10th Parliament · 1st Session
The PRESIDENT (Senator the Hon. J. Newlands) took the chair at 3 p.m., and read prayers.
– Is it the intention of the Government to follow the usual practice of asking the Trades and Labour Councils to nominate their representatives on the proposed Industrial Commission to the United States of America? This course was followed in connexion with the appointment of the Labour representative’ to the Geneva Convention.
– The method by which delegates on the proposed commission shall be selected is under consideration, and a further statement will be made by the right honorable the Prime Minister at an early date.
– Is it the intention of the Government, before Parliament adjourns, to appoint members of the Markets and Migration Commission and the Northern Australia Commission?
– It is proposed to make the appointments at the earliest possible date, and it is hoped to do so before Parliament rises.
Senator Barnes brought up the report of the Parliamentary Standing Committee on Public Works, together with minutes of evidence relating to the proposed construction of a new wharf at Garden Island Naval Establishment, New South Wales.
– Is the Leader of the Senate yet furnished with answers to the questions which I asked in the dim and distant past as to the number and cost of existing boards and commissions that have been appointed by this Government ? If not, can he say when the information will be available?
– The answer to that part of the honorable senator’s question relating to the number of boards appointed has been available for some time, but replies as to their cost involves ari exhaustive examination in every department. That is the reason for the delay.
– Will the information be supplied before the end of the session?
– I hope so.
Single of Double Link Tunnels
– Has the Minister representing the Minister for Works and Railways received a reply to my question relating to the estimated cost of single and double line tunnels on the KyogleBrisbane railway? If not, when does he expect to have the information?
SenatorCRAWFORD. - I regret that the information is not yet available, and also that I am unable to say when the replies to the honorable senator’s question will be ready.
Resignation of Assistant Architect
– On the 22nd July, Senator Elliott asked the following question . -
Is it a fact that the architect who designed the homes for civilservants shown in the pamphlet recently circulated by the Federal Capital Commission has resigned his position ?
I now desire to state; for the information of the honorable senator, that I have been advised by the Federal Capital Commission that the homes for public servants, shown in the pamphlet recently circulated, were designed by the architect’s department of the commission, and not by any one officer. The architect in charge has not resigned, but his senior assistant recently submitted his resignation, which has been accepted.
– On the 22nd July,
Senator Elliott asked the following questions :
I am now able to supply the following answers to the honorable senator’s questions: - 1 and 2. Forty-six business sites near the civic centre have already been made available by the Federal Capital Commission. The commission considers that these, in addition to the business sites in other subdivisions, adequately meet the present business requirements of the Capital. The commission proposes to submit additional business sites for sale at an early date. It is considered that the sale of isolated business sites would be inadvisable from an architectural point of view.
The following papers were presented : -
War Service Homes Commission - Report for the year 1925-26.
Ordered to be printed.
Arbitration (Public Service) Act - Determination . by the Arbitrator, &c. - No. 23 of 1926 - Commonwealth Medical Officers’ Association.
Canned Fruit Bounty Act - Return for 1925-26.
Defence Act - Regulations’ amended - Statutory Rules 1926, No. 98.
Defence - Munitions Supply Board - Annual Report for the period 1st July, 1924, to 30th June, 1925, together with Annual Report of the Commonwealth Government Clothing Factory.
Dried Fruits. Export Control Act - Statement, dated 2nd August, 1926, by the Minister for Markets and Migration, regarding the operation of the Act, together with a copy of the Second Annual Report of the Dried Fruits Control Board.
Estimates of Receipts and Expenditure, Estimates of Expenditure for Additions, NewWorks, Buildings, &c, and Estimates of Expenditure from Loan Fund, for the year ending 30th June, 1927. (In substitution for Estimates presented to the Senate on 8th July, 1926.)
Iron and Steel Products Bounty Act - Return for 1925-26.
League of Nations - Conference for the Supervision of the International Trade in Arms and Ammunition and in Implements of War - Convention, &c., signed at Geneva, 17th June, 1925.
Northern Territory - Ordinance No. 17 of 1926 - Lunacy (No. 2).
