House of Representatives
27 March 1946

17th Parliament · 3rd Session

  1. House of Representatives
  2. 17th Parliament
  3. 1946

Mr. Speaker (Hon. J. S. Rosevear) took the chair at 2.30 p.m., and read prayers.

page 640

HOUR OF MEETING

Motion (by Mr.Chifley) agreed to - That the House, at its rising,adjourn to to-morrow,at10.30 a.m.

page 640

LIBRARY COMMITTEE

Motion (by Mr.Chifley) - by leave - agreed to -

That Mr. K. E. Beazley be appointed to fill the vacancy now existing on the Library Committee.

page 641

QUESTION

RE-ESTABLISHMENT

Malarial ex-Servicemen - Vocational Training - Unemployed ex-Service- mEN in Tasmania - Studies by Correspondence - Re-establishment and Employment Act.

Mr HARRISON:
WENTWORTH, NEW SOUTH WALES

– Will the Prime Minister state whether ex-servicemen who contracted malaria are prohibited from obtaining positions in the Public Service? Is it a fact that malaria cases are not accepted as pensionable by the Repatriation Commission? If so, will the right honorable gentleman explain why exservicemen who contracted malaria in the execution of their duty are penalized by being prevented from obtaining positions in the Public Service?

Mr CHIFLEY:
Prime Minister · MACQUARIE, NEW SOUTH WALES · ALP

– I cannot answer the question off-hand. I shall obtain the information, and let the honorable member have it as soon as possible.

Mr CONELAN:
GRIFFITH, QUEENSLAND

– Can the Minister for Post-war Reconstruction say whether it is true that the re-establishment branch of his department has ceased the teaching of seven important trades in connexion with the vocational training of exservicemen in Queensland? If so, what is the reason for it?

Mr DEDMAN:
Minister for Post-war Reconstruction · CORIO, VICTORIA · ALP

– I doubt very much the accuracy of the information the honorable gentleman has received, but I shall make an investigation and advise him of the result.

Mr BARNARD:
BASS, TASMANIA

– Has the attention of the Minister for Post-war Reconstruction been drawn to press reports published in Tasmania, alleging that a considerable number of ex-servicemen are unemployed in that State. If not, will he ascertain the facts and figures in relation to this matter and take any necessary action?’

Mr DEDMAN:

– I have no detailed information regarding the position in Tasmania, or in any separate State, but I do know that taking the Commonwealth as a whole, unemployment amongst exservicemen is very low. I shall obtain the information sought by the honorable member, and if remedial action by the Government is required, it will be taken.

Sir EARLE PAGE:
COWPER, NEW SOUTH WALES

– I direct the attention of the Minister for Post-war Reconstruction to a disability, which I am sure is unintentional, suffered by certain discharged servicemen. The Army Education Service provided troops awaiting discharge in New Guinea with courses of correspondence studies. Now that the men have been discharged they are unable to continue those courses. The case I have particularly in mind is that of a deputy shire clerk who was taking a course in local government. He is unable to continue that course unless he goes to a university, which is impossible. Consequently he desires to continue the course he was taking before his discharge. He tells me that his position is not singular and that a great many other men are similarly affected. I ask the Minister for Post-war Reconstruction whether he will take steps to correct this anomaly?

Mr DEDMAN:

– The right honorable gentleman’s question appears to relate to the eligibility of men to attend university courses. That depends upon the standards laid down by the universities and in that matter the Commonwealth Government could not interfere. I shall have the whole matter examined to see whether anything can be done.

Mr.FRANCIS. - The Reestablishment and Employment Act which, unfortunately, provides . preference for exservicemen for a period of only seven years, commenced to operate from the cessation of hostilities with Japan, namely, the loth August, 1945. The National Security Act and regulations thereunder will continue to operate until six months after the signing of the peace treaty, which may not occur for years. Meanwhile, hundreds of thousands of Australians are still serving in the forces. Will the Prime Minister agree to introduce amending legislation so that the Re-establishment and Employment Act shall operate as the National Security Act operates, or provide that the period of preference for which an ex-serviceman is eligible, shall date from the time of his demobilization?

Mr CHIFLEY:

– I shall have the matter examined to see whether any action can be, or should be, taken.

page 642

NATIONAL SECURITY ACT

Duration - Coal Control Regulations

Mr JAMES:
HUNTER, NEW SOUTH WALES

– At the Central Coal Reference Board a fortnight ago, Mr. Gregory Forster stated -

The war officially ended on the 3rd March, and consequently all National Security Regulations ceased on that date.

He quoted the Attorney-General as his authority for that statement. Consequently, Judge Drake-Brockman adjourned indefinitely his award for the Collieries Staff Association, an Australiawide mining organization. As this association has patiently waited for over six months for this award and now threatens to withdraw its members from’ all mines in Australia about the 8th April, will the Attorney-General state whether the National Security (Coal Control) Regulations ceased to operate on. the date mentioned? If these regulations are now null and void, does the right honorable gentleman realize that that fact may cause one of the greatest upheavals in the coal-mining industry, and that immediate action is needed to safeguard all the awards that have been made under the regulations, which Mr. Gregory Forster threatens are to be the subject of an appeal to the High Court of Australia, in order to establish whether or not they are now ‘valid?

Dr EVATT:
Attorney-General · BARTON, NEW SOUTH WALES · ALP

– by leave- The honorable member has raised a matter that was raised recently by the honorable member for Fawkner (Mr. Holt). The National Security Act was passed in 1939, and. was expressed to endure not longer than what was described as “the present war and six months thereafter “. That reference was to the war between the King and Germany. About the middle of 1940, after Italy had entered the war, the relevant section was amended to provide that the act might endure for the period of any war in which the King is or might be engaged and six months thereafter. The intention was to cover not only the period of the war with Italy, but also any other, development or extension of the war, such as that which subsequently occurred upon the outbreak of hostilities with Japan. The view then entertained by the Menzies Government and by the Curtin Government subse quently, and their legal advisers, was that the period of time in which the King might be engaged in any war marked the period which ended, not with the cessation of hostilities with any country, but” with the cessation of the war. The view taken was that the cessation of war with a country was when a state of peace came about between the King on the one hand and that country on the other. Of course, the determination of this point is not a matter for the Parliament or for the executive government, but ultimately for the courts of law. It is proper to say, however, appropos the facts mentioned by the honorable member, that the machinery of government in the Commonwealth has always been operated on the assumption that the armistice of the 3rd’ September last was not the period mentioned in the National Security Act ‘as the date of the cessation of war, but only the date of the cessation of hostilities. The 3rd March is not the terminal point of the National Security Act. The time, when it will cease to operate has not yet been reached. Mr. Gregory Forster should not have quoted me as an authority for his reported statement, because what I am now saying at greater length i3 what I have already said in the House on several occasions. The decision on the matter is not for the Executive Government. Judge Drake-Brockman will no doubt give his decision in due time, but the final decision will rest with the courts subsequently.

Mr HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– But this was a case of unconditional surrender.

Dr EVATT:

– I do not wish to discuss that point at this stage. The date of the armistice in the first world war was the 11th November, 1918, but that was not the date of the cessation of the war with Germany. The peace treaty was signed in June, 1919, and the 10th January, 1920, was proclaimed as the date of the termination of the war with Germany.

Sir Frederick Stewart:

– Why was the 3rd September taken as the commencing date of the soldiers’ preference?

Dr EVATT:

– For the same reason. The 3rd September indicates not the cessation of war, but the cessation of hostilities.

page 643

QUESTION

AIRCRAFT PRODUCTION

Mr ABBOTT:
NEW ENGLAND, NEW SOUTH WALES

-Will the Minister for Aircraft Production inform the House whether the statement published in this morning’s press that the Government proposes to build 61 Lincoln bombers at an estimated cost of £9,600,000 is correct? If the statement be true, is the programme being undertaken to meet requirements of the Security Council of the United Nations, or to provide employment in the Commonwealth? If the latter, will the Minister recommend to Cabinet that the man-power and resources proposed to be used in this programme be diverted to the production of urgently required consumption goods, and particularly builders’ hardware, so that the many thousands of homeless Australians may the sooner obtain shelter?

Mr MAKIN:
Minister for Aircraft Production · HINDMARSH, SOUTH AUSTRALIA · ALP

– Yesterday, I answered a question on this subject by the honorable member for Balaclava, but if the honorable member wishes to have a full statement of the programme I shall be pleased-

Mr Abbott:

– I want an answer to the two questions I have asked. So far, the Minister has not answered either.

Mr MAKIN:

– I shall supply an answer in my own time.

page 643

QUESTION

FOOD SHIPS FOR INDONESIA

Mr RYAN:
FLINDERS, VICTORIA

– The week before last I asked the Prime Minister a question, upon notice, about the sending of ships to the Dutch East Indies, with particular reference to loading and other conditions. The Prime Minister said that he would let me have the information later, and I now ask when-I may expect to receive it.

Mr CHIFLEY:
ALP

– As a matter of fact a reply was prepared to the question, but it has been withheld because certain conferences dealing with- the matter are to take place later this week, and I’ thought it better to wait until I could give the honorable member fuller information. I am sorry for the delay, but that is the reason for it.

page 643

AUDITOR-GENERAL’S REPORT

Mr SPEAKER:

– I lay on the table the following paper: -

Audit Act - Finance - Treasurer’s Statement ofReceipts and Expenditure for year 1944-45,accompanied by the Report of the Auditor-General.

Motion (by Mr. Chifley) proposed -

That the paper be printed.

Debate (on motion by Mr. Menzies) adjourned.

page 643

QUESTION

BRETTON WOODS AGREEMENT

Broadcast by the Minister for Transport.

Mr MENZIES:
KOOYONG, VICTORIA

– The Australian Broadcasting Commission announced to-day that the Minister for Transport will broadcast to-night over the national stations, or, at any rate, over a national station, a talk on the Bretton Woods agreement. In view of the fact that the broadcast is to be made by a ‘ Minister, and over a national station, may honorable members assume that he will be expressing the views of the Government?

Mr CHIFLEY:
ALP

– Any statement made by the Minister for Transport in such a broadcast will express only his personal views.

Mr Holt:

– What has become of responsible government?

Mr CHIFLEY:

– The position is much the same as when the honorable member for Barker (Mr. Archie Cameron) expressed his personal views while holding office as a Minister in a previous government.

Mr Menzies:

– Would the Minister for Transport, as a private citizen, be given facilities for a broadcast over the national network ? ‘

Mr CHIFLEY:

– Dealing, first, with the original question, I have to say that any statement as to Government policy in relation to the Bretton Woods agreement will be made by the Leader of the Government in due course. Any decision as to the persons to whom permission to broadcast over the national network is given, and the subjects of such talks, is a matter entirely for the Australian Broadcasting Commission. The present Government has not made any suggestions to that body as to what should be broad- cast over its network, although I believe that during the regime of previous governments that policy was not strictly adhered to.

page 643

MOTOR VEHICLE

page 643

QUESTION

MANUFACTURE

Mr RIORDAN:
KENNEDY, QUEENSLAND

– Last year consider able publicity was given to offers by various companies to manufacture motor vehicles in Australia.Can the Minister for Post-war Reconstruction say what progress has been made towards the establishment of that industry in this country ?

Mr DEDMAN:
ALP

– Some of the companies which were interested in the manufacture of motor ear’s in Australia informed the Government that they could not proceed with their proposals until the Government had done certain things. As the outcome of their representations, the Government decided to repeal two nets which were then on the statute-book. That having been done, the way was clear for manufacturers to submit definite proposals to the Government, and three or four companies did so. Their proposals, which were examined by the Government, included, in some instances, requests for certain concessions, such as re bates of taxes, and relaxation of customs duties. The Government decided not to grant some of their requests. At least one of the companies has gone ahead with its proposals, andI believe that it has publicly announced that the first of the motor cars to be manufactured by it will come off the production line about the middle of this year. Other companies have amended their proposals in the light of the Government’s decision not to grant some of the concessions asked for. At the moment, I am not in a position to say what progress has been made with their proposals.

page 644

QUESTION

WAR DAMAGE INSURANCE

Mr FADDEN:
DARLING DOWNS, QUEENSLAND

– Has the Treasurer any information to give to the House, off- . hand, as to the amount of war damage insurance collections? If so, will he indicate how the Government intends to utilize the balance remaining in the fund after the settlement of all claims for which premiums were paid?

Mr CHIFLEY:
ALP

– Offhand, I cannot give the exact figures, but the total collections by way of premiums amounted to approximately £13,000,000. The provisions of the War Damage Regulations have been widened since the original regulations were promulgated, thereby enabling additional claims to be made on the fund under the control of the War Damage

Commission. Until a final settlement has been made, it will not be possible to determine exactly what will be the balance between receipts and expenditure. So far, no decision has been reached as. to what will be done with the balance.

page 644

WHEAT INDUSTRY

Marginal Areas. Mr. MOUNTJOY.- In view of the world-wide demand for wheat, will the Commonwealth Government agree to allow wheat-growers working under marginal area, reconstruction schemes to sow areas greater than their basic acreage? If so, will the Minister take this matter up with the States forthwith in view of the nearness of cropping?

Mr SCULLY:
Minister for Commerce and Agriculture · GWYDIR, NEW SOUTH WALES · ALP

– I should like it to be definitely understood that the Commonwealth Government, under its wheat stabilization plan, has no control over marginal areas. That is entirely a matter for the States; but I can assure the honorable member that the Commonwealth Government would like to see the fullest possible production of wheat in the corning season, because every bushel will be required. In accordance with the honorable member’s suggestion, I shall take the matter up with the State authorities, but I emphasize that the Commonwealth has not interfered in any circumstances with the actions of the States regarding marginal areas.

page 644

QUESTION

QUESTIONS

Debatable Matter

Mr RANKIN:
BENDIGO, VICTORIA

– Having addressed a question to the Minister for Commerce and Agriculture-

Mr SPEAKER:

– Order ! I regret having to interrupt the honorable member, but his question introduces argument by a person outside Parliament regarding the merits or demerits of a proposal of the Government. Honorable members are not permitted to ask questions which involve debate, and’ the arguments of a member of the public may not be introduced into this chamber by proxy. If the honorable member reconstructs his question, he may address it to the Minister later.

page 645

QUESTION

PAT STOCK SALES IN MELBOURNE

Supplies - Meat Ration Coupons

Mr HOLT:

– Will the Minister for Commerce and Agriculture proceed to Melbourne in an attempt to overcome the difficulties that are preventing supplies of fresh meat from being made available to the people of Melbourne? Also, in the event of Melbourne residents being unable to secure adequate supplies of fresh meat within a reasonable time, will the Government arrange for an extension of the life of current meat ration coupons, so that they may be used when supplies are forthcoming?

Mr SCULLY:
ALP

– Like the honorable member for Fawkner, I too desire an early settlement of this dispute; but perhaps if I go to Melbourne, I shall aggravate rather than overcome the difficulties. However, the honorable member’s suggestion will be taken into consideration. An extension of the. life of meat ration . coupons will be discussed with the Acting Minister for Trade and Customs. I appreciate the seriousness of the position, and I am hopeful - perhaps over-optimistic - that a settlement will be reached at an early date. Meat supplies yesterday were limited and fell far short of the demand, but there seemed to be a general improvement, and I believe that the common sense of all concerned will prevail.

page 645

QUESTION

Y ASS-CANBERRA RAILWAY

Mr FULLER:
HUME, NEW SOUTH WALES

– Can the Minister for the ‘Interior say whether the construction of the proposed Yass-Canberra railway is likely to be proceeded with immediately? If so, is any of the heavy construction equipment of the Army likely to be used to expedite the work?

Mr JOHNSON:
Minister Assisting the Minister for Works and Housing · KALGOORLIE, WESTERN AUSTRALIA · ALP

– Whilst the importance of the construction of the YassCanberra railway is fully recognized, I think it would be wrong for me to promise early commencement of the undertaking. The Government of New South Wales is also involved in the matter; but, as far as the Commonwealth Government is concerned, the work is marked for consideration as a post-war measure. I have previously noted the strong recommendations made by the honorable gentleman in connexion with this matter.

page 645

QUESTION

WOOLLEN MILLS

Sir FREDERICK STEWART:

– Is the Minister for Post-war Reconstruction able to give the House any information concerning the report that 30 woollen mills, to cost £20,000,000, are likely to be established in Australia?

Mr DEDMAN:
ALP

– I have no information on that matter.

page 645

QUESTION

BARLEY

Mr RUSSELL:
GREY, SOUTH AUSTRALIA

– I ask the Minister for Commerce and Agriculture whether the Barley Board, which markets barley in South Australia . and Victoria, will go out of existence when the National Security Regulations come to an end. If so, what steps are being taken to ensure continuance of organized- marketing of barley?

Mr SCULLY:
ALP

– The Barley Board has given excellent service on behalf of the growers. It is constituted under National Security Regulations, and will cease to operate on the expiry of those . regulations. Continuance of the board beyond that date will depend on the wishes of the growers, but . I think growers in South Australia and Victoria are anxious to have it continued. I have discussed the matter already with members of the Barley Board. If the growers so desire I will take up the matter with the Agricultural Council to see whether we can devise a scheme for the marketing of barley in Victoria and South Australia similar to the wheat stabilization plan.

page 645

QUESTION

HYDRO-ELECTRICITY

Snowy River Scheme

Mr FRASER:
Minister for Health · EDEN-MONARO, NEW SOUTH WALES · ALP

– Will the Minister for Post-war Reconstruction inform me what stage has been reached in the consideration of proposals to use the waters of the Snowy River for hydro-electricity and irrigation? Is this project still held up by a disagreement between the Governments of Victoria and New South Wales? Is there any further step which the Commonwealth Government can take to enable this great post-war reconstruction work to be commenced?

Mr DEDMAN:
ALP

– At present, the Government of New South Wales has decided to proceed with certain proposals. When the Commonwealth received advice to that effect, it communicated with the Government of Victoria, and at the last conference of Commonwealth and State Ministers a small committee, consisting of the appropriate Ministers of the Commonwealth, New South Wales and Victoria, conferred on the matter. I understand that the parties agreed to meet again at a future date for the purpose of considering exactly what should be done. I am not able to say when the conference will take place, but I shall obtain the information for the . honorable member.

page 646

QUESTION

OFFICE ACCOMMODATION IN SYDNEY

Mr FALSTEIN:
WATSON, NEW SOUTH WALES

– Has the Minister for the Interior yet received a report from Mr. Westhoven, the officer appointed to investigate the availability of business offices in Sydney ? If he has not received the report, will he ascertain whether its completion can be expedited, and will he implement its recommendations as soon as he receives the document?

Mr JOHNSON:
ALP

– A report has been received from Mr. Westhoven on Commonwealth occupation of office accommodation in respect not only of Sydney, but also Melbourne and Brisbane. Mr. Westhoven, who is now in Canberra, this morning attended a meeting of the Cabinet sub-committee which is considering this problem. That meeting will be resumed at 7.30 p.m. this evening, and at its conclusion I hope to be able to make a statement on the subject.

Mb. S. M. BRUCE.

Mr ARCHIE CAMERON:
Postmaster-General · BARKER, SOUTH AUSTRALIA · ALP

– I ask the Prime Minister whether any attempt has been made to retain for this country the able and distinguished services of the Right Honorable S. M. Bruce? If not, why not?

Mr CHIFLEY:
ALP

- Mr. Bruce, who has rendered very distinguished services to this country, has not been offered any position by this Government. I do not think that I am called upon to give the reasons why the Government has not done so, or to discuss whether the Government should offer Mr. Bruce a position at some future date.

page 646

QUESTION

WAR GRATUITY

Mr CONELAN:

– Will the Prime Minister give favorable consideration to the payment of war gratuity to servicemen who served in the Torres Strait islands during the war at the higher rate in respect of overseas service, instead of at the lower rate applicable to service within Australia?

Mr CHIFLEY:
ALP

– The payment of war gratuity to Torres Strait islanders was dealt with generally by the Special Committee on War Gratuity. I cannot recall whether consideration was given to the subject of the honorable member’s question. I shall examine the matter and supply an answer later.

page 646

QUESTION

MR. INIGO JONES

Mr BERNARD CORSER:
WIDE BAY, QUEENSLAND

– Will the

Prime Minister review the claims for assistance to Mr. Inigo Jones from Comrnomvealth funds in order to aid him in his timely and valuable weather forecasts which ho has provided for many years? He has been refused such assistance owing to the determination of certain scientists not to recommend such recognition of his work.

Mr CHIFLEY:
ALP

– Claims for financial assistance to Mr. Inigo Jones were rejected on the ground that his work was not of a kind to warrant the provision of financial aid by the Government. However, I shall have the matter further investigated.

page 646

CONSTITUTION ALTERATION (SOCIAL SERVICES) BILL 1946

Second Reading

Dr EVATT:
Attorney-General and Minister for External Affairs · Barton · ALP

– I move -

That the bill bo now read a second time.

The object of this bill is to alter the Constitution so that this Parliament can continue to provide directly for promoting social security in Australia. This is in no sense a party measure. Ever since federation, it has been assumed by successive governments and parliaments that the National Parliament could spend for any all-Australian purpose the money that it raises. In 1944, I warned the House and the country that, under the Constitution as it stands, the legal foundations for even the moS’t urgent modern social service legislation were doubtful and insecure. The High Court’s decision last year in the pharmaceutical benefits case has shown that these doubts were only too well founded. The object of this bill is to place Australian social service legislation on a sound legal footing. Not only in Australia, but also throughout the world, there has been a marked development, in the present generation, in the realization that it is the community’s duty to provide for its members benefits of a social service character. When the Constitution was adopted in 1900, the idea of even invalid and old-age pensions was new. But the framers of the Constitution recognized that such a matter could be dealt with more satisfactorily on an Australia-wide basis than by piecemeal and varied action on the part of separate States. This is just as true of other social services, such as, for example, child endowment, widows’ pensions or medical benefits, which we realize to-day must be provided. Indeed, the argument for action by this Parliament is much stronger to-day. Half a century of living together as a nation has made it repugnant to Australians that the measure of their social security should depend on the accident of their residence in one State or in another.

I turn next to remind the House and the country what provision the Constitution, as it stands, makes for social service legislation by the National Parliament. The Commonwealth has power to make laws for “ invalid and old-age pensions” : section 51 (xxii). It also has power in relation to “ insurance “, other than State insurance”: section 51 (xiv). Any other social service payments made by the Commonwealth must, therefore, rest on some other foundation. The only one available is the power implied by section SI, to appropriate money by law, from the Consolidated Revenue, for the purposes of the Commonwealth.

For many years there have been two schools of legal thought on the meaning, in this section, of the words “ the purposes of the Commonwealth “. The wider view was that any purpose for which the Parliament chose to make an appropriation of money thereby became a “ purpose of the Commonwealth “. On this view, there were no limits to the purposes for which the Parliament could authorize the expenditure of money. Another, and narrower, view was that “ the purposes of the Commonwealth “ in section 81 must be purposes indicated elsewhere in the Constitution as coming within the Commonwealth’s legislative, executive and judicial powers. The Parliament, as I have said, has consistently acted on the wider view of its appropriation power. Until recently, the High Court had not been called upon to pronounce formally on the validity of this practice, although the matter was discussed by the court in 1935.

The Pharmaceutical Benefits Act 1944 provided’ for certain pharmaceutical benefits, payable out of the trust account established under the National Welfare’ Fund Act 1943. The moneys which form this fund are derived from the Consolidated Revenue Fund. The High Court, with one dissentient, held that the Pharmaceutical Benefits Act 1944 was beyond the powers of the Commonwealth Parliament, and therefore invalid. Without going into technical details of the reasons- given by the various justices, it may be stated that a majority of the court clearly rejected what I have called the wider view of the meaning of the words “ the purposes of the Commonwealth “ in section 8.1 of the Constitution. This decision throws serious doubt on the validity of a number of acts on the Commonwealth- statute-book, including several acts that provide for what are commonly referred, to as “social services “.

In considering the effect upon ‘other Commonwealth acts of the principles laid down by the High Court in the pharmaceutical benefits case, the Government obtained opinions from Sir Robert Garran, K.C., of Canberra ; from Messrs. Maughan, K.C., and Barwick, K.C., of Sydney; and from Mr. Ham, K.C., and Dr. Coppel, K.C., of Melbourne. With the consent of the House I shall incorporate in Hansard a tabular statement analysing the opinions given by these counsel -

After considering these legal opinions and those furnished by its own advisers, the Government has decided that the only amendment to the Constitution which is urgently necessary as a result of the High Court’s decision is an amendment to authorize the continuance of acts providing benefits in the nature of social services, and to authorize the Parliament in the future to confer benefits of a similar character. That is the object of this bill. I emphasize that the bill does not seek to extend the appropriation power in any other respect. The proposed alteration embodied in the bill is, therefore, limited to benefits of a social service character and, in the main, to benefits of a type provided for by legislation already on the- statute-book.

Mr Spender:

– Would the power to legislate in respect of medical and dental services, if granted, enable the Parliament to nationalize those services?’

Dr EVATT:

– We might discuss that in some detail at a later stage. I answer the question at the moment by saying that, if the Constitution were altered to enable the Parliament to make provision for medical and dental services, that would authorize the Commonwealth to do everything incidental to providing those services. In other words, the Commonwealth could obtain the services of medical and dental practitioners, nurses and the like for that purpose; but the proposed alteration would not enable the Commonwealth to say, “ We shall make all practitioners in the medical and dental professions members of the service of the Commonwealth “.

Mr Archie Cameron:

– Why not?

Dr EVATT:

– We shall be able to do everything necessary and incidental to providing these services. That is a very wide power.

Sir Earle Page:

– Would this provision control the registration of doctors and dentists ?

Dr EVATT:

– Not the general registration. The right to practise in those professions is governed by State law. This proposal would not affect that, nor would it affect the right of a doctor or a dentist as an individual to practise his profession.

Mr McEwen:

– Would not Commonweal th law override State laws?

