House of Representatives
8 November 1950

19^th Parliament · 1^st Session

QUESTION
- CIVIL AVIATION
QUESTION
- EGGS
QUESTION
- PENSIONS
QUESTION
- JAPANESE PEACE TREATY
QUESTION
- COST OF LIVING
QUESTION
- MEAT
QUESTION
- KOREA
QUESTION
- MILK
QUESTION
- HEALTH AND MEDICAL SERVICES
QUESTION
- DOLLAR LOAN
QUESTION
- IRON AND STEEL
QUESTION
- TIN
ELECTORAL
QUESTION
- AGRICULTURAL MACHINERY
QUESTION
- SUPERANNUATION
QUESTION
- POSTAL DEPARTMENT
QUESTION
- COMPULSORY MILITARY TRAINING
QUESTION
- NEW CALEDONIA
QUESTION
- CAPITAL ISSUES AND EXCESS PROFITS
QUESTION
- INCENTIVE PAYMENTS
QUESTION
- NATIONAL DEVELOPMENT
QUESTION
- INDONESIAN SEAMEN’S TRUST FUND.,
QUESTION
- MAIL FROM ISRAEL AND CYPRUS
QUESTION
- BRAN AND POLLARD
QUESTION
- IMMIGRATION
QUESTION
- PUBLIC SERVICE
QUESTION
- BAUXITE
QUESTION
- GOVERNMENT BUSINESS
NATIONAL WELFARE FUND BILL 1950
- Second Reading
STATES GRANTS BILL 1950
- Second Reading
STATES GRANTS (ADDITIONAL TAX REIMBURSEMENT) BILL 1950.-
- Second Reading
ADJOURNMENT
PAPERS
ANSWERS TO QUESTIONS
- Telephone Services

– The question raised by the honorable member has already been resolved in the budget papers that have been before the House, and in the Estimates that are to come before the Committee of Supply. The ‘Government will pay the pensions to which the honorable member refers as from the first pay-day in November. The actual physical payment will be made as soon as the- appropriate bill becomes law. There will be no retrospective payment to the 1st July last.

Mr WARD:
EAST SYDNEY, NEW SOUTH WALES

– I ask the Prime Minister whether in view of the urgent need of those who are in receipt of age, invalid, widows’ and war pensions, the Government will give priority to legislation to give effect to the increased pensions which have been announced and which, although inadequate, will give some relief? Will the Prime Minister also state the reason why the Government proposes to make these payments applicable as from the first pay-day in November instead of from the 1st July as has been proposed in the case of increases of salary for members of the -judiciary and top ranking public servants who are already in receipt of very high incomes and who are much more favourably placed?

Mr DEPUTY SPEAKER:

– The latter part of the honorable member’s question is out of order.

Mr MENZIES:
Prime Minister · KOOYONG, VICTORIA · LP

– The Government wishes to have these bills introduced and passed at the earliest possible moment. There will be no delay. The Treasurer will, in due course, introduce them.

page 2065

QUESTION

JAPANESE PEACE TREATY

Mr KENT HUGHES:
CHISHOLM, VICTORIA · LP

– Will the Prime Minister inform the House whether the recently published views of the Minister for External Affairs on the subject of the Japanese peace treaty are the views of the Australian Government? If they are, will the Government give to the House an opportunity to discuss them so that if some honorable members have views differing from those of the Minister they may at least have the opportunity of putting them forward for consideration? If the views expressed by the Minister for External Affairs are not the views of the Government, is it wise that they should be published to the world in the manner in which they have been published ?

Mr MENZIES:
LP

– I am not sure that I am entirely familiar with the views to which the honorable member refers. From time to time I have seen in the press statements credited to the Minister for External Affairs, but the Minister himself will be here next week.

Opposition MEMBERS. - Hear, hear !

Mr MENZIES:

– I am certain that honorable members will join with me in the hope that the right honorable member for Barton will be here also at the same time. In any case my colleague will be here, and I have no doubt that at the earliest possible time he will take an opportunity to make .a statement to the House on a variety of these matters.

page 2065

QUESTION

COST OF LIVING

Mr PETERS:
BURKE, VICTORIA

– Did the Prime Minister see in Monday’s press the statement of the president of the United Women’s Movement, supported by evidence, that housewives’ food bills have risen by at least 300 per cent, since 1939? As’ the cost of housing and clothing has also risen by more than 300 per cent., and wages, according to Sir Douglas Copland, have risen by 100 per cent, during the same period, will the Government have an investigation made to find out how much of the missing purchasing power has gone into exorbitant profits?

Mr Menzies:

– In what State was that statement made?

Mr PETERS:

– In the most important of the Australian States, Victoria.

Mr MENZIES:
LP

– I confess that I have not seen the statement referred to by the honorable member, but in view of the fact that the control of such prices, in i lie case of the State of Victoria, is in the hands of the Victorian Government, and as I shall have the opportunity of conferring on Friday in Melbourne with various Prices Ministers, I shall perhaps take the opportunity of asking the Victorian Government how it comes about that these prices have risen as the honorable member has stated. If the Government of that State can give me some information on the matter I shall convey it to the honorable member.

page 2066

QUESTION

MEAT

Mr BERNARD CORSER:
WIDE BAY, QUEENSLAND

– I inform die Minister for Commerce and Agriculture that I have received many complaint? from graziers’ organizations against interference with the present meat marketing methods. Will the honorable gentleman say whether the Government has agreed to the request by the State governments that it should meet them and discuss the matter? If so, can he say what is the Government’s present attitude towards it?

Mr McEWEN:
CP

– One or more of the State Prices Ministers has said on different occasions that the Australian Government’s policy with respect to the export of meat tends to raise the prices nf meat in Australia. I understand that those same Ministers intend to raise this issue with the Prime Minister at an early date. The policy of the Australian Government is not to interfere with normal transactions in meat sales. At present, no such interference takes place and the Government does not intend to interfere. Every one who is informed on the subject should know, and I am sure that the honorable gentleman is aware of the fact, that the price level of meat in Australia is based on a floor price which is determined by the prices paid under the contract with the United Kingdom for .beef, sheep meat and pig meats. So long as meat can be purchased at prices that are in conformity with the United Kingdom contract prices, that establishes the floor prices in this country. When there is a shortage of meat for export the ordinary law of supply and demand operates and determines the market price of live-stock on the hoof.

The retail price of meat in shops is controlled by the State prices authorities.

Mr CLARK:
DARLING, NEW SOUTH WALES

– I ask the Prime Minister whether he promised the State Premiers that he would endeavour to take immediate action to stabilize the price of meat. If so, what action has the Government taken in the ma tter ?

Mr MENZIES:
LP

– I made no promise in relation to that matter when it was raised at the Conference of Commonwealth and State Ministers. It was treated as one that had to be discussed between the governments concerned.

Mr GILMORE:
LEICHHARDT, QUEENSLAND

– My question to the Minister for Commerce and Agriculture is supplementary to the question asked by the honorable member for Wide Bay. Was the Minister, during his recent visit to England, able to discuss meat contracts? If so, can he inform the House of the present position in regard to that matter.

Sir EARLE PAGE:
CP

– The scheme will apply to the persons who are in receipt of invalid, age, widows’ and service pensions, and to their dependants. Perhaps I should explain that the dependants will be regarded as those dependent on the recipients of the pensions up to the age of sixteen years, and a wife will be regarded as a dependant if she is not entitled to a pension. Arrangements have been practically completed for the provision of free medical treatment for persons in those categories, and the introduction of the scheme depends on how quickly the Department of Social Services can despatch the necessary documents to the pensioners in order to enable the machinery to operate. We are planning to make the scheme work as smoothly as we possibly can from the standpoint of the pensioners, and we shall not be deterred in our efforts by the votecatching attempts of .the Opposition.

Mr WARD:

– In view of the number of conflicting statements and unfulfilled promises that have been made by the Minister for Health in regard to the approximate date of commencement of the free health and medical services scheme for age and invalid pensioners, will the Minister give some guidance to the people? As he apparently has difficulty in naming the exact date of commencement, can he say whether the scheme will commence this year or next year ?

Sir EARLE PAGE:

– I am not responsible for the mental squint of the honorable member which causes him to perceive all sorts of different statements. I have stated that as soon as it is physically possible for the scheme to be implemented it will he put into force. On the 25th August, 1950, I promulgated a regulation designed to enable the scheme to be carried out, and the matter is being proceeded with as fast as possible. The. scheme will come into force during this year. The honorable member who asked the question was a member of a government that did nothing about such a scheme for eight years.

page 2068

QUESTION

DOLLAR LOAN

Mr DRURY:
RYAN, QUEENSLAND

– Can the Minister for National Development inform me when the first shipment of goods that have been purchased with funds from the 100.000,000 dollar loan negotiated by the Prime Minister during his recent visit to the United States of America, is expected to reach Australia?

Mr CASEY:
Minister for Works and Housing · LP

– I can only make a guess at the date, but I believe that the first shipment of goods may reach Australia about the end of November. If the facts are other than I have stated them to be, I shall advise the honorable gentleman privately of them.

page 2068

QUESTION

IRON AND STEEL

Mr COSTA:
BANKS, NEW SOUTH WALES

– Is the Minister for Supply aware of the shortage of black sheet iron, which is used in the manu facture of sanitary pans, garbage tins, buckets and tubings? I wish to explain that, from the stand-point of health, it is important that sufficient numbers of those articles shall be available to the public. If the Minister is aware that this base material is in short supply, can he inform me of the reason for it, and can he take any action to relieve that position? The shortage is causing difficulties for small manufacturers, who are able to provide only intermittent employment, and also for sanitary contractors, who are unable to fulfil their responsibilities to the community.

Mr BEALE:
Minister for Supply · PARRAMATTA, NEW SOUTH WALES · LP

– I am aware that there is a shortage of sheet steel in Australia, and that, of course, implies a shortage of black sheet iron. A deputation waited on me a few .days ago and directed my attention to the shortage of sheet bar, which is cut from the steel ingot, and is subsequently rolled into various forms of sheet steel. I promised that deputation that I should refer its representations to the Minister for National Development, whose department deals with such matters, and I shall also direct his attention to the question that has been asked by the honorable member for Banks. The shortage of black sheet steel is attributable to several causes, one of which is the shortage of coal, which is due partly to the activities of Communist agitators, who are given a great deal of encouragement by the Labour party, including the honorable member for East Sydney.

page 2068

QUESTION

TIN

Mr TRELOAR:
GWYDIR, NEW SOUTH WALES

– Last Monday I was waited upon by a deputation of members of the New England Tin Producers Association of northern New South Wales, where a lot of alluvial tin is produced, who pointed out that whereas the overseas price of tin is approximately £1,040 sterling a ton, the local price is only £540 a ton. The members of the deputation also pointed out that the ore in northern New South Wales, from which the tin is produced, is of low grade, and that because of the low price of tin in Australia it is almost impossible for them to continue to produce tin. I received to-day a telegram from the association asking that representations be made on their ‘behalf to the conference of State Ministers administering prices control that is to be held in Melbourne on Friday next. Will the Minister for National- Development endeavour to impress on the State Ministers at their forthcoming meeting the need to approve a higher price for tin in order to stimulate the local production of that metal?

Mr CASEY:
LP

page 2072

QUESTION

IMMIGRATION

Mr SWARTZ:
DARLING DOWNS, QUEENSLAND

– As the pool of displaced persons in Europe who are suitable for immigration to Australia has been rapidly diminishing, can the Minister for Immigration indicate the approximate number of displaced persons still available to become new Australians, and for what period the migration scheme will continue? Does the Minister know of the International Refugee Organization’s plans for dealing with the so-called “hard core” when the flow of suitable physical types is exhausted? Has there been or is there likely to be any relaxation of the mental and physical standards set by the Department of Immigration for displaced persons who wish to become new Australians?

Mr HOLT:
Minister for Immigration · HIGGINS, VICTORIA · LP

– I am unable to give very precise information to the honorable member regarding the final stages of the displaced persons scheme, but as recently as October we were advised that it is proposed now to continue the scheme until October of next year. Previously it had been intimated that by March of next year the scheme would be completed. We understand that there are good types of migrants still available, and, in fact, some new groups have come under the jurisdiction of the International Refugee Organization and we are examining possibilities in that connexion at thu present time. So far as the “ hard core “ aspect is concerned, Australia has already done a good deal in that connexion in a manner different from that normally contemplated when reference is made to “ hard core “ cases. Our contribution has been to take elderly parents who normally would not be eligible to come to Australia under the migration policy. We have allowed them to come out with families who have accompanied them or in some cases have preceded them. I assure the honorable member that it is not intended to relax in any way the medical and physical standards that have been set by the Government and that migrants must now satisfy.

page 2072

QUESTION

PUBLIC SERVICE

Dr NOTT:

– By way of explanation I state that my question emanates from a circular, 1,300 copies of which have been circulated throughout the Public Service in the Australian Capital Territory and a copy of which appears in today’s issue of the Canberra Times. I ask the Prime Minister whether his attention has been drawn to the very grave charges made in that statement, and if so what action the Government proposes to take in connexion with them ? _ Mr. MENZIES.- I have not seen the circular myself, but I did read in to-day’s issue of the Canberra Times what purported to be an account of it. It seemed, if accurately reported, to be a singularly vague document, sadly lacking in particulars. It might have interested mc more had it contained a few facts and less invective. However, I am having it looked at in order to see what substance, if any, it possesses.

page 2073

QUESTION

BAUXITE

Mr CLARK:

– I ask the Minister for Supply whether proposals have been made to export bauxite to Japan.’ If so, will the Minister take action to prohibit its export in view of the shortage of supplies in Australia?

Mr BEALE:
LP

– I know of no proposal to export bauxite to Japan. At present we have ample bauxite deposits in this country but as far as I know the Government has given no consideration to such a matter as was mentioned by the honorable member. I shall look into the matter and shall let the honorable member know the result of my investigations.

page 2073

QUESTION

GOVERNMENT BUSINESS

Precedence

Motion (by Mr. Menzies, through Mr. Fadden) proposed -

That Government business shall take precedence over general business to-morrow.

Mr CHIFLEY:
Leader of the Opposition · Macquarie

.- Nodoubt, this motion has been made in order to enable the Government to deal more expeditiously with certain financial measures that are before the House. However, the Treasurer (Mr. Fadden) realizes that it will preclude the House from considering to-morrow the Constitution Alteration (Prices) Bill 1950 which is shown under “ General Business “. Whilst that item appears on the notice-paper in my name, it did not originate as the result of any action on my part as an individual member. The measure was received from the Senate, and upon its receipt I moved the first reading, which was agreed to. I can well understand that a discussion of prices would be unpalatable to supporters of the Government; but in view of the facts that I have just mentioned, I ask the Treasurer to give an assurance that I shall be given an opportunity to move the second reading of the measure during the current sessional period.

Mr Fadden:

– I shall bring the right honorable gentleman’s request to the notice of the Prime Minister.

Question resolved in the affirmative.

page 2073

NATIONAL WELFARE FUND BILL 1950

Message recommending appropriation reported.

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

Motion (by Mr. Fadden) agreed to -

That it is expedient that an appropriation of revenue be made for the purpose of a bill for an act to amend the National Welfare Fund Act 1943-45 and to repeal certain provisions of the National Welfare Fund Act 1945.

Resolution reported.

Standing Orders suspended; resolution adopted.

Ordered -

That Mr. Fadden and Mr. Anthony do prepare and bring in a bill to carry out the foregoing resolution.

Bill presented by Mr. Fadden, and read a first time.

Second Reading

Mr FADDEN:
Treasurer · McPherson · CP

– I move -

That the bill be now read a second time.

The bill proposes amendments to the National Welfare Fund Act. These amendments are related to the Government’s proposals for the simplification of the tax system. Honorable members will be aware that the costs, other than administrative costs, of Commonwealth social and health services are borne by the National Welfare Fund. Section 5 of the National Welfare Fund Act provides for the appropriation to the fund each year of the amount of social services contribution, including provisional social services contribution, which becomes payable in that financial year. The provisional contribution is the amount provisionally levied each year in respect of the income of that year which is subject to contribution but not subject to pay-as-you-earn deductions.

The House has before it the proposal to merge social services contribution and income tax into a single levy on incomes. If this merger were not effected, it is estimated that the fund would receive in 1950-51 £101,000,000, made up of £71,000,000 from social services contribution payable on 1949-50 and earlier incomes and £30,000,000 provisional contribution levied in respect of 1950-51 incomes. As under the taxation proposals now before the House, social services contribution will not be separately assessed on 1950-51 incomes, provisional contribution will not be levied for this year and the fund will not, therefore, receive thu estimated £80,000,000 from this source. To make good this deficiency, the bill provides for a special appropriation of £30,000,000 for 1950-51 to the National Welfare Fund. This sum, together with the amount expended to be payable for social services contribution, will add an estimated £101,000,000 to the receipts of the fund. This amount is, of course, exclusive of pay-roll tax, which is estimated to contribute £26,000,000 to the fund in 1950-51.

For future years it is intended that the fund shall receive the amount, of the arrears of social services contribution payable in those years in respect of 1949- 50 and earlier incomes. This amount is to be built up each year in accordance with a formula set out in clause 2 of the bill; for it is intended that, so far as the practicable measures available can ensure it, the fund should continue to receive approximately the same amount as it would have received had the tax and thecontribution continued to be assessed separately. To achieve this aim, it is proposed that the amount on which the appropriations for subsequent years are based shall be the sum, at present estimated at £101,000,000, to be appropriated to the fund in respect of social services contribution in 1950-51. It is proposed that that amount shall vary by the same percentage as the percentage variation of the amount of pay-roll tax collected in those years compared with the pay-roll tax collected in the base year

1950- 51.

I shall cite an example to illustrate how this formula will work. Let us assume that the amount appropriated for 1950-51 is the estimated £101,000,000, and that payroll tax collected for this year is the estimated £26,000,000. If payroll tax in 1951-52 increased by say, 30 per cent, over the 1950-51 collection - this is a purely hypothetical and illustrative figure - then the £101,000,000 would be increased by the same percentage to give an appropriation to the fund of £111,100,000 in respect of taxes on incomes in 1951-52. This,, together with payroll tax of £28,600,000,. would give the fund £139,700,000 in 1951-52.

About two-thirds of the existing total social services contribution comes from salaries and wages. Moreover, although the yield of a progressi ve tax will increase faster than the income on which it is assessed, I would point out that the social services contribution is progressive only up to ls. 6d. in the £1. If, therefore, the contribution were to be retained in its present form, the amount payable from year to year could be expected to move up or down approximately in step with upward or downward movements of the total payroll in those years. As payroll tax is imposed at a flat rate of 2-J per cent, on payrolls, collections of that tax each year should give a suitable measure by which to determine the amount to l>e appropriated to the National Welfare Fund each year in respect of taxes on incomes.

What is more, changes of income will be reflected in the fund’s receipts in the year the changes occur. At present, there is a year’s lag, since the assessment of the social services contribution is based on the previous year’s incomes. The formula that is now proposed will avoid that lag. This will be a gain from the budgetary policy angle. It will mean that the appropriate budgetary measures in relation to the fund could be taken as soon as there is a change of business conditions, and not a year afterwards.

A slight refinement of the formula could have been introduced to assimilate the effect on rising incomes of the progressive rate of social services contribution below ls. 6d. in the £1. But whilst. this “multiplier “ would have added something to the receipts of the fund while incomes generally rose, it would also accelerate, the reduction of the fund’s receipts if there were a falling-off of incomes. What is more important, the addition of a “ multiplier “ to the formula would have complicated it unduly. It is the Government’s aim to simplify the tax system ; and it would be inconsistent with the purposes of that policy for a simplification of the tax system to be accompanied by a complicated method of appropriating moneys to the National Welfare Fund, especially if a lot of administrative work were needed to obtain the data for the formula. At the same time, I think it will be considered desirable in itself that the method shall be easily comprehended by the ordinary nonmathematically qualified taxpayer. In choosing a formula, therefore, the Government regarded simplicity as a prerequisite. A large number of possible methods was considered, but the formula proposed in the bill appears to combine more satisfactorily than any of the others the qualities of a reasonable degree of accuracy with administrative and arithmetical simplicity.

Before I conclude my speech, I should like to emphasize a point that has been evident to all who have examined the matter seriously, that is to say, the fund’s existing sources of income are not adequate to support any substantial expansion of social services, particularly if suitable steps are to be taken to deal with the problem of the means test. For some time past, the Government has been examining the complex questions associated with the means test and the difficulties inherent in the present system of social services in Australia. The Government’s inquiries so far indicate that the whole matter of finance for social services needs reconsideration. It is certain that no easy solution of the problem will be found; but it is the Government’s intention to submit at the appropriate time a plan designed to put Commonwealth social services on a new and more satisfactory basis. In the meantime, the Government wishes to preserve the present financial position of the fund.

Other amendments proposed in the bill are of a machinery character. Section 6 of the existing act is to be amended to substitute the description “ age pension “ now used in the Social Services Consolidation Act for the older but now obsolete expression “ old-age pension “ ; while sections 6, 7, S and 9 of the .1945 amending act are to be repealed, since they have in the meantime been superseded by relevant sections of the Social Services Consolidation Act. I commend the bill to honorable members.