Public Service Act - Appointments–
Department of Health - F. J. Dempster.
Department of Works and Railways - F. G. Connor.
Regulations amended - Statutory Rules 1926, Nos. 94 and 100.
Territory for the Seat of Government - Ordinances of 1926 -
No. 7 - Provisional Government.
No. 8 - Real Property.
No. 9 - City Area Leases (No. 2).
No. 10- Meat.
The Budget 1926-27 - Papers presented toy the Honorable Earle Page, MP., on the occasion of the Budget of 1926-27. (In substitution for Papers presented on the occasion of opening the Budget on 8th July, 1926.)
Shale Oil Bounty Act - Return for 1925-26.
Sulphur Bounty Act - Return for 1925-26. Wine Export Bounty Act - Return for 1925-26.
.- I lay upon the table of the Senate the agenda paper of the Imperial Conference, and move -
That the paper be printed.
I do not propose to speak upon the subjects listed for discussion at the forthcoming Imperial Conference, but I direct honorable senators’ attention to the fact that a full statement of the Government’s attitude towards the questions to be considered has been made by the Prime Minister (Mr. Bruce). My object in submitting this motion is to give honorable senators who so desire an opportunity to address themselves at some suitable stage to the subjects to be discussed. If the adjournment of the debate is moved that can be done.
Debate (on motion by Senator Needham) adjourned.
– No. The budgetpapers previously presented contain only the totals of the expenditure for last year, whereas those now presented give the expenditure in detail.
Parliament House - Building Costs
asked the Minister for Home and Territories, upon notice -
– The Minister for Home and Territories has supplied the following answers to the honorable senator’s questions: -
asked the Minister for Home and territories, upon notice -
-The Minister for Home and Territories has supplied the following answers to the honorable senator’s questions: -
Assent to the following bills reported : -
Petroleum Prospecting Bill.
Seat of Government (Administration) Bill.
Loan Bill (No. 1).
Grafton to South Brisbane Railway Bill.
Bill returned from the House of Representatives with a message intimating that it had agreed to the requested amendments of the Senate.
Bill received from the House of Representatives, and (on motion by Senator Pearce) read a first time.
Bill received from House of Representatives, and (on motion by Senator Crawford ) read a first time.
Bill received from House of Representatives, and (on motion by Senator Crawford) read a first time.
Bill received from House of Representatives, and (on motion by Senator Crawford) read a first time.
Debate resumed from 23rd July (vide page 4561), ou motion by Senator Pearce -
That the papers be printed.
Senator Sir HENRY BARWELL (South Australia) [3.23]. - Having given much thought and consideration to the budget for 1926-27, I regret to say that I am quite unable to congratulate the Government upon it. I am genuinely sorry to have to make such a statement. It is much, more pleasant for me to uphold than to condemn the actions of the Government; but -in this case I find myself in the predicament of having either to remain silent or to say that which is unpleasant. To say nothing at all upon such an important matter, when one feels as strongly as I do, would amount to a shirking of one’s responsibility as a member of this Parliament, and that I have no intention of doing. My disagreement with the budget has been applauded by one or two of my friends opposite. I trust that they do not think that I wish to infer that the position would have been any better had Labour been in power. I am satisfied that it would have been infinitely worse.
Senator .Sir HENRY BARWELL.The honorable senator can take it for granted that I mean it from the bottom of my heart. My first comment upon the budget is that the taxpayers of Australia had every right to expect a reduction in taxation.
Senator Sir HENRY BARWELL.I have expressed my opinion as to what the position would have been had Labour been in power.
