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Thursday, 20 October 1910

Senator CLEMONS (Tasmania) . - I can quite understand and sympathise with the remarks with which Senator Millen yesterday opened a speech which was quite up to his usual high standard of effectiveness. The honorable senator referred to the hopelessness which oppressed him when called upon to discuss this measure in the Senate. Every member of the Senate must admit that for all practical purposes the position is hopeless. No one here believes for a moment that any suggestion by way of amendment will be accepted by the Government. We have had a clear indication of that, and if we did not know it we might be assured from the evidence we have of the feeling of the party whom the Government are leading in this legislation, and of what happened in another place, that it would be but idle folly to expect that any amendment of this Bill - at any rate, if moved from this side - would be accepted by the Government. Whilst I agree with Senator Millen in that statement of practical politics as regards the position in the Senate, I am inclined to think that outside it is not entirely hopeless. I admit that it may be regarded as hopeless if we consider but one section of the community which is drawn, I venture to say, from all sorts and conditions of men, who, through some pressure in life' s circumstances connected with their environment, have gradually become discouraged,. have gone from that condition to discontent, from discontent to envy, and then from envy to the final stage in their feelings represented by something like vindictiveness and a desire for revenge.

Senator Story - The position is very hopeful from their point of view.

Senator CLEMONS - I am speaking from our point of view. It may be hopeful from the point of view of men who derive a base gratification from any opportunities afforded them to indulge a feelingof revenge.

Senator Givens - I think the honorable senator is ascribing very base motives to a large section of the community.

Senator CLEMONS - I did' not say that the section to which I refer is a large section of the community ; but I did say that it is composed of all sorts and conditions of men. I have not said that it is composed only of men whom Senator Givens might specially describe as supporters of the Labour party. From the little experience I have had outside the Senate chamber, I am induced to believe that there is a thinking section of the community, including some who supported the Labour party at the last election, knowing that it was their intention to introduce ;i Land Tax Bill, and even because they intended to introduce such a measure, who view with disapproval, and, in some cases, almost with dismay, the particular form which this Bill has taken. I think I shall be able to prove that.

Senator McGregor - Do they think that it is not drastic enough?

Senator CLEMONS - If Senator McGregor will allow me, I shall give reasons which seem to me to be sufficient for the expression of that opinion. Let me consider the genesis of this Bill. It has arisen from a demand, adopted and approved, I venture to say, by every thinking man in the community, of whatever shade of politics, that it is desirable that land should be put to its best use in the interests of the community. That was a sound and proper beginning for this class of legislation. The next stage was that men asked themselves how they might bring about the putting of land to its best use. The answer promptly supplied by the majority of people was - by prompting closer settlement. The next stage in connexion with which some doubts arose was reached when it was stated that, in order to promote closer settlement we must burst up large estates. The final stage was arrived at when it was decided by the Labour party that, in order to burst up large estates they would introduce a Federal land tax. That, I think, is a fair statement of the case outside Parliament prior to this session.

Senator Rae - A very long time prior to this session.

Senator CLEMONS - I admit that; but that does not make the case any worse. I agreed with the first two stages to which I have referred many years ago.

Senator Guthrie - The honorable senator has omitted one stage - the purchase of big estates.

Senator CLEMONS - I remind honorable senators that the original demand was that land should be put to its best use. In the first instance no one bothered himself very much wilh the question whether land was held in large or small areas. The basis of the principle was that land, however held, should be put to its best use. I say at once, as a criticism of this Bill, that it ignores that principle altogether. It aims equally at all land throughout the Commonwealth, in whatever areas it may be held, and irrespective of the fact that it may be at present used in the most productive way possible. I do not think that any one can deny that, and, to that extent, the Bill fails. When we come to the bursting up of large estates by means of a Federal land tax, we are confronted with the fact that the- Labour party, in common with every other party that have had power, have, in the present instance, attempted to meet what they consider to be the wishes of, at any rate, a section of their supporters, and have brought in measures which meet with their approval, even if they do not meet with the approval of the general community. Honorable senators opposite have decided to attempt, under cover of our Federal powers, to burst up large estates by means of a land tax. Every member of the party knew that immediately that attempt was made, partial failure, at any rate, was absolutely certain. By partial failure, I mean to say that it was abundantly certain to' any man who knew the Constitution and our powers, that by imposing a Federal land tax grave and grossinjustice must necessarily be done in individual cases. To-day no one can deny that statement. I do not wish to cite personal instances, because I abhor the introduction of the personal equation into the Senate, and if, presently, I cite cases, they will at once be recognised as types to which hundreds of instances are known to conform. This is the position in which the Labour party found themselves when they sought to impose a Federal land tax. The main object is to burst up large estates. There was no question of the necessity of deriving revenue from this source raised at first. But to-day we are told that, although through the limitations of the Constitution, it is impossible to treat city and country lands differently, that the result will still be good, because we shall get revenue; and, further, we are told, and I regretted to hear it, that it is desirable that this revenue should be specially appropriated and positively earmarked for the purpose of defence. Diverging for a moment, I can remember an occasion in the Senate which, at the time, seemed to rae of considerable importance, when a proposition was introduced, not by a Labour Government, but by a Government to which I was opposed, which had for its object the ear -marking of certain specific duties of Customs to provide for old-age pensions. I remember with pleasure that, owing largely to the co-operation of Senator Turley and some other Queensland representatives of Labour, that proposition was defeated, although a majority of the representatives of Labour in the Senate supported it. I dare say that now every member of the Labour party agrees that it was very fortunate that it was defeated. Some members of the party, combining with honorable senators then in opposition to the Government, refused to allow old-age pensions to be paid for except from the general funds. I shall be extremely disappointed if I find to-day that any of those who rightly felt they were justified in objecting to the ear-marking of specific Customs duties for the payment of old-age pensions are prepared now to advocate that the enormous revenue which the Government will derive from this land tax shall be specially appropriated for purposes of defence.

