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Tuesday, 25 October 1910

Senator CHATAWAY (Queensland) . - I do not know whether the Government are willing to consent to an adjournment of the debate.

Senator McGregor - No; we must finish the discussion to-night. The honorable senator can say what he wishes to say in Committee.

Senator CHATAWAY - There are several matters to which I desire to direct attention. The first is that, to my mind, the Bill violates the Constitution, under which there is a sort of agreement that until this Parliament has exhausted all methods of indirect taxation it will not resort to direct taxation to add to the revenue of the Commonwealth.

Senator McGregor - Where is that agreement to be found?

Senator CHATAWAY - In a book called " 7'/ie Coming Commonwealth:' by Robert Randolph Garran, B.A., which was published in 1897, we have probably the best summary of what a Commonwealth Constitution ought to be. That volume was published in a comparatively cheap form. A copy of it was forwarded to every newspaper throughout the Commonwealth, and it was used largely as. a text-book in the framing of the Constitution. I venture to say that nearly all the arguments which were advanced by the newspapers in favour of Federation were founded upon it. Upon page 67 of that publication the writer, in arguing what the Commonwealth should do, says -

It has exclusive control of Customs, the States being forbidden to levy import or export duties; and it is from this source that the bulk of the Federal revenue is derived.

After citing the cases of Germany, Austria, and other countries which the Acting Prime Minister has cited, the author says, on page 158-

We have also seen that the Federal Government ought to have power to raise revenue by any kind of taxation, direct or indirect; that, as regards direct taxes, the powers of the Federal and provincial Governments must be concurrent, though the Federal Government is not likely to resort to direct taxation except in an emergency ; but that the power to raise revenue by Customs and Excise must be given exclusively to the Federal Government, and forbidden to the States.

That exactly follows on the lines of the American Constitution. I am only a layman, but if my honorable friends will study the development of the American law they will find that where it was found necessary for the establishment of the national safety they were allowed to impose direct taxation, but when later the national stability was fully established the Supreme Court said that they had no right then to interfere with direct taxation. That was the text-book which went into every little newspaper office throughout Australia, and from which I venture to say those newspapers preached the doctrine that the people could afford to federate because the Federation would have the right to levy indirect taxation, and only in a national emergency would it deal with direct taxation such as a land or income tax. If my honorable friends want to alter the bargain let them say to the people of Australia plainly and plumply, " We propose to alter the bargain under which you federated." But do not let them hedge their taxation proposal round with stories that they want to break up estates or need more revenue and so forth. What do they propose to do now? Amongst other things they told the people before Federation that one of the_ most urgent things to be done was to separate the State and Federal finances. They pointed out how in Canada, America, Germany, and Switzerland that separation was made as soon as possible. It was represented that at the end of ten years, that is, after the expiration of the Braddon "blot," the State and Federal finances could be separated, but what do the Government propose now to do? They say, " We want to separate the finances. We want money." That is one story. At the same time they give the States about £6,000,000 a year out of the revenue from indirect taxation, and then come to us and say that they want one or two or three millions, or whatever they can get by direct taxation. I venture to say that never before were the State and Commonwealth finances mixed up more perniciously than is proposed in this measure. The Government are asking the States to give the Commonwealth out of the field of their taxation a million, or, as Senator McGregor said, two or three millions, while at the same time the Commonwealth is giving the States money out of the indirect taxation. That is not what was contemplated. The idea prior to Federation was that as soon as possible the State and Federal finances should be separated, but the Government are proceeding in exactly the opposite direction. Not only are they not attempting to separate the finances, but they are mixing them up in the most awkward way possible. That is an arrangement which I think must lead to very awkward complications in the not far distant future. I have proved the falsity of the argument as regards raising revenue by showing that it is intended to give away far more money than is to be raised under this measure. Amongst the other argu ments used in favour of this land tax was one used by Mr. Fisher in the wonderful manifesto which was issued at the time of the general election, being signed by that gentleman, and countersigned by Mr. Watkins, and which I admit has been repudiated by several members of the Labour party. It pointed out that it was unreasonable that 50s. per head should he raised by indirect taxation, and practically nothing by direct taxation. I ask my honorable friends what that meant ? Was it a promise to the people that those who paid indirect taxation should be relieved of a certain amount, and that that amount should be raised by direct taxation in the form of a land tax? Mr. Fisher said that 50s. per head was too much to raise by indirect taxation, and that, therefore, they must have direct taxation. I ask my honorable friends opposite, " Is there any proposal before the country to reduce the 50s. per head? No. All that they propose to do is to increase the taxation. I think it was Kipling who wrote about " flannelled fools and muddied oafs " in connexion with sport. I venture to remark, with all due respect, to my honorable friends on the other side, that there are "flannelled fools and muddied oafs " in connexion with Australian and national finance. It has been most marvellous how nearly every one of them, except probably a Minister and an offsider, has remained away while this question has been under discussion. They have stopped out of the chamber so that they could not hear, or so that they would not interject, while honorable senators on this side were criticising the Government policy.