Senator Sir HENRY BARWELL.Yes; and heavens knows when it will present its report. It will be at least twelve months, at any rate, before a scheme can be approved . by Parliament in connexion with that subject, and, on the other hand, no scheme may ever materialize. ITo wonder comment is heard outside regarding the overflowing coffers of the Treasury. It was certainly contemplated by the framers of the Constitution, and it was provided in the Constitution itself, that surplus revenue should be paid by the Commonwealth to the States. During the last few years the accumulated surpluses would amount to close upon £15,000,000, not a penny of which has been returned to the States. I know, of course,, the legal position as determined by the High Court; the Government has power to pay the money into trust funds. I am merely directing attention to the way in which the position has been strained. In order to absorb a portion of the surplus revenue the Government has resorted to a payment to a trust fund for a scheme such as national insurance, which, as I have said, may never materialize. At last it has given up the cry that the Customs and excise duties are bound to fall off; we are now told that the estimated revenue for the current financial year from that source is £40,500,000. That is a staggering sum. The population of this country is only 6,500,000 - men, women and children. It is an appalling figure, considering the extent to which we are dependent on primary industries, the comparative smallness of our secondary industries, and the fact that the possible expansion of those industries is limited to all intents and purposes to the requirements of Australia, since we are unable to export our surplus manufactures, the position is serious.
The first of the other subjects upon which I wish to touch is that of the financial relations of the Commonwealth and the States. The proposals of the Government for the re-adjustment of those relations is causing great concern to the States, and the matter should be scrutinized carefully by this Parliament. The purpose of the proposed readjustment, we are informed, is the severance of the Commonwealth and State finances. Theoretically that object is sound; but I think that in this case it is neither wise nor safe to proceed upon pure theory. I admit candidly that I was strongly inclined at first blush to support the proposals of the Government, provided that due notice was given to the States so that they would have sufficient time to bring about a proper re-adjustment of their finances. During the last week or two, however, I have taken the trouble to make a careful study of the origin and history of those financial relations. I have read every word upon the subject in the debates at the conventions of 1897 and 1898, and I have also read everything said in the debates that took place when the Surplus Revenue Bill was under consideration by Parliament in 1910. In 1897 and 1898 it was stated emphatically by the representatives of the smaller States - South Australia, Western Australia, and Tasmania - that those States would never- accept federation without a provision for repayment to the States of a proportion of the Customs and excise revenue. Their intention was that there should be a permanent provision for such repayments. The members of the convention as a whole realized that that provision would of necessity have to be made - that federation could never be brought about unless it was provided in the Constitution that a certain proportion of that revenue, which the Treasurer calls “easy money,” should be returned to the States. The Constitution, as adopted finally by the convention held in Melbourne in 1S9S, embodied the Braddon clause. That clause - not the Braddon clause as now embodied in the Constitution, but the Braddon clause as it appeared in the final draft of the Constitution as it left the convention on the 10th March, 1898. - provided -
Of the net revenue of the Commonwealth from duties of Customs and of excise not more than one-fourth shall be applied annually by the Commonwealth towards its expenditure. The balance shall in accordance with this Constitution, be paid to the several States or applied toward the payment of interest on the debts of the several States taken over by the Commonwealth .
I want, honor able senators to notice that that provision was of a permanent nature. There was no limitation as to time. It was to operate for all time, subject, of course, to the right of the people to amend the Constitution as provided by the Constitution itself. It was the Constitution with the Braddon clause in that form that was first submitted to the people a* the time of the first referendum.
Senator Sir HENRY BARWELL.No. That referendum was submitted only to the electors of New South Wales, Victoria, South Australiaand Tasmania, the electors .of Queensland and Western Australia not voting. In Victoria, South Australia, and Tasmania the proposal was carried. In New South Wales it was approved by a majority of 70,000 of the electors who voted ; but between the time of the finalizing of the draft Constitution by the convention and the. submission of that Constitution to the people at the first referendum, the New South Wales Parliament passed legislation providing that the majority necessary to approve of the Constitution should be 80,000, whereas previously it was 60,000. The majority being only 70,000, the result was that, technically, the Constitution was not agreed to. Subsequently, the Constitution was reviewed at a conference of Premiers held in January and February, 1899, when the Braddon clause was al tered. When the draft Constitution, asaltered by that Premiers’ Conference was5submitted to the people on the occasion’ of the second referendum, it was agreed’ to. The only difference between the Braddon clause, as it appeared in the final draft of the 1898 convention, and the Braddon clause as finally agreed to at the Premiers’ Conference in 1899, was that it was prefaced with the words “ During a period of ten years after the establishment of the Commonwealth, and thereafter until the Parliament otherwise provides.” That limitation was placed upon it by the Premiers’ Conference of 1899. The position then was that, although a large majority of the people of Australia voted for the adoption of
The Constitution as finalized at the convention of 1898, it was found necessary, in order to placate a minority, and to get federation consummated, to alter the Braddon clause. The matter came up again for review in 1910, when the Surplus Revenue Bill was before Parliament. I need not relate the circumstances, except to say that at that time there was another referendum.
