Senate
11 August 1910

4^th Parliament · 1^st Session

1. Senate
2. 4^th Parliament
3. 1910

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• NAVIGATION BILL
• QUESTION
  • LAND VALUES
• QUESTION
  • CONFERENCES IN EUROPE
• QUESTION
  • ELECTORAL EXPENSES
• QUESTION
  • SMUGGLED OPIUM
• COMMONWEALTH CONCILIATION AND ARBITRATION BILL
• NAVAL LOAN REPEAL BILL
  • Third Reading
• SURPLUS REVENUE BILL
  • Second Reading
• MONETARY DEPOSITS AT ELECTIONS
• COMMONWEALTH BANKING COMPANIES RESERVE LIABILITIES BILL
  • Second Reading

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The President took the chair at 2.30 p.m., and read prayers.

page 1382

NAVIGATION BILL

Senator W RUSSELL:
SOUTH AUSTRALIA · ALP

– When do the

Government intend to bring in the Navigation Bill?

Senator McGREGOR:
Vice-President of the Executive Council · SOUTH AUSTRALIA · ALP

– It will very probably be brought before the Senate next week.

page 1382

QUESTION

LAND VALUES

Senator ST LEDGER:
QUEENSLAND

asked the Vice-

President of the Executive Council, upon notice -

1. Has the Government, through its own or the State agencies, yet obtained information showing the amount of acreage and the unimproved value of the same above £5,000 in value in leasehold (Crown or private) and freehold lands of Australia? If so, will the Government inform the Senate as to the amount and value of the same?
2. If such information has not yet been obtained, through what agencies, State or Federal, is it being obtained, and when will it be available?

Senator McGREGOR:
ALP

– The answers to the honorable senator’s questions are -

1. No.
2. An attempt was made to get it through the co-operation of State officers, but it was intimated to the Government that it would cost £10,000 or £11,000. When the land tar proposals of the Government are carried into effect the information will be easily obtainable.

Senator ST LEDGER:

– Arising out of the reply, can the Minister state through what agency, or by what means, the Government will arrive at the acreage and value of leasehold or freehold lands above £5,000?

Senator McGREGOR:

– That information will be obtained by the Department established in connexion with the proposed progressive land tax.

page 1382

QUESTION

CONFERENCES IN EUROPE

Senator NEEDHAM:
WESTERN AUSTRALIA

asked the VicePresident of the Executive Council, upon notice -

1. Has the Government instructed Sir George Reid, High Commissioner for Australia, to attend the Conferences to be held in Brussels and Paris, respectively?
2. If so, has the Government instructed him as to the attitude he will take up at such Conferences ?
3. If the above questions are answered in the affirmative, will the High Commissioner furnish the Government with a report?

Senator McGREGOR:
ALP

– The answers to the honorable senator’s questions are -

1. Yes.
2. No special instructions have been sent, but the High Commissioner will give any information that may be desired on Australian conditions, and will take special notice of any matters brought before the Conferences likely to be of interest or importance to Australia. 3.yes.

page 1382

QUESTION

ELECTORAL EXPENSES

Senator NEEDHAM:

asked the VicePresident of the Executive Council, upon notice -

Will the Government cause inquiries to be made in order to ascertain if any of the candidates for the Senate and the House of Representatives at the last Federal elections, in the prosecution of their candidature, exceeded the limits of expenditure allowed under the Electoral Act?

Senator FINDLEY:
Minister (without portfolio) · VICTORIA · ALP

– The answer to the honorable senator’s question is -

The returns declared to and lodged by the candidates under the provisions of Part XIV. of the Electoral Act do not disclose that any candidate has exceeded the statutory limit of “Electoral expenditure.”

It is notproposed to enter upon any special inquiries in the absence of evidence of irregularity.

page 1382

QUESTION

SMUGGLED OPIUM

Senator ST.. LEDGER (for Senator

Chataway) asked the Minister representing . the Minister of Trade and Customs, upon notice -

Does the Department destroy opium which has been seized?

If so, will the Minister considerthe question of giving the opium, under proper restrictions, to hospitals, where it may be used for medical purposes?

Senator PEARCE:
Minister for Defence · WESTERN AUSTRALIA · ALP

– The answers to the honorable senator’s questions are -

1. Yes.
2. The Minister has obtaineda report from the Federal Analyst on the practicability of this proposal, but finds that, owing to the low morphine content of smoking opium and the inclusion of flavourings and other substances, its use for the purpose desired would probably be found neither economical to the hospitals nor beneficial to the patients.

page 1382

COMMONWEALTH CONCILIATION AND ARBITRATION BILL

Bill received from the House of Representatives, and (on motion by Senator McGregor) read a first time.

page 1383

NAVAL LOAN REPEAL BILL

Third Reading

Motion (by Senator McGregor) proposed -

That this Bill be now read a third time.

Question put. The Senate divided -

Ayes … … … 19

Noes … … … 6

Majority … … 13

Question so resolved in the affirmative.

Bill read a third time.

page 1383

SURPLUS REVENUE BILL

Second Reading

Debate resumed from 5th August(vide page 1 189), on motion by Senator McGregor) -

That this Bill be now read a second time.

Senator DE LARGIE:
Western Australia

– As very little opposition has been offered to the Bill, and so much said in its favour, there is little or nothing for one to reply to. I do not know whether that is due to the fact that owing to the repealing and passing of financial measures this session is becoming somewhat tedious. We are getting rather more financial measures than we seem to care for. In supporting this Bill I am merely carrying out a promise which I made during the recent election, and that, too, notwithstanding statements which have gone forth from time to time that during the general election Labour candidates in Western Australia were pledged to the adoption of a twenty-five years’ term.

Senator Lt Colonel Sir Albert Gould:

– Hear, hear.

Senator DE LARGIE:

– I am glad to hear that cheer from the other side, because it gives me something to reply to. I can quite understand honorable senators from other States being misled by rumours of that kind, but there is no such justification for those who were candidates in Western Australia. It is absolutely false that Labour candidates in that State pledged themselves to the payment of 25s. per head per annum to the” States for a term of twenty-five years.

Senator WALKER:
NEW SOUTH WALES · FT

– Did not one of the non-retiring senators distinctly say so?

Senator DE LARGIE:

– None of the Labour candidates at the last Federal election in Western Australia made any promise that they would support a twentyfive years’ term for the proposed agreement. I can speak for myself on this point, and I am satisfied that neither Senator Henderson nor Senator Buzacott made any such promise. The senators for Western Australia who did not retire at the time of the last election were in no way responsible. If three years before that time, when they were themselves before the electors, they had made such a promise, I have no doubt they would be bound by it. The question is one which cropped up subsequent to their election, and I repeat that the Labour candidates in Western Australia at the last election never made any such promise.

Senator Walker:

– Is the honorable senator prepared to say that one of the three senators for Western Australia who did not retire at the last election did not state that he was in favour of a period of twenty- five years?

Senator DE LARGIE:

– What the nonretiring senators said or did not say did not affect the matter. A pamphlet dealing with the financial position was issued by Senator Pearce about the time of the election. I have read it recently, and the words “twenty-five years” do not appear in it. It is the practice of the principal daily newspaper in our State, the West Australian, to give Labour candidates and members one report, and one only, of their utterances during a session or during a campaign.

Senator O’Keefe:

– D - During a session?

Senator DE LARGIE:

– One report, and one only, and an incomplete report at that. In the speech delivered by Senator Pearce at Subiaco, where he was most fully reported, there is no reference to a term of twenty-five years. I can say that with confidence, because I have taken the trouble to look it up recently.

Senator St Ledger:

– Did the honorable senator see Senator Pearce’ s letter of 22 nd February, 1910, in the West Australian?

Senator DE LARGIE:

– No; I was not able to hunt through the correspondence columns of the newspapers. Again, if Senator Pearce did recommend a period of twenty-five years, he did not speak for me or for Senators Henderson and Buzacott, The honorable senator had no power to pledge any one in the matter; but I have said that he made no such pledge in his two most important addresses to the electors of Western Australia. This should be sufficient to dispose of the “straw man” that has been set up by the opponents of the Labour party. It is said that we cannot in this matter bind future Parliaments, and that the next Parliament may revise the arrangement now proposed. That is quite possible, but the Labour party have done nothing in the past which would justify a suggestion that they are likely to revise the arrangement now proposed before the expiration of the term indicated in this Bill. I know of nothing in connexion with the finances of the Commonwealth which should lead us to believe that the arrangement now proposed is likely shortly to be revised. I think it highly improbable that any alteration will be suggested during the next ten years. A period of ten years is as long as any reasonable party could assent to for such an agreement, and the Government make this proposal honestly believing that it will continue in force to the end of that period. The question has been raised from time to time of who is entitled to the credit of suggesting a per capita payment to the States. A reference to our financial history will justify the claim that the proposal was first made by the Labour Conference held at Brisbane about two years ago.

Senator McColl:

– It was made at the Federal Convention.

Senator DE LARGIE:

– Those who have to go back to the days of the Federal Convention for the origin of a proposal, which was brought into the arena of practical politics only two years ago, must be poverty-stricken for an argument. No such proposal was mentioned in any of the various financial schemes propounded by the different Commonwealth Treasurers. It was not until the Brisbane Labour Conference submitted what, in my opinion, was the most complete scheme for dealing with the financial relations of the Commonwealth and the States that had up to that time been put before the electors, that such a proposal was brought into the arena of practical politics. I, therefore, claim that the Labour party are entitled to the credit of having solved what was undoubtedly a knotty financial problem, requiring a great deal of consideration. The present Government have brought forward the proposal in a practical way, and are showing the genuineness of the offer we made at the Brisbane Labour Conference. During the recent elections, Sir John Forrest declared many times in Western Australia that the scheme of the Labour Conference did not involve the payment of an annual sum of 25s. per head to the States. I may here say that if Labour men in Western Australia were reported but seldom, the remarks of Sir John Forrest, at two or three meetings a day, were reported. The statement was made by the then Treasurer of the Commonwealth that the proposal of the Brisbane Labour Conference was to divide annually between the States a fixed sum of £5,000,000, and that this amount was not to be increased, no matter how the population of the States increased. The suggestion was that as a result of an increase in the population of the States the Commonwealth might, under the proposal of the Labour Conference, pay, not 25s., but 10s. or less per head to the States. Sir John Forrest made that statement over and over again, and Mr. Fisher was quoted in a sort of way in support of it. I have said that the charge that Labour candidates in Western Australia pledged the party to agree to a term of twenty-five years for the proposed arrangement is entirely without foundation. It is a fact that in this Chamber last session I proposed that the Financial Agreement should continue for a term of twenty-five years, but the reason for doing so is easily understood. At that time Mr. Fisher proposed a ten years’ term for the agreement. That was rejected. The Government of the day carried things with a very high hand indeed and when the agreement reached the Senate, Senator McGregor proposed that it should continue in force for a period of fifteen years. That also was rejected, and later on I tried to get the Bill recommitted to submit a proposal for a twenty-five years’ term, but failed. Honorable senators will remember that our objection to the Financial Agreement on thatoccasion was not to the per capita amount proposed, but to the embodiment of the agreement in the Constitution, as that would have robbed this Parliament of its rights and privileges.

Senator St Ledger:

– It was a matter of tactics rather than of principle.

Senator DE LARGIE:

– It was a question of tactics, and the object was to prevent effect being given to one of the most disgraceful propositions ever submitted to a Parliament. The biggest stigma ever attempted to be placed on this Parliament was that which the party represented by honorable senators opposite attempted to place upon it in asking that the agreement should be embodied in the Constitution. Thank goodness we had a patriotic people to appeal to, and they put right what some members of this Parliament would have put wrong if they had been iri a position to do so. During the Federal election some State politicians who were” hand-in-glove with the Fusion party - though I notice they are not so ‘sweet on them now - took action in political matters in Western Australia which amounted very nearly to political corruption. They used public funds in a way that was quite unwarranted and quite unusual in the history of party politics in Australia. We had members of the Western Australian Government going round the country making all sorts of promises to the electors if they would vote for the Financial Agreement. They went in state to places where railways were required and told the people that if they would vote for the Financial Agreement they would get the railway for which they were seeking. They issued leaflets at the public expense appealing to the electors to vote for the agreement. I have one of those leaflets here. It is headed “ The Question of Questions - A Cabinet Leaflet.” It gives instructions to the electors as to how they should vote on the question, and, in, my opinion, approaches very nearly to a contravention of our Electoral Act. I propose to quote one or two short paragraphs from this leaflet. The statement is made -

Under the Agreement we shall receive about £600,000 a year. If these moneys be not received the Government cannot carry on, since no Government would find the means of replacing them. Unification would follow ; the Government of the State would not be by its own Parliament. It would be. swept away by the Federal Parliament. If you seek a parallel to a unified. .Western” Australia, look to Ireland, with her county councils, the substitute which unification will give us if our sovereign State Parliament is taken away from us.

They mixed up one question with another in such a way that the electors were no doubt very much confused. They actually declared that unless the Financial Agreement was ratified the rights of ‘ the State Parliaments would be taken from them, and it would be impossible for the States to remain solvent. My attention has been drawn to a telegram published in one of the newspapers, reporting the proceedings of the Western Australian Parliament. It reads as follows : -

Perth, Wednesday. - In the Legislative Assembly to-day the Premier (Sir Newton Moore) informed Mr. Collier (Labour) that a Cabinet leaflet in support of the Financial Agreement at the time of the Federal elections had been authorized by the Government. In all, 55,000 copies had been printed, and in one or two districts Government servants had been employed to distribute them.

That shows that the State Governments used public funds for political purposes in a way which reflects very little credit upon them. The State Premiers that entered into the Financial Agreement at the secret Conference in Melbourne were prepared to go to any length to secure the acceptance of it for party purposes. Of course they had no doubt that if the Labour party came into office it would carry out the proposal of the Brisbane Conference to pay 25s. per capita to the States. I am pleased to be able to carry out the election promise that I made that no matter what party was returned, an annual payment of 25s. per capita would be secured to the States, notwithstanding anything said on the other side. I am pleased to be here to-day - and on the Government side at that - to help to put into practical shape the proposals initiated by the Brisbane Conference, where this per capita method of settlement was brought into the arena of practical politics.

Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [3.2].- It is my intention to vote against the second reading of this Bill. The measure itself is clearly a breach of the Constitution, in so far as it proposes to affect the constitutional obligation to pay to the States threefourths of the Customs and Excise revenue until the end of 19 10. I do not, however, take much exception to the first part of the Bill which deals with the payment of the ,£450,000 deficit in the finances of the Commonwealth for the last financial year. It is proposed that that sum shall be paid to the States in the proportions set forth in the schedule. I assent to that because I realize that the Commonwealth took upon itself a great and serious obligation, and to that extent, relieved several of the States of the obligation which they had assumed relative to the payment of old-age pensions. The Commonwealth Parliament considered that’ it was only proper that old-age pensions should be administered by the Federal, as distinguished from the State, authority. Good reasons where submitted for making that change. I, for one, realize that a person who has resided during his life in two or three different States should not be debarred from obtaining a pension. When a State Parliament was dealing with the old-age pensions question, it could only legislate for the State. The State of Victoria, for instance, could not grant a pension to a man who had resided for the specified time in New .South Wales or one of the other States. But when old-age pensions were dealt with nationally, it was immaterial in what portion of Australia an individual had resided. If he had resided in this country the specified time, it was recognised that he should be entitled to a pension. The assumption of the old-age pensions system by the Commonwealth was a considerable relief to the three States that had previously granted oldage pensions. New South Wales, for instance, was paying between £500,000 and £600,000 in this direction, and was relieved of that burden by the Federal Parliament. The result was that the Federal Government found itself faced by a deficit at the end of the year of £450,000. Consequently, I do not take any exception to the provision made in this Bill to charge the £450,000 against the States. But the main principle involved in this measure is much more serious. It is provided that the Bill shall come into force as from the 1st July last. Consequently, we are going to make the new ten years’ period date from the last July, and by that means abrogate a distinct provision of the Constitution. We are clearly proposing to rob the States of moneys to which they are entitled.