Debate (on motion by Mr. Chifley) adjourned.

page 2075

STATES GRANTS BILL 1950

Second Reading

Debate resumed from the 12th October (vide page SOO), on motion by Mr. Fadden -

That the bill be now read a second time.

Mr BEAZLEY:
Fremantle

.- The report of the Commonwealth Grants Commission shows that the State of Western Australia applied to that body for a grant of approximately £7,000,000 for the current financial year, and received £5,839,000, that the State of South Australia applied for a grant of £5,600,000 and obtained £5,332,000, and that the State of Tasmania applied for a grant of £1,575,000 and received £1,004,000. In no instance - and I do not make this comment as a criticism - was the amount for which a State applied recommended to the Government by the Commonwealth Grants Commission. We tend to accept that situation as normal, believing that a State applies for a larger grant than it needs on the principle that the Commonwealth Grants Commission will reduce its grant anyway, so that by asking for more than it actually requires, it may obtain what it needs. That is the common view of the function of the Commonwealth Grants Commission, but I do not think that it is altogether sound, and indeed, altogether fair to the three minor claimant States.

The position of South Australia, Western Australia and Tasmania, has altered considerably since the period before the outbreak of World War TJ. in 1939. The seventeenth report of the Commonwealth Grants Commission shows that the number of persons employed in secondary industries in South Australia has risen from 43,000 in 1938-39 to 76,000 at the present time, whilst the number of employees in secondary industry in Western Australia has risen from 23,000 to 38,000 in the same period. Those developments have placed an enormous strain upon the power resources of Western Australia and South Australia. The attention of the Commonwealth has been directed largely to the plight of South Australia in that respect, because its dependence upon supplies of coal from New South Wales n.i the basis of its generation of electricity has dramatized its difficulties in expanding its power resources, and its rather bold solution of the problem by the development of the coal deposits at Leigh Creek has attracted public attention. However, the position of Western Australia, has been most difficult. The expansion of industrial demand for electric power has led to the complete breakdown of what had already become obsolete electrical equipment, and the development of new power stations has proceeded slowly because of shortage of labour and the non-fulfilment of orders for dynamos and other electrical equipment by the United Kingdom. Consequently, when the less populous States make requests for considerable grants, the idea that they should not receive the amounts for which they ask should be critically examined, because, after all, they are responsible, insofar as they control power, for the basis of a great deal of our secondary industry. I believe that the Commonwealth Grants Commission, instead of adopting the formula that merely looks at previous grants, and at the States’ budget deficits, will need to examine very carefully in the future such matters as power, railway equipment and a. great deal of the fundamental capital equipment of the States, in respect of which they are heavily in debt, and which has become completely obsolete, and consider whether a more generous policy of making grants to the States should be adopted in the interests of national efficiency.

– That may be so, but. unfortunately, no such proposal has been made for the States of Western Australia, South Australia and Tasmania.

The commission also devotes considerable attention to the provision of basic social services, such as schools and hospitals. It has always recognized that the cost per head of education is much higher in Western Australia than in other States because the population of Western Australia is much more scattered. Similar considerations apply to the cost of maintaining hospitals. Whilst the commission has now abandoned its former policy of reducing the grant of a particular State because it believed that too much, money was being expended by the Government of that State on social services, I still consider it does not pay sufficient attention to the provision of adequate social services in the three minor States. Members of the Australian Country party who represent Western Australian seats will agree with me that the hospitals of Western Australia are suffering from serious deficiencies. Country hospitals are, in many instances, too small, their equipment is either obsolete or- insufficient,, or they are unable, for financial reasons, to attract doctors and nurses. I think that that disability should, have been taken into consideration by the Commonwealth Grants Commission, and I do not consider that the commission was justified in recommending that the grant for Western Australia should be reduced from £7,000,000 to £5,600,000. I think that it is inevitable that that reduction will restrict the provision of adequate social services in Western Australia. The Government of that State is already endeavouring to reduce expenditure upon education by closing one-teacher schools and catering for the children concerned in area and consolidated schools, but the adoption of that arrangement means, of course, that fewer teachers are available for a given number of pupils. I repeat that the provision, of proper hospital facilities for Western Australia is a matter of serious importance to the people of that State, and I consider that the commission should have paid more attention to that fact when preparing ite recommendation for a grant for Western Australia.

In regard to housing, the Australian Government could assist the States generally, and particularly Western Australia, by encouraging the quarrying of stone and the erection of stone houses. Most of the houses built to-day are of brick or wood construction. Although adequate supplies of first-class building stone are available at Geraldton and other places in Western Australia, there are not nearly sufficient quarrymen or stonemasons to enable us to utilize the stone. Much of the stone is of superior quality, such as the Donnybrook, stone, from which the university of Western Australia was built. Some time ago, and prior to the recent visit of the Italian migrant mission, I pointed out to the Minister for Immigration (Mr. Holt) that some arrangement might be made to bring Italian quarrymen and stone-masons to this country as migrants. If that proposal is not practicable some arrangement might be made similar to the system of interchange of artisans that exists between Italy and France. For some time past Italy has been sending its people to France to work for specified periods, after which they return to their own country. Practically no Australians are engaged in the quarrying and stone-masonry industries in Western Australia, and it seems a great pity that our large supplies of building stone are not being worked. It appears to me that the general housing programme would be accelerated if migrants were engaged in quarrying stone and using it to build houses. Although the cost of constructing stone houses is such that only comparatively wealthy people could afford them, one consequence of their erection would be to reduce the keen competition that now exists to obtain bricks and timber for housing. Furthermore, the encouragement of even limited stone construction might revive the art of the stone-mason, which is threatened with extinction. I doubt whether any one travelling round the Australian Capital Territory would see a single building of which anybody will be proud in 50 years’ time. There is an appalling impermanence about Australian building at the present time which is not seen in buildings erected many years ago. St. John’s Church in Canberra is an example of the stonework of the past. It was done by a quite mediocre stonemason. Some parts of it were fashioned more than 100 years ago. Anybody looking at that structure now sees an intact building with some permanence about it. It is quite a good job and is worthy of both admiration and pride. It seems to me that, because of our present building standards, the only existing buildings in Australia that will be regarded as good in 50 years’” time are not those that have been erected in the last two decades but those that were constructed many years aero. That position arises from the fact that stone-masonry as an art has fallen into some degree of desuetude. I consider, therefore, that the Commonwealth would he justified in assisting the States in that particular matter.

I turn now to the development of outer harbours in Western Australia, by which I mean ports other than Fremantle. I know that the Commonwealth is tackling the whole matter of obsolete mechanical equipment and the defective nature of

Australian harbours, and has a long-term programme of modernization before it. Its attention is naturally concentrated very largely on the main ports. I think, however, that a good deal of the congestion and the discontent that exist now on our waterfront could be alleviated by decentralization of the waterfront industry. I believe that it is time we asked ourselves whether it is necessary to concentrate so much of our commerce in the main ports. When Western Australia presents a case for the development of the existing ports of Bunbury, Geraldton and Albany the Commonwealth Grants Commission might treat it more sympathetically than it has treated such submissions so far.

The division of responsibility in ports, between Commonwealth authorities and State authorities, is most unsatisfactory. . We find in Western Australia, for instance, that the Fremantle Harbour Trust controls the inspection and supply of the machines and tackle available, whereas on board ship those matters are in the province of the Commonwealth navigation authorities. When the Commonwealth navigation authorities complain about equipment they are unable to have their complaints translated into immediate action because they have to go before a State authority, which very often is crippled because of lack of finance. As a result of lack of finance the State Government is unable to comply immediately with the Commonwealth’s requirements. We have suffered in that respect in Western Australia because of a policy of very mean economy that was established in the decade before the outbreak of the last war or even further back than that. There is a tendency on the part of the Commonwealth Grants Commission to take into consideration the level .of the State expenditure during that decade, without having any regard to depreciation and deterioration of capital equipment in the State. The commission should see whether the Commonwealth -could cooperate in the provision of more uptodate equipment to replace obsolete equipment.

I consider that on the whole the commission’s report displays a thoroughly constructive outlook that is most generous in comparison with pre-war standards, and that the Government has no reason to be ashamed of the report or of the bill that is to give effect to it. But I do consider that we should regard the commission in a certain light. It is a body which makes real what always ought to have been a feature of federation, but which for many years was not such a feature - that is, that the more highly developed areas of the Commonwealth should assist in the development of the backward areas. I think that that principle is implied in the very nature of federation. The report is a good contribution towards that end, and if we can now extend the observance of that principle a little further and regard the commission as an instrument in the development of the les3 developed States, we shall be doing a very great service by increasing both efficiency arid decentralization.

Mr LESLIE:
Moore

.- The Government has agreed that the amount recommended by the Commonwealth Grants Commission for allocation to Western Australia shall be made available tei that State. That amount is larger than the amounts to be made available to South Australia and Tasmania under the bill, but as the honorable member for Fremantle (Mr. Beazley) pointed out, it by no means represents full satisfaction of the needs of Western Australia. [ cannot speak for the other States and naturally their case will be put by their representatives. I do not intend to speak in a spirit of criticism. I say that the Commonwealth Grants Commission, in its assessment of the disabilities that affect Western Australia as the result of federation, has altered its attitude in that it has moved away from the old system of comparing the cost of providing services in Western Australia with similar costs in other States. I am afraid, however, that even though the commission’s attitude has altered its decisions are still to some degree governed by a comparison of costs in the various States and that, although the commission does not say so in its report, it considers that the cost of providing public services in Western Australia is higher than is necessary. Western Australia’s peculiar circumstances should be taken into consideration more than they have been in any assessment of costs. For instance, our hospital costs are higher for each patient than are the costs in other States because of our great distances. In Western Australia the cost is up to £3 a patient a day in our country hospitals, not because we have an unusually healthy community that does not require the services of hospitals but been use of the tremendous distances that have to be covered in the State. In order to provide services that will relieve, as much as possible, the difficulties of living in the outback, it is necessary to provide hospital services in distant areas at a heavy cost for capital equipment. In addition to that, a tremendous amount of money is absorbed in maintenance. The value of a life cannot be assessed in pounds, shillings and pence, and it is wrong to ass-ess the value of a hospital service on the basis of the cost of a patient a day. Hospital services must be provided, and the saving of one life may very well be worth the whole of the cost of the whole of those services.

Those remarks also apply to the provision of educational services in Western Australia. Some of our schools are very far outback and cater for only a very few children. But if schools were not built there the children of those areas would have to go without education. We have, of course, a system of correspondence schools that has done, and does, a remarkably good job. I believe that I am correct in saying that the academic record of children who have been educated under the Western Australian correspondence class system excels the academic record of children attending school. However, children who are taught by correspondence lack the benefit of one vital factor in our present-day system of living. I refer to the social contacts and understanding of the problems of others that are gained by children actually attending school.

Other public services in Western Australia suffer from the same disabilities of immense distances. Our transport and water supply services are called upon to provide facilities for people at great distances from, the main centres of population, and naturally the overall cost of such services is higher in Western Australia than in other States in which the distances are not so great. Those are factors that the commission has not properly considered in the past. I know that that position has been changed, but I still have a fear that the members of the commission will still have at the back of their minds the old ideas, which will cause a possible limitation of the extent to which they will be willing to meet the State’s disabilities. I consider that the commission and the Government should assess “Western Australia’s requirements on an entirely different footing. They should be assessed on the basis of a consideration of Western Australia’s contribution per head of population to the national income of the Commonwealth, which stands high above that of any other State in the Commonwealth. Western Australia is predominantly an exporting State, particularly so far as primary produce is concerned. That must be the consideration - the value of the State’s production to the nation as a whole. If that were taken into account I am sure that the Western Australian Treasurer would have no difficulty in obtaining greater assistance from th: Commonwealth Grants Commission.

Mr Ward:

– Western Australia gets back more than it contributes.

Mr LESLIE:

– That is correct. It receives an amount that is greater than the amount that it directly contributes, but it does not get back an amount which compares with what it contributes to the whole of the national economy. If the inquiries of the Commonwealth Grants Commission were so extended as to embrace consideration of the amount necessary to provide for the development of the State, instead of dealing merely with the maintenance of existing services, the time would speedily arrive when Western Australia would not seek a disabilities grant because it would be able to carry on of its own accord.

The honorable member for Fremantle has made reference to the condition of Western Australian railways. I agree that those railways are in a lamentable condition. They are capitalized at £27,000,000 but I doubt whether the whole of their assets are worth £7,000,000. A royal commission inquired into the operation of the Western Australian railways, and after reading its report one wonders that any passengers are game to travel on them. Their present condition is due to neglect during the years before the war and to the attempts of the State Government to meet the demands of the Commonwealth for economy by the States. The State Government undoubtedly lacked vision in not providing for new equipment and in failing to maintain its services at a proper standard. The proposed grant of £5,000,000 does not make any provision for the rehabilitation of the railways. The Commonwealth will have to do something in that connexion.

Mr Ward:

– The Western Australian Government rejected a very generous offer by the Commonwealth.

Mr LESLIE:

– It did not. The Western Australian Government continued the discussions with the Commonwealth. The honorable member for East Sydney (Mr. Ward) conducted those negotiation’s with the Government of Western Australia when he was Minister for Transport and he was inclined to adopt a rather arbitrary attitude and to say, “ This is what we give you and no more “.

Mr Ward:

– That is completely untrue.

Mr LESLIE:

– That is my interpretation of the correspondence that I have seen. There was a basis for continuing negotiations but something has still to be done in that connexion. Had there been a more understanding attitude something might have been accomplished. That understanding attitude is still needed. My remarks do not apply only to the previous Government. If the attitude of the Government is sympathetic it will be possible to get over these troubles. I do not blame the previous Government for the position in Western Australia except that it is characteristic of Labour governments. It was a Labour government which, by its lack of vision, allowed the position to develop. The same may be said of the electric power supply to which the honorable member for Fremantle referred. The State Government made no provision for the future. So long as it could carry on the job to the fullest degree for the time . being, everything was considered to be all right.

The Commonwealth must .go to the assistance of “Western Australia. The Commonwealth Grants Commission, in addition to investigating the requirements of the State in order to maintain the comparatively negligible public facilities available, should investigate also its developmental interests. If it were to recommend assistance to the under-developed States on the basis of programmes for development, they would benefit to a much greater degree than they do at the present time.

A problem that is more vital to “Western Australia than to any other State is that of water supply. For years, that has been the major problem of Western Australia and it will continue to be so unless it is dealt with on a major scale instead of in the piecemeal manner in which it is “being dealt with at the present time. The State Government provides little dams, wells and small water-supply schemes all over the country. Those little jobs are not going to help in the development of the country. The whole of the agricultural areas, except in the extreme south, are crying out for a better water supply for “the security of their primary industries. The Government should mate money available to Western Australia for the provision of an adequate water supply. It should take into consideration the developmental work necessary for the economic advancement of the State. I am quite sure that ‘the Western Australian Government could present a case that would entitle it to the amount that it ‘requires to make this one -vital necessity available. Within 6 or 7 miles of Perth there are people who are in just as dire straits in regard to ordinary household water supplies as are people in the 8, 9 and 10 inch rainfall districts, although the coastal area has 34 inches of rain a year. The coast of Western Australia has bounteous falls’ of rain, which either run away or soak into the ground because of the lack of vision and finance to undertake developmental works which would enable Western Australia to contribute further to the national economy.

It might be suggested that if developmental works would be worth so much to the State, .the State Government could very well finance them under a loan programme. That cannot be done because it would mean saddling the State with financial commitments which would be such a burden on it as to make the value of many of the projects disproportionate to the charge for the capital expenditure involved. Such a suggestion would be quite unreasonable. The State is not in a position to borrow. The money can only be made available from Commonwealth grants. In case it may .be thought that Western Australia is always pleading for help, let me say that I doubt whether there is any other State in the Commonwealth that has helped itself as much as has Western Australia. It has a State-wide system for the bulk handling of wheat which cost the Government nothing because it was provided by the farmers themselves. This system is splendidly efficient, saves very large costs, and has no indebtedness. I could mention other schemes by which the people of the State, with ‘the encouragement of the Government, have helped themselves to develop their State and to limit their costs. Western Australia does all that it can to help itself but it cannot undertake capital works that would coat millions of pounds and would require the engagement of experts. In Western Australia, for instance, we look with envy at what the Commonwealth Scientific and industrial Research Organization and the Department of Commerce and Agriculture have done in the eastern States in dealing with the problems of the agricultural industry. The Western Australian Department of Agriculture carries on, year after year, on a very small amount of money and does a tremendous job in attempting to solve the problems of the State. The vote to that department alone if it were appropriate to the work necessary to be done and the problems necessary to be tackled, would be no less than one-fifth of the £5,000,000 to be made available to the State this year. The State is helping itself in this matter by imposing taxes wherever it can on the man on the land so that he can contribute to the central organization which is .attempting to help him. The primary producers bear the hurden of taxation just as cheerfully as anybody else does. That alone needs great consideration because Western Australia is a primary producing State and is deserving of exceptional investigation and consideration by the Commonwealth Grants Commission quite apart from the matter of social services. If Western Australia is to play its part in the affairs of the Commonwealth it will be necessary for the Commonwealth to render a greater degree of assistance to it. Through the Commonwealth Grants Commission more capital assistance could be rendered.

It must be constantly borne in mind that the strength of this Commonwealth is no greater than that of its weakest State, and if we allow one State to remain in a backward condition because money is not provided soon enough and in large enough quantities for its needs and advancement, then the whole of the Commonwealth must ultimately suffer. From the stand-point of defence and the national interests the Australian Government should ensure that Western Australia shall be provided for to the fullest possible degree in order to make up for the years when that State was allowed merely to drift along and be considered by some eastern States as their poor relation. I point out, however, that Western Australia has, figuratively speaking, provided a considerable proportion of the butter that has been spread on the bread of the people of the eastern States. The exports of Western Australia have been of tremendous value to the whole of our national economy.

Mr. CALWELL (Melbourne^ P4.19]. - The section of the Constitution which authorizes legislation of the kind now before the House is section 96. That section reads -

During a period of ten years after the establishment “ of the Commonwealth and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit.

All States Grants Acts that have been passed by this Parliament up to date under that constitutional provision have related to the needs of only three States - Western Australia, South Australia and Tasmania. The position of those three States which are sometimes miscalled “ claimant “ States is not much better now than it was when the first applications for grants were made. Indeed, the position is worse in the case of Tasmania, Western Australia’s position is not much better, but South Australia’s condition is improving because of that State’s increasing industrialization. However, South Australia still needs more assistance from the Commonwealth. During the course of years the High Court has adopted a somewhat more liberal view about the intentions of the Constitution in the matter of the exercise of power by the Australian Parliament. In the lifetime of this Nineteenth Parliament the defence power has been used in a way that was never previously contemplated. I consequently foresee the possibility that the Australian Parliament might be able to use the defence power in the future to improve the financial position not only of Western Australia, South Australia and Tasmania, but also of all the States of Australia.

– Yes. If we could relieve all the States of the responsibility for dam construction, in effect we should have to assist Tasmania, Western Australia and South Australia with legislation of this type to a far less degree.

It may be that we shall never have our railway gauges standardized until the Commonwealth takes full financial responsibility for doing the work. If the Australian Government accepts thai responsibility it is by no means certain that we shall secure the co-operation of all the State governments to become the constructing authorities. Therefore it may be that the Commonwealth will have to become the constructing authority under it3 defence power. By accepting full responsibility for the standardization of railway gauges we may be able to help the various Australian railway systems, particularly those of Western Australia and South Australia, where the territory is vast and the population relatively small, and where equipment and rolling-stock will never be so modern as it is in the other States of the Commonwealth. Western Australia’s position in regard to rolling-stock is parlous. If the Collie mine were in full continuous production or if the whole of its resources could be exploited, the Western Australian Government would not have the rolling-stock to move the coal from Collie to other parts of the State. Moreover, Collie coal deteriorates and must therefore be use-l quickly. It seems that a good deal of developmental work requires to be done by the Government of Western Australia in conjunction with the Australian Government if Western Australia’s present dependence on the Commonwealth is to be relieved in any way. I have visited Western Australia on a number of occasions and it has always impressed me as the apotheosis of madness that iron ore from Yampi Sound is dragged 6,000 miles round the Australian coast in order that it may be smelted at Port Kembla. There is a good harbour at Bunbury, and good coal at Collie, which is only 37 miles away. Why private enterprise or some government authority or both combined do not evolve a scheme to bring iron from Yampi Sound to Bunbury and smelt it with the use of coal from the Collie mine I do not know.

Mr Eggins:

– Is not a proposal alone those lines being developed at present ?