Senator Sir HENRY BARWELL.Undoubtedly. In opposition to my first ideas, I have been forced to tha conclusion that the contention of the States, that they have a moral claim to a share of the Customs and excise revenue, is right. Undoubtedly, one of the factors which induced the smaller States to agree to federation was the provision for a refund of a portion of the revenue derived from Customs and excise duties.
Senator Sir HENRY BARWELL.That is perfectly true; but Customs and excise revenue was practically the only revenue of the Commonwealth at that time, although, just previously, land taxation had been imposed.
Senator Sir HENRY BARWELL.The act did not provide for that; but the money could come from no other source.
Senator Sir HENRY BARWELL.Yes, and the Labour government that was then in power, realizing that something had to be done, introduced and passed the Surplus Revenue Act of that year. The debate on that measure clearly indicated that it was never contemplated that the Federal Government should deprive the States of all share in the Customs and excise revenue. Although it was not specially mentioned, it was taken for granted that the per capita payment of 25s. per head was to come out of the Customs and excise revenue. The smaller States were assured of a return of some portion of that revenue. It was not anticipated that they would be deprived of it at the expiration of the ten-year period ; and though it was contemplated that there might be some further revision of the provision, they were prepared to trust the Parliament. It was, however, suggested that in the event of war breaking out, involving the Commonwealth in huge expenditure, the Commonwealth might resort to direct taxation without interfering with the proportion of revenue that was being returned to the States. The more I have studied the subject, the more convinced am I that this sharing of Customs and excise revenue by the Commonwealth and the States was one of the fundamental principles of the federation. Another consideration which influences me is the wording of the Braddon clause and the wording of section 4 of the Surplus Revenue .Act of 1910, I refer to the alternative provision in both of them for the application of the money to be refunded by the Commonwealth to the
States. Section 4 of that act provides that all surplus moneys shall be paid over to the States or applied towards the payment of interest on debts taken over by the Commonwealth from the States. It was clearly intended that the debts of the States should be taken over! Until that was done, the proportion of Customs and excise revenue repayable to each State could be applied to the payment of interest on those debts. Section 105 of the Constitution puts the position very clearly. It reads -
The Parliament may take over from the States their public debts as existing at the establishment of the Commonwealth, or a proportion thereof according to the respective numbers of their people as shown by the latest statistics of the Commonwealth, and may convert, renew, or consolidate such debts, or any part thereof; and the States shall indemnify the Commonwealth in respect of the debts taken over, and thereafter the interest payable in respect of the debts shall be deducted and retained from the portions of the surplus revenue of the Commonwealth payable to the several States, of if such surplus is insufficient, or if there is no surplus, then the deficiency or the whole amount shall be paid by the several States.
We have the same references to the surplus revenues of the Commonwealth being paid by the Commonwealth to the States in other sections.
The Government’s present proposals are ill-advised. I cannot help saying that its action savours of sledgehammer tactics, which are inexcusable in the circumstances, since they are likely to create a feeling of hostility between the Governments of the States on the one hand, and the Government of the Commonwealth on the other. Since the people who constitute the population of the Commonwealth are the same people that constitute the population of the States, it should be possible for the Federal and State governing authorities to work together in harmony. Various recent actions of the Government, including this one, have created the utmost bitterness between the Governments of the States and the Government, of the Commonwealth, and I tell the Government that the people of Australia will be far more likely to stand by the Governments of the States than by the Government of the Commonwealth. Any one who has been in State politics knows how much closer are the relations of the pepole with their State Governments than are their relations with the Commonwealth Government. Therefore, I think that the Government would be wise to proceed about this business in a different way. The readjustment of the financial relationships of the Commonwealth and the States is not urgent. Certainly it should not be bludgeoned through this Parliament. There is no necessity to bring it forward at the present time. As things Are going it looks as if it will be possible for the Commonwealth Government, within a few years, to evacuate the field of direct taxation, without interfering with the States’ share of the Customs and excise revenue, assuming, of course, that theper capita payments are regarded as portion of Customs and excise revenue, and undoubtedly that was the original intention. Year after year the Commonwealth has had large surplus revenues, whilst the States are experiencing the utmost difficulty in balancing their ledgers.