Dr EVATT:

– It would enable the Commonwealth to make use of the services of doctors and dentists to provide national medical and dental services. Under the power sought, no authority will be vested in the Commonwealth to control health generally or the general practice of medicine or dentistry, or to abrogate the right of the States to lay down the qualifications that must be held by those who wish to practise in those professions. I was saying that the proposed alteration is limited to benefits of a social service character and in the main to benefits of a kind already provided for by statute. The exceptions, or partial exceptions, are medical and dental services, and family allowances. Medical services had, to some extent, been provided for by the Pharmaceutical Benefits Act itself, and dental services are so closely analogous to medical services that the Government considers that it would be illogical to enable the Parliament to provide for the one and not for the other. The power to grant “ family allowances “ is probably wide enough to cover some of the other powers enumerated in the proposed paragraph, but it is intended to cover also analogous benefits which may fall outside the precise, wording of those other powers.

It may be said that the Commonwealth should, under the Constitution as it stands, make provision for social service benefits by conditional grants of money to the States. But the Government feels strongly that the effective and harmonious administration of such benefits is best ensured by a Commonwealth-wide administrative organization, and that the Commonwealth should have the power to carry out directly, and iri its own way, the social services schemes on which the Parliament decides. The proposed powers will not deprive the States of power to make laws on the same subject-matters, so long as those laws are not inconsistent with Commonwealth law. As I have already shown, the constitutional alteration proposed by this bill is absolutely necessary if even the existing Commonwealth social service measures are to be continued, let alone extended.

Debate (on motion by Mr. Menzies) adjourned.

page 649

CONSTITUTION ALTERATION (ORGANIZED MARKETING OF PRIMARY PRODUCTS) BILL 1946

Second Reading

Dr EVATT:
Attorney-General and Minister for External Affairs · Barton · ALP

.- I move-

That the bill be now rend a second time.

The object of this bill is to alter the Constitution so that this National Parliament can deal effectively with what has become one of Australia’s most urgent national problems - the organized marketing of primary products. The Commonwealth has done so during the war. Many primary producers are apprehensive of the future if the Parliament cannot continue to do so during the yearsof peace, and particularly during the difficult years that lie immediately ahead. In particular I instance organizations of growers of wheat, barley and potatoes.

During the war, under the defence power, the responsibility for organizing the marketing of primary products has fallen squarely upon the Commonwealth. Despite the war-time dislocation of markets, the results -have been highly beneficial to the producers. As long ago as 1944, it was estimated that the .mortgages and bank overdrafts owed by primary producers had been reduced by over £60,000,000 since the war began. I refer also to the figures cited in the House recently by my colleague, the Minister for Post-war Reconstruction, which showed that at various income levels the income of primary producers had increased greatly during the war years. The Minister quoted the following table which, with the consent of honorable members, I incorporate in Hansard: -

Sir Earle Page:

– Do those figures represent gross income, or income for taxation purposes?

Dr EVATT:

– They represent actual income.

Sir Earle Page:

– There is a very big difference.

Dr EVATT:

– Which applies to all of us. Australia’s war-time marketing experience clearly shows the great advantage to primary producers of enabling a single national authority to lay down a plan for the marketing of primary products. The history of Australian attempts to organize the marketing of primary products stretches back for at least twenty years before the war. The general object has always been to bring about price stability in the primary industries, to assist them to bear the heavy burdens of climatic ancertainty andworld competition, and to ensure for primary producers a reasonable standard of living and adequate economic security. The methods used ha ve included “ pooling “, compulsory or voluntary; “orderly marketing” by means of zoning, quotas and the like ; and arrangements to ensure better grading, parking, advertising and so forth.

With the exception of the war years, attempts by this Parliament to give effective assistance to primary producers by organizing the marketing of primary products have encountered two constitutional difficulties. One is the fact that while the Parliament may make laws with respect only to trade and commerce with other countries and among the States, it may not make laws with respect to trade and commerce within a single State. The second difficulty is the requirement laid down in section 92 of the Constitution, that trade, commerce and intercourse among the States shall be “ absolutely free “. The present bill is designed to obviate both these difficulties.

Mr Menzies:

– I take it that the Attorney-General is not suggesting that section 92 does not operate in respect of the defence power, but that, in the circumstances of war, with acquisitions and the like, it has been of less importance ?

Dr EVATT:

– Yes, and has been interpreted somewhat elastically in the courts.

In the first place, the new paragraph which the bill proposes to add to the list of legislative subjects in section 51 of the Constitution will cover intra-state as well as interstate and overseas transactions. No effective plan can be worked out for the organized marketing of primary products which does not embrace all three types of transactions. In the second place, the new provision which the bill proposes to add at the end of section 51. will release from the requirements of section 92 any laws made for the organized marketing of primary products.

Something further should be said about section 92. It has been the subject of judicial consideration in the High Court on ‘many occasions, and also in the Privy Council. The exact effect of the decisions is exceedingly difficult to state. On many occasions, I have explained my view that section 92 does not altogether prohibit organized marketing. Some marketing schemes have been upheld, notwithstanding section 92, on the ground that they were directed not to the mere restriction of interstate commercial transactions but to the achievement of such objectives as the preservation’ of standards of purity and quality, and the maintenance of supplies for consumers. Each marketing scheme has to be examined in the light of its own particular facts and circumstances.

On the other hand to leave section 92 untouched is necessarily to expose all plans for the organized marketing of commodities to the possibility of overthrow by the courts.. Our own experience with marketing legislation in the years between the two wars has shown how important it is that those responsible for the welfare of the primary industries should be in a position to formulate their plans with the certainty that they will not be upset on constitutional grounds. Two decisions given by the High Court last year with regard to the effect of section 92, though not directly related to marketing legislation, have further illustrated the difficulty of advising what is and what is not permitted under that section. This Parliament, and the Government of the day, thought, in 1936, that marketing legislation ought not to be subject to section 92, and proposed a constitution alteration with that object in view. Subsequent decisions have shown that section 92 does not make all marketing plans impossible. But the section does make all marketing plans to some extent uncertain. The position in fact is still one of such doubt that action should certainly be taken now to clear it up for the future. This is one of the objects of the present bill.

The bill extends not to the organized marketing of all commodities, but only to that of primary products. This is the field in which the need for extending the power of the National Parliament is greatest and most urgent. The future of Australia’s primary industries constitutes a special problem of such vital importance to the whole community that the existenceof national power to protect them is essential.

The expression “ primary products “ is not a technical term, with a fixed legal meaning. But the phrase is in such general use that there will seldom be any doubt as to whether or not a particular commodity belongs to the category of “ primary products “. In the ordinary popular sense, “ primary products “ are understood to include not only the immediate products of such occupations as the agricultural, dairying and pastoral industries, but also certain processed goods derived directly from those products. All Australians, for instance, would immediately recognize butter, cheese, flour and dried fruits as “ primary products “, though not cakes or bread. There may, of course, be borderline cases. But there are dangers in attempting to define in advance the categories of constitutional power. The exceptional cases, if they arise, can safely be left for decision by the courts.

If this Parliament is endowed with the power now sought, it will be able to deal effectively with a problem which transcends State boundaries. The marketing of primary products has ramifications which are Australia-wide, and the national interest demands that the Commonwealth should be free to take measures to regulate marketing in a manner that will serve not only the interests of producers but also those of the people of Australia as a whole.

Debate (on motion by Mr. Menzies) adjourned.

page 651

CONSTITUTION ALTERATION (INDUSTRIAL EMPLOYMENT) BILL 1946

Second Reading

Dr EVATT:
Attorney-General and Minister for External Affairs · Barton · ALP

-I move-

That the bill be now read a second time.

The object of this bill is to alter the Constitution so that this Parliament will be able, like the legislature of every State in Australia, to regulate, either directly or indirectly, the terms and conditions of employment in industry. The intention is to fill a gap which has been recognized by governments of all parties as one of the greatest anomalies in our constitutional system. But in proposing to give this essentia] power to the National Parliament, the bill also imposes a restriction, in order that Australians may never be made subject, in time of peace, to that most unpopular of war-time necessities, industrial conscription.

During the war years, the industrialization of Australia has made unprecedented strides. Old industries expanded, new industries were set up. Australia became for the first time an exporter of secondary products. A major problem of the peace will be to maintain and even increase this high level of industrial production. Our hopes of providing full employment depend on it. So do our hopes of attracting and maintaining a larger population.

During the war years, the defence power of the Commonwealth enabled this Parliament, and under its authority, the Government, not only to improve and extend tha existing machinery for conciliation and arbitration but also to deal directly, as occasion required, with almost every phase of the terms and conditions of employment. Wages, hours, holidays, and working conditions were regulated, in some cases for industry generally, and in some cases for particular classes such as seamen, or women. These, wider national powers have been exercised with marked success. That is shown by the great expansion of industrial production that has taken place. You cannot secure and sustain increased production unless you can secure terms and conditions upon which employers and employees alike are willing to work. Broadly, this is what the war-time national powers achieved.

What will be the position when the defence power has. shrunk to its normal peace-time scope? Under the -present

Constitutional powers of the Commonwealth in time of peace, this Parliament has no direct power to regulate terms and conditions of industrial employment in general. Under section 51 (xxxv) itcan maintain, and, of course, modify and. improve, the existing machinery for conciliation and arbitration - but only in relation to disputes, and interstate disputes at that. It could perhaps directly regulate the terms- and conditions of employment of those engaged in interstate commence - that is, if they could effectively be isolated and defined as a distinct class. ‘ But that is all. It is not enough.

The new power which the bill proposes to give to this Parliament will not in any way abrogate or curtail the existing industrial powers given by section 51 (xxxv.). The new power, however, will supplement the present’ conciliation and arbitration power in two vital respects. First, as I have already said, the- existing powers of industrial regulation are indirect. It is an extraordinary anomaly that although this Parliament has exclusive authority over such matters as customs and excise, it cannot take direct responsibility for regulating wages and hours and industrial conditions, which are in actual practice linked inseparably with tariff questions.. The problem of ensuring that employees shall get their proper share. of the benefits of a protective tariff system has always existed in Australia. The bill- would enable this Parliament to deal with it effectively. Industry is entering a phase in which new conceptions of living standards, of welfare, and of leisure must be worked out. Under Commonwealth leadership during the war, Australia- made striking progress in many of these directions. National leadership will be necessary if this progress is to be maintained in the different conditions in time of peace.

Secondly, it is another extraordinary fact that only through processes originating in industrial disputes can there be any fixation under Commonwealth authority, in time of peace, of wages, hours and conditions of employment. The bill would enable Australia to lay aside the confused and technical system of regulating industrial relations in which the present Constitution, has resulted. The peace-time powers of the Commonwealth are insufficient to enable the Australian Parliament to tackle on a. national basis the problem of fixing standard working conditions in such a national industry as coal, which is the life-blood of the - industries of this country. Just the same must be said of industrial conditions in other basic industries. Since World War II. began, Australia has made important advances in organizing industrial peace. Exaggerated attention is often given to the industrial disputes that have taken place. I have said before in this House, and say again without fear of contradiction, that despite the unprecedented strain which the waging of total war placed upon industry, industrial relations have been incomparably better in World War II. than they were in World War I. I do not suggest for a- moment that the war-time expedients in industrial regulation are the last word on the subject. I do suggest that the problem of improving industrial relations in Australia, cannot be tackled radically or fundamentally so long as the present Constitution stands.

The bill lays clown that the proposed new power of the Parliament to make laws with respect to terms and conditions in industry shall not be exercised so as to authorize “any form of industrial conscription”. In Australia, this, phrase originated in the National Security Act 1939, which imposed exactly the same restriction as the present bill contains. In view of the desperate position in which the British Commonwealth found itself in 1940,. this prohibition Was in effect repealed. By virtue of the amending National Security Act 1940> the manpower system was established, under which men and women were directed into the service of specific employers, and were

Prevented from leaving their employment. Under the present bill, such a system would not be possible in time of peace

The most important aspect of this bill, however, is the positive powers it will confer. It will enable this Parliament to fix standard hours in any industry, though not in occupations that are not industrial in character, in accordance with the distinction between industrial and other types of employment drawn by the decisions of the High Court, under section 51 (xxxv.). It will enable disputes to be’ arbitrated upon if they are industrial in character. Employment of many types does not fall within that category. It will enable this Parliament to fix the basic wage, in accordance with the requirements of the present day, or to fix the principles on which it should be assessed - sv n mn probably would be the sounder method of approach. It will also enable the Parliament to fix the maximum weekly hours of labour that may be worked in industry throughout the Commonwealth. It will enable this Parliament to continue the important work formerly carried out by the Women’s Employment Board. The National Parliament will thus be in a position to deal effectively with one of the great industrial problems that have grown out of war conditions - the entry into industry of many thousands of women workers. In short, the bill will enable this Australian Parliament to discharge all the normal responsibilities of government in an advanced industrial democracy. All of those powers in each of the States are possessed by the respective State Parliaments.

Debate (on motion by Mr. Menzies) adjourned.

page 653

STATES GRANTS (TAXREIMBURSEMENT) BILL 1946.

Second Reading

Debate resumed from the 20th March (vide page 431), on motion by Mr. Chifley -

That the bill be now read a second time.

Mr FADDEN:
Darling DownsLeader of the Australian ‘Country party

.- The direct effect of this bill is to define, within fairly strict, limits, the quantum of tax revenue which each State shall have annually’ to carry out its sovereign functions. State borrowing is already rigidly controlled through the Loan Council^ and consequently the annual expenditure of each State for the future will be largely within Commonwealth control. As money is the lifeblood of any legislature, this bill completes what is without doubt the widest and most important transfer of sovereign powers from the States to the Commonwealth since the financial agreements were reached about fifteen years ago. The agreements both then and now have been ushered in by extraordinary emergencies. On the first occasion, the determining factor with regard to the agreement which limited the States’ control over loan finance was a worldwide depression. On this occasion the opportunity for control of the States’ finances in the direction I have indicated was provided by war.

The system formerly introduced is now perpetuated, not so much because it makes a desirable redistribution of sovereignty, but because it is an established fact whereby the taxpayer is saved the trouble of making more than one taxation return. Consequently, there are debits and credits in the system, depending’ on whether it is viewed from an individual, a State or a Commonwealth angle. Simplicity appeals to the individual, for there is freedom from the worry of filling in more than the minimum number of forms. Viewed from a broader angle, however, the provisions of this bill could prevent the States from obtaining the revenue increases naturally resulting from development within their borders. Take, for example, undeveloped States such as Queensland, where the benefits resulting from development . brought about by the expenditure of loan money are not felt until years after the expenditure has been incurred. The measures we are now considering need to be sufficiently flexible to meet the changing conditions, in order to give to a State such as Queensland the benefits of capital expenditure over the years.

A formula is often an unsuccessful attempt to standardize things which are irreconcilable. For instance, the financial requirements of a growing youth, a reformed’ spendthrift and a successful middle-aged business man are subject to entirely different factors. Put Queensland, New South Wales and Victoria in the place of the examples which’ I have just given, and we realize that this bill contains the germs of future friction between State and State and between Commonwealth and State. It is beyond the art of man to devise a formula providing an overall satisfactory .compromise between State productivity, development and capacity to pay, on the one hand, and adequate taxation return reticulated through Commonwealth instrumentalities on the other. Difficulties in this direction could quite reasonably cause one or more States to have a legitimate grievance on the ground of the unfairness of their treatment under the scheme. Perhaps some adjustment could be made in future by a more flexible formula, or by the incorporation of machinery providing quicker adjustment to correct the anomalies which will inevitably arise as a result of experience. Just as the future holds different destinies for. the Australian States, depending on their natural productivity and the diversity of raw materials contained within their boun. claries, so have their historical backgrounds been different. It is much easier to have a standardized tax for the Commonwealth than it is to establish standardized taxation systems in all of the six States. There are bound to be occasions when one State can legitimately claim that its inhabitants are, in fact, subsidizing the residents of other States, even though individual taxpayers are all taxed on the same basis. However, arguments pro and con about uniform taxation are beside the point at this stage. We are now presented with an accomplished fact. The Commonwealth Government has decided that it will brook no interference. It called the Premiers of the various States together, and they agreed on a formula which we are now asked to ratify. No doubt the premiers found themselves somewhat restricted in their choice. Indeed, they were in the position of a man who has either to compound with his creditors or go bankrupt. Thus, we have an opportunity now to ratify or reject an agreement reached, reluctantly it may be, by the State premiers. If this bill be not passed, the States will get nothing. If it be passed, they will receive the amount to which they have agreed. In view of this, I do not intend to oppose the passage of the bill.

Mr SPENDER:
Warringah

.- This bill purports to continue indefinitely the uniform taxation legislation passed by this Parliament some time ago. As has been pointed out, the financial control exercised by the Commonwealth through the Loan Council, and through this legislation, will limit for all time the amount of money which each State may receive for State purposes by way of either revenue or loan. It seems to me that the bill is wrong in principle, not because it proposes to continue uniform taxation - honorable members will recall that I supported the principle of uniform taxation when the general legislation was before Parliament - bur because it lays down for all time a formula which, must he wholly em,pirical. Although I am in favour of the indefinite continuance of uniform taxation, I believe that it would be wiser to continue the system under a formula which would have application for a limited number of years only, and to provide for reviewing the position at the end of that period. When the review took place, it would not be with the idea of possibly returning to the system of dual taxation, but in order to see whether the formula was just as between the parties.

It should not be forgotten that things are, at this time, in a. state of flux. To-day, notice was given of three bills, the purpose of which is to make provision for the alteration of the Constitution. It may be that some of the proposals will receive the support of the people. Perhaps other proposals will, in time, be agreed to for the alteration of the Constitution. No one can predict what the future may hold in this regard ; but if additional powers are transferred from the States to the Commonwealth then, to that degree, financial burdens will be removed from the States and laid upon the Commonwealth; yet the formula laid down in this bill makes no provision for changes of that kind. Let us suppose, for instance, that all social services are ultimately transferred’ from the States to the Commonwealth. The present formula provides for an adjustment of payments on the basis only of variations of population and of the living wage. If, however, social services are’ transferred from the States to the Commonwealth, the States will be relieved of heavy expenditure, and the claims upon the Commonwealth will be consequently increased. As I have said, no provision is made in the bill for such a contingency. For that reason, I suggest that the proposed arrangement should be extended for a period of only four or five years, and th at it should then be reviewed.

Another objection is that the formula for the distribution of revenue has been based on the amount of revenue which the States were receiving just prior to the commencement of uniform taxation. It is well known that Victoria, for example^ expended on social services and education substantially less per capita than did New South- “Wales. Thus, Victoria will be limited in its expenditure on education and social services to the standard existing when uniform taxation was first introduced. When we consider the basis of distribution for the financial years 1.946-47 and 1947-48, added point is given to my argument. The amount allotted to New -South Wales is £16,477,000 and to Victoria £8,860,000. This allocation bears no relation whatever to the population of the States concerned, or to problems existent, or likely to arise in the future. It is based entirely upon what the States were expected to receive in revenue “during the base years. This is another reason why the formula should be reviewed from time to time. I arn net seeking to qualify anything which I previously said in support of uniform taxation. Indeed, I take this opportunity to endorse it. But, when we have before us legislation which is to operate indefinitely, it is most important to bear in mind the two points which I have mentioned. Both those factors are arguments, not against the principles embodied in the bill, but against the bill in its present form. I urge the Government to withdraw the bill and redraft it to provide for its operation during a definitely limited period. I am opposed to the formula in the bill being applied without knowing what problems we shall have to face in the future, and how they will be adjusted as between the Commonwealth and the States. It must be recognized that we are living in a federal union, and that if that union is to have any value at all, there is. an increasing responsibility on both the Commonwealth and the States to work together to the advantage of all. It does not follow that the field of operation and the status of the States will remain stationary, and therefore I urge that the matter be reconsidered from that aspect.

Mr GUY:
Wilmot

.- I am opposed to the continuation of uniform taxation, hut I realize that it is futile to advance arguments against the bill, because the Government has made up its mind to bring about unification, and when the division bells ring, its supporters will enter the chamber and vote as directed. A decision in regard to this measure will be made by weight of numbers, not necessarily by weight of argument. I oppose the bill because it is one of the greatest steps towards unification that has ever been proposed in this Parliament. It has been said with some justification that “ Government is finance, and finance is government “. This bill is definitely aimed at the unification of finance, because it takes away the sovereignty of the States. I shall always fight to protect the people of the States from centralized financial control and tha placing of increasing burdens on individual taxpayers. This measure, if pa.s:a into law, will render the States financially impotent; it will reduce them to the status of vassals and mendicants. When introducing legislation for .the imposition of uniform taxation on the 15th May, 1942, the Treasurer (Mr. Chifley) said-

The Government, having carefully considered the Committee’s report, has decided to adopt the’ recommendations with a view to bringing about u single taxation authority for the period of the war and one year thereafter. The bill provides machinery for the temporary transfer to the Commonwealth of the staff, and accommodation and equipment used by the States for collecting income tax.

That definite pledge that .uniform taxation would operate for only a limited period, was embodied in the Income Tax (“War-time Arrangements) Act, which also provided for the temporary transfer of State officers to the Commonwealth. The Treasurer reiterated his pledge in his 1942 budget speech. Section 16 of that act reads -

This Act shall continue in operation until the last day of the first financial year to commence after the date on which His Majesty ceases to be engaged in the present war, and no longer.

The Government now proposes that that provision, shall be deleted. That amounts to the breaking of a definite pledge made not only by the Treasurer, but also, by the then Prime Minister, Mr. Curtin. At a meeting of Premiers held in’ Canberra in January last, the Prime Minister (Mr. Chifley) rejected the pleas of the States against the continuation of uniform taxation, but finally he agreed to make increased refunds from the pool to the State Governments. I submit that the Treasurer has broken his pledges,and has disregarded the opposition of the State Premiers at that conference. In this connexion, I cannot do -better than quote the words of Mr. Cosgrove, the Labour Premier of Tasmania. Discussing the pledge, Mr. Cosgrove said -

On a major question such as this it. would be unthinkable that any Government would deviate from such an undertaking.

The promise that uniform tax was a war measure -

If the pledge were not carried out, not only would the future policies of the States be subject to the financial control of the Commonwealth, but their programmes would be limited to the amount of finance made available from time to time. It would also have the effect nf eventually foreing every State to come under the control of the Commonwealth Grants Commission.

I repeat that those are the words of a Labour Premier in relation to a definite promise made in 1942 when uniform taxation legislation was brought before the Parliament. It may be said that the State Premiers agreed to continue uniform taxation. In some degree, thar is lAr. Guy. true, but they agreed under duress. The Commonwealth forced .its views on the conference by politically brutal methods, and tried to palliate its unreasonable attitude by making a “ hand-out “ to the * States. .It is also true that the High Court held that the existing legislation providing for uniform taxation is constitutionally valid. That means that the Commonwealth does not depend for the legality of that legislation on any war-time powers. With that trump card in his hand, the Prime Minister was adamant in his determination to retain uniform taxation, and to rob. the States of their independence and dignity. I do not exempt ‘the State Premiers from criticism in this connexion, I believethat they fell, down on their job. Hat?, they taken a united stand against unification, the proposal now before us would never have been introduced. A few years- . ago there was some feeling in favour’ of greater centralization of government, but the experience of the people during the war of a cumbersome and often inept bureaucracy centred at Canberra, which was not amenable to adjustment to meet a wide variety of conditions in the different States, has convinced most citizens that a decentralized form of government iswell worth its cost. Less than a year ago the people spoke in no uncertain voice against the centralization of powers, but unfortunately, the State Premiersat the recent conference were bluffed and. bamboozled into signing away the birthright of their States. They agreed, under ‘ pressure, to strip their States of financial: independence. They bartered their sovereignty for a few miserable pounds. Without financial power, the Parliaments. of the States will be little more than debating clubs, and State autonomy will” become a hollow sham. The honorable member for Warringah (Mr. Spender) referred to the formula embodied in theproposal before us. In. .my opinion,, that formula, which is designed to increasethe allotments from the federal pool tothe States, is most unsatisfactory to thesmaller States. It provides for a set procedure which will stabilize the finance.:; mid will allow no advancement, progress,, or industrial development. The financial! position will become more or less static. A had feature of uniform taxation is; that the spending of money by the States is divorced from its collection. Taxpayers have only a remote control over State expenditure. A principle which permits one government to raise money to be expended by another is unsound, and is likely to induce a feeling of irresponsibility on the part of the expending authority. The refusal of the Commonwealth octopus to relax its hold and restore State control of income tax, drastically affects the powers, functions and responsibilities of the States as instruments of government. I shall vote. against the measure.

Mr BOWDEN:
Gippsland

– Although the Leader of the Australian Country party (Mr. Fadden) has said that if this measure be not passed the States will receive no money, and if it be passed they will receive what is tantamount to a dole, and for that reason he would not oppose it, I shall take the risk of opposing it on behalf of Victoria, although I have not any lively expectation of securing the defeat of the measure. The people of Victoria are irrevocably opposed to this proposal, and they will suffer permanently if it be passed. They will lose the advantages that they had gained for themselves Over the years through good management which has made low taxation possible.

Mr Lazzarini:

– What about social services?

Mr BOWDEN:

– I have yet to meet any Victorian who is less well cared for, or less intelligent, than the average citizen of any other State. The point is this: Victoria by implementing a low taxation policy, encouraged industrial development, which in turn facilitated decentralization. It was solely because of taxation advantages that industries such as General MotorsHoldens Limited, Ford Company Limited, the International Harvester Company mid the Phosphate Co-operati ve Company of Victoria were established in thai State. Despite its low taxation, Victoria suffered nothing in contrast with the advantages enjoyed in’ other States.

I oppose this measure because it seeks to make permanent a provision which was imposed originally for the duration of the war. The act is very specific on that point. Section 8 states -

This .4 et shut! continue iti operation until the last day of the first financial year, to commence after the date on which His Majesty ceases to be engaged in the present war, and no longer.

