor - has to borrow to meet its war expenditure. In other' words, the people from whom we borrow have in their turn to borrow for that purpose.

Senator Lt Colonel O'loghlin - But the honorable senator's party desired to borrow to meet defence expenditure in time of peace.

Senator BAKHAP - The Government at whose instance the land tax was imposed dared not openly avow the real object underlying the introduction of that legislation. Our Constitution does not empower this Parliament to interfere with the land policies of the States. But by a misconstruction of the spirit of the Constitution without a violation of its letter, a direct policy of interference with the land policies of the States was initiated.

Senator Needham - Why did not the honorable senator test the validity of that legislation?

Senator Lt Colonel Sir Albert Gould - Because there was nothing to show that it was not a taxation measure.

Senator BAKHAP - As it was a taxation measure upon its face, a taxation measure it was decreed to be. But if its purpose had been avowed in its' preamble what would have been its fate at the hands of the High Court? The Minister of Defence, in introducing this Bill, did not say that the taxation proposed was required for war purposes. Instead, he used an argument in these " piping times of peace," namely, that the measure was intended to break up large estates - a policy which, according to Senator Stewart, has admittedly failed. There is no courage required to impose a confiscatory tax on a class of people who have practically no power at the ballot-box, because of their numerical inferiority. Do honorable senators think that a very brave thing is being done in this connexion?

Senator O'Keefe - Does the honorable senator think that it is a very brave tiling to go on wringing a little more taxation out of those who are unable to pay it?

Senator BAKHAP - The people upon whom this tax will fall have no power to defend themselves at the ballot-box. Seeing that a Democracy is all powerful, manifestly it ought to be just.

Senator McKissock - These people have the power of the purse and of the press, and the honorable senator knows it. "Senator BAKHAP. - They have no power at the ballot-box.

Senator SENIOR - The honorable senator's argument leaves him without a leg to stand upon.

Senator BAKHAP - I believe in defending people against taxation which is predatory in its intention. I would not dare to oppose a surcharge on the land tax if it were clearly demonstrated that it was intended to meet our war expenditure. But the Minister of Defence this afternoon openly affirmed as a reason for the introduction of this measure, that it was intended to interfere with the land policies of the States. The more honorable senators gloat over the power they are exercising at the present time, the more certain will be their downfall at the hands of the electors on the day of reckoning. One would imagine that objection to this form of taxation was the perquisite of the Liberal party. But just let me tell honorable senators what the Treasurer of Tasmania had to say on this question. During the present week the Leader of the Opposition in that State moved a resolution acknowledging the power of the Commonwealth to impose taxation, but protesting against its too drastic exercise, and also against interference with the functions of taxation by the various States. This is what the

Treasurer - the Labour Treasurer - with a brother Minister who was a Labour candidate at the Senate election in 1913-

Senator O'Keefe - Does the honorable senator say that the Treasurer of Tasmania was a candidate for the Senate?

Senator BAKHAP - I beg the honorable senator's pardon - Mr. Lyons is the Treasurer. That gentleman said -

There is no doubt a protest was due against the intention of the Commonwealth Government to make the taxation complained of, permanent. If it were imposed for the purpose of meeting the war expenditure it was justified. He had communicated with the Commonwealth Treasurer, and had received a reply to the effect that it would be a mistake to consider the taxation imposed for the war only.

Senator Ready - Is it not a fact that Mr. Giblin, who followed Mr. Lyons, said that the Liberal party had been " pulling his leg " ?

Senator BAKHAP - Mr. Giblin wanted the Commonwealth to reduce the per capita contribution to the States. But there was a chorus of dissent to his suggestion.

Senator Ready - That was a patriotic stand for Mr. Giblin to take up.

