10th Parliament · 1st Session
Mr. Speaker (Hon. Sir Littleton Groom) took the chair at 2.30 p.m., and read prayers.
– Can the Minister for Home and Territories inform the House of what is being done in regard to the appointment of an executive council in the Mandated Territory of New Guinea?
– I shall obtain the information desired by the honorable member and convey it to him later.
German Developmental Project
– Will the Prime Minister lay on the table of the House all documents in connexion with the requests ofJ. Fanning, of Sydney, during the last five years for the consent of the Commonwealth Government to the introduction of German capital into New South Wales for the purpose of developing the coal fields and the erection of a coke and bi-products treatment plant in that State?
– I shall look into the papers, and if I find that the public interest will not be detrimentally affected by publicity. I shall lay them, on the table of the House.
– I ask the Minister representing the Minister for Defence how many aeroplanes under the control of the Commonwealth have been fitted with the new slotted safety device?
–I shall obtain that information for the honorable member.
– Is the AttorneyGeneral yet prepared to lay on the table of the House the documents relating to the Abrahams prosecutions?
– I propose to reply later to a question asked by the honorable member on Friday, last, and to lay certain documents on the table of the Library. The reason for not laying them on the table of the House is that they belong to departmental files and their early return will be necessary. If they were laid on the table of the House, they could be released only by order of the House.
– Did the PostmasterGeneral consult the commercial community before introducing the new regulation requiring postal notes to be signed before presentation? Has the department made any arrangements for . registered signatures to be lodged at post offices ?
-I shall get. the information for the honorable member.
– Has the PostmasterGeneral any further information regarding the unsatisfactory working of the telephone trunk line between Sydney and Newcastle and the delays that are occuring in connexion with wireless communications with shipping?
– Unfortunately that service has been interrupted, but a new carrier-wave system is being installed which will provide several new channels, and will, it is hoped, afford the necessary relief.
Mr.RODGERS. - Has the Prime Minister seen the press reports of frequent objections by a section of the Canadian people to certain phases of the reciprocal trade treaty between Australia and Canada? Will the right honorable gentleman take a favorable opportunity while the Tariff Bill is before another place, to give full consideration to Canadian interests, particularly in regard to the lumber trade ?
– I have from time to time read in the press of the discussions in Canada in regard to the reciprocal treaty made with Australia a few years ago. Those discussions seem to be merely the ordinary political controversies that fiscal matters arouse in any country. The Tariff Bill which is now before another place does not provide an opportunity for readjusting our trade relations with Canada, as they are governed entirely by a reciprocal treaty. Any alteration must be by a revision of the Treaty.
– Is the Prime Minister yet able to inform the House if any tenders have been received for the purchase of the Commonwealth Government Line of Steamers? If so, who are the tenderers?
– In response to the Government’s invitation certain tenders have been received, but I am not yet able to make any statement to’ the House in regard to them.
– Can the Prime Minister make any statement to the House in regard to the published report that the Eastern Extension Telegraph Company and the Marconi Company have reached a provisional agreement for the fusion of their interests, subject to the agreement of the Dominions?
– I have no information of any such arrangement.
– I ask the AttorneyGeneral whether any date has been fixed for the proclamation of the Bankruptcy Act?
– No date has been definitely fixed, but I anticipate that on 15th May, if that date is acceptable to all the States, the act will be proclaimed.
Kerbing and Guttering Charges
– Has the Minister for Home and Territories given consideration to the charges imposed upon lessees in Canberra in respect of kerbing and guttering? If so, when will the honorable gentleman make a statement to the House?
– This vexed matter is under my consideration and I hope to be able to make a full statement in ‘ regard to it either to-morrow or on Wednesday.
Reports of Australian Delegations
– Can the Prime Minister indicate to the House when the Orders of the Day for the resumption of the debate upon the reports of the Australian Delegations to the 7th and 8th Assemblies of the League of Nations are likely to be reached? Obviously, if the debates on these matters are to be of any value, honorable members should have due notice, so that they may prepare their speeches.
– Orders of the Day 4 and 5 will be dealt with as soon as the business of the House permits, and I shall endeavour to give the longest possible nptice, so that honorable members may prepare any remarks that they may wish to make.
– Can the Treasurer yet inform the House when the machinery for operating the housing scheme will be in working order, to enable applications to be made by those who desire to erect houses under it?
– The directors of the Commonwealth Bank are at present negotiating with the savings banks of the various States with a view to arriving at some arrangement under which moneys shall be made available to the State authorities; but no finality has yet been reached.
– Last year I moved an amendment to the Income, Tax Assessment Bill, with a view to having income derived from investments outside Australia brought within the provisions of the Income Tax Act. The Prime Minister then said that inquiries would be made to ascertain what the effect of such an amendment would be. I should like to ‘know whether any action has been taken, and. whether there is a possibility of an amendment of that nature being incorporated in . the Act during this session ?
– In accordance with the promise that I gave to the House when, the amendment was moved by the honorable member, the matter was immediately taken into consideration, and it has occupied the attention of the Commissioner for Taxation and his officers ever since. The subject is complicated and requires considerable investigation. Inquiries are not yet complete, but I anticipate that they will be concluded in the near future. The Government intends to take all the facts into consideration and to announce to the House, as early as possible, whether any action is to be taken.
– What security does the Attorney-General hold for the payment by the Abrahams brothers of additional donations amounting to £300,000, and on what dates are they to be paid ?
Mi-. LATHAM.- There are no additional donations in any sense whatever to be obtained from the Abrahams brothers. The sum of £500,000 - not £300,000, as the honorable member has stated - is smaller that that which the Commissioner of Taxation would have been able to charge without appealing to any court at all. The securities which are held relate, I understand, to land in various parts of the Commonwealth and perhaps to other forms of property; but, without, notice, I am unable to state precisely what they are.
– I wish to draw the Attorney-General’s attention to the fact that he has overlooked my question respecting the dates when the donations are to be made.
– I propose later this afternoon to make available to honorable members the terms of the agreement between the Commissioner and the Abrahams brothers, and from it any honorable member will be able to ascertain the dates. I have not in my mind at the moment what those dates are.
– I have received an intimation from, the honorable member for Werriwa (Mr. Lazzarini) that he desires to move the adjournment of the House this afternoon for the purpose of discussing a definite matter of urgent public importance, namely, “ The unjust and differential treatment meted out to Australian citizens for alleged breaches of wireless regulations.”
Five honorable members having risen in their places,
.- I have taken this course in regard to summonses that have been- issued against certain persons in my electorate for breaches of the wireless regulations, because it is the only way in which I can ventilate this matter on the floor of Parliament, unless its discussion is delayed until the Estimates are before us, that is, some months ahead. I shall put the position briefly. I am making two charges against the Postmaster-General’s Department. The first is . that it has treated certain persons with undue harshness, and I shall give one specific case as an indication of many others. The second is that one person at least was summoned on the same day that a more serious offence against the regulations was disregarded by the PostmasterGeneral’s Department. The person summoned was Mr. Frank Matthews, of Scarborough, and he had committed no serious breach of the regulations at all. A wireless instrument was installed in his home, and he was summoned for using it without a licence. The facts are that the instrument was sent from Sydney and arrived at Scarborough by the 4.30 p.m. train on the .1st December last. That night it was partly erected by the radio dealer, and was completed and operated for about two or two’ and a half hours on the night of the 2nd. The dealer then took the instrument out of the house - it was still his property - to give a demonstration at Austinmere on the Sunday to one or two prospective customers. He returned with the instrument on Monday night, the 5th December, and permanently installed it at Mr. Matthews’ home. I understand that the regulations allow the radio dealer three clear days during which to install a wireless set and to test it, before it is placed in the possession of the purchaser. Then, of course, the purchaser is responsible for taking out a licence. Mr. Matthews told the radio dealer that he would pay for the set the next clay, and would also take out a licence. He had to leave his home at 6.30 a.m. on the Tuesday morning in order to be at the face of the mine where he was employed at 7 o’clock. No post office is open at that early hour, and it wa3, therefore, impossible for him to get his licence, before he went to his work on the Tuesday, when his responsibility for the set actually began. While he was at work that day two men called at the house of Mrs. Jones, where he boards. The men asked if Mr. Matthews had a licence ‘for his radio set, and Mrs. Jones replied that she thought he’ had not. The men said that they would call back later to see Mr. Matthews. That afternoon Mr. Matthews drove in his motor car to the post office, about l£ miles distant, took out a licence, and also paid the radio dealer for the machine. When he returned home, the men saw him and practically insulted him by insinuating that if they had not called to see him that morning he would have operated the set without a licence. After a few moments’ further conversation, during which he was told that he would receive a summons from the police, the men went away. Mr. Matthews communicated with me, and I addressed a letter on the matter to the Postmaster-General, from whom I received an ordinary routine reply, acknowledging receipt of the letter, and stating that inquiries would be made into the case. I received a further letter from Mr. Matthews, stating that he had been informed that the summons would be delivered on the Wednesday. I communicated by telephone with the wireless authorities, and was informed, five days after my writing to the PostmasterGeneral, that they were waiting for a reply from the Minister as to what action should be taken. I then received from Mr. Matthews an extract from the South Coast Times, stating that he had appeared before the court, and had been fined for breach of the wireless regulations. I may point out that unjust treatment of the owners of radio sets, such as. has been meted out to Mr. Matthews, is militating seriously against the increased use of wireless telegraphy. As a matter of fact, I have seen a statement by the Postmaster-General to that effect. I shall refer in a few moments to a minute written by the Minister, giving the instruction that the summons against Mr. Matthews be withdrawn. Nevertheless, inspectors took the matter to the court. Although the circumstances of the case had been explained to them, as I have outlined them to the House, the inspectors endeavoured to prove to the court that Mr. Matthews had the instrument in his- house and had used it without a licence from the 1st December. Mr. Matthews, during his examination in court, compelled one of the inspectors to admit that there had been a misunderstanding, and that he had only committed a breach of the regulations - virtually only a technical breach - from the Tuesday morning. There had been some glaring breaches of the regulations in the neighbourhood of “Wollongong, where persons had used, .their sets for weeks without a licence.” With offenders of that description, I have no sympathy. The magistrate had threatened to be severe on the defendants if further similar cases were brought before him, and, in giving his judgment against Mr. Matthews, he had in mind his promise to inflict severe penalties in future. After five or six men had been fined the magistrate, according’ to a newspaper report, said -
He was prompted to say this, evidently in view of the fact that, whereas the regulations allow six days in which to have a set registered, two of the defendants-
Mr. Matthews and a man at Wollongong had been pumiced upon on the sixth day.
In view of Mr. Matthews’s explanation that he had only come under the regulations on the Tuesday morning, or, at the earliest, on Monday night, the inspectors had no right to offer him a gratuitous insult by saying that, but for their inquiries, he would not have obtained his licence at all, and that he secured it only
Mr. Lazzarini i to avoid punishment. Mr. Matthews is an exemplary citizen, and is known and respected throughout the community in which he lives. He could obtain credit, not for £2 or £3, but for hundreds of pounds, from any of the business people on the coast. For him to have been haled before the court, treated as a rogue, and charged practically with trying to cheat the department out of its licence-fee, is too much. When I put the case before the Postmaster-General, explaining that I had received a letter giving particulars o’ the circumstances, I said that it was a case of harsh and unjust treatment. I received a letter, in reply, stating that the Minister had inquired into the matter, and had made a note that the summons should be withdrawn, but that the information had not been sent on to the wireless inspectors. Owing to an oversight the minute had remained in the Minister’s office, and that was given as the reason why Mr. Matthews had been brought before the court. I told the Minister that Mr. Matthews should, at least, be reimbursed to the extent of the amount of his fine and the value of the time lost from his employment. A statement to that effect in the press would have exonerated him. Nothing was done. A letter was received stating that, after all, the man had been convicted in the court. He was a man who,’ as I have said, worked in the mines for his living, and who had to leave his home at 6.20 each morning to get to his place of employment. There was another man to whom the inspectors went the same morning. He was not at home, and they asked his wife whether his instrument was licensed.
– What was his name?
– I shall give his name presently. He was himself just as much incensed about the treatment meted out to Matthews as I am. When questioned by the inspectors his wife said that she did not know whether the set was licensed. The .inspectors then told her that they would return later and interview her husband. I do not wish any one. to think that this man was dishonest. He had made only a technical omission. He was not robbing the PostmasterGeneral’s Department, nor had he evaded payment of his licence fee any more than Matthews had. The fact remained, however, that they represented two different classes of society, and they were treated in different ways. The second man went to the post office and obtained his licence in the same way as Matthews did.
– The honorable member might let us have his name.
– His name escapes me for the time being, but I can easily obtain it. He is the manager of the mine; the other man a worker in the mine. When he arrived home his wife told him that the inspectors had called, whereupon he went to the post office and obtained his licence. The inspectors called again, and he informed them that he had obtained the licence; They said, “ You are lucky ; you got it just in time.”
– How long had he had his set?
– He had obtained his set before Matthews got his, and had been using it all the time. If these inspectors are going about the country doing their job in this way, they are not entitled to hold the positions they do. In my electorate the Postmaster-General’s Department has been administered more for political purposes than to meet the needs of the people. I deprecate the action of the inspectors in jumping on these men for such technical breaches of the wireless regulation, particularly in country districts. The PostmasterGeneral is a member of the Country party, the policy of which is supposed to be to give all possible facilities to the people in the country, and to encourage the development of country centres. The action of which I have spoken militates very greatly against the development of wireless in country districts. I have communicated examples of unfair treatment to the Minister. I have made no recommendation whatever, but simply sent on the letters embodying the complaints, as any member of Parliament is bound to do. I have never pleaded any case in which a man had committed a breach for which it was right he should pay the penalty. If the Postmaster-General has officers moving around the country with instructions to obtain convictions at any cost, like an enthusiastic policeman looking for his next stripe, then he should treat all the people alike; the same treatment should be meted out whether a man works in a mine or manages it. I hope the fact that I have ventilated this case will prevent future examples of favoritism, and that the Postmaster-General will see that his officers investigate cases of this kind on their merits.
– Were they the same inspectors who called on both the men who have been mentioned?
– They were the same men, and they called at both places on the same day.
– One law for the rich and one for the poor.
– I do hot wish the matter to be debated any further, now that I have ventilated it. While it is unlikely that Matthews will obtain any redress, I hope that the mentioning of his case will prevent others of a similar nature occurring in the future. So far as I am concerned, if such cases occur in my electorate, I shall always bring them before the House, and endeavour to see that the people receive justice.
– This is a matter which might have been brought up on an ordinary motion for the adjournment of the House. I do not think the formal adjournment motion should have been used for the discussion of so trivial a matter ; because the only object, it appears to me, was to bring the case of Matthews before the House. The duty of this Parliament is to make the laws of the country, and to provide the machinery for carrying them, out; if we were to deal with all the individual cases that are brought before the courts, we should be able to” do nothing else. The case of Matthews was quite clearly put by the honorable member. He stated it as it was put to me, but he did not state the. whole case.’ I wish to say quite definitely tha.t there is no differential treatment whatever in regard to persons with wireless sets without licences. The honorable member mentioned the case of i manager of a mine, a man whose name le does not Know, and he gave no information as to when that man obtained his set. The proof should be given to the House now, and not at a later date. If he had supported his case by stating when the man had obtained his set-
– The honorable gentleman is not putting the case fairly.
-The honorable member is the best judge of how he should present his case.-
– It is unfortunate that many members of the general public have a’ very elastic conscience in relation to wireless licences, and other matters which affect government revenue. They appear to think that it is not a crime to rob the Government. The honorable member said that by the institution of prosecutions against person’s found to be using unlicensed wireless sets the department was militating against the taking out of licences.
– The PostmasterGeneral has admitted it.
– I have not.
– It is stated on official files.
– I shall show the honorable member that the prosecutions have actually resulted in the receipt of many additional applications. The department is not harsh. Prosecutions only occur when an unanswerable case has. been made out that a wireless set has been used without a licence. Our officers do not, as the honorable member has stated, go about prosecuting everybody. Were they to do so Ave should probably lose more cases than we win. We only take to the courts the cases in which we have absolute proof. The following figures will show clearly what has followed the institution of prosecutions. In New South Wales at one period the number of applications weekly for licences was 2,329 ; but it fell to 523. A warning was then broadcast that persons found to be using sets without a licence to do so would be prosecuted. The number of weekly applications immediately rose to 1,006. A few prosecutions occurred subsequently, and the number of applications then increased to 2,654 weekly. A little later the figure fell to 169 per week. It was then resolved to institute further prosecutions in. cases in which we had absolute proof to submit to the court. Following those actions the number of applications increased to 1,091 per week. This, surely shows the necessity for policing the whole work of broadcasting. If we did not do so, practically no licences would be applied for. The work of policing broadcasting falls upon my department. The number of prosecutions that occurred in 1926 was 427 in New South Wales, and 210 in Victoria. The fines inflicted varied from 10s. to £1 in each case.
– What about the other States 1
– Prosecutions in them were not in the same proportion. Compared with Great Britain we have been lenient, for 579 prosecutions were conducted there last year, and the fine in some cases was £10: It is true, as the honorable member for Werriwa (Mr. Lazzarini) stated, that Mr. Matthews only installed his set on the 1st December, and my officers visited his home on the 6th December and 7th December.
– The set was not installed on the 1st December.
– It was brought from Sydney and installed on the 1st . December.
– It was only partly installed on that date; the installation was not completed until the 5th December.
– The set was installed completely on the 1st December except for the batteries. I did not receive the letter that the honorable member wrote to me in regard to the case until the 17 th December. In reply I told him that I would examine the file ‘to ascertain the position. The file came to Melbourne on the 22nd December, Christmas and New Year intervened, and on the 4th January I had it minuted to the effect that the case should be withdrawn. Unfortunately, the letter did not get away on either that day or the next, and although posted on the Monday, did not reach Sydney in time for the prosecution to he withdrawn. However, Matthews had the opportunity of which I suppose he availed himself, of appearing in court and stating his case. The magistrate saw fit to impose a fine of £1. If Matthews was not satisfied with that decision he could have appealed to a higher court. I am prepared to admit that in a case in which a man had his set for only a week it was something like harsh treatment to proceed against him, for he may have been merely trying it out. But I do not think it would be wise on my part to remit the fine, as there is no doubt that a breach of the regulations, did occur.