Senator McGregor:

– Do not use such a harsh word.

Senator Lt Colonel Sir ALBERT GOULD:

.- I repeat that we are about to rob the States of money to which they are clearly entitled under an Act which has re ceived the sanction of the Imperial Parliament, and which we have no power to repeal or amend except by the method specified in the Act itself. We have no constitutional right or power to touch one singlesixpence of what the States are entitled toreceive under the Constitution. When Federation was effected, the people weretold that the States would be entitled tothreefourths of the Customs and Exciserevenue of the Commonwealth for a period of ten years. Those of us who have taken, the trouble to study the debates of the Convention will remember that it was originally proposed that the return of threefourths to the States should be an absolute condition of the Constitution, unlimited ia point of time.

Senator McGregor:

– Did not the Premiers of the States assent to what is now proposed while the Fusion Government were in office?

Senator Lt Colonel Sir ALBERT GOULD:

– Subject to certain conditionsthey did ; and if the Government are prepared to carry out those conditions, I shall not have a single word to say in opposition.

Senator McGregor:

– Did not the people refuse to accept those conditions ?

Senator Lt Colonel Sir ALBERT GOULD:

– No, the people refused to makean alteration in the Constitution. The period of ten years during which the threefourths of Customs and Excise revenue was. to be paid to the States does not expire until 31st December of the present year. The Government themselves recognisethat they are bound to pay the threefourths up to the end of this year. The honest thing would be for usto say to the States, “ You areentitled, under the Constitution, to receive this money for the full period of ten years..We have no power to interfere with that.” But, instead of that, we are saying, “ We have power, after a coming date, to deal with the finances as we please, and we are going to give you such a share of the Customs and Excise revenue as will enable us to take from you what you are entitled to.” Possibly thisBill may not be upset in the Law Court* owing to its peculiar wording. One honorable senator, in speaking to it, has said that he would have preferred to see a provision made under which it would operate from the 1 st January next, and providing for a payment to the States, not of 25s. per head, but of 10s. or 15s., Tora limited period, sp as to enable the Commonwealth to. recoup itself for the money which it had been compelled to pay during the present year. I recognise that if this Parliament sees fit it can say to the States, “ We want the whole of this money, and will not give you a sixpence of it.” Probably an enactment to that effect would stand in the Law Courts. But it would not stand in the courts of conscience, nor would it be an honorable provision to enact. This Parliament does not represent a foreign power. It represents the people of the States. This is not a Parliament that is alien to the States of Australia. We are Australians. We are residents, voters, and taxpayers of the several States which comprise the Commonwealth. It is the duty of the Senate, in particular, to see that the States are properly protected.

Senator Ready:

– The honorable senator is straining the position now.

Senator ALBERT GOULD:
NEW SOUTH WALES · FT; ANTI-SOC from 1910; LP from 1913

-Colonel Sir ALBERT GOULD. - I am not straining the position in the least. I am putting the position as it appears to me any honest and honorable man would regard it. It is our duty to carry out faithfully and truly the provisions of the Constitution, at the same time protecting the rights of the people of this country in its National Parliament. But this cannot be a National Parliament if it is going to take from the States rights which are assured to them under the Constitution. The Constitution points out the way in which such rights should be withdrawn. It says clearly that if any provisions do not suit, they can be altered by the people in a constitutional way. If we are true to ourselves, and to the people whom we represent, we cannot do other than maintain the Constitution in its integrity, except where the people have consented to an alteration.

Senator Guthrie:

– Then the Hobart Conference was absolutely useless?

Senator ALBERT GOULD:
NEW SOUTH WALES · FT; ANTI-SOC from 1910; LP from 1913

-Colonel Sir ALBERT GOULD. - That was a Conference in which leading men had an opportunity to consider what was best to be done in the interests of the Commonwealth and the States with regard to financial and other questions. But no Conference has the power to alter the Constitution by one jot. The members of a Conference may consult together, and agree as to what ought to be done, and no doubt their advice would have very great influence with this Parliament when . dealing with the questions. We have to wait, and see what the Parliament will do, and when it has expressedits will, we have to consult the people to whom we are responsible. We are supposed to represent their views. When it is found that a public man does not represent the opinion of the electors, he is speedily replaced by a man who does. What was done by the Parliament? It passed a Bill for a constitutional alteration under which the States would receive 25s. per capita during the period of its operation, which could only be determined by the passing of a similar Bill, and the taking of a referendum of the people. The electors would not accept the constitutional alteration, which was referred to them. It is true that the proposed per capita allowance was to start from the 1st July of this year, and that section 87 of the Constitution was to be wiped out. The Government claim that they are complying with the provision which was referred to the people for their acceptance. Are they ? Certain conditions were attached to the provision. Not only was the agreement to be embodied in the Constitution but the States were to consent to the payment of onehalf of the estimated deficiency. That arrangement was to be of a permanent character, and the States would thus be enabled to know exactly where they were. But the electors negatived the proposed alteration of the Constitution in regard to the division of the revenue as from the 1st July. By their vote at the referendum, they declared that section 87 should be as binding upon the Parliament as if an alteration thereof had never been suggested.

Senator McGregor:

– They never said anything of the kind.

Senator ALBERT GOULD:
NEW SOUTH WALES · FT; ANTI-SOC from 1910; LP from 1913

-Colonel Sir ALBERT GOULD. - For the Government to claim that they are carrying out a portion of the decision of the people is to say what is not correct, because the people said clearly, “ We leave it to the Parliament to decide the way in which the money shall be distributed after the 1st January, 1911, but up to that date it is bound by a sacred obligation, from which it cannot get away, as a matter of law, or of honour, or of principle.” We are bound to stand to that if we wish to carry out the Constitution in its integrity. But the Government say, “ We will comply with the wording of the Constitution, but will re-take from the States all the money that we give in excess of the specified amount. We do not care whether you are entitled to it under the Constitution, or not. By the wording of the Constitution, we have power to get behind its provision in that respect.” Why do not the Government say at once, “ We will make the Bill retrospective for a year, or for two years “ ? It would be just as honest to do that as to do what they propose. The people have never given any authority to the Parliament to get behind the Constitution in this respect, and if it takes that course it will stultify itself, and depart from a tradition which is generally observed by the Parliament of every British-speaking country. Those who have been educated in the principles of responsible government as administered by the Parliament of Great Britain know that it has never been untrue to its traditions. Every man ought to observe the law so long as it remains in force, and when it is necessary to make an alteration the legislative body should act within its powers. This is not a Parliament which can do what it pleases. It is bound by the Constitution, which states distinctly its rights and duties and the rights and privileges of the people. I was told to-day that the voice of a man who speaks on this side of the Chamber is just as effective as the voice of one who is crying in the wilderness. Honorable senators on the other side listen to what is said, but they might just as well be deaf if they will close their ears to arguments. We might just as well speak to the wilderness, where there is no one to hear a single word of an utterance.

Senator Findley:

– Why this effort then?

Senator Lt Colonel Sir ALBERT GOULD:

– It is the duty of every Opposition to make known its reasons for opposing the adoption of certain views or the passing of certain measures, because there is an ultimate court of appeal to which we all have to go eventually. Would not the honorable senator say that I should be unworthy of the confidence of the people if I attempted to cloak my views simply because they appeared to be unpopular in the Parliament for the time being? Let me point out why I think that honorable senators on the other side are wrong in supporting this measure. They have been delving into recent history. Hansard relates that certain honorable senators, who represent the dominant party here, were all in favour of amending the original proposals by adopting a period of either fifteen or twenty years. They objected to a Bill which proposed to put the agreement in the Constitution in perpetuity, and the people at the referendum disapproved of that proposal. On the 26th November last the Senate, in Committee, resumed the consideration of clause 3, which proposed to alter the Constitution by inserting after section 94 the following sections - “ 94A. From and after the thirtieth day of

June, One thousand nine hundred and ten, sections ninety-three and ninety-four of this Constitution shall cease to have effect.” “ 94B. From and after the first day of July,

One thousand nine hundred and ten, the Commonwealth shall pay to each State, by monthly instalments, or apply to the payment of interest on debts of the State taken over by the Commonwealth, an annual sum amounting to Twentyfive shillings per head of the number of the people of the State as ascertained according to the laws of the Commonwealth.”

In speaking to the second proposition the Vice-President of the Executive Council, who was then leading the Opposition, said -

I trust that the Committee will vote against proposed new section 94B. To my mind, that provision contains the greatest sting in regard to curtailing the powers of the Commonwealth Parliament. If it be negatived, I shall propose to insert in its stead a new provision, which, from the expressions of opinion that have been indulged by honorable senators, ought to give effect to the wishes of a majority in regard to the adjustment of the future financial relations of the States to the Commonwealth. The new sub-section which I shall move reads -

That during a period of15 years from 1st July, 1910, and thereafter until the Parliament otherwise provides, the Commonwealth shall pay to the States by monthly instalments or apply to the payment of the interest on the State debts taken oyer by the Commonwealth an annual sum equal to 25s. per head of the people of the States as ascertained according to the laws of the Commonwealth.

Senator O’Keefe:

– D - Did Senator McGregor move that?

Senator Lt Colonel Sir ALBERT GOULD:

– On that occasion Senator McGregor proposed that a provision should be placed in the Constitution in such a way that during a period of fifteen years no Parliament would be able to make a change. Continuing he said-

Honorable senators generally admit that the time has arrived when some new financial arrangement ought to be made with the States, and they are willing that the Commonwealth should return to the States annually 25s.per capita…..

I hope, therefore,that proposed new section 94B will be eliminatedso as to give me an opportunity of moving inthe direction that I have indicated.

In the course of the debate the honorable senator spoke again. He said -

If the proposed new section 94B were omitted, and the amendment I have suggested were proposed, even the objections urged by Senator Clemons might be overcome. I have proposed that we should say that during a period of fifteen years, after the ist July, 1910, and thereafter “ until the Parliament otherwise provides,” certain things should be done.

It will be seen that he attempted to insist that we should place the provision in the Constitution for a period of fifteen years.

Senator St Ledger:

– I think we have just been told by interjection that all that was tactics and not principles.

Senator Lt Colonel Sir ALBERT GOULD:

– I assume that honorable senators on the other side then said what they thought was right and proper in the interest of the Commonwealth as a whole. Speaking to this matter, Senator Lynch said -

I am not in favour of fixing the duration of this agreement for such a short period as that which Senator McGregor indicated. I believe that it would be better to adopt a period of twenty, or twenty-five years.

On the question that the proposed new section 94B should stand as printed there were eighteen Ayes and fifteen Noes. Let us see who then voted against the insertion of the provision in the Constitution and so followed the lead of Senator McGregor, presumably on the ground that they thought that a period of from fifteen to twenty years should be adopted. The Noes were J, W. Croft, E. Findley, now an Honorary Minister, T. Givens, G. Henderson, J. H. Keating, P. J. Lynch, G. McGregor, now Vice-President of the Executive Council, G. F. Pearce, now Minister of Defence, E. J. Russell, W. Russell, J. C. Stewart, W. H. Story, Sir Josiah Symon, H. Turley, and E. Needham, teller. All those men have turned their backs on the proposals which they then made.

Senator Henderson:

– Will the honorable senator now read the names of those who tried to wheedle the people in the same division?

Senator Lt Colonel Sir ALBERT GOULD:

– The honorable senator knows that that is unnecessary at this juncture. Senators Symon and Keating were the only two senators who did not belong to the present dominant party who were then in opposition to what has been termed the Fusion Government.

Senator Guthrie:

– To which party do they belong now?

Senator Lt Colonel Sir ALBERT GOULD:

– I do not think they belong to the honorable senator’s party. On the ist December, Senator Millen moved the third reading of the Bill, and then Senator de Largie came upon the scene rather prominently. I find this in the report -

Senator DE LARGIE:
Western Australia

– - I move -

That the Bill be recommitted for the reconsideration of clause 3, proposed new section 94B.

I desire to move an amendment slightly different from that moved in Committee by Senator McGregor. My proposal will be to fix a term for the operation of the new arrangement by inserting in proposed new section 94b after the words “ From and,” the words “ for a period of twenty-five years.”-

The honorable senator has to-day told us that he made no statement to the electors of Western Australia that he was in favour of a period of twenty-five years. Yet here are the honorable senator’s words in Hansard, as uttered within a few weeks of the time when he appealed to the electors. Let honorable senators remember that the period of twenty- five years was to be embodied as a part of the agreement in the Constitution, so that neither this nor any other Parliament within that time should have the power to revise it. Senator de Largie further said -

I had intended to submit, an amendment to this effect when the Bill was in Committee, but, owing to an unfortunate incident that happened, I was absent when the opportunity occurred. It is necessary to make this explanation, because I do not wish it to be supposed that I am moving this amendment with a view to causing delay. The adoption of a twenty-five years’ term will allow the agreement that we propose to enter into with the States to terminate at the same time as the special payment to Western Australia. It will then be open for Parliament to reconsider the whole position.

He mentioned that it would synchronise with the provision in the agreement for a special payment to Western Australia for the same term, and he went on to say -

One of the weak spots in Senator McGregor’s proposal for a fifteen years’ term was that it treated the matter without regard to entanglements affecting any particular State.

I direct attention to the fact that not only has the honorable senator turned his back upon his own proposal at that time, but he is now advocating a proposal which involves just the same entanglement in respect of the special provision made for Western Australia as that involved in Senator McGregor’s amendment, which he considered open to that objection. Now, what was the division on Senator de Largie’s proposal? Here it is -

Question - That the Bill be recommitted for the reconsideration of clause 3, proposed new section 94B - put. The Senate divided.

AYES: 17

NOES: 18

Majority…… …1

Honorable senators opposite cannot get away from the fact that they pledged themselves to support periods of fifteen and twenty-five years. I find that Senator de Largie supported Senator McGregor’s proposal that the period should be fifteen years, though he said it was a mistake, and that it would be better to make the period twenty-five years, as that would avoid difficulties in connexion with the special grant to Western Australia. How can honorable senators opposite come forward now and claim that the arrangement provided for in this Bill is in the best interests of the Commonwealth?

AYES

NOES

A marciful Providunce fashioned us holler

O’ purpose thet we might our principles swaller.