Senator BAKHAP - It was not one which met with general approval. We have heard that the land tax imposes no liability on land-holders - that they do not suffer any hardship. Personally I believe that land-owners in many respects occupy a similar position to that occupied by members of Parliament. I suppose honorable senators have frequently been approached with applications for considerable loans of money, and when they have expressed their inability to grant them have been met with the remark, " Why, you are getting £600 a year," as if they had a golden stream at their command. That is very much the position of many land-owners in Tasmania. The Treasurer of that State, during the discussion of the proposal to which I have referred, said that some State land taxpayers were in arrears, and that as a resuit, there would be a decrease in the revenue from that source of £14,458, leaving out of consideration any taxation derived from income. That is a very considerable portion of the total_ amount collected as land tax in Tasmania.

Senator Ready - How does the honorable senator explain the circumstance that there have not been twenty-five applications for .relief from the payment of the tax?

Senator BAKHAP - For the simple reason that there was not the slightest chance of their getting that relief. To show that all the graziers are not rolling in wealth, last night's paper contains the report of. an inquest on a grazier who took his own life owing to depression caused by the bad times.

Senator O'Keefe - I could parallel that with the case of a grazier who died the other day worth about £500,000.

Senator BAKHAP - Is the leaving of half-a-million a crime? Does this Legislature subscribe to the doctrine that the holding of wealth is a penal offence? Senator Stewart said the other night that if the Labour party could get at the income of the land monopolist in no other way, they would steal it. Although there might be some jocularity in that remark, it was, nevertheless, a revelation of the possibility of taxation being made predatory, and just as ruinous in effect as knocking a man down and taking money out of his pocket. The exercise of the right of taxation in a vindictive spirit is no more justifiable because it is imposed by the nation, than is an assault committed by a footpad.

Senator de Largie - Do you say that this taxation is vindictive?

Senator BAKHAP - I do. Let me quote, for the benefit of Senator Ready, who has been expounding the land question for the last four or five years, the municipality of Evandale, Tasmania. Some time ago the Government of Tasmania, which I supported, instituted an assessment of the lands of the State as a prelude to the introduction of taxation on unimproved values. It was found that most of the large properties- were grazing properties, and that in many cases, particularly in the municipality of Evandale, the unimproved value represented about 80 per cent, of the capital value. Take an estate of that character of the value of £120,000, and assume that the unimproved value is £100,000, as is not infrequently the case. I was as great a platform man as Senator Ready on the question of land monopoly at one time, but when I began to travel extensively through Tasmania and the other States I found that in quite a number of instances the properties held by the squatters, these so-called " fat men," were being put to the best use possible. They were not suitable for" agriculture, but were rocky. They were admirably adapted to the production of' good wool, which brought a high price, and wool has played a big part in Australian prosperity to date.

Senator Gardiner - How much would that land be worth?

Senator BAKHAP - Some of the properties, the very best in the midlands, that have been settled for eighty or ninety years, are valued, and can be bought to-day, for little over £4 per acre.

Senator Ready - That is not a bad price.

Senator BAKHAP - What is the price of the chocolate soil lands in the Scotsdale district?

Senator Ready - Does the honorable senator know the Mount Pleasant Estate ? Is it not a fact that there twenty families have been successfully settled on what was a mere grazing estate, purchased by the Closer Settlement Board for £3 17s. 6d. an acre?

Senator BAKHAP - I am referring to freehold estate. To show that the price I have quoted is a fair average, I refer the honorable senator to Mr. Bennett's estate, which he knows is well improved, with good buildings and fencing, and in good order generally. Yet it was sold to a neighbour, owing to certain family arrangements which the old gentleman desired to make, for £4 per acre. When the sons heard that the sale had been effected, they protested, as they had been born on the property, and the purchaser did not think he had such a bargain as made it worth his while to hold on to it. In a spirit of neighbourly friendliness he returned the property to Mr. Bennett at an advance of £100, Mr. Bennett being left, on account of the cost of transfer and other expenses, the loser by the transaction. The Mr Pleasant estate to which Senator Ready referred has not been a very pronounced success under closer settlement. In any case it has the advantage of being at an elevation which gives it toe chance of a better rainfall than many other midland properties.

Senator Ready - It .was bought for less than £4 an acre, and has been an outstanding success.