– But the Minister evidently recognizes the fairness of the claim for its remission.
– I have communicated with the inspectors who are travelling in the district mentioned by the honorable member for Werriwa, and I have ascertained that only one summons has been withdrawn in it. Prosecutions have occurred in every other case in which they were recommended. I do not know why the one case was withdrawn. It is absolutely essential that the department should police broadcasting to ensure that licences are obtained by those who listen in, otherwise the revenue would suffer so badly that the broadcasting companies, especially in the States in which not many licences have been issued, would not have sufficient money to arrange reasonably good programmes.
.- It was not the desire of the honorable member for Werriwa (Mr. Lazzarini) that there should be a long debate on this matter, and I certainly had no intention to participate in the discussion until certain remarks were made by the PostmasterGeneral (Mr. Gibson).
Motion (by Mr. Bruce) proposed -
That the question be now put.
The House divided -
Question so resolved in the affirmative.
Question - That the House do now adjourn - put. The House divided.
Majority . . . . 15
Question so resolved in the negative.
Prime Minister’s and GovernorGeneral’s Residences - Land Statistics and Valuation.
asked the Minister for Home and Territories, upon notice -
Whether additional accommodation is being erected in connexion with the Prime Minister’s residence at Canberra, and, if so, what is the amount of expenditure involved?
– No additional accommodation is being erected in connexion with the “ Prime Minister’s residence at Canberra.
asked the Minister for Home and Territories, upon notice -
With reference to the reply given to the question asked by the honorable member for Reid, on 18th November, 1927, concerning the cost of the construction of residences for the Governor-General . and the Prime Minister, did the costs stated include administrative and other overhead costs, and, if not, what was the amount of same?
– The amounts given in the reply of the 18th November, 1927, did not include the whole of the administration and other overhead costs, but showed the expenditure brought to account at that date. As all charges have since been distributed, the final -figures are now available. After allowing for interest during construction, administration, architectural inspections, other minor overhead costs and some small adjustments’ of debits, and credits which had not been effected at the date the figures were previously given, the total cost under the various heads then quoted is as follows : -
asked the Minister for Home and Territories, upon notice -
– The answers to the honorable member’s questions are as follow: -
Approximately 100,000 acres of freehold land have not yet been acquired from private owners, and no valuation has been made of these areas. The Seat of Government (Administration) Act 1910, provides that the value of such land shall be taken not to exceed the unimproved value of the land, or the interest therein of the owner, on the 8th October, 1908, together with the value of his interest in the improvements on the land at the date of the acquisition of the land. Novaluation has been made of . the areas ceded to the Commonwealth by the State of New South Wales.
Mr.FENTON asked the PostmasterGeneral, upon notice -
Whether he will supply the House with replies to the series of questions asked by the
asked the Prime Minister, upon notice -
– - The replies to the honorable member’s questions are as follow : -
The new wireless agreement ratified by Parliament in December last has, in effect, acquired the company’s patent rights for broadcasting purposes, and, so long as part II. of that agreement ‘ continues in operation, no claims can be made on the wireless broadcasting industry for royalties in respect of the use of the company’s patents after the 1st November, 1927.
asked the Treasurer, upon notice -
What was the total amount paid in fees by the Commonwealth Bank to the architects, Messrs. Kirkpatrick and Messrs. Kirkpatrick and Miller, from the inception of the bank to the present date?
The honorable member’s question is being brought under the notice of the Commonwealth Bank.
asked the Treasurer, upon notice -
Mr. BRUCE (for Dr. Earle Page).The answers to the honorable member’s questions are as follow : -
asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Minister representing the Minister for Defence, upon notice -
– The answers to the honorable member’s questions are ‘as follow : - 1, 2 and 3. The seaplane carrier is being fitted with all possible modern fittings.
asked the Minister for. Works and Railw ays, upon notice -
– The answers to the honorable member’s questions are as follow : - 1 and 2. The information desired by the honorable member is contained in the’ following return : -
Taxation Office (Central), Post Office Buildings, Elizabeth-street. C.l.
Custodian of Expropriated Property, 318 Post Office-place. C.l.
Public Service Arbitrator, ‘42 Jolimont- road, East Melbourne. C.2.
Electoral Office, New Commonwealth Offices, Post Office-place. C.l.
Bureau of Census and Statistics, New Commonwealth Offices, Post Office-place. C.l.
Meteorological Bureau, corner of Drummond and Victoria streets, Carlton. N.3. . ‘
Victoria Barracks, St. Kilda-road. S.C.I.
Marine Branch (Navigation and Lighthouse Services ) , Central; also Victorian section of Lighthouse service, 35 Willsstreet. C.l.
Mercantile Marine Office, Customs House, William-street. C.l.
Victorian Staff, Customs House, Flindersstreet. C.l.
Analyst, Customs House, Flinders-lane. C.l.
Works Branch, Victorian Section, New Commonwealth Offices, Post Office-place. C.l.
Lands and Surveys Branch, Post Officeplace. C.l.
Victorian Administration, G.P.O., corner ofBourke and Spencer streets. C.l.
asked the AttorneyGeneral, upon notice -
In view of the many murders lately reported in the several States, is it the duty of the Commonwealth Government to take a hand in their suppression, or to obtain punishment by the offering of a substantial reward in each case, on such terms as the Government may think fit?
– No. The matter does not fall within the constitutional power of the Commonwealth.
Passengers - Speed and Steaming Radius - Armament
asked the Prime Minister, upon notice -
What was the number of passengers carried by the “Bay” steamers (a) overseas, and (b) . coastwise, for the year ended 31st December, 1927 ?
– The answers are as follow : -
To United Kingdom. - Number of oversea passengers carried, 4,885.
To Australia. - Number of oversea passengers carried, 10,346.
Totai number of coastal passengers carried, 12,350.
asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follow : -
Bays,” steaming at 14 knots, 43 days; equivalent to 14,450 miles. “ Bays,” steaming at 161/2 knots, 30 days, equivalent to 11,880 miles. “ Dales “ steaming at 12 knots, 68 days; equivalent to 19,584 miles. “ Dales,” steaming at 14 knots, 49 days-; equivalent to 16,464 miles. “Dales,” steaming at 16 knots, 36 days; equivalent to 13,824 miles. 3, 4. It is not considered advisable, in the public interest, to make this information available.
– I desire to . inform honorable members that a highly distinguished aviator, Captain Herbert Hinkler, A.E.C, is within the precincts of the House. With their concurrence, I propose to invite Captain Hinkler to take a seat on the floor of the House beside the Speaker’s chair.
Honorable Members. - Hear, hear!
Captain Hinkler thereupon entered, the chamber and was seated accordingly.
asked the Minister for
Works and Railways, upon notice -
When will an answer be supplied to the question asked by the honorable member for Reid, on 30th November, 1927, concerning the cost of the maintenance of Vice-Regal residences ?
-The information is being obtained, and will be furnished at the earliest possible date.
asked the Minister representing the Minister for Trade and Customs, upon notice -
Mr. BRUCE (for Mr. Pratten).The answers to the honorable member’s questions are as follow : -
asked the Minister for Markets and Migration, upon notice -
Mr. BRUCE (for Mr. Paterson).The answers to the honorable member’s questions are as follow: -
Statement of claim.
High Court proceedings -
Statement of claim.
High Court proceedings -
Statement of claim.
There are other papers, suchascasessubmitted for the opinion of counsel, the advice of counsel,’ and other confidential documents relating to the litigation which are not tabled. It has never been the practice to disclose such documents for publication.
The following papers were presented -
Defence Act - Regulations Amended - Statutory Rules 1928, Nos. 17, 19.
Naval Defence Act - Regulations Amended - Statutory Rules 1928, No. 18.
Northern Australia Act -
Central Australia-s-Ordinance of 1928 - No. 1 - Licensing.
North Australia-Ordinance of 1928 - No. 1 - Licensing.
Seat of Government Acceptance Act and Seat of Government (Administration) Act - Ordinances of 1928-
No. 3 - Trespass on Commonwealth Lands.
No. 4 - Apiaries.
No. 5 - Methodist Church Property.
No.6- Industrial Board.
Debate resumed from 9th March, (vide page 3789) on motion by Mr. Bruce -
That the bill be now read a second time.
Upon which Mr. Charlton had moved by way of amendment -
That all the words after the word “ That “ be omitted with a view to insert in lieu thereof the following words: - ‘‘the bill, involving as it does an alteration of the Constitution, be postponed until Parliament has had an opportunity to discuss a comprehensive scheme of constitutional reform, including the evidence taken before the royal commission now sitting and its proposals when made.”
. - On Friday last, when I obtained leave to continue my remarks, I was dealing with certain quotations made by the honorable member for Bass (Mr. Jackson) from the speech of Mr. Andrew Fisher when Leader of the Opposition in this House. I then quoted from the same speech a number of extracts which, I think, entirely disproved the deductions made by the honorable member for Bass. Mr. Fisher did, at the time, say that he was prepared to allot £5,000,000 per annum to the States, but. we must put in conjunction his statement that the Commonwealth could take ‘Over something like £150,000,000 or £160,000,000 of State debts and pay interest thereon, and in addition control State borrowing. I have been reading a portion of the debates on the financial agreement that took place in the Victorian Parliament. Although that Parliament accepted the proposals of the Commonwealth Government by a majority of fifteen or sixteen, the speeches of the Premier and the Leader of the Opposition’ indicate that they accepted the agreement simply because there was nothing better offering. I believe that the State Premiers generally would much prefer the per capita payments to continue. Prior to Federation the New South Wales Parliament inserted a provision in its referendum act that unless the Constitution were accepted by a certain majority the vote so far as New South Wales was concerned would be null and void. When the vote was taken, that majority was not attained, and therefore it was necessary for the representatives of the States to meet again. I might state that the Convention Bill practically provided that the States should for all times receive three quarters of the customs and excise revenue. I am pleased indeed that that legislation was not carried because I believe that as the years go by it will be necessary for the people to clothe the National Parliament with greater powers, with a consequent reduction of the powers of the States. We should do nothing to leg-rope the Commonwealth Parliament or to handcuff the people of Australia, who should at any time be able to so alter the Constitution as to give greater power to the Commonwealth. One of my objections to the present agreement is that it will bind the Commonwealth and the States to a certain course of action for a period of 58 years. That will certainly be a serious handicap to the people of Australia.
They should be free, and not bound by an agreement that will prevent them from incorporating better and wiser provisions in the Constitution. I shall read one or two quotations from a speech of the Premier of Victoria to show that although the Financial Agreement Bill was carried in that State by a large majority, he would have much preferred the continuation of the per capita payments. He said : -
On the 2nd March of this year the Prime Minister proceeded with the Bill providing for the abolition of the per capita payments, and this Bill was agreed to by both Houses on 22nd March, 1927 (Act No. 4 of 1927). The States were thus finally deprived of any share of the customs and excise revenue. . . Act No. 4 of 1927 had been passed by the Commonwealth Parliament and its action was constitutional. The per capita payments were to be stopped after this year, and the Commonwealth was tendering a promissory note for handing over a mythical surplus. This Government, as well as other State Governments, had to make the best of the situation.
He was evidently driven to making that recommendation.
y. - They all were.
– I quite agree with the honorable member. In fairness to Mr. Hogan, let me quote further from his remarks: -
In conclusion, I wish to point .out how unreliable to. the States is any source of income over which the Commonwealth Parliament has unfettered control. State Premiers and State taxpayers have for years lived on the edge of a volcano, in regard to any financial decision of the Commonwealth Parliament. Now we know where we are, and State Premiers will have no excuse if they fail to pursue a definite line of policy, knowing to what extent their future revenue will permit.
I now intend to quote from the same copy of Hansard certain remarks by the Leader of the Opposition in the Victorian Parliament, Sir William McPherson, who opposed the bill. Speaking of one conference, which he attended as Treasurer of Victoria, he said -
The Prime Minister .(Mr. Bruce) came to the conference in - I do’ not want to say anything that is not correct - a not very- conciliatory mood. He said., “ We are determined that this per capita grant shall cease.” The Premiers felt that they had to do something. Admittedly, the Federal Parliament had it .in their power to abolish the per capita grant. . . . The Premier referred last night to a statement made by the Queensland Premier that the States practically agreed in 1923 to the abolition of the per capita grant. We were driven to do it. We were told that the per capita grant would be taken away. We had no choice in the matter. “ But,” we said, “ if YOU are going to do that, get out of the field of direct taxation altogether.”
I do not think that Sir “William McPherson had any desire to refer in a derogatory way to the two States mentioned by him, but he pointed out that two States, voting with the Commonwealth, could determine the borrowing policy to be adopted on behalf of the whole of the people of Australia. He remarked -
The Commonwealth plus two of the smaller States, namely, Western Australia, which has, I’ think, a population of 320,000, and Tasmania, which has a population of about 250,000, can together out-vote Victoria, New South Wales, Queensland and South Australia, which together have a population of 5,500,000. That does not seem to be right to me. I do not like placing ourselves practically in pawn to the Loan Council.
He also spoke of the Loan Council being a better borrowing authority than the States and the Commonwealth acting independently. We hope that, if we are compelled in future to borrow outside Australia, it will be advantageous to have one borrowing authority for the six States and the Commonwealth; but I doubt if that would enable us to obtain money at a cheaper rate. I am one of those who believe that great steps in the direction of united action have been made in the last few years by those oversea authorities who have money to lend. It will be remembered that, when the honorable member for Dalley (Mr. Theodore) was Premier of Queensland, the moneylenders in Great Britain practically closed the door in his face. He was practically compelled to go to New York to obtain the money required by his State. I understand that a polite request was made to him that certain legislation passed in Queensland should be repealed, and that conditions that were more con- , genial from the point of view of the big squatters should he laid down. It is now a matter of history that, because of the honorable member’s refusal to accede to that unjustifiable demand by persons outside Australia, the money-lenders were influenced, and he had to betake himself elsewhere for loan money. In New York he succeeded in a short space’ of time in meeting his requirements, and I am glad that the Commonwealth Bank, through its agency in New York, co-operated in the matter with the then Premier of Queensland. That proves that Australia has a competitive money market. If the money-lenders in Great Britain refuse to deal in a fair manner with an overseas premier, he can go to a competitive money-lender. I believe that the financial houses of Nivison, in London, and Morgan, in New York, are practically united. When these two great institutions have come to an agreement as to the rate of interest to be charged, the less powerful money-lenders, both in London and New York, have perforce to come to heel. I have no doubt that that combination will be made more secure in future, and even the Loan Council, borrowing on behalf of the six States and the Commonwealth, will have to comply with the conditions that’ it chooses to impose. If the Commonwealth and the States act in unison, through the Loan Council, money-lenders overseas will organize even more actively to see that their interests are protected. Those who have money to lend are naturally more powerful than mere borrowers. The Loan Council has not shown any great fruits of its policy of borrowing on behalf of the Commonwealth and the States. Perhaps it is too soon yet to expect concrete results. The last loan for which we applied was surely a gilt-edged security. The sum of £8,000,000 was asked for. The interest rate was 5 per cent., and the bonds were issued at £98. Those were very good terms, but the great hulk of the loan was left on the underwriters’ hands. Sir William McPherson made an interesting statement in the Victorian Parliament, when the financial agreement was under- consideration. I believe that he was State Treasurer at the time. He referred to a visit paid by him to London. Sir Robert Nivison, now Lord Glendinning, was the head of the Nivison house, and Sir William had a conversation with him about Australian borrowing. Lord Glendinning remarked, “ As far as Victoria is concerned, you could not possibly do any better by linking up with any of the other States. Honorable members may at once retort that Lord
Glendinning is a money-lender, and would prefer to deal with a number of borrowers instead of with one ; but, when it comes down to the final analysis, such men can exercise their power, not only against great corporations, but even against the Commonwealth of Australia.
– The final analysis, judging by recent loans, does not show that the Commonwealth has been borrowing to particular advantage.
N.- That is so. I have just instanced the fact that the great bulk of the money asked for recently in London by the Loan Council was left on the ‘ hands of the underwriters. Much has been said about New Zealand being able to borrow under more, favorable conditions than either the separate. States of Australia or the Commonwealth as a whole. A similar remark is made concerning South Africa. The late Sir Richard Seddon exercised almost uninterrupted power in New Zealand for about sixteen years. I doubt whether any individual in Australasia, or in any of the dominions ever held sway as he did. His power was wonderful, both in his own dominion and abroad. It is surprising to me that such a little patch of the Empire as New Zealand should be called a dominion. Canada and Australia are large territories, and have considerable populations; but New Zealand is still a comparatively small country. Considering the size of its territory, its resources are remarkable. New Zealand’s present prestige is no doubt due largely to the influence of the late Sir Richard Seddon, and, I may add, parenthetically, that both in regard to imports and exports, the Dominion has enjoyed better tariff conditions than those obtaining in Australia. Largely owing to the influence of that strong man, New Zealand is able also to borrow on better terms than Australia can secure. He was not a powerful orator, but he was a sagacious statesman. The conditions secured by him years ago have, to a large extent, continued to the present time. South Africa is one of the largest gold-producing countries ; and we are fortunate in having practically 80 per cent, of the gold yield of the world within the British Empire. South Africa, because of its wonderful output of gold, even though that is not so great as it used to be in comparison with the total world production, is able to obtain favorable terms when she goes on the markets to borrow. This agreement certainly provides a financial guarantee to the States for a number of years. The greatest inducement held out to the States to enter this agreement was the prospect of having the position defined in regard to borrowing. In this connexion I hope I am a false prophet, and that, if the agreement is ratified by the Federal and State” parliaments, it will have the effect of enabling us to. borrow on better terms, and at a lower rate of interest than now. I am very doubtful, however, that that will be the result. I wish to refer to the Labour platform on this point. The honorable member for Swan (Mr. Gregory) is not in the habit of distributing bouquets to the Labour party; but he did us the honour the other day of quoting from the Labour platform in regard to per capita payments, and he was compelled to state that our attitude on this matter was open and above board.
– I quoted from the Labour party’s platform, because it has been stated in this House that the Government was afraid of what the Labour party might do.