Senator Givens - There is no such suggestion.

Senator McGregor - Nor was any such proposition embodied in the constitutional amendment to which Senator Clemons has referred.

Senator CLEMONS - I am perfectly willing to allow honorable senators who were here at the time to judge of the accuracy of my statement.

Senator Millen - The proof of its accuracy is that those who opposed that Bill were accused of opposing a Federal scheme of old-age pensions.

Senator McGregor - But there was no proposition to ear-mark the funds to be derived from those special duties.

Senator CLEMONS - The proposal emanated from a Government of which Senator McGregor was a supporter. I have not heard it stated specifically that the revenue which is derived from the proposed land tax will be devoted to defence purposes. But on more than one occasion I have heard it said, " What if we do get a revenue from the tax? We want it for defence purposes."

Senator Rae - Further, those who have property should pay for its protection.

Senator CLEMONS - That statement has been made, and it discloses a reason foi allocating in that way the money which will be collected under this Bill.

Senator Rae - It is a very sound view, too.

Senator CLEMONS - Personally, I think it is an utterly wrong view. But let me come back to the question of the revenue which will be derived from the tax. Seeing that under it a large revenue must be collected, the members of the Labour party have to defend that position. And, in defending it, to what are they committing themselves? To the proposition that in imposing taxation for revenue purposes we are justified in levying a tax which is equivalent to [OS. 1 in the £1 upon the income of a man who possesses a sufficiently large estate.

Senator E J RUSSELL (VICTORIA) - The honorable senator is assuming that he has a very large estate.

Senator CLEMONS - I am assuming that he is possessed of land the unimproved value of which is .£75,000 or upwards. In such circumstances, the tax would be 6d. in the £1 upon its capital value.

Senator E J RUSSELL (VICTORIA) - But the honorable senator spoke of " income."

Senator CLEMONS - It is a fair thing to assume that 5 per cent, net represents the return which the holders of large areas throughout the Commonwealth receive annually. Now 5 per cent, capitalized means jos. in the £1 on the income of these individuals. If a man is taxed at 6d. in the £1 upon the capital value of his property, it is equivalent to OS. 11 in the £1 on his income, assuming that his capital earns him 5 per cent. Under the Bill, landowners will be taxed in respect of the unimproved values of their land. It is clear, therefore, that upon estates valued at more than ,£75,000 the tax will be equivalent to 10s. in the £1 upon the income derived therefrom.

Senator Givens - Only on unimproved values in excess of £75,000.

Senator CLEMONS - I have already stated that. I was careful to say that I was referring to large estates the unimproved value of which was £75,000 and upwards.

Senator Givens - But persons reading the report of the honorable senator's speech in Hansard will be likely to misunderstand the position.

Senator CLEMONS - I cannot help that.

Senator E J RUSSELL (VICTORIA) - The honorable senator's intention may be to put the case clearly, but his .language does not give effect to his intention. It is a misrepresentation.

Senator CLEMONS - I am sorry if Senator E. J. Russell does not understand the position. I am endeavouring to make it quite clear.

Senator Rae - There will be very few tears shed over the man who is taxed on more than £75,000 worth of unimproved values.

Senator CLEMONS - It is that sort of expression which sometimes makes me despair of the future of Australia. Because a man is possessed of land the unimproved value of which exceeds £75,000, why should he be denied justice by being taxed at the rate of 10s. in the £1 upon his income?

Senator Sir Josiah Symon - And taxed only because he has £75,000 worth of land.

Senator Fraser - Although there may be a mortgage of .£65,000 upon it.

