House of Representatives
26 October 1904

2nd Parliament · 1st Session



Mr. Speaker took the chair at 2.30 p.m., and read prayers.

page 6088

DISTINGUISHED STRANGER

Mr SPEAKER:

– As I observe that His Excellency the Governor-designate of Tasmania is present, I will, with the concurrence of the House, invite him to take his seat on the floor of the Chamber.

Honorable Members. - Hear, hear.

SPEECH ATTRIBUTED TO Mr. WILKS.

Mr PAGE:
MARANOA, QUEENSLAND

– Has the attention of the Prime Minister been drawn to a paragraph in the Bega Standard, which states that the honorable member for Dalley, speaking at Wellington, said that the next issue before the electors would be Liberalism and antiSocialism versus the Labour Party and Socialism, and declared that the aim of Socialism is the nationalization of land and of all sources of wealth, the abolition of the marriage tie, and the destruction of’ religion ?

Mr Wilks:

– That speech must have been made by the honorable member for Robertson, not by me.I have not been Wellington.

Mr PAGE:

– The newspaper account states that the remarks which I have read were made by the honorable member for Dalley. I wish to know from the Prime Minister if he sent the Government whip to Wellington to issue this manifesto against the Opposition.

Mr REID:
Minister for External Affairs · EAST SYDNEY, NEW SOUTH WALES · Free Trade

– I believe that the honorable member for Dalley has not been in Wellington for years.

Mr Wilks:

– And I am not likely to go there.

ADJOURNMENT (Formal).

Newspaper Attacks upon Mr. Isaacs.

Mr ISAACS:
Indi

– I desire to move the adjournment of the House, to discuss a definite matter of urgent public importance, viz., “ The unwarrantable statements in the Argus newspaper regarding the honorable and learned member for Indi.”

Five members having risen in their places,

Question proposed.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

-I submit that the honorable and learned member is not in order in moving the adjournment to discuss a matter affecting himself, since the Estimates are now before’ the House, and it is a wellknown rule that it is not permissible to refer to matters in this way, which can be discussed in Committee on the Estimates. I am not able to put my hand upon the authority which governs the case, but I distinctly recollect several rulings having been given in the direction I have stated, and even, in “the absence of any such precedent, I submit that you, sir, should rule in tire direction of securing a procedure which would economize the time of Parliament without doing an injustice to any honorable member.

Mr Page:

– -Is this the honorable members idea of fair play?

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The honorable and learned member for Indi will have the fullest opportunity to make any statement on the subject in Committee, but I submit that he is not in order in moving the adjournment to discuss a purely personal matter which can be much more fully and unrestrictedly discussed on the Estimates.

Mr SPEAKER:

– The point taken by the honorable member for Parramatta involves, the question whether what is proposed to be discussed by the honorable and learned member for Indi is purely personal to himself. It is a personal matter, but a matter affecting him as a member of this House, and therefore one which the House may fairly consider on this motion. I rule the motion in order.

Mr Page:

– No gagging.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– There is no desire to gag.

Mr ISAACS:

– While I am very loth, indeed, and have shown it recently by my silence in the face of great provocation from the quarter from which the attack of which I now complain comes, to interrupt the course of public business for personal considerations, I feel that the moment has arrived when I can endure these attacks no longer. The recent statement of which I complain, added1 to the long and malicious personal attacks of the Argus newspaper upon myself, passes the bounds of propriety and decency, and I am therefore compelled, not only for my own sake, but for that of my constituents and of the race to which I belong, to refer to the matter. Whatever our differences on political questions .may be, the least we can expect from the press is that we should be fairly represented. We are all ready, I am sure, to take the responsibility of our actions and of our words ; but it is an undue weight to place upon a public man to compel him to bear interpretations of conduct which are wholly unjustifiable.

Mr Fuller:

– What about the statements of the Age in regard to the Prime Minister ?

Mr ISAACS:

– I am not here to justify anything that is wrong in the press, but to refer to something which I think is unjust towards myself.

Mr DUGALD THOMSON:
Minister for Home Affairs · NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– If the same notice were taken of statements appearing in other newspapers in regard to other members of the House, the adjournment would be moved constantly.

Mr McDonald:

– Why do not honorable members take notice of them, if they object to them?

Mr DUGALD THOMSON:
Minister for Home Affairs · NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– Because we are not so foolish.

Mr ISAACS:

– On the 12th October, during a short interim discussion between the Minister of Defence and myself, as to whether the contract labour section of the Immigration Restriction Act has to do with the White Australia policy, as distinguished from an Australian policy, I said - and my words are reported in Hansard at page 5466-

The words of the honorable and learned member for Ballarat were that a White Australia is not a matter of colour only, but of the conditions under which white men and white women ought to live. It stands for civilization and fair wages, and will the Minister for Defence tell me that he does not regard it as an essential part of the White Australia policy that we should not be inundated with labourers imported like chattels for any length of time, at any rate of wages? 1 say that that is an essential part of the White Australia policy, and if that one gate is to be taken off its hinges and cast down, then good-bye to our White Australia.

Then my honorable and learned friend the Minister of Defence said -

I agree that it is an essential part of Australian policy not to import labourers like chattels, but it is an abuse of terms to say that that is contrary to the White Australia policy.

Of course, I am not referring to this matter now for the purpose of re-entering upon a discussion as to which of us was right. I intend to refer only to the words used, because on those words a charge has been- built up by the Argus, and an attempt has been made to support that charge by imaginary considerations which I do not hesitate to say are disgraceful to the proprietors of that newspaper. My honorable and learned friend the Minister of Defence agrees with me, and I believe we have never been at variance on the point, that anything equiva-lent to importing men like chattels, bringing1 them away from their own country for any length of time at any rate of wages, and compelling them to serve under those conditions, is wrong. The only question between us was whether that could properly be considered as a part of the White Australia policy, and, of course, that is a jo b matter fairly open to consideration. The Argus afterwards attempted to fasten upon me a charge that I was referring -to all contract labour coming to Australia as chattel labour, and it has further attempted to fasten upon me the charge that I referred to people of the British Islands coming out to this country under contracts, however good they might be, as mere “chattels.” Nothing could be further from the truth, and no one could honestly have understood that that was what I intended bv the remarks 1 made. All I wished to’ refer to is shown by the report appearing in the Argus itself. In the issue of that newspaper for 13th October, I am reported to have said -

Was’ Australia to be inundated by labourers imported like chattels at sweating wages?

In all their subsequent comment, the writers of the Argus have left out those words “at sweating wages.” Of course, that makes the whole distinction, and shows at once the dishonesty of this newspaper’s references to myself. To-day (he Argus says -

Mr. Isaacs, having previously described British subjects who come to Australia under contract

Not a word about “sweating wages.” - to do skilled work as “ chattels,” now denounces them as slaves.

That passage is not justified, because last night, when the Prime Minister spoke of a White. Australia policy, all I said was that we object to men being brought here as slaves. In the first place we know that in< Great Britain books have been written referring to the “ White Slaves “ of England. We know that in this country we have termed poor workers who were sweated before Factory Acts were introduced as slaves.

Mr Mauger:

– And so they were slaves.

Mr ISAACS:

– No one would venture to say that in doing so we cast any slur upon Australia. No one would venture to say that the author of “ The White Slaves of England “ was casting opprobrium upon his fellow countrymen and women, tie was condemning a system.

Mr Spence:

– He was describing indus- trial conditions.

Mr ISAACS:

– The Argus article goes on to say -

Certainly Mr. Isaacs’ race owes an inextinguishable debt to the British people.

That is where they bring in matters that ought to be excluded from these considerations. That is where the prejudice and malice comes in -

This is acknowledged openly, and repaid, as far as possible, by its members in loyal and valuable citizenship.

I take leave to say that the members of my ‘ race, while adhering to their own religion, are as loyal to the country in which they live as are the people of any other race. They are not less loyal as British citizens because they worship in a different form from others. The article goes on to say -

But it does not lie in the mouth of Mr. Isaacs to hurl at Britons opprobrious and insulting epithets because they enter into perfectly honorable and open engagements-

Whoever hurled at Britons opprobrious and insulting epithets, because they entered into perfectly honorable and open engagements? I ask honorable members whether the statement made is not a gross misrepresentation ? The article also says -

He should reflect that if the principles he now so unsparingly advocates had been adopted in earlier days in the British Isles, his race would never have obtained a footing there. If the ancestors of those “chattels” and “slaves” he decries had not been more magnanimous, he would not have been in a position to utter his carefully-coined expressions of contempt.

Now, is not that a deliberate lie ? Surely no other word can properly describe it? I regret that there should be no other word by which I can adequately express my sense of the disgraceful nature of the statement there made. The fastening on to that of considerations of race and religion is an attempt to light the flames of religious persecution once more, and to create prejudices which should be kept far from this young land of ours.

Mr Mauger:

– Hear, hear ; we should bury them.

Mr ISAACS:

– I do not forget, and I trust that I shall never forget, the magnanimous treatment which my race has received at the hands of the British people; but I cannot forget either that not only the British people, but every other people on this earth - I do not care in what department of life, even though it should be in connexion with the most sacred foundations of our society - is under great obligations to the people of my race, and amongst them there is, from Sacred Writ, the command -

That shalt not bear false witness against thy neighbour.

The Argus appears never to have known it, or to have forgotten it. But does it not place at the head of its editorial columns the statement -

I am in the place where I am demanded of conscience to speak the truth, and, therefore, the truth I speak, impugn it whoso list.

It apparently feels that it is necessary that it should place such a statement at the head of its editorial column, and I desire to say that I am reminded by it of witnesses who are continually saying in the witness box - “ I am here to speak the truth.” When we find the Argus conscious of the necessity of telling the people of this country day by day that it speaks the truth, it appears to me to be like some woman of the streets, who flaunts her feathers, and loudly but unavailingly proclaims her chastity. I am entitled to say that the Argus has a Victorian reputation, and it is time we placed on the Federal record what that reputation is. Recently this newspaper published statements of me which are utterly untrue, and with which I need not trouble this House.

Mr Fuller:

– Let the honorable and learned member instruct his newspaper to speak the truth.

Mr Spence:

– The Argus champion.

Mr Fuller:

– I am not the Argus champion, but I should like to see the Age treated in the same way.

Mr ISAACS:

– I am not the advocate of any newspaper; I am here in self-defence. I have recently had to endure, and did endure in silence, statements that were made concerning myself, and I was surprised to hear to-day from one of my honorable friends in this House that they had had some effect upon the minds of honorable members. A statement was made in the Argus, referring to the offer made to me by my late colleagues in the State Parliament, of the Premiership of Victoria. The statements on that subject was made in clear and distinct language, as though they had some semblance of truth, but my right honorable friend the Federal Trea’surer is aware that the statement to which I refer was utterly false.

Sir George Turner:

– Hear, hear.

Mr ISAACS:

– I am glad to hear the right honorable gentleman’s confirmation of that. I did not come here to disturb or interrupt public business with my grievances. I endured them, because they did not seem to me to be Federal matters, although the statements were intended to affect me in Federal circles. This is not the only case. 10 b 2

Not only does the Treasurer know that the statement to which I have referred is untrue> but Sir Alexander Peacock, under whom I afterwards served as a Minister, also knows it to be incorrect, and tha strongest evidence could be given at any moment in contradiction of it. I think that I am justified, not only in defending myself, but in letting the public of Australia know what the public of Victoria already know, with regard to the official character of the Argus. Its record goes back very far. I do not know of any paper in Australia, or indeed in the world, that can show such a record of previous convictions.

Mr Johnson:

– Except the Age.

Mr ISAACS:

– No; nothing has ever been done by the Age to expose it to the official convictions of which the Argus has been the subject. In the Victorian Government Gazette of Friday, 21st February, 1879, the following notice was published: -

In consequence of the fabrication by, and the publication in, the Argus journal of false news, purporting to be genuine and authoritative, concerning the proceedings and discussions of the Cabinet, being continuously persevered in for several weeks last past, the public are hereby cautioned against giving any credence to either those statements, or any similar kind of news, for the future in that journal. The Argus journal has been refused any official information of the kind by the Acting Chief Secretary, who feels justified in taking this course, as that journal has for several months unpatriotically attempted to depreciate the financial credit of Victoria.

Bryan O’Loghlen,

Acting Chief Secretary.

Then again, on the 12th September, 1895, the Victorian Legislative Assembly passed a resolution signifying the public opinion of the Argus newspaper. Mr. John Murray, now the Minister of Lands in Victoria, moved this resolution -

That, in the opinion of this House, the charges made against Mr. Albert Harris, a member of this House, in the issue of the Argus of the nth inst., are wanton and profligate untruths.

That was agreed to without a division. I say that with such a record as that, the Argus has no right to cast a stone. But when it seizes the oportunity - the great opportunity which the press always has - to disseminate statements and innuendoes over the length, and breadth of the land against individuals - because we are mere individuals, although invested with a public trust - it behoves us as far as we can, without unduly taking up the public time or interrupting the public business, to defend ourselves and the honour of those who sent us here. Regretting as I do the necessity of taking this course, I am not going to sit still under a charge of vilifying the nation,” when it was my desire to protect the weak of the nation. However I may differ from my honorable friends opposite, as to what is right or wrong, and however we may dispute as to the policy that should be pursued, no one has ever said, with the Argus, that I ever ventured to vilify the nation. The Prime Minister said I ought to have had some sympathy with the poor man; and he expressed the opinion that the persecution which my race had undergone might have led me to feel such sympathy. I do feel that sympathy. I would much rather that the right honorable gentleman had made no such reference, but I could see his line of argument. This, however, is a matter of an entirely different class. The right honorable gentleman made no charge against me of vilifying the nation, or of ingratitude to a whole people for the kindness they had shown to my race. He did not go further than to say that I should have sympathy for the poor. We both have sympathy for the poor man, and each of us thinks his own course is the best to follow in order to express that sympathy. It is not necessary, I am sure, for me to show - because honorable members already know it - that there was no intention on my part to take the attitude ascribed to me by the Argus, and that there was no justification for stating that I cast any opprobrium upon the British workingman. On the contrary, my desire was to protect our own workingmen. and at the same time to assist in meeting the needs of those of the motherland.

Mr JOHNSON:
Lang

– Whilst I feel every sympathy with the honorable and learned member for Indi, who has made a complaint with regard to what appears to be an unwarrantable and unjustifiable attack upon him by the Argus–

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– It was very mild compared to what some of us have ,to put up with.

Mr JOHNSON:

– I submit that the matter is not one which concerns this House, but is one which lies between the honorable and learned member, the Argus, and the Law Courts. If honorable members were to move the adjournment of the House day after day to call attention to misreports and misrepresentations in the press, the whole of our time would be taken up in considering such matters, to the exclusion of the public business. At the same time, I wish it to be understood that I have every sympathy with the honorable and learned member, especially in regard to the reflection which has been made upon his religion. Every honorable member will, I am sure, regret extremely that any such improper thing was done; and will regard it as an exhibition of the worst possible taste. It does seem strange, however, that whilst indignation is shown in regard to the attacks made by the Argus upon the honorable and learned member, not the slightest word of protest has been raised by honorable members opposite against the attacks which have, time after time, been made upon the Prime Minister.

Mr KING O’MALLEY:
DARWIN, TASMANIA · ALP

– Those attacks were not of a religious or racial character.

Mr JOHNSON:

– All kinds of scurrilous, malicious, and slanderous attacks have been made upon the Prime Minister, day after day for weeks and months together, and not the slightest protest has been raised by honorable members. The right honorable gentleman himself has . riot considered it necessary to ask the House to occupy its time in such matters. I think that, while the honorable and learned member has every justification for feeling hurt at what has been said with regard to him, the time of the House could, in my opinion, be better occupied than in considering a matter which should1 be dealt with by the honorable and learned member in another place.

Mr GROOM:
Darling Downs

– I hold an opinion entirely different from that expressed by the honorable member who has just resumed his seat. I think that the honorable and learned member for Indi took the only course a man of honour could follow. I should, to some extent, have entertained a lower opinion of him if he had not risen and taken the stand he has. The statements made in the leader published in the Argus are grossly unfair, and are calculated to excite racial feelings, which no honorable newspaper should endeavour to arouse. The honorable and learned member has shown that the statements made are absolutely unwarranted. Honorable members seem to think that the matter is one merely of individual interest ; but I hold that as it reflects upon the public character of a member of this House, the honorable and learned member has a perfect right to bring the matter before us. When statements are made, which amount to a libel upon an honorable member of this House, it is our duty, no matter upon which side of the House we sit, to protest against it.

Mr DUGALD THOMSON:
Minister for Home Affairs · NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– We have daily cause for complaint.

Mr GROOM:

– The newspapers enjoy great privileges, and their duties to the public are correspondingly important. No one can find fault with them for criticising principles and measures, but when we find them impugning the honour of a member of this House, we have a right to regard the matter as one affecting our collective dignity and honour.

Mr Johnson:

– Has the honorable and learned member read the statements which are made in the Tocsin?

Mr GROOM:

– Here is a newspaper enjoying a large circulation, which purports to represent the wealthy and aristocratic classes of the community. Copies of it are circulated by the thousand in homes of all descriptions, and the honorable and learned member for Indi has no opportunity to make an adequate reply to its statements. Indeed, it is quite possible that people who read its charges in cold print will believe that the honorable and learned member has . hurled opprobrious epithets at the British people. That we know- to be an absolute falsehood. He has never uttered one word which savoured of discourtesy to our race. Upon all occasions his speeches have reflected the greatest devotion . and loyalty to the people amongst whom he lives. In addition to that, he has set a good example to other men here by placing his very great abilities at the services of the people of this Continent. We are proud to have him as a member of this assembly. Upon all occasions he has stood for what he believes to be just and fair in the interests ‘of the nation as a whole. He has never suggested that we should exclude British people from Australia. He has practically made the same statement as the Prime Minister himself when the

Tight honorable gentleman declared in one of his speeches in Sydney that he was quite prepared to exclude those persons from the United Kingdom who were induced to come here under contract, as the result of the avarice and greed of other people in this Continent.

Mr DUGALD THOMSON:
Minister for Home Affairs · NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– He has accused the Prime Minister of not desiring to preserve a White Australia.

Mr GROOM:

– He has not done that. The charge levelled against the honorable and learned member by the Argus is that he has hurled opprobrious epithets at the people of Great Britain, and that practically he has sought to exclude British subjects as such from the Commonwealth. That statement is absolutely false. He has taken up the stand that has been adopted by a majority of honorable members, namely, that we desire to preserve the best conditions . that we can for our people, and that we do not wish persons to come here under contract in violation of those conditions. I believe that the Prime Minister is in sympathy with that idea; it accords with his own expressed convictions. However, the question that we are considering is not one of policy. That question is- “ Has the honorable and learned member for Indi been grossly misrepresented?’’ I say that he has.

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– Yes, and so have many other honorable members.

Mr GROOM:

– But this instance, I claim, is the worst case of misrepresentation that can be cited, because the Argus has attempted to despise the honorable and learned member because he belongs’ to a certain race. That is contemptible and unjust, and we should be wanting in manliness if we did not protest against such tactics. I am glad . that the honorable and learned member has drawn attention to this matter. It is just possible that the article in question was written with a want of knowledge of the words which were actually used by him, and if so. it would be a fair and manly act for its author to admit that his utterances do not justify the statements which are contained in the article in question.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I rise for the purpose of removing a wrong impression which appears to exist upon my right regarding my action in taking exception to the way in which the honorable and learned member for Indi has raised this question. I do not object , to his coming here as often as he chooses - if he is being vilified outside this House - and making his protest. But there is a right way and a wrong way of doing that. In my judgment he has adopted the wrong way. I have in my mind two distinct cases which occurred in the New South Wales Parliament in ‘ which similar matters were raised, but not in this way. They were raised, as matters of privilege, and the honorable member aggrieved concluded with a motion summoning the editor of the offending newspaper to the bar.

Mr Chanter:

– What did Parliament do with him when it had him there ?

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I have seen Parliament tackle a newspaper editor upon two occasions, and upon both Parliament has made a fool of itself. I venture to say that the newspaper about which so much has been said to-day will be glad indeed of the splendid advertisement which it has received at the hands of this Parliament.

Mr Hutchison:

– Is it so lost to shame as that?

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

–I do not know whether it is lost to shame, but I think that honorable members are becoming a little thin-skinned. I speak in the light of mv own personal experiences within the past two or three weeks. During that time statements in reference to myself have appeared in newspapers which profess to sympathize with labour - statements which are infinitely worse than those to which the honorable and learned member for Indi has drawn attention, and which are libellous in the extreme. Yet I passed those statements by without comment.

Mr Hutchison:

– Perhaps the honorable member deserved them.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– -I wish that the honorable member for Hindmarsh would keep quiet. He makes very nonsensical interjections in a very musical tone. There is one matter, however, of which the honorable and learned member for Indi has a right to complain. I refer to the opprobrious reference which is made by the Argus to the race to which he belongs. However much we may differ or cross each other’s paths politically, I submit that we ought not to trench upon matters of that character. For the rest, I think that the honorable and learned member should have looked at these newspaper statements in a more lenient light, having regard to his actual statements in this House. Last night, whilst the Prime Minister was speaking of England, he interjected, “ We want no slaves from there.” That remark stung me for the moment, and I retorted quickly, “ There are no slaves there.”

Mr Watson:

– Slaves are to be found there as elsewhere.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– In the economic sense I admit that that is so.

Mr King O’Malley:

– That is what the honorable and learned member meant.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– That is precisely what he did not say, and for the moment I was stung into making the retort which I have indicated. After a few minutes’ reflection, however, I realized that he referred to slaves in an economic sense. But owing to the unqualified way in which, he spoke, I thought for the moment that he was grouping the workers of Great Britain with those of the coloured races whom we are anxious to exclude from Australia.

Mr Isaacs:

– The honorable and learned member would not have sat down, and in cold blood, have based a leading article upon that remark.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– No; and I certainly should not have referred to the race to which the honorable and learned member belongs. At the same time, I do not think we ought to spend any more time in discussing this matter. I should not have risen but for a desire to put myself right and explain that I did not take exception to the honorable and learned member for Indi raising this question - I merely objected to the way in which he introduced it to the notice of this House. If a motion for adjournment is to be submitted upon every occasion that an honorable member conceives that he has been libelled outside the House, we shall do nothing else but investigate statements of the same character, and shall transact no public business. I sympathize with the honorable and learned member extremely regarding the reference which the Argus makes to his race - a reference which ought not to be made by any newspaper.

Mr WATSON:
Bland

– I think that the honorable and learned member for Indi has grave reason to complain of the treatment which has been meted out to him by the senior morning journal of this city, especially in view of the fact that - not content with controverting his argument upon the point immediately at issue - it has attempted to introduce racial questions.

Mr Isaacs:

– The Argus is not the senior morning journal.

Mr Reid:

– It is the oldest journal by many years.

Mr WATSON:

– I thought that it had been established longer than its contemporary. At any rate, it seems to me that that newspaper has adopted a most unfair method of attack. Surely, if there was anything in its case, there was sufficient argument on its side to admit of its refraining from adopting that particular method of attack in addressing itself to the position of the honorable and learned member. The fact that it has resorted to such tactics instead of addressing itself to the points of political controversy which have been raised seems to me to argue a consciousness of the weakness of its own case. The boast of the British people for all time has been that they are willing to receive, in the freest and frankest spirit, every person who is willing to conform to the. usages of their society, and to work for the benefit of the nation as a whole. That has been a material element of strength in the building up of the British nation, and it seems to me that it is rather late in the day for anyother action to be advocated by those who seek to lead public opinion in a British community. The honorable and learned member is accused in the leading article appearing in to-day’s issue of the Argus, of having described some Britons as chattels. Who is there among us who would deny that there are some Britons who to-day are as chattels? What nation in the civilized world is there which does not contain, among its people, a proportion - aye, and too large a proportion - of persons who are only chattels .under the command of those who have the power of wealth and influence in the community ? To say that a person who comes here, bound to observe certain conditions - bound under a contract agreed to, in all probability, in absolute ignorance of the condition of affairs existing in this community, is not a chattel, or, at all events, economically speaking, a slave, is, to my mind, to remain wholly oblivious of the facts as” they exist.

Mr Isaacs:

– Did not the right honorable member for Adelaide describe, such persons as bondsmen?

Mr WATSON:

– When discussing this question of contract labour, some time ago, the right honorable member for Adelaide certainly did describe such persons as bondsmen. He said that we should welcome as citizens all who came to Australia free from shackles, whether verbal or expressed, and to that proposition I do not think that any one in the community took the slightest exception. I am free to say that I do not think that the honorable and learned member for Indi intended lot one moment to convey the insinuation against the Prime Minister that is suggested by the statement in the Argus.

Mr Isaacs:

– Not at all.

Mr WATSON:

– I say at once that I have not the slightest apprehension of any danger whatever to our ideal of a White Australia, in its ordinary conception, in the retention of office by the Prime Minister. The right honorable member took decided action, years ago, in New South Wales in regard to the influx of coloured persons to Australia, and his utterances upon the question since then have been no less decided. Therefore, so far as concerns the influx of coloured aliens, I have not the slightest doubt as to the attitude of the Prime Minister, nor have I any fear that Australia will suffer from any lack of action on his part in that direction. At the same time, I agree with the honorable, and learned member for Indi that there is something more behind the spirit which moves us to attempt to preserve a White Australia than the mere question of excluding coloured aliens.

Mr McCay:

– Does not the honorable member think that he is raising a general debate on the broad question?

Mr WATSON:

– Perhaps^ the honorable and learned gentleman is justified in making that observation; but I feel that in view of the most unfair attack made on the honorable and learned member for Indi, one is justified in saying something in support of the position that he assumed. We must bear in mind that there is more behind the spirit which actuates us in asking for a White Australia, than is conveyed by the mere use of the word “ white.” There is behind it all that makes . for the improvement of the conditions of the people - for their protection from an influx of those who, whether because of their necessities or an inability to recognise their duty to society, are prepared to accept terms that tend to drag society down rather than to build it up.

Mr DUGALD THOMSON:
Minister for Home Affairs · NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– That question has never cropped up.

Mr WATSON:

– At this point there is a difference of opinion. I hold that that view of the question is distinctly raised by permitting the entrance of men under contract.

Mr DUGALD THOMSON:
Minister for Home Affairs · NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– In the cases that have yet been dealt with it has not come up.

Mr WATSON:

– That is where the discretion exercised bv the Minister comes in.

Mr SPEAKER:

– I am afraid that the honorable member is going beyond the question before the Chair.

Mr WATSON:

– The only cases that have occurred up to the present have not been of sufficient importance to justify any action on the part of the authorities. Perhaps the fact that there has been no necessity for intervention on their part is attributable to the existence of the provision passed by this Parliament. We inserted the provision in question in the Immigration Restriction Bill, and I do not know that any one at the time objected to it. I believe that it has had a good effect. I do not wish, however, to digress any further in this direction, but’ I certainly desire to express my sympathy with the honorable and learned member for Indi, who has been most unfairly attacked, and to say that I believe he is quite justified in having in the most public manner possible drawn the attention of the country to the matter.

Mr CHANTER:
Riverina

– I certainly thought that the Prime Minister, as leader of the House, would have offered some observations on this motion, in view of the fact that the question raised involves the honour of the whole House. I am extremely sorry that the right honorable gentleman has not spoken to the motion, for the reason that I think that a few remarks which he inadvertently uttered last night led to the writing of the leading article in question. To the credit of the right honorable gentleman it must be said, however, that as soon as he had uttered the words to which I refer he appeared to recognise that he had made a mistake - that it was wrong to allude to the religion of any honorable member, or to the race to which he belonged - and he made it perfectly clear that he had no intention whatever to speak of the honorable and learned member in the sense which his remarks at first suggested.