There is a great deal of truth in that couplet, and we are now finding a large number of honorable senators on the other side, and of honorable members on the right of the Speaker in another place, making an important change, although the 13th April did not give the present Government the right to swallow all their principles. At -the elections a certain number of people decided that they would have a change, and that the Labour party should be given an opportunity of showing what they could do when in office, with a majority behind them. We know that they were in office on two occasions previously, but they had not then the support of a majority in the Commonwealth Parliament, and were not given a fair opportunity to carry out their policy. It has been very much the same with all previous Governments in the Commonwealth. We have never hitherto had a dominant majority on one side or the other. I prefer to see the Labour party in power with a substantial majority behind them, to seeing them in power under the conditions on which they assumed office on previous occasions. I like to see them given a fair opportunity to show what they can do, and let the people judge how far their legislation suits the country. I hope that honorable senators will bear in mind the evidence of inconsistency to which I have referred. I hope they will realize, also, that in this Bill the Government are going behind the Constitution, and acting in a way foreign to all our previous ideas of the way in which constitutional provisions should be observed. I say that this proposal is in derogation of the rights of the people under the Constitution by which they were induced to become members of ii Commonwealth. Tt is one of the basest of things to deceive a people in connexion with conditions to which they have been pledged. The Government are aware that they are not entitled to withhold from the States any sum in excess of I 2S. 6d. per head during the financial half-year, but they get over the difficulty by saying, “We have control of the money, and although in this year we will give you what you are entitled to under the Constitution, we will subsequently reduce the payments made to you, so that you will receive three-fourths of the net Customs and Excise revenue for nine and a-half years, and not for ten years, as provided in the Constitution.” I feel that, in this matter, I have discharged my duty, and if in the State Parliaments an outcry is raised, and the Commonwealth Parliament is charged with trying to override the sovereign rights of the States, honorable senators opposite will have only themselves to thank for it. This Bill is but another attempt to set aside the rights of the States. It treats the State Parliaments as provincial bodies, instead of sovereign Parliaments, as they are under the Constitution.

Senator WALKER:
New South Wales

– While Senator de Largie was speaking, I asked him whether he was aware that any senator from Western Australia had, during the elections, stated that he would support the payment annually of 25s. per head to the States for twenty-five years. I gathered from what the honorable senator said that none of his colleagues had made such an assertion.

Senator Vardon:

– Senator de Largie proposed such an arrangement himself.

Senator de Largie:

– Not during the elections.

Senator WALKER:

– In the West Australian newspaper, of 22nd February of this year, appears a letter from Senator Pearce in the following terms -

I may be allowed to say that when Senator de Largie moved in the Senate a resolution to limit the present agreement to 25 years he had the votes of every Labour senator.

Senator de Largie:

– The honorable senator is not quoting from a newspaper. He is quoting from Hansard.

Senator WALKER:

– I am quoting from a letter written by a gentleman who is an honoured senator from Western Australia.

The PRESIDENT:

– I ask the honorable senator whether, as alleged, he is quoting from Hansard of the present session ?

Senator WALKER:

– I am quoting from a letter published in a newspaper.

The PRESIDENT:

– Is the honorable senator quoting from Hansard of the present session?

Senator WALKER:

– Yes.

The PRESIDENT:

– Then the honorable senator is out of order.

Senator WALKER:

– I am not going to tell a fib about the matter, but the letter from which I was quoting appeared originally in a newspaper. Senator Pearce is one of the most popular men in Western Australia, as he is also deservedly one of the most popular men in this Parliament. A few days later, he repeated the same statement.

Senator de Largie:

– Who said so?

Senator WALKER:

– It is so staled in the newspaper.

Senator McGregor:

– The honorable senator ought to be compelled to lay the newspaper on the table of the Senate.

Senator WALKER:

– The Western Australian representatives have to thank the present Government for depriving their State of a very large sum of money. Under a twenty-five years’ arrangement, Western Australia would have received an extra payment of £3,250,000. Under the ten years’ arrangement, she will receive £2,050,000. Western Australia will therefore lose £1,200,000, that being the difference between a ten years’ and a twenty-five years’ adjustment. When the ten years’ period expires, it is quite likely that, owing to an alteration in the character of the population of Western Australia, there will be no necessity to pay them an extra allowance per annum. The loss of £1,200,000 will therefore be due to Senator de Largie and those other senators who have declined to put into the Constitution a proposition which Senator de Largie himself supported in the last Parliament.

Senator de Largie:

– We are quite prepared to rely upon the Labour Government that will be in office ten years hence to do justice to Western Australia.

Senator WALKER:

– The honorable senator will find, if things go on as they are now, and we are to have nothing but class legislation, that the state of parties will be reversed in Parliament ; certainly in the other House, if not in the Senate.

Senator de Largie:

– Will the honorable senator’s party repeal this agreement, then?

Senator WALKER:

– There is no agreement. The honorable senator’s party refused to make an agreement.

Senator de Largie:

– There will be an Act of Parliament. Will the Fusion Government repeal that?

Senator WALKER:

– The Act will expire in ten years. Senator Gould has rightly impressed upon the Senate that this Bill is a distinct breach of the Constitution. It endeavours to abrogate the right of the States to three-fourths of the Customs and Excise revenue up to the 31st December next. There is no doubt about that. Even Senator Givens agrees with me on that point. I hope that whenwe get into Committee, Senator Givens will support us in endeavouring to effect an alteration.

Senator VARDON:
South Australia

– This Bill embodies a proposal to pay a certain amount of money to the States during the next ten years. Last week, when we were considering the Trust Fund Advances Bill, the Vice-President of the Executive Council said that that measure provided that the States should be credited with certain amounts of money that were not to be actually paid. It was to be a kind of bookkeeping entry. The States were to be credited with the money, and afterwards debited for the purpose of squaring accounts. I find from the newspapers, however, that the money has been paid. Apparently, every penny due to the States up to the 30th June has been handed over to them.

Senator McGregor:

– Is not that a good thing ?

Senator VARDON:

– I wish that the honorable senator had said at the time that that was going to be done.

Senator McGregor:

– I did say so.

Senator VARDON:

– The honorable senator distinctly said that the States were not going to be paid, but only credited. I am very glad that the Constitution has been complied with in that respect. This Bill proposes to do what is perhaps the right thing, but in altogether a wrong way. The Constitution distinctly provides that, up to the end of 19 10, threefourths of the Customs and Excise revenue shall be returned to the States.

Senator McGregor:

– And it will be returned to them.

Senator VARDON:

– It will not be returned to the States at the rate of 12s. 6d. per capita from the 1st July to the 31st December, and 12s. 6d. from the 1st January to the 30th June. As I understand the proposition, the States are to be paid their full three-fourths up to the end of this year, and then are to receive the balance between that amount and 25s. per capita, minus £450,000 that is to be retained by the Commonwealth. What claim has the Commonwealth Government to that £450,000?

Senator McGregor:

– It was part of the Premiers’ agreement.

Senator VARDON:

– There was a Conference between the Premiers of the States and the Prime Minister of the Commonwealth; and, after a good deal of discussion, an agreement was arrived at.

Senator Guthrie:

– How does the honorable senator know that there was a good deal of discussion? The Conference was secret.

Senator VARDON:

– Well, I do not know that there is discussion in the Labour party’s caucus meetings, because I am not there.

Senator McDougall:

– Why does the honorable senator condemn the caucus for its secret meetings, while he approves of what was done at the secret Conference of the State Premiers?

Senator W RUSSELL:
SOUTH AUSTRALIA · ALP

– The honorable senator himself attends caucus meetings of his own party.

Senator VARDON:

– I have never known such a gathering to be held. The Premiers agreed that, recognising the claims of the Commonwealth for additional revenue in consequence of the assumption of the responsibility for old-age pensions and the increased cost of defence, £600,000 should be retained from their revenue.

Senator McGregor:

– Should they not be thankful that the whole £600,000 is not now to be retained by the Commonwealth ?

Senator VARDON:

– But there are two parties to an agreement. Furthermore, an agreement has to be accepted as a whole, and not in part. If there are four or five clauses in an agreement, one of the parties to it cannot say, “ I will throw over four of the clauses and abide by the fifth.”

Senator McGregor:

– But there was another party to be consulted, and that party said, “ We will accept part of the agreement.”

Senator VARDON:

– There was a third party to be consulted, and that party said, “ We will not have any of the agreement.”

Senator Rae:

– According to that, we have no right to pay the States 25s. per capita.

Senator VARDON:

– I say that the agreement between the Premiers and the Federal Prime Minister has been completely swept aside by the people. That agreement contained the provision that in consideration of the States giving up ?600,000, the new arrangement was to be embodied in the Constitution. The people having swept that agreement aside, every bit of it has gone. Therefore, no party can claim that any portion of it should be put into operation. I do not say that the States should not contribute any portion of the ?450,000, but I do say that this Parliament cannot demand it from them. We cannot justly demand the money as part and parcel of the agreement.

Senator Givens:

– Which does not now exist.

Senator VARDON:

– Exactly. We ought to have so arranged our finances as to make this Bill operate from the 1st January next. Then we could have made an arrangement for ten years, or any shorter period. I am not particularly enamoured of the ten years’ provision. At all events, it is quite long enough.

Senator Givens:

– It is a great deal too long.

Senator VARDON:

– It may be. When the Financial Agreement was submitted, I said that I did not believe it would last for more than three Parliaments, that is, nine years ; and I should not be surprised if before the end of ten years this measure has to be repealed, and some other provision made. But I voted for the Financial Agreement because I considered that if the people put it into the Constitution they could easily take it out again. I have heard honorable members opposite stand on the platform, and say “ Trust the people.” I am prepared to trust the people. I believe that if at any time the Commonwealth Government had gone to the electors, and told them that it was necessary to re-adjust the financial relations of the Commonwealth and the States, the electors would have been loyal and patriotic enough to have altered the Constitution. South Australia is one of the smallest States, and yet she did not accept the Financial Agreement, although it would have been to her advantage to do so. But, although the agreement was rejected, we are taking advantage of it.

Senator MgGregor. We are simply taking it as a basis.

Senator VARDON:

– The Government are taking advantage of the States by refusing to pay them their proper proportion of the Customs and Excise revenue up to the 31st December. If the States choose to contest the position, I do not believe that the Commonwealth will be able to enforce this measure. But I do not want to see any litigation about it. I would sooner have the States accept the position.

Senator de Largie:

– The honorable senator is more troubled about the State finances than he is about old-age pensions or the requirements of the Commonwealth.

Senator VARDON:

– That is a very insulting interjection, such as I do not think any honorable senator has a right to make.

The PRESIDENT:

– Senator Vardon has complained of a continuous run of interjections. I hope honorable senators will allow him to make his speech in his own way.

Senator VARDON:

– I did not complain of interjections generally, sir, because I do not mind them, but I complained of an insulting interjection that I have more regard for the finances of the States than I have for the payment of old-age pensions.

Senator de Largie:

– I would rather make insulting interjections than make disloyal statements about this Parliament.

Senator VARDON:

– I have not made such a statement, and the honorable senator had no right to say that I have. For the last twenty years I have supported the principle of old-age pensions. If the honorable senator had known anything of my history he would not have made an interjection of the sort. When we were considering the Trust Fund Advances Bill it was interjected that the Opposition wanted to rob poor people of their pensions. That was not a fair thing to say with regard to the Opposition. I hope that the statement will not be repeated. I admit that the Commonwealth has need of revenue, but there is a right way of proceeding, and the Government are taking the wrong way. Even if our revenue were short at the end of the year it would be much better to give the States all that is due to them and arrange in some other way to make up the deficiency. That is the only complaint I have to make regarding the Bill. I have no complaint to make about the term of the payment. I do not think that it ought to be for a longer term than ten years. I know that Senator de Largie proposed a term of twenty-five years, and that in a letter to the West Australian Senator Pearce said that the whole of the Labour party were prepared to stand by the proposition of Senator de Largie. Speaking on behalf of the Labour party Senator Pearce then stated that if the agreement were thrown out they would pass legislation providing for the payment of 25s. a head for the period of twenty-five years.

Senator W RUSSELL:
SOUTH AUSTRALIA · ALP

– I would not vote for that.

Senator VARDON:

– That shows the honorable senator’s good sense. I would not vote for such a long period. I am not objecting to the term of ten years being adopted. I am not objecting that the States may be asked if they choose to contribute the £450,000. But I object to the mode in which this legislation is submitted. It is practically a violation of the Constitution, and I do not think that we ought to invite any litigation with the States.

Senator ST LEDGER:
Queensland

– I do not wish to delay the consideration of the measure in Committee. .1 do not quite understand the silence on the other side, unless the Government are desirous of getting to work in Committee. The criticism from the Opposition benches has unmistakably drawn out a fact, and so far as it has done so I think it will be for the advantage, as it certainly is for the education, of the community. The last election was fought on the crucial point as to what form of Bill should, if the referendum were rejected, come before the Parliament. During last session the present occupants of the Government benches proposed that a term of fifteen years or twentyfive years should be inserted in the Constitution. But we know now from the Vice-President of the Executive Council, and by interjection from other honorable, senators, that those propositions were simply so much tactics, or jiu jitsu, more or less intended to deceive the country or, if that be a rather hard expression to use, intended not to educate the people, but to deceive the Senate. I do not know whether, in the circumstances, to admire more the candour with which that position is now admitted, or the discredit which ought to attach to every honorable senator who took up that position on a matter which was of vital interest to the States, and who now says that he was only playing a game, and was not dealing fairly with the people. I may not, as the result of this criticism, be able to break into the conspiracy of silence. But if the debate has done nothing else it has made clear, what is nowadmitted by the present occupants of the Government benches, that the tactics adopted on a former occasion were part of what I may call a parliamentary campaign of hypocrisy, and that they did not, by their votes, express their real feeling. The discussion of the question has made it evident what the electors have lost, and what they are likely to gain, if anything, from the present proposition as compared with that which was submitted to them by the late Government. I think that if the electors had been told that the campaign of those who opposed the agreement was, more or less, a sham,as they have now admitted, the result would have been very different. It is said that inasmuch as the electors by an overwhelming majority have sent in a party which represents the opposition to the Financial Agreement, therefore we, on this side, are more or less unjustified in resisting the present measure. At the referendum public opinion was very finely divided, because out of a total of 1,300,000 voters the majority was only about 2 *</inline> per cent., which is a remarkably small one. The percentage of the voters who constituted the majority to the electors on the roll who were entitled to vote was under 30 per cent. As I have said, only i* per cent, of the electors who voted rejected the agreement. If we take the whole number of electors, only per cent, voted for its rejection. I think it is highly necessary to emphasize two things, namely, that the majority for the Government is remarkably small, and that they will be only doing justice to the country by carefully weighing their steps. The clause of the Bill dealing with the allocation of the 25s. *per capita* during the current twelve months is framed in such a way that I believe that when it goes into Committee the Vice-President of the Executive Council, and many of his followers, will be more or less ashamed of it. The honorable senator suggested a very handy word. Referring to the tactics which he indulged in some time ago, he spoke of them as being a form of jiujitsu. If ever there was a clause which dealt in that way with the States, it is the one which I have just mentioned. **Senator McGregor** knows that some of his supporters are almost ashamed of the way in which the States have been treated in view of section 87 of the Constitution, and his own election campaign. I wonder whether he will be quite as easy when clause 4 is considered in Committee. It has been frequently suggested from the other side that no such thing as permanency was ever intended by the Labour party. I think that they themselves did nothing to make the Financial Agreement permanent. It must be discouraging to the present occupants of the Government benches that they find themselves by their tactics not able to make the provision for a longer term than is proposed in the Bill. I do not suppose that a more competent authority on that question can be quoted than the Chairman of the Committee which sat to discuss and determine the matter at Brisbane, and to tell the public what the Labour party intended to do. The manifesto, from which I propose to read, was signed by **Mr. McGowan,** Leader of the Labour party in New South Wales; **Mr. Holman,** Deputy-Leader of that party; and **Mr. Niel** Nielson, its secretary. When a dispute arose as to what was really meant by the Brisbane scheme, it was stated that it was intended to give permanency. Yet, during the election campaign, this statement was sent forth by the Labour party in New South Wales -

As to the other point in dispute, whether the scheme (i.e., the scheme proposed by the Brisbane Conference of Federal Labour members) should be carried out by Constitutional Amendment, it may fairly be submitted that this is the only way in which the permanency and security so dwelt upon by speakers at the Brisbane (Labour) Conference can be obtained. Nothing, of course, can ever be quite permanent, as the Constitution can be altered at any future time to introduce any new arrangement, just as easily as it can be altered now, to include the set of proposals, but by its being put in the Constitution the sovereign powers and the solvency of the States will be secured by any hasty interference by the other party to the compact.