Senator CLEMONS - I intend to deal with this question exhaustively if I am permitted to do so. I do not suppose that any member of the Labour party will urge that this Bill, if it produces an enormous revenue, but fails to burst up large estates, can be a satisfactory one. I cannot believe that any member of the party can descend to such a. depth of vindictiveness. I credit its members with a desire to promote closer settlement. Consequently, I say that if an enormous revenue be raised under the Bill, and it does not succeed in bringing about closer settlement, they will have nothing upon which to congratulate themselves. It would be a poor thing to pour millions of pounds into the Treasury while leaving undone those things which honorable senators opposite wish to do. Under this Bill, what will happen? An enormous revenue will undoubtedly be raised from properties which cannot possibly be subdivided. In many instances pastoral properties are not susceptible of subdivision, whilst city properties cannot be thought of in that connexion. An attempt has been made to justify the introduction of the measure on the ground that it will produce revenue. But what honorable senator can justify imposing an income tax of 10s. in the £1, so far as the product of land is concerned? And, if he can justify it, how can he stop there? With what sense of propriety can anybody justify a tax of 10s. in the £1 upon income derived from land, - whilst leaving untouched the individual who possesses a large amount of personal property ?

Senator Givens - The land-owner can avoid paying the tax by subdividing his holding.

Senator CLEMONS - Senator Givens knows perfectly well that the persons who will evade this tax are those who it is not desirable should escape it. In Victoria frequent demands have been made for the imposition of the tax, because in the Western District of this State large areas are held by a few individuals. But what will happen in regard to those areas? Their owners can sell them.

Senator Fraser - Most of them have been sold already.

Senator CLEMONS - The men who own those areas will be able to sell in a ready and abundant market at prices which will amply satisfy them. But what will happen in the case of the poorer landowners who are engaged in pastoral pursuits and who cannot dispose of their holdings so readily? In many instances largo areas are held by individuals in places remote from railway communication and from other advantages which tend to make land saleable.

Senator Givens - In western Queensland there have been as many as 120 applications for a single grazing farm.

Senator CLEMONS - I dare say that many exceptions can be cited. But everybody knows that there are enormous tracts of country which are not saleable because of their distance from market, and because they are unlit to put to any purpose other than that to which they are being devoted.

Senator Rae - If they have no saleable value they will have no taxable value.

Senator CLEMONS - In many instances the taxable value will be about the price which the owners gave for them when they purchased from the Crown. I am speaking of land which was sold by the Government probably at £i per acre. These large areas will always remain unproductive unless they continue to be worked as they are being worked at the present time. If they are cut up their value will diminish. There are many properties ranging from 40,000 to 80,000 acres in area, which, if cut up to-day, would not realize per acre what they are worth in the block. Yet under the proposed tax the holders of such properties, who are usually men who deserve well of the community because of their enterprise and pluck, and who have certainly never made much money out of their ventures, will, if their lands be mortgaged to any considerable extent, be absolutely ruined. On the other hand, the holders of free property will have their incomes considerably reduced - reduced to the extent of from 4s. to 10s. in the £1. In their frantic endeavours to promote closer settlement and to smash up large estates, the Government and the Labour party do not hesitate to overwhelm with ruin hundreds - perhaps thousands - of absolutely innocent men - men who have committed no offence against the community and who are employing as much labour as their' land can employ. These men have evidenced a measure of enterprise and pluck which, I venture to say, is not possessed by many of us. I come now to the case of city lands. No member of the Labour party can justify this tax in regard to city properties.

Senator Givens - Why not?

Senator CLEMONS - Because, in the first place, those properties have nothing whatever to do with closer settlement.

Senator Givens - But why should they not be taxed from a revenue point of view ?

Senator CLEMONS - I hope that no honorable senator will attempt to justify from a revenue point of view a tax which runs up to 10s. in the £1 upon a man's income.

Senator Givens - Upon values that the public themselves have created.

Senator CLEMONS - Large sums of money are invested in city properties in Sydney and Melbourne which produce a return of only 5 per cent. Any man of business will admit that. Huge sums have been invested in city properties with the full knowledge that the investor would not get more than 5 per cent, on his money.

Senator Sir Josiah Symon - And they are very glad to get it.

Senator CLEMONS - Exactly. That being so, I repeat that when the unimproved value of a man's property reaches £75,000 or more, this tax will be equivalent to 10s. in the £1 upon his income.

Senator Givens - Not upon his income, but upon his income from property the unimproved value of which exceeds £75,000.

Senator CLEMONS - Senator Givens may quibble, but I am quite satisfied with the accuracy of my statement. But I do not want to limit myself to 10s. I will come down to one-half that amount. Is there any member of the Labour party who would advocate an income tax - except where the income is derived from land - of 5s. in the £1 ?

Senator Givens - Yes ; if the value had been created by the public, and not by the exertion of the person enjoying the income.

Senator CLEMONS - I was prepared to hear the cry about the unearned increment. But does Senator Givens imagine that by the imposition of this tax he can recover the unearned increment from the man who got it ? The man who had the unearned increment yesterday has put it in his pocket, and gone. What unearned increment has the man who has recently purchased ?