N.- That is so. We are not of the vacillating kind. We are prepared to state our platform and stick to it, and when we get into power we put our platform into effect. That has been our record in every State, and in the Commonwealth Parliament as well. On this subject our platform states -
Until the Constitution is amended in accordance with Plank I. ‘of the general plat- form, the per capita payments to the States to be continued without diminution.
It also provides for the abolition of the Senate. I think that the Senate is demonstrating, day by day, that it is a political excresence, and should be abolished.
Mr. DEPUTY SPEAKER (Mr. Bayley) . - Order!
– Plank I. of the platform sets out that-
The. Commonwealth. Constitution to be amended to provide -
Unlimited legislative powers for the Commonwealth Parliament, and such delegated powers to the States or provinces as the Commonwealth Parliament may determine from time to time:
The Commonwealth Parliament to be vested with authority to create new States and provinces.
The Senate to be abolished.
The High Court of Australia to have final jurisdiction in all Australian causes.
The principle of adult suffrage to be embodied in the Constitution.
The initiative, referendum, and recall.
I know that there are some who will say that we cannot expect to get the whole of our platform at once. If, however, we cannot get all we want for the one asking, we can ask for different things at different times. I do not say that there is any political constitution in the world which would be entirely applicable to a place like Australia. We’ refer sometimes to the Canadian Constitution, and to those of South Africa and Germany, and we have often referred, and continue to refer, to the constitution of the United States of America. I am one of those who regret very much that we followed so closely the lines laid down in the constitution of the United States of America, because I believe that many of bur difficulties to-day-
Mr. DEPUTY SPEAKER.- Can the honorable member connect this with the subject before the House?
– Certainly. The bill contains reference to a proposed amendment of the Constitution. That being so, we may refer to the constitutions of other countries, and to the principles on which our own Constitution was formed. By following too slavishly the lines of the American constitution we opened a way for many of the difficulties which confront us at the present time. It may, of course, be said that when the Constitution was framed 28 years ago there was a good deal of State jealousy, and that State boundaries were very real and very important things. I repeat, however, that when the Constitution was formulated, too strict a regard was paid to what were called State rights, and to’ those things pertaining to the States. If our Constitution had been patterned on the right principles we should, from the inception of federation, have enjoyed much larger powers in the National Parliament, and we should have delegated certain limited powers to the States.
Those who framed this agreement did so with the object, among other things, of obtaining loan moneys at cheaper rates than- at the present time. It appears to me, however, that we are beating against a stone wall in making these little tiddley-winking efforts at economy, efforts which perhaps cut off a million here or a few thousands somewhere else. There is only one way to effect economy. Not until we reduce the status of the States, abolish existing State boundaries and create new States, and give this Parliament greater powers can we effect the economies which are needed. There is one country which furnishes a striking example of the wisdom of those who framed its constitution. I refer to Canada. The constitution of the United States of America was drawn up by Washington and his associates in 1787. Canada did not see fit to enter into the federal’ form of government until 1866, or 79 years after the constitution of the United States of America had been signed. Did the Canadians follow slavishly the constitution as evolved by the Americans? No. I do not say that we should follow the Canadian system too closely, to the extent of having a nominee upper house, nor need we have followed it to the crossing of a “ t “ and the dotting of an “ i “ in other directions. It remains true, however, that the Canadians passed the American system by, and adopted one that gave the federal government greater powers than ours possesses. If the framers of our constitution had been wise in their day and generation, they would have framed it more on the Canadian system, and less on that of the United States of America. There are people who say that the States will receive great benefits at the hands of the Federal Government as the result of this agreement. Figures were quoted by the honorable member for Perth to disprove that statement, and these . figures will bear repetition. I thought when I first heard them that they might, perhaps, have represented merely the deductions of the honorable member himself, but since then he has handed me a statement compiled by the Commonwealth Statistician, Mr. H. L. Wickens. These figures may not be true to the last detail, but when you arrive at a total of £823,000,000 in the one case, and £440,000,000 in another, the statement is sufficiently startling even after allowance is made for possible inaccuracies. The statement covers a period of 58 years, and sets forth what the various States will receive under the proposed agreement, and what they would have received under the per capita system of payment at the rate of 25s. a head, assuming a uniform rate of increase in population. Under the per capita system, New South Wales would receive £336,000,000; under the present arrangement she will receive £169,000,000 or £167,000,000 less.
– And that is more than she is entitled to.
N- That is the honorable member’s opinion. We are now dealing with a financial arrangement which will run on for a period of 58 years. In Victoria under the old arangement we should receive £190,000,000; under the agreement we shall receive £123,000,000 or £67,000,000 less. Queensland would have received £132,000,000 under the per capita payment, but under the proposed system she will receive only £64,000,000, representing a loss of £68,000,000. South Australia would have received £72,000,000 under the old system but will now receive only £41,000,000, a reduction of £31,000,000. Western Australia would have received £73,000,000, but will now receive only £27,000,000 or £46,000,000 less. Tasmania would have received £20,000,000 under the old system, but will get only £15,500,000 under the present proposal, representing a loss of £4,500.000. The States would have received £823,000,000 in the next 58 years had the per capita payments been continued at the old rate; but if these proposals are ratified they will receive only £440,000,000, or a little less than half the amount due under the per capita arrangement. I am not an upholder of State rights, and have no time for those who can see only as far as State boundaries ; but I fail to understand how any honorable member who claims to be concerned about the interests of the States can honestly argue that the acceptance of this agreement . will increase their financial stability. From that point of view, these proposals are a menace to the States. The figures which Mr. Wickens supplied to the honorable member for Perth are enlightening on that aspect of the subject, and should certainly have been placed before the House by the Prime Minister when he moved the motion for the second reading of the bill. As I have said on other occasions, I refuse to be limited by State, boundaries in considering a subject of thisdescription. I have been called aunificationist, though I am not preparedto admit the justice of attaching suchatag to me. My opinion is thatthetime has arrived when Australia should be divided into a large number of provinces, each of which should be granted a substantial measure of self-government, while the Commonwealth Parliament should be made the sovereign body.I do not consider that to be unification. If other people think it is, and describe me as a unificationist for holding such views, I shall not be greatly disturbed. I am firmly of the opinion that many of the great departments which the States at present manage should be placed under the control of the Commonwealth. It has been demonstrated, ever since federation, that the Commonwealth is able to manage a huge undertaking like our Postal Department, the ramifications of which extend to the smallest village of the Commonwealth, far more effectively than it was managed in the old days by the different colonies; and I can see no reason why it should not also manage, with similar success the railways of the Commonwealth, and other big undertakings, which the States at present control.
– The honorable member wants more centralization, and not decentralization.
N.- That is not so. I should be prepared to give to the bodies which would be set up in the provinces far more effective local governing powers than are enjoyed by the people at large at present. I am aware that some honorable members disagree with my views, and with the Labour party policy generally, in this regard, but I believe that if they were adopted the Commonwealth would reap a great advantage. It is peculiar to me that at the very time when the Government has a royal commission of its own appointment making inquiries into constitutional affairs as they affect the Commonwealth and the States, it should have introduced this proposal, which we all realize involves an alteration of the Constitution. We may assume that, sooner or later, the report of the commission will be presented to’us, but if we pass this bill our hands will be tied, at least in respect of financial matters.
– The commission’s report could be considered upon its merits.
N.- Not if . we had already agreed to a proposal of this, description. The promise the Government made during the last election campaign that a constitutional session would be held has not been fulfilled. I submit that on that account the Ministry merits severe censure. We have been told that we should accept this scheme because it has been approved by the States. My reply is that the State premiers could not have done other than accept it. The Government, by abolishing the per capita payments, made acceptance of the scheme almost compulsory for the States. I am of the opinion that a much more effective scheme could be devised which would be accepted voluntarily by the States. I am glad that the people will be given the opportunity of expressing their opinion on these proposals, for I believe that they will reject them. The people of Western Australia may certainly be trusted to do so, and I think that the electors of some pf the other States will be almost as emphatic in their views as those of Western Australia. If my expectation is fulfilled we shall find ourselves, probably during 1929, considering in this House in the light of the defeat of this scheme by the people, and of the report of the constitutional royal commission, the formulation of some acceptable scheme of financial readjustment. If we start de novo we should be able to make proposals which- will be far more beneficial to the country at large than these are, and more in keeping with the aspirations of the people of Australia.
.- I can quite understand certain honorable members who hope to serve the best interests of the Stateswhichthey represent by strongly opposing the ratification of this agreement on the ground that it is not sufficiently generous; but I cannot believe that the Leader of the Opposition (Mr. Charlton) can serve any useful purpose by postponing consideration of the legislation now before the House. We cannot overlook the fact that the premiers of the Labour-governed States of the Commonwealth have already given their approval to the scheme. Considerable time has elapsed since the Prime Minister introduced this . bill, so that it might be well if I repeat what the Government intends to achieve with this legislation. Briefly, the proposals could be summed up as follows: -
The Government is now asking Parliament to ratify the agreement that has already received the approval of the State governments. The proposed legislation now before the House has been described oya number of honorable members, and also by the press, as the most important financial measure yet submitted to the Commonwealth Parliament. The Prime Minister stated that the bill provides for the permanent and amicable settlement of a very vexed question. Probably no other matter has caused greater confusion and discord between the States and the Commonwealth, and the BrucePage Government is entitled to much credit, because it had the courage to propose and secure the repeal of the Surplus Revenue Act 1910, in March of last year, under which the per capita payments were made. The Prime Minister, in his speechon the bill now before us, gave a useful historical review of the financial relations of the States and the Commonwealth since federation. Many conferences have been held, and many proposals suggested to remove the difficulties that have arisen from time to time. It was originally recognized that, if the States were to’ preserve their independence, adequate financial provision would have to be made to enable them to meet their commitments. As a result they were allotted threefourths of the customs and excise revenue of the Commonwealth for the first ten years from the inauguration of federation. That arrangement worked excellently, and at its expiration it was decided that a per capita payment of 25s. should take its place for the succeeding ten years, and afterwards until the Parliament should otherwise provide. That arrangement also worked satisfactorily; but in 1919, the right honorable member for Balaclava (Mr. Watt), then Commonwealth Treasurer, submitted a proposal to the States under which the per capita payment should diminish at the rate of 2s. 6d. per annum until it reached the minimum of 10s., and then remain permanent. That arrangement was not acceptable to the States, and settlement of the matter remained in abeyance until 3923, when the Bruce-Page Government called a conference of State and Commonwealth Ministers, and put certain proposals before the States. The States submitted counter proposals, and no agreement was arrived at. In 1926 the States took the attitude that they had a moral right to the continuance of the per capita payment of 25s. for all time, and absolutely refused to discuss any substitute proposals with the Commonwealth Government. The next conference was held in 1927, as a result of which the Commonwealth Government decided that it was necessary to force the hands of the States by repealing the Surplus Revenue Act of 1910. That proposal brought about a very spirited debate in this House, opposition to it emanating from honorable members on both sides, and from a section of the press. The Government, with commendable determination, pursued its intended course, with the result that another conference of State and Commonwealth Ministers was held in June and July of last year, when, after amending the proposals submitted, the agreement embodied in the bill was accepted by the States. While honorable members are quite right in endeavoring to safeguard the interests of their States, they pay the State Ministers a doubtful compliment by indicating that they do not know what they want, and suggest that they have been imposed upon by the Commonwealth Government.
y. - That is scarcely a fair way to put the position.
– That is what the statements of honorable members who are opposed to the agreement amount to. That the States were justified in opposing the proposals of 1909, 1919, 1923 and 1926, is best proved by the more satisfactory character of the arrangement that they have since been able to make. The effect of the present agreement is to maintain for the States for a period of 58 years a guaranteed payment of 25s. per head of the present population. These payments do not take the form of per capita grants; -but the amount will be quite as serviceable to the States. I am unable to understand some of the objections of honorable members, as, although the scheme imposes certain conditions, it is none the less acceptable to the States. The State finances will be much better off for a number of years than they now are under the per capita system. I admit that, finally, the Commonwealth Government will benefit, but the chief merit of the agreement is that it makes a permanent settlement of the financial difficulties existing between the States and the Commonwealth. The larger States, New South Wales, Western Australia, Queensland, and South Australia, will need a great deal of money for developmental purposes ; but, if satisfactory progress is to be made, they must have additional population. If our tariff wall can ever be made effective by the sympathetic co-operation of Labour and Capital we may expect pur industries to develop and absorb ever increasing numbers of workers from overseas. It lias been stated that the population of Australia has increased by 50 per cent, during the last 29 years. If we assume that our population will increase at the same rate during the next 29 years we shall then have 9,000,000 people in Australia while, at the end of the 58 years covered by this agreement, we shall have at least io,000,000. Taking 9,000,000 as the average population for the period of 58 years, the existing per capita payments would amount to £11,250,000 per annum, while the payments under the proposed agreement would amount to £7,500,000. Obviously, the Commonwealth would obtain an advantage, but it cannot be denied that the surplus which the Treasurer has enjoyed year following year has been made possible only because of the huge revenues obtainable from the Customs Department. It is abundantly clear that they cannot continue - if protection has all the virtues that have been claimed for it. I believe that the policy of protection will develop our secondary industries, so that we shall have manufactories able to compete favorably on a price and quality basis, with overseas competition. But the success of the policy of protection will necessarily . decrease our customs revenue, and make it impossible for the Commonwealth Government to continue to make the present per capita payments. That is a good reason why the Commonwealth should seek to make a new arrangement, but other reasons were advanced ‘ by the Prime Minister. The right honorable gentleman gave as his three principal reasons: first, the objection to one government receiving revenue by means of taxation and handing it over to another government to expend. Second, that the Commonwealth Government considered it desirable to avoid double taxation. Third, and mainly,- that the States should not be left to depend for their finances on a chance majority in the Commonwealth Parliament. It would be possible for any government holding the same views as the honorable member for Maribyrnong (Mr. Fenton) to enforce unification of the States by means of financial strangulation. No doubt the representatives of the different States appreciated the force of the Prime Minister’s reasoning and were content to accept the present scheme. Labour and other Premiers have been condemned for consenting to what has been termed to be a bad arrangement for their States. I shall quote the opinion of the Premier of Queensland, Mr. McCormack, who, when presenting his financial statement in the Queensland Parliament in October of last year, said -
The ‘proposed agreement for the adjustment of the financial relations between the Commonwealth and the States will mark a very important point in Australian history. I am satisfied that the arrangements which it is proposed, to embody in the agreement are sound in principle, and will prove of distinct advantage to the States. Of the results which will be achieved by the proposals, perhaps that which affords most grounds for present gratification is the settlement of the very uncertain situation which has existed in recent years as regards the Commonwealth Government’s intentions with respect to its financial relations with the States. Furthermore, the transferred properties problem, which has been in the realm of uncertainty ever since the Commonwealth was established, will be solved satisfactorily. There is no doubt the credit of the States will be considerably enhanced by the establishment of public debts sinking funds on a definite basis, in addition to which very great advantage should accrue from the proposed system of uniform borrowing through the Loon Council.
Owing to the absence overseas of the Premier, the Secretary for Agriculture, Hon. W. Forgan Smith, represented Queensland at the July conference between Commonwealth and State Ministers, and on his return to Brisbane made this statement in. the course of an interview -
I think it must be admitted that these important proposals should be regarded from the Australian point of view, and not merely in a parochial spirit, or in the light of any advantage which one particular State may gain more than another. I adopted this mental attitude in the discussion which took place, and I am glad to say that a similar spirit seemed to actuate the Prime Minister and the Premiers of the other States. I am extremely gratified that an amicable arrangement has been arrived at tentatively between the Commonwealth and the States for the settlement of the very important question of the per capita payments, and I am convinced that if the arrangement is finally accepted, the question will be settled to the advantage of the States.
When one realizes that nothing apparently could have prevented the Commonwealth Government withdrawing these payments completely, and when it is borne in mind that the proposals assure a fixed payment by the Commonwealth to the States on account of interest on the public debt for the next 58 years, the Governments of all the States must feel immensely relieved to know that the menace which has threatened them for so long should now be’ removed. In addition to a continuance of an equivalent amount of the present per capita payments towards the payment of interest, the Commonwealth proposes to share with the States in the provision towards sinking funds for the existing and future public debts of the States.
– What humbug that is!
Y. - Prominent politicians in the Western Australian State Parliament have spoken in similar terms, and I do not think they would appreciate the honorable member’s description of their remarks as humbug.
– Why did the Commonwealth Government alter the proposals it made to the States prior to the conference in July last.
Y.- The reason is obvious. I have studied the proceedings of all the conferences on this subject, and I think that the opposition of the States to the proposals of the Commonwealth was justified, inasmuch as the longer they waited the better bargain they were able to obtain. It was apparent’ to everybody that in July last the Commonwealth Government would have to make more generous proposals than those which were discussed in this House in the preceding March.
– And in the meantime this Parliament had discontinued the per capita payments.
Y. - Yes, and I supported the Government in. that action because I thought that the States should be convinced that the per capita payments as such must cease otherwise these conferences might be continued without result for the next 50 years. A decision was so vitally necessary that the Government was justified in taking a definite, if somewhat drastic step in’ order to reach finality. When recommending this agreement to the members of the Queensland Parliament, Mr. McCormack said -
I think there can be no doubt that the people of Australia will give the Commonwealth the necessary power, and that, therefore, the agreement will be permanent, and much benefit will result to the States and the Commonwealth from the stabilization of the finances.
I am sure the honorable member for Swan does not regard the stabilization of Australia’s finances as humbug.
– The State representatives did not say that when they were in conference with the Prime Minister and Treasurer.
Y. - Probably not, but” the fact that they accepted the agreement is proof that they were quite content with the arrangement. During this debate a suggestion has been made that the State Premiers and Treasurers were concerned only in securing an arrangement that would be beneficial to the States for the next few years, during which time those gentlemen would have administrative responsibility.
– The statement has not been made in that form.