Mr McCay:

– Having made that clear last night, why should the right honorable member make any explanation to-day ?

Mr CHANTER:

– I repeat that it is to the credit of the right honorable member that he made that point clear last night, tout it is not to his credit that he has not taken exception to the attack made by a public newspaper, on racial grounds, on the honour of a member of this House. I do not suppose that the Minister of Defence agrees with me.

Mr McCay:

– I ask whether the honorable member for Indi agrees with the honorable member.

Mr CHANTER:

– I am addressing my remarks to the whole House, and more particularly to the Prime Minister. An attack on the honour of any honorable member of this House must affect the honour of every member of it, and whenever any newspaper, no matter what journal it may be, seeks to introduce into the politics of Australia matters which should find no place in them, the Prime Minister, as leader of the House, should be ready to stand up and show the people of the Commonwealth that the public men of this country are prepared to act in such a way if necessary as to prevent the recurrence of such incidents.

Mr DUGALD THOMSON:
Minister for Home Affairs · NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– The Prime Minister sat still under attacks made upon himself.

Mr CHANTER:

– That was his own fault. Had the right honorable gentleman* brought these attacks before the House when they were made, and shown that they were unfair, I venture to say that even those politically opposed to him would have stood by him, just as they would be prepared to defend the honour of any other honorable member. We have a right to expect the leader of the House to stand up in defence of any honorable member who is unduly attacked, and to show the country that, as custodian of the honour and the interests of the House, he will not allow such statements to pass unnoticed. I believe that the honorable and learned member for Indi has taken a proper action, and, indeed, the only course open to him. It will have a - good effect in the future, inasmuch as newspaper writers, when criticising public men, will be careful not to put into their mouths words which they did not utter, or to attach to their utterances meanings which thev were not intended to bear.

Mr FULLER:
Illawarra

– I should not have taken part in this discussion but for the remarks of the honorable member for Ri-erina as to what should have been the action of the Prime Minister in this matter. The right honorable gentleman would have played a ridiculous farce if he had interfered in what is wholly of personal concern to the honorable and learned1 member for Indi. Although you, Mr. Speaker, have ruled the motion to be in order, I think that the subjectmatter of it should not have been brought before the House. I have every sympathy with the honorable and learned member for Indi, so far as the remarks about his racial connexions are concerned1, because in my opinion they were absolutely uncalled for and unjustifiable. But if every honorable member were to publicly complain in the House of the personal attacks made upon him by newspapers, the time of Parliament would be nearly ull consumed by personal explanations. I have felt from time to time that the Prime Minister should take action in connexion with what has appeared about him in the Melbourne Age. That newspaper has attacked him in the most unjustifiable manner, and yet the honorable and learned member for Indi and other honorable members of the 0 Opposition have not protested. I wish to call the attention of the honorable and learned member to what has appeared about him in another newspaper. Surely if it is necessary to bring before the House what has been published in the Argus, he should also complain of what has been published in the Tocsin, the official organ of the Labour Party.

Mr Isaacs:

– I have not seen the article to which the honorable and learned member refers, and I do not know what it contains, though I imagine it to be an aspersion upon myself. Am I to reply to it, not having read it, or had time to consider it? I have already raised one question ; am I to raise another?

Mr SPEAKER:

– I think that the honorable and learned member for Illawarra is entitled to show that as notice has not been taken of some other, newspaper article, it should not have been taken of the article appearing in the Argus.

Mr FULLER:

– The paragraph to which I wish to refer appears in the labour organ of Australia.

Mr Page:

– Is Victoria Australia in the honorable and learned member’s eyes?

Mr FULLER:

– It is Australia in the eyes of some members of this Chamber. The writer states -

If the Federal Labour Party had been well advised they would not have touched the Isaac Lyne overtures for coalition at any price. The “ Ikelinites” are only politicians who are afraid of labour opponents at next elections. No one wants half -breeds, and the labour folk should not have been decoyed into saving the bacon of political shandygaffs.

I trust that the honorable and learned member for Indi, since he has felt compelled to complain of the article which has appeared In the Argus, will take notice of what has appeared in the Tocsin, the organ of the Labour Party, about himself and the honorable member for Hume, and that the

Labour Party will take notice of what has been said of the alliance of which they are now members.

Mr CARPENTER:
Fremantle

– I deprecate the attempt of the honorable- and learned member for Illawarra to give . s». party aspect to this very important , question.

Mr Wilks:

– What about trie speech of the honorable member for Riverina?

Mr CARPENTER:

– I am sure that the honorable and learned member for Indi had no desire that the matter should be treated as a party question. The honorable and learned member for Illawarra has not been in public life very long.

Mr Reid:

– He was in Parliament eighteen years ago.

Mr CARPENTER:

– Then he has apparently never been subjected to the vitriolic attacks which are sometimes made on public men, or he would have more sympathy with the honorable and learned member for Indi in the vicious attack which has been made upon him.

Mr Fuller:

– I said that I had sympathy with him.

Mr CARPENTER:

– The honorable and learned member took ari extraordinary way to show it. What has happened to the honorable and learned member for Indi today may happen to any other member of the House some other day.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– A great deal worse has happened to me within the last fortnight.

Mr CARPENTER:

– If any one deserves to be harshly treated, it is ‘he honorable member. He is such a persistent interjector and objector that he lays himself open to criticism. I regret that honorable members opposite, directly this question was raised, began to look at it from the party point of view. I have sympathized with the Prime Minister when he has been attacked by another journal.

Mi. Wilks.- The honorable member did not get up and howl about it.

Mr CARPENTER:

– It is the place of the Prime Minister to do any howling that may require to be done in such cases, though he has such an enthusiastic whip that he perhaps feels that unnecessary. This matter is one which affects, not ‘any party in the House, but every individual member, because any one of us may be subjected to similar treatment in the future. We do not wish to prevent the press from fairly criticising us, but there are bounds beyond which that criticism should not go; and the Argus has, by common consent, broken those bounds. In my opinion, the article is part of a plot to undermine the great White Australia policy which we are here to defend.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Oh !

Mr CARPENTER:

– I expected that the honorable member for Parramatta would laugh, because, although he is a professed friend of the White Australia policy-

Mr SPEAKER:

– I prevented the honorable member for Bland from dealing with this question, and therefore I cannot allow the honorable member for Fremantle to discuss it.

Mr CARPENTER:

– I should like to point out that other honorable members have referred to the matter. I did not propose to discuss it, but I wished to say that the attack upon the honorable and learned member for Indi was, tomy mind, but part of a plot that exists throughout Australia’ to-day to undermine the White Australia policy. Any man who reads conservative journals carefully cannot but be convinced that that is true. I wish to enter my protest against this being done in such an underhand way. I share with other honorable members the sympathy which has been extended towards the honorable and learned member who has complained this afternoon. I hold that the honorable and learned member was perfectly justified in the course which he has taken.

Mr. ISAACS (Indi). - I wish to say only one or two words. I wish to express ray warmest personal recognition of the very evident sympathy which has been expressed for me to-day by my honorable friends, on both sides of the House. Notwithstanding that some of us have fought very strongly, there has been a universal recognition that I have been unfairly attacked, and it is a remarkable thing that a journal of the standing of the Argus is unable to find in this Chamber a single individual to rise to say one word for it.

Mr SPEAKER:

– Before I put the question, I desire . to say that while, under the Standing Orders under which we work I could not rule the honorable and learned member for Indi out. of order, and did not so rule, it would be convenient for the House if we were to establish the practice that questions relating to attacks upon any honorable member personally, or upon the House, should, when dealt with at all, be dealt with as questions of privilege, or in the form of personal explanations, and not under cover of motions for the adjournment of the House. I make that suggestion to honorable members.

Question resolved in the negative.

page 6098

QUESTION

LONG SERVICE MEDALS

Sir LANGDON BONYTHON:
BARKER, SOUTH AUSTRALIA

asked the Minister of Defence, upon notice -

Is he aware that there is great delay in the issue of Long Service Medals in South Australia to those who have earned them, and whose applications have been approved ?

Mr McCAY:
Protectionist

– The answer to the honorable member’s question is as follows : -

I understand from the General Officer Commanding that there has been some delay in’ the issue of Long Service Medals to those who have been awarded them in South Australia, which has been due to a delay in supplying the medals from England. These were ordered in December of last year, but they only came to hand on the 20th inst. Steps are now being taken for their early presentation.

I might add that the medals are obtained by us from the Royal Mint, which strikes them for us, and that that sometimes causes delay. As they are silver medals, there might be some difficulty in making arrangements with the Melbourne branch of the Royal Mint to strike them, but I am making inquiries to ascertain whether we can have these medals struck in Australia instead of having to send Home for them.

page 6098

QUESTION

LETTER-BOX CLEARANCES

Mr MALONEY:
MELBOURNE, VICTORIA

asked the PostmasterGeneral, upon notice -

  1. Will he place before the House the reasons for making the last clearance of letters in the suburban letter-boxes of Melbourne and suburbsat the present early hour?
  2. Will he supply the percentage of letters collected at the last clearance for delivery in the metropolitan area, and the percentage for Ballarat and Bendigo?
  3. Is the same early hour made compulsory for the other State capitals ; if not, what are the times for the last clearances in such capitals?
Mr SYDNEY SMITH:
Postmaster-General · MACQUARIE, NEW SOUTH WALES · FT

– The replies to the honorable, member’s questions are asfollow : -

  1. The reason for making the clearance at what is in many cases an earlier hour, is to afford a greater convenience, and to insure that letters posted in the receiving boxes shall be despatched by the trains leaving Melbourne for the country at 2 a.m., thus securing delivery in the country. before 8 a.m., instead of in the afternoon, as previously. The result of the early clearance has been that an increased number of letters have been brought to the Melbourne office by it, while the number by the subsequent clearance has not been augmented, thus showing that more letters have been posted for the clearance at the earlier hour, and that there has been no increase that is perceptible between that hour and the clearance which reaches Melbourne between 11 a.m. and noon, as heretofore. The whole system of clearances from the receiving boxes in Melbourne and its suburbs is now being fully inquired into by competent officers, and, upon receipt of their report, the times of clearance will be reviewed, and such action taken as will secure the greatest convenience for all concerned, both in the city and in the country.
  2. For metropolitan area (night, 60 per cent.); for Ballarat, 9 per cent. ; for Bendigo, 9 per cent.
  3. No comparison of any value can be made in this respect between Melbourne and the other State capitals, as in every instance the clearances are made to suit the running of the trains and other local conditions. In Sydney the corresponding clearance is about midnight ; Brisbane, about 4.50 a.m. ; Adelaide, about 3.45 a.m. ; Perth, about 5.30 a.m. ; Hobart, about 6 a.m.
Mr Maloney:

– And Melbourne?

Mr SYDNEY SMITH:
Postmaster-General · MACQUARIE, NEW SOUTH WALES · FT

– I might say, in regard to Melbourne, that while it has been stated that the clearances are at 8.30 p.m., in a very large number of cases there has been very little alteration made, and the clearances range from 8.30 p.m. to midnight. My decision was to make the clearances as late as possible. The officers intrusted with the work felt that they could not make them later than the time mentioned. In the public interest, I have endeavoured to give the fullest convenience, not only to the Melbourne people, but to the people of the country. I appointed a board of officers competent to deal with this question to make a full inquiry, not only in regard to the night, but also in regard to the day clearances, with a view to making such arrangements as would give the greatest convenience to the greatest number of people using the Post Office.

Mr Maloney:

– Am I to understand that the clearances are at midnight in the city as well as in the suburbs?

Mr SYDNEY SMITH:
Postmaster-General · MACQUARIE, NEW SOUTH WALES · FT

– In some cases the clearances are at 8.30 and 9.30 p.m., but in the majority of cases the letters do not come in until midnight.

Mr SPEAKER:

-The Minister must not discuss the question.

Mr SYDNEY SMITH:
Postmaster-General · MACQUARIE, NEW SOUTH WALES · FT

– I desired only to give all the information I could. In a large number of cases the clearances take place beteween 10 p.m. and midnight. The whole matter is being inquired into.

page 6099

QUESTION

ELECTORAL ROLLS

Mr McDONALD:

asked the Minister of Home Affairs, upon notice -

In the event of an election at the present time, what would be the number of electors disfranchised in the States of New South Wales and Victoria ?

Mr DUGALD THOMSON:
Minister for Home Affairs · NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– The answer to the honorable member’s question is as follows: -

No qualified electors who have complied with the requirements of the Electoral Act, and themselves taken the necessary steps for enrolment, will be disfranchised; but, as regards the very large number who did not take such precautions, the following statement will explain the position : -

Any election within the next three or four months would have to be held on the old rolls, with their omissions, duplications, and inaccuracies.

The canvass finished in New South Wales, and nearly finished in Victoria, will provide in the two States named, a means o.f correcting rolls for- the use of returning officers. The extent to which even this correction could take place before an election depends on the date of the election, as the correction will probably occupy three months, and the revision and printing of complete rolls about four and a half months. But even were these correct rolls in the hands of returning officers, the only ones available for the public would be the old rolls, with their original inaccuracies, and subsequent accretions of error, and supplementary rolls, which, owing to the errors in the original, the many changes among electors, the new grouping for polling places, Sc., would be very bulky, and having to be read with the original roll, confusing to the electors. This must interfere with the recording of the votes of a great many electors, and render difficult the recording of those of many others.

In two of the other States, the canvass will not be finished for five weeks, and, in the other two, it has only recently been commenced.

page 6099

BUDGET (1904-5)

In Committee of Supply (Consideration resumed from 25th October, vide page 6032, on motion by Sir George Turner) -

That including the sums already voted in this present session of Parliament for such services, the following sums be granted to His Majesty to defray the charges for the year 1904-5 for the several services hereunder specified, namely - The Senate,£6,722.

Upon which Mr. Isaacs had moved, by way of amendment -

That the proposed vote be reduced by1s.

Mr SPENCE:
Darling

– Owing to the attitude assumed by the Prime Minister with regard to the proposals submitted by the honorable and learned member for Indi, for the appointment of a Commission to inquire into the Tariff, the position has completely changed, and I do not desire to prolong the debate. I think that the action of the honorable and learned member has been fully justified, because he has afforded honorable members an opportunity to discuss this matter, and to ascertain the views of the Government. The Prime Minister has stated that this debate might very well have been dispensed with, but I would remind him that after the recent want-of -confidence motion was disposed of, he made certain statements to the press, particularly with regard to the personnel of the proposed Commission, which called for discussion.

Mr Reid:

– Does the honorable member think that the amendment of the honorable and learned for Indi should be pressed to a division?

Mr SPENCE:

– That all depends upon one’s point of view. If the honorable member for Wilmot were to suddenly take it into his head to come over to this side of the House, the smile on the face of the Prime Minister would be replaced by a very gloomy expression. It appears to me that the Government will be called upon to give the Commission certain instructions as to how they are to conduct the inquiry. Employers will doubtless appear before the Commission, with the object of showing that their industries are suffering from the want of adequate protection. They will probably represent that owing, to the awards given under the Factories Act in Victoria and the Arbitration Acts in. other States, they are called upon to pay higher wages than would be current in the absence of such legislation, and that they require special protection to enable them to compete with manufacturers in other parts of the world. In all such cases, evidence should be called from the other parties concerned in the industry. I am anxious that the workers’ view, as well as that of the manufacturer, shall be presented. It is desirable, in my opinion, that the Commission should be constituted of members of both Houses of Parliament. If business men outside of Parliament were selected, thev would probably ignore the claims of the workmen in an industry to give evidence, and tell them that they were not directly interested, or, at any rate, not more interested than other members of the community who were consumers. There are certain organizations, the officials of which could act as the mouth-pieces of the different classes of workers, and they would have as much right to express their views as those represented by Chambers of Commerce, Federated Employers’ Unions, and” similar organizations. Honorable members will recollect that during the debate on the Tariff, a great number of ex -parte statements were made with regard to the condition of certain industries, and that ir> some cases the assertions made by manufacturers were proved to be misleading. It is natural that a manufacturer should present the view of the case most favorable to his own interest, and frequently overlook the fact that what would be good for him would be very bad for some one else. Therefore, it should be made clear to the Commission that the views of all parties concerned should be obtained. It would be very difficult to find business men outside of Parliament who were not connected with some vested interest, and it certainly would? be very difficult to secure an impartial Commission. With a mixed Cabinet, such as we have at present, business men. without pronounced views upon fiscal or other public questions, would probably be selected. A Commission composed of members of Parliament would be in my opinion most capable of conducting the inquiry upon impartial lines, and in a comprehensive fashion. I believe, further, that the members of the Commission could be selected to greater advantage by this House thai* by the Cabinet. The Government have evidently forgotten that “ In a multitude of counsellors there is safety.” There would be more safety in a selection made by honorable members than by the GovernmentI am glad that the Prime Minister has recognised that it would be a mistake reappoint a Commission constituted solely of business men. The Government will haveto lav down some guiding principles to be followed by the Commission in conducting their investigations, otherwise it may not report for yearsIndeed, it is quite possible that Parliament may have to do as the honorable member for Darwin suggested was done in the case of a Royal Commission in. America - appoint another Commission te* ascertain what has happened to it. I think that the Government should inform us whether they intend to give definite instructionsto the body which it is proposed to create regarding the scope of its inquiry, or whether they intend to allow it a free handIf the latter course be adopted, and the members of the Commission are paid for their services, the investigation will prove immensely costly, and ultimately the House - as the result of changes in the -personnel, after the next election - may have to take the matter up itself. If, on the contrary, we lay it down that the Commission must submit a progress report to Parliament early next session, some check will be imposed upon the area of its investigations. To give it liberty to inquire into every separate item of the Tariff would be disastrous. It has been repeatedly urged in this House that certain industries - particularly in Victoria - are suffering as the result of the operation of the Tariff. That statement has yet to be substantiated. Upon inquiry, it may be found that in some industries there is a decreased demand for machinery - a fact which would account for the depression that is affecting various other industries. I’ think that the honorable and learned member for Indi is right in suggesting that this House should prescribe the limits of any inquiry which may be undertaken. When the Government are called upon to face the situation, I believe that they will be driven to adopt proposals which will closely approximate to those of the honorable and; learned member for Indi. . If the scope of any inquiry by a Commission is limited to those industries which are said to be chiefly affected by the working of the Tariff, it will be quite possible for it to submit its report to Parliament next session. If, on the other hand, we declare that every person in the Commonwealth shall have an opportunity of approaching that body and ventilating his grievances, it will require to sit every day of the week for an immense period, and even then its labours might be fruitless. I trust that the Government will profit by the discussion which has taken place to the extent of indicating to the Commission the lines upon which it shall proceed. Personally, I am of opinion that it would be better to appoint members of Parliament to that body. The Commission need not be a large one, but it should consist of the most extreme free-traders and protectionists. That would insure a searching crossexamination of witnesses, and after all, the report of a Commission is of less value than is the evidence which it collects. We might well ask it to consider the effect of the Tariff upon those industries which employ the largest amount of labour. That would be preferable to having facts bearing upon the operation of the Tariff as a whole, partially presented. I am not a fiscal faddist. When the Tariff was under consideration I accorded both sides fair play. We must recollect that in recent years the field in regard to Tariff matters has become much broader than it was formerly. I remember the days in Victoria when, in this connexion, the interests of the manufacturers alone were considered. Now, however, the interests not merely of the workers, but of the consumers, are accorded consideration. By adopting the means which I have suggested, we should obtain valuable information, and should arrive at a better knowledge of the working of the Tariff generally. I do not think that I need say much more, but I cannot refrain from making a few observations concerning certain remarks by honorable members opposite. We have heard a good deal during recent months in reference to a fiscal peace. Last night we were assured that honorable members upon this side of the House were violating the fiscal truce to which they were pledged. I would point out that at the last election the cry which was raised by the Prime Minister was for the enactment of a revenue Tariff, and did not favour a fiscal truce. He refused to recognise any fiscal peace whatever. The right honorable gentleman and his followers practically fired upon that flag of truce. They refused to recognise it. Subsequently, when Parliament assembled, the right honorable gentleman admitted that he was defeated, and that the country had declared that it would not have a revenue Tariff pure and simple, but would stand by the Tariff which the first Parliament had enacted. Consequently, I claim that the statement that the country upholds a fiscal peace is misleading. If the amendment of the honorable and learned member for Indi had not been regarded as tantamount to a motion of no confidence, the Government would not have consented to re-open the Tariff. They intended to appoint a Commission of business men merely to inquire into its operation. But the present issue between the Government and the Opposition is as to whether there shall be a limited inquiry or whether the Commission shall have power to make a general investigation. The Prime Minister claims that he intends to stand by the decision of the country, but that statement is somewhat inconsistent with his proposal to vest the Commission with power to inquire into the working of the Tariff as a whole. The honorable and learned member for Indi has the best of the argument when he contends that the whole Tariff should not be reopened, but that the inquiry should be limited to those industries which, according to statements publicly made, are suffering under the operation of the duties.

Mr Mcwilliams:

– Who would select the industries to come under the review of the Commission?

Mr SPENCE:

– The House.

Mr Mcwilliams:

– We should discuss that matter alone for three months.

Mr SPENCE:

– It would not take long to deal with it. A general instruction might be given to the Commission. There is a great difference between the proposal made by the honorable and learned member for Indi that the inquiry shall be limited, and that made by the Prime Minister, that an open invitation shall be extended to every person in the Commonwealth to go before the Commission and give evidence as to any complaint that he has against the Tariff.

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– If we had a limited inquiry it would have to be renewed every year.

Mr SPENCE:

– Not necessarily. Al the last elections the feeling which generally prevailed was that the Tariff was merely on trial. It cannot be denied that, owing to the peculiar constitution of the House, many anomalies were allowed to creep into the Tariff. The Prime Minister admits that there are many anomalies, and says that he is prepared to allow themto be dealt with. He does not explain, however, what he means by anomalies.If we have allowed an anomaly to creep in, in respect of one industry, we must expect to find that other industries have been affected by it. One of the guiding principles largely followed by us when the Tariff was under consideration was that any attempt to secure protective duties to encourage industries not yet established should be rather discouraged, but that there should be a revenue Tariff with a protective incidence, to prevent the destruction of those which had already been built up under a protective policy. That principle, however, was not fully observed by us, and it may be that some industries were not fairly treated. We created a very large free list - so large that nearly onehalf of the goods imported into Victoria come in free, whilst one-third of the goods imported into New South Wales, according to the last return, also came in free of duty. In these circumstances, we may reasonably assume that certain industries have not been fairly dealt with. That being so, there is no reason why we should not appoint a Commission which, without re-opening the question of the difference between the revenue Tariff proposed at the time by the right honorable member for East Sydney and his party, and the revenue Tariff with a protective incidence proposed by the Government of the day, should deal with a limited number of industries that are said to be suffering. Various assertions have been made, and more particularly in a series of articles published in a Melbourne newspaper, to the effect that the Tariff is adversely affecting certain industries. Those statements may or may not be well founded, but a Commission having a limited power of inquiry would be able to report without delay as to whether there was any justification for them. If, as the result of the inquiry, we found that these industries were suffering, not from the effects of the Tariff, but from a natural depression in no way attributable to it, we should be in a far better position to deal with the Tariff than we were when we were called upon to deal with it in the first Parliament. If the Government stood by the announcement made by the Prime Minister outside the House as to his intentions in regard to this matter, the whole Tariff question would be re-opened., and that would be contrary to his declared policy. Perhaps, however, the right honorable gentleman desires to shelve the question altogether. One cannot help entertaining a suspicion that that may be the object whichthe Government have in view, for theirsupporters are very much mixed on the fiscal issue.

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– We are no more divided than are the members of the alliance.

Mr Mauger:

– We are not mixed. There are thirty-six staunch protectionists on this side of the House.

Mr SPENCE:

– It may be that the Prime Minister feels that his only hope of retaining office, in the event of the dissolution for which we hope taking place - or after the next general election, in the natural course -of events - is for him to shelve the fiscal question. If that be so, his proposal for the appointment of a roving Commission, consisting of -members of the public having no knowledge of the fiscal question - men who are, so to speak, fiscal atheists - and having authority to inquire into the whole Tariff, is a splendid one. The right honorable gentleman would say that the Commission had been appointed with the approval of the House, and it would not be likely to present a report before the next general election in the ordinary course of events came round. The Commission would not hasten to present even a progress report if it knew that there was no desire that it should expedite the work. If no limit as to the duration of their investigations were imposed upon the Commission, the inquiry might be prolonged indefinitely so as to carry the mixed party, which now holds together by sinking the fiscal issue, over the next elections. I am not assuming that that is the intention of the Government, though I should be justified in doing so in view of the statements made by the Prime Minister, in an interview which has been published in the press.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– That if an assumption which admirably states the position of the members of the alliance.

Mr SPENCE:

– Personally, I am not worried about the Tariff issue at all. But, as I have shown, if the investigations of the Commission were prolonged for an indefinite period, the Government party could, at- the next elections, say to the people, “ We have appointed an impartial body of men to inquire into the whole question “of Tariff reform’,” and thus secure a continuance of the coalition which it is essential to their existence to preserve. In my opinion, however, the Government see the danger of doing that, and, therefore, they now propose something more reasonable. I hope that the Commission will be composed entirely of members of Parliament. The Prime Minister casts a reflection upon us when he assumes that our party feelings are so bitter that we would be unable to make a fair, and impartial investigation. What is most desired is to obtain evidence on the question, and I think that any body of men - chosen from this House, even if composed wholly of the members of one party: ‘would give a fair resume of the evidence placed before then;. Notwith-standing the discredit which has been cast upon commercial men by reason of Customs prosecutions, the butter bonus revelations, and other similar proceedings, I have no doubt that the Prime Minister could obtain a sufficient number of persons possessing a commercial training to make an honest inquiry; but from the nature of their experience, and their interests, such persons would not inspire as much confidence as would a Commission of members of Parliament, who’ would look at the mat ter from all points of view. The- Government, in framing the Commission, should lay down instructions as to the general scope of the inquiry, though if the Commissioners were members of Parliament I have no doubt that the points to which I have referred would be taken into consideration’ even without such instructions. Not only should the representatives of the various industries which are affected be examined, but the Commission should also call before it representatives of the workmen and of the organizations of workmen, and representatives of the consumers, to ascertain how proposed increases of duties would affect prices. I believe that only a limited number of industries are at the present time asking for an inquiry of this kind, and if the Commissioners were required to report next session, in time to allow their recommendations to be dealt with by Parliament, they would have to select for investigation the conditions of those industries which are most affected, allowing others to remain over until some future time. I urge upon the Government the consideration of the views which I have expressed, in order that the report of the Commission may be worthy of it.

Mr CHANTER:
Riverina

– I shall not detain the Committee very long, because there is not much to be gained by prolonging the debate, seeing that we on this side have gained nearly all that we wish for. When the discussion started, there was a broad difference betwen the members of the Opposition and the supporters of the Government ; but the Ministry have given way so much that now the difference is a very narrow one. From this time onwards we shall undoubtedly hear a great’ deal about fiscal, peace, or, to use the newer term, fiscal truce. The cry for fiscal peace was forced upon the protectionists at the last election by the declaration of the Prime Minister that if he obtained a sufficient following he would rip the Tariff, to use his own words, from end to end. and make it as nearly as possible a revenue Tariff. Thereupon the honorable and learned member for Ballarat stated that in the interests of Australia as a whole, the electors should pronounce for fiscal peace. I am proud to think that, notwithstanding the great ability of the Prime Minister, he is beginning to see the error of his ways, and is rapidly becoming a protectionist. It is 1 now agreed by honorable members on both sides that a Commission should be appointed to inquire into the operation of the Tariff,, though all that the programme of the alliance asked for was an inquiry into the condition of those industries upon which the operation of the Tariff is detrimental.