Senator Rae - We must start some time.

Senator Keating - The honorable senator must not forget municipal taxation also.

Senator CLEMONS - I do not. Many of us can sympathize with the desire to get the unearned increment for the community. But will this Bill do that?

Senator Sir Josiah Symon - The Bill gets it from the wrong man.

Senator CLEMONS - The Bill does not get it at all. I cannot suppose that any man in the Labour party wants to get the unearned increment from the man who has not got it, and never had a penny of it. If they were to say, " We are going to tax certain properties in such a way as will secure the unearned increment for the community," many persons would have sympathy with them. But every one knows that they are not going to get the unearned increment from the man who has really enjoyed it, but that, on the contrary, in order to get it from a very few, they are going to do a gross injustice to very many sections of the community.

Senator Rae - We are going to get it from all future land-holders.

Senator CLEMONS - Mr. Lloyd-George, in England, has shown the way to get at the unearned increment. German legislation has also shown how to get at it. But this Bill does not attempt to get at the unearned increment in the manner indicated in Great Britain to-day, or in the manner that has been pursued in Germany for many years. There is no man in the Labour party who can point to any part of this Bill, and say that it affords a means of getting at the unearned increment. Suppose that any member of the Labour party were sole dictator in the State from which he comes. Is this the kind of Bill he would introduce for the purpose of getting at the unearned increment?

Senator Rae - We must be governed by circumstances.

Senator CLEMONS - Yes; and I wish to be governed by circumstances; and the circumstances with which we are faced now are that if you impose this land tax while to a certain extent you may say you are promoting closer settlement, yet at the same time you are inevitably committing flagrant injustice against individuals. How far are we to go in sacrificing the individual for the sake of the community? I have heard of persons who have said of a certain course of conduct, " This is my own risk ; it is the right thing to do, and I am determined to do it regardless of consequences." But when a man said that, it was his own risk. To-day, however, the Labour party are saying, " We will impose this tax at all risks," whilst the risk is borne by the man who, under the sanction of the law, has invested his own money in land.

Senator Needham - The man who has hitherto made the profits.

Senator CLEMONS - I am not now dealing with those cases to which this Bill may particularly apply - and to which, perhaps, under certain conditions, it will rightly apply; I am not now dealing with men in the Western District of Victoria. But I say that you are going to inflict the grossest injustice upon a large section of the community who have, done no wrong, and the injury to whom will in no way contribute towards the promotion of the policy which the Labour party have in view. I say unhesitatingly that if we were to have a land tax in Australia, it would have been infinitely better for the Labour party to propose a referendum to the people, having for its object to secure freedom for the Federal authority to impose taxation on land in the manner it thought best. Every one knows that we are cramped and hampered at present. It is because we are cramped and hampered that these injustices are going to follow. Infinitely better would it have been for the Labour party to have faced this problem fairly and squarely, having regard to those elementary principles of justice of which we must always be regardful. It would have been better had they said, " We want to impose a land tax in this community on lines that every one of us thinks fair " ; and there is no one man in the Labour party to-day who, if he had the latitude, would have dreamed of framing a Bill at all comparable with this one. I venture to say that if the Government were perfectly free the provisions of this measure would be divergent in many directions.

Senator Rae - Is there a member of the honorable senator's party who would have helped us to get through a Bill to provide for such a referendum?

Senator CLEMONS - Does Senator Rae think that his party want any help from us? They are at the present time passing through Parliament Referendum Bills dealing with vital and serious questions - questions quite as large and important as the imposition of a land tax, and with which they desire to deal untrammeled by any hampering sections pf the Constitution. If they are not afraid to submit proposals for referenda on such subjects, they are not at all in need of our assistance in submitting a proposal for a referendum for the purpose of imposing a land tax. I want now, since I am dealing with cases of hardship, to point to one or two more, such as I suppose every member of the Labour party knows about, though I do not think that the general public know about them at present. The question, as it affects the mortgagor, is notorious. I do not want to give an individual case, but I shall give a type. Take this one. I admit that it concerns a man holding a large area of land, but the large land-holder is just as much entitled to justice as the man who owns a cottage. If that principle were not generally recognised we might despair for this Commonwealth. Take the case of a man who has ,£40,000 of his own money, and who thinks that he is better equipped for carrying on pastoral pursuits than for any other occupation in lite. Suppose that he has bought a property worth £120,000, a case quite common in business transactions to-day. Any such man, if he is any sort of a man at all, in respect of his personal character, with a properly fairly worth £120,000 to the satisfaction of an intending lender, could readily raise a loan of , £80,000 at a reasonable rate of interest - say, at from 4½ to 5 per cent.

Senator FRASER (VICTORIA) - 4 per cent., sometimes.