Y.- That is exactly what has been said. The inference to be drawn from such a statement is that the Commonwealth Government is prepared to embarrass Commonwealth finances during the next few years in order to benefit the States. The opponents of this agreement must see that their argument cuts both ways. I would be very loath to believe that the State representatives at the conferences consented to do other than what they believed to be in the best interests of the people. They were anxious to arrive at an agreement that would give to the States a permanent measure of financial security. The agreement that was reached was approved, not only by the governments that were parties to it, but. also by their parliamentary opponents. The Leader of the Opposition in the Queensland Parliament (Mr. Moore) said, in the course of the debate on the bill for the ratification of the agreement -
The tremendous expenditure involved in the war, repatriation, ami war pensions certainly necessitated a firm basis on which the States and Commonwealth would be able to come to an agreement. There is no doubt that the abolition of the per capita payments was a certainty within the next ten or twenty years. When the bill to abolish the per capita payments was before the Federal Parliament, Mr. Charlton, the Leader of the Federal Labour party, made a very suggestive statement. He said that at the time the proposal to abolish the per capita payments was made it was unjustifiable, unless the Prime Minister had some large scheme of social reform costing a lot of money at the back of his head. Mr. Charlton practically indicated that he had some large scheme of social reform at the back of his head which he would have introduced if lie had been Federal Prime Minister, and that he would have provided for the’ necessary expenditure entailed by abolishing the per capita payments.
– The honorable member can not have read the Labour party’s platform.
Y. - The Leader of the Opposition in this House made that statement; and the Prime Minister, anxious to safeguard the interests of the States, said that his Government was not prepared to leave this matter to be determined by a chance majority in this Parliament.
– Having regard to the enormous amount of customs revenue, why take this step now?
Y.- Logically, it should matter little to the States whether our fiscal policy is protection or freetrade. If protection is effective the present large revenue from customs duties will not continue. If, on the other hand, a freetrade policy were adopted no revenue would be available through the customs. It is obvious, therefore, that the huge customs revenues cannot continue, and that is a very good reason why some definite arrangement should be made at the earliest possible moment. Another member of the Opposition in the Queensland Parliament (Mr. H. M. Russell) said -
The scheme embodied in this agreement is one which exceeded our wildest hopes. That is why it is so widely acclaimed in Australia and applauded by all shades of political thought. It is one to which we can all assent. So far as I can gather, little or no opposition has been shown to the proposal.
The Secretary for Agriculture. - It is a very sound Australian policy.
Equally emphatic declarations of approval have been made by members of other State Parliaments, and it is surprising that such objections to this agreement should have been voiced by honorable members opposite. It is significant that the agreement was unanimously accepted by members of the Queensland Parliament in December last.
The arrangement in regard to transferred properties is a satisfactory settlement of a long outstanding problem, and must afford general gratification. These properties have an agreed value of £11,000,000, on which the Commonwealth has been paying 3$ per cent, interest. The States have continually complained that the rate of interest was too low, and under this agreement the Commonwealth has promised to increase the rate to 5 per cent., which will cost the Commonwealth Treasury an extra £163,000 per annum. We should give credit to the State Administrations for their far-sighted policy in earlier years in reserving important areas of land for public purposes. As a member of the Public Works Committee I know that that policy has saved the Commonwealth tens of thousands of pounds in connexion with the acquisition of sites for public buildings. While it is right that the Commonwealth should increase the rate of interest on the transferred properties, the States gain nothing by retaining the titles. It would be of advantage to both parties if the States would agree to transfer these properties at the agreed value to the Commonwealth, which would take over an equivalent amount of State debts.
Another commendable feature of the agreement is that providing for the adjustment of the financial relations of the Commonwealth and States by the creation of a loan council. It is proposed to give constitutional authority to that body to arrange for all future borrowings of the States, including conversions, redemptions, and consolidation. The importance of this loan council cannot be overestimated, and the proposal to place it upon a constitutional basis will not fail to obtain the approval of the people. This step in conjunction with the definite policy proposed with respect to sinking funds must have a beneficial effect upon Australian finance. It is true that the various proposals will require an amendment of the Constitution before they can become permanent, and” for that a referendum will be necessary.
– There will be no opposition to it.
Y.- There should not be any doubt about the issue, and having regard to the facts that the agreement has been hailed with approval by all sections of the people, it is unthinkable that the threats of opposition from some honorable members in this Parliament will be carried into effect.
I cannot support the amendment moved by the Leader of the Opposition, because I think the settlement of this financial question is too important to be mixed up witb other issues. Finance was one of the most difficult problems that confronted the framers of the Constitution, and from the early days of federation has been the cause of constant confusion and discord. To wait until the Constitution Commission had reported to Parliament, and action could be taken in accordance with that report would be to lose a splendid opportunity to give effect to the scheme contained in the bill. “With the States and Commonwealth Parliaments in cordial agreement the present satisfactory arrangement should be placed before the people for approval at the earliest possible moment - certainly not later than the next generalelection. With the Commonwealth and the States in agreement, I cannot think that any honorable member, considering his responsibilities, would attempt to go on the platform and discourage the people from accepting the financial agreement. Our experience of referendums in Australia has been unfortunate. From time to time the Commonwealth Government has submitted to the people proposals that it would have been in their interests to accept, but there has always been a division of opinion. Honorable members opposite have not directly opposed the bill. All’ that they ask for is its postponement until the’ report of the Constitutional Commission has been received. I trust that they will reconsider their attitude and assist in passing the bill.
.- The honorable member for Lilley (Mr. Mackay) has stated that the bill has not been opposed by honorable members on this side. He evidently failed to follow the remarks of the honorable member for Maribyrnong (Mr. Fenton), or else was absent from the chamber when that honorable member was speaking. I shall make at least the second member on this side who is opposed to the bill. The Prime Minister, in his second reading speech on the 14th December last, stated that this was without question the most important financial measure that had ever been submitted to the Federal Parliament, embracing as it did the financial relations of the Commonwealth and the States.
is.- That is quite true.
Mr. A. GEEEN. - I agree entirely with the honorable gentleman. This bill is so important that honorable members behind the Government should be making a greater study of it than they apparently are doing to-day. I consider this bill entirely from the point of view of Commonwealth and State functions. At the risk of being ca.lled a States-righter, I say that the functions of the States are altogether supreme to those of the Commonwealth. The Commonwealth has control of defence, which I admit, if Australia were threatened by enemy invasion, would be of supreme importance. The Commonwealth also shapes the tariff. lt carries out the important public function of controlling communication by telegraphs, telephones, and mails. It deals with our trade abroad, and its duty should be, and would be if the Labour party were in power, to promote the Australian national spirit. Without detracting from the importance of the Commonwealth’s share in our national life, I claim that the States arc more closely connected with the daily and economic needs of the people, and, therefore, their functions are of more importance than those of the Commonwealth. First of all the States control the lands upon which our great primary industries rest, and from which our products are raised. The Government that has possession of the land essentially occupies the primary position so far as the welf are of a country is concerned. In addition, the States control transport, including the railways which carry our products to the seaboard; education, which moulds the minds of our citizens of to-morrow; mineral wealth, timber resources, water supplies, and finally, the dispensation of justice. The breadandbutter needs of the people are essentially in the hands of the States. The founders of the Constitution had this in mind. Probably more of their time was taken up in dealing with the financial relations of the Commonwealth and the States than with any other question. For ten years, from the beginning of federation, under section 87 . of the Constitution, known as the “Braddon Blot,” the States received three-quarters of the customs and excise revenue. Since then the tendency of the Commonwealth has been, like Oliver Twist, to ask for more and more.
Section 87 also provided that not more than a quarter of the customs and excise revenue should be applied annually by the Commonwealth towards its expenditure, the balance to be paid to the States or applied towards the payment of interest on debts of the States taken over by the Commonwealth. The Surplus Revenue Act of 1910 provided for a per capita payment of 25s. until Parliament otherwise provided, which was a less satisfactory arrangement for the States. They, of course, were not consulted, because the Commonwealth had supreme power. My experience as a member of a State Parliament is that the States have constantly tried to solve the problems of finance and land development, but they have been hampered at all times by insufficient revenue. Notwithstanding that, the Commonwealth has, since 1910, endeavoured to filch portion of- the revenue that has been apportioned to the States. In 1919 the States were invited. to meet in conference, and it was proposed by the then Treasurer, Mr. Watt, that,the per capita payment should be diminished by 2s. 6d. fer annum until it was reduced to 10s. do not say that Mr. Watt was not, from his point of view, justified in making that proposal, because at that time Australia was incurring a huge war expenditure, and the Government had no idea of the ultimate expense. It was absolutely essential to meet our obligations, and therefore Mr. Watt was probably justified in making his proposal. Much water has run under the bridges since 1919. . The States continued to receive the per capita payments, but instead of the Commonwealth suffering financial disability, we find that the Treasurer has, for years past, been in the happy position of being able to throw bouquets at himself. He reminds me of a prosperous company promoter at a directorate meeting saying, “ Gentlemen, I have much pleasure in being able to announce another generous dividend.” In 1923 the Prime Minister brought forward counter proposals that were not accepted by the States. At various times the representatives of the States have, at the behest of the Prime Minister, had to journey from remote parts to Melbourne to consider the Shylocklike proposals advanced by him as maximum payments to the States. The State representatives were uncertain of their position, and it was only after the per capita payments were abolished that they agreed, under duress, to the financial agreement that is now under discussion. In 1926 the Prime Minister met the representatives of the States and submitted proposals to them which were refused. He painted with glowing colours a picture of the benefits that would accrue to the States. It was a case of the monkey and the nuts - two for you two and two for me too. The Commonwealth Government was, according to the Prime Minister, burning with the desire to make a financial sacrifice. It cannot be denied that the right honorable gentleman in the Federal Parliament fried to prove to Australia, if not the world, that the States were to receive a very fair deal indeed. However, the press of Australia denounced the proposals, and they were withdrawn. Last year the Prime Minister abolished the per capita payments and . there was nothing left for the States but to accept an alternative arrangement. The honorable member for Lilley (Mr. Mackay) pointed out that the Premier of Queensland had told the people of Queensland that it was a satisfactory agreement, and that Mr. Forgan Smith, of Queensland, had said that it would undoubtedly help Australia as a whole. The honorable member would have been wiser to quote the statements of the State Premiers when they were in conference with the Prime Minister discussing these proposals. Every State Premier, with the exception of perhaps the Premier of Tasmania, opposed them, and endeavoured to obtain a more satisfactory arrangement. I admit that under the financial agreement the States will benefit to some extent for the next five years.
– The Leader of the Opposition said that the States would benefit for fifteen years.
EN.- I contend that the States will benefit only for the next five or six years. The Prime Minister has naturally given a reason for the change.
– He has given several, and some of them conflict.
EN- That is so. The attitude that he took up on the 14th December last, in introducing this bill, was different from that adopted in any previous proposal. Prior to that he had said that it was intolerably wrong that one authority should collect money for another to spend. Yet, his present proposal involves the making of grants to the States out of the revenues of the Commonwealth. On the 14th December last the Prime Minister had an after-thought. He remarked, “ This Government does not wish to go out of office and leave the States at the mercy of any chance majority in this Parliament.” I take it that he meant that another party might obtain power, and make an arrangement that might be more detrimental to the States than his proposal. Therefore, he desired to pose as the champion of the States. Mr. J. R. Collins, when Secretary to the Commonwealth Treasury, stated before the “Western Australian Disabilities Commission that it was fully understood by everybody’ concerned that the 25s. per head of the population was to be a final payment. The Prime Minister, however, in introducing the present bill, said he had heard it suggested that legislation had been introduced to repeal the Surplus Revenue Act in order to secure some financial agreement to the Commonwealth. Surely that argument could not be successfully advanced, he added, because each new proposal imposed additional financial obligations on the Commonwealth. If the Prime Minister tells us that this bill involves the Commonwealth in additional financial obligations he is either misleading the House or is not fully seised of the effect of the bill. I prefer to be generous and say that he does not realize the full effect of the measure. The Commonwealth, we are told, is going to take over the State debts. That. is a fairly glib way of putting it, because the States will have to pay their share of the interest, and find security to the Commonwealth for the money borrowed on their behalf. The present debts of the States amount to £641,000,000, The Commonwealth has abolished the per capita payments, and has set aside a sum equal to those payments for last year to pay interest on the current debts as at 30th June, 1927. This amount, £7,584,912, will be paid annually to the States as a lump sum, and the arrangement lasts only for 58 years. The next advantage is that a sinking fund of 7s. 6d. per annum will be established for the liquidation of all State debts as at 30th June, 1927, and to this the Commonwealth will contribute 2s. 6d. per cent., the States paying the other 5s. per cent. That arrangement, also, will come to an end after 58 years, because at that time the State debts as at 30th June last will have been liquidated. Thus two of the Commonwealth payments will have disappeared - the amount substituted for the per capita grant, and the 2s. 6d. per cent, towards the sinking fund. I now come to the third proposal - a sinking fund for all debts contracted by the States on and after 30th June, 1927. This fund is to be provided by the payment of 10s. per cent., to which the Commonwealth will contribute 5s. and the States 5s., and in 58 years the debts will have been liquidated. There is difficulty in ascertaining the amounts to be paid to the States under that heading; but I shall endeavour to show how they would fare under a supposititious case. Further, the interest on the transferred properties is to be increased from 3£ to 5 per cent., that is, the Commonwealth will pay 1-J per cent, more to the States than it previously contributed. In this matter the States may well say, “ Thank you for nothing.” For years they have been trying to obtain a fair rate of interest on the transferred properties. Every State Premier since the war has striven in that direction, and the Commonwealth has consistently refused to come to terms. It might be argued that 3£d. per cent, was a fair’ rate in pre-war. days, but that cannot be contended to-day when the Commonwealth pays 5£ per cent, to the American moneylender. This additional payment by the Commonwealth will mean £163,000 per annum to the States. On the basis of the current State debts, this would involve the Commonwealth in payment of £1,600,000 per annum as its contribution of 5s. per cent, of the State debts. Take a supposititious case in order to see how we relatively stand under the present proposals. It should be remembered that any increase in the amount paid by the Commonwealth would be offset by increased population and increased customs duties 58 years hence. If we did not have increased taxation the position then would be that there would be no per capita payments, but the additional interest charges would amount to £163,865, and the Commonwealth contribution of os. per cent, of State debts would be £1,600,000, a total of £1,763,865. But, under the old arrangement, the per capita payments at that time would have amounted to £7,734,990. Therefore, if there had been no increase in the population at the end of 5S years, the loss to the States would have been £5,971,125 per annum. But something else has to bo said concerning this contribution of 5s. per cent. The Treasurer, according to Hansard of 6th October,, 1927, page 314, said -
Every member was desirous that the States should, as far .as possible, obtain all their requirements in Australia. We were unanimous that the Commonwealth Government should keep out of the Australian market.
It has been said that the margin above which it would not be safe for Australia to borrow in the local market is £10,000,000 per annum. The Commonwealth, therefore, goes to London and New York for its money, and the Australian market is reserved for the States. As the interest on State loans is taxable,the Commonwealth will gain by the investment of Australian money in State loans. I shall now try to determine what this would mean, and use it as a set-off against the 5s. per cent, proposed to b-3 paid by the Commonwealth toward the liquidation of State debts. If a person is to receive £5,000 by way of income from investments in State loans, he needs to have £95,200 invested in bonds at t> per cent. The federal tax on that income amounts to £913, and the Common - wealth contribution to the States would be £23S, so that the Commonwealth would show a profit of £675 ls. 3d., after receiving income tax on the interest from State loans. We can well see, therefore, that under these conditions the investor in State loans would be taxed to supply, either wholly or in part, what the Commonwealth was actually giving in the 5s. per cent., provided towards the liquidation of State loans floated since 30th June, 1927. But an investor finds it necessary to show a profit, and, naturally, he would add accordingly to his tender for the bonds. The States, therefore, would have to pay the piper. Fifty-eight years is a short period in the life of a nation. Let us review the position as it will then appear. The per capita payments have been discontinued, and the payment of £7,584,912 that was to take their place has disappeared. The sinking fund payments on debts contracted prior to the 30th June, 1927, have been discontinued, and all that the States have left to them is the increased interest on the value of transferred property, amounting to £163,S65, and a negligible amount of the 5s. per cent, payment on the existing debts, which will be more than offset by the increased interest which will have to be paid by the States on Australianraised money.
– There is no one simple enough to think that we shall extinguish our debts in 58 years’ time. At the present rate, the debts will be increased.
EN. - No ; but every debt raised under this scheme has to be extinguished in 5S years from the time it is contracted. The estimated population of Australia in 58 years’ time, taking the present rate of increase of 2 per cent, per annum, will be 20,000,000 people. At the rate of 25s. a head this would represent an annual payment by the Commonwealth to the States of £25,000,000. The revenue of the Commonwealth is increasing much faster at the present time than is its population. A per capita payment of £25,000,000 a year may seem an exceedingly large sum, but it is not excessive if we compare the revenues received by the States and Commonwealth with the revenues raised in pre-federation days. ‘ At the existing amount of debt per capita, with a population of 20,000,000, the States would be carrying the enormous debt of £1,792,000,000 in 58 years’ time,, and even on this sum the Federal Government would contribute only £4,500,000 a year under, the sinking fund arrangement, whereas it would be saving, through the abolition of the per capita payments, no less than £20,000,000 a year. It is idle, however, to speculate on the position as it will obtain in 58 years’ time. The strangulation of the States will have occurred long before then if these proposals are persisted in. Long before then the Federal Government must have restored to the States the contributions that belong to them or some hideous form of unification, such as the Prime Minister talks about, will have taken place. To my mind, it is incredible that a Treasurer and Prime Minister can be found to put forward such absurdly inadequate proposals for the welfare of the States. Surely the Prime Minister was not serious when he said -
Every move we have made in regard to this matter ‘ lias involved the Commonwealth in additional financial obligations.
Nor when he made the amazing statement -
I agree that if we had surplus revenue in hand, it should be possible to reduce taxation, and if we- had not come to this arrangement with the States, but had gone on paying them 25s. a head of their population, we should have had surplus revenue in hand a’nd could have made a generous gesture of that kind.