Senator Needham - Will you look at your own benches and say how" many senators are listening to you? Two.

Senator CHATAWAY - My honorable friends on this side agree with me, I am not criticising them. I venture to say that if I made any criticisms I am entitled to be heard from the other side. I am pointing out that the Government have not attempted in any way to meet the point made by Mr. Fisher in his speech at Gympie in 1909, when he argued that you must reduce the indirect taxation of 50s. per head, and impose a direct tax in order to afford that relief. No such proposal has been made. The Government do not say, " We are going to take the taxation off somebody else," but they say, " There is somebody to be taxed, and we are going to tax him."-

They remind me very much of Mrs. Browning's lover who, when referring to the man who wanted the girl's heart, said - ...... do you know,

You have asked for this wonderful thing As a child might have asked for a toy ;

Demanding what others have died to win With the reckless dash of a boy.

The Government came down here without knowing whether this Bill will raise one or two or three millions. They ask us to give them authority to start a machine which may be a machine of ordinary taxation or a machine of oppression, and when we say that it may produce a revenue of two millions, the Minister merely says, " Oh, if it produces not one but two or three or four millions, all the better." That is the sort of finance that we get from the Labour party which was supposed to be high above anything the ordinary deadly Conservative could think of. They do not care whether the land tax will produce one or two or three millions. All that they say is, " The more it produces, the better." May I remind them that far greater statesmen than even my friend Senator McGregor have said that the greatest statesmanship so far as finance is concerned is that which will take the least possible amount out of the pockets of the people in order to carry on the business of the country. On one occasion when Senator Pearce was speaking on the land tax proposal from this side of the chamber. I asked, " How much do you expect to get out of the tax?" and he replied, "£1,000,000." The Government have stuck to that estimate ever since, but they have never made a serious effort to find how much the tax will actually realize. Senator McGregor simply says that if they get more than £1,000,000, so much the better. I venture to say that on both the points to which I have referred the Government have made a serious mistake in the eyes of the country. They have shown that they are absolutely incapable of dealing with the proposition which they are handling. I recognise that hard cases make bad law, and am not disposed to discuss whether Jones, Brown, or Robinson will be harshly dealt with under this Bill. It is equally true, however, that bad laws make hard cases. I shall deal with the subject from the broadest possible point of view - as it applies not to individuals, but to the actual government of the country. Probably my honorable friends have not realized that when they deal with land taxation they are dealing with a tremendous number of very different instances. For instance, there are land taxes in Victoria and New South Wales. There is an idea that the proceeds of those taxes will not be seriously affected by this Bill. But I doubt that statement. The last available figures show that the New South Wales land tax produced £80,794; but the land rates in New South, Wales produced £800,000. In Victoria the land tax produced only £85,559;butthe land rates produced £902,741. Queensland has no land tax. She is regarded as a perfect horror by supporters of this Bill. But the land rates of Queensland produced £436,344, which is more than half the produce of the land rates of New South Wales. Seeing that Queensland has only one-third of the population of that State, she is, I think, not doing too badly. In South Australia the land tax produced £92,158, and the land rates produced £187,000. In Western Australia the land tax produced £33,120, and the land rates £139,228. Tasmania - which, after all, is not so much behind in this matter as some people would have us believe, considering that she is only a fly-speck on the map - produced land tax to the extent of £59,162. and land rates to the amount of £59,072. I quote those figures to show that, while it may appear that a State like Queensland, for instance, is not taxing people on the land as they should be taxed, in actual fact it is taxing them more than any other State in Australia. Take the ordinary land rates - not the water rates, or any other rates . Take the towns and cities of Queensland - Ipswich, Bowen, Blackall, Cairns, Bundaberg, Charleville, Charters Towers, Mackay. The land rates, on an unimproved value basis, yield from 5d. to 81/2d. in the £1. We find a shire like the Bourke, which consists of 32,000 square miles, levying land rates at 2d. in the £1. Cloncurry, with 24,710 square miles, levies land rates of 3d., and, in some cases, 31/2d. in the £1. Daintree, with 13,446 square miles, levies land rates of from 3d. to 2d. in the £1. In a number of the small shires the rates range from 3d. to as high as 8d. in the £1. In the larger shires the rates run from1/2d. up to 3d. in the £1 on the unimproved value of the land. I should like honorable senators to understand that whatever may be the effect of this tax in Victoria, Tasmania, or South Australia, the effect of it in Queensland, where the local bodies already levy land rates, will be to strike a heavy blow at the local govern- ment system that is at present so effective for good in that State. It may be said that we require to deal with the question of breaking up the large estates. I reply that in Queensland we have already dealt with that question. In 1886 an Act was passed dealing with the unimproved value of land. In 1887 the Legislative Assembly passed a land tax. It was thrown out by the Legislative Council. In 1905 a Bill was passed dealing with land monopoly. It was expressly called the Land Monopoly Tax Bill. I venture to say that it dealt with the question as the Commonwealth Parliament cannot deal with it. It dealt with land held in large areas and not used for the best purposes. The Legislative Council threw out the Bill. Thereupon the people of Queensland did not set up a howl for the Federal Government to deal with the matter. They had three general elections in three years. The Constitution was altered, and now it is the law of Queensland that if the Legislative Assembly passes any law twice within a given time, it becomes the law of the State, whether the Legislative Council likes it or not. That, so far as Queensland is concerned, is the answer to the charge that the Legislative Councils prevent effective land tax legislation from being passed. In 1909 the Federal Government, of which Mr. Fisher was the head, introduced a Land Tax Bill, of which I have a copy before me. I propose to direct attention to the way in which that measure was introduced. It was read a first time on 26th May, 1909. I should like honorable senators to listen to the memorandum attached to it. Not a single word was then said about the necessity of raising revenue. The memorandum read -