Senator CLEMONS - At any rate, such a case is typical. There are many such in Australia. Under this proposed land tax, that man would practically be ruined, and of his £40,000 hardly anything would be left. Let me give the details. Assuming that he makes on an average 5 per cent. on his £40,000, his income from that source would be £2,000 a year. Of this total income, after he had paid his land tax, there would be left to him only a few hundred pounds.

Senator E J RUSSELL (VICTORIA) - What tax would he pay ?

Senator CLEMONS - He would pay £1,593on £100,000, and 20,000 sixpences in addition - that is, £500 - making the total payment £2,093.

Senator E J RUSSELL (VICTORIA) - Can the honorable senator give the average rate of taxation ?

Senator CLEMONS - I am not dealing with the average rate. I admit at once that with regard to the lower values - up to £40,000 - this tax, though it is a very stiff revenue tax, is not confiscatory. Though it is extremely hard, and, from my point of view, unfair, it is not confiscatory. Let me show how the matter works out, however, in the typical case I have taken. I haveassumed that the man has put £40,000 into an estate worth £120,000, and that he has borrowed £80,000 at 5 per cent. I have to assume that he makes something for himself on that £80,000. Otherwise he would not borrow it.I assume that he makes 1 per cent. on the £80,000. In other words, I credit the man with making 5 per cent. on his own £40,000 - £2,000 a year - and 1 per cent. for himself onthe £80,000 - £800 a year. That is to say, he makes a total income of £2,800 a year. If I have not put the case fairly let any honorable senator opposite use his own judgment, and show how I have overstated it. I have made my own investigations, and believe that I have put a typical case with approximate accuracy.

Senator Rae - Does the honorable senator say that 1 per cent. is a fair rate of interest for the borrower to make for himself on the £80,000?

Senator CLEMONS - Sometimes he would not make as much.

Senator Rae - Sometimes much more.

Senator CLEMONS - But we must deal with these matters by taking a long term: of years, making due allowance for bad seasons and bad prices, as well as for good times.

Senator Givens - It would not do to generalize from one year's experience.

Senator CLEMONS - I am not so generalizing. As far as I can ascertain the facts what 1 have given is an accurate statement of a typical case. I assume, therefore, that the man has been making a revenue of , £2,800. Now, this land tax comes along and takes from him £2,093. Therefore, his position is that, instead of getting an income of £2,800 he is left with rather less than £800 per annum ; and that is going to represent to him his interest on the £40,000 which he has invested, as well as the risk he has taken in borrowing the £80,000. As far as his capital is concerned what happens? Capitalize his income, as any fair accountant would do, at 5 per cent., and it will be seen that the value remaining to him is twenty times , £800, or , £16,000. He has put into the estate £40,000 under the sanction of the law. No one could say that he did anything wrong. Yet by the operation of this tax his capital is at once reduced to £16,000, and his income to less than , £800 a year.

Senator O'Keefe - The honorable senator will admit that the Bill will serve one purpose. It will serve the intended purpose of preventing large aggregations of land, because, in such a case, a man would think it better to be satisfied with an estate worth £40,000 rather than take on the responsibility for one worth £120,000.

Senator CLEMONS - I do not indorse the honorable senator's statement with regard to aggregation. I say that it is a fair and right thing that land should be put to its best use. But I also say that a man with 100,000 acres can, in some instances, put his land to just as good use as in other instances can a man with 1,000 acres.

Senator Rae - Very seldom.

Senator CLEMONS - I admit that there are instances where land-owners have not put their land to good use. I could cite many instances myself. But I also know of large areas which have been put to the best use.

Senator O'Keefe - There are many instances where land-owners are putting their land to hardly any use at all.

Senator CLEMONS - I have already admitted that half-a-dozen times over, and will admit again, for Senator O'Keefe's special benefit, that there are notoriously bad cases in Australia. If it had not been so we should not have had the agitation as the result of which this Bill has been introduced. But, at the same time, I say that by means of this Bill the Government are doing flagrant injustice to many men who have behaved admirably as citizens, and against whom you cannot say a word.

Senator O'Keefe - That is purely a matter of opinion.

Senator CLEMONS - No; it is just as much a matter of fact as that under this Bill you will get at some men who have been keeping land out of its best use.

Senator Millen - City lands.

Senator CLEMONS - How can any honorable senator defend the taxation of city lands? Take a block in Collins-street which is worth ,£20,000 or £[40,000, and on which there is a building that cost £300,000. Typical instances of that sort can be found anywhere. This idea of putting land to its best use must go by the board at once when you come to deal with city lands ; and you fall back on one thing, and that is revenue.

Senator de Largie - Could we exempt such areas?

Senator CLEMONS - No; but are you justified in using such a wholly inefficient measure as this, in using the limited opportunities conferred upon you by the Constitution ?

Senator Ready - Will the honorable senator help us to alter the Constitution?

