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Tuesday, 15 December 1914

Senator GRANT (New South Wales) . - The proposal to tax land values is part of the Labour platform, but the exact amount of the tax has been left to the discretion of the party in office. The first effort made in this direction was a very mild one, and proved quite ineffective to break up large estates. I venture to say that this Bill will also be ineffective. To my mind it will be a means of producing a paltry, insignificant amount of revenue. It is absurd to regard the Bill 1 as one which will confiscate land values. It will do nothing of the kind, and I hardly imagine that anybody seriously believes that it will. Even if the tax were 9d. in the £.1 all round, it would not be of a confiscatory character. I know of one case, in the township of Hay, in which the local taxation, including the general, lighting, and water and sewerage rates, amount, not to 9d., but to ls. 7|d. in the £1. That taxation has not in any way affected the selling value of land in the municipality. We know, too, that the present progressive land values tax has not had the effect of reducing the selling value of land in the Commonwealth. It is more difficult to purchase land to-day than it has been at any period in our history.

Senator Findley - It would have been still more difficult if it had not been for ohe land tax.

Senator GRANT - That is problematical. I am prepared to deny that it is easier to purchase land to-day than it was before the imposition of the tax. In my opinion, the land tax is not nearly heavy enough. The States have persistently refused to tax land values in any way worthy of the name. As a matter of fact, the whole of the State taxation derived from land to-day throughout the Commonwealth amounts to £581,615.

Senator Guthrie - Not sufficient for the maintenance of roads.

Senator GRANT - I have here a return showing how very careful the State Parliaments are of the interests of landowners. In New South Wales I find that the total sum contributed by this class to the State revenue last year amounted to only £5,738. In Victoria, the land-owners paid, by way of land tax to the State, £308,275.

Senator Findley - In New South Wales there is a municipal tax as well, is there not?

Senator GRANT - There is a municipal tax certainly. But I was speaking of the amount which the land-owners of New South Wales pay by way of land tax to the State Government. In Queensland this class of the community does not pay anything at all in the form of land tax. In South Australia the amount contributed to the State revenue under this heading was £141,807, in Western Australia it was £46,519, and in Tasmania, of which we have heard so much this evening, it was only £79,276. For the whole of the Commonwealth it will thus be seen that the States receive as land tax only £581,615. When we consider the enormous value of the lands of the Commonwealth, and when we realize that the States are not prepared to levy a heavier tax-

Senator Senior - They could not do bo if they tried.

Senator GRANT - The trouble is that they will not try. The man who dares to stand up in any Parliament in Australia and advocate the taxation of land values is a very courageous individual, because he knows that some land-owners will, pursue him with undying hostility with a view to his undoing. That is the reason why quite a number of persons are unwilling to say anything against the oldest and most powerful monopoly in the world. It is quite a simple matter for a man in Parliament to propose taxation through the Customs House. Even in Queensland men are prepared to do that, but when it comes to a question of interfering with the land-owners of that State they are not prepared to say a single word. Some years ago, at the instigation of the Labour party, this Parliament imposed a land tax from which we derive a certain amount of revenue. I am not concerned to know whether the proposed increase in that tax is designed to raise revenue, or whether it is intended to help us to finance our share in the war. I am glad to get even this small measure of land values taxation from the Government. It is very small. It is hardly worth talking about. I should have been pleased if Ministers had proposed a heavier tax, and if they had also proposed as a war tax the abolition of the £5,000 exemption.

Senator SENIOR - We are pledged to that exemption.