That manifesto was issued to the people of Australia by the Labour party, and quoted to the Senate when it was considering the question. It was intended to give as large an amount of permanency as they possibly could to the arrangement. It is one of the curiosities of political history that, in a matter of vital interest to the people, we should have a voice speaking in one way and a voice speaking in another way. The only parallel to such conduct is that of the present occupants of the Government benches, who have said that while they themselves made clear and distinct proposals to give permanency to the agreement up to fifteen, or even twentyfive years, it was all so much jiu-jitsu. Now what guarantee have the people of Australia that the present movement is not all tactics? If they did a certain thing on a previous occasion, they are liable to do it again. One of the strong reasons why we urged the electors to ratify the agreement was to prevent this important question from being made the plaything of parties. When

Senator McGregor:

asked the Senate to adopt the provision for a term of fifteen years, he knew that he was holding out a powerful bait to the then Government, because what we wished to achieve would have been almost substantially gained if we had followed his lead. He knew well, and so did every one of his followers, the fascination of the temptation which he held out in his amendment. What happened immediately after that amendment was defeated ? It was a question of whether we should not make an agreement for a substantial term of years, and knowing that it was proposed that the term should be twenty-five years, and that that should be embodied in the Constitution, every member in both Houses of this Parliament must have realized what the temptation was. What would have been the position if the Government of the day had said that they would accept the amendments, in view of the fact that they would then be giving in substance what they desired to give to the States? Could a single member of the party now in power have said, “ We never meant it”? Did the proposal become immoral because we refused to support it, or would it have become moral if we had supported it? The VicePresident of the Executive Council cannot extricate himself from the difficulty. He has admitted that the action of the then Opposition was entirely insincere, and was, in fact, an exhibition of political hypocrisy. “We could at that time have tied up Senator de Largie, and every member of the then Opposition, if we had said that, seeing that they would give us in substance what we were asking for the States, we would accept the amendment. No. member of the then Opposition could then have dared to say in this Parliament, or before the electors, what, in the consciousness of their overwhelming strength, they are prepared to say now. The task before the present Opposition is a difficult one, in view of the fact that they cannot expect that their criticism will be effective, because of the overwhelming numbers on the other side. But we shall have done something in this matter in educating the people on this question, because the discussion has made it clear that when honorable senators opposite were apparently working in the interests of Australia, it was all a game of political jiu-jitsu. Honorable senators opposite, with the numbers on their side, may be regardless of criticism, but our political systems have their day, and majorities fail, and it is as well that the people should know that on the vital question involved in this Bill, and the proceedings from which it springs, every member of the Labour party, in speaking to the people in Parliament, or from their platforms, was speaking with a double tongue, and engaging in a political game of jiu-jitsu. In the circumstances, what confidence can this Parliament, the State Parliaments, or the people of Australia, have that the present Government, with their overwhelming power, will maintain the provisions of this Bill ? What reliance can be placed upon the utterances of any honorable senator opposite who advocated the rejection of the Financial Agreement, and is responsible for this substitute for it, when we have found every one of them wavering from time to time, according to the political weather? A political party is no better or stronger than the individual members composing it, and when we find individual members of the Labour party wavering in this way, we can accept no assurance from the present Government as definite. It is admitted thatone of the ablest members of the present Government is the Minister of Defence, Senator Pearce. There is no member of the Government whose utterances are received with more interest, and upon which, once they are made, it is felt that we can rely more confidently. On this important question, he stated in Western Australia that he desired a term of twenty-five years for this agreement.

Senator Vardon:

– He pledged the Labour party to it.

Senator ST LEDGER:

– That is so. I propose to read what the honorable senator said. We are now told by honorable senators opposite that they are not bound to the term of ten years provided for in this Bill. We point out that such a term was distinctly pledged by the present Prime Minister in a manifesto to the people officially authorized by his signature, and that of the secretary to the parliamentary Labour party. That manifesto was received by the people with all the authority which attaches to the utterances ofa leader in a political campaign. Yet we have the party now saying that it might just as well have been so much waste paper, since they are in no way bound by it. We are told that it does not pledge the party any more than if it had never been issued. That manifesto having been accepted as the manifesto of a party enunciating great political principles, what reliance can be placed upon it when the Prime Min ister’s own supporters in so vital a matter assert that he had no right to say what he did ? They say, “ He is only the Honorable Andrew Fisher, and the other signatory to the manifesto is only Mr. David Watkins. We never made the statement, and we shall deal with these matters as we like.” After such an exhibition, the Opposition cannot be expected to place very much reliance upon the security offered by an Act of Parliament submitted by a Prime Minister who is treated in such a way by his supporters. We can only compliment the present Prime Minister upon his tact and patience, and sympathize with him when we find that he submits, or is obliged to submit, to what would be regarded in other circumstances, and by other parliamentary leaders, as an act of gross insubordination. It will be open to the Opposition in considering this Bill in Committee to move, when we come to the clause dealing with the period during which the agreement is to remain in force, the substitution of “ fifteen “or “ twenty-five,” for the word “ten.” Will a single honorable senator on the other side vote for such an amendment? What will be the position of the Minister of Defence if we move an amendment of that kind? I wish the honorable senator were present to say. What will be the position of other honorable senators on the opposite side if such amendments are moved. In connexion with a Bill dealing with an analogous matter, one honorable senator opposite said that this Parliament could not bind the next. What position would that honorable senator find himself in if we moved to strike out the word ‘ ‘ ten” ? He would be bound to vote with us. So that honorable senators will see that this Bill is at the mercy of political tactics and jiu-jitsu. It is a discreditable position, if I may be permitted to say so ; and, if not discreditable, the members of the Government must at least feel it to be intensely difficult. There appears to be an intention on the part of honorable senators opposite to remain silent; but we shall see what will be the result of my speech. I have often succeeded in drawing the other side. I cannot compliment the supporters of the present Prime Minister upon placing him in the position he occupies in connexion with this matter to-day. In his manifesto, he seemed to be speaking with the full knowledge and consent of his party. It was published in all the leading journals of Australia, and in most of them was referred to in much the same way as it was referred to in the Sydney Morning Herald, from which I quote the following : -

The following manifesto has been issued by the Commonwealth Labour Party, and is indorsed by “ Andrew Fisher, Chairman,” and “ David Watkins, Secretary,” and on and in behalf of the Labour Party of Australia.

Yet we are told here to-day that it does not bind anybody. From beginning to end, the manifesto of the present Prime Minister speaks on behalf of a party with a definite policy. The answer to my criticism may be that neither he nor any other member of the party could pledge it outside their published platform and its corelated planks. That may be good enough as between the members of the party and their Leader, but it is not good enough for the people, because it is not in accordance with accepted constitutional practice and tradition. When the Leader of a political party issues a manifesto to the electors, in which he speaks of his party and their policy, it is assumed, by reason of long tradition, and is so understood by the people, that he means every word that he says; and that if he is returned to power, the policy he has announced will be carried out, irrespective of any platform which even he may have signed, whether in secret or not. That is a principle and practice of constitutional government. It has been alleged that we are now governed by a caucus Ministry. Over and over again, in connexion with this question, that has been stated directly, and by inference. The charge is made that we are being governed by caucus, and that that is a violation of all previous constitutional traditions and practice to which we should not submit. I think that some of this criticism is not well placed, and is to some extent unfair. But when the Leader of a powerful party in Opposition appeals to the country with a political manifesto, signed by recognised officials of the party, and outlining a definite policy that is accepted by the people, and we then find that individual members of the party claim that they are not in any way bound by it, every word that has been said about the danger to constitutional government is justified. We have the admission to-day that the whole of the tactics adopted during last session, by those who now occupy the Government benches in this Chamber, were not based upon any question of principle at all, and that the arguments which the people were induced to take seriously represented merely so much jiu-jitsu.

Let us put an end to this kind of thing if we can. In one of the clauses of this Bill we are not dealing fairly with the people of Australia. I should like to see that clause materially altered. The Government are proposing to deprive the States, during the months from the 31st December to the 30th June of next year, of so much as - put against what the Commonwealth will have paid them in the previous six months - will result in the aggregate of the twelve months’ operations to 25s. per capita. Let honorable senators opposite produce to me if they can a speech by any representative man on their own side which indicated that if the Labour party were returned to power the finances of this country would be treated in that way. Did the Vice-President of the Executive Council tell the people of South Australia, “ If you return us to power we will give you 25s. per head, not from the 31st December, but from the ist July of this year, and will take away from you so much as will make up a return of 25s. for the whole year “ ? I challenge a single honorable senator opposite, from the VicePresident of the Executive Council downwards, and including his very able Minister of Defence, to produce one scrap of paper by which it can be proved that the people of Australia could have inferred that that was to be done. If the Vice-President of the Executive Council will condescend to take up that challenge, I, and others, will await his declaration with a great deal of interest. But if he chooses to treat it with the contempt that he may safely assume by reason of his overwhelming majority, he must stand convicted of being a member of a party which has promulgated a policy that is more or less unfair, hs compared with what was spoken about some months ago, and, in a political aspect, is more or less hypocritical.

Senator NEEDHAM:
Western Australia

– I recognise the truth of the old saying, “There is nothing new under the sun.” It would be very diffi cult to advance anything new on the subject under consideration. But if 1 aic not original on this occasion, I shall at least be brief. There are two excellent reasons for brevity in my case. The first is that it is hard to discover anything fresh to advance on the subject, and the second is the physical reason that the condition of my throat will not permit me to speak at length. . No subject since the inception of Federation has claimed so much attention as the financial arrangements between the Commonwealth and the States. The Fusion Government, in the last Parliament, sold our national rights for a mess of political pottage. The pottage was the compact entered into at the secret Premiers’ Conference. The Fusion Government agreed to try to kill the National Parliament by lending itself to an agreement favorable to the Premiers, on condition that they should receive support from the States Governments at the ensuing Federal election. The compact was a most unholy one. The statement that I am now making has been made by me, and other members of my party, both inside Parliament and out, and no member of the Fusion party has dared to contradict it. I interjected to-day that the secret Conference was a conspiracy. So it was. A plot was there hatched with the object of destroying the powers of the Commonwealth Parliament. Had that plot succeeded, this Parliament would have lost its national character. lt would have become subservient to the dictation of any six gentlemen who might for the time being be Premiers of the States. But I am glad to say that that plot was practically killed at its inception. The agreement was fully discussed in both branches of the Legislature. This brings me to a point made in a speech which has been delivered by Senator St. Ledger, in his usual intelligent and capable manner. He said that when the agreement was referred to the electors, it was rejected hy the narrowest of majorities. The honorable senator may enjoy that solatium if he pleases. But let me refresh his memory by referring him to what took place in the last session of Parliament. The third reading of the Constitution Alteration ^Finance) Bill was carried in the Senate by 19 votes to 16. That is to say, it was carried by the narrow majority of three votes. Surely the honorable senator will admit that, as the Bill was carried by the narrowest of majorities in a deliberative assembly, the members of which had every opportunity to debate the complex questions at issue, it is not surprising that it was not rejected by a larger majority by the people at the poll. Senator Gould has referred to-day to the action of the then Labour Opposition in voting for a limitation of the period during which the agreement was to operate. I find, on turning over Hansard, that suggestions were made that the agreement should operate for ten, fifteen, and twenty-five years. Divisions were taken, after long debates, on the proposed periods of fifteen and twenty-five years. I voted in both those divisions in favour of such limitations. But at the same time I was opposed to the placing of the agreement in the Constitution. I should have welcomed any period of years, so long as this Parliament was not shackled for ever. At the end of the specified period,’ the arrangement would have “ petered out,” and the position revised. But the matter had to be referred to the final court of appeal - the people of Australia. They said: “ You shall not tamper with the Constitution in this respect.” The people rejected the agreement altogether. They would not have it for any period of years. They said: “We will give the Commonwealth Parliament another lease of the trust tha’t we originally reposed in them.” Regarding the position logically, we stand now as we were before the Financial Agreement was submitted. The people have given us authority to deal with the Customs and Excise revenue as we think proper, after the expiration of the Braddon section of the Constitution. The logical result of the referendum is a confirmation of the confidence of the people in this Parliament. Personally, I think that ten years is too short a period ; but as the people have shown that they are prepared to trust the Commonwealth Parliament in the future, so am I. I may or may not be a member of this Parliament ten years hence, but, if living, I shall be a citizen of the Commonwealth, and I shall then be prepared to place in this Parliament the same trust as I do to-day. I admit that I have said that Senator de Largie’s amendment last session was the best solution of the problem which then faced us. But my masters, the people of Australia, have said by their votes that this Parliament is the tribunal to determine the whole question. It is now doing so, and I am prepared to support the second reading of the Bill. I want to refer to the clause which provides a special subvention for Western Australia. It reads as follows : - (1.) The Commonwealth shall, during the period of ten years beginning on the first day of July One thousand nine hundred and ten, pay to the State of Western Australia, by monthly instalments, an annual sum which in the first year shall be Two hundred and fifty thousand pounds and in each subsequent year shall be progressively diminished by the sum of Ten thousand pounds.

When I first glanced at the clause I thought that there was a danger that the special subvention would cease at the end of ten years; but on further consideration, and after getting advice of a legal nature on this point, I can now see that the State will be quite safe under the provision as it stands. The special subvention is being given to Western Australia owing to her abnormal position in comparison with that of other States. If we deduct £10.000 each year, at the end of ten years there will be a sum of £150,000 being paid to the State of Western Australia. It cannot be the intention of any Government which may be in power to suddenly cut off the subvention.

Senator Walker:

– Why not? The Bill says that the payment is to last for only ten years.

Senator NEEDHAM:

– There is an implied contract in the provision, and I cannot see how any Parliament could dishonour it. If at the end of ten years the present abnormal conditions do not obtain, then there will be no necessity for continuing the payment; but if they do exist then, the clause as drafted will meet the situation, and the subvention will continue until the £250,000 has entirely disappeared.