The Treasurer (Mr. Chifley) supported that provision in later statements. Perhaps I am somewhat old fashioned, but I still believe in the sanctity of contracts. If the Commonwealth wished to retain its uniform tax powers for a longer period than was specified in the act, section S should have been repealed, and a new approach made to the States. Although I agree that the aftermath of war may create conditions that necessitate the continuance of special measures such as this,. I believe that the Commonwealth should have, approached the matter in a different way. The Prime Minister, apparently, had that in view when he called the Premiers of the States together to discuss the future, of uniform taxation. No doubt he expected that because five out of the six Premiers were of the same political complexion as the Commonwealth Government, there would not be any difficulty in securing agreement; but to theconsternation of the Prime Minister and his colleagues, every State Premier opposed the Commonwealth’s proposal.

Mr Conelan:

– They all agreed ultimately.

Mr BOWDEN:

– No. They all opposed the proposal and were not backward in expressing their opposition. However, they were listened to patiently by the financial arbiter of their destinies, and when he thought that they had played around for long enough, he curbed their enthusiasm by telling them that they were talking a lot of “ coloured “ nonsense. I know that subsequently it was claimed that the Premiers had reached a unanimous agreement; but actually the only unanimity shown was in the acceptance of the alternative formula offered by the Prime Minister. In that regard their “unanimous agreement” was very much like that of Ned Kelly’s victims when he pointed his gun at them and said-, “Hands up”. They just had to agree. At the conclusion of the conference, the Premier of New South Wales, Mr. McKell, made a speech on behalf of al] the Premiers. He made it clear that whilst they had agreed to the alternative formula, they had not agreed to uniform taxation in principle. I shall read from Mr. McKell’s speech one paragraph which is rather pertinent -

When the Commonwealth Government first informed the Premiers that it was of .the opinion that the single tax system introduced as a war- ti me measure should bo merged into a permanent peace-time arrangement, I set up an expert committee to examine .Mie implications of the proposal.

Mr Conelan:

– Prom what journal is the honorable member quoting?

Mr BOWDEN:

– Prom a publication aptly named Red Tape. The Premier continued -

This committee, after exhaustive research, reported that, in its opinion, there was no conceivable formula which would automatically relate financial resources to requirements in ever-changing circumstances.

That simply means, I take it, that any static revenue in the periods of fluctuating expenditure which all governments must face, will defeat the efforts of a government to meet the demands for the development of its State. It means also that State development will not be determined by the will of the government of a State, but by the amount of “dole” that any future Commonwealth Treasurer cares to allow to it. I have no doubt that this meets with the wishes of those who claim to be unificationists, but I doubt if many of them have ever studied its implications. I am not a unificationist: I believe in State rights. I represent a province which industrially could be one of the greatest in Australia. Whether or not that province shall be developed depends to-day upon the voice of Victoria. If the unificationists had their way it would depend On the voice of the whole of the Commonwealth. On the other hand, if authority were more equitably distributed, and Gippsland became a State in its own right, its development would be determined only by the people of Gippsland. That, of course, applies equally to every other province in Australia. Only by this wider distribution of power can there ever be full development of the resources of the Commonwealth in this connexion. The word “unification” is a synonym for “stultification “. The people who prate’ about unification do not know its implications, particularly in a country of Australia’s size. I am not saying that in England or a little dominion like’ New Zealand it does not work, but in a country of Australia’s vastness it decidely does not. I visited Western Australia for the first time recently. Only then did I understand why the people there voted for secession, because, apart from defence implications, if ever a State screamed for the right to develop itself, isolated as it is from the seat of government here, it is Western Australia. In war-time, with . the enemy at our gates, the Constitution is not sacrosanct, but in peace-time it must be accepted as the guide for our activities. Peace reigns to-day, and I believe that the constitutionality of the uniform tax must be considered. Section 51 of the Constitution provides -

The Parliament shall, subject to this Constitution, have power to make laws for the peace, order and good government of the Commonwealth with respect to -

Taxation; but so as not to discriminate between’ States or parts of the States.

I do not claim . discrimination in the collection of the tax, but there is discrimination in the disbursement, and that, I think, conflicts very definitely with that provision. Victoria is the most heavily taxed State of all under uniform taxation. Whereas in 1940-41 federal income tax collected in Victoria amounted to £9,100,000, and S,tate income tax to £6,600,000, the uniform tax collected by the Federal Government in 1944-45 amounted to £52,000,000, an increase of 231 per cent. The next worse off State under the uniform tax is South Australia, where the increase is 198 per cent. I impress upon honorable” members that that represents income tax only. Of the £70,000,000 collected in New South Wales last year the Commonwealth Government refunded 21^ per cent, to the State Government for its purposes, but Victoria received back only 12 per cent, of the tax is collected in that State. How oan that be called uniform? How can that be described as not discriminatory. I do not know on what’ the formula for 1946-47 is based. It has never been made clear. Under it Victoria is to be. reimbursed £8,860,000 and New South Wales £16,477,000, almost double what Victoria is to receive. The population of New South Wales is 2,893,000 and that of Victoria 2,110,000. The difference is not very great, yet New South Wales is to get back twice as much as Victoria.

Mr Spender:

– The only reason is that New South Wales has spent more.

Mr BOWDEN:

– Yes. The careful, saving government is penalized to pay for the profligate government. It is like a man who has played “ ducks and drakes “ with his finances being refinanced in his business at the expense of the man who has kept his head above water by using careful and sound methods.

Mr Lazzarini:

– New South Wales gave widows’ pensions, child endowment, and many other social services, but Victoria had no social services at all.

Mr BOWDEN:

– I have listened to the Minister before and no doubt I shall have to again. Millions of pounds is to be taken from Victoria and given to New South Wales. Victoria does not mind giving New South Wales a helping hand ; it is normally capable of doing so ; but I am concerned about the fairness of the system. That should appeal to the Minister. The unfairness of the Government’s proposal cannot be denied. This measure will be placed on the statute-book by sheer weight of numbers. But if the Minister will ‘ guarantee that the constitution of this House at this very moment will not be altered within

I lie next twenty minuses, I shall call for a division now, and I think I shall be a hh? to have this measure thrown out. My State opposes it with good reason.

Mr. BERNARD CORSER (Wide Bay) 1 4.19 . - This measure cannot be called a party one. It is an attempt by the Commonwealth Government to continue in peace-time the uniform tax applied in war-time with such advantage to all. Much can be said in favour of the bill, and something against it. From the people’s point of view, one advantage is that some limit can be placed on the taxing powers of States that prior to the introduction ‘of the uniform tax overtaxed their people. Another advantage derived from uniform tax is the elimination of multiple returns and assessments and different tax acts and regulations. Some of the States did go beyond reason able limits in levying, taxes. The imposts were so severe that they were a deterrent to progress. As a Queenslander, I welcome this provision because, before the introduction of the uniform tax, Queensland was the highest taxed State in the Commonwealth, and consequently was unable to compete with States not so heavily taxed’ in the development of new industries. As a Victorian, the honorable member for Gippsland (Mr. Bowden) naturally feels some disappointment, but my disappointment is differently based. I am disappointed because the Prime Minister and Treasurer (Mr. Chifley) saw fit to buy the concurrence of the State Premiers in the continuance of uniform taxation. At a1 time when the Australian people were looking for a reduction of taxes, the Commonwealth Government limited its capacity to reduce the income tax by increasing the amount to be reimbursed to the States by £5,74/5,000. Apparently, the Commonwealth did not want that money, but, instead of handing it back to the taxpayers, it will hand that sum to the States. Victoria in 1946-47 is to receive £S,860,000, as compared with its present reimbursement of £6,890,000, an increase of just on £2,000,000. The reimbursement to New South Wales has been increased by £960,000 to £16,477,000. Some’ honorable members have complained that the reimbursement to New South Wales is disproportionately high compared with the payment to Victoria, but the scheme provided that the reimbursement should be calculated on -a population basis, and general and social services commitments of each State before the introduction of uniform taxation. Reimbursement to meet the cost of widows’ pensions and other social . services was the first charge on tax collections. For many years, New South Wales provided more generous social services than did Victoria, and for that reason the reimbursement to it is higher proportionately to the payment to Victoria. However, the existing basis of payment is not rigid and permanent. If the Commonwealth’s Constitution alteration proposals be endorsed by the people, Victoria will achieve equality with New South Wales in the treatment of its widows and other recipients of pensions.

Sir Fred ei5j cic Stewart:

– The Commonwealth has relieved New South Wales of 1110St of its social service commitments since the passing of the original act.

Mr BERNARD CORSER:

– Doubtless the Commonwealth will ultimately assume responsibility for all social services, but the necessary money will still be provided by Australian taxpayers. As the representative of a Queeusland electorate. I do not desire to be parochial, t am gratified that the uniform taxation has not only abolished the old system of dual taxation, but also provided more money for developmental purposes in Queensland. Unlike New South Wales, Queensland did not embark upon great irrigation schemes. For years, the northern State wasted millions of pounds, and failed to provide many social service benefits for ils indigent people. Queensland expanded its railway system, and embarked upon certain other works which were expected to yield a return to the Treasury. Some of their operations resulted in losses.

As I have indicated, the basis of the reimbursements is not rigid. The bill provides for their . review. .Either party has the right to request an adjustment of the present basis of distribution if a major change iii the rela-tions between the Commonwealth and any State affects the finances of that State. That change may occur - -whether by reason of a substantial alteration in the powers, functions or responsibilities of the Commonwealth or of any State or States or otherwise.

If the States assume any new responsibilities, either party shall have the right, at the. end of seven years, to request a review of the general basis of reimbursement:. I hope that under this legislation the States will have an adequate amount for their purposes, but 1 also hope that the agreement will ultimately enable the Commonwealth to reduce taxation in order to relieve the people of the great financial burden which is . crushing them to-day. Earlier, I complained that the Commonwealth Government, in continuing uniform taxation, had handed to the States £5,745,000. In my opinion, that money should have been utilized for the reduction of war expenditure. Honorable members should debate this bill, not from a State or party standpoint, but from the national standpoint. At the same time, the State view must be considered. Honorable members should not oppose the bill, because it contains a provision for the calculation of payments to the States, not only oil a population basis,, but also by taking into account the social services commitments of each State to relieve poverty and distress, and help the sick and maimed, and widows.

Mr HARRISON:
Wentworth

– No honorable member will contest the necessity for the introduction of uniform taxation in war-time. When the scheme was introduced, the Government proposed that the operation of uniform taxation should be limited to the duration of the war. That was reasonable. In order to meet rapidly-mounting war expenditure, the Commonwealth was obliged steeply to increase taxation, and ‘ Com mon wealth taxes, of course, were superimposed on the already high taxes levied by the States If uniform taxation had not been introduced, the combined rates of Commonwealth and ‘State taxes oil the higher incomes would have exceeded 20s. iri the £J. As I agreed, we could not complain about the introduction of this scheme in wartime; but condition.? have now altered, and we have entered upon’ an era of peace. Whilst I admit that for a long time the Commonwealth will have heavy commitments, we should not regard uniform taxation as a permanent measure in our general financial system. However, honorable members were not left in. doubt as to the intentions of the Government. At the conference of Commonwealth, and State Ministers held last January, the Prime Minister (Mr. Chifley) said -

The States had surrendered no powers of taxation to the Government, as it was clear from the decision of the High Court that they had no powers whatever to surrender.

By that statement, the Prime Minister made it perfectly clear that he was opposed to any attempt by the States to recover their right, to impose taxation. Now, the State Governments have a responsibility to administer and develop their territories arid while, we retain the present federal system, we must recognize their sovereignty. If we fail to do so, we must adopt without hesitation the policy of unification. If that sys’tem is to be perpetuated, this is a. unification measure; but it does not offer any of the advantages claimed for unification. Under uniform taxation the Commonwealth Government is not responsible for the development of the States. Each State is granted a sum of money agreed upon at a conference of Commonwealth and State Ministers; and the Commonwealth will increase, or decrease, that dole just as party political considerations in the various States dictate. That is not a .scientific approach to this problem. Tt is simply bargaining at conferences. Under this system the States will be enabled to disclaim responsibility for development, or, indeed, responsibility to .obtain the best value for expenditure of this money. That system encourages a trend already noticeable in government financial policy. It will tend to perpetuate wastage in governmental expenditure, because State governments will not be directly accountable to the people for the use of this money. The principle of State responsibility for the raising and expenditure of State revenue is completely destroyed under this system. Let us look at the developmental problems confronting the States. N”o one would say for a . moment that the resources of the Commonwealth have been fully developed. Having regard to this proposal, who is to take the responsibility for the further development? This system means that State governments win ch have no responsibility for collecting revenue, but which will merely be given a grant by the Commonwealth for developmental purposes, will, with, the disappearance of direct responsibility, tend to expend the money primarily to gain party political advantages. That is bound to occur. The result will be. (hat essential developmental work which will return no party political advantage will not be undertaken. Will the Commonwealth Government ensure that this money will be expended on wi.–c developmental projects? Of course not. The re-imbursements to the States will be determined as the result of bargaining at conferences. Increases will bo granted as sops to the States, or in order to prevent the State premiers from “ganging up” with the object of asserting their responsibility within their respective spheres. Under uniform taxation neither the States nor the Commonwealth will be responsible for development. The Commonwealth will “ pass the buck “ by saying that it has made millions of pounds available to the States for. developmental purposes. Which authority will then have the responsibility of developing this country? Under genuine unification that responsibility would rest upon the central government; but this measure, whilst being unificationist in form, is not unificationist in fact. For that reason the measure should be rejected. If we are to recognize the federal principle, the Government should put a term to the continuance of uniform taxation, and undertake to restore to the States the right to collect and expend revenue required for essential developmental works. Such responsibility is fundamental to sound government within the States; and by depriving the States of that right we shall strike a blow at their sovereignty- If that be the intention of the Government, it should adopt unification immediately in a form in which the central government will accept direct responsibility for the development of the Commonwealth. I repeat that under the system to be perpetuated under the measure neither the central government nor the State Government will have that responsibility. We are not-now at war, and the Commonwealth Government does not need to continue to collect its huge war-time revenue through high taxation. Admittedly, the Commonwealth is responsible for developing territories which it directly controls. At the same time, the States have a definite responsibility jo carry out developmental projects in their own spheres; and the consummation of such projects is now a clamant, need. However, because of party political exigencies the system embodied in the measure will encourage “ buckpassing “ and “ duck-shoving “ by the various governments in order to escape responsibility for developmental projects. The States will adopt the line of least resistence, being content to appeal to the Commonwealth from time to time to increase their doles. Let us examine how the reimbursements were increased at the last conference of Commonwealth and State Ministers. The increases were: New South Wales, £960,000; Victoria, £1,970,000 ; Queensland, £780,000; South Australia, £1,000,000; Western Australia, £740,000; and Tasmania., £295,000, making a total increase to the States of £5,745,000, from £34,255,000 to £40,000,000. Honorable members know that the States have never had so much money and such little responsibility as they have at present. Honorable members know that the States themselves have no fixed plan of developmental works’ of any importance. Certainly, the States have had much to say about long-range plans; but those plans will not be brought to fruition under a system under which State governments will lend to expend these moneys in order to gain party political advantages. At present, the governments of a number of States are politically akin to the Government ‘in power in this Parliament. Naturally, the central government will tend to pay regard to the representations of governments of like colour in the States. The central government will be disposed to give to its political relations “ hand-outs “ sufficient to help them carry out particular projects which will strengthen their party political influence in the States concerned, and, at the same time, provide the central government with opportunities to increase its numerical . strength in this Parliament. On the other hand, the central government will, be disposed to cut down the dole to State governments which are not of its political colour, and by thus, preventing them from carrying out essential works, discredit them. I cannot see one good reason why the system of uniform taxation should be perpetuated. During the war that system served a good purpose. 1 believe that it- will continue to serve a good purpose for the next three or four years. However, it should be terminated as soon as it has served that purpose, so that the States will have the responsibility of carrying out their great developmental schemes. We on this side of the House adopt exactly the same attitude now as we did when uniform taxation was introduced. This is not a. party measure, and we insist on exercising the right to express our opinions freely. It is significant that Ministers and their supporters have not yet announced their views . on this measure, although six or seven members of the Opposition have done so. Perhaps the party “ steam roller “ has been run over them again. I should like to know their real thoughts on the matter. What does the honorable member for Denison (Dr. Gaha), for instance, think of it? He is usually a fearless speaker, and I should like, to hear his views, as a representative of Tasmania. What does the Minister for Repatriation (Mr. Frost), another Tasmanian, think of the bill, which is of great importance to the smaller States? It seems to me that this issue causes a . great deal of embarrassment to Government supporters, and that therefore they remain silent. We on this side of the chamber are fearless in expressing our opinions, and are not bound by party rulings. Having a naturally liberal approach to the- problem, we speak either for or against the measure as we see its advantages or disadvantages to the system of federation and the sovereignty of the States. Certain members on this, side of the chamber gave to the Government all the support that it required when it introduced uniform taxation in order to meet war-time responsibilities, and some of us will again do so because we realize that, for the next three or four years, there will be a severe demand upon the resources of the Commonwealth Government. However, unless the Commonwealth Government restores to the States the right to collect their due revenues and the power to discharge their inherent responsibilities for developmental and administrative purposes, it will not be carrying out in’ entirety the principle of federation to which we subscribe.

Mr TURNBULL:
WIMMERA, VICTORIA · CP

.- It has been said that the. passing of this bill is a foregone conclusion; therefore, what I have to say will probably carry little weight. Nevertheless, as a representative of Victorian electors, I enter a protest against the continuance of uniform taxation. The honorable member for Gippsland (Mr. Bowden) has cited facts and figures which I need not repeat. He said that the method adopted by the Commonwealth in taking large amounts of money from the State of Victoria under the uniform taxation scheme is reminiscent » of Ned Kelly’s tactics. Ned Kelly’s methods were gentlemanly “in comparison with the Commonwealth Government’s action. It is the unfairness of the system to which I object. It is evident from the tone of speeches which have been made this afternoon, that opinions of members within the different political parties vary. My colleague, the honorable member for Wide Bay (Mr. Corser) said that the continuance of uniform taxation’ would be beneficial to Queensland. I have no doubt about that. He also said that he doubted the fairness of the scheme. That is the point which worries me, because the scheme is unfair to Victoria. The honorable member said that millions of pounds of money had been wasted in Queensland. Is it fair that Victorian taxpayers’ money should go to a State which has wasted millions of pounds? Victoria has been very enter- - prising under sound governments. It seems that the more sound the government, the more enterprising the statesmen, and the more efficient the workmen, then the more will a State lose from its revenues “under this system. For this reason, I am definitely opposed to the continuance of uniform taxation. Certain acts are necessary in war time, and uniform taxation was intended to be a wartime measure. Its continuance would not be in the best interests of Australia generally. It is wrong to make Victoria suffer on account of the high standards of governmental administration which it has established. The interests of other States would be better served by increasing their standards to those established in Victoria. Uniform taxation filches from the taxpayers of that progressive State revenue which could be used for further development, and hands it over to another State which has been less. industrious. I would not be a proper representative of a Victorian constituency if I failed to protest against this measure, and I do so very definitely.

Mr BEAZLEY:
Fremantle

.- This measure for increasing reimbursements from the Commonwealth to the States is both necessary and sensible. I was surprised to hear the Deputy Leader of the Opposition (Mr. Harrison) assert that the States had never had so much money as they have received under the uniform tax system, and that they did not know what to do with what they had. That statement was an outrageous . generalization. One of the divisions of the Constitution - which has been a weakness in the Constitution - assigns to the States expenditure departments, such as those dealing with health and education, whereas revenueproducing departments, such as those dealing with posts and telegraphs, and trade and customs, are assigned to the Commonwealth. The States are committed to enormous expenditure under their social service schemes, for instance* merely in adjusting to the changed cost of living wage payments to employees in social services departments. There is no doubt that, when wage-pegging ends, as it will have to end ultimately, the permanent change which the war has made in the cost of living will make it necessary for the States to pay higher wages to teachers and civil servants. The honorable member for Wimmera (Mr. Turnbull) asserted that Victoria’s low taxation level was due to the progressive policy of that State. On the contrary, it is due in the main to the fact that Victoria, in spite of its industrialization and its great wealth by comparison with Western Australia, has thoroughly backward standards of social services, teacher training, and civil service generally. Honorable members opposite contend that uniform taxation should not continue after the war. The honorable member for Wimmera, amongst others, seems to be subject to the delusion that war finance ends on the day that war ends. It is obvious that the Government must pay troops while they are waiting for demobilization. It must also be obvious that certain new costs of government have arisen as the result of the war. For instance, the budget must include £75,000,000 for war gratuities, £54,000,000 for deferred pay, and £62,000,000 to pay off a debt to Great Britain. representing a total of £191,000,000 of new costs. I do not believe that any of these provisions are opposed by honorable members opposite. They have expressed their approval of them in general terms, and yet now they say that, since the war has ended, the Government no longer has to meet problems of war-time finance, and therefore uniform taxation and the system of reimbursing the States should end. Nobody can sustain such a proposition. We all recognize that the interest burden and the special temporary costs associated with rehabilitation necessitate the continuance of war-time finance, and hence the continuance temporarily of uniform taxation. The Commonwealth Government has increased by approximately £5,745,000 the amount of money to be paid to the States. I do not believe that that increase reimbursement does very much more for the States than off-set the c decline of the purchasing power of money which has taken place during and since the war. That is my answer to the Deputy Leader of the Opposition, who contended that the bill proposes an increased grant. Having regard to the purpose behind the measure, all honorable members must support it in principle.

Sir FREDERICK STEWART:
Parramatta

– When the uniform tax legislation was introduced in 1942, I endorsed it in principle, chiefly on the ground that, in order to raise the money necessary to conduct the war to a successful conclusion it was essential to level up some of the “inequalities resulting from the differential rates of State taxation then in vogue. It would obviously have been impossible to impose an extremely high Commonwealth tax and at the same time maintain State taxes at their then existing level, as this would have brought the total contributions of many taxpayers to a rate in excess of 20s. in the £1. Because of that overriding consideration I believe there was then universal acceptance of the principle of the proposal. However, I was not unmindful of the fact that there were other desirable features in the uniform, tax measure, namely, that it would bring about the removal of dual income tax returns and simplify the multiplicity of irritating and confusing regulations and provisos relative to deductions which imposed a heavy burden on taxpayers generally. For these reasons most of us were pleased to accord our support to the measure in 1942. It is true that in the incidence of its application, this legislation has revealed many anomalies and has operated unfairly in tn any way?.

During this debate reference has been made to the inequitable allocation of the proceeds of the uniform fax among theStates. It has been stressed that this has resulted in lack of opportunity by the States to carry out their normal developmental policies. I believe that it should bepossible to remove all these disabilitiesmerely by adopting a more scientific, and equitable formula for the distribution of. the moneys collected by the central taxation office. It is on record that when the uniform tax bill was being debated in. this Parliament in 1942 I drew attention, as honorable members have done to-day, to the proposed unfair distribution of the moneys as between the StatesStrange as it may appear, my complaintwas that New South Wales, the State in which I have the honour to represent ait important constituency, was being toogenerously treated. As honorable members will recall, the formula adopted for determining the reimbursement to theStates in 1942 was based on the amount of taxation collected in the two base years- L939-40 and 1940-41. It was assumed by; the framers of the original measure “that State revenues and expenditures in thebase years would bc continued throughout the period of operation of the uniform tax legislation. If that assumption had been? correct the formula itself would have been correct; hut it was not, and its incorrectness was obvious at the time the bill was before us. In the interregnum between, the base years and the passage of thelegislation in 1942 a very considerablevolume of the financial responsibilities of the States had been taken over by theCommonwealth ‘ Treasury. For instance, in the base years the New South Wales Government was responsible for child endowment and widows’ pensions and had? to meet very heavy expenditure on unemployment relief. By 1942, responsibility for both child endowment and widows’” pensions had been assumed by the Commonwealth. Again, whereas in the baseyears the New South Wales Treasuryhad to find approximately £3,000,000 forunemployment relief, in 1942, owing tothe complete absorption of our manpowerfor war purposes, expenditure on unemployment relief had dwindled to aninsignificant figure. Despite that, ant amount equal to the full amount which, the New South Wales Treasury had collected in the two base years, partly to meet the cost of social services of the kind I have mentioned, was allotted to that State. It was obvious that the Commonwealth Government was anxious to secure the agreement of the State Premiers to the proposed unified tax and was willing to pay such a high price for the support of the Premier of New South Wales. If there is any doubt in the minds of honorable members as to the force of my remarks, I refer them to the recent references by the AuditorGeneral of New South Wales relative to what he described as the irregular and illegal setting aside of reserves in the New South Wales Railways accounts. What has happened in New South Wales may well be happening in other States. Whilst I approve of the measure in principle I believe it could be improved. I trust that the Government will give consideration to the representations made by honorable members on this side of the House during this debate, and make the uniform tax legislation more acceptable to the people by adopting a more equitable formula for the distribution to the States of the moneys raised by the Commonwealth on their behalf.

Mr POLLARD:
Ballarat

– I support the measure and, for once, am glad to find the honorable member for Parramatta “(Sir Frederick Stewart) in agreement with me. This measure does not call for a great deal of debate. As Australians we are amply justified in endorsing the principle that the citizens of Australia, wherever they .may reside and whatever may be their occupation, should pay a uniform tax for the services of the Commonwealth and of the State in accordance with, their ability to pay. Most taxpayers have been delighted at the simplicity of a single income tax return. One might draw a parallel between the benefits derived from the uniform tax and those resulting from the operations of the Loan Council. Many years ago the Commonwealth and State Governments in their wisdom saw fit to enter an agreement under which all loans required for public works in Australia, whether’ of the Commonwealth or of a State, should be raised only after consultation and agreement between the representatives of the Commonwealth and the States in the Loan, Council. That system has worked well, and I believe that the system of uniform taxation is also working well and will continue to do so. It is true that at the inception of schemes such as this some difficulties and inequalities are inevitable. Originally, uniform tax disbursements were made under a formula laid down by the Commonwealth Government. In the amending bill a clause has been inserted which differs slightly from the old formula and will determine future disbursements to the States.