A population sufficiently large to effectively develop its various resources and defend it from invasion is essential to the progress and even the very existence of every country. While this is true of all countries, it is particularly true of Australia. No land has greater natural resources; none, by reason of geographical situation or by the enormous extent of its coast-line, is so vulnerable to attack.

We cannot hope to escape the common lot of all nations. Sooner or later we shall be compelled to make good our right to hold this great country. That we should do so the more effectively, a large population is imperative. But this must be of the right type and far ampler opportunities for its absorption must be afforded. Our great centres of population are already swollen out of all proportion, more than 36 per cent, or our people live in the six capital cities of the Commonwealth ; more than one-half in towns of over 5,000 inhabitants. And this tendency is becoming more marked each year. The people flock to the cities; they desert the countryside.

In a country like Australia, where there are vast areas of fertile land with an adequate rainfall and a good climate - and where so large a portion of the national wealth is derived from primary production - the percentage of the population engaged in rural occupations ought to be exceptionally high. But this is far from being the case. The percentage dwindled from 17. r in 1871 to 12.8 in 1891, and though it increased slightly during the next decade, it does not, so far as can bc ascertained, exceed 14. 1, the point at which it stood in 1901.

The full significance of these figures can be better appreciated when we compare them with those of other countries. In France the percentage of those engaged in rural industries is 21.2; in Germany, in spite of the phenomenal extent of manufactures, it is 23.06. The joint area of these countries does not exceed that of Queensland.

Why pick out Queensland ? Why not take the whole of Australia, when instituting the comparison ?

The density of their population is enormously greater, their manufacturing industries infinitely more varied and more extensive than ours. Yet the proportion of their population settled upon the land is more than 50 per cent, greater than ours.

In new countries the cultivation of the land is the natural and proper occupation of the people. The substantial prosperity of France, the marvellous progress of Germany, alike rest upon the firm and endurable basis of land settlement. And if Australia is ever to be a great nation it must be upon this foundation.

Our need is for men - of our own or kindred races - to settle upon our lands to further develop our great resources, to create new wealth. But such men, although there is happily no scarcity of them, will not go half-way round the world without some positive assurance that facilities for settlement upon suitable lands are provided. And at present these cannot be given.