Senator W RUSSELL:
SOUTH AUSTRALIA · ALP

– It is very liberal treatment, anyhow.

Senator NEEDHAM:

– I will not say that it is liberal treatment ; it is just treatment.

Senator Sayers:

– Ten years hence the conditions may not be the same, and the Parliament might then think that the subvention was too much.

Senator NEEDHAM:

– In’ my remarks to-day I do not want to anticipate what the position of the States ten years hence may me. I hope, as I am sure we all hope, that every State in the Commonwealth will be prosperous. Western Australia is prosperous to-day. I have given very careful consideration to clause 5, and I do not think that there is any danger of the special subvention entirely ceasing at the end of ten years. I intend to support the second reading of the Bill.

Senator McGREGOR:
Vice-President of the Executive Council · South Australia · ALP

– - I am very pleased that after a full and fair debate the Senate has concluded that it is nearly time that we settled this question. So far as the Opposition is concerned, I have very little to reply to. In his speech Senator St. Ledger threw out a challenge. At the time I felt inclined to be silent, but it was not because I was unprepared for a challenge from him. I have been taken to task for the manner in which I submitted the Bill. It has been characterized as undignified and practically disorderly. The honorable senator who so characterized my manner did not remain in the chamber one minute after he had concluded his speech, and he is not. here now to be replied to. I think that even he considers that there is no necessity for saying anything on the subject. If any honorable senator feels offended, or in any way displeased with my manner, or with the language I used on that occasion, I can assure him that I had no intention to offend the susceptibilities of any one. As Senator St. Ledger has thrown out a challenge I am prepared to meet it. He has declared that on no occasion did any honorable senator who is supporting the present Government tell the people that we were going to deduct from the States’ share of the Customs and Excise revenue during the first half of the financial year 1910-11 any portion of the deficit of the previous year, or that -we were going, in the second half of that financial year, to make up any deficiency with respect to the 25s. per capita payment which might be brought into existence by the carrying out of section 87 of the Constitution, up to the 31st December, 1910. As regards the Financial Agreement, it was repeatedly put before the public that the members of the Labour party had no serious objection to paying the States 25s. per head per annum for a term of years, and the term most frequently referred to was ten years, because it was considered that in ten years we should be in a better position to judge how the financial relations of the Commonwealth and the States would work out. The attention of the public was also called to the large deficit which was anticipated by the late Treasurer. It was pointed out that theState Premiers had agreed with him to make up that deficit to the extent of £600,000, on account of the expenditureof which they were relieved by the Commonwealth taking over the payment of old-age pensions. It was also stated that we considered that if the State Premierswere prepared to make an offer of that kind to the Fusion party, it was only fair that they should be asked to adhere to the offer if any other party got into power. Theonly thing which was objected to by members of the Labour party in Parliament,, and by the electors, was the proposal tolegrope the Commonwealth for all time by putting any agreement in the Constitution..

We told the people that we were prepared to accept the Financial Agreement as far as it went, for a term of years, including that portion which referred to a refund for the first half of the financial year 1910-11, and that portion which referred to making good the deficit up to the amount of £600,000. The electors indorsed the policy of the Labour party because they believed that it was a fair one, so far as the States and the Commonwealth were concerned, and we are here to-day to carry it into effect. There is nothing in a challenge of the kind which Senator St. Ledger made. With respect to the remarks of Senator Needham, the Government consider that they have made very fair provision to meet the existing conditions in Western Australia. A special subvention was suggested at the Conference which was held in Brisbane in 1908, as a recognition of the position in which that State was placed. With respect to the differences of opinion which may exist regarding clause 5,I would point out that in clause 4 it is provided that the payment of 25s. per capita is to be made for ten years, and thereafter until the Parliament otherwise provides. It is possible that at the end of that term the conditions of the Commonwealth may be such that it will not be necessary to alter the arrangement. But if it is necessary then, we can trust the people to return members to Parliament who will do what is right. I am sure that the representatives of Western Australia have nothing to fear. For ten years that State will receive a sum commencing at £250,000, and diminishing at the rate of £10,000 a year. If, at the end of ten years, the position in the State is unaltered, if it is still in the same position with respect to Customs and Excise revenue and expenditure, I am sure that its people can confidently rely upon the influence of their representatives, and the desire of the representatives of other States to do them justice. When we recollect that the Parliament has always treated the States generously, I think that there is no occasion for alarm. But, of course, new circumstances may arise. In ten years Western Australia may be one of the most prosperous and wealthy States in the Commonwealth. She may then have attained to what is the normal condition in other States. I know that the representatives of Western Australia and its people are just as fairminded as are those of other States, and would ask no concession, because there would be no justice in doing so. I hope that the

Bill will be allowed to go into Committee, and be carried into law as speedily as possible.

Question - That this Bill be now read a second time - put. The Senate divided.

AYES: 20

NOES: 6

Majority…… 14

AYES

NOES

Question so resolved in the affirmative.

Bill read a second time

In Committee :

Clauses 1 to 3 agreed to.

Clause 4 -

The Commonwealth shall, during the period of ten years beginning on the first day of July One thousand nine hundred and ten, and thereafter until the Parliament otherwise provides, pay to each State by monthly instalments, or apply to the payment of interest on debts of the State taken over by the Commonwealth, an annual sum amounting to Twenty-five shillings per head of the number of the people of the State :

Provided that in the six months ending the thirtieth day of June One thousand nine hundred and eleven the Commonwealth may deduct from the amounts payable in pursuance of this section the amounts set out in the Schedule. . . .

Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [5.40].- We might, on this clause, consider the propriety of increasing the period during which the provisions of this Bill shall remain in force.

On this point might I be allowed to say that when Senator de Largie moved in the Senate last session to limit the present agreement to twenty-five years, he had the votes of every labour senator. So that, though there is no time stated in the Brisbane Conference scheme, that warrants me in saying that in any Act passed to determine the question the Federal Labour Party would be prepared to give it a currency of that length of time.

I will stand by my original contentions, Mr. Wilson notwithstanding : -

That the Labour Party is in favour of paying 25s. per head to the States and a special grant to Western Australia, and if the agreement is kept out of the Constitution is pledged to embody it in an Act of Parliament for a fixed term of, say, twenty-five years.

That the word “ ten,” line 2, be left out, with a view to insert in lieu thereof the word “ fifteen.”

Senator DE LARGIE:
Western Australia

.- I should be the last to find fault with any member of the Opposition who, being in a difficult predicament, and having a very poor case, endeavoured to make the most of the material that he had. It must be admitted that the material Senator Gould had in hand was very meagre indeed. Consequently, he had to spin it out to the fullest length in order to make any use of it whatever. The policy of the Labour party, notwithstanding all that has been said about its being tied down by the caucus, is practically determined by its conferences. At the Brisbane Conference, where the per capita system was initiated, no term was fixed. That Conference spoke authoritatively for the Labour party.

Senator St Ledger:

– The AttorneyGeneral said that the arrangement then proposed was to be in perpetuity.

Senator DE LARGIE:

– In the formulation of a political programme much must necessarily be left undefined. It is impossible for a Conference to lay down every detail. All that can be done is to enunciate general principles.

Senator Lt Colonel Sir Albert Gould:

– It was clearly understood that the Conference declared for an arrangement in perpetuity.

Senator DE LARGIE:

– Well, I was present at the Conference, and took some part in the debates. I can assure the honorable senator that no time was mentioned.

Senator McGregor:

– And I am sure that eternity was not mentioned.

Senator DE LARGIE:

– We have every right to take advantage of a precedent in a matter of this kind. In the minds of most people the ten years’ period for which the Braddon section ran was the period for which a new arrangement should be made. We know how the ten years’ arrangement has worked out. I am satisfied that another period of ten years is what was in the mind of most Labour politicians when our platform was laid down. When the matter came before us in the Senate last session, we objected to the perpetuity proposal. As a means of improving upon that a fifteen years’ term’ was proposed. That was defeated. Then, inasmuch as there was to be special provision for Western Australia for twenty-five years, I thought it might be possible to get that term adopted in regard to the per capita payment, so that the two provisions might synchronize. That proposition, however, was also defeated. All our former proposals having been defeated, we are now starting de novo. I say quite frankly that if we fail to secure the ten years on this occasion, I should be prepared to support twenty-five years again. I quite recog nise that Senator Gould finds himself in an uncomfortable position, being in a minority. But he ought to recognise frankly that the people of Australia have spoken on this subject, and he should be loyal enough to accept the verdict of the electors, who expressed themselves in favour of the policy laid down by the Labour party. I could mention candidates from the Opposition side who have advocated different periods. There is, therefore, no more inconsistency on the on z side of the Senate than there is on the other. Some Labour candidates advocated a lesser period than ten years. Mr. Frazer, the member for Kalgoorlie, for instance, considered that ten years was too long. But we must accept a proposal in conformity with the general opinion, and I consider that a ten years’ period meets requirements. At the end of that time the matter will be open for review, and I have sufficient confidence in those who will succeed us to believe that they will propose a policy acceptable to the people of Australia and just to the States. Therefore, I trust that Senator Gould will not force his amendment to a division, but will accept the proposal submitted by the Government.

Senator HENDERSON:
Western Australia

– I am somewhat delighted that Senator Gould has seen fit to submit an amendment to this Bill. I am not going to support him, but his action is an illustration of the very inconsistency of which he made so much when speaking to the motion for the second reading. If any one will take the trouble to look over the divisions in the Senate last year, as recorded in Hansard, they will find that Senator Gould never once departed from the iron-clad perpetuity proposition laid down by the late Government as the result of the political conspiracy to which Senator Needham has been referring. An arrangement for ten years is a fair and ample provision for any Parliament to make. When the question was previously discussed, I made that statement in the Senate, basing it upon the arrangement made by the Federal Convention. Senator Vardon was candid enough to say that, although he voted for the Financial Agreement, he himself did not believe that the conditions which it embodied could continue for the period of three Parliaments. Surely, then, both Senator Gould and Senator Vardon were guilty of political inconsistency when party tracks were either being laid down or covered up. I defend the ten years’ provision on the ground that last session I contended that, as the framers ot the Constitution were not able to see beyond a period of ten years, we should be wise, as men having national responsibilities on our shoulders, not to make another arrangement for a longer period. Those who supported the Financial Agreement proclaimed themselves in favour of an arrangement to last until the crack of doom. The provision they made was not to run out as long as time lasted. It would only expire when the edge of eternity was reached. But I maintain that, in regard to any financial arrangement we make, we should remember that we are legislating for a country that is as yet almost “ in the raw.” Development in Australia is simply in its infancy. If we can maintain the new arrangement for ten years, we shall undoubtedly have accomplished a great service to this country. It is to be expected that there will be a marked change in the conditions prevailing in Australia between 1910 and 1920. Persons living in the latter year will be able to look back and say, “ While we have managed our affairs satisfactorily up to the present moment, the time has now arrived when we must adopt different means and methods.” Financial relationships then will have to be adjusted according to the circumstances of the case. Therefore, I hope that Senator Gould’s amendment will not be adopted. I have the assurance of the Vice-President of the Executive Council that the Government will not accept it, and the honorable senator has my assurance that I shall not support him.

Senator WALKER:
New South Wales

– Senator Henderson seems to be under the impression that those who voted for the Financial Agreement thought they were making an arrangement for all eternity. I am of opinion that if it had been agreed to, and embodied in the Constitution, the people of Australia would have been quite ready, when the proper time came, to alter the Constitution again if that were shown to be desirable. Senator Henderson talked very sensibly with regard to the Constitution having provided that the Braddon section should operate for ten years. I hope that the honorable senator will show the same regard for the Constitution when we deal with the provision affecting our obligations to the States. We in the Senate should stand up for the rights of the States. I am afraid some honorable senators forget that, under the Con stitution, this is the House whose special duty it is to protect the rights of the States, and one of those rights is that the Braddon section shall remain in force until the 31st December, 19 10.

Senator ST LEDGER:
Queensland

– Senator Henderson is labouring under the delusion that an honorable senator on this side has made a proposal which, if ratified by the people, would last for eternity. The Constitution does not permit any one outside a lunatic asylum to seriously talk of perpetuity : it actually forbids it, because it provides machinery for making alterations. As the result of an important Conference the leaders of the Labour party did intend to make a financial agreement with the States as permanent as the Constitution would permit it to be. It is of no use for honorable senators on the other side to pretend to say that the Attorney -General did not understand the meaning of what the Brisbane Conference determined.

Senator de Largie:

– He was not there, and I was.

Senator ST LEDGER:

– I presume that the Attorney-General has intelligence enough to understand what its determination meant.

Senator de Largie:

– I had a better opportunity to know what transpired than he did.

Senator ST LEDGER:

– If it was not a secret Conference, if its proceedings were reported in spirit ‘and substance, there is no man on the Government benches to-day who is more capable than the AttorneyGeneral to understand what- was meant.

Senator de Largie:

– He was absent.

Senator ST LEDGER:

– It does not matter two straws whether he was absent or not. He has stated as distinctly as language can state that the Brisbane scheme was intended to be permanent. In Hansard of the 12th August, 1909, he is reported as having said concerning the Brisbane scheme -

And then there was the scheme put forward at the Labour Conference in Brisbane. Whatever may be the shortcomings of that scheme, it had at least the merit of practicability. It was not merely a temporary expedient for a year or two, but a settlement for all time.

If anybody has used the term “ perpetuity” it was a member of the Labour party who attended the Brisbane Conference. Many prominent men have used language both at the Conference and afterwards from which it is clear that they knew that the arrangement was to be permanent. It is an insult to the intelligence of the Attorney- General for any honorable senator to say that he did not understand the Brisbane scheme or know what was meant. It was not six weeks afterwards that he said in the House of Representatives exactly the opposite.

Senator E J RUSSELL:
VICTORIA · ALP; NAT from 1917

– Suppose that he did make that statement, who should prevail - Mr. Hughes, or the Conference, or the will of the people?

Senator ST LEDGER:

– That is not the point. My. honorable friends on the other side cannot make the AttorneyGeneral a scape-goat at one time and a supporter of their financial scheme at another time. An amendment has been proposed from this side to increase the term of the payment to the States from ten to fifteen years. So far as direction of principle is concerned, that proposal is in entire harmony with the whole object of this party when it went to the country and the whole object which it now seeks to attain ; to the extent to which it can be done by an Act, we wish to give continuity to the arrangement. What position will honorable senators on the other side occupy when they are confronted with their utterances in the newspapers? The Minister of Defence will not, I think, dare to deny that he led the people of Western Australia to believe that the payment of 25s. per capita to the States would be secured by a provision in the Constitution or by an Act of Parliament. Many honorable senators on that side must find themselves in a dilemma in the division which is about to take place, and possibly at a later stage. Senator Walker has reminded the Committee that the Senate was intended to represent the States. That is why every State was placed on a political equality. Through the Constitution the people of Australia have said that the Senate shall represent the States qua States. In other words, they have declared that all the time the Senate shall seek to protect and guard the interests of the States in their relations with die Commonwealth. Under the Constitution an appeal was made to determine and to secure their financial relations. Two contending policies were submitted. One policy was rejected, and we cannot say that the other was affirmed. What is the position which will be determined to a very large extent by the adoption of this clause ?