Mr Reid:

– What alliance?

Mr CHANTER:

– The alliance of members of the Protectionist Party with the members of the Labour Party for the protection of the manufacturers of Australia, so that our own people may obtain the work which is now given to foreigners, and for the protection of our workers, so that they may have plenty of employment at a fair wage. I have always given the right honorable gentleman crpdit for a sincere desire for the welfare of the people of Australia ; but while he thinks that it can be secured only in one way, I believe that it is to be gained only in quite another way. Personally, I see no need for a Commission. When the Tariff was framed, the Ministers of the day obtained all the information that they could get, and laid it before honorable members, and Parliament then determined what rates should be fixed. Why that course cannot be followed again now I am at a loss to know. A majority of honorable members favour the idea of appointing a Commission to inquire into the working of the Tariff, and the difference of opinion seems to be chiefly as to whether this Commission should be composed of members of Parliament or of private citizens. The Prime Minister spoke of appointing impartial men to the Commission, but every man in the mercantile life of Australia, who is worth his salt, holds strong convictions on the fiscal question. I do not suppose any honorable member will be anxious to serve on the Commission, though honorable members whose services are sought may be patriotic enough to give them to the country without payment. It would, however, be impossible to obtain private citizens possessing the knowledge which honorable members necessarily have, who would accept seats on the Commission without payment. In referring to the qualifications of members of Parliament for this work, I speak without egotism, because one who sat in Parliament for over twelve months, while the Tariffs of the world were being discussed, without learning more about Tariff matters than is known bv persons outside who have not enjoyed similar opportunities, would be a perfect dullard. A Commission constituted of six or seven experts would involve an outlay of at least £200 per week for salaries. It would probably have to sit for a considerable time, and the community would object to the heavy cost. They would also accuse us of shirking our responsibilities, and of neglecting our duty to frame a Tariff in the interests of the people. No one on this side of the House has asked that the whole Tariff question should be re-opened. All that is desired is that an investigation shall be made as to the extent to which injury is being inflicted by the Tariff upon certain industries, in regard to which we hear day after day that machinery is lying idle, and that workmen are being dispensed with. , It was suggested that certain specific industries should be reported upon, in the first instance, so that Parliament might have an opportunity to apply the remedy in the most pressing cases. When the Prime Minister was speaking last night, I felt that, without any loss of self-respect, he might have gone the length of promising that if the Commission reported that the’Tariff was inflicting injury upon certain industries, he would afford honorable members an opportunity to immediately give -relief. There was no adequate reason for his refusal to answer the question put to him by the honorable and learned member for Indi upon the point. I should like to know when the fiscal truce, which has been entered into, is to terminate. We are told that it is to extend for the life of this Parliament ; but I am at a loss to understand the position which the Government will occupy when they go to the country after the truce has expired. Will they propose an extension of the term of fiscal peace? It will be impossible for them to put forth either a protectionist or a freetrade policy, and it seems to me to be desirable that we should do our best - irrespective of party - to amend the Tariff in she interests of our languishing industries. It is our duty, whether we be free-traders or protectionists, to put a stop to the present ruinous waste of some of our best material ? Men are being driven out of employment, and are proceeding in large numbers vo Canada, South Africa, and elsewhere. Surely we should act as speedily as possible upon the information which is being afforded to us day by day, and if necessary increase some of the duties under the Tariff. The honorable and learned member for Indi asked, on behalf of those associated with him, that the inquiry - whether by Commission or otherwise - should take place during the coming recess and that a report should be laid before Parliament, so that action might be taken, if considered desirable, during the next session. Why cannot the Government agree to that? The Prime Minister said last night that he would not promise to take any course until the report of the Commission had been placed before him. No one asked that he should do so. All that is requested is that he shall facilitate an inquiry, and immediately the report is placed in his hands afford Parliament an opportunity to deal with it. He might have agreed to this the more readily because he would be speaking only on behalf of the free-trade section of the community, many of whom make large profits out of importations from abroad. The protectionist members of the Government appear to have their tongues tied. They have made no announcement as to what they are prepared to do. There has, however, been no hesitation on the part of protectionists on this side of the House in stating their intentions. Whilst, in common with other honorable members, I declared to my constituents that I was prepared to follow the honorable and learned member for Ballarat when he stated that he would endeavour to maintain fiscal peace, I felt that I could1 no longer support him when it was afterwards made clear by the evidence forthcoming from day to day that some of our industries were in a perilous condition. It would be a national calamity if we were to hold ourselves bound by an undertaking to preserve fiscal peace, whilst our industries were perishing. Should we excuse the Government of Great Britain if it failed, owing to considerations of neutrality, to d’en.and reparation from Russia for the outrage recently perpetrated by the Baltic Fleet of that power upon English fishing vessels? When the honorable and’ learned member for Ballarat first spoke of fiscal peace, there was not the slightest evidence, so far as I was aware, that many of our industries were suffering seriously through the operation of the Tariff. A few months afterwards, however, we heard of numbers of employes being discharged on account of the increase of imports under the Tariff, and we felt that immediate action was called for. The Government now say that they are prepared to appoint a Commission, which shall consist half of Members of Parliament and half of impartial business men. If the Prime Minister felt that he could find six Members of Parliament qualified to act on the Commission, surely he might have found another six equally well equipped for the work. I believe that a Commission composed wholly of Members of Parliament would be able to deal with the matter more effectively and rapidly than a body otherwise constituted. The right honorable gentleman has made some concession in regard to the fiscal peace issue, and he has also conceded that half the Commission shall consist of Members of Parliament. He might reasonably go still further, and permit those industries which are crying out for assistance, to become the first subjects for investigation, leaving others to be dealt with as occasion may arise. The closing down of industries day by day represents a loss to the community. In order that a few individuals may wax fat upon importations, we should not be deterred from affording relief to the large number who are dependent upon the industrial life of Australia. It is our duty to build up that industrial life as rapidly as we possibly can. Almost from one end of Australia to the other people are crying out for the Legislature to do something to provide them with work. At present the lands of the States art* locked up by a variety of means, so that the people cannot gain access to them. Those who own the. land will not hold out the hand of relief to their fellows. Even if they did so, it would merely mean the removal of workmen from one part of Australia to another. We cannot fail to recognise that our citizens are being driven out of the Commonwealth, because they cannot find employment j,i the trades to which they were apprenticed. Although a great deal of adverse criticism of the press, in another direction, has been uttered to-day, we have to thank one section of it particularly, for hawing laid bare this phase of the question during the past few months. It has clearly shown the loss which is being occasioned in Australia by the paralysis of its industrial life. The honorable member for Hume mentioned one industry last night, which is concerned in the manufacture of a particular class cf agricultural machinery, and which is suffering acutely. Is not every honorable member aware that there are scores of industries - especially those connected with the iron industry - which are being seriously injured by the anomalies which exist under our Tariff? The argument that one item in the Tariff cannot be touched without interfering with twenty or thirty others is a mere bogy. If iron and steel works existed in Australia such an argument might have some force-

Mr Johnson:

– Upon the score of equity, how can the honorable member justify the exclusion of any industry from consideration by the proposed Commission ?

Mr CHANTER:

– I do not attempt to do so. I have not uttered one word which would justify any such conclusion. But whilst I would not exclude any industry from consideration, we know that specific industries are being practically mined. Let us deal with them first. If evidence of a similar character were subsequently forthcoming in regard to other industries, we should then be at liberty to deal with them. There is nothing to prevent a Commission composed of members of this House, who would diligently face the task before them, from submitting a progress report to Parliament almost immediately after its re-assembling next session. If, on the other hand, we appoint a Commission and allow it to withhold its report until it has inquired into the industrial conditions obtaining all over Australia, we shall require ‘to wait five or six years for that document. That is not the kind of relief for which Australia asks. Whilst the electors of the Commonwealth declared at the recent elections that they did not desire any more Tariff turmoil of a general character, no constituency affirmed that we should not remedy existing anomalies in the case of specific industries’ when those anomalies were” disclosed. The sole difference between the Government and the Opposition is as to whether the proposed Commission shall be appointed for the purpose of affording immediate relief to certain industries, or whether it shall deal with the effect of the Tariff - upon the industries of all the States, and submit its report when it has completed the task of taking evidence. How is this difference to be reconciled ? I desire the Prime Minister’ to inspire me with confidence by his acts. He can do that most effectively by showing that he is anxious to relieve Australian workmen, notwithstanding that by doing so he is compelled to discard his own pet fiscal theory. That is what I hope for. In my opinion there is no necessity whatever for the appointment of a Commission to afford immediate relief to certain industries. When the right honorable member for Adelaide and the present Treasurer framed the existing Tariff, they undertook a gigantic work. They had, as far as possible, to harmonize six conflicting Tariffs. That undertaking was one of much greater magnitude than is the task which we at present have to face. I cannot understand why party differences should allow us to remain inactive while certain industries are being ruined. Although this matter may not be one of importance to the Government, it is of very great moment to the individual who cannot obtain work and who, under the operation of the Victorian or South Australian Tariff, has been accustomed to find employment in industrial enterprises. It is not for the Ministry to say, “ Except it suits us we shall not give the House an opportunity of correcting certain legislation which it has enacted.” I am glad that we have progressed some distance upon the road to a compromise. It is our duty to put forward our best efforts to bring about an understanding which will conduce to the benefit of the people of Australia. Before this debate closes I hope that some honorable member opposite will indicate whether he is in favour of appointing a Commission to immediately deal with specific industries, or whether he supports the proposal to allow it to inquire into every item of the Tariff before any relief is afforded. If we adopt the latter course the report of the Commission will not be forthcoming for years. I have been waiting for some honorable members opposite to indicate how far the Government supporters are prepared to act in conjunction with us, in order that a more cordial agreement may be arrived at between the two parties as to the best means of affording immediate relief to the people. So far no honorable member has given us any information on the subject, but I trust that action will be taken without any further loss of tin.e.

Mr POYNTON:
Grey

– I rise to express my satisfaction that the Government have gone so far as to acknowledge that the amendment, or “squib,” as they have described it, possesses some merit. Their estimate of the danger of the “squib,” so far as their retention of office is concerned, is best known to themselves, but the fact that they are prepared to agree to about ninetenths of the propositions made by the honorable and learned member for Indi, shows that they consider it to be of some importance. A Commission is to be appointed, and no one is better pleased than I am that an investigation is to be made, although perhaps my opinion as to what will be the result of it differs from that entertained by the honorable member for Melbourne Ports. I hope that there will be no attempt to burke the real issues involved, but that a. thorough inquiry will be made into the condition of those industries which are said to be seriously affected. The inquiry should be confined as far as possible to these industries, and to those associated with them which are indirectly affected, and a progress report should be submitted as early as possible. In the event of the report of the Commission showing, on satisfactory evidence, that any industry of a national character is being seriously affected by the operation of the Tariff, I cannot conceive of the leader of the Government declining to give the House an opportunity to discuss on its merits a proposal for relief. I differ from any honorable member sitting in the Opposition comer as to the causes leading up to the depression prevailing in some of the industries to which reference has been made. I think it will be found that the iron industry has been affected by influences having no connexion whatever with the Tariff. Whilst travelling by rail a few days ago, I had a conversation with a gentleman engaged in the iron industry, who expressed the opinion that oil engines had practically displaced thousands and thousands of pounds worth of machinery worked by steam. He pointed out that many steam engines and boilers are now practically so much dead stock, and that oil engines are not only cheaper than steam engines, but cost less to run. All these facts will, no doubt, be brought to light by the Commission. Another point to be borne in mind is that in any of the States one may purchase first-class mining machinery at one-third of its original cost, owing to the stagnation in the mining industry. These, and other circumstances, have tended to depress the iron trade. I am not one of those bigoted free-traders who would refuse to consider, on its merits, any report, based on satisfactory evidence, showing that an industry had been seriously affected by the Tariff, but I feel’ that the Tariff is not solely responsible for the depression which exists in certain trades. It is my desire that the Commission shall be empowered to inquire into the operation, not only of the low duties, but of the higher duties in the Tariff.

Mr Mauger:

– The honorable member will find that even the high duties will have to be increased.

Mr POYNTON:

– No doubt, the manufacturers will say so.

Mr Groom:

– The manufacturing jewellers desire that the duty on jewellery shall be increased to 25 per cent.

Mr POYNTON:

– And I understand that they also favour preferential trade. If they examine the returns, they will find that less than £12,000 worth of the jewellery imported into Victoria last year came from countries other than Great Britain.

Mr Mauger:

– If we could have shut out the goods coming from those other countries, what a material benefit we should have conferred on the people.

Mr POYNTON:

– There are two sides to the question. We need to have an inquiry made as to the effect of high duties, not only upon those engaged in a particular industry, but on the consumers, and also the revenue of .the States. I am glad that a Commission is to be appointed, because I have sufficient confidence in the Prime Minister to believe that no hole and corner inquiry will be made. I feel satisfied that he will cause an investigation to be made into the condition of certain industries which are said to be more seriously affected .than are others by the operation of the Tariff; and if the report shows that they are being adversely affected, I am sure that he will grant the House an opportunity to consider proposals for relief. I believe, also, that the inquiry will be conducted on lines that will enable us to ascertain the effect of the Tariff on the manufacturers, the consumers, and the revenue of the Commonwealth.

Mr Reid:

– Those are the three main points.

Mr Mauger:

– The position of the workmen should also be taken into consideration.

Mr Reid:

– That is covered by the points named.

Mr POYNTON:

– I do not desire that the position of the workmen in the various industries dealt with by the Commission should be overlooked. ‘ The Commission should consist solely of members of this House, and I am pleased that the Prime Minister has agreed that at least a proportion of its members shall be Members of Parliament. If that course be followed the report of the Commission will have greater weight with the House. I could not conceive of any Government appointing a onesided Commission, for if that were done the report would be prejudiced even before it was presented to the House. I have only to add that I trust that the Commission will give attention to the several points I have enumerated.

Mr ISAACS:
Indi

– I rise now to make a proposal, which, I think, will expedite public business. I may say that the Opposition have had a consultation, and have arrived at the conclusion that very considerable progress has been made towards the realization of the views presented on their behalf.

Mr Mauger:

– We have scored all along the line.

Mr Reid:

– It is a happy issue out of all our afflictions.

Mr ISAACS:

– Several propositions made on behalf of the Government during the debate have given us considerable satisfaction, and I think that they are now beyond the region of controversy. In the first place, since we first began this agitation, this much has been accomplished - a Commission is to be appointed. The next point to be considered is the composition of the Commission. The Government, through the Prime Minister, have met our views on this aspect of the question to a very considerable extent. The embargo originally placed by the right honorable gentleman upon the composition of the Commission has been largely removed, and Members of Parliament are not to be disqualified, by reason of their political positions, from appointment to it. The third point is that the Opposition are to be consulted as to the -personnel of the Commission. That will approximate very closely to an appointment bv the House, and means that the appointment of the Commission will not be a purely Executive act. The fourth point is that there are, substantially, to be progress reports furnished by the Commission, and that is a matter of considerable importance. These promises, in conjunction with the expression of opinion offered by the honorable and learned member for Ballarat - an expression of opinion which, no doubt, will have great weight, and has practically received the acquiescence of the Government - that the industries most urgently in need of consideration should first receive it, and that progress reports be presented to Parliament, go a long way to meet our view that the operation of the whole Tariff may not have to be traversed by the Commission j that it may be found sufficient to deal with those matters which we consider urgent, and which may hereafter be considered urgent, although not within the region of our present consideration. The fifth point is that in the concluding words of his speech - words which were very fair - the Prime Minister stated yesterday that, although he could not pledge himself before he saw the reports of the Commission as to the exact action that he would take, still he had no hesitation in saying that he would be prepared, on the presentation of these reports, to deal with hardships, if any were disclosed, and would have no fear of being upbraided for disregarding the fiscal truce in permitting that course to be. adopted. This is as far as we can expect him to go at present, and I think we can fairly rely on the Government respecting that statement. The House, of course, will have the fullest opportunity hereafter to say whether, in its opinion, sufficient consideration has been given to that aspect of the matter. The embargo placed on the consideration of Tariff matters during the life of the present Parliament, and even during next session, has been removed, and the Government, while stating that they are not prepared to say, until they see the nature of the reports of the Commission, what action, if any, shall be taken, leave themselves with an open mind to consider the nature of those reports. If they show urgency and necessity, it will be open to the House to say what further steps shall be taken, and- we shall then be not only in as good a position as we are at present, but in a better position to judge of the matter. In these circumstances the Opposition, having held a consultation, think that the best interests of the country will be conserved by our not proceeding further with the amendment. I therefore ask leave to withdraw it.

Mr REID:
Minister of External Affairs · East Sydney · Free Trade

– Before the amendment is withdrawn, I should like to say that I have listened very attentively to the statement made by the honorable and learned member for Indi, and that I think it of great importance that there should be noloophole left for subsequent misapprehension, or for charges of bad faith against the Government. I wish, therefore, before my honorable and learned friend takes the course he has indicated - a course which I hope the Opposition will always take in connexion with these matters-

Mr Mauger:

– When we obtain what we desire.

Mr REID:

– I say that it is a course which I heartily applaud, and which I trust the Opposition will continue to take upon all occasions of this kind.

Mr Mauger:

– We applaud the reasons leading to the adoption of this course.

Mr REID:

– I think that my honorable friend and I, in arriving at this happy consummation, must give credit where it is deserved. We must give our due share of credit to those public-spirited members of the Opposition who are not prepared to go so far as the honorable and learne’d member for Indi.

Mr Watson:

– Was that the reason why the right honorable gentleman made his concessions ?

Mr REID:

– No. This intelligence reached me after my statement. I heard so much that I was quite prepared for the course which is now being taken, which I put down officially to the purest patriotism, but which I may privately have the. suspicion is a matter of arithmetic.

Mr Mauger:

– The right honorable gentleman has spoiled everything now.

Mr REID:

– I think that we had better leave sentiment outside our deliberations on this occasion. The honorable and learned member for Indi yesterday, in the exercise of a right which he possessed, stated that by the amendment he proposed to move a motion of censure on the Government, with reference to a number of matters which were not before honorable members, but which would enable the members of the Opposition to vote together in approval of it.

Mr Isaacs:

– I said thaf I left it open to others to form their own reasons.

Mr REID:

– I think I heard something about a White Australia in connexion with this Tariff. That seems to be a matter upon which we must never either slumber or sleep - a task beyond my defective powers. The honorable and learned member, however, made one or two observations which may give rise to misapprehension in the future, and he’ will appreciate my motives if, before he withdraws his amendment, I make a few comments upon his remarks. In the first place, the question of Tariff revision was arrived at substantially by my honorable colleagues and myself in the earliest phase of our existence as a Ministry. My honorable colleagues will bear me witness that the subject was discussed by us as a Cabinet within eight or ten days of taking office. But honorable members will recollect that we had a month’s engagement with our friends opposite, which suspended our powers as an Executive Government.

Mr Watson:

– Why was the question not mentioned in the right honorable gentleman’s policy speech ?

Mr REID:

– It was a serious and important matter, which required to be elaborated and thought out. I hope that the present Ministry will earn a reputation for carefulness in statements of an official character. I was anxious, however, that the matter should be considered by the public, because it affects them as much as it affects honorable members of this House. I think we often forget that we are here only as the representatives of the people of Australia. We are their agents, not in the commercial, but in a much higher sense, and the oftener we recollect that in our actions in this House, and as members of the Go vernment, the better it will be for the community.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– There are 360,000 free-trade voters in New South Wales who have not been mentioned in this debate.

Mr REID:

– I hope that they will feel satisfied when they know that the honorable and learned member and myself, to say nothing of the other free-trade representatives, are in excellent trim.

Mr Austin Chapman:

– That number of free-tradeis could not be found now in New South Wales,if one offered to pay £10 a head for them.

Mr REID:

– I think that the free-traders of Australia will have no great anxiety so long as I and other honorable members are in the Government. The matter is one between them and the free-trade wing of the Cabinet, just as loyalty to protection is a matter between the Minister of Trade and Customs and the protectionist wing of the Cabinet.

Mr McLean:

– I hope to convert the right honorable gentleman on this subject.

Mr REID:

– Taking a superficial view of the question, I think that there is more scope for the efforts of the honorable member in that direction than for my own in securing his conversion. I wish to explain my motives in referring to the appointment of this Commission, npt as a Ministerial announcement, but as a personal announcement, coming from myself through the newspapers a few days ago. I think that honorable menbers will admit that the announcement has helped very much to make possible an amicable agreement on the question, and I put it forward with that object in view. The paramount desire of Australia in connexion with Tariff revision - granted that there is to be Tariff revision - is that the Royal Commission appointed to inquire into the subject shall be selected under such auspices that all the reasonable men in Australia, on both sides of the fiscal question, will have full confidence in it. How would it be possible to appoint a Commission under such desirable auspices, if we, as a Government, did not exhaust all legitimate means to bring our friends opposite into agreement with us on the subject? I do not wish to be ungenerous to them in the hour of their defeat.

Mr Watson:

– We have secured a victory. The right honorable gentleman has climbed down - what more could we desire ?

Mr REID:

– My honorable friends knew, as a matter of fact, that if they went to a division my majority would acquire enormously increased proportions. I do not give them’ credit for generosity in this matter, nor am I called upon to do so. I give certain honorable members who are in opposition the utmost credit for having taken a patriotic attitude in regard to the matter, which has led to this result ; but it is of no use to pretend that the facts are contrary to what they really are. We all know that several members of the Opposition put public interest before personal considerations or party ties, and made no secret of their intention to vote against the honorable and learned member for Indi, although sitting on the same side of the Chamber. I return my sincere thanks to them for having brought about a state of things which I am sure will be viewed with satisfaction by the people of Australia. We are now burying all our party antagonisms in this matter.. We are anxious to co-operate, and to select Commissioners in whose competency and impartiality both parties will have perfect confidence. But there must be no misunderstanding on one point. The honorable and learned member for Indi quite inadvertently put me in the position of having made this great concession - that if any hardships were disclosed by the investigations of the Commission, I should be prepared to remedy them. Hardships is an ambiguous term.

Mr Watson:

– It is the word which the right honorable gentleman used yesterday.

Mr REID:

– I used a very different word.

Mr Watson:

– “ Hardship “ was the word - I took it down at the time.

Mr REID:

– I said “anomalies.”

Mr Groom:

– That was the word used in the interview.

Mr REID:

– “Anomaly” was the word which my honorable and learned friend could not translate. I used the word “ anomaly,” but he used the word “hardship.”

Mr Watson:

– The right honorable gentleman used the word “hardship” yesterday,

Mr Mauger:

– Yes.

Mr REID:

– I wish to have no misunderstanding about this matter. At the present time, any duty which is below 30 or 40 per cent, is, in the opinion of some honorable members, a hardship to certain industries. Instead of duties of 20 per cent., they wish for duties of 30, 40, or 50 per cent.’

Mr Isaacs:

– That statement is not accepted by all in its nakedness.

Mr REID:

– I am going to leave no opening for that sort’ of abuse which has been poured on my head from day to day, and from hour to hour, both in this Chamber and out of it. I have been industriously represented as one who is always endeavouring to arrive at amicable compromises, regardless of the weighty obligations which they entail, and, therefore, I am determined that there shall be no misunderstanding about this matter. I wish it to be clearly understood that while I hold my present position, I shall absolutely refuse, during the life-time of this Parliament, to allow anything to come before this House in the name of the Government, or in spite of the Government, which amounts to a re-opening of the fiscal question. If the Commission reports the existence of a state of things with reference to any industry amounting to a hardship, but recommends what does not amount to a reopening of the fiscal question between the freetraders and the protectionists, I shall be willing to give the subject my best consideration. But any honorable member who twists my statement, so far as to represent me as a Prime Minister who is willing to prove false to the faith in which T believe, by bringing protectionist measures before this Chamber, thinks me capable of a breach of my trust as a public man, which I shall never commit. The only arrangement under which free-traders and protectionists can sit together on this side of the Chamber is one which, although we are prepared, even in connexion with the Tariff, to remove every sort of injustice or hardship which is brought to light, is subject to the understanding that if the opening of the fiscal question is involved to any degree worthy of serious regard, it will be our duty to go to the electors of Australia upon the subject with a distinct policy. If either wing of the Government finds that a difficulty has arisen under which the loyal protectionists and the loyal free-traders find it impossible to continue together on the present basis, I think I can say for my protectionist colleagues, as well as for my free-trade colleagues, that from that moment we part company. We can remain in office as a united party only so long as I do not call on my protectionist supporters to prove untrue to their fiscal creed, and they do not call on me to be disloyal to mine. That is the basis on which the Government rests. The moment that that basis becomes impossible, the existence of the Government becomes impossible. I shall co-operate with the leader of the Opposition in every way to make the Commission one which will command his confidence as well as my own. I wish to obtain a Commission in every member of which my honorable friend and myself - and I am sure that I can speak for my colleagues - will have confidence. I do not desire merely that the honorable and learned member for Bland should have confidence in one-half of the Commission, and that I should have confidence in the other ; but I desire to act in such a friendly and loyal way to this great investigation that the honorable member and myself will agree regarding the suitability of every man upon the Commission. When my honorable and learned friend speaks as if a course of that sort involved some infraction of the principles ofresponsiblegovernment- of responsible government-

Mr Isaacs:

– No.

Mr REID:

– The honorable and learned member seemed to indicate by his remarks that I was making some surrender of my rights in consulting the leader of the Opposition. Upon all national questions of whatever kind, the man who occupies the position of leader of the House does not appreciate his position if he does not recognise that he owes a duty to the other side of the House as well as to honorable members who are supporting him. I recognise that honorable members opposite, as well . as those honorable members who are supporting the Government, have rights, especially in regard to a measure that divides us so keenly. When the honorable member for Bland occupied the position of Prime Minister, he had an impor tant Commission to appoint. What course did he take? There was no necessity to make a public announcement upon the subject, because there was no antagonism centering round the appointment ; but he asked me to assist him in the constitution of the Navigation Commission. In taking that course, he adopted a proper and honorable attitude, which every patriotic Prime Minister should always assume, and I do not think that I have humiliated myself, or broken the highest traditions of responsible government, by recognising the rights of my honorable friends opposite. I shall beonly too delighted, as will my colleagues also, if in the appointment of this Commission it can be said of us that we have done so well that those appointed command the confidence of all shades of public opinion.

Amendment, by leave, withdrawn.

