1917-09-14 7 2 0 SENATE 2077 0 Senate. 1917-09-14 The President (Senator the Hon. T. Givens) took the chair at 11 a.m., and read prayers. 2077 Questions 2077 Instructional Staff: Warrant and Non-Commissioned Officers 2077 JXJ 0 0 NEEDHAM, Edward Senator NEEDHAM - Has the Minister for Defence received any replies to the following questions, which I asked yesterday : - How many of the permanent instructional staff have gone abroad on active service in the past two years? The number from each State? Did they go abroad with commissions? Have any of the acting instructional staff been requested to go abroad on active service? 5.If so, how many, and. from what States? How many permanent sergeants of the acting staff have gone abroad on active service? How many of the permanent staff have been sent to Duntroon from the different States, and how many have passed the examination? Were any of those that failed afterwards asked to volunteer in the A.I.F. as company sergeants-major ? Would the acceptance of such offer have meant a reduction of rank? Are married men on the acting staff, with families, now being told to join the A.I.F. as privates ? Will members of the acting staff have a chance to qualify for a commission at Duntroon ? 2077 K0F NAT 1 0 PEARCE, George Senator PEARCE - The honorable senator asked a series of questions, and I promised to get the desired information. I assume that the honorable senator refers to the warrant and non-commissioned officers of the instructional staff, and am going to answer the questions accordingly. 2077 JXJ 0 0 NEEDHAM, Edward Senator Needham - I am not too sure as to the military term. 2077 K0F 0 0 PEARCE, George Senator PEARCE - The answers are - Ninety-nine. 1st Military District, 12; 2nd Military District, '28; 3rd Military District, 32; 4th Military District, 10; 5th Military District, 9; 6th Military District, 3. Ninety-four were commissioned in the Australian Imperial Force. No, but they have been offered the opportunity of proceeding abroad with the permanent rank of sergeant in the Australian Imperial Force, which would give them a slight increase of pay. Three hundred and twenty-seven acting sergeants-major accepted the offer referred to in answer to question 4. They are from districts as follows: - 1st Military District, 64; 2nd Military District, 100; 3rd Military District, 96; 4th Military District, 27; 5th Military District, 26; 6th Military District, 14. One hundred and seventy-two have already embarked ; the balance will embark shortly. One hundred and forty permanent instructors were sent to Duntroon; sixty-six passed the school, and will shortly receive commissions in the A.I.F., and embark for service. No, but those of military age and fit for active service have been offered the opportunity of going abroad for active service with the permanent rank of company sergeant-major, which carries the same pay as they now receive. No. No. This is not likely, as the Department already has a very large number of qualified officers available for all requirements, and the Officers' Training School at Duntroon has been closed in consequence. 2077 JZ9 0 0 O'KEEFE, David Senator O'KEEFE - Did the Minister for Defence see in the Melbourne newspapers yesterday morning a report concerning a lecture given by Commander Creswell on wireless telegraphy at the United Service Club, and containing this passage - The distance to the Perth station was, approximately, 7,000 miles, while to Sydney via America, across which it was presumed the sound waves travelled, the distance was about 12,000 miles. The receipt of messages at this range, it was stated by Commander Creswell, constituted a world's record. He explained that, owing to the effect which light had upon wireless waves, German messages only reached Sydney when they were transmitted at night. The distance to Perth being, however, some thousands of miles shorter, the Western Australian station caught and recorded messages sent out from Germany either by night or day. Commander Creswell added that while these remarkable achievements had become possible solely as a result of the great developments which had token place in the science of wireless telegraphy, an important part was played by the operators, and it was due largely to their skill that German messages were being intercepted and interpreted by Australian stations. The lecture, which was the -first of a new series arranged by the United Service Institute foT the benefit of officers of the Naval and Military Forces, was well attended. If the Minister has read the report, does he not consider it injudicious during war time to indicate the receiving capacity of Australian wireless stations or to give such information concerning them to the general public? 2078 K0F 0 0 PEARCE, George Senator PEARCE - I suggest to the honorable senator that he should give notice of the question, .and direct it to myself as representing the Minister for the Navy, whose Department deals with wireless telegraphy. 2078 JYT 0 0 FERRICKS, Myles Senator Ferricks - Where was the censor ? 2078 JZ9 0 0 O'KEEFE, David Senator O'KEEFE - Has the Minister representing the Minister for the Navy any objection to lay on the table of the Senate a return showing the expenditure and receipts in connexion with the various radio stations belonging to the Commonwealth? 2078 K0F ALP; NAT from 1917; UAP from 1931 0 0 PEARCE, George Senator PEARCE - I shall bring the request under the notice of the Minister and acquaint the honorable senator with the decision. 2078 2078 KKZ 0 0 GARDINER, Albert Senator GARDINER - Will the Leader of the Senate bring the following clipping from the Worker under the notice of the Prime Minister, and ascertain if it correctly, reports his views as published in an article in the Railway and Tramway Record of the 15th May, 1908: - For the benefit of the public generally, we might mention that nine years ago, to be precise, on 15th May, 1908, W. M. Hughes in an article in the Tramway and Railway Record had these words: - "It is true that the blackleg is free to sell himself to the employer and betray his workmates. The traitor who sells his country fin joys the same freedom. Judas was free to sell Christ, and he sold Him, and Was for ever damned in thiB world and the next." In case the public may be puzzled at the above extract, it is necessary to, add that the Hughes of 1908 is the same Hughes who, a couple of weeks ago, instituted agencies for the recruiting of blackleg labour. 2078 KUL NAT 1 0 MILLEN, Edward Senator MILLEN - The time of the Prime Minister is so drawn upon by the demands of important public matters that I do not feel justified in worrying him about a quotation from the newspaper in question. 2078 JU7 0 0 DE LARGIE, Hugh Senator DE LARGIE - Will the MW inister make inquiries regarding the editor of this newspaper, and see whether his first start in the industrial life of Australia was in the capacity of a strike breaker, and that before any arbitration laws had been enacted? 2078 KUL 0 0 MILLEN, Edward Senator MILLEN - The history of the gentleman referred to is, I believe well known without the necessity of a further inquiry. 2078 KTD 0 0 MCDOUGALL, Allan Senator McDOUGALL - Will the Minister inquire if allegations of strikebreaking were not previously made against the editor of the Worker, and if he has not- often denied them, and denounced them as a cruel lie? 2078 2078 K0F NAT 1 0 PEARCE, George Senator PEARCE - I desire to intimate, for the guidance of new honorable senators, that when questions are given notice of on Thursday, it is always advisable to give notice for the first sitting day in the following week, as it is almost impossible to get replies for Friday when both Houses meet at an early hour. 2078 leave of absence Motion (by Senator de Largie) agreed to- That leave of absence for one month be granted to Senator Lynch, who is on a visit to his home, and owing to stoppage of sniping communication cannot return to Melourne. 2078 special adjournment Motion (by Senator Millen) agreed to- That the Senate, at its rising, adjourn till Tuesday next at 8 p.m. 2078 bill Bill read a third .time. 2078 bill Bill received from the House of Representatives, and read a first time. 2078 bill 2078 KUL New South Wales NAT 1 0 MILLEN, Edward Senator MILLEN .- I move - That this Bill be now read a second time. This, and the measure immediately following, are rendered necessary by the peculiar circumstances under which this Parliament met. The original Act for the appointment of Public Works and Public Accounts Committees required the Committees to be appointed during the first session of the Parliament. The first session of this Parliament took place when portion of the old Senate was still in existence, and it was not then deemed advisable, or, indeed, right, to appoint the Committees under the then existing circumstances. The purpose of this measure is to provide that it shall be competent for this Parliament to appoint the Committees in the second session, which is the present session. Question resolved in the affirmative. Bill read a second time. In Committee: Clause 1 agreed to. Clause 2 (Appointment of Committee). Senator GRANT (New South Wales) [11.19]. - I am. not satisfied with the delay in the presentation of the reports of the Committee to Parliament. I do not know how many hours per day, or how many days per week, they sit, or what they do, until their work is almost completed. The Vice-President of the Executive Council might give us an assurance that the Committee will present progress reports of the work they are doing at least once every fortnight. 2079 KKZ ALP; PROG LAB from 1928 0 0 GARDINER, Albert Senator GARDINER - Cannot we have the card system for them? 2079 KMP NEW SOUTH WALES 0 0 GRANT, John Senator GRANT - No doubt, the members of the Committee carry out their work satisfactorily enough, but they should convey to Parliament more frequently an idea of the work they are performing. 2079 KUL New South Wales NAT Vice-President of the Executive Council 1 0 MILLEN, Edward Senator MILLEN . - I hardly think that Senator Grant his given this matter that profound thought which he generally gives to questions to which he addresses himself. If his suggestion were adopted, the Committees would frequently have to report that they were unable to report. All they could say, in the middle of an inquiry, was that they had examined so many witnesses, or visited so many places. 2079 KMP ALP 0 0 GRANT, John Mr GRANT - That is what I wish to find out. 2079 KUL 0 0 MILLEN, Edward Senator MILLEN - The honorable senator's best way to ascertain it would be to secure inclusion on the Committee. He cannot be serious in asking for a progress report of that nature, which would be adding quite unnecessarily to the labours of the officials and the cost of printing. 2079 KMP NEW SOUTH WALES ALP 0 0 GRANT, John Mr GRANT . - The extra work would not occupy the time of the secretary or chairman of the Committee more than a few minutes, but the reports would enable us to know exactly what the Committee were doing. Under present conditions, they might sit for six weeks or six months, and we should know nothing of the work they perform. I should like to be apprised at frequent intervals of what they are doing, and would be glad of an assurance from the Minister on the subject. 2079 KUL New South Wales NAT Vice-President of the Executive Council 1 0 MILLEN, Edward Senator MILLEN . - I give the honorable sena tor the assurance that I will bring the matter under the notice of the Committee when appointed, to see if they can fall in with the suggestion. Clause agreed to. Title agreed to. Bill reported without amendment; report adopted. 2079 bill 2079 KUL New South Wales NAT 1 0 MILLEN, Edward Senator MILLEN .- I move - That this Bill be now read a second time. The measure bears exactly the same relation to the Public Accounts Committee as 'the previous one did to the Public Works Committee. 2079 KMP New South Wales 0 0 GRANT, John Senator GRANT .- Will the Vice-President of the Executive Council make a similar request to the Public Accounts Committ-ee as he has promised to make to the Public Works Committee, so that we may have at least! fortnightly a report of the work they are doing? It is very important in this age that we should know what is being done. If the card system is to be applied to ordinary workers, it is time something was done to see whether Committees of this kind are doing their work properly or not. 2080 KUL New South Wales NAT 1 0 MILLEN, Edward Senator MILLEN . - I shall place the suggestion before the Committee! I have no doubt they will receive it, as I do, as an indication that Senator Grant is a convert to the card system. Question resolved in the affirmative. Bill read a second time. In Committee: Clause 1 agreed to. Clause 2 (Appointment of Committee). 2080 KKZ New South Wales 0 0 GARDINER, Albert Senator GARDINER .-Would Senator Millen be prepared to adopt, with regard to this Committee, the card system prepared by the New South Wales Railways Commissioners ? I refer chiefly to the one under which sub-foremen are appointed to report each week what work is being done, the cost of the material, the material consumed, and, particularly, whether any of the members of the Committee are unsatisfactory or surplus. It is an excellent opportunity for the Senate to get exact information from its own members as to the working of the card system. I should not like the whole system to be introduced, because it might bring about a strike, but I should like card No. 6 to be applied. 2080 KUL 0 0 MILLEN, Edward Senator Millen - If you are not careful there will arise a public demand to apply the card system to this Chamber. 2080 KKZ 0 0 GARDINER, Albert Senator GARDINER - That would be an excellent idea, as I might have the opportunity of being appointed a sub-foreman, with power to report that there were some surplus or unsatisfactory members here. I can quite see that the idea of extending the card system is gaining ground. I want to try it on this small Committee to ascertain if .it worth while introducing it, seeing that it is bringing about such disastrous results elsewhere. 2080 KUL New South Wales NAT Vice-President of the Executive Council 1 0 MILLEN, Edward Senator MILLEN . - The honorable senator has overlooked the fact that the adoption of the card system, as he suggests, would mean the appointment of foremen. That is quite unnecessary, because I take it that Senator Grant proposes to constitute himself foreman, to report whether the work of the Committee is being discharged satisfactorily or not. Clause agreed to. Title agreed to. Bill reported without amendment; report adopted. WAR-TIME PROFITS TiX ASSESSMENT BILL. In Committee (Consideration resumed from 13th September, vide page 2013) : Clause 7 - There shall be levied and paid on all war-time profits from any business to which this Act applies arising after the thirtieth day of June One thousand nine hundred and fifteen a tax (hereinafter referred to as " war-time profits tax") at such rate as is declared by the Parliament. The war-time profits arising in a financial year shall be calculated as follows: - toy ascertaining the monthly average of the profit or loss arising in the accounting period ending in the financial year and separately the monthly average of the profit or loss arising in the accounting period beginning in the financial year; by multiplying the respective monthly averages of profit or loss (as the case may toe) by the number of months of the respective* accounting periods falling within the financial year; by adding together the amounts of the profit or deducting the amount of the loss from the amount of the profit (as the case may be) and deducting from the sum so obtained the pre-war standard of profits as defined for the purposes of this Act; and Id) by deducting from the sum remaining in paragraph (c) hereof the deduction (if any) allowed by the next succeeding sub-section. From the sum remaining under para-, graph (c) of the last preceding sub-section - in the case of a business in which the pre-war standard of profits does not exceed Five hundred pounds, there shall toe deducted the sum of Two hundred pounds; in all other cases, where the sum remaining under paragraph (o) .of the last preceding sub-section - does not exceed Two hundred pounds, the total sum shall be deducted; (li ) exceeds Two hundred pounds, there shall be deducted the sum pf Two hundred pounds less - in the financial year ending on the thirtieth day of June One thousand nine hundred and sixteen. One pound for every Two pounds by which the excess exceeds Two hundred pounds; (ii) in all succeeding financial years, One pound for every Four pounds by which the excess exceeds Two hundred pounds. For the purposes of this Act the account ing period shall be taken to be the period of twelve months for which the accounts of the business have been made up for the purposes of the Income Tax Assessment Act 1015-1016, and where the accounts of any business have not been made up for any definite period, or for the period for which they have been usually made up, or a year or more has elapsed without accounts being made up, shall be taken to be such period not being less than six months or more than a year as the Commissioner determines ending on such a date as the Commissioner determines. Where a business has not been in existence during the whole of the financial year or a business has changed ownership in a financial year this section shall have effect as if there were substituted for Two hundred pounds a proportionately reduced amount. 2081 K1J New South Wales 0 0 PRATTEN, Herbert Senator PRATTEN . - This is the pivotal clause of the Bill, and I should like the Minister to explain clearly the reference made to the accounting period, and indicate how businesses would fare which issue their balance-sheets on 30th September, . 1915, which would be a couple or three months after the accounting period fixed. It seems to me that under the clause the fixing of the accounting period would create a good many complications in some cases. For instance, if a business balanced on 30th September, 1915, would that year be the pre-war year, or would the pre-war year be the year ended 30th September, 1914? If so, their would be a hiatus of nine months as between the accounting period and the date fixed for the commencement of the operation of the Bill, namely, 30th June, 1915. I should like some information on this point, so that business people may know clearly what sort of returns they should send in. 2081 KUL New South Wales NAT 1 0 MILLEN, Edward Senator MILLEN . - I understand that the specific question put by the. honorable senator is whether, in cases in which the accounting period ends on the 30th September, 1915, that period would commence on 30th September, 1914? My answer is that it would date from 30th September, 1913. 2081 K1J 0 0 PRATTEN, Herbert Senator Pratten - What is to be done with the hiatus ? 2081 KUL 0 0 MILLEN, Edward Senator MILLEN - There is no hiatus. 2081 K1J 0 0 PRATTEN, Herbert Senator Pratten - There is a hiatus of nine months. 2081 KUL 0 0 MILLEN, Edward Senator MILLEN - No. The last complete period before the outbreak of the war must be taken into consideration. 2081 K1J 0 0 PRATTEN, Herbert Senator Pratten - Then what is to become of the period between the 30th September, 1913, and the 30th June, 1914? 