A celebrated French cynic once said of a particular body of individuals who were accorded extraordinarily special privileges, that they were doing so remarkably well that his only wonder was that they could pass one another in the street without laughing. My only wonder is that the Prime Minister and Treasurer can pass one another on the sidewalk without smiling after having forced these proposals on the States. If this bill is passed we shall be living in a fool’s paradise. I am going to support the amendment moved by my leader. I differ from him, and from many honorable members on this side of the chamber, on this question, but I agree with him that nothing should be done until we have received the report of the royal commission which is inquiring into the Constitution. If the Prime Minister and the Treasurer had had experience in State politics they would not bring forward a proposal of this kind. There is a constant tendency, not only amongst civil servants, but amongst all people occupying positions of power, to strive constantly for more power. Take, for instance, a small government department in Canberra. The officer-in-charge tries constantly to make it more important. He feels always that the only department which is really of supreme importance ia that which he happens to be administering, and he is sure that a larger staff should be appointed, and more powers granted to him. That is the thing which we have always to fight against where officialdom is concerned, and ‘ it is the same thing with governments. The Federal Government is striving all the time to filch from the States powers which, I contend, rightly belong to them. We have passed through the war period, and the war has been financed. The Treasurer has himself shown that since he has been in office, the revenue has increased from £62,000,000 to £78,000,000. The Federal Government is not faced with financial stringency, so that there is no reason for bringing this proposal forward. The Government may think that it is treating the States fairly, but as a former State member I am certain that if this measure is carried into effect it will check development, and will bring about financial chaos in ‘ Australia. My party has been charged with favouring unification. It is true that the party with which. I am associated does stand for extending the powers of the Commonwealth Parliament, but it does not stand for crippling the States financially. Any scheme which this party might have in mind will only be’ put into effect after the most careful consideration. Clause 8 of the Labour party’s platform reads -
Until the constitution is amended the per capita payments to the States to be continued without diminution.
That is where I stand to-day. The State representatives who have met at different conferences to consider these financial proposals at first refused to be browbeaten, but were eventually forced toaccept them because they recognized that, after June of last year, they possessed not the slightest legal claim to the per capita payments. They came to the last conference stripped of every legal right to the money. Moreover, they were confronted with a scheme for the pooling of the Commonwealth and the State debts. Figures have been quoted by other speakers to show that the State of Western Australia has been able to borrow money at a lower rate of interest than is paid for the average Commonwealth loan; but notwithstanding that, I maintain that the proposal for pooling the Commonwealth and the State debts is essentially a step in the right direction, and one which must be taken sooner or later. The Government, however, has acted very shrewdly from its own point of view. Linked with this proposal for pooling the debts are certain other proposals which will, for the time being, place the States in a better position than they are in to-day, but will be utterly disastrous to them in the years to come. The great objection to this scheme is that it extends over a period of 68 years. Who is there amongst us who can, say with any certainty what the financial position of the States and the Commonwealth will be in 58 years’ time? For this reason, if for no other, this question should be set aside until we have before us the report of the royal commission, which is dealing with the Constitution of the Commonwealth. The Prime Minister has said that the position1 to-day is that the States will be £898,787 better off than if the per capita payments were continued, but he did not tell us that the advantage will soon disappear, and that in six or seven years’ time the States will be in a far worse position than under the per capita system. I have shown that even if the population of the States is the same- in 58 years’ time as now they will lose nearly £6,000,000 per annum, and receive less than a quarter of what they are entitled to. In the statement prepared by the Commonwealth Statistician, it is set out in cold, clear type, that the position of the States in 58 years’ time under this proposal will be worse to the extent of £383,000,000 than if the per capita system was retained, not allowing, of course, for the proposed contributions by the Commonwealth to the sinking funds. The States in the past have found their task too big for them without financial assistance from the Commonwealth Government; but under these proposals they will- be worse off than at the present time. The people of Australia will not tolerate the introduction of such a scheme as this. The Prime Minister has expressed the opinion that the system of per capita payments is unjust, and that it benefits a large, rich State like New South- Wales, much move than a more thinly populated State like ‘ Western Australia. I have deliberately refrained from looking at this subject from the point of view of any one State, and have tried to regard it from that of all the States ; but as certain State comparisons have been made, let me say that under the per capita payments Western Australia fears nothing and has nothing to fear. Between the years 1890 and 1925 the population of New South Wales a little more than doubled itself, while the population of Western Australia increased by 700 per cent. It is true that Western Australia is suffering from many disabilities, and that the loss of the per capita payment or its equivalent will be felt severely by her; but time is on her side, for she has a large territory and almost limitless possibilities. We regard this proposal of the Government as not only pitifully inadequate and entirely foolish, but as likely to bring disaster to it at the next election. The Prime Minister may rest assured that T shall use every effort to make clear to the people of Western Australia the real effect of this scheme, and they may be trusted to mete out to the Government the treatment that it deserves.
.- If this Government had done nothing more than settle the vexed question of the financial relations between the States and the Commonwealth it would deserve well of the people of Australia. This subject has been a live political issue ever since federation. It was the rock upon which a number of pre-federation conventions split, and only when the Braddon clause was limited to ten years in the proposed Constitution did it become acceptable to the people of New South Wales. The second paragraph of section 87 of the Constitution makes it quite clear that the Commonwealth may apply certain of its moneys to the payment of interest on. debts taken over from the States, and I therefore submit that the Government is following the lines laid down by the framers of the Constitution in placing this, scheme before us. I go so far as to say that it is the most statesmanlike effort yet made to place upon a permanent footing Commonwealth and State financial relations. That the operation of the Braddon section was limited to a period of ten years is, to my mind, proof positive that the framers of the Constitution did not intend that the States should receive in perpetuity a portion of the customs revenue. Again, when the people of the Commonwealth were invited by referendum to make the per capita scheme permanent they wisely declined to do so.
They realized that to do so would lead to the further aggrandisement of the more populous States, while the smaller ones would have become even more dependent upon the bounty and taxation of the people of the larger States than they are at present. I believe that the people will regard the scheme now before us as a reasonable settlement of this much debated question. As the Federal Government will affirm it and all the State governments have approved of it, I think the electors of the States may be relied upon to do so: So far, not a single substantial or cogent reason has been advanced by those opposed to the ratification of the agreement to justify, their attitude. It has been argued that the State Premiers have accepted the proposals for somewhat unworthy reasons; but it is significant that these gentlemen are not all of one political complexion. Four of them lead Labour administrations and two are at the head of Nationalist governments. That is inescapable evidence that the scheme is sensible - and just. The State Premiers apparently have looked at it without prejudice.
n. - They have accepted it under duress.
– I have heard the word “ duress “ used frequently. What is the meaning of it ? It implies forcible restraint or imprisonment, and it it is not at all applicable to any situation that has arisen during the consideration of this scheme. There is no evidence that Mr. Collier, the Labour Premier of Western Australia, or Mr. Hogan, the Labour Premier of Victoria, or any of the other Premiers were illegally forced to accept this proposal. The honorable member for Lilley (Mr. Mackay) has shown by certain extracts which he has read from speeches reported in the Queensland Hansard that the Premier of Queensland (Mr. McCormack), and Mr. Forgan Smith, who are influential members of their party, consider this arrangement to’ be fair. I presume that those gentlemen expressed their convictions.
- Mr. Hogan made some references to the withdrawal of the -per capita payment.
EN - And so did Mr. McCormack.
– They said that this was the best alternative that they could get.
L.- It is being suggested that they were forced to accept the scheme. I deny that, although I am prepared to admit that they may have felt some soreness at the loss of the per capita payment. The criticism of the scheme by
Borne honorable members of this chamber has, to my mind, been indulged in largely because of certain remarks that they made last year when discussing the States Grants Bill. In passing, may I say that, in my opinion, the Government acted wisely in withdrawing the per. capita payments when it did.
– The honorable member is only an ordinary claqueur.
L.- The honorable member for Kalgoorlie (Mr. A. Green) is only a very insignificant member of the House.
Mr. SPEAKER (Hon. Sir Littleton Groom) . - Order ! I must ask honorable members not to indulge in personal interjections.
– The chief critics of this measure have been the Leader of the Opposition (Mr. Charlton) and the honorable member for Perth (Mr. Mann), both of whom relied to a considerable extent upon deductions made from certain figures compiled by the Commonwealth Statistician, Mr. Wickens; but, unfortunately, for their case they arrived at entirely different conclusions. The Leader of the Opposition asserted that on his understanding of the figures the States would benefit under this scheme for the first fifteen years of its operation, and then they would begin to lose ; while the honorable member for Perth assured us that the States could benefit only for the first five years of its operation. Different conclusions of this character are always arrived at when amateurs attempt to analyze intricate financial tables. For my part I am quite prepared to leave such matters to the experts. But even allowing that the deductions which the honorable members have made from the figures that I have mentioned are correct, I submit that an entirely different aspect will be put on the matter when some fundamental factors which they have overlooked are taken into consideration. Certain payments with regard to sinking funds and transferred properties, and the raising of State loans within the Commonwealth are among the important factors which have been overlooked by the honorable members in their superficial deductions.
– Let us hear the honorable member give his deductions.
L. - I shall do so at a later stage. It has been said that the State Premiers accepted this proposal because it would not adversely affect the States, at least until their personal political careers had ended.
Sitting suspended from 6.15 to 8 p.m.
– It is very wrong to ascribe to the State Premiers petty and unworthy motives, and there is not the slightest justification for the insinuation. “All the records indicate that the State Premiers and the majority of their constituents regarded the proposed arrangement as an equitable one. The quotations made by the honorable member for Lilley (Mr. Mackay) confirm that view. Judging by the utterances of the State Premiers on this matter, we must conclude that they regard the proposed agreement as an eminently fair and just one. Reference has been made during this debate to a statement ascribed’ to the Prime Minister to the effect that this matter should be thrashed out; that it should receive the most careful consideration and should not be left to the chance vote of any party which might be temporarily in power. Surely honorable members will agree with that view. It certainly must have considerable weight with the State Premiers. What could those State Premiers expect if a Labour government were in power? I shall quote from the platform of the Labour party, particularly with regard to constitutional amendments.
– What about lofty motives now?
L.- The honorable member clearly indicates that he is unable to discriminate between personal motives and criticism of a party. I am directing criticism against a party and am not imputing improper motives. A plank of the platform of the Labour party provides for -
Unlimited legislative powers for. the Commonwealth Parliament, and such delegated powers to the States or provinces as the Commonwealth Parliament may determine from time to time.
– Read the other paragraph wherein the Labour party pledges itself not to alter the per capita payments until the constitutional powers are amended.
L.- I shall do so. The paragraph which I read is No. 1 of the platform of the Labour party, and I assume that its premier position indicates that it is most important in their view. It defines their objective as unification. I shall read plank 8, as requested by the honorable member for Swan (Mr. Gregory).. It is merely a machinery clause”, and reads -
Until the Constitution is amended in accordance with plank 1 of the general platform the per capita payments to ‘the States to be continued without diminution.
The very first proposal after the fighting platform has been outlined is that the States shall be immediately denuded of many of the important powers that they now possess. -Provinces are to be created and conducted on lines similar to those applying to our local governing bodies, and important administrative duties now allotted to, and satisfactorily performed by the States, are to be taken over by the Commonwealth under a unified system. That assumption was confirmed by the statement of the honorable member for Maribyrnong (Mr. Penton) this afternoon.
– Is it fair for the honorable member to say that the States are to be denuded of important powers? Is it not proposed that the States shall voluntarily give up those powers ?
L.- It is suggested that I should say that the States will voluntarily relinquish certain rights. I do not intend to do so. because I do not consider that that would be done. All along the line there has been no surrender by the States of their powers, except in relation to arbitration matters, and then only to a limited extent. The State Premiers realize that, if a Labour government were in power in the Commonwealth sphere, the States would like Lazarus be compelled to accept the crumbs that fell from the table of the rich man - Dives in this case being the Commonwealth Government. The proposals now before this House are in accord with the platform of the National party of New South Wales, and are equally in accord with the platform of the National Federation of Australia. It may, therefore, be assumed, with justification, that the whole of the proposals are in consonance with the wishes of the National party.
There has been no direct opposition to the proposals. The principal opposition is to immediate action. It is suggested that the agreement should be postponed. That, after eight years has been given to the consideration of the problem, is belated advice; a counsel of despair which should not be tolerated for one, moment. I have seen many eminently respectable governments which have waited for things to turn up, and pursued a policy of inactivity and rejection at the polls has been their portion. I am convinced that the Commonwealth Government will not countenance stagnation, and that the suggestion that the proposals should be postponed will find little sympathy. Postponement is sought in order that the Constitutional Commission may first submit its report.- I have heard honorable members opposite condemn this Government because it has appointed commissions, yet those honorable members now simulate interest in the Constitutional Commission, wherein they affect to discover great and new virtues.
– Not at all. It was the honorable member’s party that appointed the commission, and we contend that it should wait for its report.
L.- I confess that I do not hold a similar opinion as to the merits of that commission. I think of the great men of the past who framed our Constitution, men who, with singularly broad vision, constructed from nothing a Constitution that has served this country well for 25 years, and I mentally compare them with the personnel of the present Constitutional Commission. I shall not record in Hansard the result of the comparison, but I shall await with interest the report of the Commission in order that I may judge whether its members have been able to discriminate between essentials and nonessentials. This question stands by itself, and has done so ever since the
Federal Constitution was brought into existence. I contend, therefore, that the Government is pursuing the right course in dealing with the proposals as a separate entity, and on their merits.
Reference has been made to the fact that the Government promised a constitutional session in Canberra, and complaint is made that the promise has not been fulfilled. But when the Government comes forward with the most important constitutional matter that has engaged the attention of this Parliament for many years, honorable members opposite decline to discuss it but desire to procrastinate, to set it . aside until the report of the Constitutional Commission is to hand. I submit that such inconsistencies are advanced merely to cloak the evident barrenness of the opposition emanating from honorable members across the chamber. Had this proposal been introduced by the Labour party I would have supported it. That party, aware that the majority of its supporters favour the suggested proposals, are uneasy in their efforts to make political capital out of the matter. I am prepared to accept the considered advice of the Prime Minister, the Commonwealth Treasurer, and their expert financial advisers. In addition, the proposed agreement has the approval of the State Premiers, acting on the considered advice of their trained civil servants. In face of the acceptance of the agreement by the Prime Minister, his Treasurer, four Labour and the State Premiers, there can be little good ground for opposition.
The only other argument, if it can be termed an argument, advanced is that this legislation is to last for 58 years. I can see nothing wrong with that when I consider that the framers of the present Constitution introduced legislation to last for all time.
– They did nothing of the kind.
L - They bound the States in an indissoluble federation, with only the most conservative power to amend the constitution. Possible happenings within the next 5S years, which no one can foretell, should not deter this Parliament from legislating for the present. The suggestion that we should cease consideration of this subject because of something that may happen half a century hence is a counsel of fatuity and fear, and has no foundation in reason. The electors who by their votes approve of this arrangement may, after ten, fifteen, or twentyfive years, or at any other period, alter it if they so desire. Their power of revision is no less than their power of acceptance. Therefore, the fact that this agreement is for a period of 58 years is not a defect, but rather an advantage, having regard to the nature of the matters that are bound up with it.
The amendment proposed by the Leader of the Opposition declares that the consideration of this matter should be deferred until the report of the Constitution Commission is received. The honorable gentleman did not advocate the rejection of these proposals; he did not say they are inherently wrong, or that the Commonwealth1 will be disadvantaged by them, or that they are unfair to the States; he gave no reasons against them, but merely urged delay. This Parliament cannot be expected to adopt so feeble an attitude. Some, at least, of the honorable members opposite are unificationists, and they are entitled to oppose these proposals, but I anticipate that the most interesting feature of the next election will be the spectacle of those honorable members who are hostile to this arrangement carrying the fiery cross of propaganda through the electorates in opposition to the Nationalist and Country party candidates, and State Ministers who are in favour of it, and thus giving to the electors an extra alternative to support other Ministerial candidates. I shall be very much interested, to see these heroes preaching a policy of procrastination and “ wait and see,” in the face of the overwhelming mass of public opinion that is in favour of these proposals. For the reasons I have mentioned, I support the agreement, which embodies the most statesmanlike proposal ever submitted to the Federal Parliament. Than this, no more important question has been discussed, and the Government is entitled to congratulation for having evolved such a satisfactory solution of a difficult problem.
.- If I do not admire the arguments of the honorable member who has just resumed his seat, I, at any rate, marvel at his self-assurance. In my long association with this Parliament, I have never achieved the confidence in myself that the honorable member has in himself, and I shudder at the thought that I might ever have reached such a stage. The honorable member congratulated the Government upon having solved a very difficult problem. His attitude is clear - he is right behind the Government, and apparently his motto is, “ My party, right or wrong.” There is something to be’ said for such an attitude; at any rate, we know where he stands, and the Government has the satisfaction of being able at all times to rely upon one vote, apart from those of honorable members sitting on the front Ministerial bench. We know where the honorable member is, but that hardly gives merit to his arguments. He has said that this is a very important agreement; the same remark has been made by every speaker during the debate, and that probably is the only point upon which I agree with him. This proposal involves almost revolutionary changes in the borrowing policy of the Commonwealth and the States, and has caused hasty, almost panic, legislation, by some of the State Parliaments. . Before it is settled, the people will require to be consulted by referendum, and if their decision is in the negative we shall have “ confusion worse confounded.” If, on the other hand, the referendum produces an affirmative declaration by the people - that is doubtful - this Parliament will still require to pass a validating bill, and the whole of this debate will be repeated. What has caused all this upheaval? If this course of action were necessary because some agreement or legislation had expired by effluxion of time, one could understand the attitude of the Government. The reasons advanced by the Prime Minister and the Treasurer in justification of their policy were deplorably weak and hopelessly inconsistent. The Prime Minister reiterated that the Government did not wish to leave the States at the mercy of a chance majority in this Parliament. Well, the States were quite prepared to chance such a contingency; they vigorously opposed this change, and surely it is a misguided act of mercy for the Government to submit a scheme to save the States, which all the while were vigorously crying aloud to be saved from the Government.
n. - The States require to be saved from themselves.