Senator GRANT - We are not pledged to it when we desire to raise money foi: war purposes. I know that our party is pledged not to interfere with any land monopolist who owns an estate of less than £5,000 unimproved value. Personally I think that that is a great mistake, but it is the policy of the party, and it is therefore my policy. An effort has been made in some quarters to show that this is a form of taxation which should be reserved exclusively to the States. Now, the framers of our Constitution deliberately provided that this Parliament should have full power of taxation- in respect of land, probates, income, &c, and therefore we are quite within our rights in looking to the land values of the Commonwealth for some portion of our revenue. The idea that this tax is a confiscatory one could not be better controverted than by the quotation of a return which will show the paltry sums which will be contributed under this Bill. Upon an estate worth £6,000 there remains a taxable value of £1,000. Upon such an estate, the present tax is £4 6s. Id., and the proposed tax will amount to £4 8s. Hd., an increase of 2s. lOd. Yet this is what Senator Bakhap characterizes as a < confiscatory impost. It is nothing of the kind, and it will not have the effect of placing any land whatever on the market for sale. Upon an estate worth £10,000, the taxable value would be £5,000, and the present rate on such a holding is £24 6s. Id., whilst the proposed rate would be £27 15s. 7d., an increase of £3 9s. 6d. If this be a confiscatory tax I do not know what honorable senators will say when a proposal is submitted for their consideration to impose an extra tax of 3 s. upon a gallon of whisky, which can be purchased for 21s., and upon which the present duty is 14s. a gallon. An estate of a taxable value of £10,000 at present has to pay £55 lis. Id., and the proposed tax will amount to £69 8s. lid., an increase of £13 17s. lOd. Upon an estate the taxable value of which is £15,000, the amount at present paid is £93 15s., and the proposed tax will amount to £125, an increase of £31 5s. On a holding of £25,000 taxable value, the tax at present is £190 19s. 5d~, and the proposed tax will amount to £277 15s. 7d., an increase of £86 16s. 2d. An estate of the taxable value of £45,000 at present pays £468 14s. Hd., and under this Bill it will be required to pay £750, an increase of £281 5s. Id. Upon an estate of the taxable value of £95,000, the present tax is £1,593 14s. 10d., and the proposed tax is £2,625, an increase of £1,031 5s. 2d. Considering the enormous value of the lands of this country, it is time something was done to make the holders pay a fair share of the cost of government. Adam Smith laid down the formula that a man should pay in proportion to his income, bub that theory was exploded years ago. The proper method of taxation is to compel a citizen to pay in proportion to the value of the land that he monopolizes.

Senator Millen - This is nob in proportion, because the graduated principle has been introduced

Senator GRANT - -That is a slight defect which the next Labour Conference may remove. I hope then we shall have a straight-out land-values tax with no exemptions or graduations of any kind. It is difficult to get from any of our statisticians complete records of any of the lands of the Commonwealth. A return furnished bo me shows that the number of freehold estates in New South Wales, or estates in process of alienation, is 91,313; South Australia, 21,168; Tasmania, 13,844; Victoria, 66,811; Western Australia, 14,925. Returns from Queensland are not available. These give a total of 208,061 estates, but, unfortunately, the return does not include leasehold properties, or any freehold estates of less than £3,000 in value.

Senator Millen - Does it include all town lands?

Senator GRANT - Yes, if the value is over £3,000. The number who will be affected by the tax is very small in proportion to the number who will not be directly affected. Occasionally, people advocating land taxation were told that the tax could be passed on, but a land-values tax is the only tax which cannot be passed on. Hence the strong opposition offered to it. No opposition is offered in those quarters to the imposition of Customs taxation, because it falls mostly, and out of all proportion to their incomes, upon the poorer section of the community. Directly a proposal is made to tax land values a howl of indignation arises. When Mr. Lloyd George proposed to tax some of the land-values of England, the outcry that went up from the aristocracy could almost be heard in Australia. I thought the bottom was going to fall out of Old England, but they seem to have got over it and are now paying a small quota towards the revenue. On 30th June last we had an adult population, excluding the Northern Territory and the Federal Territory, of 2,760,735. I have not been able to obtain from the Statistician a complete statement showing the number of land-owners. Had I been able to secure it, it would have shown that, on the average, of every six adult persons one met, only one would be a landowner. Admitting, for the sake of argument, that the proposed tax will confiscate a certain amount of the value of land, and depreciate its selling value, it is obvious that, while the £5,000 exemption is retained, it will fall with great severity upon those who in the future may purchase land of less value than £5,000, and that the exemption is an effort made to enable the big land-owners to more successfully disgorge their estates. This was made very clear some time ago in New Zealand, where a proposal was made to remove the exemption, which in that country is £500. The Government were at once waited on by the Bank of New Zealand Estates Company, who represented that the £500 exemption was absolutely necessary, because with it they would be able to disgorge their estates at a higher price to would-be purchasers than would otherwise be the case. If it is true, as the Opposition claim, that the tax is going to confiscate the value of an estate, the moment the tax is removed from any portion of the, estate the value of that portion increases. Consequently, when a large estate is cut up into sections which will come under the exemption, the value of those small sections will be immediately restored to that which, as portion of the large estate, they possessed immediately prior to the imposition of the tax. The £5,000 exemption is, therefore, by no means a good thing so far as the poor landless man is concerned.

Senator Senior - I strongly differ from you.