2081 KUL 0 0 MILLEN, Edward Senator MILLEN - It will not count. 2081 K1J 0 0 PRATTEN, Herbert Senator Pratten - Then there is a period that will not be taken into the taxpayer's calculations. 2081 KUL 0 0 MILLEN, Edward Senator MILLEN - Quite so. Otherwise we should have to compel him to revise his whole system of accounts, and to bring it up to the outbreak of the war. 2081 K1J 0 0 PRATTEN, Herbert Senator Pratten - It is for the Department to come into line with business balances. 2081 KUL 0 0 MILLEN, Edward Senator MILLEN - The Department cannot do that. - 2081 K1J New South Wales 0 0 PRATTEN, Herbert Senator PRATTEN . - This matter must receive some consideration. The Vice-President of the Executive Council has admitted that there will be a hiatus of nine months in connexion with the balance-sheets of some businesses in the Commonwealth. There are many businesses which issue balance-sheets on 30th September each year, and in the compilation of their returns all of these will be obliged to go back nine months in order to establish a pre-war standard of profits. The nine months between 30th. September, 1913, and 30th June, 1914, will be lost. No account of it will be taken either one way or the other. I should like to see a provision made in the Bill for monthly averages to be taken from 30th September, 1913, to 30th June, 1915. 2081 KUL 0 0 MILLEN, Edward Senator Millen - The honorable senator must recognise that, the taxpayer is given the option of selecting any two out of the three years immediately prior to the war in order to determine his pre-war standard of profit. 2081 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - Will he be able to include this period jrro rata in his prewar standard ? 2081 KUL 0 0 MILLEN, Edward Senator Millen - Would any taxpayer do that? 2081 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - Some of the other clauses of the Bill provide for a pro ratd standard. This is another of the complexities of the measure which very few people understand. 2081 KKZ 0 0 GARDINER, Albert Senator Gardiner - The honorable senator is responsible for that. 2081 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - I am not responsible for it. That responsibility rests on the Government which framed the Bill, practically on the lines of the Imperial Act. 2082 KKZ 0 0 GARDINER, Albert Senator Gardiner - We have agreed to the second reading of the Bill. What is the use of the honorable senator complaining now ? 2082 KUL 0 0 MILLEN, Edward Senator Millen - He is not complaining. He is merely seeking information. 2082 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - I do not think that the Minister has been sufficiently clear on this point. I should like to know whether, in their decisions, the income tax authorities will be guided by the promises which have been made in both Houses of this Parliament during the consideration of the Bill? I am sure that as we proceed with this discussion we shall recognise the increasing difficulties of the measure. We shall certainly realize that one man, in the person of Mr. Ewing - wen if he were the Archangel Gabriel himself - will not be able to lay down equitable lines. It seems to me that regard should be paid by the income tax authorities to the pronouncements that are made by Ministers in both branches of the Legislature. I ask the Committee to consider whether this clause should not be entirely recast. On the admission of the Vice-President of the Executive Council himself, many businesses will have to drop out of their returns nine months of their business operations. The amendments made in another place in regard to the accounting period have tended towards simplicity, but that simplicity has not gone as far as it might go. At all events, this clause will result in losing the standard of profits of many businesses which balance on 30th September each year. The further we look into the measure the more complicated does it become. 2082 KUL New South Wales NAT 1 0 MILLEN, Edward Senator MILLEN . - The honorable senator has referred to this -clause as another of the complexities of the Bill. As a matter of fact it is as plain as 3. pikestaff. It is not a complexity, but a bogy that the honorable senator has raised. The purpose of the clause is to enable the Department to ascertain what was the taxpayer's pre-war standard of profit. To enable it to do this, it will take the last three balance-sheets upon which the taxpayer has based his income tax returns. It will not ask him to adjust a single figure in those returns. It will merely say to him, " Out of your last three complete years you may select the two years which are best from our point of view, and those two years shall determine your pre-war standard of profits." That is simplicity itself. The arrangement was devised to save the taxpayer from the complexity which would arise if he were required to bring his accounting period up to the date when this Bill will commence to operate. The period referred to by Senator Pratten as a hiatus might disclose either an increased or decreased profit. It is pure supposition as to which way it would work. While in some cases it might help the individual in others it might injure him. 2082 K1J New South Wales 0 0 PRATTEN, Herbert Senator PRATTEN . - In the case of a business which balances on 30th September, 1915, the Vice-President of the Executive Council would go back to the balance-sheet of 30th September, 1914, and the balance-sheets for the two previous years, in order to establish the pre-war standard of profit. It is clear, therefore, that no consideration will be given to the operations of any business which balances on 30th September in any year, in determining the pre-war standard as between 30th September, 1914, and 30th June, 1915. 2082 JYR Victoria 0 0 FAIRBAIRN, George Senator FAIRBAIRN . - I think it would be as well to make this accounting period as elastic as possible, otherwise it may work injury to some individuals. The Vice-President of the Executive Council has already pointed out that it is quite a simple matter for the taxpayer to select any two out of three pre-war years for the purpose of establishing his pre-war standard of profits. But if the taxpayer chooses to go to the trouble of making up another balance-sheet, I think that the Commissioner might very well consent to that procedure being adopted. If the individual were permitted to make up his balance-sheet, and to ignore the regular accounting period, an improvement would be effected in the measure. The same question will arise in sub-clause 12 of clause 16 of the Bill. If the Vice-President of the Executive Council can see his way to make the accounting period elastic, while more work will be thrown on the taxpayer, it may avoid hardship being inflicted upon him. 2082 KUL New South Wales NAT 1 0 MILLEN, Edward Senator MILLEN . - I really think honorable senators, possibly spurred by the presentation of the facts of a single case, are losing sight of the broader view of this matter. Assuming that the accounting period of a business terminated throughout the year as frequently in on© month as in another, the worst that could . happen would be a six months' difference between the accounting period and the period when the tax would begin to operate. What can be the purpose of asking for a -special set of accounts in order to meet that six months ? In addition, it must be remembered that the taxpayer has the option of selecting any two out of three years immediately preceding the war as the basis of his pre-war standard of profits. 2083 K1J 0 0 PRATTEN, Herbert Senator Pratten - Why omit nine months of his pre-war trading operations if he balances on 30th September? 2083 KUL 0 0 MILLEN, Edward Senator MILLEN - We merely say to him, ""What profits have you been making for the past three years?" 2083 K1J 0 0 PRATTEN, Herbert Senator Pratten - Omitting the nine months ? 2083 KUL 0 0 MILLEN, Edward Senator MILLEN - We give him the right to select any two out of the three pre-war years in determining his pre-war standard of profits. I would remind Senator Pratten that under another clause of the Bill, if the three pre-war years were years of abnormal depression in connexion with a particular business, those controlling it are entitled to take the. three previous years, so that they may not be unduly burdened by this taxation. What the honorable senator proposes is that if the owner of a business made abnormal profits during the nine months immediately preceding the war, he might include them in his accounting period, in order to raise his pre-war standard of profits, and if he had a bad time during those nine months he could avail himself of the option given him under the Bill and go back to the earlier years. However much an honorable senator may be interested in the business' of particular firms or individuals, that does not seem to me to be a reasonable thing to ask. 2083 K1J 0 0 PRATTEN, Herbert Senator Pratten - I 'do not know of a single individual case. I am speaking generally of firms balancing on the 30th September. 2083 KUL 0 0 MILLEN, Edward Senator MILLEN - No greater number balance on the 30th September than the number balancing on the 30th June. There would be, on an average, six months' interval between a firm's financial year and our financial year, and, in view of the concessions made to taxpayers permitting them to pick their own period of two years out of the three years prior to the war, in order to estimate their prewar standard of profits, I think the Committee would not be justified in any alteration of the clause now under review, in the way suggested by Senator Pratten. 2083 KTD NEW SOUTH WALES ALP 0 0 MCDOUGALL, Allan Senator McDOUGALL . - I did not speak on the second reading of this Bill because I considered that this is a baby which the present Government should have to carry themselves. I believe they will find it a very heavy baby before they are finished with it. 2083 KUL 0 0 MILLEN, Edward Senator Millen - Honorable senators opposite are making the baby restive. 2083 KTD ALP 0 0 MCDOUGALL, Allan Senator McDOUGALL - I know that, when this Bill was first introduced in another place, many communications were received by members from business firms complaining that the fixing of the accounting period in the way proposed would be likely to inflict great hardship upon them. I know that some firms of auditors audit the books of many of the businesses in a particular street. The accounts of one firm are audited at the end of one month, and of another firm at the end of the next month. Under this Bill, firms whose accounts are audited on the 30th July will have to go back twelve months to fix the pre-war standard. 2083 KUL FT; ANTI-SOC from 1910; LP from 1913; NAT from 1917 0 0 MILLEN, Edward Senator MILLEN - We do not ask them to do that. 2083 KTD 0 0 MCDOUGALL, Allan Senator MCDOUGALL - I frankly admit that I do not understand this measure, and do not think that anybody else does, and I want some explanation. I had an opportunity of going through the books of one firm, and I find that they made a clear profit of £14,000 in one year, whilst in the next year they made a profit of only £1,200. In this case, by reckoning the accounting period in one way, the business would have to pay this tax on the good year, but by* reckoning it in another way it would escape on the bad year. I believe that an amendment of this particular provision was made in another place. One business balancing on the 30th July will have to go back for twelve months and pay the tax, and another business being carried on next door, whose balancing period is different, may escape scot free. Senator MILLEN" (New South Wales - Vice-President of the Executive Council) [11.49]. -A business will not be t allowed to go scot free. The object of the clause is to ascertain the profits made by a firm or business -prior to the war, and for this purpose the ordinary balance-sheets of a firm are taken. The war broke out on the 4th August, and, in order to determine what a firm made in pre-war years, we take what the books show that it made in its last financial years prior to the war, and accept that as the prewar standard. The alternative is to ask the business man to revise the whole of his bookkeeping, and draw up a balance-sheet to the 3rd August, though his ordinary practice may be to balance on the 31st December. We give him the right to take the last three years prior to the war, and the option of taking the- two years of those three which best suit him. That, I think, may be regarded as a concession which will more than compensate for any little disadvantage which in particular cases might arise from adherence ito the accepted accounting period. 2084 JYR Victoria 0 0 FAIRBAIRN, George Senator FAIRBAIRN . - I do not think that the Minister quite understands the point. 2084 KUL 0 0 MILLEN, Edward Senator Millen -. - I have been thinking that of some of the critics. 2084 JYR 0 0 FAIRBAIRN, George Senator FAIRBAIRN - We should deal with every taxpayer alike. The purpose of the Bill is to discover what were the profits of a business prior to the war. Under this clause, a firm balancing some months prior to the 4th August may be prevented from taking advantage of what may have been a very profitable period in estimating its pre-war profits. If the accounting period were made- elastic, a business would be given the opportunity of including that profitable time in its accounting period. I do not see why there should be any objection to that. I do not think that, because a firm balances its books at a particular time, it should he asked to cut out possibly a very profitable period of nine months and thirty days in estimating its pre-war profits. If the taxpayer, with the consent of the Commissioner, is willing to go to the trouble and expense of making up a balance-sheet to the 4th August, apart from his customary balance-sheet, there should be no objection to his doing so. 2084 KUL 0 0 MILLEN, Edward Senator Millen - Does the honorable senator not see that a man could not today take stock of the stock he had in hand two years ago. The only way to deter mine the matter is to turn to his balance-sheets when stock was taken at the regular periods. 2084 JYR 0 0 FAIRBAIRN, George Senator FAIRBAIRN - Where it would be impossible, the business man would not ask that it should be done, and the Commissioner might object ; but there are many businesses to which the honorable senator's objection would npt apply, and in connexion with which a balance-sheet might be made up at any time. I can see possibilities of great hardship, under this clause. Merely for the purpose of taxing a man we should not make fish of one and flesh of another, and I repeat that I would like to see some elasticity in, the accounting period provided for. 2084 K1J New South Wales 0 0 PRATTEN, Herbert Senator PRATTEN . - I do not desire to labour this point, but I remind the Minister that in sub-clause 12 of clause 16 the pre-war years are defined in this way - " The last pre-war trade year " means the year ending at the end of the last accounting period before the 5th day of August, 1914, and " the last three pre-war trade years " means the three years ending at the three corresponding times. Clearly, under this, pre-war years, in the case of . businesses balancing on 30th September, or on 31st December, go back as from 30th September and 31st December, 1913. Suppose a business were established, and its first balance-sheet was issued on 30th September, 1913- 2084 KUL 0 0 MILLEN, Edward Senator Millen - That is a business established for only one year ? 2084 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - Yes. Would that business, in view of this clause, be brought under the pre-war standard, or would the Commissioner of Taxation insist that in that case there was no prewar standard because the business had existed only for one year and nine months before the war, and therefore levy the tas on the percentage basis? 2084 KUL 0 0 MILLEN, Edward Senator Millen - The honorable senator will see that, in paragraph b of the proviso to sub-clause 3 of clause 16, there is specific provision made to meet such a case. 2084 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - I see that that is so. . I have to ask another question. If a business is balanced on 30th September, 1914, will it be taxed on the pre-war standard, or will the Commissioner insist on assessing the profits on a percentage basis ? 2085 KUL 0 0 MILLEN, Edward Senator Millen - In clause 15 the honorable senator will find that provision is made that in such a case the tax will be levied upon 10 per cent, of the capital, or £1,000, whichever is the greater. 2085 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - In other words, the levy will be upon the percentage standard just as if there are no pre-war profits. I think the Government would be well advised to consider whether, in connexion with fixing the pre-war standard, the balancing day nearest to 4th August, 1914, should be taken. I will leave this point, and will later refer to other parts of the clause. I remind the Committee that there are fifty-five lines of the Bill covered by this clause. I am not clear as to what is really meant by sub-clause 3, and I should he glad if the Minister will explain its incidence. 2085 KUL New South Wales NAT Vice-President of the Executive Council 1 0 MILLEN, Edward Senator MILLEN .- I do not think that the honorable senator can be serious in suggesting that I should get up and give a full explanation of each clause as it is submitted to the Committee. 2085 K1J 0 0 PRATTEN, Herbert Senator Pratten - I referred to subclause 3 of this clause. 2085 KUL 0 0 MILLEN, Edward Senator MILLEN - The honorable senator has had the Bill before him, and has evidently given it careful study, and, if he is asking me to explain the incidence of each clause as it is put to the Committee, he is asking too much. 2085 KKZ New South Wales 0 0 GARDINER, Albert Senator GARDINER .- Senator Millen, with his experience of Parliament, will admit the temptation that is offered to the Opposition to join in the debate upon this Bill, and will scarcely expect me to' maintain the neutrality of attitude which I took up on the second reading. In moving the second reading of the Bill, the honorable senator admitted that it is an intricate measure, and said that it lent itself more to explanation in Committee. 2085 KUL 0 0 MILLEN, Edward Senator Millen - Certainly, when specific points are raised. 2085 KKZ 0 0 GARDINER, Albert Senator GARDINER - My colleague from New South Wales has asked the Minister for an explanation of sub-clause 3. That is a fair request, because the whole clause is the most complicated in the Bill, and I do not think it has been suggested that we should hurry in our discussion of the measure. The explanation has been asked for, and I think it will expedite matters' if the Minister will give it. Personally, I have been anxious to see the clause passed, so that we may consider the following clause, to which I propose to move some amendments. I think, also, that an explanation would help as a guide to those officials who will have the responsibility of administering the Act. 2085 KUL New South Wales NAT 1 0 MILLEN, Edward Senator MILLEN . - Senator Pratten has already shown that he knows the purport of this clause, because he has been combating it* and yet he asks me now for an explanation of what he regards as an iniquitous; and wrong principle. The honorable* senator can hardly expect me to do what he has already shown to be unnecessary. We propose, for the purpose of ascertaining the pre-war standard, to allow a taxpayer to take any of the two completed accounting periods according to the manner in which he has been keeping his books. 