– The honorable member may elaborate that argument if he chooses; I do npt care to take the responsibility. The reason given by the Treasurer was a jewel. He is the most successful pedlar of phrases in this chamber. He talked at large of the vicious and intolerable principle involved in one government raising money to be handed over to other governments to spend, and he said that the Governmentwas prepared to take its political life in its hands in the endeavour to end such an immoral state of affairs. Yet his followers have credited him with being the author of the roads grant proposal, which, people agree, savours very much of that same vicious principle which he so righteously denounced. Under the roads agreement, money raised by the Commonwealth is to be handed over to the States to spend. The South Australian Government was raising, by means of its petrol tax, money to carry out its own roads policy; but the Commonwealth Government successfully challenged the right of the State to do that, and is itself raising money in South Australia by means of a petrol tax, which money is to be handed back to the State for expenditure upon roads. But if there be any doubt about the roads agreement being a violation of a principle which the Treasurer has so much at heart, I turn to the housing scheme, under which the Commonwealth has arranged to advance money to be expended by State authorities in the construction of homes for the people.
– There is no vicious principle until something is actually done !
T.- As the honorable member reminds me, the housing scheme is merely in contemplation, nothing is yet accomplished. . There were already two home-building authorities in each State. The War Service Homes Commission was constructing a large number of homes throughout Australia, and in addition there was in each State a government home-constructing authority. Upon these two the Government superimposed its own scheme. Of course, I realize that in bidding for votes at the last general election the Government gave certain undertakings and is in the awkward position of having to redeem its promises before the next general election.
– Is it not a fact that a State which does not want any of the Commonwealth . grants need not take them?
T.- I know the honorable member too well to believe that he advances that argument seriously.
– The honorable- member is assuming that the Commonwealth is forcing this money upon the States.
T.- I am assuming nothing of the kind. When South Australia imposed a petrol tax, the Commonwealth deliberately pushed that State aside, collected the tax itself, and is now handing it back to the State to expend. New South Wales at first refused the money, but the tax accumulated until that State was compelled by force majeure to take it.
– Because of a change of Government.
T. - The honorable member is under a misapprehension, because the money was taken before thechange of government.
The Prime Minister in his secondreading speech made more contradictory statements than I have known him to make in any previous speech, and I propose to deal with some of them. If one thing more than another was made clear to the States it was that under this proposal they would be- more generously treated than under . the per capita payments. The Prime Minister said -
It is our desire not merely to give the States absolute justice but, so far as lies in our power to deal with them generously. I agree that ifwe had surplus revenue in hand it should be possible to reduce taxation, and if we had not come to this arrangement with the States, but had gone on paying them 25s. per’ head of their population, we should have - had surplus revenue inhand, and could have made a generous gesture of that kind.
The Prime Minister is there referring to reduced taxation. He continued -
No Commonweaith Government would make an arrangement with the States involving it in heavier payments than it was under an obligation to make unless it sincerely believed that some fundamental principle impelled it to that course.
That, as all honorable members will agree, is a clear indication that under this proposal the Commonwealth Government would pay to the States more than they would have received under the per capita payments. The Prime Minister further said -
Wo should not have undertaken this additional obligation had we not believed that a fundamental principle rendered it necessary. . . The fact that the Commonwealth will pay more does not mean that the taxpayers of Australia will be levied on for a greater amount.
The Prime Minister certainly led the States to believe that they would receive more over a period of 58 years than they would have received under the per capita payments. The right honorable gentleman then made a most contradictory statement, which, when reading it literally, would lead one to think that the previous statements that I have quoted were contrary to his beliefs. He said -
I put two points forward for the earnest consideration of those who are inclined to oppose the agreement and who may have the idea that the States would have received more under the per capita system. The first is that it is incredible to think that this system should be allowed to continue much longer.
I have pondered upon that sentence and it seems to me strange reasoning. I wonder what the right honorable gentleman would say if the Leader of the Opposition at the next election gave to the people as his reason for rejecting the present Government that it was incredible that it should be allowed to occupy the Treasury benches any longer. The Prime Minister continued : -
The second is that there is grave doubt whether the Commonwealth will have the revenue in the future to make payments to the States at the rate of 25s. per capita particularly in view of the growth of population.
That is a clear case of either confusion of thought or inconsistency between that and the previous statements. What is the motive behind this proposal? It is hard indeed to define it. The Government, of course, has talked about vicious principles. Sometimes I wonder whether the real reason is not the old story of fools rushing in where angels fear to tread. The Prime Minister and the Treasurer have been exceedingly fortunate and are probably anxious to do something to justify their position. That is no unworthy ambition, but they have attempted, without urgent necessity, to grapple with undue haste the problem of the financial relations between the Commonwealth and the States. In 1923, when I had- I shall not say the honour, but - the experience of being a member of the present Government, it placed before the Premiers’ Conference a proposal to suspend the per capita payments for a period of five years. At that time there was a duplication of taxation which it was desired to avoid, and the subject was discussed with the States. Eventually the Commonwealth proposed to vacate certain fields of income and other taxation, and to suspend the per capita payments for five years. The fundamental difference between that and the present proposals is that at any rate the first was placed before the States for their consideration. Their hands were not forced. The proposal was discussed amicably, an agreement was not reached and the per capita payments were continued. I can visualize the Treasurer saying to the Prime Minister. “ We shall have to alter this system. While we allow the States to draw the per capita payments they will never agree to any alteration. The only thing to do is to wean these lusty infants by abolishing the per capita payments, and then we will put a proposition to them which they will be forced to accept.” So we reached the stage at which the per capita payments were abolished. One argument used by honorable members supporting the Government was that the States are in favour of the bill. Does the Government really regard that as an argument, or is it mere wordspinning? If the Government contends that the wishes of -the States themselves are a factor in this issue and should be respected, then I must say that it took up a very different attitude when the bill for the abolition of per capita payments was before Parliament. At that time, the State governments, whether Nationalist or Labour, were bitterly opposed to the proposals of the Government.
– The Government and the Opposition in each of the States were opposed to the proposals.
T. - That is so. When the States desired to reject the proposal to abolish the per capita payments, the Commonwealth Government turned a deaf ear to them and brushed their argument aside. During this debate it has been repeatedly stated that the State governments are in favour of the financial agreement. Let me quote from the Victorian Hansard of the 24th December, 1927. . On page 3843 Mr. Hogan, the Premier of Victoria, is reported as follows : -
It ia essential that we should pass the hill this session. Otherwise we must make provision for raising ?553,000 immediately, with which to meet our sinking fund obligations.
– Does that mean if the bill is not passed this session?
Mr. Hogan. That is so. We must pass this bill or bring in additional taxation to raise ?553,000, or repudiate obligations which this Parliament and previous governments of Victoria have entered into in respect of the payment of interest to people from whom we have borrowed money, and to pay certain sinking funds provided for in acts of Parliament. The honorable member for Allandale will at once admit that we have entered into contractual obligations. We have borrowed money. We have agreed to repay that money within a certain period. We have agreed to pay certain interest and sinking funds upon it. We have either to pass this bill,, and temporarily suspend our sinking fund obligations, which will.be taken over and met by the Commonwealth Government, or we must adopt new income taxation or land taxation to raise a further ?553,000 this year; or, thirdly, we must repudiate our obligations. I ask Parliament: Which of the three alternatives are we going to adopt? If we pass this bill this session, our sinking fund obligations will be suspended temporarily, and will be met by the Commonwealth Government. The alternatives are new taxation or the repudiation of our financial obligations.
Mr. Gray. Or another arrangement with the Commonwealth.
Mr. HOGAN. We cannot make another arrangement with the Commonwealth Government this year.
That was the position in which at least one of the State parliaments found itself. The Victorian Government had to pay into the sinking fund on some of its loans in half-yearly instalments. I think that these payments were due on 31st December, and, as the Victorian Premier plainly and forcibly put it, his Government was in the position of having to find ?553,000 by taxation, or repudiate its obligations, unless it accepted the agreement. We have been asked to believe that the States have willingly entered into this arrangement.
n. - The point was that, if they did not accept it, they would receive nothing.
– They had Hobson’s choice.
T.- Quite so. It seems to me that the Prime Minister’s statement that this is a cordial agreement that the States have cheerfully accepted is deliberately misleading.
– They are taking this rather than go without.
T.- That is quite clear. We are told that, if we pass this bill, there will be financial stability for 58 years. Does any honorable member really think that? Is it to be understood that, when the division is taken on the second reading, those who believe in financial stability for 58 years will pass to one side of the chamber, and those who are against financial stability will go to the other side?
– It depends on what is meant by that term.
T.- Of course. I submit that this Parliament has no power under the Constitution to pass the bill; it is to be passed in a cartbeforethehorse fashion. If the people vote in the affirmative at the referendum, the Government will have to bring before the House a bill to validate what is now proposed.
– Is that the honorable member’s personal opinion, or the view of constitutional lawyers?
T.- It is my own opinion ; I do not pose as a constitutional authority. I contend that the present bill is invalid. As the Constitution stands, it is not worth the paper on which it is written.
– It becomes null and void if the people reject the referendum proposals.
T.- Yes. But if these are passed, and if the existing Government is still in power, and is in the same frame of mind then as now, it must bring forward a bill under the new powers granted to make this legislation valid.
– I think that the agreement empowers the Commonwealth to legislate afterwards without the States passing similar legislation.
T. - I disagree with the honorable member, and I submit, with all due deference to the House, that the assumption that the present bill will become law automatically by an affirmative vote of the people at the referendum, is wrong. In other words, the Government has brought this bill before Parliament deliberately, although it is invalid under the Constitution. It will be invalid until this Parliament receives the new powers now sought from the people.
– Is not the agreement in this bill to be embodied in the Constitution?
T.- Not at all. The powers sought are to be embodied in the Constitution to enable a bill such as this to be brought forward in the future. I emphasize the fact that this Parliament is acting unconstitutionally in legislating in this manner. “ After going to the people, the Government must come back with a bill to legalize the invalid measure now about to be passed.
– That is hardly correct. This Parliament has power to pass the present bill.
T.- But it is unconstitutional. The Government says, “We admit that we are passing an act that is unconstitutional; but we shall go to the people and ask for an alteration of the Constitution. If we obtain that alteration it will give us power to take similar action in future, and it will also give us power to bring in a measure to validate the present bill.”
– Would it not be more correct to say that the present bill will be inoperative until the Constitution has been amended?
T.- No; it will be inoperative until another bill is brought down to validate it. Consequently this measure will have to be debated again.
– Suppose we did not seek to have this agreement embodied in the Constitution. We have power to make any grants to the States after the withdrawal of the per capita payments.
T.- But the Commonwealth is going to the people for power to do this thing, and that, ipso facto, shows that the Crown’s legal advisers admit that the Commonwealth has not the necessary power at the present time.
– I think that the desire is to satisfy the States by giving them some security.
T.- I think not. It seems to me that the Attorney-General might consider whether the Government has power under the Constitution to proceed with this bill.
– If it has not that power, it is acting in the right way.
T.- It would be more logical to go to the people first and ask for the power. That is made quite clear in the amendment moved by the Leader of the Opposition.
– I do not see why they want to amend the Constitution at all.
s. - The amendment is made necessary because the agreement provides for the consolidation of the debts, and for ‘other payments. It is proposed to make these things part of the Constitution.
– I am not dealing with the matter piece-meal, but with the whole agreement as it is. The Commonwealth Government, under the existing Constitution, does not possess the power to do what it proposes in this bill. That is proved by its making this measure contingent upon the carrying of the referendum. It admits that the measure will not become operative until the referendum is carried.
We have dealt with the situation as it will exist if there is an affirmative vote in the referendum. Let us see where we shall be if the constitutional proposals submitted to the people are rejected, as they usually are. It has been advanced in support of the measure that if it is passed by this House, we shall have an assurance of financial stability for 58 years. What will be the position, however, if the people reject the proposals at the referendum? We shall be in the position of having made payments to the States greatly in excess of the amount we should have given under the existing per capita system. For the year 1927-28 we should have made increased payments as follows : -
or a total excess payment for this year, in anticipation of this bill coming into operation, of £898,787. This sum would have been paid to the States in excess of what would have been paid under the per capita system, and still the problem would remain as it is now. Instead of financial stability, there would be financial chaos. Should we ask the States for a refund of these excess payments ? Upon what basis would we legislate for the future? The whole battle would have to be fought over again. The obvious solution is to await the report of the Royal Commission on the Constitution. I remember when I was a member of the party in the corner that its outstanding objective - I see the honorable member for New England smiling in anticipation of what I am going to say - was that a constitutional convention should be held. Such a convention, the party maintained, was absolutely necessary, and such a convention that party was going to have, even if it meant upsetting the Government. After all, what was a government or two so long as we could get that constitutional convention ?
-Circumstances alter cases.
n. - We shall have that convention yet.
– I see that the honorable member for New England is still an optimist.
– We are going to have a constitutional session.
T.- That represents a stage in evolution of this idea. The talk of a convention, to use the words of the song, “faded away and died.” Likewise the new States issue, which was considered of first importance, gradually faded away, and would have entirely disappeared, were it not for the efforts of- the honorable member for New England, and some others. A further stage in the process of evolution was reached when honorable members said “If we cannot get a constitutional convention, we shall have a constitutional session.” When the convention was abandoned, a very definite pledge was given that the objective of the party, a constitutional session, would be attained, and that the first session of this House in our new home would be a constitutional session.
– That was not the objective of this party, but of this Government.
T. - That merely strengthens my case. The objective of both party and Government was that there should be a constitutional session, and the first discussion was to be on that outstanding problem, the relations of the States to the Commonwealth, including financial relations, and then on the new States question and other matters of importance which would brook of no further delay. Well, we have come to our new home, and we have talked. Now we have attained a still further stage in the evolutionary process of side-tracking. From a constitutional convention we went to a constitutional session, and from a constitutional session we have come at last to a constitutional commission.
– The commission is a preliminary to the session.
T.- My honorable friend is still an optimist. What guarantee has the Government that the constitutional commission will not come forward with a proposal which, if accepted, would radically alter the financial relations of the States and the Commonwealth?. Is there anything in the terms of reference to this commission which will forbid it from making a recommendation on the subject of per capita payments ?
– But this Government does not give effect to the findings of its commissions; it merely appoints them and pays them.
T.- The honorable member can speak much more eloquently on that subject than I can. I am assuming now that the Government is sincere, and that it really does believe it to be essential that we should take this step. If the constitutional commission makes the recommendation that the per capita payments should be continued, and that special grants should be made to the States, what will then be the position of this Parliament ? What right have we to assume that the commission will not bring in such recommendations? Therefore, it seems quite reasonable to me that we should await the report of this commission, which has been set up to go into the very problem with which we are now dealing. Even if this measure did everything which its sponsors claimed for it - and I very much doubt that it will - it would provide financial stability for 58 years, only if the existing relations between the Commonwealth and the States continued as at present. If new States are created, however, the whole of this arrangement will go by the board.
– New States will come under the same scheme.
T. - If the honorable member reflects a little he will see that if we get new States within 58 years’ time - which seems doubtful to me - the changes in the Constitution which he so ardently desires. will automatically have the effect of throwing the whole of these proposals into the melting pot.
– The new States will not be contracting parties.
T.- Therefore there will have to be a new bill, and a new agreement altogether, and it is farcical to assume that the passing of this measure will ensure financial stability for 58 years.
– Does the honorable member not think that the Commonwealth could honor this agreement for 58 years ?
T.- I am not suggesting it could not ; but if any changes are made by way of creating new States, this agreement will have to be scrapped, and a new one made. At any rate, there would have to be some very radical adjustments made. The present Government has posed as a champion of the States, and has suggested that if it were not on the Treasury bench the rights of the States would be jeopardized. Members of the Government have not only suggested this, but have stated it plainly. They have stated that the rights of the States are safe in the hands of the Government, but that they might not be safe if this Government vacated the Treasury bench. I am compelled to say that I know of no other Government that has challenged the authority of the States, encroached upon their functions, and taken more steps towards unification than this Government has done. But it has not done it openly. I understand that the constitutional objectives of the Labour party are very radical. The party has been criticized and condemned because of them, but at any rate they are open and above board, and they would not become operative until approved by the people of Australia.
– Any capitation grant should be paid until they become operative.
T.- That is so. I can understand the policy of the Labour party, and so can any one else, although they may not agree with it. It is at least straightforward. If unification is to come let it come with the full concurrence of the people.
– The ‘ people have already defeated it.
T.- The people rejected a. rush proposal for a kind of piece-meal unification, which did not deal amply or clearly with the issues it was intended to settle. Bit by bit this Government has eaten into the very vitals of the States. Such measures as those which provided for the roads grant, the housing scheme, and the abolition of the per capita, payments have taken us further towards unification than all the legislative enactments of all the Commonwealth governments which have preceded this. In other words, it has indirectly gone further towards unification than all the governments that have been in office since the consummation of federation.
But of what use is it for us to discuss this subject? The numbers are up. If the bill is rejected the Government will be thrown out. That is one of the main objections that I have to our present system of government. The real issues are always obscured by party considerations. I propose to discuss that subject under another motion. I shall vote for the amendment of the Leader of the Opposition, for it is on all fours with the attitude that I adopted when the States Grants Bill was before the House last year. I submit now, as I did then, that far-reaching constitutional changes of this character should not be introduced in this way. We have tried out our Constitution for more than a quarter of a century, and the time has come when we should make a general review of it with the object of placing before the people such concrete and comprehensive proposals for its amendment as experience has shown to be desirable. Until that was done, I submit that the per capita payments should have been continued. Measures of this kind can only lead to unification, and I strongly object to the introduction of that policy by piece-meal legislation.
– I do not propose to occupy the time of honorable members by again traversing the history of the financial relations of the Commonwealth and the States. It is sufficient for me to say that this issue caused more discussion and dissension prior to federation than any other, and the arrangement which was ultimately embodied in the Constitution has been a subject for frequent discussion since. I wish to remind honorable members, however, that any one provision of the Constitution is as much a part of it as any other. Section 87, which is frequently referred to as the Brandon blot,” cannot be contemptuously dismissed as though it does not exist. It provides that -
During a period of ten years after the establishment of the Commonwealth, and thereafter until Parliament otherwise provides, of the net revenue of the Commonwealth for duties of customs and excise, not more than one-fourth shall be applied annually by the Commonwealth towards its expenditure.
The balance shall be paid to the several States . . . .”