Mr WATSON:
Bland

– I do not know that it is necessary to say a great deal with regard to the Budget. I was rather disappointed with the scope of the remarks of the Treasurer. So far as the Estimates themselves are concerned, he was, as is usual with him, clear, and easily understood. The Estimates bear evidence of the care that the right honorable gentleman always bestows upon any business he takes in hand, and the fact that they are largely those which I myself practically arranged a few months ago naturally detracts much from any criticism I might be disposed to level at them. There are one or two considerations, however, to which the Treasurer might have devoted some attention. For instance, as has been pointed out, the revenue from the Tariff is gradually diminishing, largely because of its protectionist incidence. We have heard a great deal during the last few days as to the desirability of some proper inquiry into the effect of the Tariff upon industry. It is true that the Customs and Treasury officials have for some time past been engaged upon an inquiry of this description - an inquiry necessarily not as full and complete as one in the course of which witnesses are summoned, and all forms are at the disposal of those engaged in the investigation. At the same time, the matter has been engaging the attention of the authorities, and I had expected something more definite from the Treasurer as to the incidence of the Tariff, and its effects upon colonial industry generally, and as to how far the diminishing tendency of the Tariff returns arising from the building up of local industries might be expected to affect our finances for some years to come. I had hoped that we should have had something like a complete expression of opinion from the right honorable gentleman. So far as the other aspects of the Budget are concerned, I do not see a greaf deal to which exception can be taken. Perhaps the most important feature of the Budget statement, one in which all honorable members will require to take some interest, is that relating to the manner in which the expenditure on new works and buildings is to be charged. Most honorable members are aware that for some years past the expenditure upon new works has been charged to the various States as transferred expenditure, and it seemed to me that that was the proper course to pursue. On the present occasion, however, the Treasurer, as he informed the House the other day, has adopted the alternative of charging all these new works and buildings as “ other “ expenditure, and consequently debiting the whole of the Commonwealth upon a populationbasis. In my view that course is not only not imposed by the Constitution, but will work out in an absolutely inequitable fashion. Take the case of Defence expenditure. Those States which have foi years past been alive to their duties and responsibilities in this connexion, which have built forts and have kept their equipment up to date, and have made accumulated reserves in the way of rifles and other armaments, will, under the new arrangement, find themselves seriously handicapped ‘in their finances because of the remissness of other States in the past in that particular regard.

Mr McCay:

– Hardly that, because a great portion of that which was necessary to. equalize conditions in the States has already been done.

Mr WATSON:

– I beg to differ from the Minister - a great portion of that work has not already been done.

Mr McCay:

– A great deal of what is necessary to equalize the conditions.

Mr WATSON:

– No, “that is not so. Take the case of Western Australia, for instance. The Defence expenditure under the head of new works and buildings - I am not speaking of the ordinary defence expenditure-

Mr McCay:

– I thought the honorable member was referring to such things as equipment.

Mr WATSON:

– The vote under the head of “ additions, new works and buildings “ upon page 236 of the Estimates, in cludes such items as accoutrements, £16,160; camp equipments, , £7,365; saddle-trees, irons, and bits, , £10,173. Surely those are items of equipment.

Mr McCay:

– Yes ; but speaking generally, the States are on very level ground, so far as warlike stores are concerned.

Mr WATSON:

– I do not think that that statement can be fully borne out.

Mr McCay:

– I promise . the honorable member that I will inquire into the matter.

Mr WATSON:

– I know that a good deal has been done during the last three years to equalize the equipment of the various States, but, leaving out the items given at page 236 of the Estimates, and assuming that the money spent in that direction will be roughly on a population basis’, and calculating “ other “ expenditure at £300,000, it will be found that nearly 25 per cent, of the expenditure on new works and buildings will take place in Western Australia, whose population percentage is just over 6 per cent. That is to say, that while their population percentage is 6, their percentage of expenditure will be roughly 25. That is not a proper state of affairs. If we were proposing to abolish the bookkeeping system altogether I could understand - even if some sacrifice were involved on the part of some of the States - the stand-point from which the Treasurer approached the position. I admit that, whilst New South Wales would have to lose a considerable amount by the adoption of the population basis of estimating the receipts arid expenditure as compared with that adopted under a book-keeping system, she would receive compensations through the removal of restrictions upon commerce which would to a large extent make up her loss. The proposal of the Treasurer, however, simply means that those States that have made some preparation for defence will suffer all the disabilities of “having to pay for the erection of forts in Western Australia, without receiving any compensation.

Mr Carpenter:

– We shall have to take over the defence works in New South Wales by-and-by.

Mr WATSON:

– The honorable member refers to the eventual faking over of the works. That is a matter which I am afraid will be deferred until the distant future.

Mr Carpenter:

– No matter when.

Mr WATSON:

– Yes, it does matter considerably when. When payment is made for the transferred properties as a whole, each of the States will have to bear its proper proportion of the cost, but the burden will have to be borne by all at the same time. But what the Treasurer proposes is that the expenditure for this year in Western Australia shall be borne by the whole Commonwealth, whilst New South Wales and other States,’ which have spent money in the past, will have to wait hu ten years before the equalization of the burden is brought about by the payment for the transferred properties. Surely it is not anticipated that the full cost of the defence works will be borne by the Commonwealth. I do not anticipate that we shall be justified in paying any of the States the full cost of the various forts they have erected.

Mr McCay:

– The Treasurer has raised that point.

Mr WATSON:

– Yes, I know he has. Any equitable method of payment for the transferred properties should not involve the responsibility of the Commonwealth for the full amount expended upon forts and other rapidly depreciating assets.

Mr McCay:

– I believe that the Treasurer’s view is that we should not pay anything more than the market value.

Mr WATSON:

– Of course it is very difficult to say what should be the basis of valuation for non-productive works such os forts. It is a very difficult thing to determine. The point which I am emphasizing has nothing whatever to do with the basis of the valuation that we shall eventually adopt for payment for the transferred properties. My point is that, in this regard, the Treasurer proposes to give consideration to one State at an earlier period than he proposes to extend it to the other States.

Mr Crouch:

– The defence of one State is the defence of all.

Mr WATSON:

– Surely a similar argument might be urged in regard to every Department which has been transferred to the Commonwealth. Take, for example, the position of South Australia in reference to the Post and Telegraph Department. Because of the bookkeeping system, that State is compelled to bear the whole of the loss sustained upon the transcontinental telegraph line - a loss which accrues as the result of the construction of the Pacific Cable which connects with Brisbane. The whole of the decline of revenue upon that line falls, not upon I the people of the Commonwealth, who ought to bear it, but upon the people of South Australia. That is one of the difficulties which the bookkeeping system imposes, and one which we shall not overcome until it has been abolished. In the present instance, the Treasurer proposes to place Western Australia in connexion with defence matters, upon a footing quite different from .that of the other States.

Mr Carpenter:

– These defence works might have been carried out in any other State.

Mr WATSON:

– I am quite aware of that.

Mr McCay:

– If Fremantle is to be used as a strategical base, its fortification is of Australian interest, and not merely of Western Australian interest.

Mr Reid:

– The larger the amount of money spent upon defence works by any State prior to Federation, the more will it receive for the value of those works.

Mr WATSON:

– Exactly. But the position to-day is that the Treasurer proposes that the Commonwealth shall bear the cost of Western Australian defences, whereas he does not propose that it shall reimburse New South Wales and Victoria for the expenditure which they have already incurred in connexion with their defences.

Mr Reid:

– Every pound of that expenditure will be repaid.

Mr WATSON:

– No doubt, in the dim and distant future, it will be repaid. But the conditions which the Treasurer proposes to lay down may continue for years. In the meantime the finances of New South Wales and the other States will be unduly and unfairly hampered by an additional contribution being made to Western Australia as compared with the sum to which she is entitled upon the basis that has been hitherto recognised.

Mr Carpenter:

– That is not a very Federal view to take.

Mr WATSON:

– A Federal spirit consists in observing just treatment to every portion of the Commonwealth. I admit that .the Commonwealth would be failing in its duty if it did not erect necessary defences for Fremantle, or for any exposed portion of the Continent. My point is that, until the Treasurer submits a scheme for the payment for transferred properties generally he should allow the expenditure . upon defence works in Western Australia, and other portions of the Commonwealth, to continue to be charged as transferred expenditure, thereby placing all the States upon the same footing. In the meantime, Western Australia would be compelled to bear the cost of her own fortifications, even though those works were undertaken at the instance of the Commonwealth, and New South Wales would continue to occupy the position which she at present occupies.

Mr McCay:

– No matter how this expenditure may be charged, the honorable member must recollect that the balances have to be paid month by month. When once they have been paid they cannot be recovered, and the works which are paid for now by the Commonwealth will not be included in the amount of the settlement for the transferred properties. Consequently, Western Australia would be permanently debited with an amount with which she should not be permanently debited.

Mr WATSON:

– That does not affect the position which I have been putting, namely, that New South Wales has practically made a loan to the Commonwealth. Assuming that New South Wales and Victorian defences are necessary for Commonwealth defence purposes, those States have really made a loan to the Commonwealth, which will ultimately require to be repaid.

Mr McCay:

– The amounts to which I refer will not be ultimately repaid?

Mr WATSON:

– Every schoolboy knows that the money will not be paid twice. The fact remains that while those States which have made preparation for their own defence will continue to grant a loan to the Commonwealth until such time as the Treasurer can submit a scheme for the payment for transferred properties-

Mr Carpenter:

– It is not a loan.

Mr WATSON:

– It is a loan in essence. Until the Treasurer submits a scheme for the payment . for transferred properties the other States will contribute towards paying for the defence of Western Australia. T admit that it will be all the same in a hundred years’ time. Some day the Commonwealth must pay for the defences in New South Wales. I object, however, to what amounts to a partial treatment of this question. T protest against any State having its expenses borneby the revenue of the Commonwealth, whilst the other States are compelled to do without the money which is represented by the same class of expenditure.

Mr Carpenter:

– The Commonwealth derives the benefit accruing from the construction of the works.

Mr WATSON:

– Yes ; but if Western Australia were debited with the expenditure which is to be incurred this year in that State, she would also, have the benefit of the works, and would occupy no worse a position than New South Wales or Victoria, because the Commonwealth would owe her the amount of that expenditure. I do not wish to do any injustice to Western Australia. That State has a right to equitable treatment, but to no more. With all deference to the Treasurer, I cannot see the equity of spending between 20 and 25 per cent of our expenditure upon works and buildings - excluding the new vote for munitions of war - in Western Australia, which possesses a population of only 6 per cent, of the Commonwealth.

Sir George Turner:

– I should like, to act otherwise’ if the Constitution permitted me to do so.

Mr WATSON:

– The Treasurer practically admits the equity of my case.

Sir George Turner:

– I did so last year by adopting the method which the honorable member advocates.

Mr WATSON:

– I mentioned at an earlier stage that I did not agree with the departure from the method which was followed last year. Now I come to deal” with the constitutional aspect of this matter. I understand that the Treasurer bases his action upon his interpretation of the Constitution. Speaking with that deference and hesitation which become a layman, I cannot see where any justification for the proposed departure arises under the provisions of the Constitution. Section 93 of the Constitution says -

During the first five years after the imposition of uniform duties of Customs, and thereafter until the Parliament otherwise provides -

  1. The duties of Customs chargeable on goods imported into a State, and afterwards passing into another State for consumption, and the duties of Excise paid on goods produced or manufactured in a State and afterwards passing into another State for consumption, shall be taken to have been collected, not in the former, but in the latter State.
  2. Subject to the last sub-section, the Commonwealth shall credit revenue, debit expenditure, and pay balances to the several States as prescribed for the period preceding the imposition of uniform duties of Customs.

The method prescribed by that section is to be found in section 89, which says -

Until the imposition of uniform duties of Customs -

  1. The Commonwealth shall credit to each State the revenues collected therein by the Commonwealth.
  2. The Commonwealth shall debit to each State-

    1. The expenditure therein of the Commonwealth incurred solely for the maintenance or continuance, as at the time of transfer, of any Department transferred from the State to the Commonwealth.
    2. The proportion of the State, according to the number of its people, in the other expenditure of the Commonwealth.
Mr Higgins:

– The question to be solved is, “ Is the building of a new fort the maintenance of a Department ? “

Mr WATSON:

– Thus we arrive at a very peculiar position. If it is said that the building of new forts does not give effect to the provision of the Constitution in regard to the “ maintenance or continuance” of a Department, what are we to do in reference to the Postal Department? Upon every occasion that a new officer is appointed, or a new switchboard is erected, or an additional section of a switchboard, or a telegraph line is constructed, are we to say that the additional expenditure thus incurred must be charged as “other” expenditure, and therefore upon a population basis ?

Sir John Quick:

– That is not new expenditure.

Mr WATSON:

– What a contention to put forward ! Take the case of the telegraph line from Port Augusta to Tarcoola. Does not that represent new expenditure?

Sir John Quick:

– It represents developmental expenditure.

Mr WATSON:

– Then what is the expenditure upon the erection of new forts but developmental expenditure ? I utterly fail to follow the subtleties of the legal mind which distinguishes’ between these two propositions. If we adopt a narrow reading of the Constitution, the Commonwealth should have drawn a line right across the books of the Department, and have declared - “ This is the point which the various Departments reached in1901, and beyond it any expenditure should be debited as new expenditure upon a per capita basis.” That is the only inference which can be drawn from the narrow interpretation which is sometimes placed upon that portion of the Constitution. If the expenditure upon the erection of the Tarcoola telegraph line, or of a new switchboard or a telephone exchange, is properly chargeable as transferred expenditure, then the emplacement of a new gun or a dozen guns at Fremantle is equally “ for the continuance of “ the Defence Department.

Mr Isaacs:

– Some weight must be given to the words “ at the time of transfer.”

Mr WATSON:

– If so, that argument applies all round. It cannot be expanded here, and contracted there, to suit the convenience of the Treasurer, or of honorable members of this House. The Constitution is certainly rigid. It lays down distinct terms. I do not suggest for a moment that it is wise to pay too much regard to a literal or narrow interpretation of the Constitution. In my judgment, so long as the equities are conserved and the Constitution will permit, we should carry out the scheme which will meet the circumstancesof the people. I contend that, until the bookkeeping period has expired - and there is nobody who more earnestly desires the abolition of that system than I do - the equities can be best conserved by continuing the development of the transferred Departments upon the basis of transferred expenditure.

Sir George Turner:

– For those which we took over at the establishment of the Federation we shall have to pay at some time or other on a population basis.

Mr WATSON:

– The difference, so far as the right honorable gentleman’s new proposal affects New South Wales, is this: That for the forts on which they expended money a few years ago, the Commonwealth now say that there is a certain sum of money owing. That means that there is a loan to the Commonwealth.

Sir George Turner:

– And that money has to be paid by the Commonwealth on a population basis.

Mr WATSON:

– In the meantime, it is a loan by the people of New South Wales to the Commonwealth. The objection T have to the right honorable gentleman’s proposal is that, whilst that loan is still owing to New South Wales, it is now proposed that the Government of that State shall contribute an undue proportion to the expenditure in Western Australia, in respect of an exactly similar class of property.

Sir George Turner:

– It will have to do so sooner or later.

Mr WATSON:

– That is not the point. In the meantime the finances of New South Wales may be crippled by the payment to

Western Australia - prematurely, as compared with the other States - of a sum of money out of proportion to her population. From the constitutional stand-point, I cannot see how it is possible that any new expenditure beyond that which was involved when the Commonwealth took over the transferred Departments can be entered upon if there be an objection to debiting military expenditure in a similar way- We cannot draw any line other than a hard and fast one - if a line is to be drawn at all - as to the expenditure at the time that the Commonwealth assumed control. Let us see what is the meaning of the words “ maintenance or continuance as at the time of transfer.”

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The point made by the honorable member seems to be an argument for a speedy payment being made in respect of transferred properties.

Mr.- WATSON.- Quite so.

Sir George Turner:

– Supposing that I arranged the matter next week, would I not in future have to charge everything on a population basis?

Mr WATSON:

– Of course. But if the matter were fixed up next week, the objection that I am now raising in equity would no longer exist. There is no proposal accompanying that to which I object to arrange for the payments for transferred properties. I do not say that there is any urgency in respect of making payment for transferred properties ; but it is most unfair, practically, speaking, that we should pay one State and not another. I refuse to believe that the Constitution renders any such course imperative. The words “ maintenance or continuance,” to my mind undoubtedly mean the maintenance of a Department in an efficient condition. “ Continuance “ means something more than the keeping of a Department exactly in the position that it occupied at the time of transfer. Surely it could not be held that if we so maintained a Department that was uptodate when we took it over as to allow it to fall behind the times in the course of a few years, we should be keeping up its efficiency.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– What is the standard of judgment?

Mr WATSON:

– I admit that the personal equation enters very largely into the matter; but I am endeavouring to show that we are not bound by the Constitution to keep every Department exactly in the position that it occupied when we took it over. It certainly appears to me that if the Treasurer be right in the contention that the Constitution imposes this duty upon him, he must be equally constrained, under the Constitution, to charge as new expenditure all those items which are in excess of the amount actually expended in the various Departments in 1901. I hold that it would be most unfair to adopt this new method of adjusting the expenditure on works and buildings without at the same time providing for payment for transferred properties. There is only one other matter to which I desire to refer, and that is the military expenditure. The Treasurer has adopted the proposal, to which I agreed when I held office, that this year there should be a net expenditure of £130,000; and that we should commit ourselves to a total expenditure of about £180,000, in respect of military armament and equipment. A’t the same time, to me there seems to be a large increase in the vote for training.

Sir George Turner:

– They did not commence recruiting until the 1st January last year, so that there were only six months to provide for.

Mr WATSON:

– But an understanding was arrived at in this House with regard to the expenditure on training - an under derstanding to which the present Prime Minister, the Treasurer, and myself, on behalf of the several parties in the House, were all committed. I refer to the arrangement that the expenditure on training generally should be kept within £700,000 a year, independent of course of special votes for arms and equipment. That sum was to include the cost of camps, and ordinary ammunition ; but was not to include expenditure in respect of special armament and equipment, such as is covered by the warlike stores vote. I have not been able to analyze the amounts, but I understand from the Treasurer’s Budget- statement, which I did not have an opportunity to read until a couple of days ago, that there has been an increase in this vote.

Sir George Turner:

– When the understanding to which the honorable member refers was arrived at, we had to pay a naval subsidy of £106,000, and there was a proposed expenditure of £592,000. That brought the total just below the limit fixed. These figures, however, did not include works and buildings, repairs, and matters of that kind.

Mr WATSON:

– I thought that they included repairs. They were certainly held to include all expenses other than those in respect of warlike stores,, such as armament and equipment.

Sir George Turner:

– The Defence Estimates did not include-

Mr WATSON:

– On that occasion they did include repairs.

Sir George Turner:

– The Estimates did not include repairs. They were provided for in a separate branch, and the House directed that, irrespective of repairs, the Defence Estimates should be reduced to £700,000.

Mr WATSON:

– That was not my view of the understanding arrived at.

Sir George Turner:

– If the honorable . member inquires into the matter he will find that what I say is correct.

Mr WATSON:

-I am not speaking of any expenditure due to the increased naval subsidy. That is another matter. The total sum to be expended on military and naval training beyond the sums necessarv for warlike stores was not to exceed £700.000. That was the understanding, as I followed it. and it seems to me that the limit fixed was a very reasonable one. If any additional sum could be spared bv the Treasurer, my contention was that he should devote it to the purchase of warlike stores.

Sir George Turner:

– I did so whilst I held office. The Department ought to have used more in that way, but they did not.

Mr WATSON:

– If the Treasurer could see his way clear to expend a greater sum than was then fixed upon, I should prefer to see him purchase more warlike stores rather than lexpend at on training men, when we have not the equipment which we should desire to place at their service in the event of trouble occurring.

Sir John Forrest:

– I think that the honorable member’s view of the position is correct.

Sir George Turner:

– The only question is whether the Estimates, as reduced to £700,000, were to include repairs.

Mr WATSON:

– I think they were to include repairs. As the Treasurer is, no doubt, aware, the military authorities are so prone to make large demand’s in respect of repairs, buildings, and matters of that description, that it is necessary to keep a very close watch in that direction, if the expenditure of the Department is to be kept within reasonable limits.

Sir John Forrest:

– I do not think that the £700,000 was to include the cost of new works and buildings.

Mr WATSON:

– It was to cover repairs and works of that kind carried out by. the Department of Home Affairs. The idea was that we should spend £700,000 on the Defence Department, and under the new Naval Agreement that expenditure was brought up to £800,000. We were to expend £700,000 on military training and maintenance, as well as any further sum that could be spared for the purchase of arms and equipment. That was the understanding arrived at, and I think that it should be observed. I anv willing to vote any sum that the Treasurer may be able to spare towards the purchase of proper equipment. We shall want to expend more than £180,000, if the men are to be properly equipped.

Sir George Turner:

– Last year’s expenditure was £742,000, including £196,000 in respect of the Naval Subsidy, which was £90,000 in excess of the sum paid under the terms of the old Naval Agreement.

Mr WATSON:

– I admit that last year the Treasurer kept well below the amount fixed.

Sir George Turner:

– This year the proposed expenditure is £774,000. with £148,000 in respect of the Naval Subsidy. That includes £30,000 for repairs - the only question between us.

Mr WATSON:

– I should prefer to see the sum of £30,000 mentioned by the Treasurer, devoted to the purchase of additional warlike stores, rather than to the training of troops. I do not see anything in the rest of the Estimates to which exception may be taken.

Mr ROBINSON:
Wannon

– I rise only to deal with one portion of the Treasurer’s statement, namely, that relating to the taking over of the debts of the various States by the Federal Parliament. Had it not been for the reference made by the right honorable gentleman to this matter. I should not have spoken. The Minister was good enough to invite honorable members to deal with this question, and I make that my excuse for troubling the Committee at this stage. The taking over of the States’ debts is the most important duty that confronts the Federal Parliament. It is second to none in importance to ‘he people of Australia, and is one which, if properly dealt with, should have a very happy influence upon the finances of the States and of the Commonwealth. I have read with considerable interest the whole of the report of the proceedings of the Conference of States Treasurers called last February by the right honorable member for Balaclava, who was then Treasurer in the Deakin Government. I have considered the various questions raised at that Conference by the Treasurer, and the answers given to them by the representatives of the States, and I intend to deal with one or two of the points that were then discussed. In the first place, I think there can be no doubt that the agreement between the various Treasurers that the whole of the debts of the States should be taken over by the Commonwealth is an eminently sound one. It would be impracticable to take over only a portion of the debts. To do so might lead to our improving the position of some of the creditors of the States, and injuring the position of other creditors ; and therefore the only practical method for the Commonwealth to adopt is to take over the whole of the States’ debts. There was a general agreement, I think, on that question^ and it was a very sound and salutary one. A great difference of opinion arose on two points - as to what form the indemnity of the Commonwealth should take, and as to what control should be exercised over the future borrowings of the’ States. These were the lions in the path, and if we could dispose of them the solution of this problem would not be difficult. I think, on consideration, that the demand of the Federal Treasurer that the railway revenues of the States should be ear-marked for interest and sinking fund purposes is a sound one. When that proposal was first made I took up the same attitude of antagonism as was adopted at the outset by the Treasurers of the various States. Most of those gentlemen, on consideration, however, came to the opinion that the demand made by the Federal Treasurer was a reasonable one, and I was glad to notice that the representatives of Victoria - Mr. Irvine and Mr. Davies - arrived at the same conclusion. In this connexion I wish to refer to a remark which has been made by members of the State /Parliament of’ Victoria, and which has been frequently made in the public press, and at public meetings, that is, that if the Commonwealth takes over the debts of the States, it must take over also the assets on the security of which those debts were contracted, namely, the railways. That is an unsound proposition. There is no necessary connexion between taking over the debts, and taking over the railways, and I do not think that the taking over of the railways is involved in the suggestion of the Treasurer that the railway revenue should be earmarked. The real security for the debts of the States is, not the properties on which the money has been spent, but the taxable capacity of the people. The Consolidated Revenue of the States is charged with the interest upon the loans raised by them ; but it is the taxable capacity of the people which the British and other money lenders have as security for their advances.

Mr Kelly:

– Would the honorable and learned member allow the States to contract new debts after the Commonwealth had taken over. their present debts?

Mr ROBINSON:

– I shall deal with that matter later on. It is no more necessary for the Commonwealth, in taking over the debts of the States, to “take over the railways, than to take over the schools, waterworks, public buildings, and other public works on which the borrowed money has been spent. If I thought that the federalization of the debts of the States involved the federalization of the railways, I would oppose it, because I do not think that the Commonwealth could at the present time manage the railways of Australia as well as they are managed by the States. The earmarking of.. the railway revenue is the simplest means which can be devised to indemnify the Commonwealth, and would involve the least confusion in State finance. While it is necessary that the Commonwealth should be indemnified and protected, it is also essential that the States should be protected, and the one practicable means of protecting them which has been suggested is the extension of the Braddon provision of the Constitution - section 87 - until the year 1925. That arrangement would, I think, meet with universal acceptance, as would also the counter proposal of the Treasurer, which amounts to very much the same thing. But unless the States got some such protection, they would be. foolish to allow the . Commonwealth to take over their debts, and’ T have ho doubt that the Treasurer and the Government feel that some protection should be given to them. I agree with the Treasurer that if the Commonwealth takes over the debts of the States, there must be only one public borrower in the future, because it would be a mistake to have seven borrowers. In my opinion, we can best secure the advantages which would arise from the federalization of the debts of the States by doing all borrowing through’ the Commonwealth authority. Within the next five or six years; loans to the amount of £20,000,000 or £25,000,000 fall due, and the Commonwealth, in renewing and converting, could not allow the market to be spoiled by an indifferent or extravagant States Treasurer, who wished to borrow for his own purposes. We have seen the injury done to the other States by the spendthrift finance which, for a period of three or four years, characterized the neighbouring State, and spoilt the prospects of the late Victorian conversion loan and of loans floated by other States. That experience is sufficient to show that if the debts are federalized, the Commonwealth should be the only borrower. Otherwise the Federal Treasurer, when attempting to raise a conversion loan, would be at the mercy of a reckless or improvident States (Treasurer, to the injury of the whole community. But while the Commonwealth must be protected by a limitation on the borrowing of the States, the States must be protected from the unrestricted borrowing of the Commonwealth. This is a matter in regard to which the Federal Treasurer should make an advance. The Treasurer of Western Australia, speaking at. the Conference, is reported on page 54 of its proceedings to have said -

Assuming that the Commonwealth took over the whole of the debts, and that there was a limitation of the borrowing powers of the States, on a sort of automatic basis, so that, say the States were restricted to borrowing , £5,000,000 per annum; if the Commonwealth in the same period went on the market for £2,000,000, what would be the position of Australian credit? There is just as much danger of the Commonwealth overborrowing as of the States over-borrowing.

I think that that position was not met by the right honorable member for Balaclava.

Sir George Turner:

– It can be met only bv the action of this Parliament in restricting the borrowing of the Commonwealth.

Mr ROBINSON:

– As all borrowing by the States should be done through, and to a considerable extent at the discretion of, the Commonwealth, so we should pass a selfdenying ordinance, and provide that the Commonwealth shall not borrow more than a certain amount in any given year, lest the extravagance of the Commonwealth Parliament injure the States, just as the extravagance of the States Parliaments might injure the Commonwealth. If that were conceded, I think that an arrangement between the two parties could be arrived at without delay.

Sir George Turner:

– I did not propose to limit the borrowing of the States in any way, beyond asking for sufficient security for the payment of interest.

Mr ROBINSON:

– The right honorable gentleman did not propose a direct limitation, but his suggestion implied an indirect one. He said that if a State applied to the Commonwealth for permission to float a loan when, or about the time when, a Commonwealth conversion loan was to be put on the market, the State would have to give way, so as not to injure the prospects of the Commonwealth loan.

Sir George Turner:

– The Commonwealth could borrow in large amounts, and lend the States what they required. The Commonwealth Treasurer would take favorable opportunities to borrow, and would keep large sums always on hand, which he could deposit at interest.