Mr CALWELL:

– No, I understand that all political parties in Western

Australia, of whatever colour they may be, have a keen hostility to the Broken Hill Proprietary Company Limited. I am no defender of monopolies, but the Broken Hill Proprietary Company Limited is one of the best conducted and best managed companies in the world and can produce steel much more cheaply than can any other concern. That great organization is prepared to operate in “Western Australia, but instead of the various. “Western Australian governments having welcomed it they have been messing round with British and American companies. Therefore we still behold the ridiculous spectacle of bringing iron ore half-way round the Australian, coast to- be smelted, and then sending some of it in manufactured form to Western Australia. Somebody once said that it would be a good thing to have a dictator governing a country if he were a. benevolent dictator. You can get plenty of dictators but very little benevolence. Under those circumstances I am afraid that democracies will have to manage as best they can, and deal in their own way however absurdly, with all their problems which could have been resolved by direct action many years ago.

I have been a very strong advocate of more States and territories, and until we divide Australia into more areas of regional autonomy we shall not achieve the decentralization or national development that is so necessary to the security of our people. On a previous occasion I pointed out that if Australia were divided by a line running approximately from a point near Carnarvon in Western Australia to a point near Bundaberg, in Queensland, very few people of our own blood would be found to be living north of it. Approximately 6,000 of Western Australia’s population of over 500,000 live north of Carnarvon. The Northern Territory, which consists of an area of 450,000 square miles also lies north of that line and has only 20,000 people of our race, therefore an area of 1,000,000 square miles north of that line, that is one-third of the total area of this island continent, is populated by only 26,000 people ; and that ar.ea is the most vulnerable part of the Commonwealth. If the Northern Territory were divided into two territories, one based: on. Alice Springs and the other on Darwin, and the Australian Government took over responsibility for the portion of Western. Australia north of Carnarvon, we should have a better chance of developing those areas than we have under present conditions. I am aware of the argument that the Northern Territory has. been neglected because of the centralization of authority at Canberra. That is a valid argument, and I recall that it was advanced by the honorable member for New England (Mr. Drummond) in a book that he published entitled New States or No States.

We shall, not solve the problem, of developing sparsely populated, areas of the Commonwealth by making provision for annual grants to the less populous States in order to help them to manage as best they can and to prevent them from sinking into an impossible position. Instead, a parliamentary committee should be appointed to investigate the possibility of forming new States and. new autonomous regions.

Mr Eggins:

– A. convention should be called to consider the formation of new States^

Mr CALWELL:

– That is another matter. The Constitution does not make provision for the holding of conventions for that purpose, and I should not support the idea of holding unconstitutional conventions on the Constitution. I would not object to these problems being referred to non-parliamentary committees. Indeed, I strongly support the British system of appointing ad hoc committees. However, we appear to be afraid to adopt that method, although when I was Minister for Immigration I had the temerity to appoint a committee the majority of the members of. which were not members of the Parliament, to advise me on migration problems.. The honorable member for Parkes (Mr. Haylen) was chairman of that body. We could adopt the American system of appointing bi-partisan, committees to investigate certain problems upon which all parties are fundamentally in agreement.

The honorable member for Fremantle (Mr. Beazley) and the honorable member for Moore (Mr. Leslie) dealt specifically with problems that confront Western

Australia, but problems that confront Western Australia, Tasmania and South Australia, which are the subject-matter of the measure before the House, have a direct bearing on the well-being of Australia as a whole. For instance, the development of outer ports is of vital importance to all the States. I represent the proud, dignified and clean city of Melbourne; but I admit that the cities of Sydney and Melbourne are incubuses upon the development of Australia. They are two vast economic centres that draw tribute from the rest of Australia, and to the degree that we permit them to grow larger Australia as a whole will become weaker. During my term as Minister for Immigration I used to talk about the day when Australia would have a population of 20,000,000. I shall continue to talk in that strain, and I sincerely hope that I shall live to see the day when Australia will have a population of that magnitude. If we are to multiply our population threefold we must treble the present population of every area in this country that is now settled. Imagine the possibility of Sydney having a population of 4,500,000 and of Melbourne having a population of 3,750,000!- Should that happen, we should require to use all the resources of the nation to provide amenities for those lucky enough to live in those cities with the result that areas that are now neglected would be neglected to an even greater degree. I stressed the urgency of this problem when, previously, I was for a brief period a member of the Opposition, and I again stress it now when for another brief period I am again in Opposition. What I have said to-day, I have said previously as a back-bencher and as a Minister. We must tackle these problems in a big way. I should not be satisfied if they were referred to a commission that had not the power to do the job that we must do if Australia is to be made great. I trust that the Government, when it has solved the problem of putting value back into the £1, will tackle the problem of developing the outer portions of Australia to the degree that the more populous portions have been developed and of making life in the outer portions as pleasant as it is for those who are fortunate enough to live in settled regions.

Mr KENT HUGHES:
CHISHOLM, VICTORIA · LP

– I listened with interest to the remarks that the honorable member for Melbourne (Mr. Calwell) has just madeAll parties are in complete agreement in respect of many of the issues that arise in the discussion of a measure of this kind. I am of the opinion that the States Grants (Additional Tax Reimbursement) Bill, which is the next item that appears on the notice-paper, and the measure now before the House should be considered together. However, I shall not be in order if I refer to matters other than State grants that come within the purview of the Commonwealth Grants Commission. I agree with the honorable member for Melbourne that financially the States are sinking into a morass. Indeed, malodorous and mephitic emanations arise from that morass which has been getting wider and wider and more and more obnoxious for at least the last ten if not the last twenty years.

I am sorry that the Treasurer (Mr. Fadden) is not in the chamber at present. The future of Australia depends on how we solve the problem of State and Federal finances. Whereas Australian Treasurers, regardless of party, have been standing on a rock that has been getting larger and larger and firmer and firmer - the rock of federal revenue - the States have been sinking deeper year by year into a morass. At conferences of Commonwealth and State Ministers, two of the last three of which I attended, the Australian Government throws a little financial timber to the States in order to enable them to keep their heads above water. Such assistance will not provide the States with a firm footing on which they can build for the future. The need to assist the States financially was recognized almost at the inception of federation. Every honorable member will agree with the principle that more populous and more prosperous areas should help less populous and less prosperous areas to deal with the problems that confront them. Originally, the States were entitled to receive certain revenue from customs collections on a per capita basis. That system was replaced by the Financial Agreement of 1927. Then, in 1933 the Commonwealth

Grants Commission was set up to determine the measure of financial assistance that should be given to the less populous States and now the financial relations of the Australian Government and the State governments are determined in relation to uniform income tax which was introduced during the recent war. I should like to know who put the “i” in ‘ claimant “ and designated certain States as claimant States, because all the States are “ clamant “ under the uniform income tax scheme. As the amounts now made available to them as tax reimbursements are totally insufficient, why should not Victoria, New South Wales and Queensland be regarded as claimant States?

Mr Duthie:

– They .-ire the “ big shots “.

Mr KENT HUGHES:
CHISHOLM, VICTORIA · LP

– That may be so; but the principle that the Commonwealth Grants Commission observes is that the grants shall be sufficient to enable the claimant States to maintain their various services at a level comparable with that of the services provided by the other three States, having regard to comparable sources of revenue including charges on State business undertakings. We find an extraordinary position when we compare the social services expenditure incurred in each of the State-3. For instance, Tasmania’s expenditure exceeds that of any other State 011 a per capita basis. The sums expended by Western Australia and Queensland under that heading are approximately equal whilst New South Wales has the next highest rate of expenditure. Then comes South Australia whilst Victoria is further behind. I know from my experience as a Minister in Victoria that that State was increasing to the greatest possible degree its expenditure on social services, such as education and hospitals, responsibility for which has not been taken over by thu Australian Government. Now, Victoria is prevented from bringing its expenditure under that, head into line with that of the other States because it does not receive sufficient revenue under the formula that governs the tax reimbursement grants to the States. Otherwise it must budget for a substantial deficit. In the first place. Victoria was considerably handicapped ku der the formula that governs the tax reimbursement grants because that formula was based on the expenditure of the various States during certain years before uniform income tax was introduced. Consequently, Victoria lost considerable revenue which is now being paid to the other States including New South Wales. I shall deal with that aspect more fully when we are considering the States Grants (Additional Tax Reimbursement) Bill.

The Commonwealth Grants Commission is supposed to base its recommendations upon a comparison of the rates of social services expenditure of the various States in order to enable the less populous States to bring the standard of their services up to that of the other States. On that basis, Victoria is entitled to apply immediately to the commission for a grant of revenue in addition to that which it receives under the uniform income tax reimbursement formula in order to enable it to bring its expenditure on social services to the level of that of the three so-called claimant States.

Mr Hasluck:

– The cost of comparable social services may be greater in the less populous States mainly because of the remoteness of those States.

Mr KENT HUGHES:
CHISHOLM, VICTORIA · LP

– Remoteness does not explain the disparity that exists between the social services expenditure of the States on a per capita basis. I arn not complaining about the grants that ave made to the less populous States, and I do not suggest that they should be reduced. A State that conducts its business undertakings efficiently, or more efficiently than another State, may charge substantially lower rates as a result of its sound administration

Mr Haylen:

– And it is victimized for its efficiency.

Mr KENT HUGHES:
CHISHOLM, VICTORIA · LP

– That is so. Under the present system, such a State would be victimized for its efficiency. I do not wish to make comparisons between the various States, because such would be invidious, but the thought immediately occurs to me that a State that conducts its business undertakings more efficiently than does another State will be victimized for its sound administration.

The Commonwealth Grants Commission, in its latest report on the applications by the States of South Australia, Western Australia and Tasmania for financial assistance during the current financial year, has recommended that grants amounting to approximately £12,000,000 be paid to them. The Commonwealth then claims that it is being a good fellow to the States, when it increases payments to them in excess of the amounts provided by the formula. The report of the commission contains a good deal of interesting matter, and when honorable members read it, they must come to the conclusion, if they have not already done so previously, that Commonwealth and State financial relations are in such a mess that they cannot be corrected by patching here and there. In my speech on the Appropriation Bill (No. 2) 1949-50 last June, I asked the Treasurer to convene, before the projected meeting of Commonwealth and State Ministers, a conference of State Treasurers in order to discuss the difficulties and the impossibilities of Commonwealth and State financial relations, with the idea of reconstructing the whole system from top to bottom. Like the honorable member for Melbourne, I thoroughly agree with the principle of establishing new States in the Commonwealth, but it is futile to advocate such a policy when the existing States are in a hopeless position, and, year after year, present themselves in the role of beggars for crumbs from the rich Commonwealth table. Sound administration, development and progress cannot be attained under that system. We require local interest and local administration, but the whole situation is becoming impossible. I am not attributing the blame to any particular Government of the Commonwealth, but I attended the conferences of Commonwealth and State Ministers in 1948 and 1949, and I know that the States are receiving a very raw deal. I realize that the Commonwealth’s responsibilities have -increased, and that its expenditure also must increase, but the complaints that are voiced by the States about their financial relations with the Commonwealth at the present time are fully justified.

What is the remedy? Whether the Commonwealth Grants Commission can be reconstructed into an independent outside body to advise this Parliament on the rebuilding of the whole structure of Commonwealth and State financial relations, or whether the situation should be considered by an all-party committee of members of this Parliament, with or without the advice and assistance of the commission, is a matter that should deeply concern every honorable member. We should lose no opportunity to ask the government of the day, regardless of its political views, to proceed with that reconstruction of Commonwealth aud State financial relations as rapidly as possible. The situation drifts from week to week, from month to month and from year to year. I wonder whether honorable members are aware of the manner in which the conferences of Commonwealth and State Ministers reach conclusions. It does not matter whether the right honorable member for Macquarie (Mr. Chifley) or the right honorable member for Kooyong (Mr. Menzies) is the Prime Minister, and is presiding over the conference. The six States may unanimously support a certain proposal, but if the Commonwealth opposes it, the decision is recorded as “ the vote is in the affirmative, but the decision is in the negative “, and that is the end of the matter. In other words, the Commonwealth is the financial dictator in Australia, and if we are not most careful, complete unification will be introduced, and all power and authority will be in the hands of the Commonwealth. I realize that many members of the Labour party are in favour of unification, but many other honorable members are not in favour of it.

Mr DEPUTY SPEAKER:

-Order! I think that the honorable gentleman’s remarks may be made more appropriately during the debate on the States Grants (Additional Tax Reimbursement) Bill 1950.

Mr KENT HUGHES:
CHISHOLM, VICTORIA · LP

– Very well, I shall relate my remarks to the States Grants Bill 1950, which is now under consideration. What I am suggesting is that the Commonwealth Grants Commission provides, perhaps, a basis from which valuable information may be obtained for the reconstruction of Commonwealth and State financial relations. The commission, as it functions at the present time, is not completely useless, because it recommends that assistance be granted to South Australia, Western Australia and Tasmania, but I cannot see why its functions cannot be enlarged for the purpose of enabling it to hear applications for assistance from the Commonwealth by New South Wales, Victoria and Queensland, all of which are expected to have budget deficits at the end of this financial year. If you, Mr. Deputy Speaker, can distinguish between that subject and the reconstruction of Commonwealth and State financial relations, “ You’re a better man than I am, Gunga Din ! “ The Commonwealth Grants Gem mission, in its seventeenth report, makes the following statement on the concept of “effort” in relation to the measurement of the financial needs of claimant States: -

For convenience, and for simplicity in calculation, the Commission expressed the amount of this special effort, which it thought the States were capable of making, as a small percentage of the average of the per capita expenditure on social services in the nonclaimant States.

In other words, the commission bases its findings on what is happening in other States, although they are not able to balance their own budgets, and require additional assistance from the Commonwealth. The report continues -

After 1942-43, when, in effect, the power ti levy income tax was reserved to the Commonwealth, the Commission suspended the special effort requirement, because the area within which a claimant State might make special effort had been severely restricted. This restriction still exists ; but the Commission has continued to take into account the general attempt made by each claimant State to balance income and expenditure.

If the Commonwealth Grants Commission takes into account the effort of a claimant State to balance its income and expenditure, is there any difference between one State and another State? All the States are now in a difficult financial position. The report proceeds : -

The vital question is whether each claimant State is making full use of resources available to it to meet its own financial requirements.

The Commonwealth examines that matter at conferences of Commonwealth and State Ministers, or at meetings of the

Loan Council, and decides whether it will adhere strictly to the formula, or grant an additional amount to the States, as was done earlier in this financial year. The report of the commission on the concept of “ effort “ concludes -

The Commission has not reached any conclusion on this question: it is now mentioned in order to direct attention to its implications for future discussion.

A study of the observations and conclusions of the Commonwealth Grants Commission in its seventeenth report must lead us to this result : that the commission is the means test that is applied by the Commonwealth to the three claimant States for the purpose of determining the additional assistance that they may require. It is also interesting to note that the commission has recommended to the Commonwealth that the applications by South Australia, Western Australia and Tasmania for assistance during this financial year be granted. There may be a difference of a few hundred thousand pounds between the amounts requested by the States, and the actual amounts that have been recommended; but for the purposes of this general discussion, it may be accepted that the commission has recommended to the Commonwealth that the applications by the three claimant States be granted in full. I do not wish to make a - long speech on this bill about Commonwealth and State financial relations, but I agree with the suggestion of the honorable member for Melbourne that the Commonwealth Grants Commission should bc made the basis of a thorough investigation of that subject. Instead of talking about, the matter, let us get on with the job and do something, because the position is becoming worse as time passes.

References are frequently made in this chamber to dollar expenditure. If a State government had applied in its loan programme for approval to purchase from the dollar area three diesel rail cars that could be obtained from the sterling area that proposal would have been immediately rejected by the Commonwealth, and I am certain that the Commonwealth Grants Commission would not have taken that matter into account when deciding the amount of additional money that should be allocated to any of the claimant

States. Yet the Commonwealth is able to obtain materials from the dollar area with impunity, because it is the financial dictator in this country. That is only one example of the difference between trying to administer a State under most difficult conditions, and administering the Commonwealth when it has almost complete control of revenue. I urge the Treasurer to reconsider the existing Commonwealth and State financial relations, and to realize that there is sufficient evidence in the seventeenth report of the Commonwealth Grants Commission to show that they must be reconstructed from top to bottom. They cannot be continually patched, as they have been in the past, by giving an additional £5,000,000 or £8,000,000 in excess of the amount provided by the formula. The plight of the States is desperate, and the longer it is left unremedied, the worse it becomes. I hope that this Government will take immediate action either to obtain an independent report on the subject, or to secure combined action by the Commonwealth and the States to place their financial relations on a sound basis.

Mr DUTHIE:
Wilmot

. - Honorable members are gratified that the Treasurer (Mr. Fadden) is present in the chamber to hear this important debate on the States Grants Bill 1950. Before I address myself to that measure, I should like to commend the honorable member for Chisholm (Mr. Kent Hughes) on his speech on the need to reconstruct Commonwealth and State financial relations. Perhaps some of his remarks would have been more relevant to the States Grants (Additional Tax Reimbursement) Bill 1950. than to the measure now under consideration, and I agree with him that the two bills should have been taken together for the purposes of this debate, because it is most difficult to distinguish in a general way between them.

Mr Fadden:

– They are separate bills, and cannot be considered together.

Mr DUTHIE:

– The Commonwealth Grants Commission is not a new body. The financial relations between Tasmania, Western Australia and South Australia on the one hand, and the Commonwealth on the other, date back, to 1901, and fall into three distinct periods.

The first was from 1901 to 1910, when payments were made to the States in accordance with section 86 of the Constitution - known as the Braddon clause - which provided -

During a period of ten years after the establishment of the Commonwealth and thereafter until the Parliament otherwise provides, of the net revenue of the Commonwealth from duties of customs and of excise not more than one-fourth shall be applied annually by the Commonwealth towards its’ expenditure.

The balance shall, in accordance with this Constitution, be paid to the several States, or applied towards the payment of interest on debts of the several States taken over by the Commonwealth.

The second period dated from 1911 to 1927, and was covered by successive surplus revenue acts. The Commonwealth Year Book for 1939 explains the operation of that system of Commonwealth aid to the States, and it is not necessary for me to repeat it in this debate. The third period of assistance dates from 1928 to the present day, and is covered by the Financial Agreement Act 1928. That legislation was introduced in order to give effect to the following purposes: -

1 ) Taking over the debts of the several States by the Commonwealth;
The payment by the Commonwealth of a fixed annual sum inrespectof the interest on such debts and for certain sinking fund contributions;
The indemnification of the Commonwealth by the States in respect of debts taken over from the States;
The borrowing of money by theStates or by the Commonwealth or by the Commonwealth for the States: and
Certain other matters connected with the management, consolidation, renewal, conversion and redemption of such debts.

I agree with other honorable members who have taken part in the debate that the financial relationships between the Australian Government and the State governments are not perfect, and I consider that a national convention should be appointed to examine the matter thoroughly. Under the present financial arrangement, which has existed since 1928, the people of the States have provided more revenue in each succeeding year for the Australian Government, which is the holder of the purse and refuses to grant to the States the amounts which they require. That is a source of constant friction between the governments.

Mr Hulme:

– The States want their taxing powers restored to them.

Mr DUTHIE:

– I am not in favour of a reversion to the system of dual taxation, because the effect of such a reversion would be that people on lower incomes would have to pay more in taxes than they pay now.

Mr DEPUTY SPEAKER:

– Order ! I think- that discussion of the financial relationships between the Commonwealth and the States should be reserved until the measure concerning those relationships is being debated.

Mr DUTHIE:

– I realize that fact, Mr. Deputy Speaker, and I was merely making passing reference to the subject. The financial assistance which Tasmania has received from the Australian Government is sei out in the following table:-

I shall comment on the recommendations made by the Commonwealth Grants Com.mission for the States generally. The grant recommended by the commission for South Australia represents an increase of £1,158,000 over the amount granted to that State last year. The recommendation for Western Australia provided for an increase of £221,000. The recommendation for Tasmania, however, provides for £258,000 Jess than was paid to that State last year. That State, after carefully assessing its needs, asked for £1,500,000. I realize, of course, that the decline of Tasmania’s population may have been a contributing factor to the reduction of its grant. The population of Tasmania last year was 279,386, but recent statistics indicate that during the first six months of this year its population declined by 4,859 people, notwithstanding that the popula tion of Australia is increasing at the rate of nearly 1,000,000 every three and a half years. We are very worried about the decreasing trend in our population, which emphasizes our contention that Tasmania cannot be properly developed unless it receives additional financial assistance. After all, finance is the life-blood of a State, as it is of a nation or of a home. Because of the tremendous industrial progress and rural development that have taken place in Tasmania for several years past, we consider that Tasmania should have received more money than it received this year. Tasmania is noted, of course, for the standard of its social services and its educational facilities. The last report of the Commonwealth Grants’ Commission shows that the expenditure per capita of population on social services in Tasmania was S3s. 10d., which was considerably higher than that of any other State. The State which expended the next highest amount was Western Australia. Its expenditure was 75s. 4d. « head. Tasmania also expended 6Ss. 2d. a head of population on health services and charities, and the highest comparable expenditure was that of Queensland, which totalled 65s. lid. per capita.