Senator CLEMONS - I have already said that infinitely sooner would I prefer to see the Labour party go to the people and say, " We want to impose a land tax which will do all that we told you we desire to do - that is, promote closer settlement, and at the same time enable us to carry out that policy without committing flagrant acts of injustice."

Senator Ready - Will the honorable senator help us?

Senator CLEMONS - The honorable senator can get his help. from whatever source he likes. Whether I help in that direction or not has nothing to do with my statement.

Senator Rae - We do not admit that this measure will do any injustice.

Senator CLEMONS - No ; I do not suppose that you do.

Senator E J RUSSELL (VICTORIA) - Take, as a typical Collins-street block, a piece of land which is let by the owner on a building lease at an annual rental of ,£40 per foot. Is that the man whom the honorable senator is begging for? Surely not.

Senator CLEMONS - What concern have I with that? I think that the effect of this land tax on city properties will be to make rents dearer. What owner of city property, as soon as an opportunity occurs, will fail to put up his rent?

Senator Millen - lt is being done in Sydney now.

Senator CLEMONS - Every time a lease falls in, it will be done at once.

Senator Givens - Doe"! the honorable senator mean to tell me that land-owners have been philanthropists in the past, and have not exacted the last farthing which they could get?

Senator CLEMONS - The interjection is, I think, irrelevant. With regard to city properties, that result is absolutely inevitable. What man with the slightest idea of business fails to recognise that, as soon as the owner of a property finds that a large amount is taken from the interest on his investment, he will say to his tenant, ""You must pay more rent."

Senator Rae - How will you, at the same time, ruin the man ?

Senator CLEMONS - I have never said that, under this Bill, you will ruin any owner of city property; but I have said that it will impose a heavier burden in the way of rent on all occupiers of city properties. The man whom my honorable friends are going to ruin by this legislation is the pioneer - the man who is far distant from any settlement, and is operating poor land. The worst feature of this measure is that the man who has rich land has that avenue of escape which my honorable friends have always said that he has ; he can sell out. But the man who is working poor land has no such opportunity.

Senator Needham - He has an exemption of £[5,000.

Senator CLEMONS - I am not dealing with that question, nor do I wish to deal with an irrelevant interjection. Every one knows the conditions of the mortgagor. Let me now take another case of hardship, of which possibly people do not know, and! that is the case of a lessor. I know that the Bill contains a strange provision that, in imposing the tax, some method of apportionment as to the estates of the lessee and the lessor shall be prescribed by regulation. That means that a certain proportion of the tax will be paid by the lessee; and I feel perfectly certain that it will be a very small amount. Take the condition of a lessor. I know of many a man who has invested his money in land, either agricultural, or pastoral, or city. Such a man may have granted a lease to a lessee for a long term of years. In many cases, leases for ten or twenty-one years have been granted. Remembering their original demand, the Labour party say, " We must promote closer settlement by splitting up the property." That cannot be done in such a case, because the lessee has his rights for a term, and the owner has no legal possibility of splitting up the estate. So long as the lease continues he has to pay the tax. That is' a case of Hardship which the Bill does not contemplate. It actually ignores the fact that none of the things which you desire to accomplish under this legislation can be brought about in that case, except the one - the raising of revenue. And if the estate is large, you will be raising revenue at a rate which is abhorrent to every civilized community, except in the time of war. and which I am sorry to say is in many cases vindictive. There is no escape for the lessor, and there is no possibility of the Bill bringing about what you say is desirable, and that is the splitting up of his estate.

Senator Fraser - It may be that the lease will expire when this Bill is passed.

Senator CLEMONS - We have no power to determine a lease, or to interfere with a legal contract. So far as I know the history of land taxation in the world, and the procedure of civilized Parliaments, this is the one and only case where a Parliament has been asked to impose a tax without having the power to legislate with regard to the tenure of land. That is the extraordinary position in which we are. We have deliberately taken upon ourselves to deal in a most drastic fashion with land, though we know that we have no power to do anything with regard to its tenure.

Senator Needham - A few \ears ago Mr. Deakin said that we had the power.

Senator CLEMONS - I can hardly believe that Mr. Deakin would make that statement. Surely the honorable senator knows that in the Constitution we have no power to deal with the question of land legislation or tenure.

Senator Givens - Except through our power of taxation.

Senator CLEMONS - Does the power of taxation touch the question^ of land tenure or land legislation?

Senator Givens - Yes. It gives a great deal of power.

Senator CLEMONS - If it does, it touches those questions in the most reprehensible way that we can touch anything.

Senator Givens - That is a matter of opinion, but it does give us power.

Senator CLEMONS - There is one other point which I wish to bring under the notice of those who are supporting this land tax so whole-heartedly, and that is clause 10, or what is known as the aggregation clause. I wonder if any man can justify it. Take the case of a professional man living in a city, who chooses to own the office in which he carries on his profession, and the house in which he lives, and who has thought fit to invest the money he has made in agricultural land or in pastoral land, or, as in a certain case which I know of, in potato land. I have in my mind a case where a certain amount was invested by a man who professionally had made a great deal in land which was being put to the best possible purpose. It was cultivated most highly, and I can assure the Senate that it was employing every man it possibly could employ profitably.