Mr ROBINSON:

– Yes; but the Commonwealth Treasurer would have to be cautious in his borrowings if a conversion project were in the air. Considering the temper of this and the last Parliament, I think that we could easily agree to limit the Commonwealth power to borrow, and if we did that, a good deal of the difficulty would be overcome. A limitation on the power to borrow is desirable in the cass of nearly all Parliaments, because excessive borrowing is the rock upon which so many young democracies come to grief. In America they have found it desirable to limit the borrowing powers of the States, and the people there have at various conventions restricted the powers of their State Legislatures in that respect. Young communities are too apt to rush to the money lender. What has been justified in the experience of America is justified here. We should put a restriction upon the borrowing powers of the Commonwealth.

Mr Mcwilliams:

– The Commonwealth does not intend to borrow.

Mr ROBINSON:

– There is no legal restriction upon its right to borrow; but if the States were given a guarantee that the Commonwealth borrowing would be restricted, just as to some extent the States borrowing would be restricted, I think an arrangement between the two parties would be much easier. All the members of. the Conference were agreed that there should be a sinking fund attached to each conversion loan to secure the repayment of the money, and the particular form which these sinking funds should take is a matter which, though it has not received much consideration, deserves a great deal. Mr. Speaker, in a memorandum which he presented- to the Conference, touched on this very important point, and paragraph 12 of it contains some remarks which seem to me to be very sensible and weighty. They are these- -

The question of the sinking fund demands some remark. As commonly understood, a sinking fund is a fund to begin with the issue of a loan, and to accrue during its currency, so that in twenty, or perhaps fifty years, when the loan falls due, the amount of accumulated sinking fund will meet the whole obligation. This is most wasteful finance, and an utter neglect to make any provision for repayment is only one degree worse. The folly of any person, or body of persons, on one hand borrowing a large sum of money at borrowers’ interest, and for a long term, and on the other hand accumulating and lending a sum of money ultimately equalling the sum borrowed, but obtaining for it only lenders’ interest, needs hardly to be dwelt on, to say nothing of the perpetual temptation which such a hoard must ever be. (Great Britain is never guilty of such folly and waste). . . . The important point is that the sinking fund should be established, and that every half year, as it accrues, it should be applied immediately to the purchase, on notice, or on the market, of outstanding stock, which must be at once cancelled, and never re-issued ; and so the loss of interest is avoided, and the accumulated fund, so tempting to a needy Treasurer or a foolish Parliament, never exists.

In the case of some sinking funds, it is provided that money shall be paid into them, and shall accumulate at interest until a sum equal to the original loan has been made up. As Sir Frederick Holder pointed out, a totally different system is in vogue in Great Britain - a system which I think should be adopted here. A certain sum should be set apart every year for the national debt fund. Of that sum, a portion should be devoted to the payment of interest, and the balance to the repurchase of stock. No large sum should be accumulated as in the case of some of the Australian sinking funds. The idea of Australian Governments up to the present seems to have been to establish funds in connexion with which large sums of money should be allowed to accumulate, with the idea that within thirty or forty years there would be a sufficient amount of money in hand to liquidate the loan in respect of which the fund was established. Sir Frederick Holder pointed out that this was a vicious practice, and experience has shown that his view was correct. Mr. J. Scott Keltie, the editor of the Statesman’s YearBook, and the author of an admirable article on “ Sinking Funds “ in the Encyclopoedia Britannica^ says -

Unless carefully managed, a sinking fund is likely to prove a snare. Where it is the genuine result of surplus revenue, and not of money, which is in reality borrowed, the only sure method of making it accomplish its purpose is to sink it yearly in the discharge of debt. Where it is allowed to accumulate at “compound interest” there is great danger of its being diverted from its purpose, and the debt increased instead of diminished.

Sir George Turner:

– I think that all the Treasurers admitted that that was the only safe course to adopt.

Mr ROBINSON:

– That point was scarcely dealt with at the Conference, and I think that I am justified in referring to this matter, because of the fate of the various sinking funds established ‘ in Victoria. Their history shows the absolute necessity for placing any sinking fund established by the Commonwealth- absolutely out of the reach of Parliament and of the Treasurer. I say this without reflecting in any way upon this Parliament, or upon the Commonwealth Treasurer. I make the statement because all the sinking funds that have been established in Victoria have met with a sad fate. In 1895, the Victorian Parliament was dealing with a Land Bill specially relating to the Mallee country, and the present Minister of Trade and Customs suggested, in the course of debate, that the revenue from the Mallee lands should be set aside to form a sinking fund or redemption fund for paying off loans. Sir George Tu,ner was then Premier, and Senator Best was the Minister of Lands. The Government adopted that most admirable plan., which seemed to be a step in the right direction. In 1898, Sir George Turner, who was then Treasurer of Victoria, established two other redemption funds, one called the Inscribed Stock Redemption Fund, and the other the Victorian Loans Redemption Fund. The former of these related solely to the loans floated on the London market. It was thought that if all loans floated in London were subject to a provision that a certain percentage should be paid off year by year, the chances of successful flotation would be increased, and a definite step would be taken towards establishing sinking funds in connexion with all fresh loans. The money was to be used in purchasing stock, which was to be cancelled, the loan being gradually (extinguished by this process. It is interesting to notice how feebly the principle was carried out. The Government fixed a rate of J per cent, as the redemption payment.

Sir George Turner:

– We fixed a £ per cent, for each half-year.

Mr ROBINSON:

– Yes, but the £ per cent, was to be calculated merely upon the total amount of the loan, and any saving of interest was not to be paid into the fund, so .that it would take about 200 years to extinguish the loan.

Sir George Turner:

– That was an omission, on my part. I should have made provision similar to that proposed in connexion with the Commonwealth Loan Bill.

Mr ROBINSON:

– If the sinking fund had been established upon the cumulative principle, the loans might have been paid off in sixty-six years, as distinguished from the 200 years that would Have been occupied under the plan adopted. The Victorian Loan Redemption Fund related only to loans floated in Victoria, and applied to the construction of works, the cost of which should have been defrayed out of revenue. The Treasurer agreed that a sum representing 5 per cent, of the cost of such works should be paid into the fund annually., so that in twenty years the whole of the loans would be paid off. It is interesting to observe how the Victorian Parliament, which has as much sense of its financial responsibility as has any other Parliament in Australia, juggled with the various redemption funds. When the revenue was falling off, the Victorian Treasurer, Mr. Shiels, invoked the sacred name of reform, and induced Parliament to pass an Act which enabled him to take all the funds in the Mallee Land Account, and pay them into the credit of the Inscribed Stock Redemption Fund. By this ingenious juggle he wiped out the Mallee Land Fund as a separate account, and broke faith with the people of Victoria by diverting moneys which were intended solely for redemption purposes to another purpose. This, I think, demonstrates the unwisdom of leaving sinking funds within the control of Parliament.

Sir George Turner:

– The Inscribed Stock Redemption Fund has been properly applied. V J 10 c

Mr ROBINSON:

– I do not think there, has been any re-purchase of local stock, i

Sir George Turner:

– Oh, yes.

Mr ROBINSON:

– The last time I inquired at the State Treasury I found that. £130,000 stood to the credit of the Vic,torian Loans Redemption Fund, and I suggested that that should be used for thepurpose of wiping out some portion of the public indebtedness

Sir George Turner:

– So far as the Inscribed Stock Redemption Fund is con1cerned, I sent £7,500 to England when1 the first instalment was received, and bought up our stock at the rate of £96. ‘

Mr ROBINSON:

– I am speaking of the1 Victorian .Loan Redemption Fund. I am aware that the Treasurer sent money .toEngland out of the Inscribed Stock Fund’ for the purpose. of reducing our indebted-; ness in London, but I do not think that’ any great purchases of local stock have been made. Another attempt was made to establish a sinking fund. Sir George Turner was very good at passing selfdenying ordinances, but was not so keen about carrying them into’ effect. In 1897 he in’troduced a Trust Funds Bill. The State’’ of Victoria had an accumulated deficiency which had not been funded, and it was proposed to pay it off by devoting any future’ surpluses to that purpose. Ths deficiency; amounted to between ,£2, 000,000 to £2,500,000, and Sir George Turner pro-‘ posed to make it imperative that all future surpluses should be used to pay it off.’ That was an excellent idea, and if it: had been carried out. half of the accumu-lated deficit would have been wiped out’ by this time.

Sir George Turner:

– I paid off’ £300, 000.

Mr ROBINSON:

– About one-quarter’ of the surpluses have been so used, but the; balance has been applied to placating’ members by constructing works’ in- their constituencies and to doing anything, except’ carrying out the provisions of the Trust; Funds Act. That again evidences the unwisdom of placing redemption funds in the hands of State Treasurers or State Parliaments. If these redemption funds are to be placed upon a sound basis it is absolutely imperative that they should be con; trolled by independent trustees. In Western Australia I understand that the trustees appointed- are bankers in the old world, who are a long way removed from the influences which can be brought to bear upon the State

Mr HUME COOK:
BOURKE, VICTORIA · PROT

– Do not the Government propose to call another conference?

Mr ROBINSON:

– I understand that it is intended that another conference shall be held. I hope that the Treasurer will be successful in his efforts in that, direction. As he asks for constitutional limitations upon the borrowing powers of the States, I think that he might’ reasonably consent to some limitation upon the power of this Parliament to borrow money, independently of conversion loans. If that concession were made to the States, I believe that this very vexed question would be settled. To my mind it is infinitely more important than any other question which could engage our attention. If properly dealt with, greater benefit would accrue to the community than will flow from the appointment of any Tariff Commission within the next century - more good would result from it than will be conferred by any arbitration law which we may enact. I think that its settlement would conduce to sound finance. The solution of this difficult problem could not be in better hands than those of the Treasurer. His attitude during the proceedings of the recent Conference proves that he is prepared to meet the States in a fair spirit. I hope that his suggestions will receive the attention which they deserve, and that the whole community will thus be benefited.

Mr HIGGINS:
Northern Melbourne

– I desire to say a few words upon this question. I think that the Commonwealth Parliamentis deserving of very little credit for

Mr HUME COOK:
BOURKE, VICTORIA · PROT

– At any rate we have not borrowed.

Mr HIGGINS:

– The only financial matter in regard to which we may take any salve to ourselves is the decision to refrain from borrowing at which we arrived upon the initiative of the Labour Party.

Mr HUME COOK:
BOURKE, VICTORIA · PROT

– A borrowing policy was just as strongly condemned by the Liberals.

Mr HIGGINS:

– But for the Labour Party, the proposal to borrow would have been carried. The Liberals were divided upon the matter, whereas the Labour Partywas solid. Under pressure of the Labour Party, Parliament laid down the principle that we should not borrow for the’ purpose of enabling us to erect every little post-office or to carry out public works of that nature. Nothing will conduce to economy so much as the feeling that for every new building that is erected, and every new enterprise that is undertaken, the taxpayer must pay during the current year. There are two problems, however, with which the people had a right to expect us to deal . promptly. They were, payment for the transferred properties, and the consolidation of States debts. As far as I can see, neither of these problems has yet been properly grappled with. It is true that the Federal Treasurer has met the States Treasurers in conference, but no conclusion hasbeen arrived at. I do not blame the Conference for that, because the problem is admittedly a difficult one. At the same time we should not rest upon our. oars in the- way that we are doing. The honorable member for Wannon has declared that the only proper means of consolidating the States debts is by taking them over in bulk. In that respect he seems to agree with the Treasurer. If we regard only some aspects of the problem, he is right. But if we consider the position which was put so well by Sir Frederick Holder in the memorandum which he submitted to the Treasurers’ Conference, we must see that if the Commonwealth took over the States debts in bulk we should be making our (bondholders a present of the difference between the value of the guarantee of a State and that of the guarantee of the Commonwealth. Under such circumstances, I think it will be apparent that the proposal to take over all the debts of the States is not a sound one, and would not constitute good business. In the memorandum to which I have referred, Sir Frederick Holder says -

In a tight market such as at present, the difference upon the average debt between a State and the Commonwealth, assuming them to be for the same interest and for the same term, is 8 or 9 per cent.

I admit that these figures are over-stated1; but that fact does not in the slighest degree affect the principle which’ is there laid down. Let us suppose that a State bond at 4 per cent, is worth £100; according to Sir Frederick Holder, the Commonwealth bond would be worth ;£io8, 0^109.

Sir John Forrest:

– Nonsense !

Mr HIGGINS:

– But the principle which is there laid down is a sound one. If the Commonwealth guarantee is better than that of a State it must be worth some money. A man, who at the present time holds .£100 in Victorian bonds carrying 4 per cent, interest, would1 receive by a consolidation in gross’ the difference between the value of .£100 Victorian bonds and £100 bonds of the Commonwealth. Any financier will admit that there must be some difference. It may be a sentimental difference. It may be that the bond-holders are misled by the great name of Australia, as compared with that of any State. Nevertheless, these sentimental ideas have a commercial value. We ought not to do anything which will deprive the Commonwealth of this benefit without receiving some equivalent for it. How is that equivalent to be obtained? I do not think that it can be obtained under the Constitution as it now stands.

Sir John Forrest:

– The present bondholders will not give up their securities.

Mr HIGGINS:

– The right honorable member for Swan has been the Treasurer of a great State for many years, and, naturally, he sees the difficulties which have to be encountered. At the same time, if he will bear with me, I shall endeavour to remove them. Personally,. I do not think that we can properly consolidate the States debts unless we alter the provision in the Constitution relating to them. If we look at section 105 of that instrument of government, we shall find that we have power to take over from the States only their public debts, as they existed at the establishment of the Commonwealth, or a proportion thereof, according to the respective numbers of their people. In the first place, that provision applies only to the debts existing on the 1st January, 1 901. In the second, -we merely have power to take over all their debts or a proportionate part of them. Therefore effect cannot be given to that provision if we are to derive any benefit from the superiority of the Commonwealth guarantee over that of any State. The proper course to adopt, if the Constitution permitted it, would be to give the Treasurer and this Parliament a free hand to deal with each loan and each creditor separately - to give them power to advertise in London that all holders, say, of any Victorian 4 or 5 per cent, bonds, which have only a short term to run, shall have an option before a certain date of accepting in lieu thereof Commonwealth 3^ or 3 per cent, bonds for a longer term. We cannot expect all bondholders to agree to such a proposal. Some of them will be entangled by their trust duties, and by other circumstances. Still, it would be a tremendous advantage if, during the currency of a debt, or when it is to be paid off or converted, we were able to say to our bondholders, “ If you like to accept, a security which is unimpeachable for a longer term, but at a lower rate, you may do so.”

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– A benefit would be immediately derived, and it would increase with years.

Mr HIGGINS:

– Yes ; the people would get the benefit of the difference between the value of the Commonwealth guarantee and that of the State.

  1. G. B. Edwards. - But the Treasurer would require to be an Alexander Hamilton to carry out that scheme.
Mr HIGGINS:

– What would be worth far more than an Alexander Hamilton would be an amendment of the Constitution’. The right honorable member for Swan says that conversion would be possible only when a loan was nearing maturity.

Sir John Forrest:

– When nearing maturity.

Mr HIGGINS:

– That would be the usual course ; but I can well conceive that if we were to advertise in London ten years before a State loan matured, and to say in effect, “We will give you a fifty years’, or a thirty years’ loan,” we should have a good many applicants.

Sir George Turner:

– What would become of the balance that was not taken up ?

Mr HIGGINS:

– It would remain owing by the State.

Sir George Turner:

– Who would have to finance that?

Mr HIGGINS:

– The State. The Commonwealth would take up only such parts of the loan as were given up by the bond holders. I have said a good deal at other times about the difficulty of amending the Constitution, but I hold that it would not be difficult to amend it in regard to a question of this sort. I think that the people would readily agree at the next general election to give the Treasurer, and this Parliament, the power to do that which I have mentioned. It would involve no expenditure on the part of the Commonwealth, except that ordinarily incurred in advertising and so forth. That would be very small, and there would be no risk. If any part of a loan were not taken up, it would still remain due by the State. I desire to see the Treasurer given power under the Constitution to barter for this Com- monwealth guarantee, which would be of some advantage, with individual creditors, and in respect of individual loans. I wish now to pass to another subject, because I feel that I cannot well take up the time of the Committee, at the present stage, in dealing with this matter at greater length. I notice that the honorable member for Kooyong, whom I am proud to call my representative in this House, has upon the noticepaper, a motion which I shall watch with a great deal of anxiety and attention, and I trust that he will succeed in awakening the House to the importance of this matter. In the course of his Budget speech the Treasurer raised a very serious question of constitutional law, with regard to the transferred expenditure, and the “ other “ expenditure. If the view that he now adopts be right, he was wrong last year; if that expressed by him this year be wrong, that which he mentioned last year must have been rights

Sir GEORGE TURNER:
Treasurer · BALACLAVA, VICTORIA · PROT

– We are agreed as to that.

Mr HIGGINS:

– I am not surprised that in the multitude of counsellors the Treasurer has found it difficult to know what to do.

Sir George Turner:

– I may have been wrong on both occasions.

Mr HIGGINS:

– Perhaps so. As I understand him, his present proposal is to treat expenditure on buildings, post-offices, and works of that kind on the basis of debiting the particular State in which the expenditure occurs.

Sir George Turner:

– That was last years practice.

Mr HIGGINS:

– I was not present last week when the Treasurer delivered his Budget statement, but I read the report of it this afternoon, and gathered that that was his intention.

Sir George Turner:

– That is the proposal I made last year, because I thought that it would be equitable. I found, however, that it worked out badly, and I had to return to what I considered to be the constitutional reading, and to charge the expenditure as “ other “ expenditure.

Mr HIGGINS:

– I thought that the right honorable gentleman said that it would be just to charge the whole expenditure for new works against the State in which they were contracted. But he now says he proposed to charge it upon the basis of population. Then, with regard to- defence expenditure of all sorts-

Sir George Turner:

– I did not speak of defence expenditure of all sorts.

Mr HIGGINS:

– The right honorable member referred to forts,

Sir George Turner:

– To permanent works.

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– If it be constitutionally correct, it is manifestly fair to charge for defence’ on a population basis.

Mr HIGGINS:

– That depends on what the honorable member includes within the term “ defence.” There must Ibe some discrimination.

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– Would the honorable and learned member consider that our contribution to the Imperial Navy could be charged in any other wav ?

Mr HIGGINS:

– The honorable member’s contention is right so far as that matter is- concerned, but there are other forms of expenditure which would not be on the same level. I wish at present to deal only with that which the Treasurer has proposed. He has in mind, I presume, such works as forts.

Sir George Turner:

– Forts and the purchase of rifles, ammunition, reserves of ammunition, and matters of that kind.

Mr HIGGINS:

– The right honorable gentleman now says also that for the present year he wishes to charge for the erection of post-offices upon the basis of population. The figures which the Treasurer has given us show that this difference of principle makes a very . great difference in the result. For instance, if we were to charge Victoria for new works and buildings in this State, under the Estimates for 1904-5, it would be liable to pay a sum of over £81,000, whereas if we charged the State on a population basis, it would have to pay £122,000 - almost £50,000 more.

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– But take the position of the rifle clubs. Victoria annually spends £25,000 for the protection of Australia in that way ; while the other States are spending only£4,000 or £5,000.

Mr HIGGINS:

– I must not get off the track.

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– But the consideration of that question would not take the honorable member off it.

Mr HIGGINS:

– Returning to the same figures ; if we were to debit WesternAustralia with the expenditure for new works and buildings in that State for the year 1904-5, it would have to pay almost £80,000; whereas, although that sum is to be expended in Western Australia in the way named, it would be debited, on a population basis, with only £24,000.

Mr Robinson:

– That means that Victoria is to be bled by Western Australia.

Mr HIGGINS:

– It does, so far as these figures are concerned ; but there may be other matters in which the difference would be the other way. I am speaking only of new works and buildings, and the figures that I have put before the Committee suggest that, so far as it goes, the proposal is very unjust. .

Sir John Forrest:

– But all these works will not be erected in Western Australia. The figures include provision for our shaie of the armament of Australia.

Mr HIGGINS:

– I am speaking of hew works and buildings.

Sir George Turner:

– But the total of £404,000 includes the £130,000 in respect of general armament.

Mr HIGGINS:

– The same principle applies. The reason why this system works out in the way I have mentioned is obvious. As the Treasurer has rightly said, it is owing to the fact that Victoria is more compact, and better developed, and does not need so many new buildings and new works as does Western Australia. Another factor is that in Victoria such vast distances have not to be traversed as in the case qf Western Australia. A great deal has been said about justice and injustice. Unfortunately, it is not with us a question of justice or injustice, but rather a question of what the Constitution provides. The Constitution has to be obeyed. It is merely a question of interpreting the provisions of the Constitution relating to what is to be done during the bookkeeping period. When we come to the question of meaning, it seems that the Commonwealth has to credit revenue, debit expenditure, and pay the balance in accordance with section 89. When weturn to that section we find that the Commonwealth is to “credit to each State the revenues collected therein.” That is clear enough. Then the Commonwealth is to debit to each State -

The expenditure therein of the Commonwealth incurred solely for the maintenance or continuance, as at the time of transfer, of any Department transferred from the State to the Commonwealth.

Allthe residue is to be distributed ona population basis. We are, in fact, to debit everything on a population basis, except such expenditure as is for the maintenance or continuance as at the time of the transfer of the Department taken over.

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– Will not the honorable and learned member admit that the defence of the separate States as such has disappeared, and that the cost of the defence of Australia is altogether a new expenditure ?

Mr HIGGINS:

– I. desire, if I can, to set aside that consideration for a few moments. I am considering, not merely the question of. the cost of defence, but the position as a whole. I wish to bring the honorable member’s mind to bear upon the fact that all the expenditure, with one exception, is to be debited on a population basis ; the exception being expenditure incurred in the maintenance and continuance as at the time of the transfer of the Departments transferred. The question is reduced to what is meant by the “ maintenance or continuance as at the time of transfer.” Supposing that a Department were transferred on the 1st March, 1901, what is meant by the “maintenance or continuance “ of the Department from that time? I admit that the words used in the section are not happily chosen, and that they must give rise to a good deal of doubt and difficulty ; but I take it that the idea which we had in mind was the maintaining of the Department so far as regards its buildings and its assets and tht continuing of the services of the Department. Substantially the meaning of the words is that we are not to charge a State for the Department carried on in that State upon a higher scale than that on which it was administered at the time of transfer. We are to find out by some means how wide an area our compass will measure out, at the time of the transfer.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Does the honorable and learned member interpret the section in the light of the discussions in which he took part as a member of the Convention, or does he give us what he thinks is a reasonable interpretation to be placed upon the words?

Mr HIGGINS:

– I interpret the clause as it stands. I ignore, as I think I ought to’ do, any personal idea that I had then as to the meaning of the words.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I wished to know the basis of the honorable member’s interpretation, because it seemed to me that it might be founded on knowledge that we had not in our minds.

Mr HIGGINS:

– I wash to give some consistent and intelligible meaning to the words. I am taking as an analogy the drawing of a compass round the area, so as to delimit and mark out the area of the Department as it stood at the time of transfer. If we are going to increase a Department by adding new post-office’s, or forts, or new equipment - by placing it on a larger wale than it was at the date of transfer - the new expenditure so incurred must fall into “other” expenditure.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Then the honorable and learned member differentiates between the maintenance of the status quo and additions ?

Mr HIGGINS:

– I do. I desire, if I can, to dissociate my mind for the moment from the question of expediency, to put aside what is just, and simply ask myself - “ If this were to go to the Court, as it may do some day, what would be the decision?” As we all are bound by the law, the more critically we inquire as to what the true legal position is, the better for ourselves.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– We should go to the Court only on some specific case.

Mr HIGGINS:

– That is so.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Would the Court go beyond the specific instance, and lay down a general rule ?

Mr HIGGINS:

– The Court, when coming to a conclusion in some specific instance, would have to lay down some principle - to find some meaning for the provision. I think that .the intention is that we shall not enlarge the ambit of a De partment to the prejudice of .the finances of the State concerned, without charging the expenses on a population basis-

Mr Robinson:

– I believe that Mr. Irvine took exactly the same position at the .Treasurers’ Conference.

Mr HIGGINS:

– The conclusion which I have come to on these figures is adverse to Victoria.: but I am not concerned with that.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Does the honorable and learned member think that it would be practicable to do this in every case ? There is a border-line upon which a great many forms of expenditure would verge, in regard to which it would be impossible to make a distinction.

Mr HIGGINS:

– I admit that it is very hard to tell where a class begins, and where it ends. What we have first to do is roughly to find some principle to guide us,. and then to try to apply it.-

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– Gordian knots have to be cut, not unravelled. ‘

Mr HIGGINS:

– To cut the Gordian knot in this instance one must alter the Constitution.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Suppose a new type of switchboard were substituted for an old type which was not worn out, should the cost be charged as maintenance, or as new expenditure ?

Mr HIGGINS:

– I should say that that would be “ other “ expenditure.

Sir George Turner:

– I should say that it would be maintenance.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I should say it would be both.

Mr HIGGINS:

– I do not see how the erection of a new switchboard could be termed the maintenance of an old one. I take it that we are not entitled to charge such expenditure against the State concerned, except on a population basis.

Sir George Turner:

– The honorable and learned member agrees with what I have done this year, in charging all new works as “other expenditure.”

Mr HIGGINS:

– Yes; not as a matter of justice, but in accordance with the provisions of the Constitution-

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Will the honorable and learned member state the principle which he thinks should be observed? It seems to me that he has propounded a problem without offering a solution.

Mr HIGGINS:

– To my mind, the principle is that the Commonwealth is not to charge as expenditure, under sub-section 2a of section 89, the cost of new postoffices, new switchboards, new forts, new equipment, and so forth. I give these concrete cases in order that the principle may be the more readily distinguished. In regard to the payment for the transferred properties, the Treasurer has met a snag; but I am sure that he will bear in mind the fact that this Parliament can, under his guidance, determine the mode of compensation. There is no obligation to pay money to the States, or to hand over bonds to them. One mode of compensation would be to take over a proportionate part of the debts of the States.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– That is the best mode.

Mr HIGGINS:

– That cannot be done if we keep to section 105 of the Constitution. I think that the best mode of paying the States for transferred properties would be to take over an equivalent proportion of their debts.’ That would dovetail in beautifully with the idea of giving this Parliament full discretion in dealing with its different creditors. I feel very sorry that, although it is nearly four years since the first Federal Parliament was elected, the problem which of all problems was put before the people as making it a matter of financial advantage to engage in Federation has not been dealt with.

Sir George Turner:

– The more it is considered the more the difficulties which are met.