2085 K18 0 0 BAKHAP, Thomas Senator Bakhap - But this clause has to be read in conjunction with several other clauses. 2085 KUL 0 0 MILLEN, Edward Senator MILLEN - Senator Prattenknows the purpose of the clause, because he has been combating it for the last halfhour. Senator PRATTEN (New South Wales) [12.3J. - The Minister is not showing his usual perspicuity in regard to the matter. He is under a total misapprehension in regard to what has been asked. So far, we have been discussing sub-clause 2 of clause 7, which is a machinery clause, dealing with the prewar standard and the accounting period. We had finished with that sub-clause, and I was asked for information with respect to sub-clause 3. 2085 KUL 0 0 MILLEN, Edward Senator Millen - We have been discussing sub-clause 4. 2085 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - No. Sub-clause 3 o has not yet been discussed. ' This states - In the case of a (business in which .the prewar standard of profits does not exceed £500, there shall be deducted the sum of £ 200. That has nothing to do with the date of balancing a business. It relates to the deduction to be allowable in certain cases, and it is most complicated. Senator MILLEN (New South Wales - Vice-President of the Executive Council) was discussing the question of the prewar standard, which is covered by subclause 4. 2086 KTD New South Wales 0 0 MCDOUGALL, Allan Senator MCDOUGALL . - Sub-clause 4 states - For the purposes of this Act, the accounting period shall be taken to be the period of twelve months for which the accounts of the business have been made up for the purposes of the Income Tax Assessment Act 1915-16. . . . I would like to know if the Commissioner will have the same power as the Income Tax Commissioner, to allow taxpayers to go back one month in their accounting period. 2086 KUL New South Wales NAT 1 0 MILLEN, Edward Senator MILLEN . - No. The taxpayer must show a complete twelve months, according to the manner in which His books have been kept. He will be allowed to select any two of the three pre-war trade years. 2086 KTD New South Wales 0 0 MCDOUGALL, Allan Senator MCDOUGALL . - The Minister has not quite understood what I meant to convey. The Income Tax Assessment Act gives the Commissioner authority to allow any firm to make the accounting period Up to the end of July instead of June. Will the Commissioner, under this wartime profits tax, have the same power! 2086 KUL 0 0 MILLEN, Edward Senator Millen - No. 2086 K18 Tasmania 0 0 BAKHAP, Thomas Senator BAKHAP . - All the States have income tax laws in operation; and with regard to the measure now under discussion, I would suggest that the taxpayer be allowed to select two of the three pre-war trade years in accordance with the income tax returns furnished by him to any State or Federal authority. Senator MILLEN (New- South Wales Vice-President of the Executive Council) [12.91. - I would again point out that under this Bill- it is proposed to allow a taxpayer to select his own accounting period ; and if it conforms to the accounting period covered by State income 'tax returns, we should naturally be adopting that period. - 2086 K1J 0 0 PRATTEN, Herbert Senator Pratten - But this does not deal with the date of balancing a business. 2086 KUL 0 0 MILLEN, Edward Senator MILLEN - We know what is behind this objection to the clause. A few businesses made tremendous profits just before the war broke out, and some would come under this provision if it were inserted in the Bill - thus they would be able to establish a higher pre-war standard, and would get a tremendous advantage. 2086 KMP 0 0 GRANT, John Senator Grant - You want to get at them. 2086 KUL 0 0 MILLEN, Edward Senator MILLEN - There is no desire to do anything in an unfair way; but, seeing that they will have the right to take any of the three pre-war trade years, they will be suffering no injustice. 2086 K1J New South Wales 0 0 PRATTEN, Herbert Senator PRATTEN .- I hope that during the discussion of this Bill in Committee there will be no suggestion that any honorable senator has any axe to grind. I am not concerned with one single business that will be affected, either adversely or profitably ; but as one having some experience of the commercial section of this great Commonwealth, I do know that business houses, as a rule, balance at quarterly intervals, either at 30th June, 30th September, 31st December, or 31st March ; or, alternatively, on the 1st of October, January, April, or July. The Leader of the Senate should l._ suggest that there is something behind this action on the part of honorable senators who are criticising the clause. It is clear that there is some anomaly in the Bill. It has been admitted that in the case of a business balancing on the 30"Bh September, that business will have to go back' nine months before it commences its pre-war standard. I say, most deliberately, that I have no axe to grind. Now that the second reading has been- agreed to, I desire to try to improve the Bill; and. - in this respect, before the clause passes, I should like to direct attention to the discretionary power given to the Commissioner. Sub-clause 4 gives that official discretionary power to determine the accounting period in certain cases; and in thirty-seven different places throughout the Bill the Commissioner has discretionary power invested in him in some form or other. 2086 KUL 0 0 MILLEN, Edward Senator Millen - And Senator Fairbairn wanted to give him more power. 2086 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - I am raising the broad principle of the discretion given to the Commissioner. However capable that gentleman may be - and I believe, he is here now - however keen he may be, and however full of knowledge of the whole of our trading, commercial, and manufacturing conditions, if he were the Archangel Gabriel he would not be able to determine, in a manner satisfactory to the commercial community, all the questions that will come before him. At another time, and in another clause, I shall bring this matter seriously before the Committee. No doubt it is far the easiest thing to do to end the discussion and close up Parliament next week ; but I say, with all deliberation, that the commercial community of this country has not had too good a time in connexion with the discretion of the Income Tax Commissioner. Chambers of Manufactures, business men, and Chambers of Commerce, ever since the income tax has been levied, have been protesting against some injustice under that Act. I can quote one injustice in connexion with machinery. Up to now, the Commissioner has in about nine cases out of ten refused to allow more than 5 per cent, for depreciation. It is-quite true that he allows for renewals and repairs, but any purchase of new machinery has to be added to capital. In the case of automatic machinery, such as is used in tin-can making, in confectionery establishments, or in some of the more intricate of engineering work, the Commissioner will not allow more than 5 per cent, for depreciation; and anybody acquainted with manufacturing will know that machinery is not supposed to last for twenty years. This discretionary power to be invested in the Commissioner appears frequently in this Bill. I have with me papers wherein protest after protest has been made by representatives of organizations; but, owing to.: the congestion of war work, these protests have merely been noted; and probably pigeonholed. I am bringing this question up now, so that there shall be no mistake as to what the discretion of the Commissioner means. If it is going to mean, in the thirty-seven clauses where it is given, the same power as it has meant in connexion with the depreciation of machinery, then God help the new industries. Even the State Government will allow 10 per cent., which is a fair thing; but the difference between the 5 per cent, allowed by the Commonwealth and the 10 per cent, allowed by the State is a robbery from the profits which are made by industrial concerns. 2087 KKZ New South Wales 0 0 GARDINER, Albert Senator GARDINER .- I join with Senator Pratten in resenting .the imputation of the Vice-President of the Executive Council (Senator Millen), that there is something behind this discussion. I did not rise to prolong the debate on that account, but to suggest to Senator Pratten that he should submit amendments, and let us deal with them on their merits. If the debate is continued on the lines of criticising a clause and asking the Minister for an explanation, it will be interminable. Therefore, with the view to expedite the consideration of the measure, I suggest to Senator Pratten that, in regard to clauses which are not satisfactory from his stand-point, he should submit definite amendments to improve them. I am sure that if that course were taken we would get on more expeditiously, and also more satisfactorily. I suggest to the Leader of the Senate, too, that he should reserve his gibes, and use them, as he has used them in the past, for the Opposition only. I earnestly appeal to him to refrain from this sort of conduct, because I can see that his gibes hurt a new member of the Senate. Clause agreed to. Clause 8 - The businesses to which this Act applies are all businesses (whether continuously carried on or not) of any description deriving profits from sources , within Australia, excepting businesses carried on -by a municipal corporation' or other local governing body or by a public authority; or by a society registered under a Friendly Societies Act of the Commonwealth or a State or Territory, and not carried on for pecuniary profit; or by or for the exclusive benefit of a religious, charitable, or public educational institution; or any company carrying on the business of life insurance so far as regards its life insurance business, but not excluding so much of the profits of that business as is available for distribution to the shareholders; and agriculture, fruit-growing, the maintenance of dairy herds for the supply of dairy products, pig and poultry raising, and the business of cooperative companies engaged for the main part in the manufacture, preparation, or wholesale distribution of foodstuffs, the produce of Australia; and offices or employments; and any profession the profits of which de pend mainly on the personal qualifications of the person by whom it is carried on, and in which comparatively little or no capital expenditure is required; and businesses where the principal business consists of mining for gold: and (/) businesses commenced since the fourth day of August, 1914, which, in the opinion of the Commissioner, derive the whole of their profits from the recovery from waste manufactured products of any materials which are used for the production of munitions of war, but including the business of any person taking commissions in respect of any transactions or services rendered, and of any agent of any description (not being a commercial traveller, or an agent whose remuneration consists wholly of a fixed and definite sum not depending on- the amount of business done or any other contingency ) . (3.) When any resident of Australia, who is on active service outside Australia with the naval or military forces of any of the Allied Powers in connexion with the present war, is. the owner of, or is a partner in a business to which this Act applies, and who before he went on active service devoted the whole or the greater part of his time in connexion with the management of the business, and whose military or naval duties require him to be in any part of the field of operations in connexion with the1 war where there is danger to life as a result of the operations of enemy forces, such person shall - when the sole owner of a business be exempt from liability to pay the wartime profits tax ; [b) when a partner in a business been titled to a refund from the Commissioner of the part of the tax payable by the partnership which bears the same proportion to the tax payable by the partnership as his interest in the profits of the partnership bears to the total profits. 2088 KUL New South Wales NAT Vice-President of the Executive Council 1 0 MILLEN, Edward Senator MILLEN . - I wish to insert after the word "Australia," in paragraph b, the following words: - so far as regards the manufacture, preparation, or wholesale distribution of foodstuffs, the produce of Australia. The paragraph exempts from the operation of the tax businesses relating to agriculture, fruit-growing, the maintenance of dairy herds for the supply of dairy products, pig and poultry raising, and the business of co-operative .companies engaged for the main part in the manufacture, preparation, or. wholesale distribution of foodstuffs the produce of Australia. The insertion of the words I have just read would limit any exemption which a company had to profits made in the manufacture, preparation, or wholesale distribution of foodstuffs the produce of this country. 2088 JYR Victoria 0 0 FAIRBAIRN, George Senator FAIRBAIRN . - Before that amendment is proposed, sir, I desire to move - _ That paragraph 6 be amended by the omission of the words " and the business of cooperative companies engaged for the main part in the manufacture, preparation, or wholesale distribution of foodstuffs, the produce of Australia." A co-operative company is a class of company which we all wish to encourage as much as possible, but there are a number of companies carrying on business which have really become proprietary companies; they are exactly the same. There is a general feeling in favour of doing away with the middleman. We want to encourage farmers or fruit-growers to come together and form co-operative companies. But cooperative companies have no business, so far as- 1 can see, to pay dividends or to make profits at all. The basic idea of a co-operative company is that only the actual cost of the distribution of the products should be charged to each individual. The original object in starting a number of these companies was to escape the large charges which were imposed upon them. But they have drifted very far from that aim, and there are n6w a great number of co-operative companies which are neither more nor less than trading concerns, carrying on just the same as ordinary agents who are trading alongside of them. If we exempt co-operative companies of that character from this tax we shall enable a company to trade against an ordinary commission agent who is alongside, and very often a poor man starting in business. It does not appear to me that that would be fair. Some of the wealthier co-operators buy lt he shares of the smaller co-operators, and then they declare large dividends. My view is that 0a co-operative company has no business to make money. We are asked to exempt these companies from a tax on war-time profits, something which they have made over and above what they made in ordinary times. That seems to me a great anomaly. I hope that Senator Millen will see his way to cut these companies out of the Bill, because the idea of a cooperative company making war-time profits, or profits at all, is ridiculous. 2088 JYF 0 0 EARLE, John Senator Earle - Their only object is to save costs to the producers. 2088 JYR 0 0 FAIRBAIRN, George Senator FAIRBAIRN - That is so. 2088 K1J 0 0 PRATTEN, Herbert Senator Pratten - They must pay interest on the capital they use. 2088 JYR 0 0 FAIRBAIRN, George Senator FAIRBAIRN - That is quite understood; but if they pay interest they cannot make war-time profits. No hardship would be inflicted upon a cooperative company if it were not exempted from this tax. 2089 KUL 0 0 MILLEN, Edward Senator Millen - It would not pay any tax though, either way. 2089 JYR 0 0 FAIRBAIRN, George Senator FAIRBAIRN - I know dozens of companies which started as cooperative companies, but which are now Ordinary trading concerns, the same as any other agency companies. If we put bastard co-operative companies in a favorable position by exempting them from the tax on war-time profits, we shall enable them to swallow up all the small agents in this country. 2089 KUL 0 0 MILLEN, Edward Senator Millen - Who first acquired the shares in the companies to which you refer ? « 2089 JYR 0 0 FAIRBAIRN, George Senator FAIRBAIRN - A company was started, and there were so many shares representing the capital originally paid in. The richer men in the company bought out the poorer men. The smaller co-operator, as a rule, gets hard up, and sells his shares to the richer co-operator, who then becomes the owner of the cooperative company, and it trades exactly the same as an ordinary company. I, do not think that we would inflict any hardship if we did not exempt these companies from the tax. If they make war- time profits, they should pay the tax. 2089 KKZ New South Wales 0 0 GARDINER, Albert Senator GARDINER . - I have a prior amendment to move, sir. I intend to move the omission of all the words from the words " educational institution," in paragraph a, down to and including the words " services rendered," in paragraph /. 2089 KUL FT; ANTI-SOC from 1910; LP from 1913; NAT from 1917 0 0 MILLEN, Edward Senator MILLEN - I take it that the effect of that proposal will be to strike out all the exemptions in the Bill. 2089 KKZ 0 0 GARDINER, Albert Senator GARDINER - Practically all the exemptions of businesses. I do not propose to strike out the exemptions in regard to profits which are not taxed. What the Bill purports to do is to tax war-time profits. Yet the Committee is asked to adopt that method of holding the balance fairly between two different kinds of businesses. Take a produce business which is conducted by a co-operative concern, in opposition to a profits business which belongs to an ordinary company, and, therefore, is not co-operative, or which is carried on by a single individual. Why should two businesses, making equal profits and run on the same business lines, have to pay a war-time profits tax, and another business have no tax to pay? That differentiation should not be allowed. I may be accused of wanting to tax agriculture. Suppose that after a man had been farming for some years he found that it would be more profitable to dispose of his farm and buy a business. Suppose that he sold his farm to a man who had been engaged in a business for some time, and with the proceeds bought that business. By bringing business methods to bear on the work of farming the new farmer finds that, owing to the increased prices for his produce in war time he is making a handsome return, perhaps a fortune. Although the old farmer has invested his capital in a business, he finds that the whole, or the greater part, of his return during the war period goes into the business. If it is to be a war-time profits tax, let it bear evenly upon all shoulders. 2089 K18 0 0 BAKHAP, Thomas Senator Bakhap - When you say " a war-time profits tax," are you using a phrase which is synonymous with wartime profits? 2089 KKZ 0 0 GARDINER, Albert Senator GARDINER - If we were to call this a tax on excess war-time profits it would probably be a more accurate description. 