In the same way, section 94 is as much a part of the Constitution as any other. It provides that -
After five years from the imposition of uniform duties of customs the Parliament may provide, on such basis as it deems fair, for the monthly payment to the several States of all surplus revenue of the Commonwealth.
It must be realized, therefore, that it was the deliberate intention of the framers of the Constitution that after the expiration of a certain period this Parliament should determine what proportion, if any, of its customs revenue should be paid to the States. By adopting the Constitution the people also indicated that this Parliament must determine that question. From the legal point of view, therefore, there can be no doubt that this Parliament has a perfect right to deal with this question without reference to any other authority and without even consultation of the people by referendum. This right was deliberately conferred upon this Parliament by the people when they adopted the Constitution. -In conferring this right the Constitution also imposes a duty upon this Parliament to give the matter its most earnest consideration. At the same time., the Government, and I am sure honorable members generally, recognize that the matter is of such profound importance that it is obviously desirable that the States should be consulted upon it. Accordingly, the measure now before the House provides that the assent of the various State parliaments and of the people of the Commonwealth shall be obtained before it can become permanently operative. Various endeavours have been made to place the Commonwealth and State financial relations upon a satisfactory basis. In 1910 the arrangement was made with the States, and embodied in a Commonwealth statute, that for the term of ten years the amount of 25s. per head of the population should be paid by the Commonwealth to the respective States. It has been suggested in recent debates that that arrangement was intended to continue for a longer, period than ten years, but the Surplus Revenue Act provided definitely that it should terminate in 1920. This Parliament, by not taking any subsequent action in the matter, indicated that for the time being it desired the arrangement to continue. In 1919 proposals were made at a Premiers’ conference for the gradual reduction of the per capita grant. These were not acceptable to the States. Various other proposals were made subsequently, and in 1926 a conference of Commonwealth and State Ministers was held, with the results of which honorable members are familiar. Two views were expressed at that conference. It was made quite clear to the Commonwealth that the States were unwilling to discuss any modification of the per capita arrangement which did nol; assume that they had a moral right to share in the customs revenue’. It has never been seriously suggested that there was any legal right of that character. The Commonwealth disagreed with the view that there was even a moral right. Bui I point out that even acceptance of that contention would not make any practical contribution towards a solution of the difficulty which confronted the Commonwealth and the States. Even if it be admitted for the purposes of argument that the States have a moral right to share in the customs revenue, it is obvious that the important thing to be determined is what is the share to which they are entitled. A mere illusory admission that there is such a right would be of no satisfaction to the States, and would give no practical benefit. Any discussion that occurred subsequent to such an admission would necessarily turn upon the amount of the share which the States were to receive.
l. - Had the States expressed any dissatisfaction with the per capita scheme?
– If one thing was obvious, it Avas that the per capita system had broken down.
– The Government broke it down by abolishing it.
M. - Prior to the passing of the States Grants Act last year, it was quite obvious that the per capita system had broken down. Neither Tasmania nor Western Australia was willing to accept the arrangement, and, as a matter of fact, those States had received far larger payments than they were entitled to under the per capita system. South Australia is at present making a request to the Government for a grant of £750,000.
– Western Australia received last year an amount equal to 45s. per head of its population.
M. - The per capita system had broken down in practice before the Government abolished it, for at least two of the States were already receiving considerably more than the per capita system would have given them.
I suggest that the most important fact in considering this measure is that an agreement has been reached among the seven governments of Australia. That has never happened before ; it has not even been within sight previously. Considering the complexity of the problem the achievement in obtaining agreement among seven governments of differing political complexions, representing States with varying interests, is one of no mean magnitude. If this agreement is rejected by Parliament, or subsequently by the people, the whole scheme will of necessity be thrown on one side, ‘ and honorable members will be accepting a heavy responsibility by taking action to bring that about, in the hope that in the unknown future it will be possible to reach another agreement upon different lines.
– Does the honorable gentleman suggest that, had the per capita payments not been cut off against the wishes of the States, they would have accepted this agreement ?
M.- I shall deal with each phase of the matter seriatim, and will reply to the honorable member in due course. Before and after federation it was recognized that one of the principal objectives to be secured was the taking over by the Commonwealth of the debts of the States. I believe that I am right in saying that all the financial authorities of Australia at the time when federation was consummated looked forward to the taking over of the State debts by the Commonwealth as one of the most important services which a federal government might render to the people of this country as a whole. Accordingly honorable members will find in section 105 of the Constitution provision for the Commonwealth Parliament to take over the whole or a portion of the debts of the States. The first portion of that section reads -
The Parliament may take over from the States their public debts, or a proportion thereof, according to the respective numbers of their people as shown by the latest statistics of the Commonwealth, and may convert renew, or consolidate such debts, or any part thereof.
The rest of the section provides for the indemnification of the Commonwealth by the States against interest charges. In the judgment of those most qualified to form an opinion that section is unworkable. The reasons are, first, that if the matter were dealt with under that section the States would be freed of their debts, and there would be no joint management of future borrowing. The States would owe nothing to any outside creditor, and would be free to borrow as they might think fit, whereas the Commonwealth would be primarily responsible for the whole of the State debts, which would be a charge on the assets of the Commonwealth.
– The States would be responsible for the interest.
M.- I think I have made that plain. It has been universally recognized that the mere taking over of the
State debts without making provision for some joint management of future borrowing was an operation which would be financially impossible and, if possible, unwise, and so far as I am aware no one has ever advocated it. There is also difficulty in the application of this section, because there is room for some difference of opinion as to what are the public debts of the States. The States owe moneys under arrangements of almost infinite variety. The public authorities organized under the States also owe moneys. In many cases such liabilities are guaranteed by the States and it is not at all easy to be quite sure what are the public debts of the States. Section 105 contemplates a taking over of the debts of the States by the mere action of the Commonwealth Parliament, independent of the will of the States. But no machinery is provided for doing so. If debts were taken over under the existing section without any agreement with the States, it would be very difficult to perform the operation in such a way as to avoid the risk of. disturbing Australian credit. Section 305 provides that if only a portion of the debts is to be taken over what must be done is to take over a proportion of the debts “ according to the respective numbers of their people “ - the people of the States - “ as shown by the latest statistics of the Commonwealth.” What is the meaning of those words ? One view is that they mean that the Commonwealth is to take over an equal amount per head of the population of each State. That is, if it takes over £10 per head in Western Australia it must take over £10 per head in New South Wales. Another view of the meaning of those words is that the debt in the ratio that the population of a State bears to the population of the Commonwealth should be taken over. Suppose, for example that the population of Western Australia was one-twentieth of that of the Commonwealth, then onetwentieth of the Western Australian debt would have to be taken over. Suppose, agai’71, that the population of ‘New South Wales was one-third of that of the Commonwealth, then one-third of the debt of New South Wales would have to be taken over. Those authorities may be right, or they may be wrong. The point that I am making is that there is doubt as to the meaning of those words, and in a matter of such importance -we cannot afford to be uncertain or to run risks. For various reasons it has at all times been impossible to take over the State debts under Section 105 of the Constitution.
It is therefore necessary to approach the problem from a new point of view, to consider an amendment of the Constitution in order that the debts of the States may be taken over upon a mutually satisfactory basis. The matter should not be considered merely from the point of view of the Commonwealth or merely from the point of view of the States. We should remember that we are one people whether organized in the States or in the Commonwealth, and that there is no justification for setting Commonwealth against States, or States against Commonwealth. The parliaments of the Commonwealth and the States are responsible to the one people. All of us who sit in this House have to meet our constituents and justify our actions and those constituents are also constituents with electoral rights in the States. We should consider the proposal for the general benefit of the people of Australia as a whole.
What are more specifically the important points in regard to this agreement? When considering any proposed readjustment of the financial relations of the Commonwealth and States, a very important factor is the effective management, of existing debts. Whatever may be the views of honorable members as to borrowing, all must admit that the Commonwealth and the States in fact owe in the aggregate some £1,000,000,000. It is impossible to repay each loan as it falls due and conversions must take place from time to time whether Governments borrow money in the future or not. It is important that those conversions should be effected upon the most favorable terms. All financial authorities are agreed that the provision of a guaranteed sinking fund is the best possible basis for satisfactory conversions. A constitutional guarantee is better than a mere statutory guarantee because it cannot be evaded by a parliament. Such a guarantee is one of the most certain methods of bringing about conversion loans in the most favorable manner. The provision of an Australian sinking fund tends to beget confidence and to dispose the minds of investors favorably towards Australian securities as a whole. One great advantage of this agreement, if it is adopted, will be that there will be a sinking fund, guaranteed not merely by statute but by a constitutional provision. The proposed constitutional provision will make the agreement binding upon the Commonwealth and the States.
– But the Constitution does not compel the Government to put that in the agreement.
M. - If the honorable member will look at the proposed constitutional amendment, page 14 of the bill clause 5 he will read -
Every such agreement and any variation thereof shall be binding upon the Commonwealth and the States parties thereto, notwithstanding anything contained in this Constitution or the constitution of the several States, or in any law of the Parliament of the Commonwealth or of any Parliament of any State.
That means that when an agreement like this is made it is absolutely binding upon Commonwealth and States. The proposed constitutional amendment includes a provision that this agreement, until varied by unanimous consent, shall be binding upon the Commonwealth and the States, notwithstanding any law that may, be passed by any Australian Parliament. That has been inserted to give to the States and to investors the fullest security and guarantee; it provides a sinking fund which will be guaranteed more absolutely than’ any other sinking fund in the world, because ether sinking funds are guaranteed at most by statutes which can be repealed by the parliaments which enacted them.
The effective management of the existing debts is bound up with the provision that the National Debt Commission shall handle and control the sinking fund formed by payments by the Commonwealth and the States. I refer honorable members to sub-clause o of part 3 of the agreement -
The meaning of that is that the sinking fund is not to accumulate, but is to be used for the purchase of the State securities in respect of which it has been constituted. The effect will be to support the stock upon the market, and in that way improve the credit of the State, and make conversion possible upon terms more favorable than otherwise would be obtainable. Great advantages will flow from a sinking fund administered with intelligence and foresight in this manner, as compared with the more or less haphazard operations of investors upon the market to which we are subject at the present time. No other proposal which would obtain these advantages has ever been suggested.
On this occasion the seven governments of Australia for the first time are in accord, and I venture to predict that if this agreement is rejected we shall wait long before another, unanimously approved by the seven governing authorities of Australia, is brought before this Parliament for ratification. Honorable members may estimate the advantages not merely to the Commonwealth and the States, considered as political organisms, but to the whole people, that will result in reduction of taxation from the successful operation of this agreement. If it be possible by this improved method of managing the Australian public debt to reduce the interest charges on the present debt by i Per cent, per annum, there will be a saving to the taxpayers of £5,000,000 yearly, irrespective of any savings that may be made by the lowering of the rate of interest on new borrowings. Therefore, this method of attacking the financial problem is based upon true economy, and aims at the reduction of the big charges which weigh so heavily upon our revenue. The agreement offers a prospect of that advantage, which can be secured by no other means.
I have spoken of the effective management of the existing debt, but in respect of new loans also, any improvement of the credit of the Commonwealth will be of the greatest advantage to the people of Australia as a whole. By giving constitutional status to the loan council this agreement aims at substituting coordination for competition in borrowing. I have heard some critics suggest that competition is better than co-ordination, and that individual borrowers may obtain better terms by approaching the market independently rather than through the loan council or any other instrument of joint control. I was in London on behalf of the Government in 1926, and had then an opportunity to meet some of the financiers whose names have been mentioned in the course of this debate. As a result of my conversations with them, and inquiries in other quarters, I ascertained that’ unquestionably competition between Australian borrowers on the London market depreciated Australian credit as a whole. It is true that the honorable member for Perth (Mr. Mann) produced a table which showed that the average rate of interest paid on Commonwealth loans was higher than that paid on State loans. From this evidence the honorable member sought in a most surprising manner to prove that Commonwealth credit is worse than that of the States. But I think honorable members were aware at the time that the honorable member for Perth was merely comparing the rates actually being paid by the Commonwealth and the States at the present time, and that nearly the whole of the Commonwealth debt was incurred during or immediately after the war, when rates of interest were relatively high. Some of the State loans on the contrary have been outstanding for 40 years, and were floated at rates as low as 3 per cent. A few of them are interminable, and need not be paid back unless the Government so desires. For example, there is a Victorian 3J per cent, stock which the Government is able to keep on the market for ever, and the bond-holders are not at all optimistic regarding the prospects of redemption. A large proportion of State indebtedness represents loans floated at rates much lower than were obtainable during and after the war. Therefore, the figures quoted by the honorable member for Perth proved nothing at all. If honorable members will .compare the rates on the London market to-day they will see that Commonwealth securities are higher than those of any of the States with the exception of Tasmania, to which special considerations apply.
Another commendable feature of the agreement is the increased security which it gives to the States as compared with the per capita system which has been advocated by certain honorable members. The continuance of the per capita payments since 1920 has depended upon the Surplus Revenue Act, which the Commonwealth Parliament could at any time repeal, and did, in fact, repeal last year. That act had no special constitutional foundation. It was an ordinary repealable statute. In 1910, when the Braddon section expired,’ the Parliament of the day substituted a payment cf 25s. per head, and took away from the States, without any compensation whatever, a sum of over £3,000,000. If the per capita payments were continued it would be possible for any future Parliament to reduce them to any extent or to wipe them out completely. Under this agreement, there is no such insecurity. If it is approved and finally adopted, the States will know exactly where they are, and will have the most absolute guarantee that they will get the money which the agreement promises to them. Such a guarantee was not offered by any other scheme that has yet been devised.
It is also necessary to consider the actual financial effect of these proposals upon the Commonwealth and the States. The honorable member for Perth dealt with this matter in some detail, and compared the par capita payments for 58 years, on the assumption of a continued increase of population at the normal rates, with the payment to the States under this agreement. The total of the per capita payments in 58 years, he said, would be £823,000,000, whilst the payments to the States under this agreement at the rate of £7,584,000 per annum would amount to £440,000,000, leaving the States at a disadvantage of £383,000,000. I propose to examine the argument which the honorable member for Perth founded upon these calculations. In the first place he was comparing a certainty with an uncertainty. An I have already said, the per capita payments would- depend, unless the Constitution were altered, upon a statute of this Parliament which might be repealed at the will of any chance majority in the Parliament. The assumption that the per capita payments would continue at 25s. for 58 years is mere conjecture, because the amount of such payments, if continued at all, would depend entirely upon the decision of this Parliament from time to time. Furthermore, the system of per capita payments has already broken down in principle, because Tasmania is at present receiving £378,000 per annum in excess of the amount that would be represented by a payment of 25s, per head of its population. Similarly, Western Australia is receiving £300,000 per annum in excess of the per capita payments. These grants depend not upon the Constitution, but wholly and solely upon legislation passed by this Parliament. The Tasmanian grant expires in June of this year, and the Western Australian grant expires, I think, in 1932.
– In what sense does that mean a breakdown of the principle of per capita payments?
M.- The amounts paid from Commonwealth revenue to the States are not, in fact, calculated in the case of two States, upon the per capita basis. The amount paid to Western Australia, instead of being 25s.; is 45s. per head per annum. In the case of Tasmania a similar position obtains. The other States are receiving only 25s. per head per annum, but in the case nf South Australia a request is now being made for no less than £750,000, in addition to the per capita payments. The financial agreement, if adopted, is a certainty for the States, and will remove any element of insecurity.
I desire to make a further comment upon the argument of the honorable member for Perth. . He took the whole amount of the per capita payments for 58 years upon the assumption of the normal, increase of population, which he mentioned, but he took part only of the payments to be made under the financial agreement. In fact, there are four different payments to be made under the agreement, but the honorable member for Perth took only one payment in order to make a comparison between the financial agreement and the per capita system. Those four payments are - first, £7,584,000 per annum to the States, which is the only element which the honorable member took into account. The second is a payment of 2s. 6d. in the £1 to a sinking fund for existing debts, which, - over 58 years, will amount to £47,000,000. The third payment is the increased interest on the value of transferred properties, which, over a period of 58 years, will amount to £9,000,000. Those two sums total £56,000,000. The fourth payment is the contribution by the Commonwealth of 5s. per annum to the new sinking fund. That is necessarily an uncertain sum, because it depends upon the amount of new borrowing. Last year the borrowing of the States was £36,000,000. The honorable member for Perth, for the purposes of comparison, assumed a future borrowing of £40,000,000 per annum by the States and the Commonwealth though he intimated that that would be an excessive rate of borrowing. It was upon that basis that he worked out his figures. The honorable member for Perth said that Western Australia certainly needed £3,500,000 next year for developmental work, and that this should be a regular payment. That was quite right iri the case of Western Australia, but if the other States wanted as much as Western Australia did, then the borrowing would be £40,000,000, which he considered an excessive amount. It is conceivable that the other States of the Commonwealth may want as much money proportionately as Western Australia, and, with the increase of population which the honorable member postulates in his calculations, long before the end of 58 years, horrible as the prospect may appear to some honorable members, it is quite possible that £40,000,000 per annum will not be the limit to the new borrowing. I am taking the sum of £40,000,000 as the new borrowing, although I am not in a position to say whether it will be reached or exceeded. At 5s. in the £1 as the sinking fund contribution on that amount borrowed annually, the additional sum paid by the Commonwealth to the States would be £.169,000,000. That added to the £56,000,000 which I have already mentioned, makes an amount of £225,000,000 to be added to the figures of the honorable member for Perth. That would reduce the honorable member’s calculation of £383,000,000 as the amount by which the States are worse off, to £158,000,000.
– On the assumption of a borrowing of £40,000,000 a year.
M. - On the assumption of the honorable member for Perth, I suggest to the House that the honorable member was not justified in omitting these, items in making his comparison, and that unless they are included, the comparison is without value. The true comparison of the figures I suggest is that which I put before the House.
– Even that makes the position very serious.