Senator Givens - Was he cultivating the land and producing the potatoes himself?

Senator CLEMONS - No, but his money was employed in that work". Why does the honorable senator ask me that question ?

Senator Givens - Because it discloses a system of landlordism which this Parliament must put down.

Senator CLEMONS - If the honorable senator is going that far, I cannot follow him.

Senator Millen - This Parliament can only stop that system by confiscating the land.

Senator Givens - We were driven out of the Old World by the landlords.

Senator CLEMONS - These interjections may be «very illuminative, but I am now dealing with the case of a man who has carried on a business under the full sanction of the law, and who has done nothing for which, from my point of view, he need be ashamed. Surely such a man has committed no offence against the community, and yet he, under the operation of the aggregation clause, may easily be taxed up to 6d. in the if the aggregation of his properties represent that amount. In what sense has he' offended, and why should he be penalized? I ask any honorable senator whether, if he were a dictator in his own State, he would for a moment think of imposing such taxation?

Senator Rae - If dictator, I should certainly put in that clause.

Senator CLEMONS - I cannot understand why. I can only say that the honorable senator would enact such a clause in order to tax a man with tremendous weight on his income from land. If a tax of 10s. in the £1 can be justified I have no more to say, but when you get in times of peace to that point you get very near confiscation of land. I wonder what they would say if 10d. in the £1 was taken off a working man's wages.

Senator Rae - He is taxed. I am taxed on the bit of tobacco I smoke.

Senator CLEMONS - I do not call the honorable senator a working man. I am dealing with a person who has not his present good income.

Senator Givens - Take a man who is earning £2 a week, and smokes. From him a great deal more than 10d. in the £1 is taken.

Senator CLEMONS - He is not obliged to smoke, nor am I, or the honorable senator.

Senator Givens - Nor are the big landlords obliged to hold land.

Senator CLEMONS - I do not want to be diverged into the question of the taxation of tobacco. The honorable senator knows that I have always held that narcotics and stimulants ought to be taxed, because they are luxuries which approach a vice. I do not wish to go into the details of the Bill now, as there will be ample opportunity in Committee. I desire to refer to a matter about which I think there is a good deal of unnecessary class feeling, and that is the question of the absentee. He is defined as a man who is not in Australia. What is the origin of this desire to tax absentees? Was it not that some of us thought that a man who had made a lot of money in Australia and was spending it elsewhere ought to pay ?

Senator Rae - Hear, hear. We are the great party to encourage immigration. We want to bring him back.

Senator CLEMONS - I do not desire any irrelevant interjections. When the various States decided to tax absentees they had in their minds the case of a man who had made a lot of money here and was spending it elsewhere. But what does this Bill propose to do? It taxes with extreme violence the man who has never been here, but who has had the presumption to invest money here.

Senator Rae - He is a worse instance.

Senator CLEMONS - One does get very strange interjections. I suppose that the honorable senator will be prepared to follow up that remark and say that all capital should be shut out of .Australia; that it is a bad thing for Australia that capital ever came here, and that it will be a good thing if capital never comes to this country to be invested in enterprise whether on land or otherwise.

Senator Rae - These people take capital out of Australia.

Senator CLEMONS - I present Senator Rae with those views, and I should be very sorry indeed to believe that they are shared by many members of his party.

Senator Rae - The honorable senator has no right to say that they are my views.

Senator CLEMONS - The honorable senator has already said that he does not want the capitalist here, nor do the framers of the Bill, because it practically says to every man in the United Kingdom, " If you venture to invest money in land in Australia you will be penalized id. in the £1 more than any one else, and, of course, if it exceeds £75,000 you will pay ;d. in the £1"

Senator Needham - When this Bill goes through, people in Australia will put their industry into the land, and we shall not need foreign capital.

Senator CLEMONS - Australia would be in a very bad way to-day if it had had to depend in the past upon the capital owned by residents for its development. With all the evils which the Labour party may say are attendant upon it, it must be recognised that the influx of capital in bygone days to Australia is what made its prosperity. The proof of that is evidenced everywhere, and it is a very poor return to say now to the men who have invested their capital in Australia that we intend to tax them at this rate, and to do it at once. In this Bill they are given no opportunity to protect themselves. Surely it would be but an ordinary honorable business proposition to say to those who have invested their money here, as 1" contend, largely for the benefit of Australia, ' ' We do not want any more of your money, you must take it out of the country, or we will tax it, and we now give you Fair notice." This Bill gives them no fairotice. It proceeds to confiscate at once. So far as the future is concerned, it says to such men, " You cannot invest your capital here, or, if you do, this is what you will have to pay." This Bill will absolutely deter any future influx of capital into Australia, whether for the benefit of this country or not. That will be the inevitable result of this legislation. Much as I object to the measure because of its many harsh provisions, I feel more strongly when I consider what its effect is likely to be. Already I see, and I hate to see it, evident signs of class warfare in Australia, [f there is a country on the face of the earth where English is spoken to-day from which that feeling should be absent, surely it is Australia. Can any member of the Labour party wonder if such feelings should arise here?