Senator GRANT - The honorable senator may be right. At the same time, I think he is quite wrong. If the honorable senator was offered a block of land worth £4,000 and carrying a tax of 6d. in the £1, or another block paying no tax, he would undoubtedly bid higher for the latter. I admit that? a heavy land-values tax will tend to compel owners of blocks to put them on the market for sale, or lose by keeping them. Since it was made optional for the municipalities in New South Wales to rate upon land values, all of them, except the city of Sydney, have collected their revenue by means of a straight-out land-values tax, without graduations or exemptions, irrespective of the value of the estate. Coincidentally, the building trade has employed more men, and more houses have gone up during the last few years than during any previous period.

Senator Senior - That would obtain where the land-values tax was not in operation.

Senator GRANT - That is not so. The method of rating upon land values only has been in force in suburban Sydney during the last five or six years only ; and it is to that period that I am referring.

Senator Millen - You will not suggest that that is the sole cause of the boom in Sydney?

Senator GRANT - Not altogether; but it has had a very good and generally beneficial effect. The municipal tax runs from 4d. to 6d., and has the effect of inducing owners to build ; but is not nearlyheavy enough to compel them to make the fullest use of the land. I am willing to accept this small measure, because it will have a good effect, and, at the same time, give us an ocular demonstration of its. ineffectiveness in bursting up large estates. It is difficult to make people believe a thing until they see it clearly demonstrated. Some persons think that a tax of 5 per cent, will be sufficient to completely destroy the whole selling value of land. On that argument a 2% per cent, tax ought to destroy half of its value, but it does nothing of the kind. A very much heavier tax is required. We require this tax to meet the ordinary expenses of government. We will, no doubt, get a fair amount through the Customs House, because the present Tariff is designed to produce revenue, in order that we shall not be called upon to impose more taxation upon the land-owners.

Senator Millen - Is that the purpose of this Tariff?

Senator GRANT - Certainly. The honorable senator knows that it is the purpose of all Tariffs. The Labour party, however, are not prepared to adopt the suggestions thrown out so persistently by the Age, the Argus, and the Daily Telegraph. Those newspapers have been most industriously endeavouring to impress upon the Senate and House of Representatives the necessity of placing duties on tea and kerosene. Why? Because they know full well that the duties would be paid by the public without a murmur. But I am pleased to say that they have no supporters in the Labour Ministry, and I hope very few in the Senate. A duty on tea would be a splendid way to get revenue; it would be a straight-out revenue tax. According to the latest figures available, in 1913 we imported in packages 400,367 lbs. , and in bulk 36,948,848 lbs., making a total of 37,349,215 lbs., of the total estimated value of £1,328,531. If we had a newspaper like the Age or the Argus or Daily Telegraph controlling the affairs of the Commonwealth, it would pounce upon the poor people and impose a rate of, probably, 6d. in the lb. on tea, which every citizen uses. Why should a man, because he drinks tea, or anything else, be called upon to pay to the revenue ? He is doing nobody any harm : it is his own business. If he is working honestly for his money he has a right to spend it as he thinks fit, so long as he does not interfere with other people; but when he invests his money in land, and prevents other people from working and producing, he is a fair subject for taxation.

Senator Senior - Do you really mean that if tea comes in free, whisky ought to come in free also?

Senator GRANT - I do, indeed. I would certainly vote for the removal of the Customs and Excise duties on whisky. I think it is a scandalous thing that, a man cannot go and buy what he wants. Some time ago I paid 7s. for a gallon of rum, on which I had to pay 14s. in Customs duty. Why should a man, because he buys rum or whisky, be called upon to pay a duty? We do not stop drinking by that method. It certainly means that a man will have to pay more for his whisky or rum, and, incidentally, it will produce a large amount of revenue. We all know that so long as the Treasury is full, there is not possible hope of imposing more taxation.

Senator Long - Did you not vote against the wet canteen ?

Senator GRANT - I did.

Senator Long - Yet you drink rum by the gallon.

Senator GRANT - I did not say that I drank rum; I only said that I bought a gallon of rum. It is frequently stated by those who are opposed to land-values taxation that it will be necessary byandby, when the Tariff has had its full effect. So far as I know, it has never been intended in any country, where a Protective Tariff has been imposed, that it should destroy the revenue derived from the importation of foreign-made goods. The main intention of all Tariffs is to get revenue. The idea that it is going to create employment,' and do all that kind of thing, is only an incidental matter.