I now wish to deal with the roads policy of the Common wealth. We are asked to accent the Government’s proposals for the adjustment nf the financial relations between the Commonwealth and the
States because, as a Minister in another place said -
They are based on the sound principle that a Government should be responsible for raising the money which it spends, and the States should be made as independent of the Commonwealth as possible.
We are asked to accept the financial proposals of the Commonwealth because of the “ sound principle “ that a Government should be responsible for raising the money which it spends, and the States should be made as independent of the Commonwealth as possible. But nothing has been said concerning this “ sound principle “ in connexion with the Commonwealth’s roads construction policy, because that policy is in direct conflict with that principle. The . Government’s proposal in this instance is that the Commonwealth should raise the money to be expended by the States, which is a direct negation of the “ sound principles” we axe asked to adopt in regard to the proposed financial adjustments between the Commonwealth and the States. There are many persons throughout Australia, including a large number of supporters of the Government, who view with grave concern the encroachments of the Commonwealth upon State rights. The Government proposals in connexion with road construction, housing, health, wire netting, and prospecting for minerals, plus those for an adjustment of the financial relations between the Commonwealth and the States, are tending towards unification. If adopted, they will make unification inevitable.
Senator Sir HENRY BARWELL.As a matter of’ fact, the present Government in South Australia introduced a petrol tax proposal which undoubtedly was an excise tax. As Leader of the Opposition in the South Australian Parliament at the time, I went fully into the matter, andlater,when the position was pointed out, the Government realized that, as it really was an excise duty, it was unconstitutional. It then considered whether it was possible to. impose a constitutional petrol tax, and that now imposed by the South Australian Government - I think a similar tax is in force in Western Australia- is being collected on the consumption of petrol, which counsel advises is legal. The tax is upon roadusers only; petrol consumers who do not use the roads are allowed a draw-back. The users of all brands of petrol, including the Commonwealth Oil Refineries’ petrol, have to bear the impost.
Senator Sir HENRY BARWELL.I am not going into the question of single tax at this juncture. The roads policy of the South Australian Government is on a scientific basis. Good roads are a national asset, and the whole population benefits by cheap, efficient and rapid transport. Although it was decided that a large portion of the cost of roadconstruction and maintenance should be borne by the general taxpayer, it was also recognized that the road-users should pay a special tax over and above that which the general taxpayers had to bear. A tax was also imposed upon the users of steam, electrically-propelled, and horsedrawn vehicles, which is just and equitable. As such a tax differs largely from the proposals of the Commonwealth Government - which are slip-shod, loose and unscientific - it is only to be expected that there should be dissatisfaction. I say emphatically that a proposal of this nature will not have my support. Why should this tax be imposed upon motorists who are now contributing £3,500,000 through the Customs, in addition to which they have to pay a special registration fee upon motors, according to their weight and horse-power, which yields over £2,000,000? As a result of these imposts, motor-owners pay on an average. £18 a vehicle. Although motor transport is so essential to Australian development,, the Government is submitting proposals which, if adopted, will tend to stifle rather than encourage it. Many business firms in South Australia and in other States are already reverting to horsedrawn vehicles, because of the high cost’ of motor transport.
SenatorFoll. - And there are hundreds who are substituting motors for horse-drawn vehicles.
Senator Sir HENRY BARWELL.I am referring to large firms which do extensive haulage work.
SenatorFoll. - I do not think there are many large firms reverting to horsedrawn vehicles.
Senator Sir HENRY BARWELL.There are many firms which find it cheaper to use horses.