Progress reported.

page 1406

MONETARY DEPOSITS AT ELECTIONS

Debate resumed from 4th August (vide page 1097), on motion by Senator Rae -

That, in the opinion of this Senate, the Commonwealth Electoral Act should be amended to provide for the abolition of monetary deposits by parliamentary candidates.

Senator DE LARGIE:
Western Australia

– This is one of those motions to which I do not consider that any great objection can be offered. I do not know that very much can be said in its favour. It seeks to repeal a harmless sort of provision in the Electoral Act. I do not think that there is very much in the provision, one way or the other. Certainly, I should not have considered it of sufficient importance to take the trouble to put on the noticepaper a motion to secure its repeal. Whilst it may not be considered very democratic to put any restriction upon a citizen who wishes to nominate for Federal honours, undoubtedly a certain amount of restriction is imposed. For instance, there is a restriction imposed in regard to the nomination paper. A man has to obtain the support of a certain number of voters before he can nominate. We have to draw a line somewhere. Whilst the requirement of a deposit may be an infliction to those who merely wish to advertise themselves, whether the voters want their services or not, still I think that in many ways it can be said to be a very good provision. At the same time, there is no denying the fact that it is not thoroughly democratic. It is only right, I think, that the Federal Parliament should keep in step with the times, and not lag behind. Perhaps the highest deposit which is required in the British Empire is that upon which the Legislative Council of Victoria insists. A deposit of £100 is required before a candidate can nominate for that very Conservative institution. That fact would lead most Democrats to say that it is a wrong practice. The Legislative Council of Victoria may be truly said to be the most Conservative Chamber in Australia, and that is one of the provisions which have helped to secure that result. Of course, its franchise is also extremely Conservative and very much out of date. Some Legislative Houses in the States still adhere to the practice of requiring a deposit by a parliamentary candidate. In Western Australia a deposit has to be made before a person can nominate. I think that it is the same in Tasmania and Queensland. It may stop candidature by persons who merely come forward to advertise themselves. Having supported a motion of this kind on a former occasion, I do not wish to be inconsistent, and, therefore, I intend to support the proposal of Senator Rae. All men and women are recognised as absolutely equal under our electoral law. every adult in the community is given a vote, and none has more than one vote; the privileges of rich and poor are the same. The abolition of the deposit may induce individuals who would be described by others as “ faddists “ to air their fads, when they learn that they may do so without expense to themselves. But I think it would effect no radical alteration in the personnel of either House of this Parliament. Senator Rae cannot be charged with taking a selfish view of this matter. It must be recognised that although the Socialists of New South Wales, from which State the honorable senator comes, have been putting up candidates in opposition t3 Labour candidates for some time past, the electors have dealt with them so harshly that they may be disregarded by other political parties. The workers of Australia recognise that the principle of evolution applies to politics, and that evolutionary stages must be gone through whether we are in a hurry or not, and whether or not we desire to put the roof on the building before laying the foundation, or to jump from the bottom to the top of the ladder at once. We have all by bitter experience learned that we can only move politically in accordance with the will of the people, which undoubtedly at present is against anything in the nature of a revolution in politics. We need have no fear that the removal of the deposit will lead to a material increase in the number of candidates opposed to existing political parties. I should have expected the Socialist vote at the last election to be higher in the Barrier electorate than in any other electorate in New South Wales ; and yet the figures quoted by Senator Gardiner when this motion was last under consideration, go to show that the Labour party need not dread the nomination of Socialist candidates, even in that electorate. We should not be afraid to extend a good principle because some one may abuse it. We have widely extended the principle of freedom of speech, and though some people undoubtedly abuse it, that abuse has never been advanced as a reason for abolishing freedom of speech. In the same way the fact that some persons might abuse the freedom to nominate for election which the abolition of the deposit would give, should not be regarded as a reason against its abolition.

Senators SAYERS (Queensland) [7.55]. - 1 opposed a similar motion to this when it was submitted last year by ex-Senator “Pulsford. I agree with Senator de Largie that if the deposit were abolished, any man who could not raise £25 for a deposit might nominate for election merely in order to advertise himself. Although by nominating he would put the country to considerable expense, he would feel that he would be getting an advertisement on the cheap, while having no chance of being returned. I do not think we should open the door more widely than we do at present to the nomination of such candidates. Where organizations select candidates they are prepared to put down the money required for the deposits. The amount of the deposit varies in different countries. In New Zealand it is as low as £10, and there, as in some of our States, it is forfeited if the candidate does not poll one-fifth of the votes polled by the lowest successful candidate. In Canada, unless a candidate polls one-half of the votes polledby the lowest successful candidate, he forfeits a deposit of £40. That is a much more stringent provision than that which we have in force here.

Senator Guthrie:

– It is not as stringent as the provision affecting a nomination for the Legislative Council of Victoria. The honorable senator does not desire that we should insist upon the deposit required in that case?

Senator SAYERS:

– No; and I- do not think that Senator Guthrie desires that candidates should be permitted to put the State to expense merely to advertise themselves. I would not prevent the nomination of any bona -fide candidate who has a prospect of success or is supported by an organization. Senator de Largie said that in New South Wales Socialist candidates are coming forward. Their number will” increase as the party they represent increases. The Socialists are stronger in Germany and in other parts of the world than they are in Australia at the present time, and it is certain that we shall have to reckon with them in the future. I do not think that a candidate has a right to come forward unless he is worth £25. I should not consider him as eligible for election.

Senator Henderson:

– Oh !

Senator SAYERS:

– If, when a man has reached manhood, he is unable to induce any organization to put up£25 to enable him to contest an election, I do not think he should be regarded as eligible.

Senator Henderson:

– The honorable senator said that he would not be eligible if he was not worth £25.

Senator SAYERS:

– I did not mean that he must have the£25 in his own pocket, but that he should be able to command it with the assistance of an organization, or in some other way. If the people behind a man think so little of his prospects of election that they are unwilling to risk a deposit of £25 to secure his nomination, such a man should not be given the opportunity to put up as a candidate in order to advertise himself at the expense of the ratepayers. If the deposit is abolished, men may be induced” to nominate merely to bring themselves before the public with the idea that they will have a better chance next time. I do not think that the State should be put to expense by the candidature of men none of whom may have a hundred supporters behind him, or be able to raise . £25.

Senator Rae:

– The honorable senator would like to have all elections unopposed, so that they would cost nothing.

Senator SAYERS:

– No; but I do not think the State should be put to expense in connexion with the candidature of any man who cannot find supporters willing to put up £25 on his chance of election.

Senator de Largie:

– Still, it would not be a bad idea if there were no opposition.

Senator SAYERS:

– That might suit some honorable senators, but I like to see a good fight.

Senator Givens:

– Why should a man be punished for his poverty?

Senator SAYERS:

– I should not punish any man for his poverty, but I think the country should not be put to expense in connexion with the candidature of a man who has no hope of success.

Senator Rae:

– Why should the rich fool be able to nominate ?

Senator SAYERS:

– If a rich man cares to put up his money and lose it, that is his own look-out. I find that for nomination for the Legislative Council of Victoria a deposit of £100 is required. That is too high. For the Victorian Legislative Assembly a deposit of£50 is required subject to the condition of forfeiture if the candidate does not obtain one-fifth of the votes polled by the lowest success ful candidate. In Canada, a deposit of $200, or£40, is required, and it is subject to forfeiture if the candidate does not secure one-half of the votes polled by the lowest successful candidate. That is a rather stringent provision. I think that we have every reason to be satisfied with our present Electoral Act in this matter. There is really no restriction placed upon the candidature of any man who has a real chance of election.

Senator Vardon:

– Who has asked for this alteration of the law?

Senator SAYERS:

– I addressed meetings at many places during the last election, and I never heard of any demand for the abolition of the deposit of £25. I never heard it said that the deposit prevented eligible candidates from being nominated. If we agree to this motion we shall be asking Parliament to saddle the taxpayers of the Commonwealth with unnecesary expenditure. If a man’s prospects of election are so poor that his supporters do not believe that he will poll onefifth of the votes polled by the lowest successful candidate at an election, the State should not be saddled with expense as the result of his nomination. I shall vote against the motion as I did against a similar motion submitted last session.

Senator HENDERSON:
Western Australia

– In supporting the motion, 1 should like to say that I fail to see how any extra expenditure would be involved by the abolition of the deposit. Politics in the Commonwealth are now very clearly defined. There are only two parties in Commonwealth politics. Though we were told that there were more than two, there really never were any more. If there is to be an election in any electorate, the expense of conducting it must be provided for, and it will not add to the cost whether there are two ‘or ten candidates representing each side.

Senator Sayers:

– It will lead to a lot of informal votes being recorded.

Senator HENDERSON:

– That might be so, but it would not add to the expense of conducting the election. A little more ink might require to be splashed in printing the ballot papers, but the papers would have to be provided in any case, whether the parties were represented by one or ten candidates. It appears to me that the position taken up by Senator Rae is perfectly logical. This is a reform which, with Senator Rae and others, I tried hard to bring about in 1891. That, I think, was the first occasion when an attempt was made to abolish the deposit. We did not succeed at the time, but the agitation we raised had so powerful an effect in New South Wales that Free Traders and Protectionists alike accepted the proposal as one which expressed the desire of the electors of the State. The alteration of the law has not done any serious injury in New South Wales. No one can point to any very material increase of expenditure that has been occasioned through the abolition of the deposit. This reform is a right one to make. We desire that every man and woman shall be a voter. If we give the vote to every person over the age of twentyone, why should we place any impediment whatever in the- shape of a monetary penalty in the way of any man becoming a candidate at a parliamentary election?

Senator Sayers:

– I have no personal objection.

Senator HENDERSON:

– I should think that very few men could offer a sound objection to a proposition of this kind.

Senator RAE:
New South Wales

– Very few arguments have been adduced against my motion, and therefore there is little to which I need reply. In the debate last week reference was made to undesirable candidates and cranks. I take exception to the use of those terms in a political sense, even when they are employed by honorable senators on my own side of the Chamber. No definition of “political crank” could be given that would satisfy the accused individual at any rate. There is no political doctrine advocated by the party to which I belong, or by any other party, that has not at some time been denounced as the idea of a crank and a madman by the party sitting opposite to us. There is not a single projected reform on the platform of the Labour party that has not been the subject of sneers and derision from those who still dare to call themselves Liberals. The moment a person transcends their idea of Liberalism, he becomes a crank.

Senator Sayers:

– That is what the Socialists say about the Labour party ; I have heard them in the Sydney Domain.

Senator RAE:

– I have heard some of them accuse us of being very much worse than cranks. Some have accused us of being Conservatives, very much like honorable senators opposite.

Senator Lt Colonel Sir Albert Gould:

– Surely the honorable senator did not believe that.

Senator RAE:

– We of the Labour party owe nothing to the revolutionary Socialists, and I am certainly not bidding for their support. They have often denounced me, even personally. We have been called fatheaded, fat men, frauds, fakers, and all sorts of other uncomplimentary epithets.

Senator Sayers:

– The honorable senator used to say such things about members of our party.

Senator RAE:

– I would not mind saying them about honorable senators opposite still. I am under no obligation to the Socialists, nor does it make any difference to me that several of them have opposed the party to which I belong. We should deal with political principles on higher grounds than that. Therefore, it is immaterial to me, for the purpose of this motion, whether the Socialists or the Conservatives approve or disapprove of it. My contention is that not only the tendency, but the essential principle of our democratic system of government is to secure economic equality for every member of the community. We ought not, in any way whatever, to put technical disabilities in the way of any citizen either as a voter or as a representative of voters. It is an unjustifiable departure from that principle to impose a monetary penalty on a man who fails to secure a certain percentage of votes at an election. Senator Sayers has stated that a candidate must have a very poor prospect of success if he, or an association behind him, cannot raise £25. That argument is all very well as far as it goes ; but I wish that the honorable senator, and others who take the same view, would, for the moment, try. to get away from their present comfortable environment, and remember the days when they were - as many of them claim to have been - working men. Let them realize what their position would be now if they were in the- same pecuniary position as they were perhaps thirty or forty years ago. Let them consider whether, if they were candidates for Parliament, their youth, vigour, and enthusiasm might not be of infinitely more value to the country than the remnant of their old age may be.

Senator Sayers:

– I should not have been a candidate for Parliament while I remained in such a position.

Senator RAE:

– There are many organizations which may succeed in finding the money necessary to enable them to run a candidate at an election ; but, unless an organization is very wealthy, the necessity of having the amount of its deposit locked up during the campaign, and the loss of the use of that money, even though it may ultimately be refunded to them, must necessarily hamper their operations. Regarding the Socialists, to whom reference has been made, I may state from personal knowledge of some of them, that they include some of the most earnest men in the community. They may be mistaken in their methods or principles, but that is simply a matter of opinion. At three successive Federal elections, they have shown their bona fides by raking up amongst them sufficient money to put up a full ticket of candidates. It involved depositing£75 in each case. They have lost that sum at three elections in succession. Whether they have increased or decreased in numbers is immaterial to my argument. At the recent election, votes were recorded for the Socialist candidates in every one of twenty-seven electorates. I think that their top candidate polled something like 13,000 votes. Almost all their support was drawn from the poorly paid working section of the community. The fact that these working men had to provide£75 to enable them to run candidates means that a heavy fine was inflicted upon them because they dared to hold opinions different from those held by most of us. That is a wholly untenable position, and the last to try to maintain it should be those who, having enjoyed success in life, are able to look back to the days when they were manual toilers, and to shake hands with themselves on being such wonderful geniuses that they have succeeded in a greater measure than have the majority of their fellows.

Senator Sayers:

– The honorable senator seems to forget that the same question was brought up last year by a senator belonging to my party.

Senator RAE:

– I give full credit to Mr. Pulsford for having brought the question forward. He showed that he believed in a sound principle, and had the grit to oppose his own Conservative associates.

SenatorLt. -Colonel Sir Albert Gould. - Is this a Democratic or a Conservative proposal? I do not know which it is.

Senator RAE:

– At any rate, Senator Gould, when a member of the Parkes Ministry in New South Wales, either believed in this principle, or he was a political hypocrite, willing to bow down to the Labour party by saying that he believed in it. He was a member of a Government that actually brought the proposition forward in an Electoral Bill.

Senator Lt Colonel Sir Albert Gould:

-No Government led by Sir Henry Parkes ever bowed down to the Labour party. Sir Henry Parkes went out of office rather than allow the Labour party to cajole him.

Senator RAE:

– Nineteen years ago last June the first Labour party sprang into existence in New South Wales. My honorable friend, Senator Gardiner, and myself were amongst those elected on that occasion. Our platform provided, amongst other things, for an amendment of the electoral law, abolishing the deposit for parliamentary candidates. The amount of the deposit at that time was£40. It is true that the deposit did not prevent some of us from getting into Parliament, but, still, it was a hardship. The league which supported us had only been recently formed, and its organization was incomplete. In the district for which I was returned a private individual - a thrifty member of the working class, a shearer friend of my own - put up the £40 deposit. The miners of Lithgow, I believe, found the deposit for the Honorable Joseph Cook.