– I cannot understand that ruling, considering the proposed allocation of the money will affect every item of expenditure in Tasmania, but I shall respect your ruling and continue no further on the line that I was taking. I shall turn now to the shipping position in Tasmania. The cost of shipping freights is part of the cost of government in Tasmania. Tasmania is still in difficulties in respect to shipping, and I say, in passing, that it will be a sad day for that island, is this Government disposes of its interests in the ships now trading to Tasmania because at the present time Tasmania is able to get the Australian Shipping Board to supply special ships to carry special cargoes. If the board disposes of its interests to private enterprise we shall no longer have that privilege, and we shall be at the mercy of shipping monopolies which dominate Australian trade whenever possible. Such monopolies always seek profitable cargoes and are not interested in cargoes that have to be lifted at a certain time and that perhaps do not return great profits. “We hope, therefore, that the Government will not relinquish its charters of the 28 ships that the Australian Shipping Board now operates because shipping is the life-blood of Tasmania.

In conclusion, I voice the disappointment of all Tasmanian members of this Parliament over the fact that Tasmania’s grant has been cut by more than £200,000, although the grants of the other two claimant States have been substantially increased. I claim, without desiring to start a State war, that development in Tasmania is at least equal to development in South Australia and Western Australia. It may be that we have been penalized because of our expenditure on social services and education, which, as I have already said, is higher than is similar expenditure in any other State.

Mr HASLUCK:
Curtin

– I had not intended to speak on this measure until I had the pleasure of listening to the contributions to the debate of the honorable member for Melbourne (Mr. Calwell) and the honorable member for Chisholm (Mr. Kent Hughes), both of whom touched on matters of fundamental importance to Australia that call for some comment from honorable members who represent the more remote parts of the Commonwealth. The honorable member for Melbourne drew attention to the undoubted fact that although the system of grants to States had been in operation for many years it had not, in fact, led to any improvement of the relative financial position of the so-called claimant States. The financial and economic positions of Western Australia, South Australia and Tasmania relative to those of the other States still show the same features that they showed when the grants system was introduced. What has happened is that a policy that was introduced as a measure to repair the disabilities of the States has become something like the standard financial practice of the Commonwealth. What has happened is that a palliative for an exceptional condition has become the staple diet and to-day we have, in an even more accentuated form than we had it in the pre-war years, unevenness of development in various parts of the Commonwealth. The almost dropsical condition of the two greatest cities of Australia exists concurrently with a lack of development of the outlying parts of the country, and must cause serious concern to people who have the broad welfare of our nation at heart.

Development is surely a matter that should be dealt with by a national parliament without any considerations of rivalries between States, or between the Commonwealth and the States. Development must mean development of our whole domain, so that we shall be able to ensure that this continent will be militarily secure, that the fullest possible use will be made of its natural resources, and that the fullest opportunity will be given to our population to share in the development of those resources. When we are considering a nation-wide, planned and an even development of this continent, we must also recognize that we face exceptional conditions. Perhaps it is rather difficult for honorable members whose constituencies lie in the eastern States to realize the single factor of distance which is such a considerable factor in any plan for the development of Australia. I can bring that point. home more emphatically by saying that when this week s sittings are concluded, and I return to Western Australia, it will take me longer to get to Perth by air than it would take me to get to New Zealand by air if I were to travel in that direction. That will give an indication of the distance factor. If our maps were drawn with the densely populated areas of Australia shown as islands, and the areas in between them shown as sea, they would reveal that the centre of population on the west coast of Australia is separated from the centres of population on the east coast by just as considerable a distance as separates Sydney from the population of Auckland. That fact is often overlooked. What can be said about the isolation of the western coast of Australia can also be said with equal force, and no doubt will be said later by other honorable members, about the northern coast of Queensland and the Northern Territory. Another point that we must remember and with which honorable members who represent northern constituencies will agree, is that the physical difficulties of development in the north are far more considerable than the people of the south realize. We have in Australia regions that arc, in effect, our tropical Alaskas. They are remote from us and because of their geographical and climatic conditions they pose extreme difficulties in the carrying out of any developmental plan. We must be conscious of those factors if we are to face this broad problem of development realistically.

Therefore, while I endorse wholeheartedly the remarks of the honorable member for Melbourne and the honorable member for Chisholm about the need for development of our whole continent, I point out that we must remember that that development cannot be accomplished in an easy or offhand way. It must be undertaken with a full realization of the peculiar disadvantages and disabilities that are encountered in the outlying parts of our continent. If the two great dropsical cities of the eastern States are to share in the task of promoting the development of the whole continent they must first become conscious of the fact that very special provision must be made for the outlying parts. It is not a case of deciding on equality of expenditure between different States, or of deciding that because expenditure in this or that

State is so much per capita of population we should not provide any more than that amount for any other State. If we do our job properly we may have to devote a larger proportion of the Commonwealth’s financial resources to the development of some parts of the Commonwealth than we devote to development of other parts. It is necessary to consider these local conditions which make development a special problem and not simply something that can be done by arithmetical calculation.

Mr WARD:
East Sydney

– I find myself in the same position as the honorable member for Curtin (Mr. Hasluck). I had no intention of taking part in this debate until I heard his contribution. The honorable member for Curtin seems to be under the illusion that honorable members who represent the eastern States have no appreciation of the problems of the more distant parts of Australia and that they are not very much concerned about the development of those parts. The Australian Labour party, of which I have the honour to be a member, has always appreciated the need for national development. I take it that by “ development “ is meant the establishment of industries. It is useless to expect that outback areas will be developed if the work is to be left entirely to what the honorable member for Curtin and the party to which he belongs refer to as private enterprise. No government in Australia, under the Constitution, has power to direct where industries shall be established. That depends entirely upon the whim of those who have capital to invest and, naturally, they take into account a number of factors, the least of which is the national welfare. All that they consider is where the industry can be most profitably established. So such factors as transport, power and the availability of markets determine where an industry shall be established. As a result, it is to the eastern States, where the most valuable deposits of coal exist, and where there are large local markets, that industries are directed. When honorable members of the Opposition propose that the Government should have power to direst where industries shall be established, honorable members opposite say that that is regimentation. Under existing circumstances, there is not much that any government can do for the proper development of this great continent.

State governments, regardless of their politics, appear to be rather parochial in their outlook. They are what might be termed “ State righters “ and, oil many occasions, it has been difficult to help them. One of the great problems of Western Australia is the need for improvement of its transport system, particularly its railways. The Commonwealth Labour Government, of which 1 was a member, did everything possible to induce the Western Australian Government to accept Commonwealth assistance. The negotiations which took place were conducted with a State Labour government in the first instance and, later, with an anti-Labour government. The Australian Government found it most difficult to assist either of those governments. If honorable members were to examine the previous Commonwealth Labour Government’s great scheme for the standardizing and modernizing of the Australian railways they would find that, under the original proposals, Western Australia was to receive financial assistance much in excess of anything that it might be asked to contribute to the scheme. No success was met with on that occasion. Later, in negotiating with an anti-Labour government, the Australian Government also met with no success. There was no suggestion of any dictatorial attitude on my part or on the part of the Labour government, as was suggested by the honorable member for Moore (Mr. Leslie). I suggest that the honorable member talk to Mr. Seward, the Minister for Transport in Western Australia, who took part in most of the later negotiations, and he will find that the State authorities were afraid that the Commonwealth might ask for some major degree of control in the management of the State railways. That fear has been entertained by practically all State governments. In Queensland, the Australian Government met the same situation. The State government was not anxious to proceed with the scheme of sha.nda.rdiza.tion because it was afraid that if the standard rail was connected with the south before the whole of the work- had been completed in the north of the State, business which normally went to the northern ports would be drained away to the southern States. The Queensland and Western Australian Governments seemed to be more concerned about maintaining their position as “ State righters “ than in developing the Commonwealth on a national basis.

Mr Hasluck:

– The main problem in Western Australia is to rehabilitate local lines.

Mr DEPUTY SPEAKER:

– Order ! This line of debate is very wide of the measure before the Chair. Whether a State can finance the standardization of its railway gauges is a matter for its own determination and is not related to this bill.

Mr WARD:
EAST SYDNEY, NEW SOUTH WALES · ALP; LANG LAB from 1932; ALP from 1936

– With due respect to your ruling, Mr. Deputy Speaker, the honorable member for Moore devoted a great deal of time to the need for the rehabilitation of the railway system of Western Australia. I do not want to transgress your ruling, but I say that he was on the wrong track. The Australian Government made a very generous offer to Western Australia. One of the offers which was rejected by the Western Australian Government was that the Australian Government would meet 50 per cent, of the cost of standardizing the main rail connexion between Western Australia and the eastern States and would also meet 50 per cent, of the coat of rehabilitating all their existing railway systems. That cannot be regarded-

Mr DEPUTY SPEAKER:

-Order! The honorable member may not pursue that line.

Mr WARD:

– I merely say that that offer could not be regarded as ungenerous on the part of the Commonwealth Labour Gove’rnment. The honorable member for Curtin is only beating the air. The subject of the need for national development comes up every year when State grants are discussed. Honorable members opposite talk about the need for developing the outback parts of Australia, although they know full well that the Government which they support has no earthly intention of doing anything about this problem. While it is in office, an aggregation of industries will remain in the great cities* of the Commonwealth. The aggregation of industries along the eastern seaboard will remain because that is where the cheapest power and the greatest local market exists and it is these f actors alone that determine where industries are established. The only possible chance of developing the Commonwealth into a great nation is by thinking, not as members of eastern or western States, but by thinking and acting as Australians. When Labour government commence to regulate the establishment of industries in accordance with national needs, honorable members should not talk about the need for avoiding regimentation and say that private enterprise should be left entirely free to determine this question.

As honorable members who have preceded me on the Opposition side have said, the system of grants to States appears to have become a permanent feature of the financial arrangements of this country. The people of the eastern States who provide a great deal of this assistance do not look upon it as anything more than they could be expected to do, having regard to the need to develop the whole continent. I am a unificationist. I believe that eventually the Australian people will recognize that it is in the best interests of Australia and the development of this continent for the source of all the legislative powers to bo concentrated in the Commonwealth Parliament at Canberra. That does not mean that all decisions should be made from the central point. Authority can be delegated but all constitutional authority should be vested in the National Parliament in Canberra. That is the only way to achieve the even development of this great continent. While the present state of affairs remains, the best that can be expected is that the Commonwealth shall assist States which are less fortunately situated than other States to meet their financial commitments.

It is interesting to hear honorable members compare the cost of health services in the various States. From my observations of health services throughout the Commonwealth, I consider that they are inadequate in every State. I do not suggest that that i« the fault of the State authorities. Hospital buildings and accommodation are inadequate. Therefore, the cost of health services must be met largely by the Commonwealth. The same applies in the field of education. Educational authorities- in every State have asked for Commonwealth assistance to provide an extension of educational facilities.

Western Australia has a great problem in connexion with its water supply. The Chifley Labour Government furnished a great deal of financial assistance to enable this work to be undertaken. Western Australia was unable to provide for itself. Unfortunately, some honorable members come to the national Parliament and pose as great Australiana who believe in the development of their country, -but act differently, when an opportunity to do something presents itself. When the honorable member for Moore goes back to Western Australia he will endeavour to make the people believe, if he can, that the Government at Canberra is a foreign government. More and more people in Australia are beginning to realize that the Parliament in Canberra is a national Parliament. Australia will not become great -as six individual nations acting in the form of a loose federation. It must be developed as one nation. In that way, real progress can be made.

I rose principally to answer the criticism of some honorable members, particularly the honorable member for Moore, who suggested that because of some dictatorial attitude of mine and the Labour Government, negotiations for the rehabilitation of the Western Australian transport system had broken down. I content myself with saying that the honorable member is ignorant of the facts, and his view would not be supported by his colleagues in Western Australia.

Mr THOMPSON:
Port Adelaide

– The debate on this bill has brought forward varying ideas from honorable members about the way the States should be financed. I do not think that any Government is responsible for the amount stated in this bill. We have a Commonwealth Grants Commission which takes evidence in each State. The State Premier or Treasurer puts a case before the commission and, after investigation, it decides upon an amount to be recommended. I was sorry to hear the honorable member for “Wilmot (Mr. Duthie) bewailing the fact that the grant to Tasmania this year is smaller in comparison with the grants to Western Australia and South Australia. If the honorable member refers to the amounts granted in previous years he might find that the boot is on the other foot. The fact that in one year one State gets a little more or less than the others is not of importance when the whole matter is considered. We cannot live under a federal system unless the Federal Government assumes the responsibility of ensuring that our people are all treated as Australians and not as Victorians, South Australians, Tasmanians or inhabitants of other States. The system of per capita payments was introduced to make up to the States for the losses that they had sustained in not being able to charge duties on the goods other States sent over their borders. Throughout the history of the States since federation something has had to be done by the Commonwealth to protect those States which were in competition with their more highly industrialized neighbours. Although our present system, is not all that might be desired, it has evolved from the previous system. If the per capita system had been satisfactory to every one it would not have been altered ; but it has gradually been altered until the present system has been finally evolved.

I was sorry to hear the honorable member for Chisholm (Mr. Kent Hughes) say that Victoria was being penalized by the Commonwealth because it was efficient. That comment should have been withheld until the debate on the next measure which will come before this House, because no question of efficiency enters into this matter. In connexion with the efficiency of State management, one of the biggest drains on the South Australian Treasury is the great loss that is suffered through the operation of the South Australian railways. South Australia found it necessary to extend its railway system into remote and sparsely populated parts of the State in order to develop those parts. Through the years a tremendous capital debt has been accumulated in respect of these developmental lines, and now the burden of interest on the loans used to construct those capital assets has reached enormous proportions. In the past, no proper provision was made for the depreciation of the assets of the South Australian railways, and that has also had an effect in causing the loss on the railways. Recently, I read a letter written by one of the big companies which set up business in the Finsbury area of South Australia. That company had originally intended to start in one of the other States but for various reasons it finally selected South Australia. The executive officers of that company found that they could not deliver their goods to the other States because of difficulties in rail and sea transport, and so it started to deliver them by road. New South Wales, because of the damage caused to its roads by heavy vehicles, recently imposed a very heavy road tax. That will now prevent this company from delivering its goods by road. Matters such as that affect the prosperity of a State. I have always argued that no matter where a child is born, whether in South Australia or in Queensland or anywhere” else, he is entitled to a good education. That being so, if the prosperity of one State is not great enough to meet the needs of the State it is right that that State should get some assistance from the Commonwealth. All the States and all the people of the States should all be entitled to fair treatment. The honorable member for Moore (Mr. Leslie) said that previous Western Australian Labour governments did not look after their railways, and therefore the railways were now failing. In South Australia, except for a comparatively few years, there has never been a Labour Government. Therefore a Labour Government could not have caused the great deficit of our railway system. I say to the honorable member for Moore that it is likely that Western Australia is suffering in much the same way as South Australia is suffering. In years gone by the Government did not. depreciate its assets sufficiently and so has incurred a very heavy interest hurden. I say quite candidly that the Premier of South Australia does not think that the sum recommended for South Australia is sufficient. But no Premier would ever say that the amount recommended was sufficient. The honorable member for Moore interjected during the speech of the honorable member for East Sydney (Mr. Ward), when that honorable gentleman mentioned the money that the Labour Government had made available for water conservation schemes in Western Australia. The honorable member for Moore said that the amount asked for was reduced by half. I say that any Premier who gets half of what he asks for is pretty lucky.

Mr Leslie:

– It wa9 only half of what he needed.

Mr THOMPSON:

– That may be so, but who determines need? I may say that I need £5,000 a year on which to live, but the honorable member might say that I need only £2,000. It is not what I say I need that is the measure of the actual need. I must convince those people who have to make the money available that my need is what I say it is. I do not adopt the attitude of the honorable member for Moore and castigate the previous Government, or this Government, because I do not think the grant recommended is big enough, for the amount has been determined by an independent commission. I am not sure that the less populous States will always be the ones to get the bigger grants. Under our present system of finance the day will come when we shall have to grant more to every State. Even to-day the bigger and more prosperous State? are making claims for Commonwealth grants for their own purposes. The honorable member for East Sydney said that he is a unificationist. Whether honorable members on the Government side believe it or not every decade brings a greater degree of ‘unification in Australia. No matter which party is in power the country becomes more unified. That is a natural process, and it may be seen in the business world where smaller businesses tend to become absorbed and merged into the bigger concerns which, it is claimed, can operate more efficiently and profitably. Another example is that of the control of electric power in South Australia: I thought that the private monopoly controlling that power operated efficiently, but a commission of three men was appointed, one from the business itself, which unanimously decided that it should be taken over and run by the Government. There are also other examples. The Australian Government will gradually become the controlling power in the Australian States whether we like it or not. The country will gradually become more unified and we shall find that this Parliament will have to legislate in conformity with that unification, whether it seeks advice from the Commonwealth Grants Commission or some other body. At the present time I believe that the Commonwealth Grants Commission is trying to deal with the matter of financing the States in a fair and equitable manner.

Sitting suspended from. 6 to 8 p.m..

Mr THOMPSON:

– Prior to the suspension of the sitting I was referring to events in South Australia which, as they involved the State in considerable financial loss, have been largely responsible for the increase of the grant which it is proposed to make to that State under this measure. Industry has expanded to a remarkable degree in South Australia since the recent war. However, great difficulties have arisen because of the lack of adequate water supplies in settled areas. When the State government constructed the Mount Bold Reservoir, which is the biggest dam in the State, it was estimated that the capacity of the reservoir would be sufficient to supply Adelaide’s requirements during several years of drought. However, due to the tremendous expansion that has taken place in industry, including home building, lack of water is a recurring difficulty every summer. Suburban residents have already been advised that during the approaching summer they will be permitted to water gardens for only two hours a week. In order to ensure an adequate water supply to serve the needs of Adelaide and of industrial areas, the State government inaugurated a scheme under which water is pumped from the river Murray to Whyalla and that supply has been extended to the guided weapons testing range.

The State government now proposes to pump water from the river Murray over the Mount Lofty Range in order to supplement existing supplies. The perennial shortage of water has caused serious loss of revenue to business undertakings. Nevertheless, although South Australia is regarded as one of the less populous States it is rapidly developing its industrial economy, and I believe that it will not be very long before it will be able to carry on without the necessity of having to apply for substantial aid in the form of grants of this kind.

Another problem that affects the economy of the State generally is the shortage of power. In order to overcome that difficulty the State government - I admit that it was a Liberal government - re-opened the coal deposits at Leigh Creek which, although they had been discovered over half a century ago, had been abandoned for many years. That task would have been teo big for private enterprise to undertake, and the State government rightly accepted that responsibility in order to assure industry that its requirement of power would be met. The State government proposes to erect a large power station at Port Augusta which will be much closer to Leigh Creek than are the existing power stations in Adelaide. Those facts prove that a developing industrial economy must ultimately rely upon the backing of the full resources of the State. Whilst South Australia is progressing very rapidly it still requires assistance of the kind that is to be granted to it under this measure. This year the sum of over £5,000,000 is to be made available to it on the recommendation of the Commonwealth Grants Commission which has conducted a thorough investigation of the requirements of the State. The proposed grant is to be made on the principle that the more populous and more prosperous States should help the less populous and less prosperous States. I trust that the Parliament will always observe that principle and that we shall always remember that we are Australians regardless of the particular State in which we may happen to reside.

Mr CHIFLEY:
Leader of the Opposition · Macquarie

– I did not intend to speak on this measure, but I take this opportunity to reply to certain remarks that the honorable member for Moore (Mr. Leslie) made regarding decisions that were made by the last Labour Government. I can see no reason to debate the measure at length. In the past, all governments, regardless of party, have implemented the recommendations of the Commonwealth Grants Commission., That body is presided over by a very able man. Professor Wood has been a member of it for a number of years, whilst the third member is a “Western Australian. The report of the commission shows that it has made a a very thorough and fair examination of the difficulties that confront the claimant States of Western Australia, South Australia and Tasmania. When we are considering the States Grants (Additional Tax Reimbursement) Bill we shall have an opportunity to canvass the wider requirements of all the States.

The honorable member for Moore implied that the last Labour Government had been dictatorial in its dealings with Western Australia. That statement is entirely without foundation. In respect of the standardization of railway gauges in Western Australia, which was the matter to which the honorable member particularly referred, the Government of which I was the head made an offer to the Western Australian Government. It cannot be said that there is anything dictatorial about making an offer. The Western Australian Government refused that offer and suggested that .the matter be again reviewed. Perhaps, I can best indicate the attitude that the last Labour Government adopted towards the States by repeating what one State Premier said after attending many conferences of Commonwealth and State Ministers. He said, in effect, that he had never failed to receive complete courtesy when he camo to Canberra. He regretted, of course, that that was about all that he did receive. In the eight and a half years during which I was Treasurer and later Prime Minister no State Minister was treated discourteously. At the same time, Treasurers cannot be expected to be philanthropists. They have the responsibility of being cautious in monetary matters. When I was Treasurer and Prime Minister, I always made it clear .to State Premiers that in my view the three claimant States, or, to put it more accurately, the three less fortunate States financially, must receive assistance from the Australian Government and the more populous States. This measure seeks to give effect to that principle.