Senator Guthrie - Make the Tariff prohibitory.

Senator GRANT - I do not think that the honorable senator is game to do that.

Senator Guthrie - I am.

Senator GRANT - In this country I have not heard a single politician who is game to stand up before his constituents and say, " I will exclude foreign-made goods," because the next question to ask a candidate is, " Where will you get your revenue? " My honorable friend could not get over a question of that kind.

If we keep out foreign-made goods, a Source of revenue is cut away, and then we are reduced to the position, that we must resort to direct land value taxation.

Senator Guthrie - Hear, hear! Why do you not become a prohibitionist?

Senator GRANT - Let the honorable senator try to put a prohibition ticket before the electors, and see how he will get on. He will find that the big and small land-holders, and those who hope to become land-holders, will soon realize that he is a very undesirable man to return, and will put him out without the slightest remorse.

Senator Keating - Do you say that the last Tariff proposals are revenue or protectionist ?

Senator GRANT - Revenue.

Senator Keating - I am glad to near that.

Senator GRANT - Furthermore, I say that all the Tariffs proposed by any of the States prior to Federation, and that all amendments of the Tariff made bv the Commonwealth Parliament, have been deliberately framed with the view of getting revenue.

Senator Senior - That is your opinion

Senator GRANT - That is the fact.

Senator Keating - This one is not a Protective Tariff ?

Senator GRANT - Certainly not. It is imposed with the view of getting revenue, so as to avoid the necessity of going to the land-owners for a bit more.

Senator Keating - I agree with you, and deplore it, but you do not.

Senator Senior - I do not agree with him, and I do not deplore it.

Senator GRANT - In the consideration of a question of this kind there is nothing like a few figures. In 1904, the Customs and Excise revenue for the Commonwealth was £8,811,174; in 1905, it was £8,639,245 ; while, in 1906, it was £9,251,005. In 1907 it was £10,859,396. The revenue was still going up, despite all the protests.

Senator Guthrie - So was the population, too.

Senator GRANT - Yes; but foreign goods were still coming here, the Treasury was full, and there was no necessity to impose more taxation.

Senator Bakhap - You will tell us presently that there should be no land taxation.

Senator GRANT - If the Opposition had their way, no doubt they would adopt the policy of the Age, and impose duties on tea and commodities of that kind. I am sure that they would never dream of asking the big land-holders to pay anything, but, on the contrary, would allow them to go free every time.

Senator Keating - They would adopt the policy of Protection ?

Senator GRANT - ;No. No Parliament in this country with Protectionist proclivities has ever been game to keep out foreign goods.

Senator Keating - We did, and your present Tariff is the Lyne Tariff of 1907, without variation.

Senator GRANT - These figures flatten out our opponents. They cannot get over me in that way. It is well for them to realize that their game is ur». The schoolmaster has been abroad. We are determined that in the future the landowners of this country shall bear the brunt of the taxation.

Senator Senior - Who is " We " ?

Senator GRANT - The Labour warty.

Senator Senior - You are not speaking for the party.

Senator GRANT - The honorable sena: tor may be an exception. The Labour movement to-day is determined that as time goes on the land-owner shall pay more and more towards the revenue of this country, and I challenge the honorable sena'tor or any other senator to deny it.

Senator Millen - I should like to be clear. Are you approving of this Tariff or not?

Senator GRANT - As the honorable senator knows, I am a member of the Caucus, and whatever decision is come to, that represents my opinion. The members of the Labour party are supposed to be the Caucus-bound party and to come in and vote solidly. How does it come to pass that honorable senators on the other side are of the same opinion every time the fate of the Government is involved ? It is well to recognise that in every Parliament the members of the so-called Liberal party have been just as caucus-bound in every respect as have been the members of the Labour party. If any member of the Liberal party dared to oppose his leader, what would follow ? The party would mark him out, and at the general election either they would refuse to select him, or, if he got through, they would fix him up.

Senator Guy - They turned down Colonel Cameron in Tasmania because he would not do it.

SenatorFindley. - And Sir Josiah Symon.

Senator GRANT - It is therefore well to recognise that there are two parties here, namely, one in favour of the working community - and that is the Labour party - and the other in favour of the land monopolist - and that is the Opposition. In 1908, notwithstanding the higher duties, the revenue from Customs and Excise was £11,126,039; in 1909 it was £11,115,251; and in 1910 it was £12,264,081.

Senator Gardiner - What bearing has that on the land tax?