2089 K1J 0 0 PRATTEN, Herbert Senator Pratten - I rise to order, sir. I draw your attention to the fact that there are two speeches going on in the chamber just now. 2089 KKZ 0 0 GARDINER, Albert Senator GARDINER - I do not mind that, sir. It rather helps me to have conversations going on around me, but I thank the honorable senator all the same. 2089 10000 0 0 SHANNON, John The CHAIRMAN (Senator Shannon - Order ! 2089 KKZ 0 0 GARDINER, Albert Senator GARDINER - Under the provisions of this Bill the farmer who sold his farm and bought a business would have to pay a huge tax. But the man who sold out of the business, and went into farming, would be allowed his profits. If that is the position, we are legislating for one class of the community against the other, whereas legislation should be evenly balanced, and we should aim at dealing out even-handed justice to all sections. 2089 K18 0 0 BAKHAP, Thomas Senator Bakhap - I should like you to emphasize the principle of equity that should obtain. 2089 KKZ 0 0 GARDINER, Albert Senator GARDINER - That is what I am aiming at. Taking a comprehensive view of the clause, we must meet with failure if we say, " This man shall be exem.pt, and that man shall not; this interest shall be exempt, and this one shall not." However, we have the Bill before us as the result of the recent elections. The people asked for it, we promised it to them, they are going to get it, and as I want them to get it in the shape that will be most acceptable to them, I move, as a test amendment - That after the words " educational institution " in sub-clause 1 paragraph a, the word " or," be left out. If that is carried I shall move that all the exemptions I indicated be struck out. 2090 KTD New South Wales 0 0 MCDOUGALL, Allan Senator MCDOUGALL . - I believe, in the words of the Prime Minister, " We must look to the wealthy people to provide the money to carry on this war ; everybody must pay ; none shall escape." But by this Bill more will escape than are going to pay. It is going to strangle some rising industries that we should foster, while allowing others who have made large profits during the war to escape. Why is the agriculturist exempted? Why is the pastoralist exempted? They have all made money during the war . whereas the business of a man who is trying to produce something that is necessary for the industries of this country is to be strangled. I have previously mentioned a firm producing fire-bricks, a necessary article which has to be imported if it is not made here. They have spent £25,000 in perfecting this silesia brick, they made no profits until last year, and now they are going to be taxed on those profits. Opposite their factory, in New South Wales, there is a pastoralist's run; he has made enormous profits out of the sale of beef during the war, but he is to escape scot-free. 2090 KUL 0 0 MILLEN, Edward Senator Millen - Pastoralists are not exempt. 2090 JYR 0 0 FAIRBAIRN, George Senator Fairbairn - The newspapers have been misleading the public on that point. 2090 KTD 0 0 MCDOUGALL, Allan Senator MCDOUGALL - At any rate, the agriculturists are to escape. The Bill has been brought forward by a Government composed of two sections which have been diametrically opposed to one another i-i their methods of taxation in the past. It hardly seems possible that they could bring in a Bill which would give satisfaction to all their following. If, even at this late hour, we struck out all the exemptions except those of charitable institutions we would make it much more just than it is, because now it picks out certain incomes for taxation and others for exemption. The only fair way to deal with it is to strike out the whole of the exemptions, and let every one pay on the same basis. Senator EARLE (Tasmania) [12.351.- I am sorry I cannot support Senator Gardiner's proposal to abolish all exemptions. I realize the truth of what he has said regarding the hardship which, may be inflicted on some business men, but there are certain industries in this country which at a time like this must be particularly guarded and fostered. While doing that, we must recognise that the purpose of the Bill must be carried out, which is to get extra revenue from the source which is most able to afford it, and which in the interests of Australia we can most legitimately levy on. 2090 KKZ 0 0 GARDINER, Albert Senator Gardiner - Do you think the man who grows wheat should be exempt, and the man who grows wool should be taxed ? 2090 JYF 0 0 EARLE, John Senator EARLE - The man who grows wool is probably in quite a good position, owTng to the demand for wool and the high price, to pay extra taxation at a time like this. At no period in 'the history of any country has it been more important that the protection or fostering of the primary industries for the production of the necessaries of life in Australia should be undertaken. On the 6th August, 1914, speaking to a body of miners to try to induce them to continue working, I said the man behind the plough or behind the pick before this war was over would be of equal importance with the man behind the gun. That expression stands good today. Following up that policy, the Government of which I was Premier advanced a considerable sum for the purchase of seed wheat to give the farmers every opportunity to prosecute this policy of production. The farmers in Tasmania took advantage of it, and acres of land went under cultivation which had not been under cultivation before. We have to follow the same policy, and, although we are under difficulties at the present time to get our wheat away, I am sanguine that they will be overcome. Every bushel of wheat and other agricultural produce that can be exported will be of the utmost value to the Allies before the war is over. 2090 K18 0 0 BAKHAP, Thomas Senator Bakhap - Yes, if the policy cf building ships is stimulated and encouraged by allowing ship-builders to earn profits. 2091 JYF 0 0 EARLE, John Senator EARLE - Honorable senators seem .to follow the policy that because there is something in the Bill which is wrong, they are going to put something in which is as bad or worse. I will help the honorable senator to exempt shipbuilders from the payment of this tax. It is a new industry, essential to the interests of Australia. I will help to exempt from the tax new industries which, as Senator McDougall pointed out. are of vital importance to the nation. If, by grasping at the increased revenue to be derived from this tax. we retard the introduction and establishment of industries which will be for all time an advantage to the Commonwealth, we shall be grasping at the shadow and losing the substance. Vital and important as it is that we should have money for the prosecution of the war, we must not get it at the expense of retarding the industries cf Australia. The producing industry is of such importance, particularly at this time, that there is a justification for its exemption from the Bill. Hence, while I am prepared to assist to exempt new industries which have been started or are about to be started, and to remove exemptions from such persons as professional men, many of whom, I believe, receive considerably increased incomes in consequence of the war, I cannot vote to remove from the list of exemptions an industry which is vital to the interests of the nation and its Allies. I noted Senator Gardiner's illustration of the farmer and the business man changing places, but the farmer is carrying on a business of vital importance to the nation, and the other goes into the trading business, which, although useful, is not vital. I admit it is hard on him to tax him in this way - it is hard on anybody to have to pay an excess fax - but if we are going to have a Bill at all. we cannot avoid it. We must- pass a Bill of this kind, and if we find anomalies in it, we must submit to them. We cannot meet all such objections as that raised by Senator Gardiner if we are going to have an excess profits tax at all. I recognise the force of his argument, but it is impracticable to carry out his wishes. 2091 K1J New South Wales 0 0 PRATTEN, Herbert Senator PRATTEN . - I intend to vote for the omission of all the exemptions. Going back to the genesis- 2091 JYF NAT 0 0 EARLE, John Senator EARLE - Let us have Revelations first. 2091 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - The revelations will come in about three or six months from the honorable senator's constituents, when they begin to feel the complications of this Bill. The policy of the National Government was to impose a war-time profits tax, and it was announced, even by the Leader of the Government in this Chamber (Senator Millen), that all those persons who make extra profits in war time ought to be taxed. With such a long list of exemptions, this Bill will not tax all those persons who have made extra profits during the war. I have every sympathy with the man on the land, but I fail to see why an extra profit made by a fruit-grower, for example, should not be taxed if ,an -extra profit made by the man who dries that fruit is to be taxed. I cannot see why an extra profit made in wheat-growing should not be taxed equally with an extra profit made by the millers in rolling that wheat. I fail to understand why a doctor should escape this taxation when an agent is to be subjected to it. I cannot see why, under this Bill, an accountant, a solicitor, or a barrister should not be required to pay when a broker is to be taxed. There is no fairness whatever in the exemptions contained in the measure. Gold-mining is to be exempted from its operation, but tin-mining - although tin is of no greater average value since the war than it was- in the three years immediately prior to the war - is to be taxed. . Many of the wealthy mining companies in Australia have already exempted themselves from this proposed taxation by making no greater profits during the war period, despite the rise that there has been in the value of metals, than they made prior to the war. Last night I saw the balance-sheet of one of these companies, which fully confirms all that I said in this connexion on the motion for the second reading of the Bill. If we must have a measure of this kind let us tax- everybody who m,akes an extra profit, and exempt nobody. When once we commence to make exemptions we begin to complicate the issue. I hope that the amendment will be carried, but my attitude towards it has not been influenced by the fact that it has been submitted by ' the Leader of the Opposition (Senator Gardiner). No m.atter how heavy may be the taxation that is imposed upon the trading and mercantile community of Australia, there will be far less dissatisfaction, if we impose a heavy tax which will hit everybody alike, than there will be if we impose p, light tax which will make flesh of one and fowl of another. I shall vote for the elimination of all exemptions. If the amendment is defeated I shall propose a new clause which will exempt somebody else. 2092 KMP New South Wales 0 0 GRANT, John Senator GRANT . - I am not sure that Senator Gardiner's amendment is sufficiently comprehensive. 2092 JU7 0 0 DE LARGIE, Hugh Senator de Largie - There is one very prominent business . which has been omitted from it. 2092 KMP 0 0 GRANT, John Senator GRANT - Possibly. I am Very much amazed at the keen interest that is exhibited in the Bill by honorable senators of the Ministerial party. They seem to realize that under its operation a large number of their constituents will be asked to p,»y something towards the national 'revenue, and, apparently, that payment will be a very unpleasant procedure. There appears to be one striking inconsistency in this clause. Why should we tax any person's business if we permit a solicitor to go soot-free? Surely if we are prepared to fasten on to a flour miller, and to make him pay this tax, solicitors and barristers ought .also to be obliged to contribute to the national exchequer ! Of course, it is impossible to accurately ascertain what fees solicitors earn. Some of them do not make very much, but others make substantial incomes 2092 K18 0 0 BAKHAP, Thomas Senator Bakhap - Do not they pay income tax? 2092 KMP 0 0 GRANT, John Senator GRANT - And other persons who will be subjected to the operation of this Bill also pay income tax. 2092 K18 0 0 BAKHAP, Thomas Senator Bakhap - Only if they make profits as the result of the war. 2092 KMP 0 0 GRANT, John Senator GRANT - If a man is making a profit during the war period he ought to be required to pay the tax. The distinction between war profits and war-time profits is a little too fine for me to appreciate. Seeing that we are bound to collect a great deal of money to enable us to prosecute the war, we ought not to countenance such a distinction. It has been asserted that since the introduction of the maternity allowance the fees of medical men have increased to such an extent as to annex a very substantial portion of that allowance. Why should these men escape taxation ? It is almost impossible to differentiate between what are, and what are not, war-time' profits. T7nder this, clause solicitors, barristers, and doctors, together with a whole army of other persons who can afford to pay taxation just as well as can some 'of the friends of Senator Fairbairn - some of the big squatters of this country - will be exempt from taxation. It is very commonly stated that men who possess no property whatever are making huge profits in Australia, and authorities like John Stuart Mill and Adam Smith have erroneously laid it down that such persons ought to be called upon to pay taxation. The Bill will interfere' with. industry all along the line, it will nob create any fresh avenues of employment, and it seeks to take from people something they have earned, arid to .use it for the benefit of the community. As the Government possesses a substantial working majority in this Chamber the passing of the Bill is a foregone conclusion. 2092 K18 0 0 BAKHAP, Thomas Senator Bakhap - The honorable senator makes it a foregone conclusion. He denounces the measure as an inequitable one, and yet he supports it. 2092 KMP 0 0 GRANT, John Senator GRANT - Honorable senators upon this side of the chamber are in a minority. Of themselves they can do nothing. But if honorable senators opposite who are opposed to the Bill will act in .accordance with their convictions, the measure may not pass in its present form. I repeat that there is no justification for exempting solicitors and doctors from the operation of this Bill. It is also proposed to exempt profits arising from gold-mining operations. ' Why should that be done if we tax the profits arising from mining wolfram, molybdenite, scheelite, and tungsten ? 2092 K18 0 0 BAKHAP, Thomas Senator Bakhap - Why did the honorable senator tell the people that the purchasing power of a sovereign is only 12s now as 'compared with its purchasing power in the pre-war period ? 2092 KMP 0 0 GRANT, John Senator GRANT - The proposal to> exempt profits arising from gold-mining, while taxing profits accruing from the mining of minerals, seems to me to be so unfair that even honorable senators opposite will not approve of it. I shall support the amendment of Senator Gardiner. I am entirely opposed, to exemptions, and I only regret that he has not moved for the elimination of all exemptions." 2093 K18 Tasmania 0 0 BAKHAP, Thomas Senator BAKHAP . - It is curious to note the perverted logic that is being employed in the discussion of this Bill. 2093 JZ9 0 0 O'KEEFE, David Senator O'Keefe - The Vice-President of the Executive Council (Senator Millen) says that the honorable senator's logic is not too good. 2093 K18 0 0 BAKHAP, Thomas Senator BAKHAP - He may say that, but I think that in private he entertains a different opinion of the whole matter, just as does the Treasurer (Sir John Forrest). It seems to me that we have been making mists through which to see less clearly, because honorable senators are supporting a measure which embodies an inherently vicious principle. I, too, will agree to to be elimination of all exemptions, if only profits directly traceable to war conditions are to be taxed. 2093 KMP 0 0 GRANT, John Senator Grant - That is the idea. 2093 K18 0 0 BAKHAP, Thomas Senator BAKHAP - It was acknowledged by the Vice-President of the Executive Council last night th,at it is intended to tax profits earned during a certain arbitrary period called the war-time period, irrespective of whether those profits can be traced to war conditions or not. Such a principle is inherently vicious. My attitude towards the amendment is quite different from that of Senator Pratten. He regards it as unfair, but wishes to serve out the misery and inequity all round. Sitting suspended from 1 to 8.30 p.m. 2093 K18 0 0 BAKHAP, Thomas Senator BAKHAP - Senator Pratten sees elements of grave danger in this Bill, and in this clause, yet he is willing to. accept an amendment so sweeping in its character as to make the inequitable principle of the measure of general application. He would drag all industries' into the whirlpool- I am opposed to the principle embodied in the Bill, and I therefore take up another attitude. I regard every industry that is saved from the operation of the Bill as something gained. 2093 K1J 0 0 PRATTEN, Herbert Senator Pratten - " A brand plucked from the burning." 2093 K18 0 0 BAKHAP, Thomas Senator BAKHAP - Exactly. So far from objecting to the exemptions already provided for, I have it in contemplation, if possible, to increase the list before the Bill leaves Committee. Nothing, therefore, will induce me to support Senator Gardiner's amendment. It seems to have been forgotten that no profit-earning industry in the Common wealth will escape taxation. The industries which derive their profits from war conditions, in common with all other industries, will be subject to the provisions of the Income Tax Acts. To my great astonishment, the Vice-President of the Executive Council, despite the mental acuteness with which we are all prepared to credit him, denied last night that from the early stages of the discussion of this matter -tine idea was that there should be taxation of war prdfits, and not of wartime profits. 2093 KUL 0 0 MILLEN, Edward Senator Millen - I stated that the original idea in the minds of most people was a war-profits tax. 2093 K18 0 0 BAKHAP, Thomas Senator BAKHAP - With great deference to the honorable senator, I say that the idea in the minds of most people now is that the measure to be passed is one for the taxation of profits directly attributable to war conditions. In a letter appearing in this morning's Argus, under the heading "War Profits Tax," the writer quotes Mr. Groom. He has a grievance, in common with every one who is protesting against this strange measure. He mentions that at page 1702 of Hansard for this session, Mr. Groom is reported as having said - Our object is to make it clear that only wartime excess profits shall be liable. 