Mr DEAKIN:
Ballarat

– I rise, not’, so much to join in this discussion, as to give reasons why it is not desirable to occupy the time of the Committee at this juncture, except to guard myself against the suspicion that I under-estimated the significance of the financial question. In my opinion, the work of the Treasurer during the last four years has not been rightly appreciated by the people of the Commonwealth, and is not likely to be appreciated by them for some time to come. Then it will be seen how difficult a task he had to encounter, and how complex were the problems with which he had to cope, because of the restrictions in the Constitution, or created by our circumstances. I join with the honorable and learned member for Northern Melbourne in his expression of regret that the Federal Parliament has not done more in regard to this matter, but am not surprised at it, and shall be surprised if we do more until we are absolutely obliged to act. That necessity will arise within a very short time. We are approaching the end of the first five-years’ period of our financial development. In the second five-years’ period we shall have to face a new set of circumstances, and at the end of ten years, if we have not already confronted it, we must deal with a condition of affairs that will make the financial issue, which has hitherto occupied a third or fourth place, probably the most important in public interest. The taxation which the people will have to pay as citizens of the States, and their obligations as citizens of the Commonwealth, must be determined by the financial- policy which this Parliament adopts. It is true that the States will continue to possess the constitutional freedom which they now enjoy ; but our necessities, our policy, which is likely to prove in many respects costly, and the development of the Commonwealth, must inevitably alter the financial policies of the States which make up the Union. The Constitution imposes certain limitations upon the power of the Commonwealth in regard to the Customs revenue which are shortly to be removed, while we possess certain powers of federal development which are sure to be exercised, and these, too, must- gravely and seriously affect the financial position of the States. Therefore I do not undervalue the importance of these financial questions, because I pass them over to-night with a few cursory remarks. It is not necessary for me to detain the Committee now, because for more than three .years I enjoyed the “privilege of continually discussing such questions with the Treasurer, and his views in regard to them are closely in accord with mine. I look forward with hopeful anticipations to the meeting of the Premiers of the States in Conference in Hobart early next year, and am aware that the Treasurer is also impressed with the importance of that occasion, and the consequences which may flow from it. A series of great problems will then have to be considered, in regard to some of which the interests of the several States are antagonistic, while i 1 regard to others the interests of the States are opposed to the apparent interests of the Commonwealth. It is too much to expect that the next Conference, or even a series of conferences, will lead to a unanimous settlement of our difficulties. The Treasurer, by previous meetings of the kind, has made a great advance towards a public understanding of the matters which have to be dealt with, but it can hardly be claimed that he has done’ more. If he takes another stride forwardand I hope that it will be a long one - that seems as much as reasonable men should expect. In the Conference he will have to face the conditions which he has discovered to us in his Budget. The Commonwealth revenue, though not declining by any great amount, is still declining, and on that question it would be possible to say a great deal which the time at our disposal this ses.sion will not permit to be said. Furthermore,’ we have an increasing expenditure, though it is ‘not increasing by much. The Federal Parliament has exercised its undoubted financial authority, and its command over its ‘resources, in a spirit of consideration to the States, for which the Treasurer deserves the utmost commendation. He has not merited the criticism of some Treasurers of the States, for no man in the Commonwealth could have more earnestly desired to meet them in every way. He has been content in some respects to cripple, or to, at all events, postpone for a time, what might have been considered the natural growth of the Commonwealth so as to allow the States to accommodate themselves to their new circumstances without undue hardship. With a declining revenue and an increasing expenditure, the Treasurer finds himself confronted by proposals which have already been formulated in this Chamber, that would not only carry us to the full margin of the fourth of the Customs revenue, over which we are entitled, under the Constitution, to exercise control, but beyond it. When we consider the question of imposing direct taxation, we have to remember that this will mean taxation by a new body, and will be taxation affecting the whole of the people of Australia. When we have to face our constituents, with proposals for imposing this new taxation; in addition to that levied by the States - of which they cannot be relieved except by the action of the States - we shall be facing a very serious situation.

Mr Gibb:

– I hope that we shall never be called upon to do that.

Mr DEAKIN:

– The honorable member says that he hopes we shall never be called upon to consider the question of imposing new taxation. Does the honorable member suppose for one moment that, in view of the demands which are being made upon us, the Commonwealth expenditure will be limited to one-fourth of the Customs revenue ? The necessity for adopting special measures of defence might arise at any time, and in such an event we should have to enter upon expenditure which would carry: us far beyond the amount represented by one-fourth of the Customs revenue.

Mr Page:

– Does the honorable and learned member think that it would be fair for us to spend as much as we liked of the States. Customs revenue, without facing the responsibility of raising taxation?

Mr DEAKIN:

– I think that we are spending as little as we can. So far, wehave exercised great self-restraint and economy. We have hot spent nearly the full amount which we are authorized to expend.We have followed a considerate policy that is in every way commendable; but Ithink that, even if we continue to be economical and cautious, the amount at present, under our control is not likely to prove sufficient. If some of the demands made in this Chamber are to be met we shall have to raise the necessary funds by’ means of direct taxation. I am not arguing for or against such taxation, but I am pointing out that we are approaching a new crisis in addition to several’ others with- which we are confronted in other fields - a financial crisis, which will become very real directly this Commonwealth proposes to become a seventh taxing body over the people of Australia.

Mr Page:

– We cannot escape it.

Mr DEAKIN:

– The crisis has not yet arisen, but it is well that we should utter a few words of warning in order that the country may consider the position, and be fully advised of the road which we shall, be bound to travel.

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– The Customs revenue will expand.

Mr DEAKIN:

– It will be necessary to revise the Tariff before we can look for anyexpansion of the Customs revenue. That, however, is a question for the future. Then, in addition to this natural outcome of the situation, which the mere lapse of time will bring upon us, the expiration of the fiveyear period will open up one set of seriousconsiderations, and the expiration of the tenyear period in another five years will open up another. All these consequences will be brought upon us in their natura) course by the terms of the Constitution, in the exercise of the powers intrusted to us by the people. My right honorable friend, the Treasurer, will, at the forthcoming Conference, necessarily give much of his attention to the great problem which exercised the Governments of which he and I were members for some considerable time, namely, the problem of the transfer of the States ‘debts. Whilst cordially indorsing my right honorable friend’s desire to establish a good understanding with the States, it will be only fitting for him to remember, and if necessary to remind the Premiers of the States, that there is a point beyond which it will not be possible for him to go in the matter of making concessions. We are called upon to undertake the transfer of the States debts only upon such terms as .will be beneficial to Australia. The Commonwealth cannot make money, and will not seek to make money, out of the necessities of the States, or of the transfer of their debts ; but we shall fail in our duty if we accept the responsibility for the States debts without imposing conditions which will protect the interests pf the people - first as citizens of the Commonwealth, and next as citizens of the States - against the possibility of over -borrowing in the future. As a Commonwealth we have brought nothing to the common stock. The States have incurred their several debts upon, the security of their lands, their railways, and other assets, and the credit of their people. We have united the States, but we have added nothing to the securities upon which they borrow. We have added together the people and the assets of the States, but we have added nothing else to these, and the prospect of a seventh borrowing power operating upon the same, securities must become a matter for serious consideration. When we are asked to accept the responsibility of the States debts and make ourselves answerable for the payment of the interest upon them, whether at the present rates, or at the lower rates, which we hope will be arranged, we are being requested to take a step which will be justified only if we can place the people as a whole, in a better position, and afford them greater safeguards against the abuse of the power of borrowing. The only consideration the Commonwealth can demand for its electors on assuming the burdens of the States debts is that an ample guarantee shall be given against over-borrowing. It is our duty to insist that the transfer shall be made . in such a manner as to protect the interests of the people of the whole Commonwealth. The only way in which that can be done without attempting to interfere with the full liberty of the States Legislatures, is by adopting the proposal of the Treasurer, that in addition to whatever share of the Customs revenue may be allocated for the purpose of discharging the interest payments upon the debts of the States. the Treasurer shall have in his hand a sufficient sum of the States money to enable him to pay that interest directly instead of being called upon to find the money in the first instance from some other source, and then claim repayment by the States - a claim which could be enforced only by means of a suit in the High Court. All the Treasurer is proposing is that extra security shall be given- for the prompt -payment of the interest on the debts incurred by the States, without recourse to law, or without contention as1 between the Commonwealth and the State. He does not ask that the railways shall be placed under Commonwealth control. The States aTe under obligations to pay their debts, and no doubt would pav them to the last farthing. All he asks is that, whilst he is acting as their agent, he shall be able to place his hand upon a sum of money sufficient to pay their interest for them, without being compelled to await the convenience of the States Treasurers, or have recourse to law. That is’ the least demand that he could make, and that the House should support him in making. We are asking for nothing for the Commonwealth, but only for sufficient guarantees for the smooth working of the financial machinery, so as to enable the interest payments to be promptly made, as they have ever been in the past, without conflict between the States and the Commonwealth. It seems to me that that is a minimum and a reasonable demand. I hope that the Treasurer will attend the Premiers’ Conference, strong in the assurance that he will have behind him the united Parliament of the Commonwealth when he represents that, whilst we recognise our obligation to undertake the burdens of the States debts, we ask that such arrangements shall be made as will prevent friction, and will place us in a position to maintain our reputation abroad. I may, in conclusion, express the hope that my right honorable friend will, when he has an opportunity ‘of meeting the Premiers of the States renew the discussion of the subject which I had the honour of broaching at the last Conference. That is, the consideration of the question which always goes hand in hand with the payment of interest on the debts, namely, the increase of the population of the Commonwealth. It is only by adding to our population that we can expect to have an expanding revenue, and to reduce the burden of the interest upon our national debt. I believe that some of the Premiers’ have not even answered the circular which I addressed to them some time ago with regard to making their lands available for settlement in the most expeditious manner.

Mr Lonsdale:

– They are all talking about buying land for closer settlement.

Mr DEAKIN:

– I do not presume to discuss the policy of the States in regard to that matter. Whether they buy up land or not, what is desired is that they should make available for settlement any land that they may have in districts suitable for carrying on agricultural operations with reasonable assurance of success. We do not wish to interfere with them or dictate to them in any way in regard to matters of detail ; but we desire to point out to them that with more land available, in districts suitable for closer settlement, and with the greater development of the resources df the Commonwealth which will naturally follow, we shall stand a chance of obtaining our share of the extra population, which is being secured by New Zealand. The recent report of the Agent-General of that Colony shows that since the new regulations regarding land settlement were adopted1 by the New Zealand Government, some 1,300 or 1,400 settlers with small capital have been introduced, are now applying that capital to profitable account, and are becoming most useful citizens. It is only by encouraging settlement of this kind, and by affording employment in connexion with our industries that we can hope to promote the development of the Commonwealth, and add to the wealth of the community. I hope, therefore, that when my right honorable friend brings under the notice of the Premiers the question of the transfer of the debts of the Commonwealth, he will not fail to remind them of the unsatisfactory condition of the population of the Commonwealth, and to impress upon them the importance of finding employment for the people we have here now, and of offering inducements that will attract to our shores a fair proportion of the splendid class of settlers who are now passing to other parts of the Empire, or, unfortunately to places outside the Empire altogether. I do not propose to detain the Committee bv entering into as full an exposition of any of these matters as they deserve. I have passed bv all the contentious points to which allusion has been made by honorable members who .preceded me in an effort to con dense my remarks, which - at this period - can be effective only in a minor degree, if effective at all. I trust that the close of this session will mark the end of the period of parliamentary stagnation which we have experienced. We hope from the Government next session a positive programme of a progressive character. I trust that the materials for that programme will be obtained upon the financial side from the Conference to which reference has been made. I hope that next session, upon the general side, we shall have an announcement of a policy which is deliberately designed to take the fullest advantage of those great opportunities with which we have been endowed by Nature, in order that we may obtain our fair share of the great exodus of population from other countries, and give employment to our own people. I trust that we may see the expanding revenue to which the honorable member for South Sydney has alluded, and that we shall be able to face the grave financial difficulties with which we shall shortly be confronted, by wise provision for economy, by foresight and energy, and by having the burdens which Australia is called upon to carry better distributed.

Mr HUTCHISON:
Hindmarsh

– I thoroughly agree with the honorable and learned member for Ballarat that if we could acquire a large increase in our population it would do much to expand our revenue. It is an unfortunate circumstance that at the present time we have an army of unemployed throughout the Commonwealth. Before we attempt to increase our population by the introduction of immigrants from Europe it would be well for us to devise a scheme to provide our own people with employment. Unfortunately, we are not able to do as much in that direction - in the direction of closer settlement - as are the States Parliaments. But I wish particularly to deal with a matter relating to the financial question. It is a matter of very great importance, affecting as it does, not only the revenue, but the people of the Commonwealth. It is one to which I would specially direct the attention of the Minister of Trade and Customs, as I’ understand that some correspondence has taken place between the South Australian Government and his Department upon the subject. As he is aware, spirits are being imported into the Commonwealth in bulk and bottled locally. It has been stated by the Customs Department that there is no objection to foreign firms appointing local agents for the pur- pose of bottling imported spirits. But I understand that large quantities of spirits are being imported into South Australia and the other States by local merchants, and sold by the same merchants, who thus secure all the profits. Under such circumstances, these persons cannot truthfully be. designated as agents. But I wish particularly to -direct attention to the fact that these merchants are alleged to import the labels, corks, and capsules of well-known brands of foreign spirits, which are consumed locally.

Sir George Turner:

– We cannot control these spirits after they pass out of the hands of the Customs Department.

Mr HUTCHISON:

– I wish to show that the control of the Customs Department does not cease with the payment of the duties levied upon these spirits. It is possible for a local merchant to secure these labels, corks, and1 capsules, because they do a large business with the firms in question, and the latter dare not refuse to supply them with the articles I have mentioned. Imported spirits pay a duty of 14s. per proof gallon. They are then diluted to 23 per cent, under proof, so that in reality they pay only a duty of ns. per gallon. But there is nothing to prevent local merchants from blending the imported spirits with the local spirits, which pay only ns. per gallon. When the locally-made spirit is reduced to 23 per cent, under proof, it has the effect of reducing the duty to about 8s. 6d. per gallon. Owing to the enormous profits to be made by acting in this way, there is a great temptation to merchants. I am quite satisfied that to a large extent the revenue is thus being defrauded. Thus the buyer of these spirits is deceived, and the consumer is not only cheated, but incurs great risk of being poisoned.

Sir John Quick:

– That is an offence against the State law, and is punishable as such.

Mr HUTCHISON:

– The reply of the Customs authorities is that it is entirely a State matter. I hope to prove, however, that it is a Commonwealth matter. If the Minister will look at section 52 of the Customs Act he will find a list of prohibited imports. Sub-section g of that section makes provision for all goods the importation of which may be prohibited by proclamation. I maintain that it is within the power of the Government to proclaim that certain labels and capsules shall not be imported into the Commonwealth.

Sir George Turner:

– In that case they would be printed here, and we should be no better off.

Mr HUTCHISON:

– If a fear is entertained that the labels will be printed here, and the same fraud committed upon a revenue which is unfortunately shrinking, it is high time we insisted that all imported bulk spirits should be bottled only in bond. Further, we ought to compel the local merchants to certify on the labels that the spirits which they contain were so bottled, and the name of the State in which the bottling took place. This is rather an important matter, not only from the revenue stand-point, but from the stand-point of the general public. It is one in which the Government of South Australia had a right to receive much greater assistance from the Customs Department than it has been afforded. I trust that the Minister will see whether he cannot afford better protection to the public and the revenue in the future.

Mr GLYNN:
Angas

– There are one or two matters to which I should like to direct attention. Reference has been, made to the question of the transfer, of the States debts, but no specific proposal in regard to their conversion is before the Committee. I should like .to say that the difficulty to which me honorable and learned member for Northern Melbourne alluded- that the Commonwealth has no power to deal with the debts incurred “by the States since the 1 st January, 1901, was pointed out by me more than once during the sittings of the Federal Convention. I implored that body upon two occasions to consider, whether it would not allow the debts incurred by .the States after the inauguration of the Commonwealth to be taken over by the Federal authorities. I trust that the’ Constitution will yet be amended to enable this to be done. I do not share the opinion of some honorable members that any great saving can be effected by the conversion of the States debts. I am - aware that that view is held by one great financial authority in the person of Mr. Speaker. But I would point out that the Canadian .3 per cent, stocks at present stand at ,£97, whilst ours are quoted at about .£85 or ^86. That fact is due, not to federal action, but to the different estimation in which our respective securities are held. ‘ Canada is a federal community, but if we compare its position with that of Australia, we shall find that the total debts of its States aggregates about £76,000,000, whereas those of Australia total about £230,000,000. The population of Canada is 5,575,000, whereas that of Australia is less than 4,000,000. In addition to that, Canada possesses an increasing revenue, and provides for a sinking fund of £2,750,000 per annum. Similarly, how does Germany - which is a quasi federation, a union of States under a different principle from ours - compare with France? Whereas the 3 per cent, stocks of Germany stand at about £90, those of France stand at £97. That difference is due to the fact . that France is a more flourishing community. Its people are less belligerent, and possess a revenue which is not in the same “ pickle “ as is the revenue of Germany, according to the last financial statement. Then, again, the 3 per cent, stocks of New Zealand stand at £90, as against similar stocks of our own, which arequoted at only £85 or£86. The difference between these securities, I repeat, is not due to the fact that a federal union offers a better form of security, but simply to a disparity between the estimates of the assets of the respective communities; However, I do not wish to dwell upon that question. The honorable and learned member for Northern Melbourne gave the Labour Party the credit of having initiated a non-borrowing policy in this House. I do not think that that party can take any such credit to itself. I do not believe that it desires to do so. As a matter of fact, I think I was the only representative of South Australia who opposed the Loan Bill which was submitted to . this Chamber. At that time honorable members were afflicted with a sort of “ blue funk “ in opposing the discontinuance of a borrowing policy, because the States were so clamorous in the other direction. But I think that the policy which we then initiated has since been generally welcomed throughout Australia. Coming to the question as to the particular way in which expenditure for the transferred Departments should be debited, I am of opinion that the method adopted by the Treasurer last year was a fail one.

Sir George Turner:

– I think that it was the fairer way.

Mr GLYNN:

– If, under the Constitution, we debit capital expenditure as transferred expenditure,, surely when we come to compensate the States for the transferred properties, we shall regard the capital expenditure in respect of them as portion of the compensation to be paid?

Sir George Turner:

– The Constitution merely provides that we shall compensate the States for those Departments which we take over.

Mr GLYNN:

– Does the Treasurer hold, upon a deliberate interpretation of the Constitution, that the capital expenditure upon a post-office represents transferred expenditure? It is something new as a fnatter of mere verbal accuracy, but as a matter of substance, it is transferred expenditure, because it is necessary for the maintenance or continuance of the transferred Departments, and the revenue acquired as the result of that expenditure goes to the State. As a matter of common sense, it must be regarded as transferred expenditure, although as a matter of fact, the building was never transferred,, and the expenditure therefore could not have been transferred.

Sir George Turner:

– The honorable and learned member speaks of a matter of common sense; as a matter of law, it could be done.

Mr GLYNN:

– If, from a common-sense point of view, we regard this expenditure as transferred, although it never existed in 1901, surely we may also regard a building which has since been erected as transferrer! property.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– -A new building?

Mr GLYNN:

– Yes. If the expenditure incurred in respect of it after Federation is transferred expenditure, surely the asset is a transferred asset. If so, then the State, when we come to compensate it for the property, will be entitled to be credited with the money which is now debited.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Surely it could not be an asset at the time of transfer.

Mr GLYNN:

– The Treasurer cannot say that the capital expenditure is. to be charged to the State, and at the same time that the property belongs to the Common wealth. If he regards the expenditure as being transferred, he must regard the asset created bv that expenditure as also being transferred.

Sir George Turner:

– Unfortunately, . I do not think I can take the expenditure as transferred.

Mr GLYNN:

– I think that the right honorable gentleman anticipated the difficulty when I referred to the matter two years ago. I know that, on that occasion, he briefly mentioned it.

Sir George Turner:

– I adopted the system by way of experiment, and found that whilst it worked out all right so far as four States were concerned, it did not do so in regard to Victoria and Western Australia.

Mr GLYNN:

– It is a matter of indifference at the present moment-

Sir George Turner:

– The honorable and learned member should ask the people of Western Australia what they have to say about it.

Mr GLYNN:

– If the Treasurer followed the line I suggest, Western Australia would get credit for the money she is paying at present.

Sir George Turner:

– Meantime I am stopping its revenue.

Mr GLYNN:

– What does it matter? These irregularities must follow in the case of the States. Tasmania, in the first year of the Federation, as against 1900, had a debit of about £171,000 in respect of Customs duty. That made a big gap in her revenue. It was a vicarious sacrifice, incurred by her in the interests of the Union, but time will remove such irregularities. In the same way Western Australia will have to bear what seems to be a loss, although it really is not one, so far as this year is concerned.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– South Australia gave up some of its postal revenue.

Mr GLYNN:

– That is so ; but the principle is a good one.

Sir George Turner:

– The State still draws its profits.

Mr GLYNN:

– It gave up a small portion of its postal revenue, but I have no desire to complain. South Australia has not incurred much loss in that direction, and, on the whole balance of accounts, no loss has been incurred by it. The question upon which I specially “desire to say a few words, however, relates to the sugar duties. I should like to ask the Committee what position we shall occupy in regard to them in 1907? The revenue derived from the sugar duties at the present time amounts to about £770,000. If I may accept the figures contained in a report presented by Mr. Coghlan to the Government of New South Wales - a report which has been handed to me by the honorable member for Richmond, and with which I do not altogether agree - the Customs duty on sugar last year yielded a revenue of £500,771, and the exoise duties £272,131, or a total of £772,902. The present method of allotting the revenue derived from these duties and apportioning the bounties, leads to unfairness, and in addition to the pre sent loss, which, after all, is only a partial one, there must be a future loss to all the, States. The present difficulty as occasioned.; as Mr. Coghlan points out, by the fact that South Australia and Victoria consume’, chiefly imported sugar. Out of a total; consumption in South Australia of1 6,344 tons last year, only 472 tons was Australian sugar.

Sir George Turner:

– It will be very different this year.

Mr GLYNN:

– I am aware of that, but let me deal with what was the position last year. A gradual equation will be going on up to 1907.

Sir George Turner:

– It depends on the ‘ production of sugar in Queensland.

Mr GLYNN:

– In the case of Victoria, the total consumption was 44,206 tons of sugar.

Sir George Turner:

– That is incorrect.’ Allowance is not made for about11,000 tons, the duty in respect of which was no! paid into revenue.

Mr GLYNN:

– I am aware that these figures do not exactly agree with those is sued by the Treasurer, and I said at theoutset that I did not accept them. I pro-‘ posed to use them only by way of illustration, but they do not affect my argument,’ and, perhaps, I had better not quote them, as they may not be sufficiently correct for publication. The position is that while the average rate of duty received by. each State in respect of the suga’n consumed was about £4 8s. per ton, the rate received by Victoria, for instance, was £6 a ton, and that received by New South Wales was only £3 us. 2d. per ton. The difference was due to the fact that there is a greater consumption of excise sugar in New South Wales than there is in Victoria or South Australia in proportion to the population. Mr. Coghlan presented a report on the subject to the Government of New South Wales, but he left out of account the fact that the bounty is now debited per head throughout the States. That interferes, of course, with the import of the figures, because when Victoria is credited with £6 per ton of sugar consumed, while New South Wales is credited with only £311s. 2d. per ton, the bounty is actually debited per head of the population. To some extent, that interferes with the apparent discrepancy, but it cannot be denied that there is a difference in

I regard to the sugar receipts’ credited to the

States, due to the fact that there is a greater consumption of excise sugar in some States thanin others.

Sir George Turner:

– Surely some States, consume . more locally-produced goods than do others. We cannot pool one item without pooling the lot.

Mr GLYNN:

– We cannot cure that difficulty. There has been an attempt to cure it by debiting the bounty throughout the States, but that has not been altogether effective. In 1907 the whole of the revenue derived from the excise on sugar will have disappeared.

Mr Bamford:

– Is the honorable and learned member sure of that?

Mr GLYNN:

– That is ‘the policy of the Commonwealth. The Tariff Act provides that on 1st January, 1907, the excise duty shall disappear.

Mr Bamford:

– Unless the Parliament otherwise provides.

Mr GLYNN:

– I hope that the Parliament will otherwise provide, and I am glad that the honorable member, who is a representative of Queensland, is apparently sympathetic with the position that I take up, that we should continue the excise duty, even if we do not increase it.

Sir John Forrest:

– The honorable member for Herbert wishes to see the bounty continued.

Mr GLYNN:

– It is simply monstrous to ask for a bounty as well as for the imposition of an excise duty. It is about the coolest proposition of which I have ever heard. A proposal was made by a representative of Queensland apparently that the excise duty should not be retained, but that the bounty should be continued for a number of years. In other words, while giving the local sugargrowers an absolute protection of £6 per ton in respect of cane sugar, and £10 per ton on beet sugar - because they are prohibitive duties, unless there be a dearth of local production - we are to give them a bounty of £2 per ton in addition to the protection. For whose benefit ?

Mr Bamford:

– The figures quoted by the honorable and learned member show that the duties are not prohibitive.

Mr GLYNN:

– I assert that they are.

Mr Bamford:

– The honorable and learned member has admitted that South Australia and Victoria for the most part consume imported sugar.

Mr GLYNN:

-Quite so; hut as I have said, these duties are prohibitive, so long as the local production can supply the local consumption. No man could pay a duty of £6. per ton on imported sugar, and compete in the market with locally-grown sugar that paid no excise. It is only when the local production cannot meet the local demand, as happened last year to some extent, and to a greater extent the year before, that sugar is imported, and the people have to pay for it “ through the nose,” as the saying goes, owing to the duties being so high.

Sir John Forrest:

– The bounties are to encourage the growth of Sugar by white labour.

Mr GLYNN:

-We shall see presently what that contention is worth. I repeat that in 1907 in all human probability the local consumption will be met by local production. At present about 150,000 tons of the sugar consumed is locally produced, and about 40,000 tons is imported.

Sir George Turner:

– About 37,000 tons is imported.

Mr GLYNN:

– In other words, the local production is about three-fourths of the total consumption, which is much better than was the case last year, or the year before. The local production was equal to the consumption before, so that we may hope that as population increases, and the industry spread’s - if it is going to spread - the local production will become more than equal to the local consumption. In these circumstances, a duty of £6 per ton on imported cane sugar is absolutely prohibitive. That is the point I desire to impress upon honorable members. With the disappearance of the excise, what shall we lose ? Last year with a duty of £6 per ton on im-‘ ported cane sugar, and £3 per ton excise on which a bounty or rebate of £2 a ton was allowed in some cases, while in others an excise duty of £3 per ton was paid, the total revenue from this item amounted to about £768,000. The whole of that revenue will be lost in 1907, if the local production be equal to the local consumption, as probably it will be. On an average of years in Australia it must be equal.

Mr Bamford:

– These averages do not work out.

Mr GLYNN:

– They are certain to work out.

Mr Bamford:

– We had a belter crop some years ago than we had last year.

Mr GLYNN:

– The normal production of Australia may be said to be equal to its consumption. That has been the case in several years, and we may take it that it will continue to be so. Unless all the talk that we have heard about . the industry is humbug, it must become a great one. If it is not to develop, I do not know whyhonorable members should talk so freely of its possibilities. For whose benefit are we to throw away all this revenue? When speaking on this question two years ago I said that it was proposed to throw it away for the benefit of the Colonial Sugar Refining Company, and probably another company. What has occurred? As a matter of fact, a trust has been formed. It was said that the price charged by the trust would be regulated by the import duty of £6 per ton on cane sugar, and, as a matter of fact, I believe that the Colonial Sugar Refining Company has entered into written contracts with some of the distributors, by which the storekeepers are obliged to buy for six months from the trust, and the price is to be the price of the imported sugar, or, in other words, the value of the sugar plus the duty of £6 per ton. We see how beautifully these economic theories work out.

Mr Mcwilliams:

– It is the same old story.

Mr GLYNN:

– We have, then, a Protectionist Association proving the free-trade theory that the price of the local sugar to the . consumer is fixed by the import rate. That has been set down in black and white. Isthe consumer to benefit by this system? I question it.

Mr Wilkinson:

– Is it not due to the monopoly of the Colonial Sugar Refining Company ?