Senator Rae - Not a bit.

Senator CLEMONS - I pay no attention to Senator Rae, who, on a matter of this sort, adopts an attitude either of levity or open vindictiveness. Surely the honorable senator has not descended to such a level as to justify a class war in Australia? Surely the honorable senator does not think that a war of that sort can do any goo4 to either side ? I hope we are all of opinion that that kind of thing is utterly degrading. No Labour man can indulge in a warfare with other classes of the community and hope to derive any benefit from it, and I venture to say that no member of the other classes in the community could take part in a warfare of that kind without feeling ashamed of himself.

Senator Needham - This is only the honorable senator's interpretation of the Bill.

Senator CLEMONS - I say that everywhere it is promoting the feelings to which I have referred.

Senator O'Keefe - According to the honorable senator's idea, the majority of the electors ought to be ashamed of themselves.

Senator CLEMONS - No.; I think that the majority of them do not understand what this Bill is, and I think, also, that many of the electors who within the last few weeks have begun to realize what is proposed in this Bill, and the injustice it will promote, are ashamed of it.

Senator O'Keefe - The honorable senator cannot prove that.

Senator CLEMONS - Of course, I cannot prove a thing of that kind, and I am not going to try.

Senator O'Keefe - The honorable senator can only prove that the electors returned a majority of both Houses of this Parliament pledged to this legislation.

Senator CLEMONS - What is the value of a statement of that kind ?

Senator O'Keefe - It is as valuable as the statement the honorable senator has made.

Senator CLEMONS - What is the value of a statement that the majority of the electors returned any party to pass the Bill which is now before the Senate? Surely no honorable senator can make a statement of that kind and expect it to be taken literally ?

Senator O'Keefe - Why not?

Senator CLEMONS - The reason is obvious. Did a majority of the electors know anything of the provision in this Bill in regard to mortgages?

Senator Barker - They knew the principles of the Bill to be proposed.

Senator CLEMONS - Every member of this Senate knows that there is a wide difference between the principles and details of a Bill. I venture to say that a very large section of the electors, if not a majority of them, never contemplated that this Bill would be applied to city properties. I have no hesitation in saying that, while I admit that a great many believed that it was intended by such legislation to promote closer settlement-

Senator Needham - The honorable senator might just as well say that no Bill that has ever come before Parliament has been understood by the electors.

Senator CLEMONS - I should not say anything of the sort. There is an enormous difference between the scope of this Bill and that of an ordinary Bill which embodies a simple principle.

Senator Needham - This Bill embodies the principle on which we consulted the electors.

Senator CLEMONS - My criticism of this Bill is that it contains no principle. It violates every principle. It contains no principle, except it be the principle of fining some one else, and it miscalls the fine " taxation." Behind all this there is something which I may be allowed to say, because I feel it very strongly, and that is that the Bill is going to promote a certain amount of class feeling and hatred.

Senator O'Keefe - No.

Senator CLEMONS - It has promoted it already. I may be contradicted, but I am certain that events will show that what I say is correct. The reason is obvious, because it will inflict injustice upon many in the community. We cannot expect that men will sit down quietly and submit to a Bill which will have the effect of reducing an income of £2,800 to £800

Senator Needham - Others are languishing for an opportunity to derive an income from the land. The honorable senator does not see that side.

Senator CLEMONS - That is no answer to my statement. A rankling sense of resentment against injustice will be created from individual instances of hardship, and I say advisedly that this will be shown not merely by those who are going to suffer under this Bill.

Senator E J RUSSELL (VICTORIA) - What about the injustice of telling a worker that smoking is a luxury?

Senator Millen - The honorable senator will find that statement made in the Government pamphlet that I quoted yesterday.

Senator E J RUSSELL (VICTORIA) - Then I am as sorry for the Government as I am for the honorable senator.

Senator CLEMONS - What has the honorable senator's interjection to do with the matter now under discussion? Am I to be regarded as having committed a crime if I suggest that the use of narcotics and stimulants is an indulgence in a luxury which borders on a vice?

Senator E J RUSSELL (VICTORIA) - I wished only to show that the class struggle has already commenced.

Senator CLEMONS - The taxation of tobacco is not a question of a class struggle, and I do not wish to be diverted by such an interruption. These irrelevant interjections do not tend to orderly debate.

Senator Needham - Then the honorable senator should not make accusations.

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