M. - -I shall deal with that point. First, in fairness to the honorable member for Perth, who unfortunately is absent from the chamber, I wish to deal with his reasons for omitting these items, because he not merely omitted them but said that he was justified in doing so. What justification did he give for omitting them? In the first place the payment on account of the sinking fund on existing debts and increased interest on transferred properties amounts in all to a sum of £56,000,000 over 58 years - about £980,000 per annum. The honorable member said that he omitted the amount of £960,000 per annum because it would be overtaken in the first five years by the increase of population. He ignored that amount after the first five years, but I submit that the Commonwealth has to continue paying it to the States. The honorable member took the sum of the per capita payments over 58 years, but in making his calculations in respect of the items under the present financial agreement he took no period, not even five years. The Commonwealth has to pay that amount to the States for 58 years, and therefore it plainly must be taken into account. A further reason which the honorable member gave for omitting to take into account the 5s. sinking fund was that we might ignore that payment, because the taxation by the Commonwealth of interest on State loans would increase the rate of interest payable by the States, and accordingly the States would lose in that way what they get back in another way from the Commonwealth. The simple answer to that contention is that, apart from the agreement altogether, the Commonwealth will get the whole of this taxation on interest on State loans and will keep it, and, apart from the agreement, will give nothing back to the States. The position to-day is that the Commonwealth imposes taxation on interest on State loans. That is paid into the Commonwealth revenue, the States receiving none of it. Under the agreement the States will receive this extra amount of 5s. per cent, per annum on the amount of new debts, which they will not get apart from the agreement. But the subject of the taxation of State loans is really a separate one. It is not dealt with by the agreement, and it is not in any way affected by it. The Commonwealth, in future, may go on taxing that interest, or, if it thinks proper, it may remove or reduce that taxation. That power will remain in any event ; but, whatever the Commonwealth may do is quite apart from, and irrespective of, the agreement.
These considerations still leave the sum of £158,000,000 as the difference between the payments under the per capita system, and the payments under the financial agreement, even on the calculations tha.t I have submitted to honorable members. That is an obvious fact. It was one of the first things that the representatives of the States saw when they were invited to consider the Commonwealth’s proposal. No elaborate calculations are needed to prove that the States will have received substantially less under the agreement at the end of 58 years than the amount that they would have received under the optimistically assumed continuance of the per capita system. When the States first accepted this agreement, there were five State Labour Governments and one Nationalist Government, and, since then, four Labour Governments and two Nationalist Governments have accepted it, knowing exactly what it means.
– Why did the Prime Minister lead the people to believe that the Commonwealth would pay out more under the present agreement than under the per capita system?
M. - It will pay out more under this agreement in the earlier years, but it has been a commonplace in this discussion ob initio that, for the whole period, the States would have received a larger sum if the per capita system had continued in operation. At least, the States knew it perfectly well, and they accepted the agreement with that knowledge. Presumably the State Ministers recognize their responsibility to their own States, and realize that they hold office at the will of their own Parliaments. First, it is a matter for them to consider whether, when a long view is taken, the proposed agreement is in the true interests of the people to whom they are responsible. Why did the States accept this apparent loss, which is a loss only upon an assumption, that cannot be justified, of the perpetuity of the per capita payments, which I venture to say no reasonable man could take for granted? They accepted the agreement first because, in their judgment, any loss was more than set off by two factors. One was the expected appreciation in credit resulting from the adoption of the financial agreement, the institution of a permanent loan council, and joint management of public borrowing, together with the establishment of the sinking fund. These advantages were expected by the State Treasurers to’ result in lower interest rates, and, therefore, a saving to the taxpayers. Upon a long view it was considered that this was a more important element in the ultimate interests of Australia as a whole, including the States, than the advantage produced by the financial calculations that I have made, based upon assumptions on which no one can rely at the present time. Then again, there was another factor, which is most important from the point of view of the States. By this agreement they obtain security, which has never been offered to them under any other proposal, and which no other proposal that has yet entered the realm of practical politics has ever provided. This element of security is a fundamental feature of the agreement, and it is most important, not only from the point of view of a State Treasurer, who is the financier of his State, but also from the stand-point of order and stability of government. The States will know exactly, where they are at the minimum. Further, the representatives of the States were not unmindful of the fact that Australians are one people, although, for the attainment of different political purposes, they are separated into different political ‘entities as Commonwealth and States. Is it likely that the people of Australia in one capacity will see injustice done to themselves in another capacity? Moreover, the Commonwealth, if this agreement is accepted, could not diminish this payment at all; but it could increase it, in effect, so long as the provisions of section 96, under which the Commonwealth can grant financial assistance to the States, remain in the Constitution. The States were prepared to rely, if some entirely unexpected eventuality arose, upon the security and minimum given by the agreement, and upon the sense of justice of their own people.
– The Premier of South Australia actually brought that matter up.
M. - I believe so. The States realized that the Commonwealth had already recognized the position of Tasmania and Western Australia. This House, I believe, almost unanimously, considered that the special circumstances of those States justified special treatment. Is there any reason for supposing that that spirit will be absent from this Parliament in future ? I think not.
– Was anything said, during the discussions with the States, to suggest that they or any of them prefer this agreement to a continuation of the per capita grants ?
M.- I think that the States would prefer the per capita grants; but that is pure speculation on my part. Last year, of course, the States preferred the per capita system to anything else proposed. On this occasion, however, that question did not arise, because the per capita grants had been abolished. The question did not arise, and therefore it is only a matter of speculation whether the States now would prefer the per capita arrangement to this proposal. The per capita arrangements were hot set as a practical proposition in contrast with this proposal because this Parliament had already declared its will very definitely and unmistakably upon the subject, and that position was accepted, though the comparative financial results were recognized. Therefore it was not practical to compare the abolished proposal with the present proposal which has been elaborated in co-operation between the Commonwealth and the States. When I am asked whether the States approve of this, that or the other, and whether the States possibly do not prefer the per capita, I can only answer that it is hardly fair to ask such hypothetical questions. We are face to face with the fact that certain of the State Parliaments have already accepted this agreement. Either they acted responsibly, or they did not. I am prepared to accept the view that they acted responsibly.
The final aspect of this matter, and that to which I direct attention, is the general legal and political aspect. This is another matter which influenced the acceptance of this proposal by the States. The acceptance and coming into effect of this agreement as a permanent measure depends on the voluntary action of the people directly on their own account, and indirectly through all the parliaments of Australia. There has never been a measure proposed in any parliament in the world in which such safeguards have been provided as in this for the purpose of ascertaining the will of the people.
– That is a very sweeping statement.
M. - It is a very sweeping statement, which I now propose to justify. Some honorable members have constituted themselves champions of the States. I am as good a champion of the States, I contend, as is any member of this House, and no honorable member has any warrant for styling himself defender and champion of the States in this House above other honorable members. What is the use of contending strenuously that the States do not approve of this measure, when the very measure itself cannot come into operation unless and until it has been approved and adopted by every State Parliament in Australia? I find it difficult to understand the suggestion that agreements such as this are made under duress. Duress is a term which connotes force and fear, and is generally associated with physical violence. I have a higher opinion of State Ministers and State Parliaments than to think that they would, submit unintelligently. weakly and pitifully to pressure from this Parliament. I know many members of the State Par liaments, and I know that they are not the men to submit to duress from this or any other body. They are quite capable of both recognizing and maintaining their rights, and they need no defence or support from any honorable member in this House on the ground of duress. [Extension of time granted.’]
I thank honorable members for the extension of time. Let me call the attention of honorable members to some of the provisions of the bill in order to show what has to be done before it becomes effective as a permanent measure, and the extent to which parliaments and the people have to be consulted. I do this with the object of suggesting to honorable members that there is really little occasion for them to defend the rights of any particular State, because every State will have the fullest opportunity of considering, and, if it sees fit, of rejecting this agreement, if it does not approve of it. If honorable members will look at the bill they will find that there is a schedule containing the agreement which, by clause 2 of the bill, it is proposed should be approved by this Parliament. Coming to the agreement itself, the first paragraph of Part I. provides that -
This agreement 3hall have no force or effect, and shall not he binding on any party unless and until it is approved by the Parliament of the Commonwealth and of the States.
That is the first condition. If any single Parliament in Australia does not actively approve by legislation of this agreement, the whole agreement falls, in both its temporary and permanent provisions. That is the first requirement, and any one Parliament - this, or any of the State Parliaments - can prevent the agreement having any effect at* all, either by rejecting the agreement or neglecting to pass the necessary legislation to ratify it. That is one safeguard. I now call attention to the provision on page 9, at the end of Part II. of the agreement, which contains certain temporary provisions. Clause h provides that -
Tn the event of the proposed law for the alteration of the Constitution referred to in part 4 of this agreement not becoming law, and this agreement not being validated thereunder on or before the 30th June, 1929, all State securities re-purchased or redeemed, aforesaid, shall be cancelled, with the exception of securities, the market value of which represents the amount Of money provided in excess of the rate of 7s. Gd. per annum for each £100 under paragraph (6) of this clause, which latter security shall be retained by, and belong to,, the National Debt Commission.
The States will get the benefit of what has been done under the agreement up to that time, including the application of Commonwealth moneys for the redemption of State securities. Such payments will run on for two years, and the States will receive the benefit of what has been done during those two years, whether the agreement is finally adopted or not. By passing this bill what honorable members will do will be to increase the payment to the States for the next two years by £960,000, and by whatever is the amount for the two years of the 5s. per cent, for sinking fund payments on new borrowings. By passing this bill honorable members make sure of that provision without any loss at all to the States for two years. At a later stage, after two years, or before the end of the two years, the matter has to go before the people. If they reject it by referendum, the States will retain all these increased benefits to the extent of nearly £1,000,000 a year, and will not be bound by the agreement in the future. Nor will the Commonwealth be bound. By voting for this bill honorable members will make sure, if the State Parliaments approve of the agreement, that the States will reap considerable advantages for two years, and it will be left for the people to determine by referendum whether the system should be made permanent or not. I now draw the attention of honorable members to the first provision in Part III. of the agreement. It reads -
This part of this agreement shall not come into force or be binding upon any party hereto unless before the 1st July, 1929, the Constitution of the Commonwealth has been altered in accordance with the proposals referred to in Part IV. of this agreement and a law of the Parliament of the Commonwealth has been made thereunder validating this agreement, but shall come into full force and effect if and when before the said date the Constitution is so altered and this agreement is so validated.
That makes it clear that the permanent part of this agreement, namely, the part which relates to the period after the 1st July, 1929, can come into effect only after certain alterations have been made in the Constitution, and a validating measure has been passed by this Parliament under its altered powers.
– The temporary agreement must be validated subsequently.
M. - The temporary agreement will be exhausted after two years. It is not possible under the temporary agreement for the Commonwealth to take over the State debts. That can be done only under the permanent agreement, which needs an alteration of the Constitution. It is for this reason that it is provided that the agreement shall have no effect after the 1st July, 1929, unless the Constitution has been amended and an act passed under the amended powers. It is within the powers of the State Parliaments to ratify all the provisions of the agreement which require such ratification. It is only because of the limitation of the powers of the Commonwealth Parliament that a validating act must be passed by it, subsequent to an alteration of the Constitution. There is security for the States at every stage, and provision for popular approval on a democratic basis to be given to the agreement. For two years until the 1st July, 1929, the States will indisputably obtain increased benefits if they all ratify the agreement. At the end of two years, the temporary provisions of the measure will be exhausted, and the permanent provisions of it can only come into operation if the agreement has already been accepted by every Parliament in Australia, the Commonwealth Constitution has been amended, and the next Commonwealth Parliament has passed a validating act. It will be seen, therefore, that the States are being given the greatest security possible.
– When the validating bill comes before the House, will the whole agreement be subject to review?
M.- No; it will have to be validated or rejected, subject, of course, to any unanimous variation of it by the States.
There is one point raised by the honorable member for Yarra (Mr. Scullin) to which I should like to reply. The only guarantee that the Commonwealth can give the States as to the permanence of the arrangement is by the inclusion of it in the Constitution. If it were merely an enactment of this Parliament, it could be altered by any subsequent Parliament. I shall now endeavour to show how the constitutional guarantee is given. Honorable members will see that provision is made on page 10 of the measure for the Commonwealth to take over, on the 1st July, 1929, the State debts on the terms set out in the agreement. In the view of all the legal authorities who have devoted their attention to this matter, this could not be done under the existing provisions of the Constitution. This agreement has not been hurriedly made. The general question has been under consideration for years, and the precise terms of this agreement have been carefully considered by the principal law officers of the Commonwealth and the States. They have consulted counsel, and the agreement has run the gauntlet of the most severe and searching legal and financial criticism. I do not say that on that account it is perfect. It, like all other agreements, will doubtless be subject to criticism from different points of view; but it has been carefully considered by those whose interest it is to examine and cross-examine its terms.
I now come to the last point of my speech, which has reference to the proposed constitutional amendment. It is provided on page 13 of the measure that -
The Commonwealth will take the necessary action to submit to the Parliament of the Commonwealth and to the electors proposals lor the alteration of the Constitution of the Commonwealth in the following form: -
The alterations that are then outlined are considered to be necessary by the legal advisers of both the Commonwealth and the States. The Commonwealth has also taken outside advice on this matter, but I accept the responsibility for the advice ultimately given to the Government after considering the opinions which had been received from all Commonwealth and State sources. It is proposed that a new section shall be inserted in the Constitution. The honorable member for Yarra asked why what is intended to be done under the proposed new section could not not be done under sub-section xxxvii. of section 51 of the Constitution. It is therein provided that the Parliament shall, subject to the Constitution have power to make laws with respect to -
Matters referred to the Parliament of the Commonwealth by the parliament or parliaments of any State or States, but so that the law shall extend only to States by whose parliaments the matter is referred, or which afterwards adopt the law.
Previously it has “been impossible to get the parliaments of the States to agree in referring any power to the Commonwealth. The Commonwealth got closest to some agreement in relation to aviation. Honorable members will recognize that, whatever may be our views as to the rights of the Commonwealth and the States, there is some practical inconvenience in the application of differing State laws to an .aeroplane and its occupants when it crosses State borders. Aviation is obviously a matter for central control by this Parliament. All the States agreed to pass legislation referring power in that matter to the Commonwealth Parliament. Four only of the States passed the necessary statutes. The States were not prepared to allow their financial arrangements, which are of such permanent and fundamental importance, to rest upon paragraph xxxvii of section 51. They preferred to have an explicit provision in the Constitution, which, in conferring powers upon the Commonwealth Parliament, limited those powers in the manner set out in the agreement. Apart from political considerations the principal reason was that there has always been a difference of opinion among authorities as to how far paragraph xxxvii goes. Apparently it contemplates the passing of a statute, by a State parliament referring a matter to the Commonwealth Parliament. What would be the position if the State Parliament subsequently repealed that statute ? No one knows with certainty.
– Oan a power be taken back once it is referred ?
M. - That is a matter for argument, and various views are held upon it. One view is that once a statute making the reference is passed it cannot be repealed. Honorable members will realize that the idea of an unrepealable statute is something quite new. To put it shortly, this paragraph was considered to involve so much uncertainty in operation that the States were not prepared to leave matters to a reference under it. The new section to be inserted in the Constitution reads -
The Commonwealth may make agreements with the States with respect to the public debts of the States, including -
The taking over of such debts by the Commonwealth ….
The management of such debts;
Observe that the first power is that the Commonwealth may make agreements with the States. The exercise of that power depends upon the success achieved in obtaining agreements with the States. Paragraph 2 reads -
The Parliament may make laws for validating any such agreement made before the commencement of this section.
If all the parliaments of the States approve this agreement, the agreement will have been made; but its permanent provisions will not be certainly valid, because the powers existing at the time when it is being made do not include a power to make these permanent provisions. It is necessary, in order to be quite sure on the point, to ask for an express power -to validate the agreement so far as the permanent provisions are concerned. The Parliament sitting just after the holding of the referendum for the alteration of the Constitution - which must be not later than six months after the passing of the measure by the House - will have to legislate to validate this agreement before it becomes finally operative. Clause 3 provides -
The Parliament may make laws for the carrying out by the parties thereto of any such agreement. .
Hitherto I have dealt with the power of the executive to make agreements. Parliament may make laws for the carrying out of the agreement, but the only laws which can be made under this power will be laws genuinely for the carrying out of the agreement. Otherwise; they will be invalid. Paragraph 4 provides -
Any such agreement may be varied or rescinded by the parties thereto.
This agreement, or any successor to this agreement, may be varied or rescinded by the parties thereto. It is not a cast-iron agreement for all time. This clause also means that no party to the agreement can vary it merely of its own accord. It is necessary to obtain the concurrence of all the other parties. That is a very great safeguard to the States, and at the same time it allows for a degree of flexibility. Clause 5 provides that -
Every such agreement and any variation thereof shall be binding upon the Commonwealth and the States, parties thereto, not withstanding anything contained in this Constitution or the constitution of the several States, or in any law of the Parliament of the Commonwealth or of any State.
There is an absolute guarantee to the States that this or any agreement made in the future under the powers to be conferred by the constitutional amendment shall have constitutional force and effect, notwithstanding any legislation passed by any parliament in Australia. The proposal embodies the highest degree of security, and guarantees to the States that they will obtain everything that this agreement; offers during its currency. At the same time, it. provides for the fullest degree of flexibility consistent with unanimity between the parties. It was not thought proper to place within the power of any one State or of the Commonwealth the right to end or vary the terms of the agreement. This is the first occasion on which anything like agreement has been obtained on this subject. There is no necessity to wait for the report of the commission on the Constitution. The approval of the State Treasurers and of the business section of the community is much more important. This may be separated from other considerations affecting the Constitution. Whatever the royal commission on the Constitution may propose is unlikely to affect the financial position between the Commonwealth and the States. I further emphasize my statement that the temporary provisions of this agreement are all in favour of the States, and that before its permanent provisions can come into operation not only has every State Parliament to be satisfied that the agreement is worthy of acceptance, but a majority of the whole of the people of the Commonwealth, and a majority of the electors in at least four States must approve it. Accordingly the measure provides for the fullest satisfaction of democratic principles. Having regard to these considerations, I ask honorable members to support the bill, and to pass it into law.
Debate (on motion by Mr. Scullin) adjourned.
Cite as: Australia, House of Representatives, Debates, 15 March 1928, viewed 22 October 2017, <http://historichansard.net/hofreps/1928/19280315_reps_10_118/>.