Senator Sir HENRY BARWELL.No. I am merely directing attention to. the heavy imposts which motorists already have to bear. A petrol tax is a class tax.
Senator Sir HENRY BARWELL.No; hut the proposal is to add the duty to the price of petrol.
Senator Sir HENRY BARWELL:That may be so in certain cases. Efficiency has to be considered, and a firm would not revert to horse-drawn vehicles regardless of efficiency. This proposal is. ill-considered and unfair. A tax will be imposed on millions of gallons of petrol not used in road transport. For instance, petrol is used by pastoralists on stations . where there are practically no roads, and by farmers in traction and stationary engines, in chaff-cutting and milking machines. It is used for lighting apparatus, aeroplanes, motor boats, for solvent purposes in rubber manufactures, for dry cleaning, for extraction purposes in the manufacture of linseed oil, and also in the manufacture of paints and varnishes. The tax, however, will not be paid by the users of the Commonwealth Oil Refineries’ spirit, which is surely the height of absurdity. Why should the users of the Commonwealth Oil Refineries’ petrol escape the payment of a petrol tax which is to be raised for providing revenue for road construction?
The Minister shall refer to the board, for inquiry and report the following matters : -
The necessity for new, increased, or reduced duties.
Later it says that the Minister shall not take any action in respect of these matters until he has received the report of the board.
There has been no reference to the board, nor any report by it, in regard to these proposed duties. On that ground they are illegal. They are also unconstitutional. In support of that, I quote theopinion of the present Attorney-General (Mr. Latham). I am unable to see in what way he can distinguish between the proposals of this year and those of last year. Speaking on the Main Roads Development Bill last year, he said : -
I am sorry that I am unable to join in the general chorus in praise of this bill. Of course, everybody agrees as to the necessity and desirability of making good roads in Australia. We want more roads and better roads. The question is, Who should make them? Should it be the Commonwealth Government or the State Governments? In proposing, year by year, legislation of this character the Commonwealth Parliament is placing itself in a difficult position. It is merely granting financial subventions instead of devoting its revenue to the work which should properly concern it. Although the Commonwealth Parliament has no power to legislate for main roads as such, we are discussing a bill the object of which, as we all know perfectly well, is to make possible the construction of main roads, without considering at all whether this admittedly desirable object is one of the objects with which the Commonwealth legislature ought to concern itself. I venture to assert, although I know it will be unpopular to do so, that in passing legislation of this description we are not acting constitutionally. This Parliament has no power to legislate for main roads. It has power, of course, to grant financial assistance to States which need it. The Commonwealth Government has no power to raise a finger to construct main roads; but it seeks by this method to assist the States to do so….. There is no certainty that these subventions will continue. It is only because the Federal Government has more money than it knows how to spend that these grants have been made.
Later he said -
The making of roads is a State function. The Commonwealth is collecting too much money from the people, and is expending upon a State basis money which has been collected upon a Federal basis, and that without the matter having first been submitted to the judgment of the people.
He concluded by saying -
I admit that developmental road-making in theback country is one of the most important matters affecting the future welfare of Australia, but I point out that in using what is really surplus Federal revenue to discharge a State function, this Parliament is laying up trouble for itself ‘ in the future, when the Commonwealth revenue may not be so buoyant as it has been in the past.
The DEPUTY PRESIDENT (Senator Plain). - Order! The honorable senator has exhausted his time. [Extension of time granted.].
During a period of ten years after the establishment of the Commonwealth, and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit.
Senator Sir HENRY BARWELL.Admittedly it is; but what does it contemplate ? Surely it contemplates a State in financial necessity approaching the Commonwealth, cap in hand, for assistance !
Senator Sir HENRY BARWELL.The position of each State has to be considered on its merits.
Senator Sir HENRY BARWELL.It might, if a State were in financial necessity and approached the Commonwealth Government for assistance. It is absurd to contend otherwise. A King’s Counsel has given it as his opinion that that is the position; and there can be no question that it is.