There is no reason to believe that, with the passage of time and with the experience gained from actual practice, this Parliament and the Premiers of the States will not be able to devise further improvements in the formula for the disbursement of . revenue. I was sorry to observe the newly elected honorable member for Wimmera (Mr. . Turnbull) working the parish pump. He complained that Victoria has raised more revenue than it is receiving under the present formula. I remind him,’1 that during the war, the great wealth of Victoria had to be poured out in the Northern Territory, in Western Australia, and in Queensland, not in order to protect the lives and property of the people of those places only, but to protect as well the lives and property of the people of Australia, including those of Victoria. Victorian money was spent in places other than Victoria, and the expenditure conferred benefits on Victorian taxpayers. The same principle holds good regarding the sending of soldiers enlisted in Victoria to serve in the Northern Territory or Western Australia. Perhaps the honorable member for Wimmera would not argue that those men should not be sent to serve outside Victoria. Of course, no one objects to sending Victorians to serve in places outside Victoria; but when it comes to a matter of money, some honorable members are disposed to work the parish pump. I maintain that if some of the revenue raised in Victoria is expended on social services or developmental work in other States, the Victorian taxpayer is, indirectly, conferring a benefit upon himself. I take it that we are Australians, not just Victorians or New South Welshmen or Queenslanders. We should develop a national spirit, and not concern ourselves with whether Victoria contributes to the general revenue £2,000,000’ more than does some other State. When I hear some of the arguments advanced hy honorable members opposite, I cannot but believe that they have been influenced by the wealthytaxpayers of Victoria who are more concerned about their money than about Australia, and are displeased because they now have to .pay a higher rate of tax than they used to pay under the old system. As an Australian I support this bill, and I hope that it will be passed, and that suitable formulas will be devised from time to time for the correction of any anomolies that may arise.

Mr MENZIES:
Leader of the Opposition^ [5.10]. - I propose to say a few words on this subject, because I believe that the bill gives one further chance to discuss important matters of principle. With reference to what has just fallen from the honorable, member for Ballarat (Mr. Pollard · Kooyong

, let me say that I, for ohe, am quite unmoved by the notion that Victoria contributes more to the pool than it receives. It is in the nature of things proper that highly developed States should contribute more to the development of Australia than new and less developed States. However, there are large questions of prin.ciple to be considered all the same. I propose to revert at this stage to something which we discussed when the last States Grants Bill was being considered in this House. I believe that we have not yet succeeded in grappling successfully with the problem of the financial relations between the Commonwealth and the States. We have dealt with them far too much on a year-to-year basis by taking some particular facet of the problem and working out an approximate rule to deal with it. Since the beginning of federation, there has existed the problem of the financial relations between the Commonwealth and the States. In this connexion, I propose to quote a passage from a speech made by Alfred Deakin, a passage which I quoted when I was

Acting Premier of Victoria twelve years ago-

As the. power of the purse in Great Britain established by degrees the authority of the Commons, so it will in Australia ultimately establish the authority of .the Commonwealth. The rights of self-government of the States have been fondly supposed to be safeguarded by the Constitution. It has left them legally free, but financially bound to the chariot wheels of the Commonwealth.

Those observations by Alfred Deakin 44 years ago have been amply justified by events. The greatest revolution in the constitutional structure of the Commonwealth during the last 44 years has been the development of a dominating financial power in the hands of the Commonwealth.

Mr Burke:

– That is almost inevitable.

Mr MENZIES:

– I wish the honorable member would not anticipate my line of thought. I believe such a development to be inevitable as the Constitution now stands. This matter was discussed twelve years ago, and an earnest endeavour was made to find a way to give the States, so long as they had great responsibilities, resources adequate to meet them. We do not dispose of this question by saying, “ I am a unificationist. The States should not have powers, and therefore I do not care whether they have resources “. Whether we ‘are unificationists or federalists, whether we are in favour of a central authority or of State rights, it is still true that so long as the States have responsibilities - and they have very great ones - they must have financial resources which will enable them to discharge those responsibilities in a way satisfactory to the people. The States are responsible for education. They have large public services to carry on. They are responsible for water supply and irrigation, for the development of lands, and for a host of things all which involve expenditure, and hardly one of which produces revenue. It is only necessary to recall these facts in order to realize that there is a real problem for us in seeing that the State have adequate financial resources.

At a premiers’ conference in 1934, various proposals were put forward. One was that the States should be given a greater fixed share of the Commonwealth income - on the principle of an extension of the Braddon clause. Another one was that the Commonwealth should take over from the States certain spending departments. A third was that the States, which to-day have no access whatever to indirect taxation, should be given access to some form or forms of indirect taxation. Of course, all these matters were discussed, as I do not need to remind honorable members, long before the weight of taxation was anything like what it is to-day. Not one of them would, be regarded as a very practical or complete solution of the problem at this moment. At that time, I had the privilege of putting forward proposals of that kind- for consideration. I still consider that they are based on what is ultimately a true analysis of this problem; but I do not regard them as being appropriate or satisfactory at the present time and in the present circumstances. When the Uniform Tax Bill came before this House I opposed it. I am still opposed to it in principle. But I should regard the repeal of uniform taxation at this moment as not practical politics. The ‘ dominating factor on the practical side is that the burden of taxation on the individual income is necessarily so large that it is not .practical to put the Commonwealth tax on one side, to hand back taxing authority to the States, and then suppose that you are going to get a total tax burden that will be in any way equitable throughout Australia. In other words, the argument referred to in the secondreading speech of the Treasurer (Mr. Chifley) is a sound practical argument in relation to the problem at present, and will continue to be a sound practical argument in the next three, four or five years, or whatever time may elapse before the tax burden is sensibly reduced. But it is still necessary for us to see what-the matter of principle is, it is not enough merely to fob off this problem for a few years. We must face, up to the question of principle. To my. mind, the vital mater of principle is this : If we are to have a federal system, with a central parliament and government, and with State parliaments and governments, and their powers are to be in. truth independent powers, and not, as one might say, hierarchial powers, then it is essential that their financial power also should be independent. You cannot have independent legislative authority with dependent financial power. Consequently, as a broad matter of principle, I believe that after this emergency has diminished we must aim ultimately at restoring independent financial powers to governments which exercise independent authorities and assume independent responsibilities. How important that is can be seen at a glance if we consider one matter for which the States have responsibility. The State parliaments undertake public education in Australia. On that subject I have already had the privilege of addressing this House. I do not propose to repeat what I then said. In any civilized and progressive community, more and more’ money must be spent if we are to have an effective educational system, an adequate teaching profession, and all the things that go to make up a sound system of mental training. But how can the States provide more money for education, how can there be any real forward policy on the part of States if, however progressivelyminded their Governments may be, they find that their financial resources are either fixed or diminishing? It is quite idle for State Governments to talk about the expansion that they propose to have if, in fact, their resources in terms of money are contracting resources, or are fixed. The Prime Minister has given some recognition to that matter by varying the existing formula and by providing for a progressive variation of it over a term of years. But I want to emphasize that, so long as we have a federal system, we must aim at getting back to a state of affairs in which independent resources will be available to the States; because I believe that any Government that exercises real authority will exercise that authority wisely, only if it accepts in the face of its electors complete responsibility for the raising of the. money that it proposes to spend. I do not need “to labour that; it is a question of principle which everybody will perceive and with which many persons will agree.

I turn to the next problem. Is it possible to apply that principle to perfection in a federation? Again the answer is “ No “ ; it is not possible to apply it to perfection unless you alter the present taxing powers by admitting the States to indirect taxes. So long as the States depend only upon direct taxes, then while the demands of the Commonwealth for direct taxes are necessarily great, it will not be possible to - restore full responsible autonomy to the States. Therefore, it becomes necessary to say: “Is this scheme now put forward the best, and the most 3 just and practical scheme for providing reimbursement for the States out of the’ money that the Commonwealth raises ? “ Let us assume “that we cannot apply our principle of independent raising at this stage. Is this the best method of distribution? On that point, at the risk of being wearisome, I want to repeat in a few sentences something that I have said before to this House on the States Grants Bill. I believe it to be a thorough fallacy in this Commonwealth of ours to treat the three States of Western Australia, South Australia and Tasmania as though they were three special mendicant communities to whom special grants have to be made. I do not believe in that at all. Hearing these matters discussed, anybody would think that Western Australia, for example - to take the most distant State - is asking the eastern States, through the Commonwealth, to be kind to it. Nothing of the sort. Why should it have to ask any other State to be kind to it? I agree for once with my friend the honorable member for Ballarat that we pay taxes as Australians. There is no particular virtue in the fact that a taxpayer lives in Victoria, when we pay money in this country for the use and benefit of the community as a whole. I believe that if you are going to pool your resources, as in uniform taxation, the total pool ought to be available for distribution in the Commonwealth and each of the six States, not to three of them in particular; not putting any States in the position of asking for a favour, but having a distribution between all seven governments as a pure matter of justice. Of course, that involves a new conception of this problem. It involves this : that having determined how much money shall be raised in one year, it becomes necessary to say what will be the requirements of the .Commonwealth, having regard to its programme, and what will be the require- ments of Queensland, Victoria or any other State. Let us assess them in order to determine what- financial adjustments have to be made, so that all of them may give effect to their programmes. Let us assume that all of them have progressive, civilized, decent programmes for the benefit of their people. Why should one programme be preferred to another? Why should the Commonwealth and Victorian programmes be taken in full, and the programme of another State only in part ? I believe that we have a great opportunity here. We have a Commonwealth Grants Commission, which over a term of years has acquired an immense experience. 1 believe that its reports are regarded withgreat respect on both sides of this House. It has a staff which has accustomed itself on the expert level to discussions between the Commonwealth and the States concerned. It has acquired a skilled technique and vast experience in examining budgets and estimates, in working out the results of financial years, and in bringing in its recommendations. If we had such a body which, year by year, month by month, could constantly keep under examination the demands of the Commonwealth and each of .the six States, so that in due course it might recommend to us what was to be the reimbursement for every government in Australia, and not merely” the two or three making special applications, then I believe that we would have a better prospect of making all those governments feel that, if they cannot at present Iia ve independent financial resources, at least their resources will be calculated on some basis of adequacy and will be determined not on some political bargaining around a table but by a cold abjective examination by expert people from each government and each public service concerned, so that in the long run the Parliament may, aft in respect of States grants, havebefore it something upon which it can- act with complete security. I still believe that this legislation cuts across a first-class principle. I am prepared to concede for the purpose of this argument that in present circumstances and for some limited time tocome the cutting across of that principle is probably unavoidable. I believe there ought to be a time limit still to this legislation, but I believe above all things that we ought -not to imagine for a moment that this basic problem in a federation, the financial relations between the central and State governments, is solved by what we do on this occasion. We should regard this as only one step on the road, and the Government ought to give serious consideration to my suggestions and to the, no doubt, better suggestions which will be offered. In the long run the States will either die of inanition or the Commonwealth will face up to the problem of preserving them and equipping them with financial resources, and doing its best to solve it.

Mr CALWELL:
Minister for Immigration and Minister for Information · Melbourne · ALP

– What the Leader of the Opposition (Mr. Menzies) has said about the independence of State governments and the necessity to allow them to control the raising of their own revenues means that the matter of the taxes to be levied in the States should be handed back for decision in five of the States by the non-elective Legislative Councils. Four of the States are plagued with Legislative Councils elected- on a property franchise, and in some of the States some members of those councils are required to own freehold property that is unencumbered. The grant which the Commonwealth proposes to make to Victoria, in particular, is far in excess of any sum which the Legislative Council in that State would sanction for expenditure on social services. The honorable member for Wimmera (Mr. Turnbull) does not speak for Victoria when he repeats in this House the request of the late Dunstan Government for the repeal of this legislation. It is well to remember that’ the not was based on the report of a committee consisting of Professor Mills, as chairman, and two honorable members of this House, one the then honorable member for Robertson, Mr. Spooner, and the right honorable member for Yarra (Mr. Scullin). The former honorable member for Robertson, speaking for the Opposition parties in the House, agreed to the principle of uniform taxation. ‘ It may be argued that it is desirable to place a limit upon its operation, but at any rate the principle was conceded, and it is too late for the honorable member for Wimmera to talk of how badly Victoria has allegedly been treated under the scheme. The basis on which .the scheme was laid was the animal net expenditure on social services for the two financial years 1939-40 and 1940-41.

Mr Scullin:

– It was based on the total collections of income tax.

Mr CALWELL:

– I accept the correc-tion, but the taxation was related to the expenditure. In essence the payment to Victoria was based on the amount of money which that State expended on social services.

Sir Frederick Stewart:

– That is wrong.

Mr CALWELL:

– I think that I am right. At any rate, New South ‘Wales, which had expended £14,000,000 on social services and had other commitments in prospect, was granted £15,000,000 in the first year of the operation of the scheme. Victoria, which expended only £6,000,000, was compelled by uniform taxation to pay £10,000,000 annually. The honorable member for Wimmera does not know, or has forgotten, that there was a provision in the legislation which enabled any State government which had increased its expenditure on social services to go to the authority created under the act and secure an increased annual grant.

Mr TURNBULL:
WIMMERA, VICTORIA · CP

– I have just arrived here, but T know that the scheme is unfair.

Mr CALWELL:

– The honorable member has arrived for what I believe will be a very brief stay. He only believes that the arrangement is unfair. When he has listened to the story he will find that it is perfectly fair. The Dunstan Government was in control in Victoria for a long time, and it was supported for a period by the Labour party. It was supported in its declining days, as one would expect, by the Liberal party. The latter party became a participant in the Government and eventually wrecked it. The Dunstan Government could have made application to the Commonwealth Grants Commission at any time for an increased grant, but it did not increase its expenditure on social security. In 1943-44,-according to the twelfth report of the Commonwealth Grants Commission, Victoria still had the lowest expenditure per capita of all the States in Australia on social security. On education, New South Wales expended 41s. lid. per head of the population, Victoria 35s. 7d., Queensland. 35s. Id., South Australia 39s. Sd., Western Australia 39s. Sd., and Tasmania 42s. 5d.; the average for Australia being 3Ss. lOd. In respect of health, hospitals and charities, New South Wales expended per capita 29s. 6d., Victoria 19s. 6d., Queensland 27s. lid., South Australia 21s. 10d., Western Australia 23s. 10d., and Tasmania 26s.; the average for Australia being 25s. 5d. On law and order and public safety, New South Wales expended 16s., Victoria 12s. lid., Queensland 18s. 7d., South Australia 12s. Sd., Western Australia 14s., and Tasmania 15s. 3d. ; the average being 15s. Id. The grand total of expenditure in that year in the provision of social security legislation in respect of each State was New South Wales, S7s. 5d. ; Victoria, 6Ss. ; Queensland, Sis. 7d.; South Australia, 74s. 2d.; Western Australia, 77s. 6d. ; and Tasmania, S3s. Sd.; the average being 79s. 4d. In Victoria the expenditure was lis. 4d. lower than the average for all of the States. There was ample opportunity for the Victorian Parliament to devote more money to the purpose of social security, provided the reactionary Legislative Council known in Victoria as the “ legislative abattoirs “ had passed the requisite enactments. But it would be hopeless to expect that expenditure on social security measures would be sanctioned by the Legislative Council of Victoria. It is my view that the money should be raised and allocated by the democratically elected Commonwealth Parliament. This is indeed a democratically elected Parliament.

Mr Bowden:

– But it has an Upper House.

Mr CALWELL:

– The distinction between the Upper House of this Parliament and the Upper House of the Parliament of Victoria is that our Upper House is elected on the same franchise as the House of Representatives, which is adult suffrage, universal and equal, whereas the Legislative Council of Victoria ls very far from being in that desirable position.

Mr Bowden:

– The occupier of . a house has the vote in Victoria, not the owner of it.

Mr CALWELL:

– The franchise has a property qualification; but however honorable members opposite like to put it, the fact is that only one-third of. the Legislative Assembly voters in Victoria are entitled to vote at Legislative Council elections. Moreover, only last year, every member of the Liberal party and every member of the Country party in the Legislative Council in Victoria voted against a bill designed to give all returned soldiers a vote in Legislative Council elections. Honorable (gentlemen opposite talk about preference for soldiers, but the fact is that these soldiers cannot get rid of a lot of old reactionaries in the Legislative Council of Victoria, with whom it is a case of “Safety first; preference last “.

I direct the attention of honorable members to the fact that this bill makes provision for increased distributions to the States for’ 1946-47 and 1947-4S as follows : -

Provision is also made in the bill for the application of a formula which will provide for the distribution of £40,000,000 plus other amounts to be adjusted on a population plus area basis. That provision -will do justice to the States with big populations and the States with small populations. It is, I believe, as fair a scheme as can be devised.

The difference between the results obtained from the attendance at Premiers conferences and Loan Councils of Mr. Dunstan, the former Premier of Victoria, and those obtained from the attendance of Mr. Cain, the present Premier of the State, is that whereas Mr. Dunstan refused to co-operate with the Commonwealth and . got nothing, Mr. Cain agreed to co-operate with the Commonwealth and the other State Premiers and lias received £2,000,000 this year for his State,

Mr McEwen:

– Submit, and you will be paid for it.

Mr CALWELL:

– No doubt the honorable member for Indi (Mr. McEwen) has submitted in his time and has obtained his reward. He entered this Parliament as tile. arch champion of democracy and within six months he had become the arch apostle of reaction. His record is. well known in Victoria.

Mr Pollard:

– If the Minister would read The Countryman of 1938, 1 am sure that he would be interested.

Mr CALWELL:

– I shall do so, and if I find the information appropriate for the purpose I shall use it in the next election campaign.

Mr McEwen:

– And also use the Department of Information for the purpose.

Mr CALWELL:

– I expected that villainous interjection. Lt is a lie. Not one penny of the money voted for expenditure by the Department of Information has been used to popularize or publicize this Government. I challenge any one to deny that statement.

This bill is right in principle. I believe that it will have a beneficial effect upon every State of the Commonwealth, and in particular upon the State of Victoria in respect of which a special plea has been mistakenly made to-day by an honorable gentleman who was not qualified to make it. I do not believe in the maintenance of the present States; the policy of the Australian Labour party is that complete power should be vested in the Commonwealth Parliament which Should then delegate certain powei’3 among provinces. We do not believe in the maintenance of the sovereignty of the States. Consequently I am not much concerned about whether the independence of the States will be guaranteed or interfered with by this bill, or whether they should have the right to raise their own revenues, and expend the money in whatever way they desire.

Mr BOWDEN:

– If this is such a good bill, why did all the State premiers oppose it at the conference?

Mr CALWELL:

– They did so because they are “ State-righters “ with a parochial attitude. They consider that that attitude helps them politically in their own electorates. I advise the honorable member for Gippsland (Mr. Bowden) not to fall into the same error, but to take a broad national outlook.

Dame ENID LYONS:
Darwin

– As I listened to the exchanges of the Minister for Immigration (Mr. Calwell) with the right honorable member for Yarra (Mr. Scullin), I was irresistibly reminded of a story about two little boys. One of’ them w>as out in the garden, and the other was inside playing the piano. When the boy in the garden was asked where his brother was he said, “ Oh, he is inside playing a duet. I have finished my part “. It appears to me that that story is applicable to the Minister for Immigration in relation to this bill. The honorable gentleman spoke about legislative councils and their reactionary effect upon legislation everywhere. He spoke, of the policy of the Labour party as being unification.

Mr Calwell:

– I said nothing of the sort.

Dame ENID LYONS:

– The Minister gave such a splendid description of unification that I could not help feeling that it was connected with the purposes of this bill. No further comment is needed by me on that point. ‘

A few arguments have been advanced by honorable gentlemen opposite in support of this bill, and I believe that it can be said that it has some technical advantages, and some conveniences, particularly at present. My view on the financial relations of the Commonwealth and the States is well known in this Parliament. I have spoken on the subject several times. I did so, in particular, during last session when the States Grants Bill was under consideration. With the Leader of the Opposition (Mr. Menzies), I believe that some means must be found to stabilize and equalize the development of all the States within the Commonwealth. I believe that in the Commonwealth Grants Commission we have the nucleus of an organization which could stimulate such development.

I desire, now, however, to get back to first principles. One fact in relation to this subject has been entirely ignored in this debate. It is that when the first legislation of this description was introduced a promise was made that it would remain in operation only for the duration of the war and one year afterwards.

Mr BARNARD:
BASS, TASMANIA · ALP

– That is not true.

Dame ENID LYONS:

– A great deal of evidence can be adduced to support my statement. It cannot be denied that at the recent Premiers Conference, at which this subject was discussed, almost every State objected to the continuation of this method of taxation on that ground, but because the Commonwealth Govern- ment had been reinforced by a judgment of the High Court, Commonwealth Ministers were able to wield a big stick. Tt is all very well to say that the States agreed to the proposal. They agreed only under coercion. What we must consider more than anything else is the moral principle underlying the obligation of a government to live up to its promise. This is not the first time that the present Government has laid itself open to a charge of breaking faith. I have spent’ about 30 years of my life defending politicians - the Lord help me ! I have said over, and over again that most of the accusations of broken promises and faithlessness cannot be sustained - that promises and policies put before the people at election time are general statements setting out aims and goals which are not always possible of achievement. But when we find a definite agreement between parties being set aside without any compunction whatever, when a distinct promise that no legislation of a specific character will’ be introduced during the life of a parliament is broken, we have a clear case of breach of faith. That, it seems to me, is the Strongest possible argument against this measure. I, for one, could not go back to Tasmania without having said that, in my opinion, the moral principle underlying the Government’s action is the most important thing. We must remember,, too, that the principle must be maintained > that the person or the authority which spends -money should also be responsible for raising it. In the power to tax lies the power of life and death. Unless that power be restored to the States - unless the promise made four years ago be kept now - the Government will have to answer for something which is of far greater importance than mere considerations of expediency. The Government will have to bring forward some other argument if it is to convince the electors at election time that it is worthy to be trusted when it gives a definite promise to the people. How the electors can have confidence- in a government which does not keep faith with them I do not know. I shall await with interest the reaction of the people’ to the introduction of this bill.

Mr BARNARD:
Bass

.- The honorable member for Darwin (Dame Enid Lyons) has entirely misinterpreted the decision of the recent conference of Commonwealth and State Ministers in regard to uniform taxation. It is true, as he - said, that a proposal was presented to the Premiers that the States should transfer their taxing powers to the Commonwealth for a limited period. The Premiers did not agree to that proposal, but they made some arrangement in respect of entertainment tax, and that agreement is being honoured. It is not included in the Government’s proposal in respect of uniform taxation. After the . Commonwealth Government had intimated that it would continue the uniform taxation scheme, four State Premiers joined with the then Premier of Victoria (Mr. Dunstan) in taking the matter to the High Court. The decision of that body was not in their favour, and therefore the point taken ‘ by the honorable member for Darwin has no substance at all in fact. Tasmania and New South Wales were not parties to the case before the High Court. It is all very well for the honorable member for Darwin to become heated and disturbed about an alleged breach of faith. It is not a fact that the Government broke its pledges. The honorable member makes that charge because she thinks that it will help the Opposition parties at the elections.

I am glad that some members of the Opposition are prepared to support this measure. The honorable member for Parramatta (Sir’ Frederick ‘ Stewart) frankly admitted that he had supported the principle of uniform taxation when it was first introduced. A former member for Robertson, Mr. Spooner, and the right honorable member for Yarra (Mr. Scullin) were members of the committee which submitted a report on this subject. All honorablemembers will admit that uniform taxation is a difficult and complex matter to administer. No one suggests that the present scheme is without anomalies, but whatever its weaknesses, the scheme has many advantages. There is nothing to be said against the principle of uniform taxation. As the honorable member for Ballarat (Mr. Pollard) said, we all are Australians. Men and women from every State served in the various theatres of war to preserve this country’s freedom. We, therefore, ought to he prepared to make equal contributions to the revenue so that the goods and. services required by the community may be provided.

Mr Harrison:

– An equal contribution?

Mr BARNARD:

– Yes. The honorable member for Wentworth lives in New South Wales, and I live in Tasmania, but our earnings are taxed on exactly the same scale. Similarly residents of Queensland or any other State make the same contribution. That was not so before the advent of uniform tatation. In Queensland, for instance, taxpayers in the higher income groups were taxed on a high rate, whereas in Victoria high taxes were levied on comparatively low incomes, and relatively low taxes on high incomes. That anomaly does not now exist in our taxation legislation. The scale of tax applies equally throughout the Commonwealth.

Another advantage is that taxpayers have to fill in only one income tax form. The procedure is simplified. Already we have been able to straighten out some of the anomalies that have become apparent since the introduction of uniform taxation. We have before us a most complex document setting out the aggregate grantto be made by Commonwealth to the States, and the individual allocations. An explanatory memorandum has been prepared for the information of honorable members. To the layman taxation procedure is not simple, but this document has been prepared by experts whose task it is to advise the Government. The uniform tax system has already been considerably improved. No doubt more anomalies will appear and will be straightened out in the future. It is all very well for the Leader of the Opposition to talk of the sovereign rights of States; but there is much to be said in favour of the point made by the Minister for Immigration (Mr. Calwell) about the control exercised by State legislative councils which are not elected on a democratic franchise. For instance, most, members of the Legislative Council of -Tasmania cannot see beyond the boundary fences of their own paddocks.

Mr Archie Cameron:

– If they areon good land, why should they ?

Mr BARNARD:

– Th at is all right, provided they have no desire to distinguish themselves in the legislative half of this country. Many of them believe that because they are on good paddocks and. are prosperous, everybody else is prosperous, and nothing should be done to alter existing conditions. They are against progress. They live in the past. ‘ They are decadent, and one of the ways in which their reactionary influence canbe bypassed is by introducing a system of uniform taxation. In a very cunning way the honorable member for Darwin has suggested to this House that the Government “ put something over “ the Premiers of the States.

Mr Harrison:

– And it did.

Mr BARNARD:

– No. Nothing was put over them.