Mr GLYNN:

– That is what I have said. We have created a monopoly, although it is not . fully operative at present, by granting this huge protection to the industry, and I ask the honorable member, as a democrat, whether he is prepared to allow that state of things to continue. Let me deal for a moment with the position of South Australia, which has benefited by the arrangement as to crediting duties collected there to each State, having received more revenue under the system by which we deal with . the duties collected on sugar than she is honorably entitled to. Before Federation her revenue from sugar was about £55,000, and in 1907 all the money so obtained will have disappeared. Why are we asked to lose this money? As compensation for’ the abolition of kanakas ? Did the kanakas constitute a vested interest in 1892, when it was agreed that the importation of South Sea labour should be permitted for a further period of ten years ? It was then expressly declared by Queensland that no vested’ interests were to be created - that kanakas were to go at the end of that period.

Mr Bamford:

– It was not expressly declared.

Mr GLYNN:

– The debates show, that the planters were given a further term of ten years, during which they might employ kanakas.

Mr Bamford:

– There was no express stipulation in the regulations, as suggested by the honorable and learned member.

Mr GLYNN:

– But the inference may be reasonably drawn from the policy reflected by the debates that the sugar planters were given ten years to see what they could do to abolish kanakas, and to grow sugar by white labour. The Commonwealth took up the responsibility, and abolished, as Queensland ought to have done, the kanaka labour traffic. Queensland!, according to the opinions expressed ten years before, would not have thrown away such an immense amouni of revenue as compensation for the abolition of a traffic which was not to create vested interests. Take the position of South Australia in this matter. The Northern Territory might have been developed by the importation of coloured labour to work the sugar industry. Both land and climate are quite as suitable as are the land and climate of Queensland for the growth of sugar-cane. The growing of cotton could also be carried on economically there by the aid of black labour, because cotton grows wild in the Territory. But, although South Australia has an Act on her statute-book permitting the importation of coloured labour from India to work these industries in the Northern Territory, she has, without a penny of compensation, kept herself white except as regards Chinese, but we have in consequence incurred a debt of £2,750,000, and have an annual deficit in the Northern Territory accounts of £100,000.

Mr Wilkinson:

– Chinamen from the Northern Territory are flooding Queensland.

Mr Carpenter:

– Does the honorable and learned member say that the Government of South Australia has kept coolies out of that State, when there is an Act of Parliament in force there authorizing their importation ?

Mr GLYNN:

– The Act referred to, although on the statute-book, has never been put into operation. If South Australia were not now a member of the Federation I think that the Act would be put in force, because I have heard that there is a majority in each House who think that coloured labour should be imported into the Territory.

Sir John Forrest:

– Then the South Australian Parliament does not believe in a White Australia?

Mr GLYNN:

– I cannot speak authoritatively, but I have heard from a reliable source, though I doubted the statement, that there is a majority in each House prepared to work the Northern Territory on true: tropical lines.

Mr Bamford:

– They have coloured la- . bour there now; why do they not utilize it?

Mr GLYNN:

– They have only Chinamen there, and Chinamen will not do the work. Besides, there is not a sufficient number of Chinamen to develop an area of 343,000,000 acres. My point is that, as South Australia never asked for’ a penny of compensation for keeping the State white, Queensland should not receive a great part of £700,000 a year - which will be the amount payable in 1907 - for all time, for getting rid of a few kanakas. The Treasurer, at page 5636 of Hansard, is reported to have said that the area cultivated by white labour in Queensland is 56,289 acres, and the area cultivated by black labour 57,402 acres, while the production by white labour is 49,600 tons, and the production by black labour 100,000 tons. Does that mean that the black labour is more effective than the white labour?

Sir George Turner:

– No ; but the black labour is employed in the far north, where there is virgin soil, while the white labour is employed on soil which is to some extent exhausted.

Mr GLYNN:

– I asked a representative of a sugar district for an explanation of the figures, and he could not give me one. The discrepancy is so extraordinary that I should like the Treasurer, if he can throw a little more light on the subject when he replies, to do so. I hope that our democratic friends from Queensland will, if the Government has the pluck to propose it, support the keeping up of the excise duty, and, if possible, the increasing of it. to prevent the Colonial Sugar Refining Company from having the monopoly to which I have referred.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– This is an occasion when honorable members are allowed, perhaps wisely, to skirmish at large over the somewhat wide territory comprehended under the word “finance;” but I have often wondered whether the discursive speeches which are made under these conditions are of any value. The Committee gets into a lazy mood, because no specific issue is before it, and the effect of a speech passes out of men’s minds almost immediately after it has been delivered. The speech of the honorable and learned member for Angas, to which I listened with a good deal of interest, fell upon a drowsy audience, which I suppose is resting after the falsetto condition in which it found itself last night. It is, however, refreshing to find that honorable members have put aside the quarrelsome personal tone, and are prepared, tonight, although the attendance is small, to discuss financial problems of great importance. One remark made by the honorable and learned member for Angas gave me great gratification. Three years ago I stood in this Chamber as about the only champion of certain races which, because of the hysterical cry of “ White Australia,” were being treated as thescum of the earth, and as unfit to come even within sight of our coasts. It is therefore very pleasing to me to hear from time to time evidence of a gradual change of opinion on the part of the people on this subject. The honorable and learned member told us to-night that both Houses of Parliament in South Australia are now willing to seriously consider the advisability of admitting black labour to their Northern Territory.

Mr Glynn:

– I do not vouch for the accuracy of the statement, and I do not say that the feeling of the South Australian Parliament represents that of the people of the State. I combated the statement when it was first made.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The honorable and learned member is one of the most accurate men in this’ Chamber. He always speaks with great caution, and with substantial . data at his back. I am not now dealing with his personal views, but with his statement that both Houses of Parliament in South Australia, so far as he can judge, are now disposed to seriously consider the advantages of admitting black labour to the Northern Territory.

Mr Carpenter:

– The last Federal elections proved the contrary.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I am glad that a change of feeling is beginning to permeate the people, and that the fever which took hold of the country and of the members of this Parliament, causing them to resort “to the most hysterical measure towards other races., is abating. I am satisfied that, as time goes on. honorable members who were most carried away by the hysterical .outburst to which I have referred will fmd it politic to modify their conduct in regard to other nations. ‘ As we go on, it will be recognised more and more by the people of Australia, under the influence of outside opinion, that we are making the smallest possible use of a stupendous territory in the northern part of this Continent, which is capable of adding in untold figures to our national wealth, without lessening the employment of the people, of our own race ; for it is clearly recognised, by all who have had much experience of black labour, that its employment invariably involves the occupation of white men as foremen and overseers. I pass from that subject, however, because my chief desire to-night is to direct attention to the two subjects which were dealt with by the honorable and learned member for Northern Melbourne. He dealt in his speech with the distinction between expenditure for the maintenance of the status quo of properties taken over by the Commonwealth under the Constitution, and expenditure upon new material or new buildings in connexion with those transferred services. I listened to him with great care. As a legal investigation of a problem which this Parliament has not -yet solved, his speech- was’ all that could be desired’; but it lacked the necessary element of practicality. With regard to the particular illustrations which I put before him, by interjection, he seemed unable to lay down a distinct line of demarcation between the expenditure upon properties as they stood, or were intended to stand under the Constitution, as at the time they were taken over, and the expenditure upon new material, constructed, erected, or purchased after the taking over of the transferred services. If the honorable and learned member were placed in the position of Treasurer, and he made up his mind to observe some such clear distinction in regard to the matter, he would find it quite impossible to do so. The wording of the Constitution makes it impossible to differentiate clearly and unmistakably between the then existing and the new state of things, and yet carry on the business of the country with any degree of despatch. Take, for instance, the Post and Telegraph Department! Every day,- I suppose almost every hour, some question of expenditure arises in the administration of that huge Department in some part of Australia ; and it would be impracticable to observe always this specific distinction in the books in which the transactions of the Post and Telegraph Department are recorded.

Sir George Turner:

– It could not be done.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I felt sure that the Treasurer would bear me out, because I speak upon the strength of some administrative experience. This is one of those matters that will have to wait until the end of the book-keeping period. It is very easy to point out in an academic way the inconsistencies in the financial treatment meted out to the States roy the Commonwealth. I do not for one moment deprecate such criticisms, because, if the Treasurer is courteous enough to listen to them, they will furnish him with data which will facilitate the formation of opinions as to what should be done. I think it will be admitted that we can wait for the reign of consistency in Commonwealth expenditure until the bookkeeping ‘ period is over. Then the House would be justified in asking the Treasurer to lay down some specific lines, and to determine how the various financial adjustments should be dealt with from time to time, whether according to the expenditure in the different States, according to their receipts, or according to their population basis. I have no doubt that if the right honorable gentleman is in office as Treasurer at the end of- the five-years period, he will be in a position to place before honorable members some clear and specific principles of adjustment applicable to the conditions - of all parts of the Commonwealth. Another important subject is that of the payments which are to be made to the States by way of compensation for the property which has been taken over by the Commonwealth. We all know that the Constitution provides that the States shall be compensated by the Commonwealth for the properties and other assets which have been taken over in connexion with the transferred services. It is obviously fair that where a State has borrowed money from time to time for the purpose of providing itself with buildings, telegraph lines, telephone apparatus, and other property connected with the Departments transferred, the Commonwealth shall, upon taking over such property, compensate it in some way or other, so as to enable it, if it chooses, to reduce its national debt in proportion to the deduction from its assets. If, for instance, we may take it that the Post Offices in Sydney and the different country districts, which, perhaps cost £3,000,000 or £4,000,000, formed part of the assets which New South Wales had to show its bondholders as security for its national debt, and if that £3,000,000 or £4,000,000 worth of property be taken out of the reach of a State bond-holder and become Commonwealth property, it is obviously fair, irrespective of the Constitution, that the Commonwealth funds should be used for the purpose of compensating a State to that extent, and enable it in some form or other to rediuce its liabilities to the extent to which its assets have been depleted.

Sir John Forrest:

– A proportion of that amount would be paid by the State itself.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The Constitution provides in very clear terms that the Commonwealth shall compensate the States for the property taken over; and it goes on to say - as I pointed out when I referred to this matter at some length in 1901, when a Bill was introduced by the Government to provide for the method of payment - that the mode of payment or compensation shall be determined by the Parliament. Oneor two members of the present Committee were not here in 1901, and therefore cannot be expected to be aware of the nature of the measure which the Government then brought forward. The Barton Government introduced a measure which provided in effect that the Commonwealth . should compensate the States for the property taken over, but that the States should first of all contribute to the Commonwealth a sufficient sum of money to enable it to pay the States the value of the properties which it had taken over.

Sir John Forrest:

– That was practically a book-keeping transaction; it was never intended that any cash should pass.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The Bill did not pass, and I do not think it ever would pass. That proposal was very much like my saying to a man, “ I want to buy your horse, and I will give you£10 for it, but you must first give me £10, and I will then pay it back to you for your horse.”

Sir George Turner:

– Where are we to get the money if we do not obtain it from the States?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– We must remember this - and I am sure no one realizes the importance of this matter more than does the Treasurer - that we must keep the Commonwealth and the States accounts distinct. It is above all things necessary in public matters, whether as between one State and another, or between the Commonwealth’ and the States, or between one Department and another in a State, that every political or departmental entity should stand upon its own merits and upon its own feet. If, for instance, a Railway Department carries goods for the Post Office, it is quite right that the Post Office should pay for the services rendered. If any looser system prevailed, it would be impossible to know whether the railways were paying, or how much the Post Office was expending. The same principle is adopted at the present time on a small scale between the Railway Departments of the different States and the Commonwealth. A contract has been entered into between the Railway Departments and the Commonwealth, under which the former are compensated for conveying members of Parliament to and from Melbourne. It would be very comfortable for the Commonwealth to say, “We are all the same people it is a mixed up sort of affair, and you had better convey the members of- Parliament over your lines for nothing.” The Railways Commissioners, however, being business men, and the Commonwealth having business men as Ministers, must recognise that it is infinitely betterthat the States railway accounts should be kept distinct) from the funds of the Commonwealth. Tne very same principle that applies to our own dealings as a Commonwealth with the States railways applies to the States railways in their dealings with other Departments in the States. We require to keep the accounts clear and separate, so that we may know from time to time what the Commonwealth owes the States, and what the States owe the Commonwealth; and we should be no more justified in mixing up in a sort of hotch-potch way, say, the indebtedness of the Commonwealth with that of the States than we should be in mixing up the affairs of the Railways Commissioners with those of the other Departments of’ any State. We cannot apply to this question of the Commonwealth compensating the

States any such hotch-potch arrangement, but must proceed upon business lines.

Sir John Forrest:

– What are the business lines proposed by the honorable and learned member?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I shall tell the right honorable gentleman. In the first place, I do not consider that the Bill, which was introduced by the Barton Government, reflected very much credit on those who framed it. My suggestion is a business one. In 1901, I tried to place it clearly before the House. The right honorable member for Swan was then in the happy position of being the member of a Government which had a substantial majority at its back, and he was so conscious of the power of the Government to resist any criticism that could be directed against it that I venture to say that he did not listen to me. _

Sir John Forrest:

– I do not think that I was here.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The Government, probably, were so conscious of their strength that half the Ministers did not consider it necessary to attend here, except at intervals ; and the Ministerial benches were frequently quite empty when honorable members who now form the present Ministerial party sat on the Opposition” side, and offered their criticism. I venture to say that tha right honorable gentleman does not know in what year or in what month the Bill to which I have referred was brought forward, and that, if he were to- follow me in this debate he could not tell the Committee the character of the measure.

Sir John Forrest:

– Oh, yes, I could. I thoroughly understood it, because I had more to do with it than perhaps any other member of the Ministry except the Treasurer.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I am sorry to hear it, because I had formed a higher opinion of the right honorable gentleman’s drafting capabilities. According to the provisions of that Bill, the Government, so far from desiring to keep the accounts of the Commonwealth distinct from those of the States, proposed that the States should contribute to the Commonwealth a sufficient sum of money to enable it to pay back to the States the value of their own properties. I hope the Treasurer will direct his attention to this matter, and let the Committee know what his views are - whether he proposes to re-submit the measure to which-

I have-, referred,- in order to have the ques-‘ tion of compensation dealt with in his, own way-

Sir John Forrest:

– We have had a Treasurers’ Conference since then.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I do .not attach much importance to those Conferences where the Constitution is involved. The right honorable member had possibly forgotten the provisions of the Constitution during the time that he, as a member of the Barton and Deakin Governments, had the support of such a large majority. I do not wish to say unpleasant things, but the right honorable gentleman has made such comprehensive admissions in regard to measures which the Government of which he was a Minister agreed to nolens volens, that it is quite possible that this Bill was included in that category. I do not know how to distinguish between measures which he heartily espoused, and those to which he had to subscribe as the result of party constraint. My idea, however, is that these claims should be paid in accordance with the provisions of the Constitution.

Sir John Forrest:

– Where is the money to come from?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I shall supply that information in a moment. The Constitution provides that the mode of com:pensation shall be’ determined by this Parliament. If -Parliament had determined that the Commonwealth should take over a portion of the debts of the States, corresponding to the amount of compensation to. be paid for the transferred properties, I could have understood the Treasurer’s position. If, on the other hand, he had said, “ I am not spending the whole of the quarter of the total Customs revenue to which the Commonwealth is entitled,” and in handing bade the surpluses to the different States had declared, “ I shall debit you with these balances as part payment for trie money which”’ we owe you on account of the transferred properties,” I could have understood that position. I repeat that the Constitution provides that the mode of compensation shall be determined by Parliament. I have suggested two modes which might be adopted. One is that an arrangement might be made 10 take over such a proportion of the States debts as would partially compensate them for the transferred properties. The other is that any surplus remaining out of the 25 per cent. collected through the

Customs, and which could have been handed over to the States, should be debited to them as part payment for those properties. But the Bill which was submitted bv the Barton Go- vernment did not propose either of these methods of compensating the States. It was unfair, not merely to the people of the. States, but to their bond-holders. If New South Wales has really added to its national debt to the extent of £5,000,000 in carrying out all the ramifications of its postal administration, it has no right to part with those properties, nor has the Commonwealth any right to take them over, with only our assuming, part of the State debt, or substituting some other form of asset as security to the bond-holders of that State.

Sir George Turner:

– Undet the proposal of the honorable and learned member, we should be taking money from the States to hand it back to them.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

-Under the ‘Constitution there is no obligation on the Treasurer to hand back to the States any part of the one-fourth of the Customs revenue to which the Commonwealth is entitled. He has a right . to take the whole of that amount, and to use it:

Sir John Forrest:

– But it we do noi use it we must return it to the States.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– There are many ways in which the Commonwealth could use it.

Sir George Turner:

– Should we not be paid by not returning it to them ?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– If, out of his quarter of the Customs revenue . the right honorable member has a surplus of £500,000, after satisfying Commonwealth requirements,he has . the right to do as he wishes, with it . In order to square accounts, he should have provided in the Bill which he submitted that . that money should be used from time to . time to satisfy the claims of the States in respect of the transferred properties.

Sir George Turner:

– If I had done that I should have been paying the States with their own money.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Certainly not. If the Commonwealth has a right to retain 25 per cent. of the total Customs revenue of the- States, even though it has no other use for it-

Sir George Turner:

– We can only’ retain it if we have a use for it.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The surplus would be constitutionally . used to pay instalments off the indebtedness for the transferred properties.

Mr DUGALD THOMSON:
Minister for Home Affairs · NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– Would that argument apply after the expiration of theBraddon section of the Constitution to the whole of the Customs revenue?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

-I anticipatethat we shall occupy a very different position before that period is reached. The Treasurer might very well have argued, “ If I return this money to the States, it’ does not matter whether I do so in the form’ of surpluses, or in the form of instalments upon money which I owe them.”

Sir John Forrest:

– There would not have been enough money forthcoming.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I do not say that there would have been a sufficient sur-. plus to pay . off the total amount in one, two, or even three years, but the Treasurer could have utilized whatever surpluses he had in that wav. He could have ascertainedeach year which State had suffered most under the altered conditions consequentupon Federation, and could have debited it with part payment for the assets which the Commonwealth had taken over.

Sir George Turner:

– They would not have relished that. They are now getting those surpluses as revenue, arid are spending them.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The Treasurer now admits that he has to preserve somesort of fairness in distributing those surpluses. Under my suggestion he would havebeen able to say, “ I think that this year Tasmania is chiefly in need of funds, and I propose topay it a substantial instalment of the amount which the Commonwealthis indebted to it on account of the transferred properties.”

Sir George Turner:

– Out of the money of the other States ?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Out of themoney over which the right honorable gentleman has control.

Mr Hutchison:

– A very just proposal.

Mr Carpenter:

– Would the States beallowed to expend that money as part of their current expenditure?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– When the Treasurer pays over money to the States hecannot dictate how they shall spend it.

Mr Carpenter:

– In that case the expenditure by the State would be tantamount to the expenditure of loan moneys.

Mr Bamford:

– And the bond-holders would be in a still worse position.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Nevertheless, we cannot control the expenditure. Take the case of New South Wales at the present time. Under the regime of the right honorable member for East Sydney, New South Wales used to get along very well with the aid of a land and income tax. But since the Commonwealth has been established it has handed over to that State between £2,000,000 and £3,000,000 annually in excess of the amount which it formerly received. What has been the result? New South Wales has added to her expenditure to such an extent as to involve an additional annual interest charge of £750,000. It has embarked upon a career of expenditure which is without parallel in Australian history. But the fact that the States to which these moneys are returned can expend them without being subjected to any control on the part of the Commonwealth does not affect my argument, which is in favour of a more correct and satisfactory method of bookkeeping. If, instead of handing back the surplus derived from his 25 per cent, of the Customs revenue, the Treasurer had been able to say to any State which was in straitened circumstances, “ I intend to give you a large sum of money this year, and to treat it as part payment for the public buildings which we have taken over from you- “

Sir George Turner:

– Does the honorable and learned member think ‘ that we could do that under the Constitution, which provides that the Treasurer must collect the Customs revenue of each State, . deduct the expenditure incurred by the Commonwealth for public works within its. borders, and return what remains after deducting its per capita contribution to Commonwealth expenditure? The honorable and learned member’s suggestion is that I should hand to Tasmania money which would otherwise be handed to New South Wales.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– This money would not represent a surplus. It would constitute a part of the Commonwealth expenditure. If the Commonwealth requires it for its legitimate purposes the Treasurer is at liberty to retain 25 per cent, of the total Customs revenue of the States.

Sir George Turner:

– There is no doubt of that.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Surely it is a legitimate thing for the Commonwealth to pay for the transferred properties?

Sir Georgr Turner:

– The suggestion of the honorable and learned member is absolutely opposed to the spirit, and I believe to the letter, of the Constitution.

Mr Bamford:

– The honorable and learned member would allocate, say, 10 per cent, of the Commonwealth’s share of the Customs revenue to Commonwealth expenditure, and 15 per cent, to paying the cost of the transferred properties.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Let us assume that 25 per cent, of the total Customs duties aggregated £2,500.000, and that for Commonwealth requirements only -^2,000,000 was expended. There would then remain a surplus of £500,000. I quite admit that if the Treasurer has no other * legitimate form of expenditure he would be bound under the Constitution to distribute that £500,000 amongst the States. But he is in a position to say. “I have a legitimate channel of expenditure for that £500,000. I have to pay for the public buildings which have been transferred to the Commonwealth, and I intend to see that a portion of that money is utilized in partly paving for those properties.”

Mr Watson:

– There would be trouble with the States Treasurers if that plan were acted upon.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Before the honorable member for Bland entered the Chamber, I stated that I desired to prevent a repetition of the introduction of the Bill- which came before us in 1901, in which it was proposed, in a most unbusinesslike way, that the States should be called upon to contribute a sufficient sum to the Commonwealth to enable it to pay them for the properties taken over. I said that that was unfair to the bondholder’s of the different States, because if we adopted it, we should make serious deductions from the assets representing the debts of the States, and would not enable them to pay off those debts.

Sir George Turner:

– The honorable and learned member practically proposes the same thing.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

-The right honorable gentleman knows that in his Commonwealth ledger he would have a series of credits to the different States in respect of properties that he had taken over. He knows that every time he made a payment to a State it would be debited to that State, so that in the end he would have to say that’ by this method-

Sir George Turner:

– I should have the property, and the bond-holders would not have the security.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– That is a matter which should not concern the Treasurer. If we had a valuation of, say, £5,000,000, made in respect of New South Wales, that State could do what it pleased with the money. Even if the right honorable gentleman, in order to relieve New South Wales, took over £5,000,000 of its debts, that State could enter into another debt of £5,000,000 in order to stand as it did before, and spend the money in an unwise way- We have to recognise that the Commonwealth cannot control the destination of any of the moneys that it hands to the States. The provisions of the Constitution do not permit anything of the kind. Indeed, Federation would not have been established if the Constitution had provided that the Commonwealth should have power to dictate to the States as to the way in which they should dispose of moneys which it handed over to them.

Mr Carpenter:

– There is a strong temptation to spend any money which can be regarded as revenue.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– If the people Of the States are not prepared to exercise control over their Governments and politicians - to regulate the expenditure of the moneys which come to them through the Commonwealth - the Commonwealth itself cannot do anything. If we once accept, in all our deliberations, the axiom that we have not, and cannot ever obtain, any control over the expenditure by the States of the money which the Commonwealth hands to them, it facilitates our discussion. We are merely concerned in knowing that up to the moment we hand the money to the States the Commonwealth has acted in a constitutional way.

Mr DUGALD THOMSON:
Minister for Home Affairs · NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– Would not the honorable and learned member’s proposal simply cancel the debt, as the Barton scheme proposed? It would do so, not to the same extent, but in the same direction.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– No ; I do not care to suggest schemes-

Sir George Turner:

– I wish to hear all the suggestions that can be offered on the subject.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I know that the right honorable gentleman is prepared to iook at this question fairly, and I certainly do speak with a fair amount of commercial and administrative experience. In 1901, when the Bill to which I have referred was introduced, providing that the States should hand over money to the Commonwealth, to enable it to pay for property taken over from them, it certainly seemed to me that the proposition was an extraordinary one. It was criticised not only by me, but by the honorable member for Kooyong, the honorable and learned member for Bendigo, and several others who agreed with me, I think, that it was a most unbusinesslike proposal.

Sir George Turner:

– The States would have to pay in any case. The Commonwealth has not a single shilling of its own.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– We know that the Commonwealth has funds. The Treasurer said the other day that he had a surplus over Commonwealth expenditure, and -we know that the expenditure of the Commonwealth has been much lower than was predicted by the enemies of Federation. The right honorable gentleman has frequently spoken of surpluses secured over Commonwealth expenditure, and after entering a credit to each State in respect of properties taken over, the Treasurer could utilize those surpluses in making payments on account. That would be a more equitable and business-like scheme. If the Bill of 1901 were brought forward in this House it would require very little exposition on the part of those who endeavoured to understand it, to enable us to completely discredit it. I have been drawn into speaking at such length by the interjections of the right honorable member for Swan, that I am’ disinclined to continue ; but I should like to say one or two words about the question of States debts. I watched the proceedings of the’ Conference which recently took place between the Premiers and Treasurers of the different States, ‘ at which a very able and exhaustive statement was submitted by the Federal Treasurer ; but I was scarcely hopeful that anything would come out of it: Although I desired as much as any one that the finances of the Commonwealth and of the States should be placed upon a better basis than at present, I felt then, as I feel now, that the whole institution of Federation was in such bad odour throughout the six States that no one who could enter this House would be able to persuade any of the States to part with any of the powers that theyhave at present. I venture to say that no honorable member would undertake for his. State that it would be possible to induce the Parliament of that State to make any further surrender of power to the Commonwealth Parliament. The whole institution is discredited. I quite agree with the statement made this afternoon that if the issue of Federation or no Federation were submitted to-morrow to the people of Australia, either as a whole or in the six sections represented by the different States, Federation would be negatived by a majority of two to one.

Mr Hutchison:

– Many who voted against . Federation would now vote for it.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The. wish is not father to the thought, so far as I am concerned. I am not less in favour of Federation to-day than I was. I do not think that I am too severe in my remarks. If we placed the finest ship in existence under bad navigators, with the result that she went ashore, the fault would not necessarily rest with the ship. We started with an excellent Constitution, and whether from misfortune or bad management there is no doubt that the Federal ship, for the time being, has been ashore, and has not yet been rescued from her position.

Mr Carpenter:

– The people were led to expect too much.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– It would be quite out of place for me to attempt to investigate the causes here, and I am not prepared to essay anything of the kind. But that is the position. When the Conference took place, I felt, as I feel to-day, that no proposal which involved the further curtailment of States powers, or the surrender of any of the existing privileges, or liberties of the States Parliaments, would be entertained by any one of the States Parliaments.

Sir George Turner:

– The only question upon which we could not agree was as to future borrowing. We practically agreed on everything else.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– That is a verylarge and important reservation.

Sir George Turner:

– If we had had another day at our disposal, I believe that we should have arrived at an agreement even in regard to that question.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– We may be of different dispositions. The honorable and learned member may be of the sanguine, and I of the pessimistic order, but I do not believe that an agreement, would have been arrived at. I have read the motion of which notice has . been given by the honorable member for Kooyong, as to the establish ment of what is called a financial council, and from what I know of his scheme - and I have had the privilege of seeing some of his proposals in detail - I think that it is an excellent one. It would establish a tribunal outside political influence, and place in its hand’s-

The CHAIRMAN:

– The honorable and learned member will not be in order in referring in detail to that notice of motion.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Then may I say, sir, that it would be an excellent thing if we could establish for financial purposes a nonpolitical tribunal, which would have the management of the whole of the debts of the different States and of the Commonwealth. We used to think that if the Commonwealth could in some way or other take over the debts of the States, by means of conversion loans, the money represented by the aggregate debts of the States would be obtained by us at a much lower rate of interest than that at which it is now obtained by the individual States. The data on which our expectation was based was the great difference exhibited between the value of the stock of the Dominion of Canada and that of the different States of the Commonwealth. I am bound to say, however, that, judging by the quotations published from time to time in the press, I do not believe that stock put forth by the Commonwealth to-day would realize any higher price than that of the States at the present time.