Senator Sir HENRY BARWELL.What happens if a State does not consent ? That was the position which South Australia occupied in connexion with the wire netting grant. What did it say ? It said to the Commonwealth Government : “ We do not want the grant. “We have our own Wire-netting Advances Act, which is being admirably and generously administered. That act lays down the conditions underwhich money shall be advanced to our farmers for the purchase of wire netting. You say to us ‘ Here is money which you can advance for the purchase of wire netting on terms and conditions that we lay down.’ You are only causing trouble and friction, because we should have to advance your money upon terms and conditions different from those that relate to advances under our act. Why interfere with us ?” The State refused to accept that grant, and has maintained that attitude up to the present time, yei it is placed in the iniquitous position of having to contribute towards the money that is advanced to other States. The same principle applies in relation to roads. The South Australian Government says: “We do not want your money. We have our own scheme for raising money for the construction and maintenance of our roads, and we cannot accept an advance from you which must be expended on terms and conditions that you lay down.”
Senator Sir HENRY BARWELL.That is a totally different matter.
Counsel in South Australia has given an opinion that is on all-fours with that which’ was given by the present AttorneyGeneral last year, when he said that the application of surplus revenue to purposes of this kind was unconstitutional. In essence, there is nodifference . between these proposals and those of last year. South Australia,therefore, says: “We do not want your money. We have our own methods of raising funds, and we want to expend those funds according to what we know to be the requirements of the State,notaccording to the requirements y.ou lay down as applicable to all of the States, but which may, not apply tous.” Therefore, I say that the Commonwealth Government has no right to intrude in this way upon the prerogatives, of the States. This proposal is not only unconstitutional and illegal; it is also unwarranted and unnecessary. It is not based upon sound principles, because it lays down conditions that are to be applicable to all the States, whereas they may be at variance with the requirements of one or more of those States. A State may not get the full benefit of the money that is raised within its own borders. The Commonwealth Government surely must see the difficulties into which it is landing itself. Why can it not confine itself to its own sphere of activities, as laid down by the. Constitution?. If it does not, it will meet with trouble all along the line. It is doing so now. In addition, it is causing ill will and friction between itself and the Governments of the States. That is inexcusable in any Government. Both institutions are agencies of and representthe samepeople. A similar objection canbe taken to the housing proposals of the Government. That being a State matter, why should the Commonwealth introduce duplication? The only result will bc an increase in cost. South Australia is carrying out a housing scheme far better than it could be carried out by the Commonwealth Government. References have been made in the Senate to the difference in the cost of houses in South Australia and at Canberra. South Australia does not want Commonwealth money for housing purposes any more than for roads. It says to the Commonwealth Government, “Do not raise more money than you require for your own legitimate purposes. Leave to us the opportunity of raising what is necessary and desirable for our particular purposes. Although we do not participate in these grants, we have to submit to the iniquitous policy of contributing towards the cost of advances that are made to the other States.
Senator Sir HENRY BARWELL.The Commonwealth Government has no right to engage in any sphere of activity that is not open to it under the Constitution, unless a State is in a position of necessity, and approaches it with the request, “ In order to properly administer the affairs of our State, we must have financial assistance.” The Commonwealth Government is given power under section 96 of the Constitution to make advances for that particular purpose.
Senator Sir . HENRY BARWELL Under the Constitution, it falls within the sphere of the. States. I admit that I cannot, in that case, make as strong representations as I can in regard to other matters. The intrusion of the Commonwealth in the matters of roads, housing, and wire netting, is not only unwarranted, but also absolutely unwarrantable. It can find plenty to do within its own sphere.
I am sorry that I have been unable to do other than pick holes in the budget. Feeling as strongly as I do, I could not conscientiously speak other than as I have. I conclude as I began, by saying that the budget is not one with regard to which the Government has reason to be proud.