Senator BAKHAP - It was bought by the Tasmanian Government, whose policy of introducing compulsory purchase I supported. I am against land monopoly, and favour the resumption of every estate in Australia that is suitable for closer settlement; but I hope I have some element of justice in my character. When the Government intentionally compel a man to sell, they should be prepared to find him a purchaser.

Senator O'Keefe - Is it a fact that on the Mr Pleasant estate there are now twenty families where there were two shepherds and a dog before?

Senator BAKHAP - Yes, and I hope they will stop there; but I am apprehensive that what has happened before will happen again - that these settlers will find, as many others have found in the midland areas of Tasmania, that cultivation is not profitable, and will desire to revert to sheep farming. In Tasmania every estate above £8,000 in unimproved value is purchasable by the State Government. Why talk of land monopoly under such conditions?

Senator Ready - Where is the money coming from to buy those estates?

Senator BAKHAP - The honorable senator is taking up the attitude of Mr. Sheridan, one of his colleagues who is in the State Parliament, and who, when a Bill to effect compulsory purchase was being brought in, said he hoped the measure would be deferred, because he was so politically immoral that he desired to see the Federal land tax in operation first, in order that the land should be cheapened, and the Government able to buy it at a lower price.

Senator Ready - A sensible man, that.

Senator BAKHAP - To depreciate the value of a man's property before attempting to purchase it is distinctly immoral, and I say it, even though the whole force of the Democracy of Australia may be arrayed against me. If the Labour party want to tax the lands of Australia for war purposes,, they can say so openly, and we shall be with them if the details of their taxation are fair. But vexatious taxation of this kind should not be imposed for other than war purposes, and especially should not be imposed for the purpose of interfering with the land policies, of the States. I have shown that the Tasmanian land policy is so advanced as to permit of the re-purchase by the State of any estate of over £8,000 unimproved value.

Senator Ready - Did not the people approve of our policy quite recently by returning us to power, land taxation being one of the main issues of the campaign?

Senator BAKHAP - No man is likely to be a just politician unless he is somewhat of a philosopher. There are a great many people who will applaud at any time the policy of taxing the other fellow, and leaving themselves alone. Mankind collectively is not just in its own case. It will cause an individual to suffer at any time, but as we progress, widening and cultivating our sense of justice, we shall have a better regard for the rights of the individual. If we have no regard for the rights of the individual who is unable to defend himself at the ballot-box, we shall presently refuse to recognise the rights of others. On an estate of £120,000 improved, or £100,000 unimproved value, the Federal land tax will amount to £1,875, plus £936 5s., or a total, of £2,811 5s., to which must be added a considerable sum in State land taxation, especially in Tasmania, which has a fairly high graduated land tax without exemption. Assuming the municipality imposes a rate of only 9d. in the £1 on the capital value - and in many cases in Tasmania ls. in the £1 is imposed - I have computed that the aggregate taxation - Federal, State, and municipal - would absorb two-thirds of the annual value of the estate.

Senator O'Keefe - The owner need not pay the tax. He can sell some of his £120,000 worth of land.

Senator BAKHAP - To whom will he sell it at a time like the present? The Government force him to sell it, but take great care not to find him a buyer.

Senator Grant - What is the basis of the municipal taxation ?

Senator BAKHAP - It is on the annual value. I think 5 per cent, on the annual value is a very fair rental for these properties, and so we may assume that the estate on that basis has an annual value of £6,000.

Senator Pearce - Seven per cent, is the generally accepted figure.

Senator BAKHAP - Very few of them bring '7 per cent, in' Tasmania.

There was an action pending in a Tasmanian Court the other day in connexion with the resumption' of one of these large estates under the Compulsory Purchase Act, and although the Judge said it ought to return 7 per cent'., it was clearly shown that this particular estate, which is regarded as a very good one, rather closer to Launceston than the ordinary midland properties, was not bringing in more than 5 per cent. If any tax absorbs two- thirds of the annual value of a property, the adjectives " predatory " or "confiscatory" are quite justified. This taxation is avowedly not being imposed to meet war expenditure. The tenor of the debate in this Chamber and of the Minister's remarks in introducing the Bill, did not convey that impression.