Mr Guy:

– The Prime Minister waved the big stick.

Mr BARNARD:

– No. The Premiers went to the High Court, and lost their case, and now they are moaning about it.

Sitting suspended from, 6 to 8 p.m.

Mr ARCHIE CAMERON:
Barker · ALP

– A great change has come over the scene since the uniform tax legislation was passed by this Parliament in 1942. Uniform income taxation is considered favorably by taxpayers, because now they have to fill in only one return instead of two or more. For many years before a uniform tax was levied only one form had to be used in South Australia, although two columns had to be filled in, because the Commonwealth allowed certain deductions that the State did not allow and the State allowed others that the Commonwealth did not ‘allow. But generally a uniform tax has meant for the taxpayer considerable saving of time, trouble and thought in the- filling in of returns, which, although this is not the time to deal with them, could be simplified. This bill arises from a decision of a conference of Commonwealth and State Ministers. It is strange that in this country, where State and Commonwealth responsibilities are defined, decisions should be made by an unconstitutional body which is not mentioned in any State or Federal documents of any constitutional standing; but British countries have the tendency, indeed the faculty, of arriving at sensible decisions by unorthodox means. By means of the conferences of Commonwealth and State Ministers decisions are reached. The Commonwealth may be able to get the States to agree to its view or the State Premiers may combine, regardless of party affiliations, to get what they believe to be their rights. We ought to recognize the axiom of “ no taxation without representation”, although we do not, especially in the territories under our control. But we must recognize that it is bad that State Parliaments should have the spending of huge sums they do not have the responsibility of raising. I, therefore, foresee difficulties arising from the fact that State Parliaments will be able to expend money that they have not had the responsibility of raising. There is a pronounced tendency in Australian politics, a tendency which was given expression to by the honorable member for Ballarat (Mr. Pollard). He spoke about unification, as did the Minister for Information (Mr. Calwell), although he denied that he used the word, notwithstanding that what he described as Australia’s future must be unification, whether he used the word or not. The tendency is for the States to look to the Commonwealth for financial support, indeed resources. We have even had from the States requests ‘ for subventions for education. I look at these things somewhat differently from other honorable members on my side of the House, although I cannot be distinguished from them in the mob.

Mr CHIFLEY:
ALP

– Not when a vote is taken.

Mr ARCHIE CAMERON:

– Sometimes, unfortunately, I have been. The right honorable gentleman may remember that as he remembered some of my other statements to-day at question time. I have a strong feeling that when the Labour party goes out of office and we return to power the financial position will be similar to to-day’s, and that the financial conditions will be extremely stringent. So, if the Commonwealth Government really believes in unification the sooner it puts it to the test, by the only means possible, by reference to the people, the better. It is interesting to refer to what the Treasurer said when the original uniform tax legislation was brought down in 1942. He said-

The Government does not seek to’ take away from the States their power to impose taxes upon incomes, but proposes to make a payment of financial assistance to any State which agrees to suspend that power in the interests of the national defence. Another bill will provide for the payment of that financial assistance.

We have gone a long way from that. The act of 1942 concluded with a section which read -

This act shall continue in operation until the last day of the first financial year to commence after the date on which His Majesty ceases to be engaged in the present war, and no longer.

That reads like the astronomical means by which the date of Easter is fixed. That section is as clear as what is in the mind of the Attorney-General (Dr. Evatt) about the actual date of the end of the war, for his answers to questions show that he has not made up his mind about that. When the Commonwealth Government took over the collection of income tax and the entertainments tax, the ‘latter of which it is now surrendering, apparently, in my innocence I expected it to take over the land tax, but I discovered that the people of New South Wales have no State land tax. So it would be too bad if they were asked to contribute to land tax as do people in every other State. Much was said to-day about Tory Legislative Councils. The Minister for Information had a lot to say about them. I point out for the information of the Minister that no legislation imposing taxation can become law in a State until it .has received the assent of the Legislative Council. The Minister should examine the franchise of some of the legislative councils. This afternoon, the Legislative Council of Tasmania was criticized for having refused to extend the franchise to certain ‘persons.

Mr Conelan:

– “Which is worse - the Legislative Council of South Australia or the Legislative Council of Tasmania?

Mr ARCHIE CAMERON:

– When the honorable member for Griffith (Mr. Conelan) left South Australia, it was probably the best thing that could have happened in the interests of that State. The Legislative Council of Tasmania was criticized for having refused to extend the franchise to service personnel who had served overseas in this war.

Mr Calwell:

– No, I said that the Legislative Council of Victoria had refused to grant the franchise to those persons.

Mr ARCHIE CAMERON:

– Very well ! I inform the Minister that in South Australia, it has been the law for about 27 years that any man or woman who departs from Australia on active service with the forces automatically becomes an elector of the Legislative Council of that State.

Mr Calwell:

– That emphasizes the truth of my contention about the tory nature of the Legislative Council of Victoria.

Mr ARCHIE CAMERON:

– I am not defending or excusing the attitude of the Legislative Council of Victoria. But when legislative councils generally are condemned so glibly and universally as they were this afternoon, it is just as well for us to examine them individually instead of referring to them as a body. Sometimes we are inclined to do that with governments, and we then arrive at some interesting results.

Mr Bryson:

– What is the honorable member’s view of the Legislative Council of Victoria?

Mr SPEAKER:

-Order! The House is debating a taxation measure.

Mr ARCHIE CAMERON:

– Certain aspects of taxation have been related to the subject of legislative councils, and I believe that there is a lot to be said in defence of them. Honorable members who represent Queensland constituencies would feel considerably relieved if the legislative council were reconstituted in that State.

Mr Bryson:

– That is to-day’s funny story.

Mr ARCHIE CAMERON:

– I am sure that the honorable member will laugh at it. The bill now before the House contains no time limit whatever. It reminds me of what was known in the early days of federation as the “Braddon Blot “, although that arrangement for the repayment of customs collections to the States had to cease at the expiration of ten years. It was one of the subterfuges to which the national convention resorted in order to persuade the Australian colonies, as they then were, to agree to federation. The “Braddon Blot “ ceased after ten years of federation. Anyone who studies the history of federation will agree that it was an excellent thing when the “ Braddon Blot “ did terminate. Unfortunately, no time limit has been imposed upon the operation of this legislation. Certain arrangements are prescribed under which there will be a change-over from a method which is to operate for the first two years to a method which will operate after the termination of that period. I put this to the Treasurer (Mr. Chifley), and to some of his friends who appear to think that they are legislating for all eternity, that it has been proved time and again that all legislative enactments must contain a certain measure of flexibility. Proper methods must be incorporated in them to enable changes to take place automatically. The moment we begin to introduce rigidity, the whole scheme is liable to collapse. That is my view of the present proposal.

In addition, the matter of interpretation arises. I do not desire to anticipate things which may be said on certain other matters before the House, but what one generation will consider to be the interpretation of a passage of English may be accepted in an entirely different sense by another generation. To prove that statement, I cite an example on income tax. If we could recall some of the members of any one of the three federal conventions before the Commonwealth Constitution became law, not one of them would state that he had anticipated a condition of affairs under which the Commonwealth Government, with the hacking of the High Court, would be told that it was entitled to collect 100 per cent, of the income tax of Australia, if it so desired. It stands to reason that if a power is granted to the Commonwealth, as the collection of income tax obviously is granted, and some limit is not imposed upon it, the Commonwealth is entitled to tax fully the source of income. In war-time the States were jammed in the way that the right honorable gentleman who is now Prime Minister and Treasurer described. They are obliged, whether they like it or not, to agree to the best possible terms that they can get from the Commonwealth. If they are not prepared to accept those terms, certain penalties will automatically be imposed upon them.

Another matter which is extremely interesting in relation to the bill is a comparison of the rates of reimbursement to the six States with those contained in the existing act. A good deal of controversy arose in this House - in fact, on one or two occasions the debate became almost bitter - as the result of the particularly preferential treatment of New South Wales, which always appears to be not only the biggest but also the hungriest and best spender of all the States. If honorable members will compare the proposed new schedule with the schedule in the act, they will see that the proposed increases of reimbursements to the States are as follows : -

I give those figures because of certain statements that have been made publicly. I believe that the Prime Minister himself made one in the recent byelection in Victoria. It lends definite colour to what I am about to say. The right honorable gentleman was reported as having said that the return of a Labour government in Victoria would assist smooth working between the Commonwealth and the State. The two States which have been given large increases under this arrangement were those which did not have Labour governments at the time of the introduction of uniform income taxation. In other words, it would appear to any impartial observer studying these two columns of figures that Victoria and South Australia paid a heavy penalty in 1942 simply because they did not have Labour governments. That is the only conclusion which ‘I can draw from the figures. I am a party man - I admit it - -but there are certain things which ought to be above- party, and in a federation like this, each State should be placed on the same footing in the eyes of the Commonwealth regardless of the political colour of the government which it happens to have in office at the time. The introduction into Commonwealth administration of a system under which a State may be penalized on account of the policy of its government is a dangerous practice.

Mr CHIFLEY:

– The honorable member will recall that the committee which made the recommendations included a representative of the Opposition.

Mr ARCHIE CAMERON:

– That representative was never selected by the Opposition. It is a matter of history now, but he was chosen by the Government, just as certain representatives of the Opposition who went overseas last year were chosen not by honorable members on this side of the House but by the Government. One of the matters which disturbs me about the administration of this Government is the way in which certain people, who have been useful to it, have been given excellent, positions. I refer to the two Frankenstein brothers who are absent to-night. One is the Administrator of Norfolk Island.

Mr SPEAKER:

-Order! That matter is not related to the bill.

Mr ARCHIE CAMERON:

– As we are dealing with taxation, I believe that one of the uses to which some of the money should be put is to make the Administrator congenial with his surroundings by removing to Norfolk ‘Island the power-alcohol distillery at Warracknabeal.

Mr Pollard:

– If the honorable member for Barker were reasonable, he might have his wishes met in the same manner.

Mr SPEAKER:

– Order ! I ask the honorable member for Ballarat not to interject.

Mr ARCHIE CAMERON:

– I do not want that kind of treatment. The Prime Minister claimed that the Opposition had a representative on the .committee which recommended the introduction of uniform taxation. I have a strong suspicion that if the Opposition had been consulted about the ma.ter in 1942, the administrative history of Australia would have been very different from what it is.

Mr Calwell:

– It has taken the honorable member three years to repudiate him.

Mr ARCHIE CAMERON:

– It is not my job to comment on everything that is done on this side; but when honorable members opposite raise certain matters I shall make my comments thereon. I am quite sure that this measure, together with certain other measures which have been passed by this Parliament, will require a lot of overhaul before we go very much further. Let me take one point. Last year, South Australia was badly stricken by drought for the third year in succession ; but when I made representations in this matter how was I treated? Honorable members opposite, if. they are allowed to speak their minds, will bear out what I have to say. In September last I put in a petition to the Commonwealth, but it was not until this month that I could get any decision about what the Commonwealth proposed to do about drought relief; and I am then told that this is a matter of Cabinet policy which is within the financial competence of South Australia. Before long a special bill will be passed by South Australia, and I shall then be able to ask the Minister for Commerce and Agriculture (Mr. Scully) what he proposes to do about the matter. If this arrangement between . the Commonwealth and the States is to succeed, the Commonwealth must show more consideration towards the States than it has shown towards them in the past. The Commonwealth now receives the total collections from income tax. Whatever the conditions of any industry may be it is no longer a question of what the State must do to help that industry, because that industry’s contribution is now made not to the .State but the Commonwealth Treasury. No industry contributes to State funds except, indirectly, or, in the case of four or five of the States, in a small degree through the medium of land tax. Therefore, as we proceed, the Treasurer will have occasion to make a few alterations to this measure. I have no doubt that the bill will have a speedy passage in this chamber, and will go through the Senate like a jet-propelled aircraft.

Mr HUTCHINSON:
Deakin

.- A.t the inception of federation certain powers were left with the States, whilst others were vested in the Commonwealth, but the .framers of the Constitution did not contemplate that the States would ever be subservient to the Commonwealth. Australia is a large country. Its development to date has depended to a great degree upon local authorities spread throughout the length and breadth of the land, and therefore, provision was made to enable certain powers to be conferred upon those authorities. At the same time, the framers of the Constitution were sufficiently far-seeing to realize that at some future date circumstances might arise which would necessitate the Commonwealth having almost complete control over income taxation. As time went on, only the States levied income tax, whilst excise and customs duty, for obvious reasons, were handed to the Commonwealth. But even out of the collections of excise and customs duty the Commonwealth paid certain sums to the States. It was not until the first world war that the Commonwealth imposed income tax. It did so for obvious reasons; but when that war ended the Commonwealth continued to levy income tax. Then came the depression, and once again when added burdens were thrown upon the finances of not only the States but also the Commonwealth, additional taxes of various kinds were levied. Many of those taxes were reduced during the regime of the Lyons Government. Then came the second world war, and we reached the point when the Commonwealth was obliged to raise revenue amounting to from £500,000,000 to over £600,000,000 annually. However, the Commonwealth was faced with the fact that the

States had differing systems of levying income tax, embodying different rates, and, therefore, it was impossible for the Commonwealth to levy income tax to a degree sufficient to meet its war expenditure on a basis that would be fair as between different States. Therefore, because of the exigencies of war, the Commonwealth adopted uniform taxation; and that system met with general approbation with the exception that many of us objected to the basis of reimbursements to the different States. It was clear that whilst extravagance on the part of one State was rewarded, thrift and frugality on the part of another State were penalized. That is borne out by an examination of the operation of uniform taxation as it affects New South Wales and Victoria. In 1940-41, the year before a uniform tax was imposed, the Commonwealth collected in Commonwealth income tax £12,100,000- in New South Wales whilst the State Government collected £16,700.000 in State income tax, making a total of £28,800,000. Under a uniform income tax the amount collected in New South Wales has increased by 143 per cent, to £70,000,000, that being the amount of income tax collected in that State in 1944-45, and of that sum the Commonwealth refunded to the State 21i per cent. But what is the position so far as Victoria is concerned ? In 1940-41 the Commonwealth collected in Commonwealth income tax £9,100,000 in that State, whilst the State Government collected £6,600,000 in State income tax, a total of £15,700,000. Income tax collections in Victoria in 1944-45 under a uniform income tax increased by £36,300,000, or an increase of no less than 231 per cent., but of the £52,000,000 collected in Victoria in that year, only 124 per cent, was refunded to the State. I am as much an Australian as any other honorable member. I agree with the Leader of the Opposition (Mr. Menzies) and, to some degree, with the honorable member for- Ballarat (Mr. Pollard), that no individual, no matter in. which State he lives, can escape his obligations to the nation as a whole, because he gains through the progress of the nation. But the difference between the allocations of income tax collections to New South Wales and Victoria cannot be justified on any ground whatsoever ; and it seems that these allocations will be made on this basis for some time to- come. At the conference of Commonwealth and State Ministers every State Premier opposed the continuance of a uniform income tax. Having regard to the fundamental policy of the Labour party, the viewpoint of the Minister for Immigration (Mr. Calwell) is somewhat remarkable. I have always understood the Labour party to stand for unification, ‘that is one parliament which alone should rule the country. Obviously, differences of opinion now exist within the Labour party with respect to a uniform income tax. -Every State Premier - and the majority of them led Labour governments - opposed the continuance of this tax, and they left the conference feeling that they had been up against .a brick wall of opposition by the Commonwealth in their endeavour to terminate the present system, but sweetened by the knowledge that more money would be allotted to the States which they represented. Victoria, for instance, got an extra £2,000,000. But what was the explanation offered to this House to-night as to why the allotment to Victoria was increased? The honorable member for Fremantle (Mr. Beazley) told us that additional money was allocated to Victoria only to make up for the depreciation of the Australian £1, a depreciation which, I remind honorable members, had been brought about as the result of the inflationary policy of the Labour Government. If this is so, then the allocation to the States has been on the same basis, namely, a basis of rewarding the extravagant and penalizing the thrifty.

The subject of social services has been raised frequently during this debate, as it has on other occasions, by no less a person than the Prime Minister and Treasurer himself when addressing the House on the question of the desirability of continuing the uniform tax. When dealing with this subject honorable members opposite invariably quote figures showing the amount per capita expended by the States on social services. Honorable members opposite appear to be under the impression that a high per capita expenditure on social services is indicative of the real standards of health and wellbeing of the people. They conveniently forget that the money provided for such services must first be obtained by the imposition of exceedingly high rates of taxation. High rates of taxation in turn affect production, .and the volume and value of our production affects the national income; and unless production is increased in volume and value, the whole basis of social services in this country must be endangered. Ten years ago when I was in Russia I sought to ascertain, some facts about the standard of living of the Russian people as it was then, and’ as it existed in pre-r evolution days. While there I met an English gentleman who had been in that country for many years. His knowledge of Russian affairs, which extended back to pre-revolution days, was perhaps more extensive because of the fact that he had married a Russian woman. He had been in Moscow for many years and it was part of his business to study economic trends and to pass on information which came to him by reason of his high position there to others in a very much higher position in his homeland. He told me that Russia had greatly liberalized its social services in the years immediately preceding my visit, as, indeed, had -every other country. But he said, “ Prom the point of view of warm clothing, a full stomach, and boots on their feet, the people of Russia are definitely worse off than they were priorto the revolution “. Shrugging his shoulders he said, “ Which would you prefer, extensive provision of social services on the statute-book, or a full stomach and a good pair of boots on your feet on a cold winter’s day?” So much for the relation of social services to real standards, of comfort! Mr. Maloney, Australian Minister to Russia-

Mr SPEAKER:

– Order! I have given the honorable member ample opportunity to relate his Russian story to the bill before the House. I now ask him to confine his remarks to the subject before the Chair.

Mr HUTCHINSON:

– The point has been made by- the Prime Minister and others that Victorians are worse off under the uniform income tax because of the low amount it has expended on social services. I am endeavouring to emphasize that standards of living are not determined by the amount provided by a government for social services.

Mr SPEAKER:

– Order !

Mr HUTCHINSON:

– In the last 20 years I have travelled extensively in all States of the Commonwealth, and I have invariably found the general standards of health and well-being, including housing, better in Victoria than in any other State. The general prosperity of Victoria was well exemplified in the depression days by its ready response to appeals for contribution to Commonwealth loans, particularly to the loan raised in 1930-31 when contributions from other States were lagging far behind the quotas fixed. This is indicative of Victoria’s sound economy and the general well-being of its people. While in Detroit, in the United States of America, I went through the famous River Rouge works-

Mr SPEAKER:

– Order ! I again ask the honorable member to confine his remarks to the bill.

Mr HUTCHINSON:

– It is possible for two people to purchase articles of the same kind but’ the value of one may be infinitely better than that of the other. The clap-trap which we have listened to from honorable members opposite regarding social services and uniform taxation in relation to standards of living is utter nonsense. Example after example of the fallacy of their arguments could be given by any honorable member on this side of the House. The’ Minister for Information raised the question of education. Statistics prove that Victoria was almost on a par with the other States and its per capita expenditure on education

Mr Calwell:

– That is not so. In Victoria the average expenditure per head of the population on this account has been much below that of the other States.

Mr HUTCHINSON:

– It was only slightly below that of the other States, the greatest difference in one instance being only 5s. per head. Private secondary education is on a higher plane in Victoria than in any other State in the Commonwealth. Victoria has more public schools than any other State, and in every suburb, every provincial centre and many country towns in Victoria private secondary schools cater more extensively for the education of children than is the case in any other State. If the hundreds of thousands, possibly millions, of pounds provided for private secondary and primary education be added, the figures might show Victoria to be on the credit side. I do not believe that any other State has provided for private education on a scale equal to that of Victoria. This is an indication of the sound well-being of the people of that State. They have not relied on the public purse for the education of their children. About two years ago, I was present at the opening of a small school, the State expenditure on which was possibly a few hundred pounds. To-day one would value the school and grounds at £1.500 or £2,000. Voluntary effort has converted it from a mere shell into a thing of beauty. It is well equipped. I do not deny for a moment that education is privately assisted in other States. The point that I make is that the mere recital of amounts spent by governments on social services is of no real value in assessing the standards of life. The. same can be said in regard to hospitals. The idea is growing in this country that real wellbeing exists because of expenditure by the State. Of course it does not. Bea! enterprise and well-being are evidenced in the individuality of the people, their self-reliance, and their determined efforts to make provision for a rainy day, not in a mere recital of figures relating to expenditure upon social services, or in the legislation that is passed and the regulations that are made.

Under the bill, the allocation of moneys to. the States is apparently to be made much on the old basis. I object to that. Desiring to do my share in promoting the development of this country as a whole, and not merely the portion of the State which I represent, I am prepared to make an equitable contribution. I am, however, opposed to a basis of allocation which I believe to be dastardly. That basis has been incorporated in this measure, which apparently is not to .be a temporary one. I am not blind to the large financial obligations which this country may have to undertake in the next few years. I know that obligations arising out of the war will add - millions of pounds to the expenditure of the Commonwealth Government. If this measure was intended to operate only for a certain number of years, as was the measure originally introduced, which the Treasurer said at the time would last only for the period of the war and twelve months after, and provided for a fair allocation as between States, having regard to the enormous obligations arising in the immediate post-war period, I should be inclined to vote for it. But it does none of those things. This system of taxation is to be applied in perpetuity. The real autonomy of the components of the Commonwealth are to be denied the right to impose income tax, and in consequence their right to selfdevelopment. I believe that this country will develop along sound - lines only when its components are free to raise money and to determine in the light of sound local knowledge the directions in which their development shall proceed. On that principle, I conclude my remarks. I consider that this system has a fallacious basis. The proposed allocation is one with which I do not believe any fairminded person could agree.

Mr BRYSON:
Bourke

.- Fortunately for himself, the honorable member for Deakin (Mr. Hutchinson), early in his speech, informed the House that he was an Australian with an Australian outlook. Had he not volunteered that information, we would have believed him. to be a narrow, parochially minded, little Victorian, because he based the whole of his argument on the assumption that uniform income taxation is wrong, on the ground that it increases the taxes of certain individuals in Victoria. That, to my mind, is entirely erroneous. I am acquainted with all the arguments that have been advanced since 1942 in regard to the extra taxation imposed on Victorian citizens. I remind the honorable member that, as an Australian,, he must expect to pay the same rate of tax as every other Australian. If he is not prepared to stand up to that test, lie cannot describe himself as an Australian. The States Grants (Income Tax Reimbursement) Act 1942 did not give as much per capita to Victoria as it gave to other States. The reasons are obvious. The honorable member has advanced some of them. Describing social services in Victoria, he characterized the Government of that Stale as thrifty and frugal. Frugality exactly describes the social services of Victoria in recent years. By way of illustration, the honorable member referred to the opening of a small country school which he visited some years ago. I have had some experience of State schools in Victoria. The Government of that State has always claimed that schooling was free, secular, and compulsory, with emphasis upon “ free “. The honorable member has said that the Government provided a new school building. It. may have provided the land, or the local residents may have made- a gift of it. The Government built a school on the land, and to the parents of the children attending the school was left the responsibility of providing all the necessary amenities for the teachers, in order that the children might be taught. No school books, sporting requisites, or shelter sheds were provided. That represented the taxation of a small section of people in order to ensure that the children would have reasonable amenities during the period of their education. It is the worst form of taxation, because it taxes only a small section in order to provide education for the children. I am acquainted with other social services in Victoria. Successive governments in that State have failed lamentably to provide reasonable hospital accommodation. The people have not been taxed so that the sick poor might receive proper hospital treatment. Appeals have been made to the charitable instincts of the people for that purpose. The charitable people have furnished the necessary funds, and the uncharitable have kept their money in their pockets. That has meant heavy taxation of the charitably-minded, and low taxation of those who were not prepared to make donations. While Mr. Dunstan was Premier of Victoria, he always claimed that it was the ideal State in regard to taxation. He was able to prove that per capita taxation in Victoria was lower than in any other State. Nevertheless, the man on a low income in Victoria paid as much if not more income tax than his counterpart in any other State. When uniform income taxation was introduced by this Parliament a large number of taxpayers in Victoria were called upon to pay less than they had paid before the introduction of the system. That was because the State Government had imposed high taxes on persons with low incomes and comparatively low taxes on people with high incomes. An examination of taxation assessments in Victoria will prove the correctness of my assertion. The honorable member for Deakin also had a grievance regarding the right of this Parliament to impose income taxes. He said, in effect, that the Commonwealth Constitution does not empower the Parliament to do so, or, if it does, the Constitution should be altered.

Mr Hutchinson:

– Apparently the honorable member did not listen to my speech.

Mr BRYSON:

– That was the basis of his claim, but the High Court of Australia has ruled that the introduction of uniform income taxation was within the constitutional powers of this Parliament.

Mr Hutchinson:

– I said, that at the beginning of my remarks.

Mr BRYSON:

– The honorable member then claimed that the framers of the Constitution did not intend that the Commonwealth Parliament should have such powers, and that the States should not be subservient to the Commonwealth in any respect. He said that by the introduction of this system of taxation certain powers had been taken from the States. I believe that additional powers should be granted to this Parliament. The people of Australia are one nation, and should be governed through a national parliament. I should be quite happy if additional sovereign powers were taken from the States. I hope that in the near future the States will be deprived of some of the powers now enjoyed by them. An opportunity to enable this to be done will be afforded to the electors at the referendum which is to be held shortly, and I trust that on that occasion the people will display a true Australian outlook by favouring a system of government through a national parliament. They should make it clear that they desire one Australian government rather than six separate State “shows” competing on against the other, but which .now and again combine in an attempt to defeat the purpose of a national parliament. I welcome this measure, and, unlike the honorable member for Deakin, I hope that the uniform taxation scheme will be a permanent arrangement.