In addition to approving the grants that were recommended by the Commonwealth Grants Commission from year to year the last Labour Government made a grant of £2,2 50,000 to Western Australia to help that State to finance its water schemes; and it also made a substantial monetary offer to assist Western Australia to modernize the electricity system in Perth. My Government also offered to assist the Government of Western Australia in respect of the capital expenditure involved in the extension of the medical school at the University of Western Australia. The Government of which 1 was head was equally generous towards the other two claimant States, South Australia and Tasmania. For instance, it made a grant of £250,000 to the Government of South Australia to assist it in developing brown coal deposits in that State. The honorable member for Port Adelaide (Mr, Thompson) has referred to the great industrial expansion that has take place in South Australia. It, is estimated that secondary industry has increased sixfold since the outbreak of the recent war. Many large industries were established there by the Labour Government for the manufacture of war materials. After the war had finished my Government was of the opinion that it would be unwise for it to retain those buildings and plants for which it had no use. Therefore, acting on the simple principle that every bee hive must have bees, it leased those undertakings to private enterprise. That policy has proved of immense value to South Australia’s economy. Tasmania, in which the manufacture of newsprint and commercial paper has been carried on successfully for many years, has been more fortunate than have been Western Australia and South Australia in that it ha’ been able to achieve a better balance in its economy. I personally made strong endeavours to have additional forms of secondary industry established in Western Australia. I shall not refer to firms by name, but I inform the House that ap- proaches were made by the Premier of Western Australia and by representatives of the Commonwealth to the biggest firm in Australia to establish a branch of its organization in that State. For technical reasons, or, perhaps, for economical reasons more than for technical reasons, that firm considered that it would not be possible to build in Western Australia the kind of works that we had in mind. I hope that the present Government and future governments will endeavour not only to develop the primary productive capacity in Western Australia, but also to get a better balanced economy for that State by having secondary industries established there.

The notable example of the establishment of a new industry in that State is the Chamberlain organization at Welshpool, which is situated a few miles from Perth. As a result of consultations with that very enterprising firm, the tractor industry has been established at that centre. The Commonwealth, indirectly, and not in the form of a special grant, made arrangements with the Government of Western Australia in respect of the factory building at Welshpool and the provision of machine tools and other equipment in order to provide the Chamberlain organization with an opportunity to begin operations in that State. When I was in Perth recently, I had the pleasure of inspecting that factory, which now employs approximately 800 persons.

Mr Hasluck:

– It is a very efficient organization.

Mr CHIFLEY:

– I was most impressed by its complete efficiency. Some slight mishaps had occurred shortly before my visit as a result of the explosion of an electrical furnace, but I felt proud that the Labour Government, which I had the honour to lead, had played a part in the establishment of such an organization in Western Australia. I need not discuss in this debate the commercial difficulties associated with that project. The manager and the directors of the Chamberlain organization explained to me their difficulties about certain matters, and I hope that their project, and other projects, will be granted Commonwealth assistance, even at the risk of causing interests in the eastern States to growl about the aid that is accorded by the Commonwealth to the less populous States. However, I make it clear that I, personally, have not heard any real complaints on that score. A former Premier of New South Wales, Mr. McKell - who is now the GovernorGeneral - the Premier of Victoria and the Premier of Queensland consider that it is necessary that assistance be given to those States. Queensland offers great scope for development, if we take the national view to which the honorable member for Port Adelaide (Mr. Thompson) has referred. I am sure that any assistance given by the Commonwealth to establish new industries or to develop existing industries in the less populous States, will return to this country, from the national stand-point, a dividend of 100 per cent.

I have referred to these matters because the honorable member for Moore suggested that I had behaved in an arbitrary and dictatorial manner towards the States when I was Prime Minister. Such a statement is not correct. I do not think that any Western Australian Minister, whether a member of a Labour or a Conservative government, would agree that I had made arbitrary or dictatorial decisions in any negotiations for the establishment of industries in that State. Indeed, I was eager to help the less populous States. I do not regard them, as some people describe them, . as the “ mendicant States “. I look upon them as the weaker sisters of the federation.

Mr Hasluck:

– They offer the biggest opportunities.

Mr CHIFLEY:

– They definitely offer great opportunities. Queensland, I believe, offers the greatest opportunities in respect of the development of Australia, and Western Australia offers great opportunities for much wider development than has yet been undertaken. I have stated in this House and elsewhere that the future of Australia depends upon increasing the population substantially, and utilizing the national resources effectively. I have discussed the potentialities with the Premiers and with State Ministers for Agriculture, and I believe that much can be done to develop the less populous States. I hope that parochialism and petty jealousies will not impede that development. I have read the Seventeenth Report of the Commonwealth Grants Commission, and I consider that it is a very fair summary of the general position. However, the Commonwealth cannot confine itself to the decisions that are made for reimbursing the States. Incidentally, that subject may be discussed more fully when the States Grants (Additional Tax Reimbursement) Bill 1950 is being debated, but perhaps I may be permitted to digress slightly for the purpose of referring to the problem of the rehabilitation of the Western Australian Government railways. The cost of that work cannot be met from the resources of that State. Speaking from memory, I think that the royal commission that investigated the position estimated that the cost of rehabilitating the railways would be £26,000,000. That report was made approximately two years ago, and, of course, the figures were based on the costs that prevailed at that time, but using them as a basis, I believe that the cost of that work to-day would be approximately £35,000,000. The State of Western Australia cannot carry that financial burden alone, and the Commonwealth must assist it. I make no suggestion about the form that such assistance should take, because that is a problem for the Treasurer to solve. I read the report of the royal commission, and if it is an accurate description of the position of the Western Australian Government Railways, it is clear that assistance must be given to that State to rehabilitate its railway system if it is to have any chance of maintaining its present economic position. It is perfectly true that the only persons who derived benefit from the construction of railway lines to the distant goldfields were the absentee shareholders in London. The royal commission’s report points out that many railways were constructed for developmental purposes, and that the people of Western Australia did not obtain any real benefit from them. However, that matter is hardly relevant to the present debate, but I may have an opportunity to discuss it more fully on another occasion.

I offer no apology for making a special plea to this Parliament on behalf of Western Australia. Neither the previous

Labour Government nor its predecessor was able to do all that it would have liked to do for that State. Its isolation from the eastern States and its transport difficulties make it eligible for specially sympathetic treatment. South Australia is limited in respect of certain resources, and by a light rainfall outside the Goyder line, and Tasmania, with its hydro-electric schemes, is able to provide cheap power for any industrial concerns that may be established in that State, but those two States are in a much more favorable position than Western Australia is. When I make that statement, I do not suggest that South Australia and Tasmania should not receive sympathetic consideration from the Commonwealth. All I am saying is that steps should be taken to assist Western Australia particularly in regard to the rehabilitation of its railways system.

I emphasize that, so far as I am aware, I have never adopted an arbitrary or dictatorial attitude towards Western Australia. I have attended many conferences of Commonwealth and State Ministers, and have met the Minister for Railways in Western Australia, Mr. Seward, but I have never intentionally shown the slightest discourtesy to the representatives of that State. It is true that the former Minister for Transport, Mr. Ward, is very nationally minded, and, no doubt, becomes a little hot under the collar when other people do not view a matter from the national stand-point. He, as the Minister for Transport in the last Government, considered that some States, by realizing the importance of the standardization of railway gauges, would be able to make an important contribution to our economic life. I do not contend that all railway lines in the Commonwealth should be standardized, because that might not .be possible, and I realize that it is not easy to undertake the work of standardization while the shortage of manpower and of materials continues, but I believe that such a project must be undertaken in the future if this country is to have a reasonably efficient transport system.

The States Grants Bill 1950 gives effect to the recommendation of the Commonwealth Grants Commission, which functions on specified lines and is sub- ject to certain conditions, some of which are prescribed by this Parliament whilst others it has laid down for its own guidance. I wish to pay a tribute to the members of the commission, past and present, for the thorough and painstaking way in which they have performed their task. I can offer no more fitting tribute than that of saying that the Premier of South Australia, Mr. Playford, has spoken to me on a number of occasions of his satisfaction with its work. The Opposition has no hesitation in supporting this bill, but I emphasize that it covers only a part of the national assistance that is granted to what we are pleased to call the claimant States.

Mr FADDEN:
Treasurer · McPherson · CP

– in reply - The purpose of this hill is to implement the recommendations of the Commonwealth Grants Commission, which has functioned successfully and has given satisfaction to the Commonwealth and to the States for nearly twenty years. I wish to direct the attention of honorable members to the fact that the amounts provided in this bill as grants to South Australia, Western Australia and Tasmania for the current financial year are the highest, in the aggregate, that have been granted, since the commission was appointed. The following table shows the grants that have been made to those three States in the last three years : -

The amount for the current financial year is £12,175,000, compared with the total grant to those three States in 1938-39 of £2,020,000. The honorable member for Wilmot (Mr. Duthie) pointed out that the special grant for Tasmania for this year is less than that made to it last year. However, it is necessary to remember that the grant is made up of two parts. The payment included in the first part is intended to adjust any underpayment or overpayment for the previous year, and the adjustment is made by comparing the grant now assessed for that financial year with the grant actually received by the State concerned during that year. The amount paid to Tasmania in 1948-49, following the recommendation of the Commonwealth Grants Commission, was greater than the grant now assessed for Tasmania in that financial period. An adjustment has accordingly been made by the proposal of the Commonwealth Grants Commission to debit the grant for Tas mania for the current financial year with £96,000. The second part of the grant is designed to meet the indispensable needs of the State in the current financial year, and that part of the proposed grant to Tasmania is higher than the corresponding part of the grant for the last financial year. The reason for thi? increase of that portion of the grant is that the expenditure of Tasmania for the current financial year is estimated to be higher than that State’s expenditure last year. The portion of the grant that was intended to meet expenditure during 1949-50 was £1,000,000, whilst the amount that is proposed to be provided for the current financial year is £1,100.000. It is apparent, therefore, that an increase of £.100,000 will be made in the amount provided for actual expenditure over that which was provided for the last financial year. I think that that explanation should cover the point raised by the honorable member for Wilmot (Mr. Duthie), who complained that the grant for Tasmania had apparently decreased. I repeat that the reason for the apparent decrease is that an excess payment was made in respect of the previous financial year, and the amount of that excess has to bc adjusted in the grant for the current financial year.

In the course of the debate various honorable members have urged that the Commonwealth Grants Commission should recommend the payment of amounts to the claimant States for developmental purposes. The reply to that contention is that the current expenditure of the States is reflected in their budgets which are taken into account by the commission in assessing the needs of those States. If a claimant State suffers loss as the result of expenditure incurred in development, that factor also is taken into account by the commission in assessing the needs of the State.

The honorable member for Chisholm (Mr. Kent Hughes) laid emphasis on the necessity for a full review of Commonwealth and State financial relations, and I think that any student of the subject will thoroughly agree with him. However, I remind honorable members thai the Prime Minister (Mr. Menzies) promised in his policy speech that if we were elected to office we would take an early opportunity to convene a meeting of State Premiers to consider the financial relationships of the Commonwealth and the States. At the recent conference of Commonwealth and State Ministers, the right honorable gentleman stated clearly that he was quite prepared to convene such a meeting in order to iron out difficulties and disabilities which have arisen in consequence of the obsolete basis on which Commonwealth and State financial relationships are founded. We hope that something tangible and beneficial will result from the conference, which will be held as early as is convenient. I assure the honorable member that the matter has not been lost sight of by the Government, and that we have every intention to discharge the promise that we made during the election campaign. I repeat that a conference will be held as soon as it is convenient to do so.

I do not think that any other matters arose during the debate that call for comment. As the Prime Minister has already stated, the measure simply proposes to implement the recommendations of the Commonwealth Grants Commission. That body enjoys the confidence, not only of the States, but also of the Australian Government, and I join with the Prime Minister in recording my appreciation of the good work which the commission lias so efficiently, painstakingly and conscientiously performed. We have every confidence that the present members of that commission will continue to discharge their duties in the best interests of the States and of the Commonwealth, having regard to all the relevant circumstances. I am sure that all honorable members who have had experience of the function of the commission feel assured that the financial needs of the States will be adequately attended to by the commission.

Question resolved in the affirmative.

Bill read a second time, and reported from committee without amendment or debate; report adopted.

Bill - by leave - read a third time.

page 2104

STATES GRANTS (ADDITIONAL TAX REIMBURSEMENT) BILL 1950.-

Second Reading

Debate resumed from the 12th October (vide page 802), on motion by. Mr. Fadden -

That the bill be now read a second time.

Mr CHIFLEY:
Leader of the Opposition · Macquarie

– The only matter to which I wish to direct the attention of the Treasurer (Mr. Fadden) is the statement that he made in the course of his second-reading speech that the total amount that will be paid to the States as tax reimbursement for the current financial year will be approximately £70,000,000. I point out to the right honorable gentleman that in addition to the amounts paid to the States by way of tax reimbursement, £8,000,000 was granted to them to cover losses sustained by them during the coal strike that occurred last year, and that that amount was distributed in accordance with the uniform tax formula. Therefore, I think that the £70,000,000 which the Treasurer said would be paid to the States this year does not represent the total amount that will be paid to them.

Mr Fadden:

– The sum of £8,000,000 was not paid to the States as a tax reimbursement, although it was distributed on the same basis.

Mr CHIFLEY:

– That is so. The payment, which was made as an act of grace, was distributed under the formula adopted for the distribution of uniform tax reimbursements. However, I think that it is only fair to point out that the States will receive at least £5,000,000 more than they received last year. I do not propose to deal with the subject of uniform tax at any length. I was responsible for introducing uniform tax and I have naturally engaged in many discussions about the matter since then. Of course, there are always defects in any complicated financial system, but I do not think that the tax payers of Australia, irrespective of whether .they pay large or small amounts in tax, want to revert to the former system of paying separate amounts for Commonwealth tax and State tax. Under the old system some firms has to complete as many as 26 tax returns. In any event, I know that taxpayers who pay substantial amounts in tax do not want to revert to that system. Although the Treasurer has said at various times a great deal about his intention to simplfy our taxation procedure, I consider that the introduction of uniform tax accomplished more to simplify our taxation procedure than did any other measure that has ever been introduced.

The Treasurer promised in the course of the policy speech that he delivered during the last general election campaign, and he repeated his promise to-night, that he would summon the State Premiers to a conference to consider the financial relationships of the Commonwealth and the States. There is nothing new in that proposal, because conferences have been held on Commonwealth and State financial relationships ever since the “ Braddon blot “ began to operate. The honorable member for Port Adelaide (Mr. Thompson) raised some ghost and roused some echoes in the chamber to-night when he referred to the per capita payments that were made in the early days of federation. Whilst I am always in favour of holding conferences, because they at least afford the participants an opportunity to meet one another and to establish personal contacts, and so tend to promote harmonious relationships, I am doubtful whether the proposed conference will achieve any very satisfactory results.

Some honorable members have complained of the treatment that Victoria has received under uniform tax. Victoria has suffered in comparison with other States because in earlier days the rates of taxation, particularly of company taxation, were very low in that State. The people of Victoria were deprived of an adequate scale of social services. That State had the poorest public service in Australia and it was very difficult to get any concession for its public servants.

People continue to use the term “ social services “ in relation to State activities that are not included in what we regard as social services. A number of honorable members have used that term during the debates on some of the measures arising from the budget that have been before the committee recently. The Treasurer himself used it in the debate on the bill that the committee discussed prior to the resumption of the debate on the present measure. We use the term “ social services “ to cover the provision of pensions, health schemes, child endowment and so on, but it is used in the States to cover matters like provision of fire brigades, police forces and many other State activities.

I hope that no attempt will ever be made to return to the system of dual taxation. A couple of years ago I said to a. prominent businessman, “ There is a great row going on about what the States are to receive this year “. He said, “ However generous you are with them, for heaven’s sake do not again inflict upon this country the system of dual taxation “. I think that the Treasurer was probably rather envious that it was a Labour government that finally put uniform taxation into practice, with the support of the decision of the High Court. There is nothing to prevent the States from imposing taxation on their own account. Under the High Court’s judgment, the Commonwealth only has priority of collection of any tax it imposes. Those who say that the States cannot impose taxation make a totally incorrect statement. The States can impose all the taxation they want to impose, but they can collect it only after the Commonwealth has collected whatever taxation it has imposed. If the Commonwealth imposed a tax of 14?. in the £1 there would not be much left to the States and if they tried to impose additional taxation there would probably be a revolution. I think that some improvement might be made of the details of the present arrangements for the collection of taxation by the Commonwealth and its distribution to the States, but I hope that, in the interests of the community, the Government will not re-introduce the system that operated previously. Discussions should take place every year between the Commonwealth and States on the extension of services such as transport hospitals and schools. On one occasion I achieved the remarkable distinction of having pleased five of the six Premiers. One would hardly credit that that was possible. If the Treasurer keeps on trying he might break the record by making the six of them happy but I think that that is extremely doubtful. The introduction of uniform taxation was a notable achievement. Mr. Mackenzie King tried hard to introduce such a system in Canada, but finally achieved only a very unsatisfactory arrangement in respect of the various Provinces. Although it may be necessary, from time to time, to give to the States additional amounts and even though it costs the Commonwealth a little more, I think that the present taxation system is the best from the point of view of the Commonwealth and the States.

Mr WENTWORTH:
Mackellar

– The speech of the Leader of the Opposition (Mr. Chifley) has at least been helpful to the House because it has shown quite clearly what is in his mind. Apparently, he believes that it is a good thing that the States should degenerate to mere appendages of the Commonwealth, living on Commonwealth revenue, and unable to collect their own because of the Commonwealth’s attitude. There was almost an illconcealed satisfaction, I thought, in the right honorable member’s tone. That is not unreasonable because the policy of the Labour party provides for the abolition of State parliaments and the establishment of a federal executive parliament with unlimited authority.

Under the budget proposals the States are to receive £111,000,000 this year from the Commonwealth. I agree with the Leader of the Opposition that the stringencies of rising costs caused by the recent increase of the basic wage will make that sum insufficient and that, just as it was necessary to make a supplementary allocation of £8,000,000 to the States last year, so it will probably be necessary to give them another £5,000,000 or £6,000,000 this year to meet increased costs which will fall upon them although the expanded revenue resulting from the increased wages will flow almost exclusively to the Commonwealth.

This is an appropriate time toreview the changes that have taken place in Commonwealth and Statefinancial relationships and. to endeavour to ascertain likely future developments. Before the war the average amount granted by the Commonwealth to the States was of the order of £16,000,000, which represented about one-eighth of the States’ budgets. That figure has now increased to £111.000.000 and, in spite of the fact that State costs have risen, this constitutes almost half the States’ entire outlay. Those State revenues which, before the war, were derived from taxation have now passed almost entirely to the Commonwealth. The main item of taxation reimbursement which did not exist before the war and which started in 1942-43’ at the level of £27,000,000, has grown by fairly regular steps to its present level of £75,000,000 and is likely to rise even higher because of the increase of the basic wage, which will involve the States in increased costs. It is clear that the States, which were, generally speaking, financially autonomous before the war and able to direct their own financial policy, and their own administrative policy which depended upon finance, have now become, to a great degree, the vassals of the Commonwealth, obligated to carry out, within the framework of their own boundaries, the policy laid down by the Commonwealth. Some people may think that this is a good thing. I consider that it is bad, because I believe that the federal system is better than a unitary system and that the present tendencies must give rise to a unitary system of government in Australia in place of the present federal system.

A point was made by the Leader of the Opposition, and was lightly brushed aside, namely, that State treasurers might lack a sense of responsibility because they are free from the odium which attaches to the collection of the taxes, the proceeds of which they expend. I believe that that point is one that is not lightly to be brushed aside. At the present time it may be said that State governments are haunted by the fear of going into deficit and being unable to meet their commitments. That is not a very real fear because in such a crisis we are well aware that help would be forthcoming, and indeed under clause 5* of Part 1. of the Financial Agreement, the States have a power unrestricted by the Commonwealth of borrowing for temporary purposes from certain institutions which operate within State boundaries. Therefore, it is quite clear that there is not a very great sense of responsibility among the State treasurers. This is a thing which gathers momentum as it goes. Speaking as one who has been an officer of a State treasury, I say that in the State treasuries there is a long tradition of responsibility. The senior officers have grown up with that tradition, but as they grow old and retire they will be replaced by officers who, under this system, will not have been steeped in the same tradition of treasury responsibility. The system does not go haywire in the case of the officers of the State treasuries who have been trained in the old tradition, because they have that sense of budgetary responsibility which can be acquired only from the raising of the funds that they themselves expend. The new generation of treasury officers which in the process of time will come to the top will have been trained in this tradition of no responsibility, and will not produce a system that will be workable in the sense in which our present system, with all its defects, is workable.