Senator GRANT - I want to point out to honorable senators on the other side that the Customs Tariff is designed for the purpose of avoiding the necessity to impose land taxation.

Senator Millen - What you are doing is to make Senator Gardiner very uncomfortable.

Senator GRANT - No.

Senator Keating - You are making your colleagues feel very uncomfortable.

Senator Gardiner - I think that he is giving us all a bit of a shake.

Senator GRANT - In 1911 the revenue from Customs and Excise was £13,564,045. I have never heard Senator Guthrie say here that he was in favour of cutting away that revenue and imposing a prohibitory Tariff, nor did I ever hear any other honorable senator do so. In 1912 the revenue from Customs and Excise was £15,650,232, while in 1913 it was £15,087,356. It will be found that, no matter what may be said in support of this Tariff, it is like every other Tariff. It is one which will bring in a large amount of revenue.

Senator Pearce - I rise to order, sir. I am loath to interrupt the speech of the honorable senator, but I submit that his remarks concerning the Tariff are not relevant to a measure relating to land tax.

The PRESIDENT - I allowed the honorable senator considerable latitude, recognising that he is a comparatively new member of the Senate, and that the opportunities for a discussion of this kind have not been too frequent. However, now that my attention has been called to the matter, I must remind the honor able senator that a casual allusion to the Tariff, especially as an alternative policy to a land tax, or vice versa, is permissible, but he will not be in order in going into an extensive consideration of the Tariff, and I hope that he will not attempt to do so.

Senator GRANT - The point I wished to make was that the amount proposed to be obtained from the owners of estates over £5,000 in value will be necessary, because our expenses run into a good number of millions, and the Customs and Excise duties cannot be expected to produce more than about £16,000,000.

Senator O'Keefe - The Tariff will produce a lot less by the time we have done with it. We will make it more protective.

Senator GRANT - That is merely a theory, and it is just as well that the honorable senator should reserve remarks of that kind for elsewhere. It is too late in the day to make them here. Let him recognise that this is a high-revenue Tariff.

The PRESIDENT - I ask the honorable senator to observe my ruling and to leave alone the question of the Tariff.

Senator GRANT - My allusion was due to a remark by Senator O'Keefe.

Senator O'Keefe - I beg the honorable senator's pardon. I had no right to interject.

Senator GRANT - I have to congratulate the Ministry upon the introduction of this measure to get a little more from the land-owners of the Commonwealth. I hope that later on they will have developed sufficiently to ask the land-owners for still a little bit more. This is the only way to effect any real good. It is humiliating to know that a man may land at Port Phillip and be absolutely as free as if he were a native of the country, but that the moment he desires to make a home for himself he finds that every bit of land is already held. Before he can begin operations to found a home, or to cultivate the soil, he has to purchase at heavy cost the small bit of land he may wish to own. If the expectations of those who enthusiastically support this amendment of the Land Tax Act are realized, land in Australia will be a little cheaper. I sincerely hope that we shall not be disappointed in this regard, though I am afraid that we shall be. It is generally admitted that ' the existing land tax has not been effective in the bursting up of large estates. As time goes on, and there is a further application of the principle of land-values taxation, we may effect our object. I hope that it will fall to the lot of the present Ministry to bring forward a further measure of this taxation. I have no faith in any other form of taxation. I do not think that any other form is nearly so effective or so fair. The man who manufactures anything has a right to consider it his own property. But a man who acquires a piece of land may do nothing at all with it. He may leave the country and return in after years to find that its value has increased a hundredfold. It is no robbery of that man for the State to appropriate the whole of the added value given to the land by the community. Land is not raised in value by the fact that a house is built upon adjoining land, but by the fact that a number of people desire to use it. We might spend millions of pounds on land in the Falkland Islands, or in Terra del Fuego, but we should not, therefore, find competitors for the blocks next door. It is the desire of a number of people to possess a piece of land that gives it its value. The values of land in this country are due to the presence of the people, and when the people have given a value to land, it is no confiscation to ask the owner to return a substantial portion of that added value to the people who created it. Other remedies have been suggested by many people to improve the position of the workers of the country. They have all failed, and, in my opinion, they must continue to fail. To-day the unemployed difficulty is raising its head in New South Wales, Victoria, and in the other States. Why? It is because the people are shut off from the lands of the Commonwealth. Anything that can be done to give them access to the lands, should be done. This Bill is a step in the right direction. I am afraid that its effects will be microscopical, but as it is a step in the right direction I support the second reading.

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