This statement was published in May, 1909. We have had another Government publication issued since, without any alteration in the land laws, which tells quite a different tale. Again -

Despite some recent attempts in various States of the Commonwealth to promote closer settlement, it is still true that land monopoly is the curse of Australia. Relatively to the enormous area of its fertile lands and the size of its population, land monopoly exists here to a greater extent than in any country in the world. In spite of the resumption of large estates by the State Governments for purposes of closer settlement these estates are growing both in number and size. In New South Wales, for example, estates of 5,000 acres and over have during the period from 1901-1908 increased very considerably.

So far as New South Wales is concerned, only one class of settlement is picked out. It is true that in the case of that class of settlement the areas have increased in size, but those who compiled this statement carefully avoided mentioning the fact that the number in the larger class of settlement showed a decrease, and the number of small settlers had very largely increased -

In spite of closer settlement schemes the area under cultivation in the Commonwealth was actually less in 1907-8 than in 1904-5.

These are not statements made by me, or taken from a report by an ordinary Government official. They are included in a memorandum attached to a Bill which was placed before this Parliament. That was the Bill which honorable senators opposite put before the electors of Australia as embodying their land tax proposals. Now, let us see what truth there is in some of these statements. We are told that the area under cultivation was actually less in 1907-8 than it was in 1904-5, but it is not explained that it was greater in 1906-7, and in 1905-6, and that, whether we take New South Wales or the whole Commonwealth in the last year for which the figures were available, the area under cultivation was greater than it had ever been in the history of Australia. One or two items are picked out for comparison, and, as in connexion with another measure, the practice adopted by some of our friends of comparing " liquid " sugar with the best sugar has been adopted. Yet we are asked to accept the conclusions based upon such comparisons as final and definite. I say plainly that these statements were made to trap the people, or to trap members of this Parliament. This further statement was made -

The evil is too firmly rooted to be cured hy the resumption of individual estates by the States Governments. At the best, the effect of such attempts is almost unnoticeable. And there is good reason to believe that in general these resumptions increase the value of surrounding estates, but intensifying the evil sought to be remedied. It is not by such means that land monopoly can be successfully attacked.

I again remind the Senate that I am quoting from a memorandum issued in connexion with the Land Tax Assessment Bill of 1909, and, so far, there is not a single word in it about the necessity of raising revenue. It goes on to say -

We must strike at the root of the evil. Legislation is called for that will neither be local in its operation nor temporary in its effects. It is necessary to provide facilities, not merely for a few hundreds of families, and for a season only, but for a great and ever-increasing stream of suitable immigrants. As things stand now, to invite such men is a hollow mockery : to indulge in talk about immigration the merest farce. It is well known that we cannot provide land of a suitable kind for our own fellow citizens.

The object of this Bill is to provide an effective remedy by means of a progressive land tax on unimproved values, with an exemption (except in the case of absentees) of ^5,000. It is confidently expected that that will operate as a substantial check on the unproductive and speculative holding of large areas, and will vastly increase the land available for settlement by our own people and by the immigrants whom we wish to encourage, and whom we must have if we are to develop our resources and maintain our position.

The Vice-President of the Executive Council, by interjection, said that the Government expected to derive a revenue of £1,000,000 from this taxation, and when some honorable senators on this side said that the revenue derived from it was more likely to be £2,500,000, Senator McGregor said, "The more the better." I ask the honorable senator now to say whether this Bill of 1909, which is referred to in the memorandum which I have quoted, is not the Bill upon which honorable senators opposite went to the country ? The honorable senator knows that it is. It is certainly the Bill which I discussed when before the electors, as I dealt with the matter solely from the settlement point of view. I admit that the people voted in favour of the measure because they regarded it as a Bill intended to promote settlement. Now we find that it is not a land settlement Bill, but a revenue Bill - a Bill to extract money from the holders of land, and whether it is to extract £1,000,000, £2.000,000, or £3,000,000 apparently does not matter. I understand that the Government absolutely refuse to give me an opportunity to continue my speech at the next sitting of the Senate, and as I have gone to some little trouble to prepare it, I am forced to go on with it now. Dealing with the proposal from the point of view of the experience in New Zealand, I intend first of all to quote an expression of opinion by Mr. Thorn. He is not one of those onehorse sort of chaps whose opinion does not amount to anything. He was the delegate appointed by the New Zealand Labour authorities to represent them at an International Conference to be held at Portsmouth. After he arrived in Melbourne, I find that on 22nd May, 1909, speaking at the Trades Hall, of the effect of the land tax in New Zealand, he is reported by the Melbourne Age to have said -

The result of their much vaunted land legislation was that they have now to fight twenty-nine little Tory land occupiers, and where they formerly had one big Tory land-owner using the land as a means of exploiting the public of the profits, they now have twenty-nine small Tory land-owners.