– The honorable member for Cunningham (Mr. Davies) should remember that under such a system the federal and State taxes combined would be less than the federal tax that is payable at present, because the Australian Government would then be free from the necessity to pay annually to the States the sum of £75,000,000, which will soon be increased, as tax reimbursements under the uniform tax scheme. To that degree the Australian Government’s budget would be lightened and it would be able to lighten its taxes correspondingly. The States would be obliged to reimburse themselves for what they did not receive from the Australian Government, hut since they would then have the responsibility of levying their own taxes - and their taxpayers would be voters - they would not have the same tendency towards extravagance and inefficiency as is being evinced in all State budgets to-day. The total burden now being borne by the taxpayer would be lightened; it would certainly not be increased. Taxpayers would still be required to make only one return and they would not be confronted with any complications that do not now exist in respect of the uniform income tax. That system would not involve any of the difficulties that existed when taxpayers had to furnish a State as well as a federal tax return. At the same time, the Australian Government would be able to carry on and the States would be financially autonomous and responsible for raising the revenues that they needed. T do not put forward that suggestion in any final manner. Whatever suggestion is offered for the solution of this problem it must be one that will give to the States responsibility for collecting the revenue that they need and, at the same time, will not penalize taxpayers either by imposing an additional tax upon them or by making the payment of tax more complicated than it is at present. Something practical could be evolved along those lines. Such a scheme would help to restore to the States financial autonomy, the loss of which, although it has not yet caused irreparable damage to our economy or our social structure, will have a long-term impact which, if left to work itself out, will ruin both the financial and the federal structure and, at the same time, convert Australia into a unified and inefficient State. Whatever the proposed conference may decide, its decisions should not be final, but should be accepted merely as recommendations .for an alteration of the Constitution, and the people should be given the final voice. I do not believe that we should act in this matter without the full sanction of the popular vote expressed in the clearest terms at a referendum for the purpose of altering the Constitution along the lines that the forthcoming conference may recommend.

Mr DRAKEFORD:
Maribyrnong

– I listened carefully to the view? that the honorable member for Mackellar (Mr. Wentworth) believes should be held by people who are interested in the progress of Australia. The honorable member could not have taken much trouble to ascertain the views that many of his colleagues, including a number of Ministers, hold on the subject that he touched upon, because they are of a different opinion. I also listened with interest to the speech that the honorable member for Chisholm (Mr. Kent Hughes) made this afternoon. As I was elected to the Victorian Parliament at the same time that the honorable member was elected to that legislature, I fully realize that the difficulties confronting Victoria under the uniform income tax scheme are the result of the blight that anti-Labour governments have cast upon that State over the years. After having occupied a leading position among the States for a considerable period in respect of the provision of social services, Victoria, before the introduction of the uniform income tax scheme, had fallen behind all the other States in that respect. Prior to the introduction of the uniform income tax scheme railway employees and public servants in comparable positions in Victoria were the worst paid of those in any of the States with, perhaps, the single exception of those in Tasmania. It was not until a classification board was appointed to investigate the claims of those public servants that they received a measure of justice. So far were they behind comparable employees in other States as the result of the attitude that the reactionary Legislative ‘Council of Victoria adopted that at one period they were being paid two shilling a day less than the basic wage. That Legislative Council could always be depended upon to reject any advanced legislation. During the period to which I refer railway employees and comparable public servants in Victoria were receiving 9s. a day, whereas the basic wage was lis. a day. The classification board was set up as the result of agitation by those employees to have their claims investigated. Its findings involved the Victorian Government in considerable expenditure. The classifications board took eighteen months to conclude its investigations and in order to give effect to its findings the Victorian Government was obliged to provide in retrospective wage payments a sum of £1,250,000.

The honorable member for Chisholm has claimed that Victoria has not received a fair deal under the uniform income tax scheme. The position of that State to-day is due entirely to the refusal of its anti-Labour Government, backed by the Legislative Council, to provide for the people social services of a standard to which they were entitled.

Mr Ryan:

– Why did the honorable member support a non-Labour government for so long in Victoria when he was a member of the Parliament of that State?

Mr DRAKEFORD:

– I supported a government which for two years endeavoured unsuccessfully to enact advanced legislation. I recall an occasion on which the honorable member for Chisholm joined me in an entertainment while members of the Legislative Council conferred with leaders of the Legislative Assembly. As usual, the Council rejected the assembly’s proposals. It was its invariable practice first to reject advanced legislation that was sent to it from the lower house and then to reject the Government’s legislation at a conference of the leaders of both houses. I was glad when the Premiers plan became a very live issue, because as the result of my opposition to it I lost my seat in the Victorian Parliament and thus was given an opportunity to enter this Parliament.

The claim that the honorable member for Chisholm made that Victoria has not received a fair deal under the uniform income tax scheme is groundless, because anti-Labour governments in that State persisted in their refusal to recognize the need to provide social services of a standard comparable with that of social services which other States were providing to avoid increasing taxation. As a consequence, Victoria has not received treatment as favorable as it might have been entitled to receive under the formula under which tax reimbursements in respect of uniform income tax are determined. Victoria does not receive treatment as favorable as- that which New South Wales, Queensland, Western Aus- tralia, and possibly South Australia receive under that scheme. The real reason for Victoria’s misfortune in that respect is that it has had far fewer Labour governments than any other State has had. Although much criticism may be levelled against the services that are provided under uniform income taxation we must recognize that the existing position has been agreed to in principle. If, at present, Victoria finds itself in the position of a mendicant that State has only itself to blame for its misfortune. However, I do not admit that any State is placed in the position of a mendicant under that scheme. The present difficulties of the States result inevitably from the development of the federal idea, the principle of which is that the Australian Government shall have the greatest, power. The honorable member for Mackellar said that one of the objectives of the Labour party is unification and that members of that party stand for the abolition of State parliaments. That conclusion may be drawn from a reading of the constitution of the New South Wales branch of the Australian Labour party. I do not wish to dispute that, but I refer the honorable gentleman to the federal platform of the Australian Labour party which, under the heading of “ Methods “, reads as follows : -

Complete Australian self-government as a member of the British Commonwealth of Nations, the Federal Parliament alone controlling administration, with a Vice-Regal representative at all times and acting on the advice of the Commonwealth Ministers, except where such powers are inconsistent with Imperial Treaty obligations. Amendments of the Commonwealth Constitution (a) to invest the Commonwealth Parliament with unlimited legislative powers and authority to create or re-order States or provinces with delegated powers.

That statement of policy means, briefly, the growth of Commonwealth powers with a reduction of sovereign State powers, and the honorable member for Mackellar suggests that such a development would be undesirable. He admits that it is likely to continue, and that it will be difficult to prevent. His view about the undesirability of the growth of Commonwealth powers is not shared by the present Prime Minister (Mr. Menzies). I refer the honorable gentleman to the Hansard report of the debate on the Income Tax (War-time Arrangements) Bill 1942, when the present Prime Minister, who was then Leader of the Opposition, said -

Paradoxically, I consider that we shall never achieve complete ease in the decentralization of functions in Australia until we have a high degree of centralization of power.

The honorable member for Melbourne (Mr. Calwell) interjected at that point -

Paradoxically, the right honorable gentleman is preaching Labour policy.

The then Leader of the Opposition replied -

I arn preaching my own policy, and I did not obtain it from a platform that was provided for me. I have arrived at it by a slow progression over a considerable number of years.

I venture to prophesy that the honorable member for Mackellar, should he remain a member of this Parliament long enough, will also adopt that view. Other members of the present Government held similar opinions in 1942. The Minister for the Interior (Mr. Eric J. Harrison), who, paradoxically, is somewhat on the exterior of Australia at the present time, also spoke in the debate on the Income Tax (War-time Arrangements) Bill 1942. He was the Deputy Leader of the Opposition at that time, and he said -

This legislation has been attacked not so much because it provides a uniform tax system but because its critics fear that it is the first step towards unification. The States which those critics represent cannot be persuaded to adopt an Australian outlook favorable to unification. They think that, if they can effectively oppose ‘ this bill, they will be able to stave off for a little while longer the inevitable unification of Australia.

At. that point, the then Leader of the Opposition interjected -

Does the honorable member recall the last referendum on an increase of Commonwealth powers, in which New South Wales defeated the marketing proposals by 440,000 votes?

The honorable member replied -

Possibly that did occur, but if the people of New South Wales were asked the simple question whether they favoured unification, they would say “ Yes “ by a handsome majority. The people of New South Wales want, the whole thing, not half measures.

The present Minister for External Affairs (Mr. Spender), who was also a member of the Opposition in 1942, said -

Personally, I am satisfied that the Government is not introducing some form of unification but is resolutely facing its responsibilities for the conduct of the war.

I agree that the argument may be advanced that the House was considering a war measure at that time. However, the honorable gentleman continued -

I make no apology for supporting this measure. If this were a step towards the centralization of power in the Commonwealth Parliament, I should support it on that ground alone.

That is another emphatic statement. The honorable gentleman proceeded -

If it were only on the ground of unification which is so condemned by many members of my own party, this legislation would be a majestic step forward to nationhood.

I am in complete agreement with that opinion. The Minister for Commerce and Agriculture (Mr. McEwen), who is a member of the Australian Country party, made the following statement in that debate on the Income Tax (Wartime Arrangements) Bill 1942: -

I find myself on no new ground in saying that I entirely agree that there should ‘be a complete re-alignment of the constitutional authorities in this country - the Commonwealth and State Governments. I have always held the view, and often expressed it here, that the States should be subordinate to the Commonweallth, and that they should legislate and administer in respect of matters delegated to them by this Parliament.

None of those Ministers has retracted those statements, which are in conformity with the part of the federal platform of the Australian Labour party that I read to the House a few moments ago. However, the honorable member for Mackellar objects to that opinion. I repeat that the policy of the Australian Labour party is the alteration of the Constitution for the purpose of investing the Commonwealth Parliament with unlimited legislative powers and authority to establish or re-order States or provinces with delegated powers, and the present Prime Minister, the Minister for External Affairs, the Minister for the Interior and the Minister for Commerce and Agriculture supported that view in 1942. Have they changed their opinion on that issue? Will the honorable member for Mackellar be able to persuade them that the view which they held in 1942 is wrong to-day? I doubt whether he will succeed in doing so. The Leader of the Opposition (Mr. Chifley) explained the position in a most reasonable way.

I submit that the Liberal party, the Australian Country party and the Labour party should not have wide political differences of opinion on this bill. Generally speaking, every one agrees that these grants must be made to the less populous States, but I cannot help feeling that at least some States consider that any attempt to reduce their sovereign powers is an affront to their dignity. What does it matter if the reduction of their sovereign powers is for the benefit of the people of Australia? If the fears that were expressed by the previous speaker are correct, and if it be necessary to bring our defence measures up to date, we must incur enormous expenditure as a result of insistence by some States upon the retention of their sovereign powers, on the standardization of railway gauges.

I directed attention to that matter 25 years ago when I was the secretary of the Australian Federated Union of Locomotive Enginemen. Admiral Henderson, who was invited to report upon defence measures in 1911-12, estimated that the cost of standardizing railway gauges at that time was £21,000,000. I do not include in that figure the cost of standardizing the inland services, but I refer to the line from Brisbane to Perth, and certain connecting lines. I doubt whether that work could be carried out to-day for less than between £120,000,000 and £150,000,000. The existence of rival sovereign powers has prevented the Commonwealth from accomplishing many important things. I speak as the representative of a Victorian electorate when I say that the State of Victoria, as a result of its reactionary attitude, ran the risk of excluding itself from the scheme for the standardization of railway gauges. If the standard gauge line were constructed from Port Pirie through Broken ‘Hill to Sydney, a very fertile corner of the Commonwealth would not have a standard gauge. Persons who have participated in the political life of this country will recall the difficulty that was experienced by the Commonwealth in obtaining an agreement between the States of New South Wales, Victoria and South Australia on the use of the waters of the River Murray. It remained for a Labour government to obtain an agreement between them, and to formulate and begin the Snowy

Mountains hydro-electric scheme. Those examples illustrate that, whilst the States retain their sovereign powers, the Commonwealth will have great difficulty in pursuing a plan of national development. When I remember the difficulties that were experienced in Victoria, and the fact that the Government of that State was not able to take a broad Australian view, I believe that everything possible should be done, perhaps by way of the present system of making grants to the States, to win the support of the people for a greater centralization of power, because that will produce beneficial results for this country in the future.

I agree with the view expressed by the honorable member for Melbourne (Mr. Calwell) that new States should be established in the Commonwealth, and I am sure that members of the Australian Country party will endorse that view. 1 believe that New South Wales could be divided into three and possibly four States, Queensland into three States and Western Australia, for the time being, into two States. My own view is that such new States, with delegated powers, would be capable of meeting the situation much more efficiently than has been possible in the past. The question has been asked, what should we do in the future? The only comment that I wish to add to my previous remarks is that the proposal to hold a conference of representatives of the Commonwealth and of the States to determine the best practice to follow is most commendable. Members of the three political parties in this chamber will not quarrel about that proposal. I do not think that we can even hope ultimately to persuade the States to agree to the delegation of powers to the Commonwealth. Another referendum, costly though it would be, would cause the attention of the public to be directed to the present unsatisfactory state of affairs.. It is clear that, in such a referendum campaign, the Labour party would advocate an extension of Commonwealth powers, and it is probably correct to say that the honorable member for Mackellar (Mr. Wentworth) would strongly oppose such a move, but I believe that at least some members of the Liberal party and of the Australian Country party would be perfectly willing to support it. Whether or not they would be the dominating section of the combined government parties is difficult to determine at .the present time, but as one who hopes to see Australia grow greater and avoid the difficulties that have been experienced in the past, I should be gratified if that conference were held, and I should hope that the outcome would be the establishment of new States, with the Parliament of the Commonwealth having centralized power. That would be the majestic step of which the present Minister for External Affairs (Mr. Spender) spoke so eloquently when he was a member of the Opposition in 1942.

Such a conference might easily achieve something far greater than we have been able to achieve to date under the present system of divided powers. Our national progress is too slow, because of constitutional difficulties. I realize that the influential newspapers in the capital cities would probably strongly oppose the greater centralization of power in the Commonwealth Parliament, and the formation of new States, because their influence would be weakened thereby, but I still am confident that a better understanding of the national need is developing in Australia, and that many people would be prepared to give their support to my proposal. I fear that a feeling exists among many supporters of the Government, particularly members of the Australian Country party, that the representatives of electors in the metropolitan areas of the capital cities have not much sympathy for the needs of country districts. I, as the representative of metropolitan electorates in the Parliament of Victoria and in this Parliament, lived in a part of Gippsland during the pioneering days, and I say frankly that we representatives of metropolitan electorates understand the difficulties that are experienced in the rural areas, and have every interest in their development. I can say, even with the honorable member for Flinders (Mr. Ryan) who is looking directly at me, that I believe that Gippsland could almost be formed into a separate State. It possesses great resources indeed, and is developing to an extraordinary degree. The State of Victoria probably would not wish to have Gippsland, one of the most fertile provinces in Australia, established as a separate State with delegated powers from the Commonwealth, but I believe that such a devolpment would accelerate national progress.

That there may be differences of opinion on matters of this kind is well understood. For my part, I believe that the feeling is gradually growing that we have taken a long time to appreciate the kind of constitution that will enable Australia to develop more rapidly than has been possible under the present system of control. My principal reason for participating in the debate to-night is to indicate that the representatives of electorates in the metropolitan areas of the capital cities wish to see schemes developed that will provide the outback with better opportunities in the future than it ha3 had in the past. The Commonwealth is now undertaking all kinds of responsibilities that were not contemplated at the time of federation. The needs of civil aviation have been the cause of the expenditure of nearly £14,000,000 during the last decade in providing aerodromes in many parts of the Commonwealth. Those works have not cost the States one penny, because all the money required for them has been provided by the Commonwealth. A similar claim may be made in respect of wireless broadcasting, although I admit that that is a Commonwealth function, and, in consequence, the Commonwealth would be expected to meet the cost of such services. However, many millions of pounds have been expended which, in my view, are of great value to Australia, and the States have not been called upon to accept any responsibility for it.

The Liberal party, the Australian Country party and the Labour party do not strongly disagree on the various matters to which I have referred, although I must make an exception of the honorable member for Mackellar, but he has been proved to be completely out of step with some of his colleagues. As far as I can discover, they have not changed their opinions. Therefore, I hope that even the honorable gentleman, who. is stubborn in his opposition to all progressive proposals, will be converted, and that we may look forward to a better future, notwithstanding his presence in the House.

Mr DRUMMOND:
New England

– No objection can reasonably be taken to the measure before the House. However, the principle underlying it raises the whole matter of the financial relationships between the Commonwealth and the States. It also raises a number of incidental issues, because, as the Leader of the Opposition (Mr. Chifley) admitted, complete financial control means final control of almost all things. I noticed a complete confusion of ideas amongst those members of the Opposition who have taken part in the debate about the real nature of a unitary system and a federal system of government. I have listened with a great deal of sympathy to the views expressed by those honorable members, particularly the honor.able member for Melbourne (Mr. Calwell) and the honorable member for Maribyrnong (Mr. Drakeford). The outstanding feature of their utterances was that, whilst they are apparently in favour of a unitary system of government, they also advocate the establishment of new States. As a matter of fact, a unitary system of government does not permit of the existence of any States, let alone of new States. The late Lord Bryce, who was a most distinguished constitutionalist, said that there were no such things as States in a federation, because complete sovereignty, which is a necessary characteristic of a State, does not reside in the State or provincial governments, which enjoy only quasisovereign powers. For the purpose of simplifying the discussion, I point out that the federal compact embodied in the Australian Constitution confers certain powers on the Commonwealth, and leaves the residuary powers to the States. The statesmen who- devised that Constitution carefully considered all the systems, unitary and federal, of which the world had had experience up to that time, including the semi-unitary system of Canada, which is partly federal and partly unitary. Fortunately, in some respects? they did not inflict upon Australia the Canadian form of constitution.

The honorable member for Maribyrnong referred to the views expressed on earlier occasions by certain members of the present Government. Without attempting to traverse all those views, I propose to say something concerning the view now held by the Minister for External Affairs (Mr. Spender). At a winter school of the Australian Institute of Political .Science, which I attended in order to deliver a lecture, the honorable gentleman also believed and admitted that he had undergone a considerable change of heart since he made the statement attributed to him by the honorable member for Maribyrnong to-night. On the later occasion he made it. perfectly clear that he realized, for the first time in his life, that the conferring of complete, centralized power on a federal government would, in my words, open the way to the highroad to dictatorship. A similar change of view may characterize other honorable members of the Government whose views have been cited by members of the Opposition to-night.

The subject of the financial relationships between the Commonwealth and the States transcends mere constitutional questions. During the last 25 years we have witnessed the consequences of a few unscrupulous individuals in other nations seizing power in a time of national stress. Those individuals have used their power to inflict untold misery upon countless people. The honorable member for Melbourne made it clear that the powers which he advocates should be delegated to new States should be those that are specifically reserved by the Constitution to the States, and that the residuary powers should he reserved to the central government. If his view is a true interpretation of the policy of the Australian Labour party, then it is not very far from the kingdom of heavenly constitutions. However, it certainly differs from the view expressed by the honorable member for East Sydney (Mr. Ward), who apparently believes in unification in the full and complete sense of that term. If unification came about it would have to be accompanied by the introduction of an important democratic safeguard which Labour has allowed to lapse into oblivion. I refer to the power of the people to demand by initiative the introduction or repeal of legislation. However, on that phase of the matter

I merely say now that, although Australia is still in its infancy, it is rapidly approaching adolescence. Our progress has been so great that we are now paying the price economically, notwithstanding our present prosperity. However, the day will come, and it may come in my lifetime, when this nation will consist of many more widely separated communities of great strength.

Let us look at the lessons of history. One of the most progressive steps taken in the United’ States of America was that taken by the people of California to stir the Federal Government of that country to take action to protect them. They were apprehensive of the consequences of the large-scale influxion of Japanese migrants to the west coast of America, and they appealed to the people of the eastern States, who were only concerned with making money and failed to realize the danger which threatened the west coast, to prevent the entry of any more Japanese. Ultimately, the people of the State of California threatened to take up arms, even against their countrymen, rather than submit to being overrun by an Asiatic people. If they had not enjoyed the constitutional power which resides in a decentralized State government they could not have impressed their wish so forcefully upon the central government in the eastern States of the United States of America. Fortunately, in that instance the United States Government followed the line of common sense and prevented the influx of any more Japanese. Incidentally, that lack of original action caused the United States Government some anxiety during the recent war.