Much -stress has been laid on the fact that under this measure’ Victoria and South Australia will receive a larger allocation than was granted in 1942. The honorable member for Barker (Mr. Archie Cameron) said that a penalty was imposed on those States at that time, because they were not controlled by Labour governments. I disagree with him entirely. Those States got as much money under the scheme as they required in 1942. The honorable member for Barker is asking that South Australia should be much more of a mendicant State than it has ever been in the past, because ‘ he has mentioned to-night the subject of drought relief, and has said that the Commonwealth should provide money for that purpose. He is such an ardent supporter of State rights that he should go to the right place, if the people of. South Australia are entitled to drought relief; hut he comes here, cap-in-hand, and asks the Commonwealth to grant that relief. Victoria is said to have been robbed of about £4,000,000 a year since 1942.

Mr Bowden:

– So it was.

Mr BRYSON:

– It was not. The honorable member for Gippsland (Mr. Bowden) should try to be a big Australian, but he is only a little Victorian. In a national cause he should be prepared to support the same rate of income tax in the £1 for Victorians as for residents of New South Wales or South Australia.

Mr Hutchinson:

– Does the honorable member agree to the allocation made to Victoria?

Mr BRYSON:

– I agreed to the gram provided for that State, in 1942, because it was proved conclusively that that amount was far more than sufficient for the State’s requirements at that time. A glance at any Victorian budget since 1942 will show that its allocations were fair, because they provided sufficient to pay for all it3 services and leave a surplus at the end of each year. When a Government can close its financial year with a surplus its revenue must be sufficient.

Mr Hutchinson:

– What about depreciation ?

Mr BRYSON:

– Adequate provision was made for depreciation in every direction. There is a large sum waiting to’ be expended on the railways of that State as soon as it can be expended. Had the additional £4,000,000 a year which certain members of the Opposition say should have been paid to Victoria been made, available, its surpluses would have been so great that the government of the day would not have known what to do with the money. Had Victoria been prepared to disburse money on social services and in other directions in the same manner as that in which other States have used it, I should say that the allocation was not sufficient, but it was only necessary to grant to that State sufficient funds to cover its annual commitments. Under the agreement now reached by the State premiers and the Commonwealth Treasurer, Victoria, with the other States, is now to get a reasonable grant. Whilst this is approximately £2,300,000 more than was allocated when the Dunstan Government was in office, I have no doubt that, as a progressive Labour government is now in power in that State, that money will be expended wisely and well, and the people of Victoria will receive the benefits of social services which they have long been denied by successive antiLabour administrations in that State.

Mr McEWEN:
Indi

.- Members of the Opposition realize that, in speaking to this bill, they are, in effect, beating the air, because this is one of those measures to which the Labour Government has accustomed us. It provides for the ratification of an agreement already reached, and, therefore, it Gannot be altered by this Parliament.

Mr Sheehy:

– Well, is that not true? .

Mr McEWEN:

– The honorable member seems to be quite satisfied with the situation. Honorable members opposite, who purport to represent the people, are apparently quite happy to condone a state of affairs in which the Government brings before the Parliament a piece of all-important legislation, and says to honorable members, “ You must accept or reject it. You may talk about it if you like, but you cannot alter it.” Such an attitude represents an abrogation of democratic government. We have here a bill designed for the raising and distribution of revenue for government purposes, but we are told that we cannot amend it in any particular.

Mr Pollard:

– A majority of the members of the Parliament has accepted it.

Mr McEWEN:

– It has been accepted by a majority of the Labour caucus because the members of that body have not sufficient backbone to exercise any judgment.

Mr Calwell:

– The measure went before caucus, and was approved.

Mr McEWEN:

– The Minister’s re- mark is indicative of a cynical attitude towards our democratic institutions. He points out that the measure was accepted by caucus, and he suggests, therefore, that it should be accepted without question by this Parliament, but I point out that it has not been accepted by the representatives of a very large section of the people. Honorable members opposite are always protesting their loyalty to the principles of democracy, but they are far’ from practising such loyalty.

The first point to consider in connexion with this legislation is that it represents a breach of faith by the Government. Other honorable members have quoted the words of a former Prime Minister and of the present Prime Minister (Mr. Chifley), who was then Treasurer, in which they gave an assurance when the original legislation was introduced in 1942, that the system of uniform income taxation would last only for the duration of the war. The behaviour of the Labour Government in connexion with this matter is typical of its cynical attitude towards the promises of its leaders. Provided the promises serve their purpose at the time, they can be broken without a qualm when it becomes convenient to do so. It is a serious state of affairs that it should be accepted as the normal thing that assurances by the Prime Minister and a senior Minister should be thus carelessly broken.

Attempts have been made by honorablemembers opposite tocharge those on this side of the House with lacking an Australian spirit. Such allegations drip so readily from the tongues of honorable members opposite that we do not take them seriously. Australia has achieved nationhood, and no one could approve a state of affairs in which there was serious discrimination between citizens simply because they happened to live in this State or that. The present system of uniform taxation and distribution has been criticized by both the Labour and non-Labour parties of the Victorian Parliament, but neither has asserted that Victoria should be regarded as a separate entity free to establish its own standards. Both parties, however, have demanded that Victoria should receive equitable treatment under the scheme. The greater part of the revenue collected by the Victorian Government is derived from the City of Melbourne, but no Victorian parliament has ever suggested that it should be all expended in the metropolitan area. There has always been a readiness to recognize the principle that-, revenue should be collected where possible, and expended where needed. However, when we are confronted with a proposal which will result in discrimination against a section of the people there is ground for criticism. The legislation which we are now considering will unquestionably effect a fundamental alteration of the relationship between the Commonwealth and the States. The federal system envisaged a situation in which there would be two sets of autonomous authorities - the States on one hand, and the Commonwealth on the other, each having certain responsibilities to discharge, and each empowered to raise revenue for that purpose. Now, at a single swoop, it is proposed to withdraw almost entirely from the hitherto sovereign States their power to collect revenue by means of an income tax, although their responsibilities still remain.

Mr Calwell:

– It is all perfectly constitutional.

Mr McEWEN:
INDI, VICTORIA · CP; LCL from 1940; CP from 1943

– The Labour party has again found a way around the Constitution. Time and again the Labour party has, in pursuing its course towards unification, and as part of its plan to destroy the federal system, asked the people for such increased power as would result in the destruction of that system. On almost every occasion the people have said : No “. However, there are in the ranks of thu Labour party persons sufficiently ingenious and politically unscrupulous to explore ways of circumventing the expressed will of the people so that a uniform system of government may be established, contrary to their wishes. And so, when I criticize this proposal and say that it will alter the whole, federal system, the Minister for Information says “ It is constitutional “. In other words, he says that the lawyers have found a way around it. The circumventing of the oft-expressed will of the people is a poor purpose to which to apply the skill of lawyers, yet that is the cynical admission of the Minister. I challenge the proposal on that ground - that it is improper to employ such devious means to attack the federal system which is our chosen form of constitutional government. However, Such matters present no difficulty to a Labour government which has as its aim the centralization of authority, the abolition of houses of review, and the introduction of caucus rule, which practically amounts to a totalitarian form of’ government. The Minister for Immigration (Mr. Calwell) referred to the ex-Premier of Victoria, Mr. Dunstan, as an obstacle to the attainment of Labour’s aims. He told us that when Mr. Dunstan came to Canberra to negotiate with the Commonwealth authorities about uniform income taxation, he was “ difficult “ ; and so he got nothing. Later, there was a change in the political scene in Victoria : Mr. Cain succeeded Mr. Dunstan as Premier. In due course, Mr. Cain, too, came to Canberra, and we are told by the Minister that he was “ co-operative “. He went away with an additional £2,500,000.

Mr Archie Cameron:

– The Minister meant that Mr. Cain was submissive.

Mr McEWEN:

– Yes. He, the. Premier of a sovereign State, submitted to the authority of his seniors in the Labour party-. That is not a1 proper attitude for a State Premier to adopt when dealing with the business of his State. Such a. state of affairs is intolerable. Having given to Victoria an additional £2,500,000, the Commonwealth Govern. ment found that it could not let the repre-‘ sentatives of the other States go away empty-handed; and so, each of them got something extra.

Mr Pollard:

– Does the honorable member think that .they ought not to have got anything?

Mr McEWEN:
INDI, VICTORIA · CP; LCL from 1940; CP from 1943

– They should not have been given more merely because they haggled about it.

Mr Pollard:

– Would the honorable member have accepted less?

Mr McEWEN:

– The amount to be allocated to each State should not have depended on haggling or on the submissiveness of its Premier. Nevertheless, haggling by State premiers resulted in the amount to be paid to the States being raised to £40,000,000. It is wrong in principle to fix arbitrarily the amount to be paid to the States for a number of years. We do not know what the future has in store for Australia, and cannot say whether the amount decided on will or will not be adequate in the years to come. We do know, however, that the Commonwealth Government is engaged in a constant endeavour to deprive the States of some of their functions, and to centralize all governmental activities in Canberra. Undoubtedly, those, tactics succeed in some measure. Every function which is transferred to the Commonwealth from the States results in the States requiring less money for their remaining functions, although they still get the same amount. That cuts across the principle which should apply to taxation. We all look forward to a reduction of taxes; but here a peg is driven in at a point which prevents any such reduction because the revenue apportioned to certain activities is fixed. Such a policy disregards any transfer of authority and the economic development of Australia. It is wrong, as well as stupid. I have said that haggling by the State premiers produced certain financial results;’ but the Commonwealth -Government could not tell the country that Victoria received an additional sum because its premier haggled to good effect. I imagine that when the additional amount for Victoria was decided upon by the Commonwealth Government, Mr. McKell said that he would not stand for it, unless New South Wales also received’ an extra sum; and so more had to be. given to that State. That being so, Mr.Wise, the Premier of Western Australia, submitted a claim on behalf of his State, and he, too, was successful. Then Mr.Cosgrove, the Premier of Tasmania, had to be satisfied. As I have said, that explanation could not be given to the country, and so the Treasury officials devoted their talents to devising a formula to meet the situation.I have studied the schedules in respect of taxation and the method of computing the liability of persons and companies to pay taxes, but I confess that like the great majority of Australians, I am incapable of working it out. I thought it was the most complicated thing I had ever seen; but it is really beaten to a frazzle in complication and, utter incomprehensibility by the explanation, supplied to honorable member’s, of the formula which, in my opinion, was devised to avoid explaining to the House the fact that the figures were really arrived at by a process of haggling. An incredible conglomeration of factors has to be woven together to discover some result. We are told that a woman is worth half a man. Then we find that children up to the age of five years are not regarded as being worth anything, whereas children from five years to fifteen years are classified at the rate of four to each adult. Starting off from that point, andbeing thoroughly bemused as to why there should be such assessments of men, women and children, we are confronted by “ zones “, “ areas of density of population “ “ adjusted population “ &c. In relation to the term “ adjusted population “ ‘ the explanatory memorandum states -

Paragraph 3 (1) of the Second Schedule defines the adjusted population of each State as being theactual population of that State, plus four times the number of children aged five to fifteen years, inclusive, living in that State. The number so arrived at is to be further increased by a percentage equal to the percentage which the sum of certain proportions of the population living in areas of low density is of the population of the State. This calculation is to be made at the beginning of the year in’ respect of which the grant is payable.

That, of course, is perfectly clear to every one; but in a further attempt at clarification, paragraph 22 states -

Paragraph 3 (2) of the Second Schedule defines “area “ for the purposes of the adjustment on account of sparsity of population in paragraph 3 (1). Areas are in general defined as local government areas but it is further provided that -

somuch of the area of a State as is hot incorporated in a local govern- ment area shall be treated together as one area,

a local government area with a population of less than 5,000 and entirely surrounded by a larger local government area, is to be combined with the larger area. This provision is designed to ensure comparability between States where townships in the middle of a rural district tend to be separately incorporated; and States where this is not so.

Again a provision of indisputable clarity:

Sir Earle Page:

– Does that refer to Tasmania or to New South Wales ?

Mr McEWEN:

– I ask the right honorable member for Cowper (Sir Earle Page) not to question me on the subject. I suggest, also that he doesnot question the Treasurer, because neither of us understands what it is all about. Most amazing of all is the fact that there is not a single word aboutthe price of wheat. That can be attributed only to the fact that the former honorable member for Wimmera, Mr. Wilson, has been fixed up with a job.

Mr DEPUTY SPEAKER (Mr Riordan:
KENNEDY, QUEENSLAND

– Order ! The honorable membermust confine his remarks to the measure now under discussion.

Mr McEWEN:

– If Mr.” Wilson had not been fixed up with a job, no doubt the Government would have felt itself compelled to mention the price of wheat somewhere in this document, otherwise it would not have been able to count upon the support, of that gentleman.

Fearing that the portions of this memorandum that I have quoted may not have been entirely lucid sub-paragraph c of paragraph 22 explains -

  1. A local government area with a population of less’ than 5,000 and an area of less than 100 square miles is to be combined with the local authority area having an area of more than 100 square miles with which it has the longest common boundary. This provision is designed tomeet the same difficulty as in (b) but where the township is not completely surrounded by a rural area. In such cases it is to be combined with the rural area with which it has the longest common boundary.

I have no doubt that as the result of all this explaining Mr. Dunstan will be able to proceed1 to discover instantly how much Victoria will get out of it. And so this incredible document goes on; but i. can find not one word about the price of butter fat. That is a serious omission. The inclusion of a reference to the price of butter fat might not enable us to understand the document any better, but possibly some of us would be a little happier about it.

The Leader of the Opposition (Mr. Menzies) hit the nail on the head when ho said that if we were to have one collecting authority for seven zones of governmental responsibility, the amount of money to be apportioned to the six States should not be determined by haggling conferences, negotiations behind locked’ doors, and caucus discussions. If the federal system is not to be destroyed at its very roots by this proposal, it is essential that the apportionment of money to the States should be the task of a skilled auth ari tj’. In that connexion the Leader of the Opposition has aptly suggested the Commonwealth Grants Commission which over the years has not only gained great knowledge of State problems and disabilities, but also has devised formulas that, are understandable to human beings and acceptable to the States. The acceptability of the amounts, of money to be apportioned is an important factor. I am entirely in agreement with the Leader of the Opposition that if uniform income taxation is to continue there should be established a skilled, competent, impartial tribunal to examine the facts, and assess the needs of the States in the light of existing conditions and prospective developments. I have not the slightest doubt that the net result of the Government’s approach to this problem will be this: State parliaments, State governments, and State parliamentarians of all kinds will soon realize that to-day we are presenting them with a perpetual and permanent alibi. I can quite imagine that it will not be long before any criticism whatever, levelled against a. State government’ or State parliamentarians, will produce the immediate reply, “But we are bound by the amount of money allocated by the Commonwealth “. It is bad that a community which has chosen for itself the federal system of government’ should take such a retrograde step as to withdraw from six hitherto autonomous governments the right to make their own decisions with regard to the collection of income taxes. The result will be that six governments and some hundreds of parliamentarians will be pointing the finger perpetually at the national government of Australia, whatever its political colour may be, and saying, “ That is where the responsibility rests for any imperfections in our administration, because we are not being given enough money. The Government is striking a blow at the root of responsible government in Australia that we chose, the federal system.

Dr GAHA:
Denison

.- When the uniform income tax was instituted in 1942 some States were so dissatisfied that they appealed to the High Court and, by the overt act, established in respect of income tax the Commonwealth’s authority to act as the taxing authority for Australia, regardless of whether the country is or is not at war. Honorable members opposite have shown no regard for realities. Over the years, I have made it my business to talk to aged members of this community of varying political opinions who were enthusiastic and active federalists. They, have all said that they were told that federation was but a step to unification with but one Parliament. Whether that is right or wrong I cannot say of my own knowledge, for I was too young to be a participant in the steps towards, and achievement of, the Australian Commonwealth. I was trained in State politics, and still have a strong State outlook. Something between the extreme unificationist and the extreme “ State- lighter “ seems needed, but any one would think, on hearing the honorable member for Wentworth (Mr. Harrison), who knows as little about the State as he does about the federal machinery, that the entire revenue of the States comes from reimbursement of income tax, whereas New South Wales, of which he is a federal representative, receives from that source only about one-fifth of its revenue, and four-fifths is raised by other means. That shows the profound knowledge of the honorable member about the State he represents.

Mr McEwen:

– The honorable member is including railway fares and freight’s as revenue.

Dr GAHA:

– I am stating facts. The honorable member for Indi knows no more about Victoria than does the honorable member for Wentworth about New South Wales, so I will tell him something about it. Despite the proposed increased reimbursement of income tax to Victoria that payment provides only about one-fifth of its revenue.

Mr McEwen:

– Nonsense !

Dr GAHA:

– I have taken the trouble to ascertain the facts, but I wonder if my stupid friend has done so.

Mr SPEAKER:

– Order !

Dr GAHA:

– Well, he says, “Nonsense ! “

Mr SPEAKER:

– Order !

Dr GAHA:

– That is fact. The States’ activities are manifold and their resources great. I champion neither the Commonwealth nor the State at the expense of the other, because I believe that one is necessary to the other. And I remind the House that provincial government has been always a part of the Labour party’s policy.I do not think everything should be centralized at Canberra, and I do not think my colleagues do.

Mr Bowden:

– A good many of them do.

Dr GAHA:

– Well, I am not responsible for what they think.It is extraordinary that if any one wants to know what happens in the caucus or what the Labour party’s policy is he must ask honorable members opposite. I hope they know as much about their own policy as theyclaim to know about ours.

Mr Frost:

– They do not have a policy.

Dr GAHA:

– That is why they concentrate on ours. It; is necessary to think in terms of a central government and State governments, notwithstanding that, asI have been told by those who should knowthat the objective was unification. I do not, know what that means. Nor do I know whether any one has ever defined it. Neither have I heard it advocated, except in this chamber, that all powers should be centralized in this Parliament. I do not think any one wants that-

Absolute centralization of authority at Canberra is vastly different from centralization of certain functions essential to the good government of Australia. It was because of a High Court decision that the Commonwealth Government ascertained its power to centralize income taxation. The State Premiers who attended the Conference of Commonwealth and State Ministers at Canberra in January rebelled against such centralization, notwithstanding the sovereign powers they still possess. Then, having agreed, reluctantly or otherwise, to a central taxing authority, they were left to decide the allocation of the money. No one else has emphasized that fact in this debate. The States decided the allocation, not the Commonwealth, because after they had agreed to a uniform income tax the Commonwealth asked them to get together on that subject. This bill represents what they agreed to. I understand that that is the correct statement of the position.

Mr Archie Cameron:

– In similar circumstances, a banker at Jerilderie agreed.

Dr GAHA:

– I do not know who he was. It sounds to me like something out of the Bible.

Mr Archie Cameron:

– I thought that the honorable member knew more about bushranging than that.

Dr GAHA:

– There is another interesting point about this matter. After a long and wordy battle, the Premiers agreed to uniform income taxation.

Mr Guy:

– Much against their will.

Dr GAHA:

– They had no alternative. They had appealed to the High Court, which had ruled that the Commonwealth had authority to centralize the collection of income taxes. Therefore, the honorable member for Wilmot (Mr. Guy) cannot properly object to the Commonwealth taking that authority. The Premiers agreed reluctantly to uniform income taxation and the Commonwealth said to them, “Here is £40,000,000. You agree among yourselves as to how it should be distributed “. The distribution is the result of the decision of the Premiers.

Sir Earle Page:

– Did the Premiers work out the formula?

Mr Lazzarini:

– Yes.

Dr GAHA:

– The right honorable member for Cowper (Sir Earle Page) has given me a thought. I do not often get one. In polities, one does not want thoughts. But I have an idea. Ever since I became a member of this chamber, I have heard everybody say - I have said it myself - that, “ The time has arrived when we must evolve an equitable formula to distribute money between the Commonwealth and the States “.. But no one has ever got beyond that point. As to the how, when, where or why of the formula we have not heard a word. In the last three years, the Leader of the Opposition. (Mr. “Menzies) has made the same, speech twenty -times in relation to the distribution of Commonwealth grants to the States, but he has never got beyond saying that, “ The time has arrived when we must have a new formula “. Although he himself has never prescribed a formula, he is the first person to criticize the formula of any competent authority. So he has it both ways. Honorable members on both sides of the chamber know that a formula providing a more equitable distribution should be evolved, but what it should be, the Lord only knows! That is my conclusion. I believe that some one should prescribe a new formula, but when we examine all the ramifications, the -problem becomes impossible. The Premiers themselves recognized that, and they soon harmoniously agreed upon this allocation.

Sufficient stress has not been laid upon another provision in the bill, and I direct attention to it. Clause 10 provides -

If, at any time - («) after the thirtieth day of June, One thousand nine hundred and fiftythree; the Government of any State so requests, the Government of the Commonwealth shall enter into consultation with the Governments of iiic States with a view to determining whether any change is desirable in the method provided by this Act for calculating the a aggregate grant and the distribution thereof amongst Iiic States, and to submitting to the Parliament legislation to give effect to such changes (if any) which, as a result (if .that consultation, the Government of the Commonwealth considers lo bo desirable.

It is not an inflexible decision.

Mr Lazzarini:

– Of course it is not!

Dr GAHA:

– If at any time after 1958, the States consider that they are receiving inequitable treatment under uniform income taxation, they may approach the Commonwealth for a new allocation.

Mr Archie Cameron:

– A State could get the necessary legislation before the Commonwealth Parliament only if the Commonwealth considered that it, was desirable.

Dr GAHA:

– Is that so terrible? Should the bill provide that if the States consider it to be desirable, the Commonwealth must introduce the legislation? What kind of a situation would that be? It would be the antithesis of what the honorable member for Wentworth said to-day, namely, that no control would he exercised over the moneys that had been allocated. What a silly situation it would be if the Parliament, of the Commonwealth had to obey the behests of the States! The honorable member for Barker (Mr. Archie Cameron) has had some experience of State politics, but, obviously, that was a long while ago,, or he did not realize what was happening. This bill baa regard for the changing face of State politics. I. have already said that of the total revenue of New South Wales, only one-fifth is derived from this C ommonwealth reimb u rsemen t .

Mr HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– Has the honorable member set off the expenditure of the railways and the like, which show losses?’

Dr GAHA:

– I am now referring to revenue. A State has many sources of revenue of which the honorable member for Wentworth has not the slightest conception, ‘because he has not been a member of a State Parliament and he neverwill know about them. After 1953, when,. T earnestly hope, we shall have reached some 3ta.te of permanent peace, States which are dissatisfied with Commonwealth reimbursements will be at liberty to request a review of the allocations. I suggestthat the Commonwealth would considersympathetically such a request. Thislegislation is not inflexible- but is saneand sound. 1” shall be very interested to hear the Leader of the Opposition evolvea formula which’ will give satisfaction, not only to the Commonwealth but alsoto the States. To date, no one has prescribed such a formula, although the>

Premiers who evolved the present formula did a good job. After they had reluctantly agreed to uniform income taxation, rhey proceeded without delay to distribute the Common wealth grant among themselves. All things considered, the bill is the best that we can expect.

I believe that we in this House should recognize more fully the contributions of State policies to the development and expansion of this country.

Mr Ahchie Cameron:

– Hear, hear!

Dr GAHA:

– “When I make that statement, I am not chiding honorable members on this side of the chamber. Whilst they may have strong federal views, they fully appreciate the contributions of the States to our development. But the States do not fully appreciate idle Commonwealth’s contributions. I consider that this bill is an excellent preamble to better relations between the Commonwealth and the States.

Mr FRANCIS:
Moreton

.- I have listened with remarkable interest to the apologies of the honorable member for Denison (Dr. Gaha). He tried to please the many people in Tasmania who are opposed to uniform income taxation, and at the same time he endeavoured to satisfy the Labour caucus and Ministers. As an ex-member of the Legislative Council of Tasmania he should know that it is impossible to please everybody. I know the honorable gentleman very well, and I have a high regard for him. In view of his previous record in this chamber, I am sorry that ho should attempt to make an apology for the vote which he will soon cast in support of the measure. If the honorable gentleman believes in these proposals, let him say so frankly, and support them; but if he does not agree with them, let him tell caucus what he really does believe.

Dr GAHA:
DENISON, TASMANIA · ALP

– I did tell caucus.

Mr FRANCIS:

– The honorable gentleman has been walking the tightrope for so long that I thought that he w as certain to fall and break his political neck. Hi; apologyhas not satisfied any one in this chamber, not even himself.

I remind the House that it was only after ve ry protracted negotiations with the States, and a thorough examination of the matter byan all-party committee in 1942, that uniform income taxation was proposed and accepted reluctantly by the Parliament as a war measure.

Mr Archie Cameron:

– Our party was not represented on that committee.