They were going lo say to the Tory land-owner, " You are too costly; we are going to shift you, and we are going to appropriate your land, and we are going, as a Slate, to use that land just as we use our railways." They had as many unemployed in New Zealand in proportion to the population as they had in Melbourne.

His statement appears somewhat differently in the Argus, in which newspaper what he had to say is reported in this way -

The result of this progressive legislation was that, where the men in the towns had to fight one big Tory land-owner who was exploiting the people, they had now to fight twenty-nine little Tory land-owners. (Laughter.) The workers and Socialists of New Zealand now saw that it did not matter whether they were robbed by one man or twenty-nine.

There was a Mr. S. Barker, who moved a vote of thanks to the gentleman who said that. On 25th June, 1910, there appeared in the Melbourne Argus an account of an interview with a Mr. Nathan, who is described as -

A leading New Zealand merchant, who has been for many years closely associated wilh the organization of the Seddon-Ward party. He has long held (lie office of Honorary Treasurer to the Liberal and Labour Federation of the Dominion, besides taking an active part in the work of the Chamber of Commerce. His business and political connexions enabled him to speak with some authority on New Zealand affairs.

I do not intend to weary honorable senators by reading the whole of the interview, but I must quote this portion of it. Mr. Nathan said -

Sir JosephWard has also intimated that the new penal impost under the graduated land tax will have to be repealed. This heavy tax on both town and country estates over a certain value has only recently come into force. But the nature of its effects is obvious. Propertyowners are quite willing to bear their share of our expenses of government, and even of the cost of our humanitarian experiments. It is not solely, or even mainly, for selfish reasons that the heavy graduation is opposed. The real reason is that it operates to restrict enterprise. Land and buildings of considerable value are required for almost every industrial undertaking, for woollen mills, for jam factories, for warehouses, arid so on. Penalizing the ownership of such land and buildings is penalizing the trade and industry by which the country lives. What we are feeling already in New Zealand is less the immediate burden of taxation than the fear which it has created. The policy is bad, because it has made every would-be investor in industrial and pastoral undertakings afraid that yet another turn may be given to the screw - that in response to extremist demands at some crucial point in the history of a Ministry or party the penalty may be increased or that the level at which it begins to be enforced may be lowered. Even as it is, every industry in the country, save mining and shipping, which are unaffected by the tax, is being hit.

This is the statement of the treasurer of the Labour and Liberal Federation. He went on to say -

No one is prepared to launch out and put up a costly factory or warehouse on land which may have to bear so heavy a burden. As a natural consequence, there is stagnation in spite of the recovery from the recent tightness of money. Though the bank returns are showing steady accumulation, and the prospects for the year are good, there is no movement to extend industry.

Then the interviewer is reported to have said -

If Sir Joseph Ward repeals the Penal Tax, and " goes slow " on Labour legislation, that will come all right?

Mr. Nathanreplied ;

I am confident it will. The Government has made a wise change in its closer settlement policy, lt found that the compulsory purchase system was really raising prices against itself, so now it is prepared to finance voluntary subdivision of estates. It will advance the money to a group of purchasers, and let them deal directly with the owner. When the owner receives his purchase money, we should, of course, like to be able to offer him sufficient inducement to re-invest it in New Zealand, and it is because the penal land tax lessens the inducement that many of us dislike it. At the present moment any company or individual with anything over jo39'999 would be foolish to buy further land, or property, or shares in any undertaking requiring land, as he would immediately be subject to a graduated tax, and also to a further penal tax. Consequently men and companies of this description are sending their capital out of the country. Owing to the unfairness of incidence and collection this graduated tax is paid more than once. Our experience of the close connexion between a high graduated tax on land and property, and the discouragement of industrial enterprise should be worth the study of Australians.

I know that honorable senators wish to catch their trains, and I am sorry that it has been necessary for me to read the whole of that extract in order to give it the publicity which I desire. I say that the proposed land tax, whether intentionally or unintentionally, will strike a blow at the root of our whole Federal system, because it is being introduced before it is absolutely required. Outside of that, I am not prepared to say whether or not it will inflict injury upon particular individuals. But certainly it will undermine the local government system which has been adopted throughout the States.

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