I say with all the conviction at my command that if the Parliament imagines that by drawing unto itself all the constitutional powers of this country it will build a great nation, it has failed to study and to absorb the constitutional lessons of the past. The purpose of constitutions and of systems of government is not merely to ensure the financial and economic well-being of the people, although that is, of course, a desirable state of affairs and one which should come about as the result of good citizenship amongst the people. But the method of obtaining good citizenship is that of conferring on the people the fullest possible liberty to govern themselves in their local communities. Unless that power is conferred freely upon them, people do not learn how to govern or how to exercise the full powers of citizenship. In the aftermath of World War I., and again after World War II., we witnessed the steady undermining of our democratic institutions in the interests of a paternal bureaucracy, which is no good to Australia and will ultimately destroy the spirit of enterprise in this country. Of course, I realize that bureaucracy fears to give to the people the freedom to make mistakes. But how does a child learn? It learns to walk by being permitted to toddle by itself, and in doing so it undoubtedly falls down many times. It learns not to burn, its fingers by touching hot substances, and it gradually acquires by experience and teaching all the other knowledge that is necessary to safeguard its life. Experience strengthens its character, and finally enables it to assume responsible adulthood. That is characteristic of the steps by which a people attain responsible nationhood. The Leader of the Opposition (Mr. Chifley) said, quite light-heartedly, that the States have no great social services, and, by a wave of his hand, he seemed to sweep aside the real responsibility that rests upon State governments. However, I remind the right honorable gentleman of a few of the services that were administered by the Government of New South Wales long before the central government arrogated those functions unto itself. The Government of New South Wales provided widows’ pensions, child welfare payments, child endowment, money for the relief of distress of adults caused by unusual circumstances, and unemployment relief. Whilst I do not contend that the National Government was wrong in assuming responsibility for financing those services, I say that it is a tragedy of the first magnitude that the administration of those

M-vices should have been taken out of the hands of the State government. Under the administration of the Australian Government those services undoubtedly become more costly and more remote from the people. Mr. Wallace Wurth, the former Director-General of Man-power and the present chairman of the New South Wales Public Service Board, has pointed out that the administration of prices control by the Government of New South Wales is costing the taxpayers of that State much less than it did when prices control for that State was administered by the National Govern ment. When the Australian Government took over the administration of certain social services in Tasmania, the cost of administering those services increased from fi 0,000 to £40,000. It is only natural that the cost of administering services should be much cheaper when they ure administered by a State government than when they are administered by the Australian Government. The States have their agents, such as local clerks of petty sessions and police officers, who can be called upon to administer social services and to discharge other functions. By these and similar means they were able to work effectively and to keep in touch with the people, while at the same time keeping expenses down. The States still have many important responsibilities. The most, important load that the States bear is the provision of education. They also control lands and agriculture. Those three activities must become expanding responsibilities because of Australia’s immigration programme. The States must provide schools for the teaching of the children of the hundreds of thousands of migrants who are being brought into this country. In addition, they have to provide increased school accommodation because of the natural increase of population since the end of the war. The number of school enrolments in New South Wales rose 37 per cent, in the decade between 1918 and 1928, as against an increase of only 6 per cent, in Great Britain and of 30 per cent, for the whole of Australia in the same period. A similar process is taking place to-day, and the States are desperately put to it to find sufficient accommodation for new school pupils. They arc also finding it extremely difficult to get sufficient young people to train as teachers.

Mr ACTING DEPUTY SPEAKER:
Mr. Ryan

– The honora’ble member is getting a bit far from the bill.

Mr DRUMMOND:

– I was merely bringing out the fact that some things that are the result of federal policy are throwing financial responsibilities upon the States. I do not wish to deliver ah address on the subject of education, but I do want to point out that education, lands, agriculture, health, local government, justice, -prisons, child welfare, public works and undertakings, mines and forests and conservation are all functions of the States, and cannot be discharged effectively if the hands of the States are tied behind their backs.

The measure before the House is thu result of action taken by the Chifley Government to institute uniform income taxation. That step has no doubt simplified the work of completing taxation returns but, in simplifying the method of making returns those engaged in the business of collecting taxes have managed to produce a wonderful and fearful instrument that this Government has fortunately succeeded in bringing back to a simpler form. The Commonwealth has taken over the whole field of income taxation. The Leader of the Opposition (Mr. Chifley) has blandly said that the States still have the power to tax. The fact is that, as far as the income tax field is concerned, there is nothing left for the States to tax. Uniform taxation is a problem that is bigger than the wishes of the State Premiers or of this Parliament. It is something in which is bound up the destiny of the Australian people. We must give financial independence back to the States. We must seek a means of conferring upon them not only the responsibility to discharge the great functions that I have mentioned as still being retained by them, but we also have to see that they have the effective means of discharging those functions. When I speak of financial independence I know perfectly well that that can only be a relative term. For instance, Western Australia, South Australia and Tasmania, which will receive special grants under other legislation that was before the chamber to-day, probably will have to receive such assistance for some time to come. It is probable that if we establish new States, as I hope we shall do, they would require financial assistance for a time at least. It is also possible that no matter what method we adopt to restore the financial independence of the States we. should still have to have some system of give and take, since the Commonwealth would still control the great revenue sources of customs and excise, and also, I assume, company tax. I believe that there are fields of taxation which can be tapped by the States. The honorable member for Mackellar (Mr. Wentworth) has traversed, in an able and forceful speech, grounds that I shall not again traverse, but I shall remind the House that the Peden Commission, which examined this matter, reported that there should be a modification of excise taxes to enable the States to take over certain of the responsibilities for the collection of revenues. I remember very well being approached by representatives of the sawmillers and of local government bodies in a timber district in New South Wales, who said that they were quite prepared to pay a small sum for every 100 super, feet of timber conveyed over the roads to the railway, if only they could get a decent road built with the money, but the State had to turn the proposal down because that would have been a form of excise.

I have outlined the problem that faces us. I do not propose to try to solve it to-night. We have got ourselves into a tangle over this matter. We have placed the States in a situation of virtual inferiority to their own local governing bodies, which have the right to levy rates while the States have not the right to tax, except in certain very limited fields of taxation that are practically exhausted. So we have the extraordinary position in which the States are in one sense less competent and independent than their own local governing bodies. The States are taking their revenge upon the local governing bodies because, more and more deprived of their proper sources of income, they are turning to the business of eating up the rights of local government. So I say that statesmanship and vision are needed to deal with this matter. I believe that in the jubilee year of this nation we should call together the people of Australia and trust them, through their elected representatives at a convention, to hammer out a suitable alternative to that of the centralization that will eventually destroy our democracy by attrition. That alternative will have to be a system that will be a compromise between overbloated cities and over-large States and the decentralization that we require to speed up the development of our defences and of our country.

Mr CRAMER:
Bennelong

– I desire to say briefly one or two things that were ruled out of order when I attempted to say them earlier today. First, I make an appeal to the Ministry that it should become the first Ministry in the Australian Parliament for a long time to show some interest in State difficulties and to have some sympathy with the work that the States are trying to do. I also appeal to the Ministry to treat the States on a proper federal basis instead of treating them like a rich uncle handing out pocket money. I have attended conferences of Commonwealth and State Ministers, and to-night, when the Leader of the Opposition (Mr. Chifley) was speaking, I closed my eyes and the books on the table and the despatch boxes disappeared and I imagined myself sitting where he was standing. Sitting there I could see him standing at a conference and saying, “ Gentlemen, the vote is in the affirmative and the answer is in the negative “. In other words, it did not matter what representation the States made, the matter had been discussed with the officers of the federal Treasury and other officers, and decisions had been made. Quite candidly, the conferences that I have attended have -been complete and utter farces in that no discussion could lead to a decision independent of the previously prepared plans. Whether that is because Canberra is so far removed from the stream of life that its atmosphere has an effect on those who have been here for some time I do not know, but it is interesting to note that the only speakers who have supported the State side as against the Commonwealth in this debate have been those who were elected at the last general election. I do not think that any conference of Commonwealth and State Ministers, by whatever name it is called, will smell any sweeter. If this matter is going to be effectively tackled it will have to be tackled by a royal commission or by some disinterested outside body. After all, the State Premiers are bound to act in the best interests of their own States and the federal Treasurer is bound to act in the best interests of the Australian Government.

I understand that the Labour party is in favour of unification and the abolition of the State governments. To-night only three or four honorable members have been present on the Opposition benches throughout most of the debate because no doubt the Opposition felt that its interests were safe in the hands of the present Government. But I do not think that that is quite correct. At present the Australian Government has all the money.

It establishes a new department, such as, for instance, the Department of National Development, irrespective of the fact that that department’s activities overlay those of State departments. The activities of the Department of Works and Housing overlap those of the State public works departments. But the bigger a Commonwealth department grows the better it is for the officers in the department, and they have no fear of expanding because they know that the Commonwealth has all the money and that the States have none. There is also overlapping in the education departments. There is duplication, waste and inefficiency because during the last eight years the Australian Government has been drawn from a party which wants to strangle the States slowly and wants to see them abolished by a method which it hopes will not be noticed. I hope that this Government will not carry on that policy and I hope that it will realize its own obligations to the States. The honorable member for Maribyrnong (Mr. Drakeford) said that the Department of Civil Aviation had done a good job; but, as an ex-Minister for Transport in the Victorian Government, I say that that department has been costing the Victorian Railways £500,000 a year.

Mr White:

– How has it been doing that?

Mr KENT HUGHES:
CHISHOLM, VICTORIA · LP

– I do not think that the Minister would understand it if I explained- it. He has never investigated transport figures. I have studied the Victorian transport system for a long time and I know what I am talking about. I am not criticizing the services supplied by the airline companies, but 1 want to say, as the honorable member for East Sydney (Mr. Ward) knows full well, that when civil aviation is subsidized and the railways are made to pay for everything from their road-beds to the very last thing, costs cannot be compared. Yet when the representative of the State governments attend conferences they are told, as the Leader of the Opposition, when he was Prime Minister, said to me, “You will have to put up your freight rate and fares and make your business undertakings pay”.

Yet the Australian Government has the money and is permitting unfair competition with State undertakings and causing them to show debits. These are facts, and they instance what is happening. Therefore, I ask the Government, and every honorable member in this House who is not in favour of unification and who believes in the responsibility of State government, having regard not only to the federal point of view but also to the overlapping of departments and of the growing inter-departmental waste and inefficiency. Let us try to restore the true spirit of federalism. I know that the Treasurer (Mr. Fadden) wants once again to try the value of a conference of Commonwealth and State Ministers, but I do not think that that approach will succeed. An outside body is needed such as the Commonwealth Grants Commission or a royal commission. Such a method should be tried if the future of the country is to be truly federal in nature, and if Australia is to progress as fast and as far as we desire.

Mr WHITE:
Minister for Air and Minister for Civil Aviation · Balaclava · LP

– The honorable member for Chisholm (Mr. Kent Hughes) has emphasized the need for preserving the sovereignty of the States. Certain power* have been given to the Commonwealth, and certain other powers have been reserved to the States. The honorable gentleman said that in some way the federal powers over civil aviation have been used to injure the State railways system of Victoria. In making that statement he shows that he is still living in a State atmosphere. There are no subsidized airlines in Victoria. In fact it was only when this Government came to power that it set up new airline.0 in that State without subsidy. It extended airlines to Gippsland, the power house of the State, and to other parts of Victoria without involving the taxpayers of either the Commonwealth or the States in a. penny of extra expenditure.

Mr KENT HUGHES:
CHISHOLM, VICTORIA · LP

– But the taxpayers still pay.

Mr WHITE:

– If the airlines are taking business from the railways, that is a different thing. It is a matter of competition.

Mr KENT HUGHES:
CHISHOLM, VICTORIA · LP

– Does the Australian Government pay the whole cost of the aerodromes, including the cost of preparing weather reports, the cost of radar, and everything else?

Mr WHITE:

– Not entirely, many municipalities have their own aerodromes. The honorable member should have studied the actual facts before .he spoke on this subject. In other respects, I support the honorable member.

Mr. WARD (East Sydney) [10.59 J.The statement of the Minister for Civil Aviation (Mr. White) should not go unchallenged. If I agree with the honorable member for Chisholm (Mr.. Kent Hughes) in one thing, it is that the Minister has a complete lack of understanding of transport problems. When he says that private civil aviation lines are not subsidized in this country-

Mr White:

– I said that they were not subsidized in Victoria.

Mr WARD:

– -Well, in Victoria. Any part of Australia where private civil aviation lines are operating may be considered, and it will be found that the service is provided with the help of a contribution by the Commonwealth which constitutes a substantial subsidization of the operation of the airlines. It is absolutely ridiculous to say that fees that are paid by private airlines are sufficient to compensate for the expenditure that the Australian Government has incurred in respect of civil aviation and in the provision of the many services from which private airline companies benefit free of cost. The trouble with the Minister for Civil Aviation is that he abhors governmental operation of any undertaking whatever, and will do everything in his power to destroy such undertakings. We urgently require to co-ordinate transport systems throughout Australia. The last Labour Government endeavoured to tackle that problem through the Transport Advisory Council. As the Australian Government did not have power to apply the requisite remedies direct, it attempted to do so by reaching agreement with the various State transport authorities.

The Australian Government should realize the urgency of the problems that confront the States. The honorable member for Bennelong (Mr. Cramer) complained about the competition of the State governments with the Australian Government for labour for public works, and he suggested that a national developmental plan should be evolved in order to remedy that position. However, he was not prepared to name any State works which he considered to be of less urgency than works that the Australian Government is undertaking. The fact is that the Australian Government is creating many problems for the States. It is bringing people to this country in numbers which cannot possibly be absorbed in our economy. Immigration does not involve merely the provision of homes. Other services, such as schools and hospitals, must be provided. Every one is aware that one of the greatest problems that confront the States is the provision of those amenities. If the honorable member for Bennelong believes that any works that are now being undertaken by the Australian Government should be given priority over the construction of hospitals and schools, he should say so. The Australian Government is rebuilding the law courts in Melbourne. Does the honorable member suggest that that work is of greater urgency and should be given priority over the construction of hospitals and schools? Or is the administrative block that is being constructed in Canberra such a work?

Mr DEPUTY SPEAKER (Mr Adermann:
FISHER, QUEENSLAND

– Order! The Chair would not allow the honorable member for Bennelong to discuss details of governmental undertakings. The honorable member for East Sydney will not be in order in proceeding along those lines.

Mr WARD:

– The only difference, Mr. Deputy Speaker, is that you allowed the honorable member for Bennelong to talk along those lines for half an hour.

Mr DEPUTY SPEAKER:

– Order ! The honorable member will withdraw that reflection upon the Chair.

Mr WARD:

– I withdraw it. Having had the pleasure of saying what I have said, I repeat that the honorable member for Bennelong was not prepared to name any State works which, in his opinion, should not be continued. I agree with the honorable member for Chisholm that the Australian Government should endeavour to understand the difficulties that confront the States. In view of the present set-up, the States are quite justified in asking the Government to endeavour to appreciate their difficulties to a greater degree than it does at present.

Mr FADDEN:
Treasurer · McPherson · CP

– in reply - If the Government had adhered rigidly to the formula that was adopted at a conference of Commonwealth and State Ministers when the Leader of the Opposition (Mr. Chifley) was Prime Minister, the States would have been entitled to receive this year by way of tax reimbursements the sum of £70,393,000. That formula has been embodied in the relevant legislation. At the conference of Commonwealth and State Ministers that was held in Canberra recently, the Premiers requested the Australian Government to increase the total tax reimbursements to be paid to them this year. The Government promised to do so, and this measure has been introduced in order to give effect to that promise.

The Leader of the Opposition, when referring to my second-reading speech, suggested that the comparisons that I made of the total amounts of the tax reimbursement grants in 1949-50 and 1950-51, did not take into account a special grant of £8,000,000 that was paid to the States last year. I point out that that grant of £8,000,000 was made not as a tax reimbursement grant, but as a coal strike emergency grant, the object of which was to enable the States to meet special non-recurring requirements in that year. That fact is borne out by tha following statement that was made by the Minister who introduced the legislation last year to authorize the payment of that grant: -

The purpose of this bill is to authorize the payment to the States in 1949-50 of a special non-recurring grant of £8,000,000 to alleviate the burden placed on State budgets by reason of the coal strike, coal shortages and the associated effects.

Therefore, I was correct when I said in my second-reading speech that under the formula the tax reimbursement grant this year will be £7,S56,000 higher than the grant that was made last year. Including the additional tax grant of £5,000,000 that, it is now proposed to make to the States, the total tax reimbursement grant to ali of the States this year will be £12,856,000 higher than the total grant that was made to them last year. I repeat that the grant of £8,000,000, to which the Leader of the Opposition referred, was a special grant entirely distinct from grants made, under the tax reimbursement legislation. The formula that is embodied in that; legislation was used solely for the purpose of determining the allocation of that sum between the various States.

Question resolved in the affirmative.

Bill read a second time and reported from committee without amendment or debate; report adopted.

Bill - by leave - read a third time.

page 2127

ADJOURNMENT

Public Service - Office Accommodation - -PERTH Repatriation Buildings - Housing - Building Materials - Wheat’ - Mr. Harold Dias - Works Programme - The Parliament.

Motion (by Mr. Fadden) proposed -

That the House do now adjourn.

Mr TOM BURKE:
Perth

.- I wish to raise a matter to which i referred at, question time yesterday. It concerns the Department of Works and Housing. As honorable members are aware, the increased services that are being rendered by the Government has necessitated an increase of the PublicService and that development has involved the provision of accommodation for public servants in all of the capital cities. In recent years, the Government has had in hand two plans for the erection of temporary buildings in Perth. They envisage a temporary structure in Wellington-street that is estimated to cost £60,000. The second proposition involves the acquisition of a considerable area of land on Tourist-drive for the erection of a temporary structure either of the Bristol type, or of some orthodox type. Citizens of Perth and members of the Perth City Council are strongly opposed to both propositions. An endeavour is being made to develop the city in accordance with a sound plan and it is felt that if the Australian Government is to be permitted to evade the zoning regulations it will not be possible to prevent private enterprise and State authorities from following suit. I raise this matter, not for party purposes, but for the purpose of directing the attention of the Government to a solution of the problem which would obviate the necessity for both or at least one of the proposed temporary structures. I have given very serious consideration to the Wellington-street, proposal. I have indicated to the City Council that, if temporary accommodation must be provided, I should not be wholly opposed to that proposition, though I consider that it would be far preferable to erect a permanent structure. I am opposed implacably to the Tourist-drive proposition, and I believe that my view is shared by every honorable member who represents a Western Australian constituency. The scheme is certainly opposed by the Perth City Council, and by the residents of Perth as a whole. I contend that there is no justification for the proposition at all. The site is outside the area zoned for public or administrative buildings. It is on territory reserved for residential purposes. In fact plans for the erection “of flats have already been developed and the site is admirable for that purpose.

The Minister’s answer to the question that I asked earlier to-day was quite satisfactory. I inquired whether, when plans were being made for the importation of prefabricated buildings, an investigation would be made of the possibility of permitting overseas contractors to import their own materials, including cement, and also their own tradesmen, to build permanent structures instead of the temporary buildings such as are now contemplated. The Perth City Council, through its Town Clerk has submitted two separate proposals. One is that the Australian Government, either on its own account, or in association with the Government of Western Australia, should engage in the production of basic materials, particularly bricks and cement. It is felt that the Commonwealth’s building programme already underway, together with activities envisaged for the near future, would justify the Govern ment in undertaking the production of basic building materials at least for its own needs. I commend that suggestion to the Minister for Works and Housing for his consideration. The council’s second proposal, which seems to me to be more immediately practicable, is that the new repatriation building, the erection of which has been approved by the Public Works Committee and the plans for which have already been drawn, should be undertaken at an early date by utilizing the services of an overseas contractor, and using imported materials and artisans. Tradesmen could be brought to this country, not only for this work, but also to remain as permanent residents. The indications are that the steel required could be obtained in quantity from overseas. Sources of supply that have been mentioned include the United Kingdom, Germany, Japan, and, I think, Belgium. I understand that considerable quantities of steel are available overseas for early delivery. Therefore, I ask the Minister to give serious consideration to the possibility of having the erection of Perth’s repatriation building, which is an ambitious structure, undertaken at an early date. If that were done, even the temporary structure to which less opposition is offered might not be necessary. It is true, of course, that the Department of Repatriation is under a great disadvantage in its present premises, but the temporary structure envisaged would not meet the growing needs of the Public Service in Perth. However, if a temporary structure is to he erected, it should be of the Bristol type, and should be built on the land adjoining the repatriation building. It might even be found possible or desirable to erect a temporary structure in the grounds of the Hollywood Repatriation Hospital. It is possible that an examination would disclose that patients at the hospital could utilize some of the repatriation services if, pending the completion of a permanent structure, temporary buildings were erected in the hospital grounds. I suggest that to the Minister as an alternative course that could be followed while the erection of a permanent building is being investigated. It is a practicable proposal. The Town Clerk is an engineer of standing and knows conditions in

Perth. He contends that even, a temporary building in Wellington-street would take a long time to construct, and would absorb a large quantity of the best joinery timber. In all these circumstances, the proposition that I have advanced appears to meet the situation. It would avoid a state of affairs that we do not contemplate with equanimity in a city building area.