Mr FRANCIS:

– A representative of our party sat on that committee, but he was not elected by us as our representative. I repeat that Parliament reluctantly accepted uniform income taxation as a war measure four years ago. In the interim the State governments have carried on as best they could under that system. However, at the Conference of the Commonwealth and State Ministers every Premier protested vehemently against the continuation of uniform income taxation. In view of that fact, how was agreement reached at that conference? Agreement was achieved only: because the Prime Minister (Mr. Chifley) stepped up his bid, as in a Dutch auction, offering more and more money to the States, until he committed the Commonwealth to an increase of total reimbursement to the States of £5,500,000 above his originaloffer. I am not unmindful of the fact that uniform income taxation has proved of distinct advantage to Queensland.’ Unfortunately, Labour governments have been in office in that State for 25 years, for which period their policy hasbeen one of borrow, boom and burst. Prior to the adoption of uniform income taxation, Queensland was the highest taxed State in the Commonwealth, and under such conditions had no hope of developing secondary industries; but to-day, under the present system Queensland is on the same footing as the other States. Consequently, its great resources are attracting numbers of companies which will develop the raw materials of the State. Uniform income taxation offers protection to those companies which previously declined to set up in business in Queensland when the rate of company tax in that State was four times as high the rate of company tax in Victoria. Therefor-, J am not unmindful of the advantages of uniform income taxation to Queensland. New secondary industries are being established in. that State; and we must rely upon the expansion of secondary industry to provide employment for our people. However, I repeat that uniform income taxation originated at a war measure and was accepted on the understanding that it would continue only for the duration of the war’ and twelve months thereafter. Now, the Government proposes to perpetuate the system. I support its continuance for a definite period, say, for another three or four years, because for that period the Commonwealth will be committed to heavy expenditure as the result of the war, including expenditure in respect of the rehabilitation of exservice personnel, soldier land settlement, war gratuity, deferred pay and other liabilities. Therefore, I support the continuance of uniform income taxation for the immediate post-war period; but I strongly object to any proposal to perpetuate it. I reiterate that a uniform income tax was agreed to only after the most protracted negotiations at a Conference of Commonwealth and State Ministers which achieved the distinction of lasting longer than any other previous conference; and even then the Commonwealth’s proposals were accepted by the Premiers under the strongest possible protests. The perpetuation of the present system will hamstring the development of the States. It is a sound principle that the Government which incurs expenditure should be responsible for the imposition of the taxes imposed to meet such expert?diture. Any departure from that principle will encourage- extravagance on the part of State administrations. Under this system we shall find the States continually wrangling in their endeavours to have their reimbursement increased. As extravagance on their part will be encouraged owing to absence of responsibility for the imposition and collection of taxes they will no doubt keep coming to the Commonwealth for more and more money. The result will be that the Commonwealth will not find it possible to reduce income taxes. However, this country cannot be developed unless the present high rates of income tax are reduced. Crippling taxation hinders trade and commerce and reduces the standard of living of the community. Under such conditions no one suffers more than the workers whom, along with other honorable members, I represent in this chamber. In addition, development must be seriously retarded if the States are obliged to approach the Commonwealth again and again asking for more and *more money to enable them to undertake developmental works. That is a prospect which we cannot view lightly, particularly in large States like Queensland and Western Australia.- Provision must be made for essential public works, particularly irrigation schemes, roads, new settlements, harbours and various other undertakings essential to open up virgin country. However, it will be utterly impossible for the States to undertake these works if they are obliged to remain dependent upon the Commonwealth for hand-outs, and to come periodically to the Commonwealth to haggle over- increases of their reimbursements. Development must be steadily carried out; but systematic’ development will be impossible under this system. For instance, should the States, after initiating essential works, find themselves unable to obtain the necessary funds to complete such works, which in many cases will take from three to four years, considerable expenditure will be completely wasted. No State can hope to develop its industrial resources if it is not able to raise its own revenue for that purpose. “The Minister for Immigration (Mr. Calwell) said, in effect, that because a Labour government is in office in Victoria, the Premier of that State, Mr. Cain, was able to obtain a much larger reimbursement for Victoria than his predecessor, Mr. Dunstan, who was the leader of a non-Labour government in that State. If that principle, or lack of principle, is to’ determine the amount of reimbursement to the States, this country will not be developed. Such a -policy will undoubtedly cause widespread unemployment. Uniform income taxation was placed on the statute-book as a war emergency measure and it is being continued to-day, if for no other purpose, to meet the costs of the rehabilitation of the country and its ex-servicemen, and to finance all the obligations and commitments that have come with the peace. When rehabilita- tion has been completed, and once again we get back to normal peace-time conditions, uniform- income taxation should be promptly abandoned. I support the bill for the sole reason that I regard it as necessary for immediate post-war reconstruction and the development of this country; but I oppose its continuance for a day longer than is necessary. Those honorable members who would have legislation of this kind placed on the statute-book in perpetuity have but one purpose, namely, unification. “Whilst I believe in the federal system, I believe also in the sovereignty of the States, and cooperation between the Commonwealth and the States in all spheres. As the States develop, more and greater powers should be given to the Commonwealth by consent of’ the people. It is a fallacy to believe that we can develop the Commonwealth whilst allowing the State governments to remain entirely dependent upon the National Parliament for “hand-outs “ as circumstances permit. Such a policy could only result in retarding the national development of this country. For the reasons I have given I support the bill.

Mr BURKE:
Perth

– We have listened to some amazingly contradictory statements from honorable members opposite in connexion with this bill. At the beginning of his speech the member for Moreton (Mr. Francis) told us that by the large contributions we had given to the States, we had ensured the continuance of high taxation, and that by this proposal we have made certain that the States will be extravagant. Later, the honorable gentleman said that, because of financial restrictions resulting from the continuance of a uniform tax the States would not be able to carry on their ordinary works programme or perform the normal functions of government which fall within their sphere. All of the contradictions we have heard from honorable members opposite, and they have been many and varied, have been repeated by the honorable gentleman in the space of a single speech. It is necessary to be clear as to what is involved in this measure, whether it is desired by the people, and what form of financial adjustment should be instituted to settle the vexed problems of the financial relations of the Commonwealth and the States. We have heard repeated from time to time with monotonous regularity the statement that the State premiers came to a conference of Commonwealth and State Ministers determined to end the present system, and that they were bitter in their opposition to its continuance. But as we travel around our electorates and move about the country, we cannot help but form the opinion that the bulk of the Australian people in all walks of life, from” the businessman and the highest executive te the smallest ‘ and least-interested tax-payer, would demand, if given the opportunity, that the uniform tax should continue and that instead of a variety of tax returns, one applicable throughout the length and breadth of Australia should be sufficient. Companies operating in different States would be certain to ask for the continuance of the present system. Looking behind the scenes, and reading between the lines of the case presented by the Premiers it is obvious that they came to the conference knowing they were going to accede to the continuance of a uniform tax, but determined to wrest from the Commonwealth the best financial treatment possible in the circumstances. That was not an unreasonable attitude. They were given a measure of financial assistance that was rather more than they formerly enjoyed in what were perhaps two abnormal years, and, in addition, an improved formula for determining the amounts to be allocated to them. They have gone back with sufficient money for the. time being to meet the ordinary commitments of their Governments. They have a sliding scale of adjustments which will enable them to expand the services which they give to the people, and to plan ahead with certain knowledge that a specific sum will be allocated to them for disbursement by their Treasuries. Honorable members opposite have insisted that this arrangement is inflexible for all time. We have only to study history to realize that the financial relations of the Commonwealth and the States have never been inflexible and that it has always been necessary to provide for them to be adjusted from time to time as circumstances required, and the needs of the various State governments demanded. I give my unqualified support to this measure. I do not pretend that the proposed financial adjustments are absolutely equitable. That could scarcely be so, having regard to differing conditions in the various States; but they probably represent the best and fairest measure’ of agreement that could be arrived at in the interests of the Commonwealth and the State Governments alike.

I turn now to the proposal made’ by the Leader of the Opposition (Mr. Menzies) and so warmly Supported by the Deputy Leader of the Australian Country party (Mr. McEwen). It is (rue, as he stated, that uniform taxation does to some degree restrict the activities of the State, and that they have not the sovereignty which they. formerly enjoyed when they were free to control their own revenues, but if ve accepted the proposition suggested by the Leader of the Opposition we would limit their sovereignty fair more than has been don’e by the existing legislation. Today,the States obtain from the Commonwealth a certain., allocation- of the’ proceeds of a uniform tax based on their former tax collections. They are entitled t-O’ expend their allocation iii any way th’ey choose, and to plan ahead in the certain knowledge that specific amounts will be placed m their Treasuries. The Leader of the Opposition suggested th’a’t we should have an enlarged Commonwealth Grants Commission which should examine the budgets of not only the claimant States but also what are regarded as the standard States. It is comparatively easy for the Commonwealth Grants Commission to’ examine the budgets of the -tandard States in order to ascertain what might be regarded as an Australian standard Under certain heads of expenditure It is also comparatively easy to analyse the expenditure of the claimant States, and to recommend what grants should’ be given to them to enable them to be placed on the agreed level of Australian expenditure; but with a Commonwealth Grants Commission with enlarged powers- and presumably with increased personnel - examining the budgets ‘of all States, it must inevitably reach the position when it will say, after examining the budgets of all six States, that certain things should not be allowed or that certain works which the States regard as essen: la l should not be carried out, and to enforce its decisions by lower- ing the grant. I claim that that argument is incontrovertible. Assessing the relative expenditure per head of the population as between the” standard and the claimant States is entirely different from saying what money shall be’ given to carry out works Or to undertake services. By such a proposal we would definitely place the State in a worse position than tinder this measure.- I share the view of those who have given consideration to these matters, tha’t the financial relations of the Commonwealth and the Slates have .not been satisfactory over the years! We have developed only bec’ause of the stress of the times through which we have passed. As the Leader of the Opposition has said, the expenditure of money cannot properly be divorced from its collection, because that would lead to irresponsibility in finance. At the Same time, there cannot be a multiplicity of tax collections in the one field o’f taxation. The only solution, taking the long-range view, is a reference of power by the States to the Com moil wealth authority, with an expanded local autonomy in the administration of departments that are local in character. I believe that the bill will be warmly welcomed- throughout the country, and that, there would be a far greater outcry if it, were intended to return to separate State and Commonwealth income tax collections. In- the circumstances, the allocation as between the States, if not completely equitable, is probably the best that could’ be devised.

Mr. HOLT (Fawkner) £10.12].- It is not necessary, for two very good reasons, for me to speak at any length at this late stage of the’ debate. The first reason is’ that,- when the original measure was introduced in 1942, 1 went into the matter in some detail, and the views that I then expressed are on record. The second reason is that my leader (Mr. Menzies)’ has stated admirably the principles which, in his opinion, should be brought to the consideration of this legislation. But one or two observations should be placed ow record before the debate concludes. I refer at the outset to one of the most obvious matters that should be mentioned. The honorable member for Perth (Mr. Burke), in common with most of the other speakers,- including several on this side of the House, repeatedly referred to the scheme as one relating to uniform taxation. The phrase “ uniform taxation” has patently great attractiveness, it conjures up in our minds a mental picture of fairness, national unity and simplicity. But insofar as the debate has proceeded en the assumption that we are dealing with uniform taxation, it has proceeded upon an utterly false assumption. The scheme presented to the Parliament is not one for uniform taxation; it does not deal with taxation in the States other than income taxation. In order to give some force to the difference which, I assure the House, is a very substantial one, I make this comment: Prior to the scheme coming into operalion, the States financed their activities in a variety of ways. Some States, including’ the State of Victoria1, believed that a substantial proportion of their revenues should be raised by indirect taxation.. Other States - for example, New South Wales - relied’ upon income tax for the bulk of their revenues. I believe, from recollection, that- before the scheme came into effect approximately one-half of the revenues of Victoria was raised by indirect taxes, whereas- in New South Wales les3 than one-third came from that source.. That’ fact has a very important bearing’ on this discussion, and 1 shall deal with it in some detail directly. In passing,, may I refer to what was said by the honorable member for Denison (Dr. Gaha), who tried to minimize Iiic consequences of this legislation by saying that it represents only a very small proportion of the revenues of the States. He, of course, was trying to pull the wool over the eyes of honorable members on this side who had not studied exactly what the revenues of the States amount to. Quite clearly, if you bring into your revenue picture the public -undertakings of the State governments, and do not bother to set off against those public undertakings the expenditures involved in -them, you get a very distorted picture. Revenue from taxation may appear to bc a very small fraction of the total revenue. Reverting to Victoria, of which I have particular knowledge: An examination of its revenue will disclose that, of a total amount of approximately £35,000,000 for this- year, about £17,000,000 is attributable to railway activities. Against that revenue must be set off ail expenditure of approximately £16,000,000. I believe that there was a surplus of less than £§00,000 on the two- accounts. Therefore, if you try to minimize the significance of taxation payments as far as State activities are concerned, you are apt to get an unbalanced picture. Reverting to the difference between uniform taxation, at which so much of this debate has been directed, and uniform income taxation, I again point to the difference between the two principal States. Victoria was largely dependent upon indirect taxation prior to the 1942 act, whereas New South Wales was very much less dependent upon it. Consequently, if there is to be uniformity of taxation in the full sense of that phrase, it must run right through the indirect, taxes which the States collect; otherwise, you will have the same degree of taxation by way of income tax applying throughout the Commonwealth, and very much heavier indirect taxes operating in some States than1 in others. That is an aspect which,, so far as I am aware, has not bean referred’ to in the course of this debate. My leader made a point in principle’ with which one should find general agreement; that is, that we should not take » parochial view of this matter. We should not expect that in the undeveloped States. there should be the same severity of taxation’ as might be imposed in the more closely settled and older States of the Commonwealth. That proposition, of course, was put in answer to the claim which- very properly has been made from time to time by representatives of Victoria, that the original scheme was inequitable insofar as the distribution of tax moneys was concerned, in its incidence on Victoria. As an offset to that argument, we have the contention that it is necessary to finance more heavily the undeveloped States. That would be an admirable principle for the Government to adopt had it not itself departed from it in what I suggest was the clumsiest and most inequitable piece of taxation legislation ever introduced in this Parliament. I refer to the scheme initiated last year, which divided Australia into a number of zones. Zone A was supposed to embrace the least developed and congenial parts of the Commonwealth. The people who live in that zone are now able to claim tax deductions, which are supposed to offset the difficulties that they undergo. Coming a little closer to the areas in which there has ‘been development, and comfort is to be found, we have Zone B. Those who live in that zone are entitled to claim a deduction on a lower scale. Finally. we come to the haven of rest and enjoyment - the southern States - in which no tax deductions are permitted. In that legislation, the Government departed from the principle of uniformity, even on the restricted basis of uniformity of income taxation. Having done that, I find less force in the argument for giving less than a uniform per capita redistribution of taxes to the more highly-developed States. That is a criticism in itself of the present legislation, but it is by no means the most serious of the criticisms one could offer. The most serious feature is the weakening effect on the authority and usefulness of the States themselves.

One can understand the danger of being charged here with being a reactionary, if one advocates retention of the authority and usefulness of the States. We are told that as Australia approaches, its full nationhood, the States pass more into the background, and that by the ideal of unification we can reach a stage where Australia can be managed most efficiently by a central government at Canberra. That, too, has a certain super.ficial attractiveness, particularly for those people who in their ordinary avocations are not required to look beneath the surface of political slogans. I confess that, when I first’ entered this Parliament, unification seemed .to me to be a desirable ideal. As recently as 1942, when speaking on the original bill, I pointed out that, as part of ite effect, it would be a strong step forward towards unification. At that time I did not find that an unwelcome aspect of the measure. I say to-day that, having regard to -my own experience of what has happened in this Parliament and in this country since 1942, when we saw just what could happen to Australia, when we endeavoured to centralize at Canberra practically all of the functions of Government, so far as they affect the individual, my own mind has gone completely in reverse on this issue. Having recalled something of the abuse of the authority in those years, the repression of the individual, the flagrant handing out of favours to party supporters and the servile “ toadying to sectional groups by the authorities at Canberra, I contend that if the liberty of the individual means anything the safest course is to decentralize the administration.

Mr James:

– And have more governments ?

Mr HOLT:

– We have many governments in Australia at present. If we gave sufficient authority to State governments and municipal bodies, as well as to the central governments, we should conduct the business of this country in a much better way than if we endeavoured to manage the detailed affairs of the whole Commonwealth from Canberra. The latter is what we have been trying to do during the war years. In a period of war that was unavoidable, but I take exception to the attitude of the Government in retaining as long as possible certain features of the National Security Act and the regulations framed under it.

The argument frequently advanced by those who would advocate this progress towards unification is that it works very well in Great Britain and New Zealand. I have no doubt that in both those countries it does Work well. Most honorable members opposite would be surprised to learn just how much decentralization of activities has occurred in Great Britain in respect of so many of the matters which we regard as being within the province of either the State or the national government. The important distinction to have in mind in advancing that argument is the geographical character of those countries as contrasted with that of Australia. They are comparatively limited in area and can be administered comparatively easily from a central source. If we wish to get nearer to a parallel with the Australian situation we should consider what happens in the United States of America and Canada, two countries with vast areas to administer. In Canada there is a federal system in operation under which a. good deal of authority resides with the States, whereas in the United States of America there has always been a very sharp delineation as between three principal functions of government - the legislative, the executive and the judiciate. Unquestionably this legislation will make the process of unification easier of realization, and we have heard the argument advanced that this Parliament is the most democratic and representative of the views of the people.

Scorn has been hurled at the legislative councils of the States, which have been described as reactionary and relics of other times. I do not claim that the State legislatures function perfectly, or are perfect instruments of democracy; but we should be deluding ourselves if we imagined that the Commonwealth legislature gives a perfect demonstration of democracy in action. We have a long way to go in Australia in the development of a tradition and experience in the Commonwealth Public Service and tradition and experience in the work of this Parliament lief ore we can give the same demonstration that the British Parliament has been able to furnish of the best system devised by man for governing himself through a democratic institution. We are told that we in this House have been democratically elected, but that is an over-statement. This Parliament is governed by machine politics. It is easier for a camel to pass through the eye of a needle than for a man to get into this Parliament other than with the support of a party group, whether that party be on this side or not. The two exceptions that come to our mind would be the former honorable member for Wimmera, Mr. Wilson, and the former honorable member for Henty, Mr. Coles. Mr. Wilson was returned as a representative of the Australian Country party, and Mr. . Coles, although nominally an independent, stood with the full force and active backing of the then United Australia1 party. We are .part of the machine which governs the political conduct of the nation’s affairs. Most countries have found that their governments can best be conducted on that basis. However, having regard to the fact that honorable members opposite arc not free to speak as they choose, and to vote as they choose, thus giving a clear expression to the views of their electorates, it is evident that we have a long way to go before we can claim that on any particular measure we can gauge with accuracy just what the majority of the people of the Commonwealth want. I believe that the citizens of the Commonwealth will enjoy greater individual liberty and a better opportunity to pursue their individual advantage under a decentralized system of authority than under a system in which authority is concentrated at Canberra. I entirely support what my leader said about giving to the Commonwealth Grants Commission extended, functions so that this legislation can be more effectively administered. I made that suggestion myself in 1942, when speaking to the original bill. Further, I believe that the Government would do well to place a time limit on the operation of this measure so that there might be, from time to time, a proper review by Parliament of the manner in which the legislation is operating.

Mr CHIFLEY:
Prime Minister and Treasurer · Macquarie · ALP

– in reply - Some honorable members in their speeches departed from a consideration of the real essence of this measure. It has been claimed by them that the Government has broken a pledge. For that reason, it is only right to place on record what really happened regarding the introduction of the uniform income tax system. It is true that the late Prime Minister, Mr. Curtin, and I .met the Premiers in Melbourne, and made a proposal to them for the passing of uniform income tax legislation. We did in that proposal suggest that if they vacated the field, and allowed a uniform income tax law to be applied by the Commonwealth, such a law would be limited to the period of the war, or for a period set out in the legislation itself. The State Premiers, however, unanimously rejected our proposal, so that any understanding which was part of the proposal went by the board. Wot only did they reject the proposal, but when the States Grants (Income Tax Beimbursement) .Bill was passed by the Commonwealth Parliament, they challenged it in the High Court. I remind the honorable member for Fawkner (Mr.

Holt) that that bill was passed through this House, and through the Senate, at a time when the Government did not have a majority in either chamber, so that his remarks in opposition to the principle of uniform income taxation ought to be addressed to his own supporters and quasi-supporters. It was generally recognized that the Commonwealth having such heavy commitments to meet, and being unable to collect sufficient revenue because of the varying taxation methods of the States, was compelled to do what it could to bring about a measure of uniformity, and thus raise the revenue which was so urgently needed.

Mr Holt:

– At that time most of the States benefited directly from the new system, and 70 per cent. of all taxpayers gained an immediate reduction of taxes.

Mr CHIFLEY:

– I think that is true. To illustrate my point about the varying rates of State taxation, let me say that in Queensland the rate began at 6d. in the £1 on an income of over £150, and went as high as 100.8d. in the £1 on higher incomes. South Australia was taxing incomes over £100 at the rate of 1s. 3d. in the £1, with an allowance of 3d. for those with dependants, while the rate on higher incomes was 63d. in the £1. A previous government, of which the Leader of the Australian Country party (Mr. Fadden) was Treasurer for some time, tried very hard, before Japan entered the war, to induce the States to agree to a system of uniform income taxation. He was unsuccessfulbecause of the recalcitrance of the States, and their determination not to yield what they regarded as their sovereign rights in the matter of taxation . As I have said, when the present Government” eventually passed legislation providing foruniform income taxation, the States applied to the High Court for a declaration that it was invalid. In that, they made a great tactical mistake, because the judgment of the High Court made it clear that the Commonwealth did not have to depend on its defence powers in order to pass legislation providing for uniform income taxation, or to obtain priority in the matter of the collection of income tax. It became clear that the Common wealth could impose whatever taxes it chose, and enjoyed priority over the States in the collection of those taxes. I mention those matters because there has been talk about broken pledges, andI want to make it clear that no pledges have been broken at all.

The honorable member for Barker (Mr. Archie Cameron) said it was stipulated that a uniform income tax act should last only for a certain time. That is true, and: if this bill is passed that particular act will not remain in force even as long as; was stipulated. I do not want to go into the point about when peace may be regarded as officially existing, but the fact remains that the present act could continue in force until after the 1st July next. Some States, including Victoria, will get a greater amount next year under this legislation than they could have hoped for had the Commonwealth Government not decided to introduce new legislation. The Leader of the Opposition (Mr. Menzies) spoke of the difficultiesassociated with the financial relations of the Commonwealth and the States. Those difficulties have always existed ; and they will continue in the future. It is extremely difficult to get six States to agree on a common policy in regard to matters submitted to them by the Commonwealth. It is said that Victoria has faired badly under the uniform incometax scheme. If that be so, it is due to the fact that? the reimbursements were based on what the States themselves had budgeted to collect over an average of two years prior to the entry of Japan into the war. It is true, as the Minister for Immigration (Mr. Calwell) said this afternoon, that because the Parliament: of Victoria desired to keep taxes low on higher incomes and profits of wealthy companies, the people of Victoria were denied certain social benefits which people in the other States enjoyed. It suited the interests represented by the Government of Victoria to allow the wealthier sections of the community to be taxed at lower rates than in Queensland where social services were provided on a better scale. The Commonwealth took the view that, if the States had budgeted in peacetime on a certain basis, they could not expect better treatment from the Commonwealth in time of war, when it had] to accept responsibility for the conduct of the war. Time has proved that that responsibility did rest on the Commonwealth Government; its indebtedness increased enormously because of the war, whereas the indebtedness of the States was reduced. Some States, including Victoria, accumulated big surpluses largely because of moneys expended within their borders by the Commonwealth. The three major States made substantial financial profits out of the war.

Mr Archie Cameron:

– Some of those profits were re-invested in war loans.

Mr CHIFLEY:

– That is true of Queensland. Victoria could have done the same, because that State also made substantial profits as the result of heavy war expenditure within its borders by the Commonwealth. The three major States are in a better financial position to-day than when the war started. The Leader of the Opposition and the honorable member for Fawkner expressed the view that the reimbursements should be determined by the Commonwealth Grants Commission. The recommendations of that body have never been rejected by any government. Generally, when such a body is set up its advice is accepted, either completely or with some modifications. If the Commonwealth Grants Commission were to be the deciding authority in this matter, the Government would be charged with accepting dictation by a body outside the Parliament. I pay my tribute to the work of the Commonwealth Grants Commission; it has done a remarkable job notwithstanding that the Government of Tasmania has protested rather violently regarding its methods. The commission’s reports contain more information regarding State finances than is to be found in any other document tabled in this Parliament. The three major” States would scorn the idea of asking the commission to determine what reimbursement they should get. They would regard such action as humiliating.

Mr Archie Cameron:

– The States did. not object to the Commonwealth taking over their responsibility for State debts.

Mr CHIFLEY:

– That is so. The Leader of the Opposition overlooked that fact when he said that the States could borrow and expend money with greater freedom than if this legislation were passed. It is not true that the States are entirely responsible for their own finances inasmuch as the Financial Agreement makes provision for the Commonwealth to contribute to the sinking funds of the States. I remind those who speak on behalf of the States that the States tie down their local governing bodies very severely ; in three States such bodies may strike a rate above a certain amount only with the approval of the State Government. The honorable member for Warringah (Mr. Spender) said that there should be an opportunity for a review of the formula within a certain time, but I remind him that this legislation does not seek to ratify a contract entered into between the Commonwealth and the States. It says that if the States do certain things moneys will be paid to them. There has been agreement between the Commonwealth and the States in regard to the entertainments tax. But uniform income tax was at no time the subject of an agreement. It is true that conferences of Commonwealth and State Ministers have no legislative power and are not officially recognized by the Parliament. Nevertheless, they do play an important part in the legislative life of this country. No contract has been entered into, but an understanding has been reached with the States, under which the uniform income tax legislation will be reviewed after seven years. Of course that binds only this Government. Any other Commonwealth Government could repeal this legislation. It is not irrevocable. Any Commonwealth Parliament could revert to the old system, but I shall be very much surprised if any future Commonwealth government does so.

Mr Archie Cameron:

– The right honorable gentleman does, not believe that any government intends to -commit political suicide.

Mr CHIFLEY:

– No. The understanding reached with the Premiers was as follows. : -

A review of the method of determining Die aggregate .y;rant and its distribution may be sought at any time after the expiration of seven years from the 1st July, 1940, by either the Commonwealth or a State government…

If, however, there is a major change in CommonwealthState relations having an effect on State finances caused, for example, by -

a substantial alteration in the powers or functions of the Commonwealth or of any State or States, or

the assumption of major new responsibilities by the States, either the Commonwealth or a State’ government may seek a review of the basis of reimbursement before the expiration of the period of seven years.