2093 KUL 0 0 MILLEN, Edward Senator Millen - " War-time." 2093 K18 0 0 BAKHAP, Thomas Senator BAKHAP - Yes, but "excess " profits. My contention is that many enterprises that materialized before and since the beginning of the war have no pre-war standard of profits, or any profit directly derivable from war conditions, and yet they will be taxed under this measure. I do not suppose that my protests will be very effective. I did not anticipate that they would, but I must make them heard. I welcome any opportunity which the close investigation of the various clauses of this Bill will give honorable senators to show the public that they are not insensible to the injustices which will almost inevitably be inflicted by its instrumentality. I am not going to adopt the attitude adopted by Senator Gardiner, who says that the measure may be wrong or right, but whether wrong or right, everything must be swept into it. I am sorry that such a clear reasoner as Senator Pratten should, perhaps in sheer desperation, have allied himself with Senator Gardiner in this matter. 2094 KKZ 0 0 GARDINER, Albert Senator Gardiner - The honorable senator does not believe in sweeping all in when it is a matter of money, but he does when it is a matter of men. 2094 K18 0 0 BAKHAP, Thomas Senator BAKHAP - I believe in sweeping everything in that can be shown to be directly attributable to the conditions set up by the war. I believe in taking that money to meet war expenditure. In respect of such profits, I am not in favour of any exemptions. - Senator Gardiner. - Yet the honorable senator is going to vote for exemptions. 2094 K18 0 0 BAKHAP, Thomas Senator BAKHAP - Because this is not a measure for the taxation of profits directly attributable to war conditions. Does Senator Gardiner impugn the logic of my attitude? 2094 KKZ 0 0 GARDINER, Albert Senator Gardiner - I fail to see it. 2094 K18 0 0 BAKHAP, Thomas Senator BAKHAP - There are none so blind as those who care not to see. I believe that the trouble in which we have involved ourselves is due to the attempt to prove the exploitation of the people by men who are benefiting from war conditions. There may be substantial profits made which are directly traceable to war conditions, and if we had adhered carefully to our original intention to secure those profits, we might have readily succeeded in doing so, and at the same time have been guiltless of inflicting any injustice upon the producers of the Commonwealth. But we have been led astray in connexion with the matter, and now, because of some imagined difficulties we are losing ourselves in a wandering maze. 2094 KNB 0 0 GUTHRIE, Robert Senator Guthrie - Let the honorable senator get us out of it. 2094 K18 0 0 BAKHAP, Thomas Senator BAKHAP - I shall get honorable senators out of it if they will follow me. Senator Gardiner must see that if we desired to levy on profits derivable or derived from war conditions, it would be logical to make every producing industry in Australia pay. But if we are not going to adhere strictly to that principle, and if, on the contrary, we are to legislate in terms of expediency, and along the lines of least resistance, not of the taxpayer, but of the legislator, we shall inflict very grave injustice. To show the iniquity incidental to the operation of this clause, Senator Pratten has pointed out that the production of one metal will be exempt, whilst the production of another will be brought under the operation of the Bill. In some respects it may be said that the agriculturist will be worse off ' than the miner under the Bill. The products of the agriculturist are perishable, and in some cases even where they are kept in cold storage they deteriorate. They are a wasting asset as perishable products, but the agriculturist has always his land which, subject to the vicissitudes of the seasons, is always productive. He is in that respect better off than the miner. Although the ore extracted from a mine will not deteriorate for many years, since there are only some very rare ores that become impaired in .value by oxidization, it has to be remembered that the mine is a wasting asset. The life of any mine is an ascertainable period, and there is no endless vista of production in the case of a mineral deposit. Yet it is proposed to allow some mine owners to escape this tax, and to make others pay. It is proposed to allow agriculturists, whose asset - the land - never wastes, to escape. 2094 KKZ 0 0 GARDINER, Albert Senator Gardiner - My amendment would include the agriculturists. 2094 K18 0 0 BAKHAP, Thomas Senator BAKHAP - I am aware of that. It would include them in what I regard as one common ruin. My attitude is that of salvage and rescue, while that of Senator Gardiner is wholesale destruction. And I am sorry that such a level-headed man as Senator Pratten should have been induced to support him. I shall vote against the amendment, and I hope that I have made plain to honorable senators its pernicious character. I have drafted an amendment to be submitted later on, which will deal with this situation, but I have come to the conclusion that the measure is so designated and so drafted- 2094 10000 0 0 SHANNON, John The CHAIRMAN" (Senator Shannon - The. honorable senator will not be in order in discussing the whole measure on this clause. 2094 K18 0 0 BAKHAP, Thomas Senator BAKHAP - I shall content myself with saying that this clause and the proposed amendment of it, considered in themselves, are essentially vicious, and in that respect partake only of the character of the whole measure. Senator GARDINER (New South Wales) [2.431-1 intend to try and reconcile the logical position of Senator Bakhap and my own. The honorable senator is opposed to tke whole Bill. He considers that it is inequitable, and is not therefore prepared to bring any business under it. I am dealing with the particular clause now before the Committee, and it is my purpose, if possible, to make that clause equitable. I believe that the. farmer who secures war-time excess profits from his crop, should be called Upon to pay this taxation as well as the miller who secures war-time excess profits by grinding it into flour. 2095 KNB 0 0 GUTHRIE, Robert Senator Guthrie - What is the honorable senator's distinction between profits and prices? 2095 KKZ 0 0 GARDINER, Albert Senator GARDINER - Senator Guthrie might put a big price upon himself, but it would not be profitable for any person to purchase him at that price. This Bill deals with excess profits made during the war period. I want to put this proposition fairly. Senator Bakhap pointed out that gold, particularly in the mines, is a diminishing quantity, as a company uses up its principal in producing profits from the mine. But does not the same principle apply to coal 1 And yet, under this Bill the coal-mining industry will have to pay the tax. 2095 K5R 0 0 SENIOR, William Senator Senior - But the price for coal varies, and that is not the case with gold. 2095 KKZ 0 0 GARDINER, Albert Senator GARDINER - There may be a varying price for coal, but if the purchasing power of the sovereign, as a. standard of value, varies, then there must be a varying price for gold also. 2095 JU7 0 0 DE LARGIE, Hugh Senator de Largie - No, because gold depreciates while other values appreciate. 2095 KKZ 0 0 GARDINER, Albert Senator GARDINER - In that case, then, there will be less to pay in respect of the gold-mining industry. The Government proposal is to tax the coalmining industry and exempt the rich gold companies which produce this mineral at a great profit. 2095 K18 0 0 BAKHAP, Thomas Senator Bakhap - Is that profit owing to the war? 2095 KKZ 0 0 GARDINER, Albert Senator GARDINER - No. It is due to the fact that the wealthy companies, particularly, have been given a monopoly to reap profits, and Western Australian legislators compel the taxpayers of that State to pay. 2095 JU7 0 0 DE LARGIE, Hugh Senator de Largie - The Western Australian mines are the only gold mining companies in Australia that have to pay taxation on their dividends. 2095 KKZ 0 0 GARDINER, Albert Senator GARDINER - And if one looks at the share list, will find that the Government of Western Australia are allowing foreign shareholders to get the full benefit of the profits from the mines, while the miners themselves work long hours and under harsh conditions for a very small wage indeed. 2095 JU7 0 0 DE LARGIE, Hugh Senator de Largie - They are the highest paid miners in Australia. 2095 KKZ 0 0 GARDINER, Albert Senator GARDINER - The belief I hold is that no miners are paid sufficiently. 2095 JU7 0 0 DE LARGIE, Hugh Senator de Largie - You know very little about mining. 2095 KKZ 0 0 GARDINER, Albert Senator GARDINER - I suppose if I knew half as much as the honorable senator imagines he knows, I would probably be better informed than all the rest of the world put together. 2095 JU7 0 0 DE LARGIE, Hugh Senator de Largie - WelL I do know something about mining. 2095 KKZ 0 0 GARDINER, Albert Senator GARDINER - Yes; because the honorable senator is a good underground engineer. 2095 JU7 0 0 DE LARGIE, Hugh Senator de Largie - I am not half as proficient as you are. 2095 KKZ 0 0 GARDINER, Albert Senator GARDINER - No doubt, because rats are supposed to be good miners. 2095 10000 0 0 CHAIRMAN, The The CHAIRMAN (Senator Shannon - Order ! These recriminations across the Chamber are distinctly out of order. 2095 KKZ 0 0 GARDINER, Albert Senator GARDINER - I want to approach this question fairly. Gold is Crown metal. Who owns it? 2095 KOS 0 0 HENDERSON, George Senator Henderson - Those who get it. 8 2095 KKZ 0 0 GARDINER, Albert Senator GARDINER - It is reserved to the Crown, and yet, under this proposal, the wealthy mining companies are to be permitted to take Crown gold, or, if we regard the Crown as representing the people, to take our gold, and- we are not going to ask them to pay any taxation on their war-time profits. If these mining companies are nob making profits, they will not be taxed. It is not the gold-miner, but the rich gold mine-owners, who will be affected by my amendment. 2095 KOS 0 0 HENDERSON, George Senator Henderson - But the honorable senator knows there are no excess profits on gold mining. 2095 KKZ 0 0 GARDINER, Albert Senator GARDINER - Then the companies will not be taxed. In my opinion, the Bill is inequitable. I do not believe that it is possible to frame any system of taxation that will not bear more unjustly upon one section of the people than another, unless it be the system advocated by Senator Grant so frequently. Senator Bakhap is prepared to exempt certain industries because he believes the Bill to be inequitable. I want to include all industries that are making war-time profits, because I think that all profits should be taxed. If when the measure reaches the third-reading stage, it is not satisfactory to me, I shall certainly adopt a different attitude. I was anxious to see it get into Committee in. the hope that we would be able to put it into an equitable shape. Senator Bakhap) after all, is only making a pretence of opposition, and whenever he sees a chance of escaping, he gets behind the Government. I want to improve the Bill if it is a bad measure. Government supporters are evidently' of that opinion, judging by the criticism it received at their hands, scarcely one member on the Ministerial side having a word to say in favour of it, either here or in another place. If the measure is not improved it will also receive condemnation at the hands of the people. What excuse is there for exempting any section of businesses which have made excess profits during war time? Senator Bakhap says that such concerns will pay income tax, bub will not all those who are included under this measure also be called upon tq pay income tax? At the best this Bill is an expedient, and though I have no doubt Senator Millen will declare that I indorsed its principle in regard to a former measure, I want to say that, so far as this clause is concerned, I never- intend to support any war-time taxation measure that proposes to deal with one industrial section in a manner different from any other. I hold that all industries making profits during war-time should pay this form of taxation. Let us take butter factories or bacon-curing establishments as an illustration. With their plants they can supply the local town with electricity, but because their main business is the handling of produce, they will escape taxation on the profits they may make upon any other business. 2096 KUL FT; ANTI-SOC from 1910; LP from 1913; NAT from 1917 0 0 MILLEN, Edward Senator MILLEN - No. They will only get exemption to the extent that they make their profits out of the exempted portion of the industry. 2096 KKZ 0 0 GARDINER, Albert Senator GARDINER - I am glad to have this assurance, because I was under the impression that the amendment introduced by the Minister -was to the effect I have indicated. Where the main part of such company's business is the handling of produce, and where they supply electric light as a by-product, I believe they will be exempt. But suppose the Minister is right, why should a co-operative concern, producing bacon for profit, be exempt from the operation of this tax, whilst a proprietary business competing with that co-operative enterprise would be called upon to pay an excess war-time profits tax? 2096 K1J 0 0 PRATTEN, Herbert Senator Pratten - Hear, hearl 2096 KKZ 0 0 GARDINER, Albert Senator GARDINER - I submitted my amendment because, unlike Senator Bakhap, I feel utterly incompetent to hold the balance evenly, and distinguish between people who deserve to be exempt, and people who do not deserve to be exempt. It is not fair to allow any concern to get an advantage over its rival. 2096 K1J 0 0 PRATTEN, Herbert Senator Pratten - Hear, hear ! 2096 KKZ 0 0 GARDINER, Albert Senator GARDINER - Let us consider the position of. two big business enterprises. Let us suppose that one business, by careful management, had two years of big profits to its credit, in 1912 and 1913, and that another, and a growing business, in 1912 and 1913, by special, efforts against its rival, reaped its reward in 1915 and 1916. What would be the result under this Bill? The growing business would have to pay a tax on its profits over and above the profits of the previous two years, whereas the other business would escape because of its prewar standard, and, possibly, it would, drive its -rival out of business. 2096 KUL 0 0 MILLEN, Edward Senator Millen - It would not drive its competitor out if the latter were making a profit. 2096 KKZ 0 0 GARDINER, Albert Senator GARDINER - The older business might, in such circumstances, have such an advantage that its rival might be compelled to get out of the business,- but if b.oth companies were taxed equally on their war-time profits, one business concern would not have an advantage over the other. It is altogether unfair to distinguish between businesses making profits, and as I do not feel competent to judge between industries that should be exempt and those that should not, I have submitted my amendment to include all industries making a profit. 2096 KOS 0 0 HENDERSON, George Senator Henderson - Senator Grant says that it is not. comprehensive enough. 2096 KKZ 0 0 GARDINER, Albert Senator GARDINER - If the Committee decides against me I will take up the attitude adopted by Senator Bakhap, and try to exempt from the provisions of the Bill as many industries as possible, because, I maintain, we cannot hold the balance evenly between industries. We cannot and I am not going to make an attempt. I submit the amendment, which may be too sweeping for some honorable senators. As regards gold mines, it will be the rich companies which will be affected. I have no doubt that the gold -mil. vng companies in Western Australia will always have sufficient influence with the Government to secure exemption from just taxation which this Parliament should impose upon them. Question - That the word " or " proposed to be left, out be left out (Senator Gardiner's amendment) - put. The Committee divided. Ayes . . . . ... 7 Noes . . . . . . 16 Majority Ferricks, M. A. Grant, J. Guy, J. McDougall, A. Bakhap, T. J. K. Bolton, Lt.-Colonel Buzacott, E. Crawford, T. W. Earle, J. Fairbairn, G. Foll, H. S. Guthrie, K. S. Henderson, G. Ayes. O'Keefe, D. J. Pratten, H. E. Teller: Gardiner, A. Noes. Keating, J. H. Millen, E. D. Pearce, G. F. Russell, E. J. Senior, W. Shannon, J. W. Teller: de Largie, H. Paib. Maughan, W. J. B. 1 Thomas, J. Question so resolved in the negative. Amendment negatived. 2097 KUL New South Wales NAT Vice-President of the Executive Council 1 0 MILLEN, Edward Senator MILLEN . - Before lunch, Senator Fairbairn brought, up a case of companies which, though legally and technically cooperative companies, had really become proprietary companies, because of the absorption by one or two individuals of the major portion of the shares. I must admit that the case has appealed to me very strongly. No one desires to allow a company or a few individuals to get an advantage denied to Weir competitors merely because they are sailing under false colours. I ask the honorable senator, therefore, to refrain from submitting his amendment now in order to give me an opportunity of seeing how far the case he cited may be provided for by an amendment of the definition clause. The notice given to me by the honorable senator has been too brief to permit me to consult the draftsmen and the Treasurer (Sir John Forrest), but I will see that an opportunity is provided for him to recommit the definition clause should he wish to press the matter on the attention of the Senate at a later period. 2097 JYR Victoria 0 0 FAIRBAIRN, George Senator FAIRBAIRN . - I have much pleasure in falling in with the wish of the Minister, and I therefore ask leave to withdraw my amendment. T have no desire to interfere with bond fide co-operative companies. It is only the bogus concerns which my amendment is aimed at. 2097 10000 0 0 CHAIRMAN, The The CHAIRMAN (Senator Shannon - There is nothing before the Chair at present, and therefore the honorable senator has simply to refrain from moving the amendment. 2097 KUL New South Wales NAT Vice-President pf the Executive Council 1 0 MILLEN, Edward Senator MILLEN .- I move - That sub-clause 1, paragraph b,. be amended by inserting after the word "Australia" the following words :-[-" so far as regards the manufacture, preparation, or wholesale distribution of foodstuffs, the produce of Australia." The effect of the amendment will be to prevent the situation arising which Senator Gardiner referred to a little while ago. Where a company is making profits by carrying on two operations, it will insure that the only profits exempted from the tax will be those which were earned by the manufacture, preparation, or wholesale distribution of foodstuffs, the produce of Australia. Amendment agreed to. 2097 K1J New South Wales 0 0 PRATTEN, Herbert Senator PRATTEN . - I have an amendment to move in connexion with the business of co-operative societies, and I shall be very glad indeed if the Minister will allow the matter to stand over till Tuesday with the ' other matter he referred to in connexion with. Senator Fairbairn's proposed amendment, because by that time I may be in a position to give him several specific instances. It will help, I believe, in the better moulding of the clause. 2097 KUL New South Wales NAT Vice-President of the Executive Council 1 0 MILLEN, Edward Senator MILLEN . - I have every wish to meet the honorable senator, but I doubt if .the amendment of which he has given notice is at all in conformity with the case indicated by Senator Fairbairn. While it is possible to meet that case by an amendment of the definition clause, I do not think it will be possible to meet the case indicated by Senator Pratten's amendment in that way. Therefore, I suggest, unless he has any other objection, that he should proceed with the amendment now, because I do not wish to recommit the whole Bill. By recommitting the definition clause, it will give Senator Fairbairn an opportunity of reconsidering the matter he has raised, but I do not think it will give Senator Pratten a similar opportunity for dealing with the matter he raises in his amendment. 