Mr TURNBULL:
Mallee

– 1 wish to express my pleasure at the announcement by the Minister for Commerce and Agriculture (Mr. McEwen) that £16,400,000 ia to be refunded to the wheat-growers of Australia out of the proceeds of No. 11 pool, which covered the 1947-48 wheat crop. That money is, of course, the property of the wheatgrowers. It was paid by them into the stabilization fund. When all this year’s wheat has been sold, that fund will amount to approximately £44,000,000. Therefore, when this money has been paid out of it there will still be a residue of approximately £28,000,000. By making this refund, the Government is indicating its determination that excessive sums of money should not be accumulated in accounts such as the Wheat Stabilization Fund. The Minister has also indicated that it is the Government’s desire that our wheat stabilization legislation should be extended to a ten-year period, and that shortly, he will confer with representatives of the wheat-growers and of the State governments concerned, about the conditions under which the scheme should function between now and the end of that period. That conference will provide an opportunity to get the wheat stabilization scheme on to a sound basis. At present, the home-consumption price of wheat is only the cost of production. There is no margin of profit for the average grower, and there is not a floor price of 6s. 3d. a bushel as many believe. Therefore, Australian wheat-growers are dependent for their prosperity wholly and solely on overseas prices which, in recent years, have been very good. However, should the overseas price fall below the home-consumption price, the average wheat-grower would only be receiving the bare cost of production under the wheat stabilization scheme and his own money from the fund would be used to keep the price up even to this level. No one in this chamber will suggest that such a state of affairs should exist in any industry. As I have said on many occasions during past years, wheat-growers are entitled, not only to recoup their production costs, but also to receive a fair margin of profit. We have tried on numerous occasions to have inserted in the stabilization legislation a clause to provide that when a wheat-grower leaves the industry through no fault of his own - either through retirement owing to age or illness, or through being forced off the land by State legislation, as is happening in north-west Victoria - he should have returned to him whatever contributions he has made to the wheat stabilization fund. There are many other anomalies in the wheat stabilization scheme which, in many ways, is stabilization in name only, and I hope that when the representatives of the wheat-growers confer with the Minister for Commerce and Agriculture and with the State governments, the Commonwealth will be able to place stabilization on a true footing.

Mr WARD:
East Sydney

.- The matter that I desire to raise this evening affects the Department of Immigration. I recall that when the honorable member for Melbourne (Mr. Calwell) was administering that department, he was often accused of being very harsh in his administration particularly in respect of certain orders issued against people whom he regarded as not having the necessary qualifications to remain in this country. I am certain that, despite all that was said about the honorable member on those occasions, he would have given his approval for the man to whom I am about to refer to remain in Australia. I refer to Harold Dias, who lives in my electorate. He was born in England. His father was a Jamaican and his mother a white English woman. He has been in Australia for four years, during which he has been usefully employed. He has no police court convictions, either prior to or since his arrival in this country, and he has become absorbed in the Australian community. He also has an excellent war record. He served with the Royal Navy, assisted in the evacuation of Australian troops from Crete, was a member of the crew of a vessel sunk by enemy action in the English Channel and took part in the landing of the Allied forces in France on D-Day. The vessel on which he was serving in that operation was torpedoed, but Mr. Bias volunteered, with a number of other members of the crew, to return to the ship, and subsequently they Ill-ought it to port. He is now a member of the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia. To direct that he should now be deported from Australia, is, in my opinion, a very harsh decision, which will nol: bring credit either to this country or to the Parliament itself.

I well recollect the great hullaballoo that arose when certain deportation orders were issued by the honorable member for Melbourne -when he was Minister for Immigration, but I suggest that none of those cases equalled in merit the one to which I am now directing attention. Mr. Dias, as I have shown, has an excellent war record and he assisted and worked with the Australian forces in various theatres of operations. There are no convictions of any description against him. He has lived here for four, years and has been assimilated into the Australian community. T shall now mention all that has been asked of the Minister for Immigration (Mr. Holt) up to this point, because when the honorable gentleman was adamant and said that his decision must stand, Mr. Dias, on my advice, approached and sought an opinion from a legal authority. Legal proceedings are pending. The Minister was asked to defer the deportation of Mr. Dias. and to take no action against him until the matter had been determined in the courts. Exactly the same plea was made to the honorable member for Melbourne, when lie was the Minister for Immigration, in other cases, and he heeded it. However, the plea on behalf of Mr. Dias has been rejected, and I understand that the Minister’s order is to he given effect to. The legal man, who is acting on his behalf, has sent a wire to the Minister, which asks him to stay his hand until such time as petitions, one of which has been directed to His Maie.sty the King. and another to the Human Rights Commission of the United Nations are considered, and until the court proceedings are concluded.

Various organizations are prepared to speak on behalf of Mr. Dias. I have already referred to the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia, of which he is a respected member, and I understand that it is prepared to speak on his behalf. Church organizations are also prepared to come forward and speak to him. Therefore, I ask the Treasurer (Mr. Fadden), who is in charge of the House, to discuss with his colleagues, including the Minister for Immigration, the request that action against Mr. Dias be deferred until the petitions to which I have referred have been dealt with, and the court proceedings have been concluded.

Mr HASLUCK:
Curtin

Mr Fadden:

– Let the honorable member do what he can to increase the production of steel and coal.

Mr CALWELL:

– I am glad that the Treasurer (Mr. Fadden) has mentioned the subject of coal because I read in the press yesterday that for the first nine months of this year coal production was greater than it was during the corresponding period of last year. If the coal-miners continue to maintain their present output coal production in 1950 will exceed that of 1942 which was the peak production year when the honorable member for East Sydney (Mr. Ward) was Minister for Labour and National Service. No longer can honorable members opposite complain that the shortage of coal is the reason for the lack of production, that the coal-miners are under Communist tutelage and that therefore they must be suppressed.

Unlike the Minister for Works and Housing, who said that he would be brief but finished up by telling us a long story, I shall be brief. To-day, I asked the Treasurer whether he intended to introduce legislation to deal with excess profits and to control capital issues. The right honorable gentleman informed me that he intended to do so. I was impelled to ask the question because in certain reactionary literature, including financial journals and the financial columns of the daily press, it has been suggested that the legislation which the Treasurer has promised to introduce to deal with excess profits will not be introduced during the present sessional period, and that it will not be so drastic as the people were led to believe that it would be. It has been suggested that the legislation to control capital issues will also be stood over until the next sessional period.

Mr Fadden:

– Will the honorable member make a bet with me on that matter?

Mr CALWELL:

– No. I simply direct the attention of the Treasurer to rumours that are circulating to the effect that capital issues control legislation will not he worth much if companies are allowed to continue to issue bonus shares and to water their stock by the distribution of reserve funds and undistributed profits made in earlier years. It is stated that many companies have made issues of bonus shares and that they will declare the same rate of dividend on those shares as had been paid before the stock had been watered down. If the measures are to be effective, they must be introduced during the present sessional period and at an early date. If that is done I do not think that the Opposition will be too querulous in its attitude towards them. However, we want them to be introduced as early as possible so that they shall not be numbered amongst the slaughtered innocents “.

Mr Fadden:

– The people slaughtered the Government of which the honorable gentleman was a member.

Mr CALWELL:

– It is true that they turned us out of office temporarily. However, I remind the right honorable gentleman that we were in office for eight years This Government will not last for eight years. In fact, I am prepared to wager that it will not last for another eight months. Furthermore, when it is turned out of office most of its members will be removed from public life permanently.

Mr FADDEN:
Treasurer · McPherson · CP

– in reply - ObviouslyI cannot disclose in advance the nature of the legislation that will be introduced by the Government. However, I repeat now the assurance that I gave to the honorable member for Melbourne (Mr. Calwell) at question time to-day that it is my conscientious desire and earnest intention to introduce measures to control excess profits and capital issues as soon as possible.

Mr Calwell:

– Will they be introduced during the next fortnight?

Mr.FADDEN. - No, not necessarily. However, if the honorable member imagines that the present sessional period wall continue for only another fortnight he is greatly mistaken. The Government has certain legislation which it desires to have passed by the Senate. If the honorable member for Melbourne is prepared to assure us that that legislation will he passed, I shall he delighted to receive his assurance. Concerning the matter brought forward by the honorable member for EastSydney (Mr. Ward), I assure the honorable gentleman that I shall bring it to the notice of the appropriate Minister for action along the lines that he requested.

Question resolved in the affirmative.

page 2133

PAPERS

The following papers were presented : -

Air Navigation Act - Regulations - Statutory Rules 1950, No. 69.

Commonwealth Bank Act - Regulations - Statutory Rules 1950, No.70

Commonwealth Public Service Act - Appointment - Repatriation Department - B. J. Lawrence.

Lands Acquisition Act - Land acquired for -

Department of Trade and Customspurposes - Waikerie, South Australa.

Postal purposes- Lilydale, Victoria.

Meat Export Control Act - Regulations - Statutory Rules 1950, No. 71.

Re-establishment and Employment Act - Regulations - Statutory Rules 1950, No. 68.

House adjourned at 11.42 p.m.

page 2133

ANSWERS TO QUESTIONS

The following answers to questions were circulated: -

Telephone Services

Mr Calwell:

l asked the PostmasterGeneral, upon notice -

How many telephones were installed by the Chifley Government in each calendar year following the end of the war?
How many telephones have been installed since 1st January, 1950?
What amount of money has been expended in each calendar year since the war on the extension of postal, telephone and telegraph facilities ?

Mr Anthony:
CP

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

1945, 69,873; 1946,91,204; 1947,88,245; 1948, 91,335; 1949, 100,940.
Nine months ended the 30th September, 1950, 96,315.
As the honorable member is aware, the accounts of the department are compiled for each financial year, and the assembly of the required information for each calendar year would not only involve a good deal of work but would not indicate the correct position, having regard to adjustments necessary at the end of the financial year for uncompleted works, advance payments for materials and other factors. The expenditure on capital works, including buildings and sites, undertaken to expand the postal, telegraph and telephone services during each financial year since the war ended was as follows: - 1945-46, 4,171,981 ; 1946-47, 5,798,971; 1947-48, 8,077,698: 1948-49, 12,358,592; 1949-50, 16,601,663. Provision has been made in the budget for 1950-51 for an amount of £21,250,000 for similar works, excluding the sum of £5,000,000 which is to be provided to enable stocks of essential materials to be built up. Thu budget also provides for the expenditure necessary under the ordinary services vote to maintain, improve, and extend postal and telecommunication facilities. For instance, £5.080,500 is to be allotted for mail services compared with the following yearly amounts since the war:- -1945-40, £3,123,147; 1947-48, f 3.307 .008: 1949-50. £4,634,936: 1940-47, £3.010,304; 1948-49, £3,947,846. “Waterfront Employment.

Mr Holt:
LP

t. - On the 3rd October the honorable member for Hoddle (Mr. Cremean) asked me a question concerning the application’ to waterside workers of the law relating to workers’ compensation. I now inform the honorable member as follows: -

The chairman of the Australian Stevedoring industry Board has had further discussions with the general secretary of the Waterside Workers Federation Mr. Healy, who informed the former that the New South Wales Government had decided to introduce legislation amending the New South Wales Workers’ Compensation Act to meet the position the honorable member is concerned with. I am also advised that Mr. Healy has the promise of the responsible Queensland Minister that the Queensland Government would follow New South Wales in the matter.

Quite recently a Victorian County Court judge confirmed the view that neither the Commonwealth nor the Australian Stevedoring Industry Board was liable for injuries sustained by a waterside worker on his way to the pick-up. The best course to follow, therefore, appears to bc that being pursued by the general secretary of the Waterside Workers Federation, namely to encourage State governments to amend their State’s workers’ compensation acts.

I may add that the Australian Stevedoring Industry Board has supported Mr. Healy’s approach to the New South Wales Government and that should its assistance with any other State government be sought by Mr. Healy it will take similar action.

Shipping.

Mr Holt:
LP

t- On the 26th October, the honorable member for East Sydney (Mr. Ward) asked me the following questions : -

Is it a fact that seven or eight vessels have been held up in the port of Newcastle for several weeks and that the shipment oi important cargoes of steel and coal are being delayed?
Is the cause of the trouble the action of the shipping authorities, who arc attempting to force the men to offer for work on a particular ship, in this instance Iron Prince, while the men are insisting on the right to offer to work ships of their own preference,, in accordance with the long-established practice of the industry?
Is it also a fact that the present trouble would not have occurred if the employers had adhered to the established practice, and that no attempt has been made by the Government to avail itself of the services of the Commonwealth Arbitration Court to settle the dispute, but an investigation has been made by officers of the Security Service?
Is it the policy of the present Government to rely upon the security service instead of upon the Arbitration Court to ascertain the facts in industrial disputes?
Is it a fact that, in replying to a question asked in the Parliament a few weeks ago, tut Minister stated that the hold-up of ships in Newcastle was part of a plot to restrict the Australian steel industry, and that thi: men were being influenced by Communist officials of their union? fi. Is it a fact that the members of the Seamen’s Union, whom the Minister now claims are under Communist direction, axe the same seamen who repudiated the instruction of their executive which had ordered them to ban the shipment of arms to Korea?
Finally, is it not a fact that, if restriction of steel production is caused, it is within existing circumstances the responsibility of the employers and will the Minister consider what action is possible to end the present dispute?

I now inform the honorable member as follows : -

Yes.
The Iron Prince was one of several vessels held up in the Port of Newcastle through inability to secure a full crew, at the time when the shipping companies took action to dismiss such members of crews previously engaged. It is understood that the shipping companies subsequently sought to man the Iron Prince, which was the first vessel held up owing to a shortage of crew, and declined to call for labour for other ships because they were of opinion that the men were declining unreasonably to man this vessel. 3 and 4. The services of the Commonweal u Court of Conciliation and Arbitration and the conciliation commissioner were at all relevant times available to the parties had they considered that an industrial dispute existed. As Minister for Labour and National Service. I took such action as under the circumstances appeared appropriate. It is not the policy of the Commonwealth Government to require investigation by the security service of industrial disputes, other than of aspects whir-li appear to have a subversive significance. It is the policy of the Commonwealth Government to support the Arbitration Court and t» arrange for a reference to the court or the conciliation commissioners of such matters a* seem to require attention. 5 and 6. My views on apparent connexion between the restricted output of coal in the Broken Hill Proprietary Company Limited collieries and the shipping hold-up in Newcastle in their effect on the steel industry have been publicly stated on u number of occasion? Responsible Ministers of the New South Yulen State Government concurred in my view on thmatter. It is not unusual to find one section of a Communist-controlled union responding tn influences which are rejected by other members.
If the employers referred to are the steel manufacturers, I have no doubt that they arc anxious to produce to the maximum of their plant capacity - and the available supplies oi coal. If the ship-owners are referred to it is surely not seriously suggested thai the would deliberately involve themselves in the delay and expense of having their ships tied up unnecessarily in the port. As to action necessary to determine the matter, the honorable member will probably be aware that most, if not all, of the ships in question have now been fully manned and put to sea.

Cite as: Australia, House of Representatives, Debates, 8 November 1950, viewed 22 October 2017, <http://historichansard.net/hofreps/1950/19501108_reps_19_210/>.

View PDF View XML View in Voyant

House of Representatives 8 November 1950

QUESTION

CIVIL AVIATION

Mr DRAKEFORD:MARIBYRNONG, VICTORIA

Mr FADDEN:Treasurer · MCPHERSON, QUEENSLAND · CP

QUESTION

EGGS

Mr RYAN:FLINDERS, VICTORIA

Mr McEWEN:Minister for Commerce and Agriculture · MURRAY, VICTORIA · CP

QUESTION

PENSIONS

Mr BEAZLEY:FREMANTLE, WESTERN AUSTRALIA

Mr FADDEN:CP

Mr WARD:EAST SYDNEY, NEW SOUTH WALES

Mr DEPUTY SPEAKER:

Mr MENZIES:Prime Minister · KOOYONG, VICTORIA · LP

QUESTION

JAPANESE PEACE TREATY

Mr KENT HUGHES:CHISHOLM, VICTORIA · LP

Mr MENZIES:LP

Mr MENZIES:

QUESTION

COST OF LIVING

Mr PETERS:BURKE, VICTORIA

Mr Menzies:

Mr PETERS:

Mr MENZIES:LP

QUESTION

MEAT

Mr BERNARD CORSER:WIDE BAY, QUEENSLAND

Mr McEWEN:CP

Mr CLARK:DARLING, NEW SOUTH WALES

Mr MENZIES:LP

Mr GILMORE:LEICHHARDT, QUEENSLAND

Mr McEWEN:MURRAY, VICTORIA · CP

QUESTION

KOREA

Mr CHIFLEY:MACQUARIE, NEW SOUTH WALES

Mr MENZIES:LP

QUESTION

MILK

Mr DEAN:ROBERTSON, NEW SOUTH WALES

Sir EARLE PAGE:Minister for Health · COWPER, NEW SOUTH WALES · CP

QUESTION

HEALTH AND MEDICAL SERVICES

Mr THOMPSON:PORT ADELAIDE, SOUTH AUSTRALIA

Sir EARLE PAGE:CP

Mr WARD:

Sir EARLE PAGE:

QUESTION

DOLLAR LOAN

Mr DRURY:RYAN, QUEENSLAND

Mr CASEY:Minister for Works and Housing · LP

QUESTION

IRON AND STEEL

Mr COSTA:BANKS, NEW SOUTH WALES

Mr BEALE:Minister for Supply · PARRAMATTA, NEW SOUTH WALES · LP

QUESTION

TIN

Mr TRELOAR:GWYDIR, NEW SOUTH WALES

Mr CASEY:LP

ELECTORAL

Mr DALY:GRAYNDLER, NEW SOUTH WALES

Mr ANTHONY:Postmaster-General · RICHMOND, NEW SOUTH WALES · CP

QUESTION

AGRICULTURAL MACHINERY

Mr PITTARD:BALLAARAT, VICTORIA

Mr BEALE:LP

QUESTION

SUPERANNUATION

Mr CREMEAN:HODDLE, VICTORIA

Mr FADDEN:CP

QUESTION

POSTAL DEPARTMENT

Mr OSBORNE:EVANS, NEW SOUTH WALES

Mr ANTHONY:CP

QUESTION

COMPULSORY MILITARY TRAINING

Mr CURTIN:WATSON, NEW SOUTH WALES

Mr MENZIES:LP

House of Representatives
8 November 1950

Mr DRAKEFORD:
MARIBYRNONG, VICTORIA

Mr FADDEN:
Treasurer · MCPHERSON, QUEENSLAND · CP

Mr RYAN:
FLINDERS, VICTORIA

Mr McEWEN:
Minister for Commerce and Agriculture · MURRAY, VICTORIA · CP

Mr BEAZLEY:
FREMANTLE, WESTERN AUSTRALIA

Mr FADDEN:
CP

Mr WARD:
EAST SYDNEY, NEW SOUTH WALES

Mr MENZIES:
Prime Minister · KOOYONG, VICTORIA · LP

Mr KENT HUGHES:
CHISHOLM, VICTORIA · LP

Mr MENZIES:
LP

Mr PETERS:
BURKE, VICTORIA

Mr MENZIES:
LP

Mr BERNARD CORSER:
WIDE BAY, QUEENSLAND

Mr McEWEN:
CP

Mr CLARK:
DARLING, NEW SOUTH WALES

Mr MENZIES:
LP

Mr GILMORE:
LEICHHARDT, QUEENSLAND

Mr McEWEN:
MURRAY, VICTORIA · CP

Mr CHIFLEY:
MACQUARIE, NEW SOUTH WALES

Mr MENZIES:
LP

Mr DEAN:
ROBERTSON, NEW SOUTH WALES

Sir EARLE PAGE:
Minister for Health · COWPER, NEW SOUTH WALES · CP

Mr THOMPSON:
PORT ADELAIDE, SOUTH AUSTRALIA

Sir EARLE PAGE:
CP

Mr DRURY:
RYAN, QUEENSLAND

Mr CASEY:
Minister for Works and Housing · LP

Mr COSTA:
BANKS, NEW SOUTH WALES

Mr BEALE:
Minister for Supply · PARRAMATTA, NEW SOUTH WALES · LP

Mr TRELOAR:
GWYDIR, NEW SOUTH WALES

Mr CASEY:
LP

Mr DALY:
GRAYNDLER, NEW SOUTH WALES

Mr ANTHONY:
Postmaster-General · RICHMOND, NEW SOUTH WALES · CP

Mr PITTARD:
BALLAARAT, VICTORIA

Mr BEALE:
LP

Mr CREMEAN:
HODDLE, VICTORIA

Mr FADDEN:
CP

Mr OSBORNE:
EVANS, NEW SOUTH WALES

Mr ANTHONY:
CP

Mr CURTIN:
WATSON, NEW SOUTH WALES

Mr MENZIES:
LP

Mr DRUMMOND:
NEW ENGLAND, NEW SOUTH WALES

Mr MENZIES:
LP

Mr CALWELL:
MELBOURNE, VICTORIA

Mr FADDEN:
CP

Mr McLEAY:
Minister for Fuel, Shipping and Transport · BOOTHBY, SOUTH AUSTRALIA · LP

Mr MENZIES:
LP

Mr EGGINS:
LYNE, NEW SOUTH WALES

Mr CASEY:
LP

Mr FAIRHALL:
PATERSON, NEW SOUTH WALES

Mr MENZIES:
LP

Mr FAIRBAIRN:
FARRER, NEW SOUTH WALES

Mr ANTHONY:
CP

Mr WILSON:
STURT, SOUTH AUSTRALIA

Mr McEWEN:
CP

Mr SWARTZ:
DARLING DOWNS, QUEENSLAND

Mr HOLT:
Minister for Immigration · HIGGINS, VICTORIA · LP

Mr BEALE:
LP

Mr CHIFLEY:
Leader of the Opposition · Macquarie

Mr FADDEN:
Treasurer · McPherson · CP

Mr BEAZLEY:
Fremantle

Mr KENT HUGHES:
CHISHOLM, VICTORIA · LP

Mr KENT HUGHES:
CHISHOLM, VICTORIA · LP

Mr LESLIE:
Moore