Senator Gardiner - He did not explain what was obvious.

Senator BAKHAP - The Minister explained that the Bill was introduced for the purpose of bursting up big estates. He used language which would bear no other construction. The Tasmanian Treasurer has received a telegram from the Federal Treasurer telling him that he would make a great mistake if he regarded this taxation as being applicable to the Commonwealth only during the period of the present war. that it would be imposed for many years, and probably for all time. Is that the spirit in which to introduce taxing measures at this juncture ? Would we be fulfilling the functions of an Opposition, or even of friendly critics, if we did not deprecate that sort of thing?

Senator Gardiner - What will a landowner with £6,000 worth of land pay ?

Senator BAKHAP - He will not pay a very substantial amount.

Senator Gardiner - How much will he pay under the proposed taxi

Senator BAKHAP - I have the table here. Admittedly, the tax on a holding of that value will not be heavy, but it increases in the higher registers to over 70 per cent, on the present amount levied.

Senator Gardiner - What is the tax per £1,000 ?

Senator BAKHAP - It increases very rapidly, until it is, in connexion with the large estates, over 70 per cent, over the present amount. If the Government take two-thirds of the annual value of an estate, they will take more from the income of that land than they would dare to attempt to take from a man who belonged to another class which has strong voting power. Therefore, it is immoral.

Senator Ready - I am told that Mr. George Nicholas, of the Ouse, is paying £2,000 a year, and has not sold any land yet.

Senator O'Keefe - With that estate, he can afford to pay it.

Senator BAKHAP - If the imposition of this tax does not cause Mr. Nicholas to sell his land, will the honorable senator pursue him to the last extremity until he does sell it, even if the State Government, which has the estate under its eyes, v refuses to purchase it when it has the opportunity as well as the power to do so? Will be still pursue Mr. Nicholas and compel him to sell the land which the State Government is not prepared to buy?

Senator Ready - Other people are prepared to buy the land, so that there is no injustice to Mr. Nicholas.

Senator BAKHAP - Other people are prepared to buy the land if by taxation our opponents can bring about the original Crown land value. Every man not being a judge in his own cause is prepared to get another man's property if he can get it at a depreciated price.

Senator Ready - I am told by an expert valuer that the Commonwealth land tax does not depreciate the price of land in Tasmania by 10 per cent.

Senator BAKHAP - Then this tax will fail to reach the objective sought by honorable senators opposite.

Senator Ready - It will be a gentle persuader.

Senator BAKHAP - Because my honorable friends entertain the fallacy that people can be taxed on to the land, they will keep on increasing the tax until it is more than the annual value. They are on the horns of a logical dilemma. The Commonwealth Government are attempting by taxation to compel people to sell estates which the State Governments will not buy, although they have the power to do so.

Senator Ready - As they have been doing for many years in New Zealand most successfully.

Senator BAKHAP - It is immoral, and any taxation of the kind which has been introduced here, seeing that it has not been introduced for the purpose of meeting war expenditure, is hostile to the best interests of the Commonwealth. Sitting suspended from 6.S0 to 8 p.m.

Senator BAKHAP - When the sitting was suspended, I think that I had commenced to follow the example of one or two honorable senators who referred to that somewhat mythical being, the " fat man." All that I have to say is that the party who have been in the habit of denouncing the " fat man " with vehemence both on and off the platform have been very glad to avail themselves of his assistance. The " fat man " is merely a reservoir. He is on© of the repositories in which the nation, because of his brain power and his organizing ability-

Senator Story - And his opportunity.

Senator BAKHAP - Not always his opportunity. It is true that time and chance happen to all men, even to fat men; but, as a matter of fact, the "fat man " is nearly always wealthy because of his superior organizing ability, for I maintain that capital does not create wealthy although in itself it may be the expression of wealth, that labour does not create wealth, but that the great factor in the production of wealth is brain power.

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