2098 K1J 0 0 PRATTEN, Herbert Senator Pratten - We are not likely to have the whole of the Bill put through before 4 o'clock. 2098 KUL 0 0 MILLEN, Edward Senator MILLEN - I am not without hope. 2098 K1J New South Wales 0 0 PRATTEN, Herbert Senator PRATTEN .- I move - That the following new paragraph be inserted: - " (a) any insurance or trading company of a co-operative nature, whose return in profits to its shareholders or members is limited by its constitution to not more than 10 per centum per annum." All over Australia there are very many co-operative societies which are outside of the particular co-operative societies exempted by the Bill. These societies are buying and selling for their members, and are not making profits in the ordinary acceptation of the term. Their so-called profits are really savings for the members. 2098 KNB 0 0 GUTHRIE, Robert Senator Guthrie - Yes; but there are other kinds of co-operative societies. 2098 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - There are, I admit, kinds of co-operative societies which cannot be distinguished essentially from a business which is merely carried on for profit or for loss. There has been some development of co-operation right through Australia in connexion with various bodies. Yesterday, I referred to the cooperative trading companies in Newcastle, Lithgow, Wollongong, and Sydney. I Have a knowledge of these companies in my own State, and I can sav that they do not make profits in the ordinary acceptation of the term. The dividends are bounded, in some cases, by a 5 per cent, maximum in other cases by an 8 per cent, maximum, and, in other cases, by a 10 per cent, maximum. 2098 KNB 0 0 GUTHRIE, Robert Senator Guthrie - And their "shares are put on the market. 2098 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - No ; I am not referring to those companies whose shares are put on the market. I am alluding to those companies whose directors are very often union officials. The secretary of a company is often a union official, and the directors, too, are union officials. They are all working for nothing, because they want to save money for those whom they supply, and who are members of the company, and wish to-cut out the middleman. The true principle of co-operation, I take it i is an effort on the part of people who come together to cut out unnecessary profits which otherwise they would have to pay. The profits axe only profits in name. They are distributed from time to time amongst those purchasers or suppliers of the company with whom they do business. I would point out to the Minister (Senator Millen) that to bring companies of this sort under the provisions of the Bill, and to take, in some cases, in the future, 75 per cent, of the money they save by co-operation, is a wrong principle. We know that in- England co-operation is growing, and that many societies are on the same basis. I .can definitely say that companies of this sort do not come under the excess profits tax at Home, and I do not think that this Committee should impose a tax upon the companies in Australia. We would be going much too far if we did. While I see very great difficulties in differentiating up to- a fine point between those companies which are essentially co-operative, and those companies which are out to trade for a profit, this Bill should in this matter, and I hope will, give very large powers to the Commissioner of Taxation. These wide powers will be subject to an appeal to the Board of Referees. If there is a dispute as to whether companies of this sort ought to pay or not, the Board of Referees will decide. But if we do not get a provision of this sort inserted to govern the instances of bond fide growing co-operative movements, they must be taxed. There will be no option, because they are not exempted. It will put back co-operation for perhaps a decade. I do not think that any one of us desires to do that, because, after all, co-operation and co-partnership may be the solution of our future troubles. I should be very sorry indeed to see the Commissioner tax savings which otherwise would go back to the purchasers of the goods, or the supporters of the companies or ' societies. I ask the Committee most earnestly to consider this aspect, and see whether some provision cannot be devised, if my amendment is hot particularly acceptable to the majority, whereby we shall not give a set-back to the whole principle of co-operation. Unless some clause is- inserted which will cover bond fide societies, there will be a weakness in the Bill, and we shall live to rue and regret it. If co-operative societies, run in the country in connexion with primary products, are to be exempted, I cannot see why other societies cannot be exempted that are being run in the same bond fide manner to deal with other goods. For the sake of this very m.uteh wanted principle of cooperation in Australia, for the sake of the elimination of the middleman and two or three unnecessary profits, I urge that we should encourage rather than discourage such movements as this. 2099 KUL New South Wales NAT Vice-President of the Executive Council 1 0 MILLEN, Edward Senator MILLEN . - On the face of it, Senator Pratten's proposal would appear to exclude from the Bill a company which does not pay its shareholders more th,an 10 per cent. But if it makes only 10 per cent, profit it is excluded now. Therefore, the honorable senator is proposing to keep out of the Bill some company which is making more than 10 per cent. Honorable senators will find that the amendment provides for the exemption, of any insurance or trading company of a co-operative nature whose return in profits to its shareholders is limited by 10 per cent. This does not mean that it has not made more than 10 per cent., but that it has not distributed more than 10 per cent. 2099 K1J 0 0 PRATTEN, Herbert Senator Pratten - The balance is the saving returned to the shareholders. 2099 KUL 0 0 MILLEN, Edward Senator MILLEN - If the company does not make more than 10 per cent, it is exempted under the Bill now, because it can take 10 per cent, as it's pre-war standard. Therefore, either the amendment is sucplusage, or Senator Pratten invites us to say that companies making more than 10 per cent, shall be exempt; the only essential Condition being that they do not distribute more than 10 per cent, of their profits. But there are plenty of ways by which a company making 20 per cent, or 30 per cent, can secure those profits quite comfortably to those interested in it, whilst only returning 10 per cent, to its shareholders. I leave it to the Committee to say whether a company making anything up to 50 per cent, shall be exempted merely because it only distributes 10 per cent, to its shareholders. 2099 K1J 0 0 PRATTEN, Herbert Senator Pratten - Will you assure the Committee that the so-called profits, or savings, as I prefer to call them, which are returned to the purchasers or policy holders, will not be taxed ? 2099 KUL 0 0 MILLEN, Edward Senator MILLEN - This proposal was not put up in the interests of those who do business with the company. It is put up in the interests of the company itself, because it speaks' of the company, and not of those who deal with it. This would cover the case of a company started, as has been done in New South Wales, in consequence of the passage of the Workmen's Compensation Act. A number of people with trade interests in common have formed a company. They are co-operating; they are shareholders in the company, and do the insurance business within the trade with which they are associated; but there are many people outside them who are not shareholders but also do business with them. Any profits that are made may be returned as bonuses, or they may not. That rests with the company. But the articles of association' provide for a limit of, say, 10 per cent, to be paid in dividends. If the company makes 40 per cent, or 50 per cent., the extra profit will go into those hidden reserves which enable the company to extend its operations, and, therefore, represents savings or profits that ought legitimately to be taxed. 2099 K1J New South Wales 0 0 PRATTEN, Herbert Senator PRATTEN . - I referred principally to bond fide co-operative distributing companies. But co-operative companies have been formed in New South Wales by various associations for the purpose of cooperating together, particularly in regard to employers' liability insurance. Those societies put up a certain amount of capital. In their articles of association they limit the interest on that capital to 10 per cent. They are working the -business on a cost of about 10 per cent. Whereas the ordinary accident company as we see it in Melbourne or Sydney spends about 30 per cent, of the premiums, these cooperative societies spend about 10 per cent, of the premiums. At the end of the year they bring down a balance-sheet showing a so-called profit of so much, and the whole of that profit over and above the 10 per cent, paid to the shareholders is given back to the policy-holders in the company the next year. If a butcher, baker, or candlestick maker joins the company, and gets his accident insurance cheaper thereby, there -is an accretion to his income to a corresponding extent upon which he will pay income tax. But if the Government say under this Bill that in the future no one may co-operate for a purpose of that sort, because if they do the Government will take 75 per cent, of the savings they make, they will simply squash these societies. 2100 KUL 0 0 MILLEN, Edward Senator Millen - No; the company will charge more reasonable premiums, and, therefore, have less to distribute. 2100 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - Surely the honorable senator does not want to upset the procedure of the whole .of the business world while this Bill is in operation. 2100 KUL 0 0 MILLEN, Edward Senator Millen - You have done that now by these co-operative companies being able to do for 20 per cent, what you say the proprietary companies used to do for 50 per cent. 2100 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - I know a great deal about these cases. Is the Committee determined to take the savings made by co-operation throughout Australia? If it is, it .ought to say so, and not exclude even the primary producer. If honorable senators take that attitude they stand convicted as opponents of cooperation in any shape or form. This would be very unjust1 in the case that Senator Millen has mentioned, if the Income Tax Commissioner, in his sometimes ruthless and relentless way, puts the collection of money before equity. Co-operative companies, such as I have mentioned, if they are bond fide, and the shareholders cannot get at any time more than 10 per cent., and if all the profits of one year are returned to its supporters in' the following year, are really not making a profit at all. They represent bond fide co-operation. Profit is what the investors in a company get or have in reserve. This is a matter which does not affect the reserves of a company. The whole question is whether the savings of any co-operative company, present or future, in Australia, shall be subject to excess tax. 2100 KUL New South Wales NAT Vice-President of the Executive Council 1 0 MILLEN, Edward Senator MILLEN . - The company Senator Pratten refers to is not co-operative at all, but proprietary. A number of people having their own insurance to do, form themselves into a company. The-" take their own insurance business to that company, but they also take business from any member of the public. That is no more entitled to be called a co-operative company than any other proprietary company which, doing its own business, also does business with the general public. Senator PRATTEN (New South Wales) [3.25].- Senator Milieu's statement is incorrect. The company does not do business with any member of the public. It confines itself to its own class and its own trade. , 2100 KUL 0 0 MILLEN, Edward Senator Millen - Does it take business only from those who have an interest in its share capital? 2100 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - It takes business only from those associated with the same class of industry. 2100 KUL 0 0 MILLEN, Edward Senator Millen - Yes, but not shareholders in that company. 2100 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - That raises another point. Will the Vice-President of the Executive Council agree to an exemption in favour of companies which do business only amongst their own shareholders 1 Will he exempt companies where two-thirds of the business is of that character the same as in -the primary industries ? 2100 KUL 0 0 MILLEN, Edward Senator Millen - No; this Bill does not exempt co-operative companies. 2100 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - It exempts primary co-operative companies. It has been pointed out that this is an injustice as against proprietary and privately owned companies. I beg the Vice-President of the Executive Council to consider this case, and allow me to bring some evidence in regard to these particular companies - I have it partially collected now - so that no injustice shall be inflicted. 2100 K5R South Australia 0 0 SENIOR, William Senator SENIOR . - In the consideration of the Insurance Bill some time ago, a matter cropped up similar to that which Senator Pratten has brought forward. It appears to me that if these companies expended the money in the way of soliciting trade, they would escape this taxation. But because they do not, but return it to their shareholders, they are , to be penalized. The so much eulogized thrift is to be fined. If a company eliminates expenses, and returns the money to those who have subscribed it, it is to be punished. 2100 KUL 0 0 MILLEN, Edward Senator Millen - What the company referred to does is like what is done by a " great many people who give you coupons with your purchases, but they are nob cooperative. 2101 K5R 0 0 SENIOR, William Senator SENIOR - The Minister will have to define " co-operation." If all the business men of Melbourne combined to do their own fire insurance . business amongst' themselves, and cut out the expenses of agencies and so forth incurred by proprietary insurance companies, they would not be a co-operative society, according to Senator Millen. I contend that if they limit the business to themselves, co-operate amongst themselves, and return the savings to themselves, they are to all intents and purposes cooperators. 2101 JRW 0 0 CRAWFORD, Thomas Senator Crawford - If they returned the savings before the end of the year it would not be a profit. 2101 K1J 0 0 PRATTEN, Herbert Senator Pratten - They do not make them until the end of the year. 2101 K5R 0 0 SENIOR, William Senator SENIOR - Then if the savings are returned before the 31st December, they are legitimate, but if they are held over until the 2nd January they constitute a crime. Is that the position the Minister takes up? 2101 KUL 0 0 MILLEN, Edward Senator Millen - What I say is that these companies are not co-operative companies in the true sense of the word. 2101 K5R 0 0 SENIOR, William Senator SENIOR - Will the Vice-President of the Executive. Council explain what he means by " the true sense of the word"? 2101 KUL 0 0 MILLEN, Edward Senator Millen - There are companies which are made up of the persons who provide them with their business, and who are also shareholders in their capital. 2101 K5R 0 0 SENIOR, William Senator SENIOR - In a co-operative company a portion of its shares may be held by merchants and storekeepers, who perhaps deal with a cheese and butter factory. In such a company the majority of the shares will probably be in the hands of those persons who supply milk to that factory. According to the reasoning of the Vice-President of the Executive Council, that portion of the profits of the company which is distributed amongst the merchants and storekeepers who provided it with the capital with which to start operations, should be exempt from taxation, while that portion which is distributed amongst, those who supply the factory with milk should be taxable. I cannot understand how the Vice-President of the Executive Council can argue that such a company is not a co-operative company. It represents a co-operation cf effort for a definite purpose, that purpose being the conferring of a mutual benefit. 2101 KUL 0 0 MILLEN, Edward Senator Millen - Then the man who buys anything, ,and the .individual who sells it, may be said to. co-operate for their mutual benefit. 2101 K5R 0 0 SENIOR, William Senator SENIOR - I differ from the honorable senator. The individual who assists another to convert something into an article which is useful is a co-operator in the truest sense of the word. Take the case of a number of butchers in Adelaide, who have associated themselves together as an accident insurance society. That society covenanted to cover risks in connexion with the butchering trade. -Its members are co-operators. They are trading, not in the sense of manufacturing something, but they are trading cooperatively. Their profits are distributed amongst themselves. So long as the profits in a company are limited to the persons within that company, I say that those persons ,are co-operators. The position of a proprietary company is very different. Its business is carried on for the benefit of its owner or owners. I think that Senator Pratten has made out a very good case for his amendment.' We ought to encourage, rather than discourage, groups of individuals to band themselves together for the purpose of establishing accident insurance funds, covering fire insurance risks, and generally carrying the burdens that are associated with such institutions. 2101 KNB 0 0 GUTHRIE, Robert Senator Guthrie - The trouble is that we cannot make them carry the burdens. 2101 K5R 0 0 SENIOR, William Senator SENIOR - That is because the number of persons covered by them is so small. My honorable friend may argue that, because the Adelaide Co-operative Society could not carry the burden imposed upon it in the early stages of its existence- 2101 KNB 0 0 GUTHRIE, Robert Senator Guthrie - There were only a dozen people in it then. 2101 K5R 0 0 SENIOR, William Senator SENIOR - That society could not. then carry the burden that it is carrying to-day, when there are a thousand persons interested in it. 2101 KNB 0 0 GUTHRIE, Robert Senator Guthrie - Elder, Smith, and Company occupy a similar position. 2101 K5R 0 0 SENIOR, William Senator SENIOR - No. I can purchase the shares of Elder, Smith, and Company in the open market, but I cannot purchase the shares of the Adelaide Co-operative Society there. I hope that the amendment will be pressed. Senator PRATTEN (New South Wales) withdraw my amendment with a view to substituting for it another amendment which may prove more acceptable to honorable senators. Amendment, by leave, withdrawn. Amendment (by Senator Pratten) pro- That the following new paragraph be inserted' : - " (fl) any company of a co-operative nature, consisting of persons who are providing the business of the company and also providing its capital, . whose return in profits to its shareholders or members is limited by its constitution to not more than 10 per cent, per annum." 