Senator de Largie:

– What Cook is that ?

Senator RAE:

– The semi-Leader of the Fusion party in the House of Representatives. Undoubtedly the great bulk of the Labour men who won seats in New South Wales at that time found it difficult to provide the money for their deposit. But whether they had difficulty in this regard or not really has nothing to do with the question. It is a matter of principle. We learn, on reading the histories of men who have adorned this and other countries, that many of them- had to make heroic struggles against adverse conditions in their earlydays. While some succeeded in the end, we do not know how many less fortunate were wiped out through being unable to surmount obstacles. It is of no use to say, because some have succeeded in overcoming pecuniary disabilities, that it is perfectly fair to insist upon a deposit being made. Suppose, for the sake of argument, that a wealthy gentleman representing the Liberal party, and a poor man representing the Labour party, were running for a seat.

Senator Sayers:

– That remark is made for the gallery. There are wealthy men in the Labour party.

Senator RAE:

– There is no gallery talk in what I am saying, as the honorable senator will realize if he will allow me to finish my illustration. Suppose, i say, that there were a wealthy man on one side and a poor man on the other. Suppose that a third candidate saw a chance of splitting the vote, and hoped that he might hop in, or, at any rate, secure an advertisement, by presenting himself to the electors. It is impossible to keep out such a man. If the deposit were £50 it might be worth his while to pay so much for the notoriety, and, in the meantime, whilst the poor man would experience great difficulty in finding his deposit, the rich man would be under no such disadvantage. Senator Gould has said that no Ministry led by Sir Henry Parkes ever bowed the knee to the Labour party.

Senator Lt Colonel Sir Albert Gould:

– Not the one with which I was associated.

Senator RAE:

– There was not one candidate in New South Wales during the election of 1 89 1, outside the Labour party, who advocated the abolition of the electoral deposit. There were 141 seats to contest. When the Labour party secured several nf these seats, much to the surprise of both the old parties - who, of course, fancied that what had been was going to continue for ever - the shock created was so severe that the party led by Senator Gould’s old chief. Sir Henry Parkes, introduced an Electoral Hill giving effect to the principle known as one man one vote, and embodying every detail that the Labour party’s programme advocated, including abolition of the de posit. If the Ministerial party did not believe in this principle before the election, they soon found reason to believe in it after. Senator Gould cannot deny that he was a member of that Government.

Senator Walker:

– That was nineteen years ago.

Senator RAE:

– Yes; and instead of progressing the honorable senator has been going back.

Senator Lt Colonel Sir Albert Gould:

– How long was that Government in office after the Labour party came into Parliament ? Only two or three months.

Senator RAE:

– The Government was in office long enough to introduce an amending Electoral Bill, which provided for the abolition of monetary deposits at parliamentary elections. I, therefore, charge the honorable senator with having been a political hypocrite in remaining in a Government which did something opposed to his belief, or else with having gone back on a principle which at one time he supported.

Senator Lt Colonel Sir Albert Gould:

– Can the honorable senator say whether I ever voted for such a provision?

Senator RAE:

– Probably the honorable senator did. At any rate, I make bold to say that he would not have voted against his chief.

Senator Lt Colonel Sir Albert Gould:

– Probably I did not vote at all.

Senator RAE:

– The honorable senator may have sneaked out at the back door. I remember these things. Furthermore, when the Parkes Government went out of office, in November of that year, the late Sir George Dibbs formed a Ministry, and introduced a Bill which also provided for the abolition of monetary deposits at parliamentary elections. It is said . that an ounce of fact is worth a ton of theory, and the best proof that the alteration of its electoral law in that respect has not worked to the disadvantage of politics generally in the mother State is furnished by the fact that although six general elections have been held under the no-deposit system, no political party or politician has ever, to my knowledge, proposed to reen,7ct the penalty.

Senator de Largie:

– New South Wales is a very unhappy illustration to choose.

Senator RAE:

– I do not think so.

Senator de Largie:

– Look at the kind of Governments which the State has had.

Senator RAE:

– I do not think that the Irvine Government in Victoria, or the Peake-Butler Government in South Australia, or other Governments which I could name, have been better patterns of political morality than those which have been controlling the affairs of New South Wales. Under the no-deposit system a general election was held in New South Wales in 1894, 1.895, 1898, 190T, 1904, and 1907, and a seventh general election is about to be held. I defy any one to show that there has been any greater multiplicity of candidates at State elections in New South Wales than has prevailed generally in other States, where a monetary deposit is required of a parliamentary candidate. ls not that a fair test of the value of the argument that the abolition of the deposit would cause greater confusion than now prevails? Does not the condition of New South Wales, after the holding of six general elections, afford a fair test of the operation of the no-deposit system? Even if it did cost more, I should not dwell very much upon that point. It is far better for a State to spend a little extra money in securing an untrammelled expression of the people’s will than, for the mere sake of saving a few pounds, to deny to any one the right of standing as a candidate. I know of several candidates who, through merely a conjunction of circumstances; not due to lack of ability on their part, lost their deposits, but who were chosen very shortly afterwards to represent the very people who previously had had no use for them.

Senator Needham:

– In two instances, a candidate who has lost his deposit has afterwards become the Premier of his State.

Senator RAE:

– Yes. For instance, there is the case of Sir Thomas Bent.

Senator de Largie:

– The electors of South Melbourne knew a thing or two when he lost his deposit.

Senator RAE:

– That does not touch my argument at all. Whether the electors for a constituency choose wisely or not will always be a matter of opinion, and therefore the interjection has no point in it. A few years after Sir Thomas Bent lost his deposit at South Melbourne, he was returned by another electorate, and subsequently he rose to the position of Premier of the State. Mr. Dalgleish had a similar experience in Western Australia. Those who are animated with prejudice against my proposal will, of course, vote against it, but I think that the weight of argument is undeniably in favour of giving to every citizen a fair opportunity to seek the representation of a constituency without inflicting a penalty upon him if he should fail to obtain a certain number of votes. The mere question as to whether a candidate is to be run by a Labour organization, or by a Liberal Reform League; or to run as an Independent, should not enter into the consideration of the motion. Surely honorable senators opposite who claim to possess the only. true and genuine brand of Liberalism will admit that there is no special virtue in a man being run by an organization.

Senator Sayers:

– We shall not admit that, because the benches opposite furnish evidence to the contrary.

Senator RAE:

– That is only an argument that with a strong organization a candidate is more likely to win. But will any one contend that the fact of a man being taken up by an organization necessarily proves that his political ideas are better than those put forward by an independent candidate? I admit that the days of the independent candidate are numbered for the time being, and that he has but a poor opportunity compared with the representative of an organization. What I contend is that a man - or a woman either - should have the opportunity to put his views before a constituency, and to ascertain whether they are acceptable to a majority.

Senator Sayers:

– Let them all come.

Senator RAE:

– Yes; even though they should not be able to poll more than a fifth of the votes obtained by the lowest successful candidate. They might not be able to comply with that condition, although they might be live times better than their opponents.

Senator Sayers:

– They mightbe.

Senator RAE:

– Why should the honorable senator want to fine a man because he thinks that he is only out for an advertisement?

Senator Sayers:

– The electors have no confidence in the man, otherwise they would vote for him.

Senator RAE:

– In other words, the confidence of the electors in a candidate depends upon the depth of his purse?

Senator Sayers:

– No.

Senator RAE:

– Then what does the honorable senator mean?

Senator Sayers:

– The honorable senator was returned, therefore the people had confidence in him. His purse may be a deep one.

Senator RAE:

– It is not. The mere fact of a man depositing £2 5 is no guarantee that he will poll more votes than he would do if a deposit were not required. A man who ran without a deposit might poll ten times more votes than the most miscalculating duffer or fool who put up money. I know a number of cases where men of means, who had a fixed idea that they could win seats, polled so few votes that every one else was astorished that they alone could not realize that they had not the ghost of a show of being returned That, however, is no reason why those who happen to have seats should try to some extent to make a close preserve of Parliament for themselves by denying to other persons the right to stand as candidates unless they can find a certain amount of spot cash. If honorable senators opposite wish to be logical, why do they not seek to impose a higher penalty, considering that the so-called cranks and undesirables still run, splitting votes, and making it impossible to ascertain the real choice of the people ? Why do they retain an ineffective provision which does not restrain the wealthy fool, but prevents the poor Solomon, from offering his services to the electors ? Whenever a monetary qualification or test is imposed it breaks down hopelessly in all those respects which are of the most real importance to our national life. The fool with the money can run at any time; split the votes, and cost the country what he likes. The mere imposition of a penalty is no check to him. If honorable senators opposite desire to stop any person from running as a candidate, why do they not impose such a penalty that even a wealthy man would hesitate before he took the risk of contesting a seat? Why should they not impose a penalty of £100 or £1,000? I believe that an unanswerable case has been made out for the abolition of the monetary deposit, and so far from believing with Senator de Largie that it does not matter much whether it is retained or abolished, that it is like a chip in porridge, I believe that it is of essential importance to make our Democracy as logical and effective as possible, and it cannot be called so while this blot remains on our electoral law.

Question resolved in the affirmative..

page 1413

COMMONWEALTH BANKING COMPANIES RESERVE LIABILITIES BILL

Second Reading

Debate resumed from 4th August (vide page 1 108), on motion by Senator Walker -

That this Bill be now read a second time.

Upon which Senator Givens had moved by way of amendment -

That all the words after the word “ be “ be left out, with a view to insert in lieu thereof the following words, “ referred to a Select Committee, to consist of Senators Walker, Sir Albert Gould, Clemons, Keating, Needham, Blakey, and the Mover; that such Committee have leave to sit during ‘any adjournment of the Senate, and have power to send for persons and papers, and records.”

Senator E J RUSSELL:
VICTORIA · ALP; NAT from 1917

– Honorable senators have been told of various reasons why they should support the Bill. After reading its provisions very carefully, I am only able to express a lay opinion as to its merits. It seems to me that, despite its very innocent-looking face, it is surrounded with considerable dangers which should make us very careful about accepting it. A cry has been raised on behalf of the poor shareholder that he has a liability hanging over his head in the event of the bank or the company in which he is interested going into liquidation. Behind the cry it is urged that there would be a very severe call made upon him, perhaps, at very short notice, that he would not be prepared to meet his liability, and that as a result the general public must suffer. There are other aspects of the question to be considered. When a charter was granted to a jointstock company or to a bank the clear intention was that the holder of shares therein should accept, not only the actual liability, but the reserve liability on the shares in the event of things going wrong. The proposal before the Senate is put forward by Senator Walker in the light of an insurance. He proposes that the shareholders should be permitted to voluntarily insure themselves against the institution going into liquidation. That sounds very nice, but let me point out that this is only a permissive Bill. Let us consider the case of a wealthy shareholder. . Under the Bill it will be permissive for the directors to put into the reserve fund from 1 to 2 per cent, in years of prosperity, but in a bad year it will not be compulsory to devote any funds to that purpose. If a voluntary proposal is made to a wealthy shareholder that out of the profits which he is entitled to receive by virtue of holding a number of shares in a bank a certain sum shall be paid into a reserve fund, he will probably reply that he is more capable of minding his money than are the trustees of the fund. But there is this other aspect to be considered, namely, that all company and banking laws, when all is said and done, are very dangerous in I he hands of unscrupulous persons. There are many possibilities for doing a considerable amount of harm to the shareholders of an institution or to its clients, or even to the country itself. This rather innocentlooking proposal will place in the hands of an unscrupulous company with a board of unscrupulous directors an immense power to inflate the value of shares merely for the purpose of rigging the market. By the building up of the reserve fund the shareholders would be relieved of the whole of their reserve liability.

Senator Walker:

– No, it is paid up in advance.

Senator E J RUSSELL:
VICTORIA · ALP; NAT from 1917

– That is so. Their reserve liability will have been paid up in advance, and the shareholders will have been relieved of it. It should not be forgotten that in legislation of this kind we must have regard to the unscrupulous companies. Honest men do not require watching. I say that it would be possible, under this Bill, for unscrupulous directors to dispose of some of the assets of a bank for the purpose of building up a reserve fund, and in that way the value of the shares in the market would be enhanced really by the depreciation of the assets of the bank. If we are to be guided by the experience of the past, and there is no better way of judging what is likely” to take place in the future, we know that it is probable that some unscrupulous men, who, in the past, have taken advantage of every possibility under the companies law, will take advantage of the provisions of this Bill to build up the proposed reserve fund by the sale of assets of the bank, with the object of making immense profits from the increase in the value of the shares which will follow upon the shareholders being relieved of their reserve liability.

Senator Vardon:

– Is it not proposed that the reserve fund shall be placed in the hands of trustees?

Senator E J RUSSELL:
VICTORIA · ALP; NAT from 1917

– It is.

Senator Vardon:

– What is the penalty upon a trustee who violates his trust?

Senator E J RUSSELL:
VICTORIA · ALP; NAT from 1917

– I am not questioning the integrity of the trustees. I do not doubt that these reserve funds would be well guarded, but I am pointing out that it would be possible for the directors of a banking company to dispose of some of the assets of the bank to build up the fund, and by removing the reserve liability upon the shares, secure a higher price for them in the market.

Senator Walker:

– Selling assets does not necessarily increase profits.

Senator E J RUSSELL:
VICTORIA · ALP; NAT from 1917

– I have tried to show that ft would not be from the sale of the assets that the profit would be made, but from the rigging of the share market. The market has been rigged before now, -and those who were disposed to rig it again might, under this Bill, practically transfer a considerable amount of the assets of a :bank to the reserve liability fund, and look for their profits from a consequent inflation in the value of the shares. I do not see that any particular advantage is to be gained by any one by the passing of this Bill. Let me remind the Senate that shareholders in banks who would be willing to submit to this voluntary insurance are in a position, without this Bill at all, to devote a portion of their profits to exactly the same purpose. There is no thing to prevent them being their own trustees of £ fund to meet their reserve liability in respect of the shares they hold. We know that some shareholders are willing to accept dividends of 8, 10, and 12 per cent, on the full value of their shares in times of prosperity, and yet when their bank suffers a loss, are unwilling to meet their liabilities. In my opinion, it can only be regarded as deliberate fraud that shareholders of such institutions should in such a way make use of profits in a time of prosperity to which they are not entitled, in view of their liabilities in respect of their shares. It has been said that the honorable senator who has introduced this Bill is a very popular member of the Senate, and has no desire to injure any person. We are not here to consider who introduces proposed legislation. It is our duty to investigate every measure, and to reject it if we deem it injurious to the interests of the public. I do not say that there is no virtue in this Bill, but the dangers lurking behind it are so great that I cannot accept responsibility for passing it. I intend to support the amendment to refer the Bill to a Select Committee. There must be some reason for its introduction. I do not think it has been stated, and it ought to be clearly stated. The Select Committee may be able to provide information which would lead to the passage of the Bill ; but if we are to be forced to vote upon the measure at this juncture, I shall feel compelled - perhaps because I am very suspicious of this kind of legislation- -to vote against it.

Senator WALKER:
New South Wales

– I am glad to be able to say that this is a non-party measure. I shall ask honorable senators, when I have given a little further evidence, to judge for themselves whether anything is to be gained by referring the Bill to a Select Committee. Since we last debated this question, I sent a few copies of the Bill to various gentlemen, from five of whom I have received replies which I propose to read to the Senate, because they bear upon a matter concerning which Senator Givens has some little suspicion.