That understanding cannot be embodied in the legislation, because it does not ratify an agreement. But this Government -intends that uniform income tax shall be permanent. Any one is welcome to make abolition of uniform income tax an election issue, because every section of the community, particularly the companies, which pay a big part of the income tax, was utterly sick of the old method. Companies that operated in all of the States used to have to make 26 different tax returns. So they welcome uniform income tax because of the difficult work that it obviates. I think, too, that the average man in the street, whatever his political leanings, does not desire to return to the old method. In New South Wales, for instance, the ordinary wage earner had to make a return of income to the Commonwealth Government and the State Government and was required to pay in addition to income tax,social security tax and wages tax. The main point, however, is that the Commonwealth Government believes that because of its great responsibilties, it should have first call on the revenue available from income tax. The war gave a striking instance of the need for that. But this Government has brought down social security legislation, which, I think, no future government will be game to repeal. We intend, if given the power and opportunity, to go on with a complete social security scheme for every one in this country. Honorable members opposite had the opportunity to do something of that kind but “ funked “ it. The National Health and Pensions Bill was passed and the organization to operate it set up, but, when the right honorable member for Kooyong became Prime Minister, the scheme was dropped. That legislation went only a little way along the road, but it could have been something attempted, something done. I do not believe, though, that, if the Opposition regained the treasury’ bench, it would do anything to upset the social legislation that we have placed on the statute-book. When that legislation was brought down, the honorable member for Wentworth (Mr. Harrison) and the honorable member for Parramatta (Sir Frederick Stewart) talked about it as being “ phoney “, but I do not hear much talk like that now, because the legislation has become a reality. We still have a long way to go, but we intend, by the good grace of the people, to go the full distance in ensuring their protection. It is a great responsibility, one that the States would have had finally to take to the full had they followed the trend throughout the world, and had we not intervened. Henry Wallace has said that this is the century of the common man. The government of every country has set out to ensure that the common man shall be given a fair deal, and he given some protection from the misery and degradation that has been his lotin days gone by. The removal of that responsibility from the States saves them a great deal of money. Under our control, social services are being granted on a uniform basis, and the necessary finance is being collected on a. uniformbasis. We have instituted widows’ pensions throughout Australia and hospital benefits in five of the six States. Soon, hospital benefits will be operating in the six States. We have also instituted unemployment and sickness benefits, and there are other social services that we should have instituted had we the constitutional power. Social services are the responsibility of the Commonwealth Government, and we intend that they shall continue to be. We have also the responsibility of defence. We have to ensure not only the social security, but also the. physical security of the Australian people. There is no doubt about that. Then we have the responsibility to share the costs incurred by Unrra to which this Parliament has already voted £12,000,000, and to which, I hope, it will vote another £12,000,000, a total of £24,000,000. That is only a. small sum compared with the total Commonwealth expenditure. The Leader of the Opposition spoke to-day, and fluently some time ago, about the need for the Commonwealth to enter the field of education. This is the only Commonwealth Government which has made a move in that direction. This Government has provided assistance for higher education, including university training and is making extensive provision for the reestablishment of ex-servicemen, technical training, the provision of equipment, and even the capital expenditure of universities. If members of the Opposition are sincere, they will never reject the policy which this Government has adopted of assisting education. Therefore, this Parliament is responsible not only for the social security of the people but also for the physical security of Australia from the standpoint of defence. We shall have important obligations in the Pacific, and shall co-operate with other members of the British Commonwealth of Nations to defend the Empire. We have gone further than this Parliament has ever gone in the past and must play our part to preserve peace. The conference of the. United Nations at San Francisco formulated proposals for preventing aggression in the future, and those proposals impose obligations upon Australia, this Parliament and the government of the day. Those responsibilities must be paid for, and every citizen of the Commonwealth, regardless of whether he livesinWestern Australia or Queensland, should be making some contribution to the cost. The Government believes that this legislation is in the best interests of the country, and I am confident that many of the political supporters of the Opposition would not forgo what they regard the benefits of uniform income taxation. The system of Commonwealth and State taxation, which operated before the introduction of uniform income taxation, was all right when rates of tax were low, but the financial responsibilities of this Parliament will never permit them to return to the level of 1920. The only simple and equitable method of collecting income tax is by a uniform system.

I rose to deal with one or two principal points which honorable members have raised regarding the relations between the Commonwealth and the States. I know that they are difficult. There will always be difficulties. I do not pretend that this legislation represents the last word in the financial relations between the Commonwealth and States, because as circumstances change, the scheme will have to be reviewed ; but I believe that, regardless of the government in office, the main principle enunciated in this legislation has come to stay.

Question resolved in the affirmative.

Bill read a second time and committed pro forma; progress reported.

Message recommending appropriation reported.

In committee (Consideration of Governor-General’s message) :

Motion (by Mr. Lazzarini) agreed to -

That it is expedient that an appropriation of revenue be made for the purposes of a bill for an act to make provision for the grant of financial assistance to States, and for other purposes.

Resolution reported and - by leave - adopted.

In committee : Consideration resumed.

Clause1 agreed to.

Remainder of bill - by leave - taken as a whole and agreed to.

Bill reported without amendment; report adopted.

Bill- by leave - read a third time.

page 699

ADJOURNMENT

Honey - Fencing Wire - Fat Stock Sales in Melbourne - National Security Act : Duration.

Motion (by Mr. Chifley) proposed-

That the House do now adjourn.

Mr ARCHIE CAMERON:
Barker · ALP

– I again direct the attention of the Minister for the Army (Mr. Forde) to the necessity for releasing men who are urgently required for the production of food. I have here letters which I shall send to the Minister in due course, hut I raise the matter to-night because of the importance of the principle involved. For the purposes of my argument I refer specifically to the plight of those engaged in the production of honey in South Australia. Because of the summer rains, many trees and shrubs are now in bloom, and large quantities of honey should be available. Men are required urgently to handle the bees. All honorable members may not be aware that mcn require some experience in handling bees and transporting them from place to place. Some men with this experience are still in the Army. They are doing absolutely nothing; but the authorities have laid down the principle that these men may be released only in accordance with the points system- The position of primary production in Australia is such that in circumstances like these, the points system should be discarded, and when a man has had experience of handling bees and gathering honey he should be permitted to return to this work. I raise that as a specific instance which, in my opinion, justifies the Government in departing from the points system so that the maximum production of food may be secured.

The secretary of the South Australian Honey Producers Co-operative Society informed me that apiarists have large orders not only from the United Kingdom, India and the - Pacific Islands but also from Denmark and Sweden. This co-operative concern can place every pound of -honey that South Australia can produce. For the information of the Government, I point out that the production of honey in South Australia is not confined to orchards. The great bulk of the honey is produced as the result of apiarists taking their bees on motor lorries through many miles of mallee scrub. The mallee tree produces the blossom from which the bees gather the honey. It is only when the rains occur at certain periods of the year that the mallee bursts into blossom, and the honey must be gathered without delay. If the honey is not gathered during the next three or four weeks, the apiarists will not have another opportunity for a year. It is high time that the Minister for the Army told his department the exact policy of the Government regarding the discharge of servicemen to engage in a production of food. Many of us have a strong suspicion that the Army is telling the Minister what its policy is.

Mr BERNARD CORSER:
Wide Bay

– I have just received the” following urgent telegram: -

Flood Mary Valley swept away 40 miles fences. No wire any kind available Queensland. Can you help hasten supplies. Mary Valley Dairymen’s Executive. - Jack Ahern, Conondale, Queensland.

That telegram speaks for itself. Honorable members are aware of the destructive floods which occurred recently in the Mary Valley. Much damage has been done at Conondale which is south of Gympie. The district is a very rich agricultural and pastoral area, and is closely settled by dairy-farmers,- the average holding being comparatively small. Therefore, the destruction of 40 miles of fencing in such an area is a serious loss. Until the fences are restored, crops cannot be planted, whilst existing crops will be menaced by stock. These fences must also be restored as soon as possible for the protection of cattle. The district is noted for its stud stock, being in that respect one of the outstanding districts in Queensland. The ‘dairy -farmers affected appeal urgently for assistance from the Commonwealth Government. They do not ask for financial aid, but simply that supplies of fencing wire be made available as soon as possible. Only a week ago I appealed in this House to the Minister for Commerce and Agriculture (Mr. Scully) to make available adequate supplies of fencing wire, galvanized iron and other galvanized products urgently required by primary producers in Queensland. On this occasion I urge the Minister, in view of the serious loss suffered by these farmers, to treat the matter urgently. I request him to contact representative farmers in the district first thing to-morrow to ascertain their requirements and to make such requirements available immediately. These farmers require fencing wire not only in the interests of themselves and their families, but also in order to be able to resume production of urgently needed products.

Mr RYAN:
Flinders

.- I bring to the notice of the Government the deplorable condition still existing in respect of meat supplies in Victoria, particularly in Melbourne. For weeks past, thousands . of consumers have not been able to obtain any meat at all. Last week a so-called settlement was announced by the Minister for Commerce and Agriculture (.Mr. Scully), who expressed the hope that the settlement would prove effective.

Mr POLLARD:

– The situation has improved considerably.

Mr RYAN:

– That is not so. The so-called settlement was founded on false premises. It will not remedy the situation. Supplies in Melbourne this week have improved only slightly. At Newmarket only 11,000 fat sheep were yarded on Tuesday. That is far below the normal yarding required to meet Melbourne’s requirements. Only country butchers and graziers operated. Melbourne butchers did not do so. Lambs fetched -£Ss. 7d. each and wethers 49s. lOd. each, those prices being about 2s. above the wholesale ceiling price. . The prices fetched for bullocks were also well above the average. Some metropolitan butchers are unable to obtain any meat. They are just keeping their shops open with their staffs at the ready, wondering when sheep will come to hand. Some shops have not had any supplies since Friday last, and those butchers are pessimistic about obtaining any meat this week. It is reported that a quantity of frozen beef was made available, but tha quantity was well below the average necessary to meet normal supplies. For instance, one butcher whose normal demand is 2,000 lb. a week received only 400 lb. last week. He found it impossible to supply the needs of his customers. The position is that metropolitan butchers are not competing at the sales because the acquisition order is still in force. Until that order is abrogated they will not buy; and in such circumstances sheep-owners will not send their stock to market. When this matter was brought previously to the notice, of the Minister he said that the acquisition order would remain in force until the supplies became normal. It must be obvious that so long as the acquisition order remains in force the situation will not become normal. The first thing that the Government should do is to abrogate that order. If that be done, supplies will become normal.

My second point relates to responsibility for the present situation. Yesterday, I asked the Minister a question, to which he replied-

Pile ink was scarcely dry on the agreement before certain interests commenced a move ment to frustrate the agreement. Those interests were making every effort to induce producers not to forward stock to Melbourne.

Then I asked the Minister to name the interests to which he referred, and he replied -

Being aware of the honorable member’s knowledge of the fat-stock trade of Victoria, I had it in mind to ask him that question when I got an opportunity.

The Minister, in effect, admitted that he could not name the interests which he stated in a vague sort of way were sabotaging the agreement; and I take this opportunity to say that I do not know of any such interests. In this House last week some honorable members said that the producers were on strike and would not send their stock to the sale-yards. That is not correct. No one can expect the producer to send fat stock to market unless he is assured of fair prices. I have seen no evidence that the opera-‘ tions of wholesale or retail butchers have had any material effect on the general state of the market. This attempt to find a scapegoat for the troubles that beset the industry will fail. The scapegoat is and can only be the Government itself. This situation is not one which has arisen this week, this year or even last year; it has been in existence ever since rationing and ceiling prices were instituted by the Government. Not the slightest effort has been made by the Government to enforce its regulations governing either of those important features of its war-time administration. If the Government had actively policed the regulations governing rationing and ceiling prices this situation would not have arisen. Its lack of a sense of responsibility in this direction has resulted in the growth of vested interests which have operated to the detriment of producers and consumers alike. Producers now hold large numbers of stock which, were bought at high prices; they cannot be expected to sell at the reduced prices now ruling. The Minister for Commerce and Agriculture should review the whole situation or the Government should be willing to appoint a committee of members of this House to ascertain the facts. I have indicated the causes that have brought about -this unsatisfactory state of affairs and I appeal to the Government to act at once to end its tinkering with the problem. I ask ‘the Minister to go to Melbourne immediately so that he may be able to obtain first-hand evidence of what is going on and take the necessary steps to find a solution.

Mr HOLT:
Fawkner

– I desire to comment on the statement made to-day by the Attorney-General (Dr. Evatt) in reply to a query which I put to him on the motion of the adjournment of the House some weeks ago. The right honorable gentleman’s statement related to the definition by the Government as to when the war . in which Australia had been engaged was to be deemed to have ceased. I doubt if anybody who listened to the right honorable gentleman would be at all enlightened upon the point. It is clear that there is a great deal of uncertainty in the commercial world and in the community generally as to when the war is deemed to have ended. “We were looking to the Attorney-General to throw some light on this important matter, but he has not taken it a stage farther than any previous statements made by the Government. To sum up his statement in a sentence he puts it that a state of war will be deemed to have ended when the treaty of peace has been concluded. He may have implied that a state of war ended when that government itself had made a public proclamation on the subject. That would be an appropriate way to end the uncertainty. One does not get very much help from the legal authorities on the subject. In the American case Chapman v. Wacaser, just after the Civil War, it was laid down that a bond stipulating that the money should be due “ ten days after peace “ between the United States of America and the Confederate States meant merely ten days after the war was over, and not ten days after the ratification of a treaty of peace. The British authorities, on the other hand, decided after the last war one important case, that of Kotzias v. Tyser, which contained this comment by the judge-

In the first place, the authorities show that, in the absence of any specific statutory or contractual provision to the contrary, the general rule of international law is that as between civilized powers who have been at war, peace is not concluded until a treaty of peace is finally binding upon the belligerents, and that that stage is not reached until ratifications of the treaty of peace ‘have been exchanged between them.

I do not believe that we can look for very much guidance from the legal authorities who have determined this issue in respect of past wars because the conditions obtaining in this instance differ very materially from those of the past. Reference was made by the learned judge in the case I have just quoted to “ civilized powers who have been at war “. There was little of civilization in Germany and Japan or in the manner in which they conducted the war against us. The Japanese war started in what they termed the “-Chinese Incident”, which subsequently developed into a full scale war in the Pacific. I believe that the Attorney-General oversimplifies the matter when he says we should await the conclusion of a peace treaty. As I asked earlier, with whom is the peace treaty concluded? In this instance there was not an armistice, as was the case during the 1914-18 war; there was an unconditional surrender by our enemies in Europe and in the Pacific, and if unconditional surrender does not mean the conclusion of a state of war, plain English words have ceased to have any real meaning. [Quorum formed.] I claim that a state of war ceased to exist with the unconditional surrender of the enemy. Viewing the matter in a practical way, does the Minister seriously suggest that all the war-time arrangements under the National Security Act are to continue until Australia has concluded a treaty of peace or has been a party to an international gathering at_ which a treaty has been concluded? The right honorable gentleman has emphasized the separate position of Australia in relation to international commitments. We declared war as a nation in respect of both Germany and Japan. Therefore, we do not have to await a final determination by other nations as to the conclusion of a state of war before we decide that a war is over. Having regard to the impracticability of concluding -a peace treaty with Germany, now subdivided into various areas for occupation by the Allies, or with Japan, at present governed by directives issued by General MacArthur, the proper course for the

Commonwealth Government to take is to issue a proclamation that a state of war between this country” and its former enemies has come to an end. If the Government does not pursue that course, but attempts to maintain the utterly unreal attitude that a state of wai- continues until treaties of peace have been concluded, the suspicions that have been aroused in the minds of many people in this country will be fully justified. They suspect that the Government, having been defeated in its recent referendum proposals, and having been frustrated in its efforts to continue into the peace-time existence of this country its war-time administration is straining the language of the National Security Act in order to continue its operation beyond the proper date, thus imposing on the people of Australia legislative enactments and regulations which should no longer have force or validity. I put it to the AttorneyGeneral that he cannot allow the country to continue in the state of uncertainty in which it has been left by the statement that he made to-day. The Government should examine realistically the situation that now exists between ourselves and our former belligerents. The proper course is to proclaim or formally declare that a state of war no longer exists.

Mr HUTCHINSON:
Deakin

– I wish to follow up the remarks of the honorable member for Flinders (Mr. Ryan) in regard to the meat position in Victoria. That there is considerable confusion among the meat producers in that State cannot be questioned. There is absolute chaos on the Melbourne meat, market. Thousands of people in Melbourne cannot purchase fresh meat. Men are out of work. I am also advised that there is a new form of Gestapo at work in connexion with the butcher shops. Beauteous females, called “Dedman’s damsels “, with tears in their eye3 implore butchers to supply them with meat to help “ poor Uncle Dan “ or some other person who badly heeds sustenance. As they have not the necessary coupons, the unfortunate butcher who supplies meat is taken to court and finds himself written up in the columns of Truth. A little more than a week ago, a conference was held in Melbourne. Prior to that a rather extraordinary debate took place in this

House, from one angle alone, in that the Minister for Post-war Reconstruction (Mr. Dedman) took one line and threatened the producers with “ merry hell “ if they did not do what he wanted them to do, whilst the Minister for Commerce and Agriculture (Mr. Scully) took an entirely different line and adopted a conciliatory tone, stating that a conference was to be held in Melbourne during the week-end from which he hoped that good would come. That conference was held, but it merely added to the confusion. It was said. that the open market would be resumed, ceiling prices would be retained, and the meat acquisition order would be withdrawn. There was some confusion as to what this meant. Last week I asked the Minister for Commerce and Agriculture when the acquisition order would be withdrawn, and his reply was, “ When the producers start sending in their stock “. The producers, on the other hand, believed that the acquisition order would be withdrawn before they sent in their stock. Had that been done, undeniably fresh meat would be in the Melbourne markets to-day. Last Saturday, an article appeared in the Melbourne Herald, which added to the confusion. It mentioned that more than 1,000,000 people in Melbourne were without supplies of fresh meat on that day, and went on to say -

People closely associated with the meat industry know this. They also know the organizers of this move and the motives influencing them, but they are afraid to speak out.

The article then stated that members of the Federal Parliament did not know or would not say what was the cause of the trouble. Another statement was -

Men who have been closely associated with the meat industry say the withholding of supplies has been sponsored hy a small group of people comprising some agents and dealers whose real concern is not the amount of meat Melbourne will get or the price producers are to be paid but their own profit.

Usually, I have a great deal of respect for the Melbourne Herald. I know many of the men who work on’ it. I can only conclude that some executive officer said to a young reporter, “ Go out and scour the city and find out what is the trouble with the meat market “. He did so, and then wrote this article, which is the greatest “ tripe “ I have ever read.

What is the trouble? The ceiling price of wether mutton is 6¼d. per lb. That means that a 46-lb. wether, allowing 2s. or 3s. for the skin, should be selling in Melbourne for 26s. ; and a 50-lb. wether, regarded as good trade mutton, for 28s. or 29s. The Albury Border Mail last Saturday, reporting a stock sale held at Albury on Friday, stated that the prices realized were - young merino wethers, over 39s.; crossbred wethers, 37s. to 38s. ; border-cross ewe weaners, 37s.; and ordinary wool’ wether weaners, over 29s. Those are store prices, but fats are supposed to be sold in the Melbourne market at between 26s. and 29s. The whole problem is purely an economic one. It is so simple that anybody who is in touch with the situation knows the cure for it. The first reason for its existence is the utter failure of the Government during the last twelve or eighteen months to deal with black marketing and enforce ceiling prices. That, however, is only a minor cause. The principal cause is that last year we had the most colossal drought in our history, and millions of sheep died. Today, the demand more than equals the supply. Everybody wants sheep. From Darwin right down to Victoria there has been a wonderful season, and there is a flush of feed. Nobody is stocked up, and many producers have been almost cleaned out. At least 70 per cent. of the producers are in lien to banks, wool firms and stock and station agents. They must have some money in their pockets and they must keep their pastures in good condition. Can we expect the market to be normal? Of course not. The producer must have a payable price. Since early in January or late in December, the prices of store sheep suitable for winter fattening have been running from 30s. upwards, and those prices are normal in districts from which the winter mutton comes. Those sheep are not run on poor country,but on rich clover land. How can a producer who has paid 30s. or more for wethers he expected to send them to Melbourne and sell them for 26s. or 27s., less trucking and yarding dues? The producers’ costs have risen. We know that prices have increased over a wide range of commodities, and the Prices Stabilization Committee has given subsidies in respect of a large variety of products. Is the meat industry to be exempt from the usual practice? Why cannot the Government recognize the economic facts in relation to themeat industry, and rectify the position? I do not believe that there is a large number of sheep that the producers wish to sell. The Riverina and the north-eastern districts of Victoria are not fully stocked, and there was a strong tendency to hold and shear. The producer might well expect a good wether to provide him at shearing time with wool to the value of £1. For example, I was told by a person present at the Albury sale that wethers sold for 39s. would in a late district cut over £1 worth of wool, and that would leave a young wether off shears a value of between 24s. and 26s. If wool prices rise as is expected, the price of sheep also must rise, and the ceiling price will have to be in conformity with rising wool values. We cannot discard economic facts, and say that the level of prices ruling some years ago will become the level to-day. There will be new levels in the post-war world. We shall not return to the 1942 values. Owing to the known fact of drought and the demand for sheep being greater than the supply, we cannot expect present ceiling prices to hold. The Minister for Commerce and Agriculture should get in touch with the leaders of the industry in Melbourne. I would say to the Government, “ For God’s sake do not send John Dedman “. If the Minister for Commerce and Agriculture would get to work in the matter and face the facts I believe that the problem could be solved.

Question resolved in the affirmative.

page 704

PAPERS

The following papers were presented : - -

Lands Acquisition Act - Land acquired for -

Commonwealth purposes - Moruya, New South Wales.

Postal purposes - South Yarra, Victoria.

Naval Defence Act - Regulations - Statutory Rules 1946, No’s. 54, 55.

War Crimes Act - Regulations - Statutory Rules 1940, No. 56.

House adjourned at 11.45 p.m.

page 705

ANSWERS TO QUESTIONS

The following answers to questions were circulated: -

Tractors,Bulldozers, and Builders’ Hardware: Army Stocks

Mr Fadden:

n asked the Minister for the Army, upon notice -

  1. What quantities ornumbers of (a) nails, (b) galvanized iron, (c) wire, (d) tractors, and (c) bulldozers, were held at theR.A.E. Depot, Coopers’ Plains, near Brisbane, the C.E.Q. machinery pool at Rocklea,and other Army depots respectively, in Queensland on the 31 st December, 1945?
  2. What quantities or numbers have since been declared surplus, andon what dates?
Mr Forde:
Minister for the Army · CAPRICORNIA, QUEENSLAND · ALP

– The information desired by the honorable member is furnished in the following statement: -

Wheat Industry

Mr Abbott:

t asked the Minister for Commerce and Agriculture, upon notice -

  1. What price or prices are at present being charged by the Australian Wheat Board f.o.b. for wheat for export, or for the manufacture of flour for export, bagged basis?
  2. What price is being charged - (a) for wheat forflour for home consumption; and (b) for wheat for stock and poultry feed, f.o.r. porta, bagged basis’?
  3. How much per ton is the present flour tax ?
  4. If the price of wheatfor home consumption is loss than5s. 2d. f.o.r. ports, why is 5s. 2d. not charged, thus saving millers and the Taxation Department clerical man-power in making returns and collecting the flour tax ?
  5. As Australia started the season with exhausted wheat stocks, why docs the Wheat Board not finalize and wind up wheat pools Nos.5,6, 7 and 8?
  6. If it is because of Government delay in settling the compensation for concessional wheat sales,’ will the Government expedite this matter so that farmers may receive what is due to them?
  7. In regard to the 1¼. per bushel which the committee appointed by the Government reported to be the additional cost to growers of the Wheat Harvesting Award, and which it was announced in January, 1944, would be paid, has the Government yet paid this? If not, does it intend to pay it: if so, when?
Mr Scully:
ALP

– The answers to the honorable member’s questions are as follows : -

  1. 10s. 4¾d. per bushel trucks port basis. 2. (a) 4s. 2¼d.; (b) 4s.6d. per bushel.
  2. £2 8s.10d.
  3. The existing method is operating more satisfactorily in the present circumstances.
  4. Final payments have been made on No. 5 pool and are being made on No. 0 pool. All pools are being completed as quickly as practicable, and final payments will be made on completion of the transactions Tor No. 7 and No. 8. These two pools have a number of transactions still to complete,
  5. The Government will do everything practicable to assist in completing pool transactions expeditiously.
  6. The amount has not yet been paid. It will be paid at an early date into the funds ofNo. 7 and No. 8 pools.

Australian Overseas Transport Association

Mr Abbott:

t asked the Prime Minister, upon notice -

  1. Is it a fact that on the 26th February representatives of the Australian Overseas Transport Association approached the Minister for Supply and Shipping and intimated that efforts were being made to resuscitate that body and desired to know the Government’sattitude towards the proposal?
  2. Has the Government undertaken to have the matter examined on the supply of certain further information, and to define at an early date its attitude towards the association and, also, the extent, if any, to which Government participation, sponsorship or agreement is considered necessary?
  3. Willhe supply the names of the representatives of the Association who conferred with the Minister for Supply and Shipping, and indicate what interests they represent and their business associations?
  4. Before the Government agrees to the resuscitation of tills body, will he hear the views of certain primary producers,and, particularly the Australian wool-growers, as to the desirability of its recreation?
  5. Will he undertake, before the Government approves of its resuscitation, to permit the Parliament to debate the question?
  6. Will he ascertain from the interests concerned what is the connexion, if any, between the Australian Overseas Transport Association, the Oversea Shipping Representatives Association, and the London Tonnage Committee?
  7. Have any shipping lines recently approached the Oversea Shipping Representatives Association to join the Overseas Shipping Conference; if so, what reply did they receive.?
  8. Will he have prepareda table of freights showing the freight rates operating in 1939 for the principal primary products of the Commonwealth exported from Australia and those operating to-day?
  9. Will he also have prepared similar tables for like products from the Argentine Republic, New Zealand, and the Union of South Africa, for the same dates?
  10. Willhe supply the names of the various interests represented on the Australian Overseas Transport Association, the voting strength of such interests in the deliberations of such association, and the name of the chairman?
Mr Chifley:
ALP

– The information sought by the honorable member is being obtained.

Cite as: Australia, House of Representatives, Debates, 27 March 1946, viewed 22 October 2017, <http://historichansard.net/hofreps/1946/19460327_reps_17_186/>.

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