2102 KNB 0 0 GUTHRIE, Robert Senator Guthrie - That will take in half the banks. 2102 K5R 0 0 SENIOR, William Senator Senior - It is altogether too wide. 2102 KNN Tasmania 0 0 GUY, James Senator GUY .- It has occurred .to me that an anomaly may arise in dealing with co-operative societies, inasmuch as the various State Acts do not all provide for the registration of these societies in the same way. If I remember aright, the Victorian Act provides that cooperative societies must be registered under the Friendly Societies Act. If that be so, these societies in Victoria will be exempt from the operation of titis Bill, but in States in which the Act does not provide for their registration under the Friendly Societies Act, they will be liable to the tax. 2102 KUL New South Wales NAT 1 0 MILLEN, Edward Senator MILLEN . - Senator Guy has raised the question of the position of co-operative societies which are not registered under the Friendly Societies Act. I would point out to him that, under this Bill, these societies occupy exactly the same position irrespective of whether they are registered or not. The only societies which will be exempt from its operation are those which are not carried on for the purpose of profit or gain. Question - That the paragraph proposed to be inserted be inserted - put. The Committee divided. 7 17 Majority 10 BaEhap, T. J. K. Barnes, J. Keating, J. H. Mcdougall, A. Barker, S. Bolton, Lt.-Colonel Buzacott, R. Crawford, T. W. de Largie, H. Earle, J. Fairbairn, G. Guthrie, R. S. Guy, J. Maughan, W. J. R. Pratten, H. E. Senior, W. Teller : Grant, J. Henderson, G. Millen, E. D. Needham, B. O'Keefe, D. J. Pearce, G. F. Russell, E. J. Shannon, J. W. Teller: Foll, H. S. Pair. | Thomas, J. AYES NOES Question so resolved in the negative. Amendment negatived. Senator EARLE (Tasmania) [3.47].- If I have not missed my opportunity, and am in order, I should like to submit an amendment to paragraph of sub-clause 1, with respect to the exemption of the professions. 2102 10000 0 0 CHAIRMAN, The The CHAIRMAN (Senator Shannon - Order! The Committee has just rejected an amendment after paragraph /, so that the honorable senator is too late. 2102 JYR Victoria 0 0 FAIRBAIRN, George Senator FAIRBAIRN .- I move- That after paragraph / the following new paragraph be inserted: - " and (g) businesses commenced since the fourth day of August, One thousand nine hundred and fourteen, for the. purpose of mining wolfram, molybdenite, tungsten, scheelite, or any other rare metal used in the manufacture of munitions of war, if the output of -the mine is disposed of to the Imperial Government." I do not think I need say much to commend this amendment to honorable senators. The mines are conducted in a small way, chiefly by working men. Their products are absolutely necessary for the prosecution of the war, and they are being sold to the British Government at the very low price of £360 per ton. In America, £600 per ton is paid for these metals. 2102 KUL 0 0 MILLEN, Edward Senator Millen - The Government are prepared to accept this amendment. 2102 KMP New South Wales 0 0 GRANT, John Senator GRANT . - As Senator Millen has mentioned that the Government are prepared to accept the amendment, I shall not encroach upon the time of the Committee further than to say that I am heartily in favour of Senator Fairbairn's proposal. 2102 K18 Tasmania 0 0 BAKHAP, Thomas Senator BAKHAP , - There seems to me to be a redundancy in the terms of the amendment. I am aware of only two tungsten ores, namely, wolfram and scheelite. 2102 K5R 0 0 SENIOR, William Senator Senior - And molybdenite is mentioned. 2103 K18 0 0 BAKHAP, Thomas Senator BAKHAP - Molybdenite is not an ore of tungsten, but an ore of the metal molybdenum, lb is a redundancy to mention tungsten as an independent ore. To the best of my knowledge, tungsten ores are obtained in two forms - tungsten of iron, which is wolfram; and tungsten of lime, which is scheelite. I respectfully suggest to Senator Fairbairn that as the two commercial sources of tungsten are mentioned in his amendment, the use of the word "tungsten," in addition, is a redundancy. Seeing that the Government have so readily accepted this amendment, I should like to ask: What about tin? It is a metal absolutely essential to the prosecution of the war, and in respect of which it cannot be shown that the average price during the war period has been greater .than the price during the three years prior to the war. 2103 K5R South Australia 0 0 SENIOR, William Senator SENIOR . - I am in favour of the amendment. I believe Senator Fairbairn is aiming in the right direction; still I direct attention to the fact that industries are established for the production of other metals, which are quite as important as the industries sought to be protected by the amendment. At the present time, there is an absence of barytes in Australia. We have the metal in the* Commonwealth, but we are importing it. It has been discovered as the result of a recent exploration, is mined, and brought long distances to market. Only to-day I heard that deposits have been found in Victoria. Paper is becoming scarce, and I may inform honorable senators that barium is used for the purpose of perfecting the surface of printing paper. 2103 KPE 0 0 KEATING, John Senator Keating - Also in the manufacture of paints. 2103 K5R 0 0 SENIOR, William Senator SENIOR - Also in connexion with white leads, which are very scarce. It would appear that one class of industry is to be exempt, and others equally important and necessary are to be taxed. 2103 KUL 0 0 MILLEN, Edward Senator Millen - The products of one class are being sold to the Imperial authorities at half the world's price. 2103 K5R 0 0 SENIOR, William Senator SENIOR - The Minister apparently believes that if the product of an industry is sold at half price, there is some virtue in it ; but if it merely supplies a public need, it should be taxed. Another industry which might be mentioned is one exploiting the manufacture of sulphate of lime, gypsum, for the purpose of producing plaster of Paris, which we have been importing largely. I know of another case, where manganese is being exploited to be used with other substances to produce true crockery ware. An honorable senator has referred to the scarcity of fire-bricks, but I know of splendid deposits of pure silicate of alumina which makes the best of fire-bricks. If people invest in these industries to-day, because a peculiarly advantageous opportunity is afforded at this time to give them a start, they are to be penalized under this measure, whilst the production of the metals referred to in Senator Fairbairn 's amendment is to be exempt. I know that potash salts imported in a manufactured form from Germany can be obtained in the Commonwealth. It is strange that when we have a chemical research association under the sheltering wing of the Federal Government, and their researches have disclosed the possibility of the establishment of industries of practical benefit to Australia, honorable senators on this side are apparently prepared to penalize their establishment. There is not one of the substances I have referred to the production of which would not be a real public utility, and involve the employment of many persons. 2103 K8L NAT 0 0 THOMAS, Josiah Senator THOMAS - They are allowed 10 per cent, profit before they are liable to this taxation. 2103 K5R 0 0 SENIOR, William Senator SENIOR - The honorable senator should be aware that very large expense is involved in the establishment of new industries of this kind. Expensive machinery has to be installed, and in many cases it is not long-lived; whilst there must be a considerable period of unprofitable preliminary work. Ten per cent., in the circumstances, is not a reasonable reward for the establishment of such industries. It is unfair that when an attempt is made to establish them it should be crippled by taxation of this kind. There seems to be a determination to allow outsiders to benefit at the expense of Australians. I do not want to see the ores that I have mentioned eliminated, and I hope the amendment will be extended to include them. I could occupy the Committee for a considerable time in showing where there are openings for such enterprises, and how the clause will make them impracticable. For instance, I know that deposits of slate for roofing purposes - an article which is urgently required to-day - could be worked profitably were it not for the fact that any profit obtained from that enterprise would come within the scope of this measure, and be taxed to the extent of 75 per cent. This matter is too important to be allowed to pass without a protest. I hope the Minister will report progress, so as to allow the Committee to discuss this question fully. 2104 JZ9 Tasmania 0 0 O'KEEFE, David Senator O'KEEFE . - The longer the discussion proceeds the greater appear to be the difficulties, and the gathering doubt in the minds of honorable senators as to the justice of allowing any exemption at all. I am convinced I was right in voting for Senator Gardiner's amendment to sweep away all exemptions. If it is fair to exempt the metals mentioned by Senator Fairbairn, would it not also be fair to exempt other metals which are necessary for the prosecution of this war? 2104 KUL 0 0 MILLEN, Edward Senator Millen - Metals which are being sold at less than the market value? 2104 JZ9 0 0 O'KEEFE, David Senator O'KEEFE - It would depend largely on what is regarded as market value. Zinc may be quoted as a very important constituent,' largely used in the manufacture of munitions. Copper, and lead to some extent, are also so used. 2104 JYR 0 0 FAIRBAIRN, George Senator Fairbairn - Would you exempt copper? 2104 JZ9 0 0 O'KEEFE, David Senator O'KEEFE - The interjection from the honorable senator confirms what I have said, that once we start making exemptions we do not know where to' stop. 2104 K18 0 0 BAKHAP, Thomas Senator Bakhap - We shall be perpetrating a greater injustice if we allow no exemptions. 2104 JZ9 0 0 O'KEEFE, David Senator O'KEEFE - The British Government have commandeered all our metals, including those mentioned in the amendment, and it is probable that the producers of these metals would have been able to obtain a higher price for them but for the action by the British Government. 2104 K18 0 0 BAKHAP, Thomas Senator Bakhap - That is practically admitted by the fact that prices have been fixed in many instances. 2104 JZ9 0 0 O'KEEFE, David Senator O'KEEFE - Yes; to some extent the producers are not getting the price they would have obtained in the world's open market. 2104 JYR 0 0 FAIRBAIRN, George Senator Fairbairn - Then, the same may be said of wool, so would you exempt the pastoral industry as well? 2104 JZ9 0 0 O'KEEFE, David Senator O'KEEFE - I would exempt none. That is the difference between my attitude and Senator Fairbairn's. I have listened very carefully , to all that has been said on this subject, and I am convinced that those who voted against exemptions took the right course, and that we are only getting deeper into the mire by attempting to widen the scope of the exemptions. 2104 K18 0 0 BAKHAP, Thomas Senator Bakhap - The honorable senator would have done right if he had assisted in modelling the measure so as to make it a purely war profits tax. 2104 JZ9 0 0 O'KEEFE, David Senator O'KEEFE - If Senator Fairbairn thinks it fair to exempt the metals he has mentioned, how can he refuse to exempt other base metals, which, perhaps, although not to the same extent, are affected by the measure ? I voted against any exemptions, not excepting even gold, but the Committee has decided to exempt certain industries, and I now intend to support Senator Bakhap's proposal to exempt other base metals in addition to those mentioned by Senator Fairbairn. In these circumstances, we' shall be doing the right tiling if, at the recommittal stage, we decide to exempt all metals. 2104 K18 Tasmania 0 0 BAKHAP, Thomas Senator BAKHAP . - While I am heartily in accord with the amendment moved by Senator Fairbairn, I want to point out that, even as a measure affording relief, it discloses once more, in all its nakedness, the principle of inequity, against which I have so frequently protested during the discussion on this Bill, which, I hope, will not pass in its present form. Wolfram mines and those enterprises engaged in the output of molybdenite, which have commenced operations since the 4th August, 1914, will be exempted by Senator Fairbairn's amendment. So far, so good. 'But what about mines that were established, capitalized, and were in process of development before the 4th August, 1914, and which have only commenced to be remunerative during the war period ? Are these to bear the brunt of taxation, while industries established since, the 4th August obtain relief? Surely the Committee will take this matter into consideration. I am not a wolfram miner, and I have no interest in wolfram. I am a tin miner, and possess certain tin leases, the operations of which, however, will not be affected by this measure at all, for the simple reason that they are only small leases, and the output is not likely to be such as to get outside the zone of protection afforded by the financial exemptions. But I am concerned with the position occupied by many old friends of mine, who, after a mining life full of vicissitudes, in the evening of their days, discovered wolfram deposits shortly prior to the outbreak of war, and who have made these properties productive during the war. These men will not secure the benefit of this exemption, whereas any mining enterprise dealing with the deposits of ores mentioned in Senator Fairbairn's amendment will be relieved. The thing is manifestly incompatible. We shall have to give relief to industries of a special character, whether they were established before the war period or since the outbreak of the war, and relief must also be given to industries which are not deriving any benefit from any increase in the market price for their products, or we shall stand charged before the people of Australia with being a most inept set of legislators, ready to adopt every legislative expedient, but who will not face the problem of establishing the principle of equity in relation to taxation proposals. The public anticipated a War Profits Bill which would tax all profits legitimately traceable to war conditions. The people did not expect anything else, because anything else in equity they could not demand, seeing that profits gained from any other cause would be levied upon under the income tax. I ask Senator Fairbairn to use his undoubted influence with the Ministry to secure an extension of the principle contained in his amendment, for he alone seems to have any influence in regard to suggested amendments. 2106 JYR Victoria 0 0 FAIRBAIRN, George Senator FAIRBAIRN . - I am not aware that I have any great influence with the Minister. 2106 KUL 0 0 MILLEN, Edward Senator Millen - It was the soundness of your amendment that appealed to me. 2106 JYR 0 0 FAIRBAIRN, George Senator FAIRBAIRN - I have no interest in these metals. In fact, I hardly know their names. Naturally, I would like to oblige Senator Bakhap, but he must admit that I am plucking a few brands from the burning, and if, later on, I can assist him to persuade the Government to consent to some reasonable request, I shall be happy to do so. 2106 K18 0 0 BAKHAP, Thomas Senator Bakhap - Do it now. Ask the Minister if it is not a reasonable request. 2106 K1J New South Wales 0 0 PRATTEN, Herbert Senator PRATTEN . - I should like to add my voice to that of Senator Bakhap in the direction of asking the Minister to accept the amendment. 2106 KUL 0 0 MILLEN, Edward Senator Millen - Senator Bakhap has not asked me to do anything. 2106 K18 0 0 BAKHAP, Thomas Senator Bakhap - I asked the Minister to declare himself. 2106 KUL 0 0 MILLEN, Edward Senator Millen - Senator Bakhap asked Senator Fairbairn to ask me to do something. 2106 K18 0 0 BAKHAP, Thomas Senator Bakhap - Previously to that you declined. 2106 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - If the argument holds good that these metals have been commandeered for the British Government at half price, and that they are essential to the production of munitions of war, the more of them we can produce just now,' irrespective of the age of the companies, the better. 2106 JYR Victoria 0 0 FAIRBAIRN, George Senator FAIRBAIRN . - I add my voice to Senator Pratten's plea. I recognise that the Minister has been very firm indeed in the consideration of this measure. I do not believe that the amendment would concern many companies. There is not the slightest doubt that metals for hardening steel are indispensable at present, and that the very life of our nation depends upon their production. The producers deserve our encouragement in every possible way. It is not a very big concession to . make, and the harmony thereby restored would be so great that I think that we would get through with the Bill very quickly.. 2106 JZ9 0 0 O'KEEFE, David Senator O'Keefe - I rise to order. Does a suspension of the Sessional Orders do away with the necessity of putting from the Chair, at 4 o'clock, the question, " That the Senate do now adjourn " ? 2106 10000 0 0 MCDOUGALL, Allan The TEMPORARY CHAIRMAN (Senator McDougall - Yes. 2106 K1J New South Wales 0 0 PRATTEN, Herbert Senator PRATTEN .- I think that Senator Grant will bear me out that there would be great injustice inflicted if this little amendment were carried. 2106 KUL 0 0 MILLEN, Edward Senator Millen - Then defeat the amendment. 2106 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - We interviewed a gentleman yesterday in connexion with a tungsten company. He -informed me that it had been at work for three years and had made no profit. If the company were to strike a patch, just now, it would be very hard indeed, after having struggled along for three years, that it should not get the full benefit of the price of metals, which are so badly required by the British Government. The suggestion made is that all companies producing these metals should be exempted from the tax. It was admitted by the Minister today that such companies are selling the metals at half the world's parity to the British Government.. I am not going to criticise that statement/ 2106 KNB ALP; NAT from 1917 0 0 GUTHRIE, Robert Senator GUTHRIE - It must pay the companies to do it. 2106 K1J 0 0 PRATTEN, Herbert Senator PRATTEN - I have mentioned a specific, instance in which it has not paid the company. It came under the notice of Senator Grant and myself only this morning. I suggest that it would be a fair thing to eliminate the accident of age. 2106 KNN Tasmania 0 0 GUY, James Senator GUY .- From the outset I have set my face against allowing any exemptions from the tax. It will be. remembered that I said in my second-reading speech that if any department of trade and commerce could claim consideration, it was mining. I uTged that mining is so much of a lottery that, if any consideration could be granted to any series of profit, it ought to be extended to. mining. 2106 KNB ALP; NAT from 1917 0 0 GUTHRIE, Robert Senator GUTHRIE - Why to mining? . 2106 KNN 0 0 GUY, James Senator GUY - Because it is so speculative, and because, on the whole, it is unr profitable. 