Mr Watson:

– Canada is in a better ptsition, and always has been, so far as financial matters are concerned.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I do not think that our stoclc will ever reach the level which that of Canada enjoyed at one time. We might approximate to it, but at present we know that there is a difference of £10 per cent, between the Canadian 3 per cent, stock and that of the different States of Australia. The conditions are quite different, as we know; but supposing that we could have to-morrow a finance council, having under its control the management of the States debts’ and those of the Commonwealth, there is no good reason to believe that the Commonwealth would be able to place even a conversion loan at a lower rate of interest than that now current with regard to State obligations.

Mr Watson:

– If we had control of the borrowing. I think we could.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

-It might be that this finance council would have some control over that matter.

Mr Hutchison:

– If the States could obtain their money at lower rates, they would borrow all the more.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I do not believe that there is one of the States that would in any way curtail its right to borrow for its own purposes, or that would give the Commonwealth control over its borrowing power.

Mr Johnson:

– It would be very unwise if it did.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– That is the prevailing opinion, and even with all the advantages which the Conference received1 from the very full, fair, judicial, and informing statement presented to it by the Treasurer, I do not think that if it met again to-morrow tha States would agree to give the Commonwealth control of their borrowing powers, I do not think either, that any one of them could be persuaded to attempt to influence his State in favour of a curtailment of existing State privileges. I think, however, that the people themselves might be willing to further the Federal movement bv some such action.

Sir George Turner:

– Would the honorable and learned member advocate allowing the States to continue to borrow as freely as they, liked, after their debts had been taken over by the Commonwealth?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I am not speaking of what should be, I am commenting upon the existing state of public opinion in Australia, and am expressing the view that nothing will be done for some years in the direction of bringing about the conversion of the debts of the States into a Commonwealth debt.

Sir George Turner:

– Sooner or later the States will be forced by the condition of the London money market to allow the Commonwealth to lake over their debts.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I should like the right honorable gentleman to succeed, but I wish to check any undue anticipations of success. If the financial position of the States becomes strained, the right honorable gentleman will do well to seize the psychological moment, to bring forward his scheme as a means for easing the strain. At the present time I do not think it will succeed. I welcome, however, the motion of which the honorable member for Kooyong has given notice, and I hope that, instead of a discursive debate on this subject, we shall apply ourselves to a distinct issue whether some such tribunal cannot be constituted which will lead to a more satisfactory arrangement in regard to our finances.

Mr WILKINSON:
Moreton

– The honorable and learned member for Angas has referred to the Queensland sugar industry, and there seems to be some misapprehension in his mind, and in the minds of other honorable members, in regard to the production of sugar by black labour. It. has been argued from the statistics which have been presented to the Committee, that the legisl; . ;on of the Commonwealth has somewhat i ai le.. in its object, but I think that the contrary is the case. The fact that the sugar produced by black labour in Queensland exceeds in tonnage that produced by white labour, does not, mean that our legislation has been a failure, it means that the black labour is employed on soil which has come recently into cultivation, and is therefore more productive than soil which has been worked for a long period. In the tropical jungles of northern Queensland, the soil is practically virgin, and the crops are twice, and sometimes three times, as heavy there as in the southern portions, where the land is cultivated by white’ labour, and has been worked for twenty-five years or ‘more. In the Bundaberg and Maryborough districts, and even in the Mackay district, where white labour is chiefly employed, sugar has been grown for a generation past, and the land has been cropped year after year, the growers, with the usual improvidence of the Australian cultivator, putting nothing back into the soil to compensate for what they have taken out of it. The Treasurer has shown, however, that the number of white growers is increasing very largely. Prior to Federation Queensland tried to encourage the cultivation of sugar cane by small holders, and for that reason £600,000 or £700,000 of public money were expended on the establishment of the Central Sugar Mills. The legislation of the Commonwealth, however, has done more than that of the States to gain the end in view. Notwithstanding that more sugar is produced by black labour than by white labour, the area cultivated by white labour has increased by something like 20,000 acres, while that cultivated by black labour has decreased by something over 2,000 acres. Reference has been made to the loss of revenue which must occur after 1907. This is a contingency which we must be prepared to face, and the honorable and learned member for Angas will find that the representatives of Queensland in this Parliament will be ready to vote for the continuance of the excise duty on sugar. At the same time, most of them will also be inclined to support the retention of the bounty.

Mr Glynn:

– One would cancel the other.

Mr WILKINSON:

– The bounty has for its object the gradual abolition of coloured labour.

Mr Glynn:

– Coloured labour will be abolished by that time.

Mr WILKINSON:

– I do not think that it will. As I interjected when the honorable and learned member was speaking, a great number of Chinamen have come to Queensland from the Northern Territory of South Australia. They are not only taking up small areas of sugar land, but are in some instances employing white labour, and claiming the bounty, and they are also entering into competition with those engaged in other industries. Especially have they become a serious menace to the fruitgrowers. Although the honorable and learned member for Angas regards the duty on sugar as prohibitive, I ask him to remember that Australian - grown sugar has to compete with sugar grown in Europe by bounty-fed cultivators, and carried here in steam-ships subsidized by the Governments of the countries in which it is produced. Then we have, almost adjacent to our shores, the island of Java, where cheaper labour can be obtained1 than was ever obtained in Queensland. In the State from which I come, the lowest wage paid to a kanaka is £6 a year,, with two suits of clothes and rations, consisting chiefly of sweet potatoes and the cheapest kind of meat and other provisions. Altogether he costs from £16 to ^20 per annum, excluding the cost of his importation. In Java, however, not only one man, but a whole family, can be got to work in the fields at 6d. per week and so much rice. Therefore it would be impossible to produce sugar in Australia without protection from foreign competition. Furthermore, our producers have not overtaken the local’ consumption by something like 42,000 tons. We are not only endeavouring to increase the area of land under cultivation, but we are endeavouring to grow sugar with the aid of white labour, instead of with the aid of black labour. The Commonwealth agreed to pay a stiff price to secure a White Australia, and it is too late’ in the day now to grumble at it. ‘Having seen the evil which has existed in Queensland, I am satisfied that the price is nottoo high. At any rate, it is insignificant compared with what the coloured labour question has cost America, where millions of: money were spent, and thousands of lives were lost, in arriving at a settlement which is by no means final.

Mr Ewing:

– Will not all these industries necessarily be inquired into?

Mr Reid:

– Yes, certainly.

Sir JOHN FORREST:
Swan

– It is my first duty to compliment the Treasurer on the very full information regarding the public accounts which he has placed in our hands. We are now iri a position to compare the expenditure of the Federal Depart- ments during a period of four years, and are therefore better able to understand the. financial position of the Commonwealth than we were ever in before. At first sight, however, it is not easy to ascertain from the documents presented to us the full cost ofeach Department, including works and buildings, because there is no summary.

Sir George Turner:

– Not for new works* and buildings.

Sir JOHN FORREST:

– It seems to me that a statement of that sort would be very useful in showing exactly how much is spent, say, in the Post Office.

Sir George Turner:

– The Post Office expenditure is especial lv shown.

Sir JOHN FORREST:

– I have not. been able to find out exactly what the cost of the Post Office is.

Sir George Turner:

– It is on page 44 of the Budget papers.

Sir JOHN FORREST:

– I have not been able to ascertain by inspection and with certainty the total’ expenditure on the Post Office. But,’ as I have already said, the information is obtainable in the public documents, and it only requires a little ferreting out to learn everything that we desire or require. As my honorable friend, the member for Parkes, has laboured a matter to which I intended to refer, I will deal with it rather out of the order which I had laid down. It seems to me that we ought never to forget that the Commonwealth and the States are composed of the same people, and that, therefore, if we have to pay any State a sum of money for buildings, not only has that State to contribute towards the payment for its own buildings, but that also it has to pay per capita for buildings taken over in every other State. I cannot look upon it as a sound business transaction, that we should borrow a large sum of money in order to pay for the buildings transferred from the States to the Commonwealth, in order to distribute that money amongst the States, thus placing upon them the obligation to pay interest, and to repay the capital borrowed within a certain time. It would mean that we should be adding largely to the public debt of the Commonwealth, and doing no good to the States either individually or collectively. This subject has been very well considered by the present Treasurer, and I myself have contributed a paper, which has been laid before Parliament and the country, in regard to the different means by which it would be possible to pay these immense sums of money for public buildings taken over by the Commonwealth. The conclusion at which I arrived was that instead of borrowing immense sums of money the same result would be obtained by debiting and crediting the amounts to be paid and the amounts to be received by each State. For instance, suppose that the Commonwealth has to pay £3,000,000 to New South Wales for public buildings taken over, and that New South Wales has to pay £2,000,000 as her share of the cost of the buildings taken over by the Commonwealth from herself and all the other States. Surely, in a transaction of that kind, it is not necessary that the £3,000,000 should actually be paid to New South Wales, and that £2,000,000 should be paid back by that State. All that it is necessary to pay to New South Wales is £1,000,000, which is the difference between the amount which the State has to pay, and the amount which she has to receive. That is surely the commonsense way of dealing with the matter. If I owed the honorable and learned member for Parkes £10, and he owed me £5, I should not pay him ten sovereigns and let him pay five sovereigns to me; I should pay him five sovereigns and complete the transaction. Whatever method is adopted, a different result cannot work out, so far as each State is concerned. The States will get exactly the amount that they are entitled to receive. There is a fixed indebtedness to each State, and there is a fixed liability on the part of each State to the other States.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Is a proper record kept ?

Sir JOHN FORREST:

– Surely my honorable and learned friend does not think that it is impossible to keep a proper record of transactions of this kind. He cannot have looked into this matter as carefully as he ordinarily looks into subjects with which he deals. During his speech he was subjected to some interjections which I regret, but they were caused by my belief that he had not given sufficient attention to the subject.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– In 1901 I went fully into it for an hour in this House.

Sir JOHN FORREST:

– Then the honorable and learned member must have forgotten the subject since 1901.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I have not read the right honorable member’s paper.

Sir JOHN FORREST:

– If the honorable and learned member had read it I think he would have a better knowledge of the subject than he appeared to have to-night. Some reference has been made to what is called the fixed policy of the Commonwealth Parliament against public borrowing. I am not aware that this House has made any declaration of that kind. I am aware that on an occasion when the Barton Government proposed to obtain authority to raise a loan, the Bill, after some discussion, was withdrawn ; but I have not heard that there has been any declaration on the part of the Commonwealth Parliament against borrowing. I am as much against public borrowing as any one can be, if it is intended that the amount borrowed shall be spent on unproductive works. Notwithstanding all that has been said to the contrary, I believe that public and private borrowing have been largely instrumental in our prosperity. We should never have been in our present position, and the members of the community represented by honorable members opposite would never have enjoyed their present prosperity, if we had not indulged in an extensive public works policy by means of borrowed money. We should not have developed our resources and our production of material wealth would not have reached its present proportions, but for the private enterprise of our citizens, and the public enterprise of our statesmen. Speaking generally, I do not believe in borrowing money for the purpose of erecting public buildings. I believe that in our present circumstances we should limit the expenditure of loan moneys to the construction of works which will afford facilities for transit, encourage production, and which are likely to prove directly reproductive to the State.

Mr Tudor:

– Such as the Port Augusta to Kalgoorlie railway ?

Sir JOHN FORREST:

– Yes, undoubtedly. The best evidence has been afforded that such undertakings have laid the foundations of our prosperity. Notwithstanding all that has been stated with regard to the money wasted in the construction of railways in Victoria, there is no doubt that the facilities provided for transit in the State have alone rendered its development possible. Countries are not injured by entering upon a borrowing policy, but by the expenditure of borrowed money upon works that are not reproductive. So far as borrowing for the purpose of constructing reproductive works is concerned, there is practically no difference between a private individual and the State.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Would not the right honorable member class a post office as a reproductive work?

Sir JOHN FORREST:

– No. Generally speaking I believe that all public buildings should be built out of revenue.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Surely post offices are reproductive.

Sir JOHN FORREST:

– I do not know that they are in all cases. However that may be, the whole of the post offices and other public buildings built during my long administration in Western Australia, with the exception of a very few upon the gold-fields, were erected out of revenue.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Why should the present generation bear the * capital cost of works which are intended to confer benefits upon posterity?

Sir JOHN FORREST:

– I am not prepared to argue that matter at the present time. My opinion, speaking generally, is that bricks and mortar should be provided for out of revenue: The honorable and learned member for Ballarat referred more than once to what he described as a falling revenue. I do not think there is any necessity for directing special attention to the decrease in our receipts, because I notice that’ the estimate of the Treasurer for the current, year is only £61,000 less than the amount actually received last year. The Commonwealth revenue has been remarkably steady during the last three years, and no radical change is expected to occur during the current year. In 1901-2 we received £11,296,985; in 1902-3, £12,105,937 ; and in 1963-4, £11,631,056 ; whilst the Treasurer’s estimate for the current year is £11,570,000. I regard the steadiness which is exhibited bv these figures as being . satisfactory, and as giving a great hope for the future.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The revenue, in a country like this, should not be steady.

Sir JOHN FORREST:

– I prefer to see steadiness rather than marked fluctuations as being more indicative of stability.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– We ought to be going ahead

Sir JOHN FORREST:

– No doubt; but it must be remembered that we have passed through a very hard time during the last two or three years, and that we have not yet recovered from the drought, which resulted in such a serious loss to the Commonwealth. In view of the adverse conditions under which we have been labouring, I think that the present position of affairs may be considered to be satisfactory. I notice that notwithstanding all the efforts of the Treasurer to keep down the expenditure, it is gradually increasing. In 1901- 2 we spent £3,733,218.

Sir George Turner:

– The expenditure for that yeardoes not afford a fair basis for comparison.

Sir JOHN FORREST:

– The Treasurer has included the revenue for that year amongst his figures without any explanatory note. I am aware that there were special circumstances to be taken into account during that year.

Sir George Turner:

– We did not spend anything on public works, and many of oui Departments were not fully organized.

Sir JOHN FORREST:

– Just so. We were only making a commencement. In 1902- 3 the expenditure amounted to £3,901,371, and in 1903-4 to £4,252,562, whilst for the current year the Treasurer’s estimate is £4,433,233. There has been an increase every year.

Sir George Turner:

– The increase is accounted for almost wholly by the expenditure upon new works and upon the sugar bonus.

Sir JOHN FORREST:

– At the same time we were led to believe that Federation would result in great economic administration.

Sir George Turner:

– Yes, but we did not expect that we should have to pay for new works out of revenue, instead of out of loans.

Sir JOHN FORREST:

– I am very glad that that system is being adopted, but I do not see why the expenditure upon new works should be increased every year. To have continued the policy of constructing buildings out of loan funds must eventually have resulted in great injury to Australia.

Mr DUGALD THOMSON:
Minister for Home Affairs · NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– The expenditure upon new works will not show an increase this vear.

Sir JOHN FORREST:
SWAN, WESTERN AUSTRALIA · PROT; WAP from 1906; LP from 1910; NAT from 1917

– But . the total expenditure of the Commonwealth is increasing. The amounts which are being returned . to the States are gradually decreasing. In 1901-2 we returned £7,368,137, in 1902-3, £8,200,457, and in 1903-4, £7,382,460, whereas during the current year the Treasurer expects to return £7,138.986.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– But how much did we return out of the 25 per cent, of Customs revenue that we were entitled to retain ?

Sir JOHN FORREST:

– The balance is estimated to be £600,275. Honorable members will see the return to the States has decreased by £229,151 in three years. Of the estimated revenue which is expected during the current year, the Customs will produce £8,980,000. The revenue expected to be derived from Departments exclusive of the Customs is £2,590,060, of which it is estimated that the Post Office will earn £2,560,000, whilst only £30,000 will be derived from all other sources. The cost of the Departments, exclusive of the amount of £264,678, which is expended upon the management of the Customs, is £4,168,555, and . if we deduct the revenue of £2,590,000 from this expenditure, we shall see that, exclusive of Customs, we lose upon our Departments £1,578,555. Although the Post Office is regarded as a great revenue producer it is also a great spender, and I hope it may not be long before we shall be able to make that institution self-supporting.

Mr Mahon:

– It is now self-supporting in several of the States.

Sir JOHN FORREST:

– Not if the cost pf the new buildings is taken into account. Victoria shows the best result, so far as the Post Office is concerned, and it is important to remember that the penny post exists in that State. This may very fairly lead us to hope that the day is not far distant, although it may not be immediately in sight, when penny postage will be universal, not only . throughout Australia, but throughout the world. I find that the expenditure upon the Post Office has been increasing at a much greater rate than the revenue has been added to. The expenditure in1901- 2 was £2,383,815, in 1902-3, £2,568,846, in 1903-4, £2,697,605, whilst the estimate for the current year is £2,813,713. Although the revenue for the current year is estimated to show an increase, we shall still have a larger deficiency than during any previous twelve months, namely, £253,713. The deficiency in 1901-2 was £10,954, in 1902-3, £164,116, and in 1903-4, £187,341. I have always advocated that the fullest facilities should be afforded in connexion with our postal and telegraph services, and I think that we may derive some encouragement from the fact that notwithstanding the reductions that have been made in the telegraph rate throughout Australia, the gross revenue of the Department is now greater than it has ever been.

Mr Mahon:

– And it accounts for a little increased expenditure.

Sir JOHN FORREST:

– I am sorry to say that, if we include, as I am including, all buildings connected with the Post Office, the increase in the expenditure is greater than the increase in the revenue. I hope the Postmaster-General will give attention to this matter. While we are always asking him to give greater facilities to our constituents, we all look forward to the time when the expenditure on this Department will not be greater than the revenue received. I mentioned before that from the published returns I could not easily ascertain what was the cost of all the Departments of the State, but I have been able, with the assistance of the Treasury, to ascertain the exact amounts. It is just as well that we should know the expenditure on every branch of the service. The total expenditure is £4,433,233, made up in the following manner: - Governor-General’s establishment£1 7,406 ; Parliament, including Ministerial salaries, £137,546 ; Department of External Affairs, £42,057 ; AttorneyGeneral’s Department, £20,079; Home Affairs Department, £38,152; Treasury, £17,731; Customs, £286,310; Defence, £954,341 ; Postal Department, £2,813,713; and; on the sugar bonus, £104,898. That includes the whole expenditure on the administration of the public affairs of the Commonwealth, including buildings, maintenance, and expenditure of every kind. I suggest to the Treasurer, who has been so lavish with useful information, that in the future it would save a lot of trouble to have a tabulated statement a little more in detail than 1 have given. showing, for the purpose of comparison, the exact total expenditure on each Department. I now want to refer to a matter which has been dealt with by the Treasurer and. several other speakers, namely, the taking over of the States debts. If we were to take over the States debts, as existing on the 1st January, 1901 - which we are empowered to do by the Constitution - what would happen ? It is said that holders of Australian stock would reap a benefit, and that the people of the Commonwealth should gain that benefit. I do not intend to advocate that we should take over the States debts at the present time in the way that has been proposed by some advocates of that step. My opinion is that if we did take over the debts the Commonwealth would not lose. It would, I think, result that the people of Australia would gain through the stock being better thought of, and command a better price. The market would be firmer, and, in the event of our desiring to borrow, we should get a better price for our new loans. My own opinion is, therefore, that, even if we decided to take over all the loans, the result would be that though those who hold the stock might make money by reason of the increased price, the Commonwealth would not be injured in the slightest degree, but, on the contrary, would be benefited.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Does the right honorable gentleman mean to ask the bondholders of the States to take Commonwealth stock ?

Sir JOHN FORREST:

– I mean merely taking responsibility for the interest, and being free to do what we like with the loans - to convert them or not, as we might think best. But I am not at the present time in favour of conversion, and, therefore, I see no special advantage in taking over the whole of the debts. The people of the States would still be liable to pay the interest - although the Commonwealth would pay it, the States would have to repay the Commonwealth. The point I wish to make is that, because holders of our stock might make some money over the transaction, there would be no disadvantage to the Commonwealth, anymore than there is when, for some reason or other, our stock largely rises in value.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Then there is no good in the conversion. What is the object of it?

Sir JOHN FORREST:

– But there might be a gain to the individuals who hold our stock. I say, again, that it is better that these people should make a gain than otherwise, because, if we desired to place a loan, the chances are that we could get a better price. There is no sufficient reason to satisfy me that it is necessary to take over existing loans until they are nearing maturity.

Mr Watson:

– Loans are maturing every day.

Sir JOHN FORREST:

– I shall come to that point directly. 1 am of opinion that we should make some arrangement with the States - as could easiily be done, because it would be to their advantage, and, therefore, to the advantage of the Commonwealth - to undertake the conversion of loans maturing. Further, I believe that the Commonwealth should undertake the raising of all new loans under a specific understanding and agreement.

Mr Watson:

– Does the right honorable member think that the Commonwealth should be compelled to take over an equal proportion of the debts in each State simultaneously ?

Sir JOHN FORREST:

– That is a difficulty which I am not prepared to answer off hand.

Mr Tudor:

– What about reporting progress?

Mr Reid:

– I think that we had better make some progress with public business.

Sir JOHN FORREST:

– My idea is that the Commonwealth should undertake the conversion of all loans as they mature, and also the flotation of all new loans, by arrangement with the States. Of course the States would have to make satisfactory provision for the payment of interest and sinking fund to the Commonwealth on all new loans. At the same time, that is not a very pressing matter, because for a long period, out of their three-fourths of the Customs revenue now returned to the States the Commonwealth would have plenty of money to meet any interest charges and to provide for any sinking fund upon loans as they mature.

Sir George Turner:

– The right honorable member would have the States managing one portion of the loans, and the Commonwealth another portion.

Sir JOHN FORREST:

– There is not much management required in connexion with loans beyond seeing that the interest upon them is paid regularly, and the States could arrange with the Commonwealth to pay their interest in London, if so desired.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– It occasions the Treasurers of the States much anxiety.

Sir JOHN FORREST:

– Of course, the providing of funds for the payment of interest is sometimes a troublesome matter. I have never approved of the proposal of the Treasurer, that the whole of the railway revenue of the States should be handed over to his control, in order that he may always have abundance of funds at his disposal. That is too large a proposition to contemplate in connexion with the small amount likely to be required for many years, in excess of the Customs revenue at his disposal. The railway revenue of Australia represents a very considerable sum, and to require the States to hand over the whole of it to the Commonwealth Treasurer suggests a want of confidence in them, for which there is no necessity or justification, especially if we take over their loans only as they mature.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The States will allow the Commonwealth to take over as much of their loans as it chooses to take, so long as it does not curtail their powers of borrowing.

Sir JOHN FORREST:

– Necessity will make the States act as most people do when they are in difficulties. We all have to subscribe to conditions to which we would not consent if our circumstances were different.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Would the right honorable member care to take over their debts, without securing control over their assets p

Sir JOHN FORREST:

– We have their Customs revenue. The honorable and learned member appears to forget that the taxpayers of the Commonwealth and the States are the same people. The interests of the States and the Commonwealth are identical.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– -The right honorable member has seen how the Customs revenue works out in a different direction in connexion with his own State.

Sir JOHN FORREST:

– In what way ?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– When they are treated upon a per capita basis, they are the same people.

Sir JOHN FORREST:

– The five years known as the bookkeeping period has not yet expired. When it does, the people of each State will have no desire to take money from any other State. No doubt that will always be a fundamental principle of our legislation.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The right honorable member now sees the effect of treating the taxpayers of the Commonwealth and those of the States as identical individuals.

Sir JOHN FORREST:

– The honorable and learned member places an interpretation upon my words which I do not wish to convey. I do not think that any attempt by the Commonwealth to convert States stock, which is not approaching maturity, will result in any profit. Our bondholders realize that these short-dated loans are practically a gilt-edged security. The interest upon them has always been regularly paid, and I do not believe that any bond-holder imagines for one moment that he will not receive both interest upon his stock, and the return of his principal. Under such circumstances, why should he sell that stock for less than it is worth? It seems idle to suppose that by any con-, version scheme-

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– There is such a thing as purchasing stock at its market value.

Mr Watson:

– I desire to call attention to the state of the House. I think that we should have a quorum present.

Mr Reid:

– That is a disgraceful thing for the honorable member to do. He might at least have asked me for an adjournment of the debate before acting in that way. It is a very unusual course for him to adopt.

The CHAIRMAN:

– Under the Standing Orders it will be necessary to call Mr. Speaker to take the Chair.

Mr Reid:

– I ask the honorable member for Bland to withdraw his call.

Mr Watson:

– I withdraw; but at the same time I think that there ought to be a quorum present.

Mr Reid:

– I am acting in the common interests, and I want to make some progress with public business.

The CHAIRMAN:

– Will the right honorable member for Swan proceed with his speech ?

Mr Watson:

– Is it not time progress was reported?

Mr REID:

– Of course I recognise that unless there is some sort of co-operation on the part of honorable members opposite, I cannot carry on the public business at this hour, which I admit is a late one. I cannot reasonably take up an adverse stand to the general feeling of the Committee. Nevertheless, I must earnestly appeal to honorable members, if they entertain any desire to bring the business of the session to a close, to co-operate with the Government with a view to that end. I recognise that it is the duty of the Ministry to stay here fo,r another six months, if honorable members wish it, but, at the same time, I do not think that Parliament should be in session all the year round.

Mr Carpenter:

– When the Government propose to have a late sitting they should give honorable members notice.

Mr REID:

– I recognise the reasonableness of that claim. At 10 minutes past 11 o’clock I cannot make any strong representations to the Committee. I accept the suggestion of the leader of the Opposition, in the hope that honorable members will try to accustom themselves to somewhat later sittings in future, not in the interests of the Government, but of themselves.

Mr Chanter:

– Why not meet in the morning? .

Mr REID:

– If we did that it would be difficult for Ministers to transact their departmental . work.

Mr. WATSON (Bland). - I sympathize with the desire of the Government to get on with business, and shall be willing to assist them. They cannot, however, complain of the debate this evening, because the speeches which - have been made were important. It is not unreasonable to ask for an adjournment at 11 o’clock, on what is really the first evening of the Budget debate.

Mr McCay:

– If we can. proceed with the debate again to-morrow it will not matter, but I understand that it is to be intercepted by the discussion of another matter.

Mr WATSON:

– We are not concerned with that just now. The right honorable member for Swan is making some veryimportant observations, and I think it is reasonable that more honorable members should have an opportunity to hear. them.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Besides, thedebate on the Budget often saves time later on.

Mr WATSON:

– Yes. I do not think that anything will be lost by a full discussion of the Budget. Even- ifthe Government got the first item of the Estimates passedto-night, they would not necessarily save time thereby ; whereas, if there is a reasonable discussion on the Budget the Estimates will probably be passed all the more quickly.

Progress reported.

House adjourned at 11.23p.m.

Cite as: Australia, House of Representatives, Debates, 26 October 1904, viewed 6 July 2017, <http://historichansard.net/hofreps/1904/19041026_reps_2_22/>.