Senator Givens:

– 1 have not said a wold as to the merits or demerits of the Bill this year.

Senator WALKER:

– We know the honorable senator’s views on the subject. With regard to what has been said by Senator E. J. Russell, I may say that the facts are against him. Unfortunately, in 1893 we had a terrible banking crisis in Australia. At that time the price of shares fell to such an extent that depositors withdrew their deposits from banks in the belief that there must be something wrong with institutions whose shares fell in value so fast. That had the effect of intensifying the crisis. The object of this Bill is, if possible, to provide one important safeguard against a recurrence of such a crisis.

Senator Givens:

– It is not anything of the kind.

Senator WALKER:

– With all deference to the opinion of the honorable senator, I intend to quote a letter from a leading stock and share-broker in Sydney, which will throw some light on the point.

Senator Givens:

– Stock and sharebrokers are not always infallible or disinterested.

Senator Rae:

– If this is such a good thing, why does not the honorable senator propose to make it compulsory?

Senator WALKER:

– Because I do not wish to interfere with the liberty of the subject. I think that the shareholders concerned should be at liberty to please themselves as to whether they shall come under the provisions of the Bill or not.

Senator Givens:

– If the public need this protection, banking shareholders should be compelled to give it.

Senator WALKER:

– When we are dealing with a general banking Bill, Senator Givens may submit such a provision if he thinks it necessary, but I am not introducing a general banking Bill.

Senator Rae:

– If the honorable senator is in favour of the liberty of the subject, why not let every one out of gaol ?

Senator WALKER:

– I am not a gaoler.I am exceedingly obliged to the VicePresident of the Executive Council for his generosity in supporting the Bill. I recognise that the honorable senator is a credit to his country and his descent. I remember reading in the Bulletin that the honorable senator is descended from a Scottish king; it was stated that it was Malcolm Canmore, and that it was something to be proud of that the descendant of a king should be a Leader of the Australian Labour party. I am indebted to Senator Gould for having stated the objects of the Bill so clearly. If his speech did not enlighten honorable senators, I am afraid that what I have to say will not have the desired effect. If there is one newspaper in Australia in which, more than another, the Labour party have confidence as a financial authority, it is the Sydney Bulletin, and this Bill has received more complimentary references from that newspaper than from any other in Australia. The Bullefat’s only objection to the measure is that companies other than banking companies are not to be brought under its operation. I have learned by past experience that the shorter a Bill is the better the chance of getting it through the Senate, and if those interested in companies other than banking companies are satisfied that it would be an advantage if they were brought under similar provisions, there will be nothing to prevent them taking action to that end. I know more of banks than of general companies, and I have tried tomake the Bill so simple that he who runs may read. Senator Givens’ amendment, if carried, would put the country to some expense, and I think I can give honorable senators evidence which will satisfy them that it is unnecessary to refer this Bill to a Select Committee. I think that after I have read the letters I have received on the subject, it will be admitted that it would be very unlikely that the proposed Select Committee could supply the Senate with more reliable information than they convey, and that it would be as well, in the circumstances, to decide either to accept or reject the Bill. The first letter I propose to read is one received from the Honorable F. E. Winchcombe, M.L.C., who is the head of a wool-broking firm, and has just retired from the chairmanship of the Sydney Chamber of Commerce. He writes me as follows, under date 9th August, 1910. -

Dear Senator Walker, i have carefully read the Commonwealth

Banking Companies Reserve Liabilities Bill asnow before the Senate, and I think the matter has therein been reduced to the simplest and safest possible form.

When this scheme was first initiated I had my doubts as to its practicability. I was afraid it would not be possible to absolutely detach the fund from the control of the bank or institution concerned, and yet have it available for.’ the shareholders in case of need.

Senator Givens:

– So it is for the shareholders that the fund is to be available?

Senator WALKER:

– Certainly. When the shareholders are called upon to pay up they are entitled to call upon the trustees of the fund to provide the money. The letter continues -

This, however, has been accomplished, and all necessary safe-guards are provided in the Bill.

In view of the fact that the Bill makes it “ lawful “ for a banking company to establish a fund without in any sense making it “ compulsory “ - thus leaving the matter entirely at the shareholders’ option - I cannot think it likely that any obstacles will be placed in the way of the Bill becoming law.

Yours faithfully,

E. Winchcombe.

Senator Givens:

– The writer says nothing as to the reason why, in the original Bill, the shareholders were not given that privilege.

Senator WALKER:

– I am aware that in Senator Givens I have a powerful opponent. I am inclined to think that the honorable senator has mistaken his vocation. He ought to have been a lawyer or a banker. I am not sure that both he and I have not before now been called “ bush lawyers.” The next letter I propose to read is from a gentleman who was also, two or three years ago, president of the Sydney Chamber of Commerce. He is a partner in the important shipping firm of Gibbs, Bright and Company. He writes under date9th August, 1910 -

Dear Mr. Walker,

I have carefully perused the Bill for an Act to be cited as the Commonwealth Banking Companies Reserve Liabilities Act 1910, and consider it a very excellent proposal, and one which in the interests of the general public should be adopted.

Experience has shown that the calling up of uncalled capital or in like manner, the reserve liability on shares, produces not only hardship, but in some cases, the sudden demand cannot be met, consequently the provision of putting aside as a special reserve in special securities and under independent control assures to the public doing business with the bank that a proportion, and ultimately it may be all, the liability of shareholders is already in hand and available in case of need.

As this special reserve cannot be made available like an ordinary reserve for the business of a bank, it is the same as if a shareholder had deposited so much per share of his liability in the hands of trustees.

Those doing business with the bank cannot suffer by the proposed legislation ; but on the contrary, the position of any bank adopting its conditions is strengthened, and in that way the public generally is further protected.

Yours sincerely,

Alf. w. Meeks.

The writer of that letter is also a member of the Legislative Council of New South Wales.

Senator Rae:

– What law at present prevents the banks from covering their reserve liability in the manner proposed by this Bill ?

Senator WALKER:

– Under the present law, the liability of the shareholders of a bank cannot be covered in the manner proposed. But under this Bill shareholders will be enabled to authorize directors to put aside money to meet the reserve liability.

Senator Rae:

– Is there any law against that now ?

Senator WALKER:

– Yes, it cannot be done.

Senator Rae:

– What law prevents it?

Senator WALKER:

– We have taken advice upon the point.

Senator ALBERT GOULD:
NEW SOUTH WALES · FT; ANTI-SOC from 1910; LP from 1913

-Colonel Sir Albert Gould. - A bank cannot put money into a fund to cover the reserve liability of its shareholders. To do so would be the. same as if the money were used in the bank’s ordinary business. If the money were put into a separate account it would not be safe for the purpose in view. It would be in exactly the same position as if it formed part of the ordinary reserve fund of the bank and the shareholders would not be protected.

Senator WALKER:

– The next letter that I desire to quote is from the manager of the Perpetual Trustee Company Limited. This is, I suppose, the largest trustee company in Australasia. It has funds exceeding£6,000,000. Under its conditions a testator generally directs the company as to what investments are to be made with his funds ; but if no specific instructions are given the funds must be invested under the trustee law. The writer of the letter, Mr. A. J. Mackenzie, has been the manager of the company almost from the start. He writes -

Senator The Hon. J. T. Walker,

Yaralla Chambers,

Pitt-street, Sydney.

Dear Sir, - I write to say that at your request I have carefully perused the Bill introduced into the Senate authorizing any joint stock banking company to set aside moneys in the hands of trustees to provide for their uncalled capital or reserved liabilities, with a view of ascertaining whether the Bill, if it becomes an Act, could prejudicially affect the public, and have no hesitation in saying that it could not, in my opinion, but on the contrary it will create still greater security to them, inasmuch as the reserved liabilities, instead of being as at present in the form of uncalled liabilities of shareholders - the value of which must necessarily always be more or less doubtful - will be protected by investments in Government securities beyond the reach of anybody except the creditors of the bank.

Yours faithfully,

1. J. Mackenzie,

Manager.

Senator Givens:

– Surely that phrase “ more or less doubtful “ is a severe reflection upon the honesty of shareholders.

Senator WALKER:

– That is an insinuation which is not justified. When I was a young man in a stockbroker’s office in Edinburgh my own father, who had retired from business, held a good many shares in the Bank of New South Wales - the very institution of which I am now a director. On one occasion, to my surprise, I found that he was selling some of the shares of the bank. I said to him, “ What is your idea in selling those shares?” He replied, “My boy, there is a reserve liability on these shares, and as an honest man 1 think that I ought to have sufficient investments elsewhere to meet that liability if ever I should be called upon to do so.”

Senator Givens:

– That was undoubtedly the correct attitude.

Senator WALKER:

– But, unfortunately, many shareholders do not do what my father thought it was his duty to do. Hence many bank shareholders would be placed in severe’ difficulties if called upon to meet their reserve liability. I have two letters from prominent members of the Sydney Stock Exchange. I have no hesitation in telling the Senate that these gentlemen are honest brokers - not jobbers, but men who simply do commission business. The first letter is from a gentleman who was for years in a bank in London. I refer to Mr. Lewis P. Bain, who writes to me as follows : -

Dear Mr. Walker,

I have copy of your Bill re Reserve Fund for Shareholders in Companies whose shares have a liability such as the banks, Australian Gas Company, insurance companies, &c.

I think your Bill an excellent one. I wish you every success in getting it passed.

Yours faithfully,

Lewis P. Bain.

Senator Walker, Pitt:

The last letter which I shall quote is from one of the principal brokers in Sydney, a man whose name is held in great esteem. Much to my pleasure he has written at length on the subject. This gentleman does a large sharebroking business, and was intimately acquainted with financial matters during the crisis of 1893. He knows the danger of reserve liability being called upon at a time when shareholders may not ‘ be able to meet their responsibilities. I do not know why honorable senators should want to have a Select Committee when they can hear the testimony of experienced men like these.

Senator Givens:

– We should like to . cross-examine them.

Senator Rae:

– Did the honorable member submit his Bill to Mr. Nash, the financial editor of the Sydney Daily

Senator WALKER:

– Certainly ; and his remarks were in favour of it. In fact, he called upon me with regard to the Bill, and asked me to write . a letter, which he printed in his financial column. The letter which I intend to quote now is from Mr. John R. Jones, who writes -

The Hon. Senator Walker.

Dear Sir, - 1 have read your “ Bill for an Act authorizing any joint stock banking company formed or incorporated in any State to form reserve funds for the express purpose of providing or accumulating funds to protect the shareholders in such banking companies against their liability in respect of the uncalled capital or reserve liabilities on their shares, and to provide for the creation of corporate bodies in which such reserve funds may be vested.”

I think it very desirable to have a Bill of this sort, and am certain that if the reserve proposed under it had been in existence at the time of the bank crisis in 1893, the panic, which was caused chiefly through a lot of timid shareholders forcing their shares on the market from fear of being called upon to pay up the reserved liability, would not have been so accentuated.

Apart from the above, I am of opinion that the confidence of depositors would be increased by the fact that the reserve liability of shareholders was assured, and they would not be so anxious to withdraw their deposits.

Hoping you will succeed in getting your Bill through.

Yours faithfully,

John R. Jones.

The letters which I have quoted are from men of undoubted reputation and integrity, and should carry weight with the Senate.

Senator Rae:

– Is there any country where a similar law to that which the honorable senator wishes to enact pre- * vails ?

Senator WALKER:

– I am not aware that there is; but the principle of this Bill was recognised when the London Bank of Australia was reconstituted. The shareholders then insisted that trustee* should be appointed with whom Government securities should be deposited to cover the note liability of the bank. It will be seen’ from the last balance-sheet that the London Bank has a reserve of £126,000 for this purpose. My Bill, of course, does not propose to relieve the bank from their note liability, but the principle is the same. The only instance I have come across of a banker offering any opposition to this Bill was that of one who said, “I do not believe in our bank having to place its money in the hands of trustees or any one else, because some day the trustees might do what was wrong.” My reply was, “ How do you know that some of the officials of your own bank will not do what is wrong?” I am old enough to remember the Pullinger frauds in London in 1861.

Senator Givens:

– I suppose that Pullinger was like the writers of the letters which the honorable senator has quoted, a man of “ undoubted integrity.”

Senator WALKER:

– Pullinger was an officer of the Union Bank of London. He had charge of the bank’s Bank of England pass-book. The banks in the clearing-house all settle their exchanges at the end of the day by cheques on the Bank of England. Consequently all the banks have large credit balances with the Bank of England, which is the bankers’ bank. Pullinger, who was a man who had never been known to take a holiday, became ill one week. During that week the exchanges were rather against the Union Bank, and one day a notice came in from the Bank of England to say, “ We have paid certain cheques to-day, but your account is overdrawn by from £200,000 to £300,000.” The directors met and asked what the meaning of this state of affairs was. Then it was discovered that Pullinger had provided himself with two pass-books. On one occasion he had made the excuse that the pass-book was lost, and obtained another.’ He had robbed the Union Bank to the extent of £250,000. That fraud was committed by a man inside a bank.

Senator Long:

– Would this Bill prevent that kind of thing?

Senator WALKER:

– No, of course it would not. I have done everything possible in this measure to safeguard the public, to safeguard the shareholders, and to assist materially in investments being made in Government stock, because the Bill provides that a; funds accumulate for the purpose indicated they must be placed in Government stock and no other kind of security.

Question - That the wordsproposed to be left out “Be left out - put. The Senate divided.

AYES: 12

NOES: 13

Majority … … 1

AYES

NOES

Question so resolved in the negative.

Amendment negatived.

Question - That this Bill be now read a second time - put. The Senate divided.

AYES: 14

NOES: 11

Majority … … 3

AYES

NOES

Question so resolved in the affirmative.

Bill read a second time.

In Committee:

Clause 1 - .

This Act may be cited as the Commonwealth Banking Companies Reserve Liabilities Act 1910.

Senator GIVENS:
Queensland

– I can suggest to Senator Walker a very much better short title. The whole object of the Bill is, as is frankly stated in a later clause, to protect the shareholders. I think that it would be very much more frank on the part of Senator Walker to include a statement of that fact in this clause rather than to have a short title which does not indicate the real object of the Bill.

Senator Walker:

– If the honorable senator will read the preamble he will see what the object of the Bill is.

Senator GIVENS:

– If the object of the Bill is expressed in the preamble, why not adopt a short title so that he who runs may read that object? Every Bill is known by its short title. In this case the long title is -

A Bill for an Act authorizing any Joint Stock Banking Company formed or incorporated in any State to form’ Reserve Funds for the express purpose of providing or accumulating funds to protect the shareholders -

Why could not that fact be frankly stated in the. short” title ? I do not desire to move an amendment, but. I respectfully suggest to Senator Walker that he should ask the Committee to postpone the clause, with a view to considering the matter.

Clause agreed to.

Progress reported.

Senate adjourned at 9.43 p.m.

Cite as: Australia, Senate, Debates, 11 August 1910, viewed 22 October 2017, <http://historichansard.net/senate/1910/19100811_SENATE_4_56/>.