2106 KNB 0 0 GUTHRIE, Robert Senator Guthrie - I heard that statement made about farming. 2106 KNN 0 0 GUY, James Senator GUY - On the whole, farming, is not unprofitable. More money is lost in mining than in any other industry. Therefore, if anything claims considers* ation for an exempation, it is mining. This proposal, if adopted, will create much dissatisfaction. From a certain day this form of mining will be exempted, but if some persons were fortunate enough to start a mining venture a week before, that date they will be liable to the tax. It may be said that a line has to be drawn somewhere, but I do not know that it has. If honorable senators are in favour of exempting mining for metals, let them exempt mining altogether. If it is decided to exempt one class of metals, I shall vote to exempt the lot. I shall support Senator Bakhap, because it appears to me that tin and zinc are as much required in the manufacture of munitions as are the others which have been mentioned. 2106 K8L NAT 0 0 THOMAS, Josiah Senator THOMAS - Will you exempt copper and lead? 2106 KNN 0 0 GUY, James Senator GUY - Copper is used very largely in the manufacture of . munitions, and so is tin. 2106 K8L NAT 0 0 THOMAS, Josiah Senator THOMAS - Will you exempt copper ? 2106 KNN 0 0 GUY, James Senator GUY - I will help to exempt most of these metals, and I think that I shall be quite justified in doing so. The trouble is that from the very start this measure is inequitable. I do not believe that one honorable senator can say conscientiously that it is anywhere near being an equitable measure. It is not proposed to levy a tax on inordinate and excessive profits, but to tax the profits' in excess at one time over another. A thousand, examples could be given to show the enormity of the proposal. I am. still of the opinion, notwithstanding all the discussion which has taken place,, that this legislation will be so repulsive to the people of Australia that there will be a strong demand to repeal the Act before it has been in existence very long. If the amendment is carried I shall feel at liberty to support exemptions in other directions with regard to mining. Amendment agreed to. 2106 K18 0 0 BAKHAP, Thomas Senator Bakhap - Can an amendment be moved to amend the amendment that has just been carried? The TEMPORARY CHAIRMAN".No; but the clause is still open to amendment. 2106 K18 Tasmania 0 0 BAKHAP, Thomas Senator BAKHAP . - Seeing that the Administration, as represented by Senator Millen, is practically dumb in regard to all advances for the embodiment of an absolutely equitable proposal in this measure, I must take the responsibility of submitting an amendment which, if carried, will remove the possibility of many injustices being done. Why wolfram mines, scheelite mines, and molybdenite mines started since the 4th August, '1914, should be exempted, and mines which were started before that date, but which have only become profit bearing during the war period, should be liable to the tax, passes my comprehension. It may be that I have been damned by nature with certain obtuseness which prevents me from seeing where the symmetry of granting relief in one case and refusing to grant it in another lies. But the fact is that I am absolutely astounded at an amendment of this kind having the limitations placed upon it which the Minister, by his silence, seems to desire to be attached Ito it. The principle for which I contend is that the production of any commodity - I do not care whether it is tin or beetroot- that has resulted in profits which cannot be traced to war conditions should be exempted from the operation of this measure. I care very little whether it can be demonstrated that the tin miner has not benefited on the average during the war period because of . any appreciation in the value of the metal. I am concerned that profits shall not be taxed when they have been made quite outside the influence of conditions created by the war. I desire to move - That the following new sub-clause be inserted : - " 4. No company nor any individual engaged solely in the production of any commodity, not covered by the exemptions in this Act, the average price of which during the first three y«ars of the war does not exceed the average price of the commodity during the three years prior to the first July, 1914, shall be taxed under the provisions of this Act in respect to profits made during the first three years of the war; but if the average price of the commodity increases in any subsequent waT year beyond the average of the price of the commodity during the three year pre-war period then for any such war year the provisions of this Act shall apply." I do not care what the commodity is, unless it has been specifically exempted by the measure, if it has not benefited by an increase in price during the years of the war, the profits made in the production of the commodity should not be taxed. There is no mention of any particular article. It may be ore or anything else. 2107 JXJ 0 0 NEEDHAM, Edward Senator Needham - But if the profits are attributable to war conditions, what then? 2107 K18 0 0 BAKHAP, Thomas Senator BAKHAP - In that case, the profits would be levied upon. I do not propose to exempt them, from the provisions of the Bill unless they have been specifically exempted. Moreover, my amendment does not shut out the industry from the operation of the measure if in subsequent war years the price advances beyond the average of the pre-war period. I wish to be just all round. I desire to be just to the Treasurer, because money has to be raised. I embody in this subclause a principle which should have permeated the whole measure, namely, the taxation, without exemption if you like, of all profits directly attributable to war conditions. This will exempt the tin-producing industry, for it can be demonstrated by statistics, for which the biggest tin corporation in Australia is responsible, that tin has not appreciated in price since the war. I will extend the exemption to the profits on any commodity not directly attributable to - an appreciating market created by war conditions. I shall move the amendment as sub-clause 4 of clause 8, and believe that it will give the necessary relief to industries that have earned profits not attributable to war conditions. 2107 K1J New South Wales 0 0 PRATTEN, Herbert Senator PRATTEN . - I have a prior amendment. I move - That in sub-clause 3 the following words be left out : - " and whose military or naval duties require him to be in any part of the field of operations in connexion with the war, where there is danger to Ufa as a result of the operations of enemy forces." I have been moved to suggest the omission of these words by a desire that the position may be more clearly defined. If they remain in the Bill they may place in the hands of the officer commanding a regiment the right to decide whether the life of a prospective taxpayer has been endangered or not. Some may consider positions in the Army Medical Corps or Army Service Corps to be those in which life is endangered, and complicated definitions may be required in other respects. Is it a danger to life to go on a troopship and risk sinking by torpedoes? Is it a danger to life to go to England, or must it be defined as being " within the sphere of gun-fire"? A phrase like this must give rise to a good deal of dissatisfaction, and requires to he carefully defined. If a man was not popular with his superior officer, he might be unjustly brought within the provisions of the Act. 2107 KUL New South Wales NAT Vice-President of the Executive Council 1 0 MILLEN, Edward Senator MILLEN . - Officers, sent to Great Britain and other parts of thu world, far away from any scene of active warfare, and in no sense involving danger to themselves, have, for certain reasons, been made members of the Australian Imperial Force and put on an Australian Imperial Force rating. If this amendment were carried, an officer of that kind, sent to America, could claim to be entitled to a concession meant only for those taking an active part in the war. Certain officers who are pure civilians have been sent to England. They were given military rank because they had deal with the civil side of the military organization. It was not intended, and it is not equitable, that they should be able to claim this concession. 2108 K1J 0 0 PRATTEN, Herbert Senator Pratten - Do you define those referred to in the clause as men who serve within the sphere of war-like operations ? 2108 KUL 0 0 MILLEN, Edward Senator MILLEN - The words are necessary to exclude from the benefits of this clause men who are not taking an active part in military operations. It will not be left to any commanding officer to define "field of operations" or " danger to life." That will be prescribed by regulation. I assume that all those who go as combatants will get the benefit of the clause. The purpose is to shut out those who have gone merely in civil capacities, although bearing military titles and on the military pay-sheet. Many names will occur to the honorable senator. 2108 JXJ Western Australia 0 0 NEEDHAM, Edward Senator NEEDHAM . - I hope no responsibility, will be placed upon commanding officers to interpret this clause. Every man who volunteers as a combatant should be re-1 garded as in the danger zone. 2108 KUL 0 0 MILLEN, Edward Senator Millen - I agree with you. Every man who volunteers for service in the active army. 2108 JXJ 0 0 NEEDHAM, Edward Senator NEEDHAM - Yes ; many of our men are engaged far behindTthe lines, safe from shot and shell for the time being, but they did not go to those positions of their own volition. 2108 KUL 0 0 MILLEN, Edward Senator Millen - Take Brigadier-General Anderson as an illustration of the cases I mentioned. He is a civilian, who was merely given military rank, not because he was a military man, but because he had to deal with military matters. 2108 JXJ 0 0 NEEDHAM, Edward Senator NEEDHAM - I want to see every man who volunteers for war purposes given the benefit of this clause. 2108 K1J NAT 0 0 PRATTEN, Herbert Senator PRATTEN - Brigadier-General Anderson may claim, in certain circumstances, that his life had been endangered by, German submarines. 2108 JXJ 0 0 NEEDHAM, Edward Senator NEEDHAM - Let him claim it. It will not affect my vote. The same thing might apply to those who have left Australia as ordinary passengers. Those who travel by rail or sea. risk their lives. I can well understand now that the Minister means that every man who volunteers for war activities will be covered. If the Committee were to strike out the words which Senator Pratten proposes to omit, it would do an injustice to a great many men who aTe serving us at the Front to-day. 2108 KNN Tasmania 0 0 GUY, James Senator GUY .- This appears to me to have been a provision hastily inserted, with the object of doing a service to our men at the Front; but I take the view that it will, at the most, benefit only one in every thousand. I presume that of the 360,000 men who have left for the Front there is not more than one in a thousand who will reap the benefit of this provision. That being so, I would strike it out altogether- The few who derive excessive profits from businesses that they were controlling before they left for the Front - profits obtained from the dependants of others who are serving us - will be benefited, while the great bulk of our men at the Front will receive no benefit whatever from it. 2108 K1J New South Wales 0 0 PRATTEN, Herbert Senator PRATTEN . - Having heard the very definite statement of the Vice-President of the Executive Council (Senator Millen) that a regulation will be framed under which the danger area will be specified, so that there is not likely to be half-a-dozen different definitions of the danger zone, I am perfectly satisfied, and beg leave to withdraw by amendment. Amendment, by leave, withdrawn. Amendment (by Senator Bakhap) proposed - That the following new sub-clause be inserted: - " (4.) No company nor any individual engaged solely in the production of any commodity, not covered by the exemptions in this Act, the average price of which during the first three years of the war does not exceed the average price of the commodity during the three year§ prior ±o the first July, One thousand nine hundred and fourteen, shall be taxed under the provisions of this. Act in respect to profits made during the. first three years of the war; but if the average price of the commodity increases in any subsequent war year beyond the average of the price of the commodity during the three year pre-war period then for any such war year the provisions of this Act shall apply." 2109 KUL New South Wales NAT Vice-President of the' Executive Council 1 0 MILLEN, Edward Senator MILLEN . - I am sure that Senator Bakhap will not expect me to debate at any length the merits of his proposal. It waa elaborated by him last night, and outs right across the basis of the present Bill. It is, indeed, .a clear challenge to the principle of the Bill. I take no exception to the action of the honorable senator in submitting the amendment, but to accept it would be to destroy the Bill. The honorable senator is putting up an entirely new proposition, . In addition, if the amendment .were agreed to, it would remove from this Bill all exemptions- ' "We have already decided that there shall be exemptions. 2109 K18 0 0 BAKHAP, Thomas Senator Bakhap - My amendment does not set aside exemptions. I am dealing with the measure as it stands. The honorable senator has said it is a Wartime Profits Tax Bill, and he makes a distinction between such a measure and a tax on war profits. 2109 KUL 0 0 MILLEN, Edward Senator MILLEN - The honorable senator is perfectly right, and I, therefore,' do not think I need detain the Committee. This Bill sets out to levy a tax on excess profits earned during the currency of the war, as compared with profits of the pre-war years. The honorable senator now proposes something entirely different. To accept his amendment would be to abandon the Bill, and that I cannot do. 2109 K18 Tasmania 0 0 BAKHAP, Thomas Senator BAKHAP . - I cannot grant that the Minister's contention is at all correct. As regards the general principle of the measure, I have combated the view that taxation should be levied on profits during the war period that are not traceable to war conditions. I have said that in the minds of most people who are concerned about, this measure the idea existed that' it was to tax profits traceable to the war. On- the occasion of the commercial travellers' celebrations, held only last month, so responsible a member of the Cabinet as the Minister for Works and Railways (Mr. Watt) who proposed the toast of the evening, referred to this measure in the presence of a large body of commercial men as a War Profits Bill. That statement appears in the official report of his speech, as published in the Commercial Traveller. ' A change has evidently come over the spirit of the dream, for dream it is, that the people will accept this as an equitable measure. 2109 JYF NAT 0 0 EARLE, John Senator EARLE - It seems to be a nightmare to the honorable senator. 2109 K18 0 0 BAKHAP, Thomas Senator BAKHAP - And it will be to the honorable senator's constituents. We are members' of a Chamber of review, and when dealing with an important taxation measure like this, it is our duty, irrespective of party, to remove from it any injustice that -we are capable of removing. I am sorry that there has grown up among Australian Ministers - and. I suppose it is inseparable from the Cabinet system of government - the feeling that they must secure every line of a measure of which they are in charge. They seem to resent amendments - to think it derogatory to their Ministerial dignity to accept any, and to believe that amendments are suggested in a spirit of antagonism. They appear to completely forget the larger principle which should animate us here, namely, that we should do justice to the people -when putting into practical operation so important a principle of taxation as this. .1- give willingly to the Minister, and to any honorable senator supporting him, the duty of explaining to the public the equity and symmetry of these clauses, when they compare the effect of the amendment embodied in the Bill, on the motion of Senator Fairbairn, in giving relief to certain industries, with the inequitable incidence of this measure as it will inevitably operate in connexion with similar industries established, a little before the war period. The Minister has said that my amendment would do away with all exemptions. That is not so. If anything is exempt under the Bill, that exemption will stand. But my proposed new sub-clause will protect any industry not specifically exempted in regard to its productions, if those productions have not appreciated in value during the war period. Will any honorable senator have the hardihood to say that profits earned during the war period, and not 'fcraceaible in any sense to war conditions, should be taxed, while larger profits earned by smaller- enterprises established before the waT, and with the pre- WW standard of comparison, escape? The whole thing is iniquitous to a degree. However, I shall not labour the question/ I throw upon the Ministry and those who are supporting them the responsibility for justifying this measure to the country. Seeing the spirit in which Ministers regard the Bill, I ajn doing my best to make its provisions, as equitable as possible. I am not even asking that the specific industry which I have championed shall be exempted. But I do urge that profits which are' not traceable to war .conditions ought to be' exempted. However, I have discharged my duty, and the Government must accept responsibility for the measure which, I venture to say, they will be- urging us to amend in the' short space of a few months. 2110 JZ9 Tasmania 0 0 O'KEEFE, David Senator O'KEEFE . - I -pledged myself to support a War Profits Bill. The other evening 1 affirmed that this measure is not 'a "War Profits Bill, but a Wax-time ' Profits Bill. If I were to occupy half-an-hour in discussing the matter, I could not put the position' more clearly than it has already been put by Senator Bakhap. His amendment- meets my views, and is consonant with my pledges. I shall support it, particularly .'because its adoption would do away - with the injustices to which such frequent reference has been made, by reason of the discrimination that is -made in the Bill between various metals. - Question - That the new sub-clause proposed to bo inserted be inserted - put. The Committee divided. ' O'Keefe, D. J. McDougall, A. paxes, Buzacott, B. Pearce, G. F. 0 0 AYES NOES Question so resolved in the negative. Amendment negatived. Clause, as amended, agreed to. Progress reported. 2110 bill Bill received from the House of Representatives, and (on motion by Senator Russell) read a first time. 2110 bill Bill received from the House of Representatives, and (on motion by Senator Russell) read a first time. 2110 bill Bill returned from the House of Representatives, with the message that .the House had agreed to the Senate's amend- ' ments. Senate adjourned at 5.1 p.m. Ayes Noes 4 11 Majority Guy, J. Keating, J. H. Pratten, H. E. Barnes, J. Earle, J. Fairbairn, G. Ferricks, M. A. Foll, H. 8. Henderson, G. feller: Bakhap, T. J. K. Millen, B. D. Needham, E. Russell, E. J.' Thomas, J. . Teller: Guthrie, R. S.