– Generally speaking, I: agree with a great deal of what Senator Barwell has said. The majority of the people of Australia anticipated that the budget would announce substantial reductions in ‘their income tax. One form it might have taken, was. a return to the taxpayers of the surplus piled up in the fiscal year ended the 30th June, 1926. The people had frequently read in the newspapers statements to the effect that the Customs and excise revenue was largely exceeding’ the expectations of the Treasurer (Dr. Earle Page), and the Minister for Trade and Customs (Mr. Pratten) ; and when the budget was presented they were sorely disappointed by the discovery that notwithstanding’ these bounding revenues, no proposal was made to reduce the income tax. There was an accumulated surplus at the 30th June, 1925, of £3,108,529., and the surplus at .the 30th June,’ 1926, is shown as amounting to £286,-944’.- The majority of the taxpayers feel that something should be done in the direction of reducing taxation. They naturally inquire whether the cost of government has increased to> such a material extent as to reduce the accumulated surplus from the previous year, which was over £3,000,000, to the comparatively small sum of £286,944 at the end of June, 1926. They ask where the money has gone. After perusing the budget carefully it is found that nearly £5,000,000 was transferred ‘ to trust funds from the actual surplus of 1924- 25, and from the anticipated surplus for 1925-26. The amounts transferred from the surplus for 1924- 25 were: - For naval construction, £1,500,000; main roads development, £750,000; scientific and industrial research, £100,000; and prospecting £100,000, making a total of £2,450,000. It appears that the Treasurer, seeing that there was a. prospect of an overflowing Treasury, determined that further sums should be allocated to trusts funds in anticipation of a surplus for the year 1925- 26. The following further .sums’ were therefore transferred: - For naval construction, £1,000,000; scientific and industrial research, £250,000; air services, £250,000; and for debt redemption, £1,000,000, making a total of £2,500,000. The grand total of the sums transferred to trust funds in 1924-25 and 1925-2&, is £4,950,000. Turning to the expenditure, as set out in the budget, we find that it includes £52,384,247 for the ordinary operations and routine services of the Government; £8,704,252 for payments to States; £387,096 to. cover deficits from the operation of business activities; and £343,251 for deficits on Commonwealth Territories, making a total expenditure of £61,818,846. The revenue account is £58,996,261, leaving a deficit as shown by .the Treasury, of £2,822,585. But it will be noticed that no credit has been given for any of -the transfers to trust funds. The actual, surplus for the year, allowing for the amounts credited to trust funds, is found to be £2,127,415, and the accumulated surplus brought forward is £659,529, making a total of £2,786,944. . If we deduct from . that total the amount of £2,500,000 which ‘ was transferred, to trust funds from the surplus for the year 1925-26 we arrive at the Treasurer’s balance of £286,944. .
It is interesting to make a comparison of the Federal taxation raised, in the last two years with that proposed to be levied in the current year. The figures are as follow : -
At first sight there appears to be a big reduction in estate duties and land tax but on closely examining the position, one finds that only a change of taxing masters is proposed. No reduction in ‘taxation has taken place. When the people of Australia hear of .the, overflowing coffers of the Federal Treasury, and realize that year after year no proposal for a reduction of taxation is made, they naturally ask themselves whether the huge Federal surpluses are due to excessive economy or to over-taxation. They do not’ imagine for a moment that itis due to an excess of economy. The firmly rooted belief in their minds is that the Federal surplus represents the product of excessive taxation, from which they should be given some relief. The enormous revenues of the Commonwealth are due entirely to the exertions and business acumen of the people, and they observe that this gross political spending is brought about only by that real development which taxpayers create, despite the heavy drain for taxation purposes. The Sydney Morning Herald, I think, described the budget as a deliberate attempt to exaggerate expenditure and under-estimate revenue for the purpose of creating a feeling that the Customs revenue was not sufficient to cover the Commonwealth expenditure.
– Does the honorable senator think that it is?
– I do not say that I do; but I shall deal with that point later. I realize that the Commonwealth Treasury officials have many difficulties to overcome in preparing their estimates. There are a number of Commonwealth public works to be carried on, such, for instance, as the Murray River waters scheme, in respect of which the estimated cost is often exceeded. The estimated cost of that work has been doubled Then we have the Grafton to South Brisbane railway. Before that work had proceeded far, the estimated cost was increased by £500,000. We also have the works at Canberra, which may be likened to a capacious maw into which the. Commonwealth can empty many millions of pounds without satisfying the necessities of that enterprise.
– Will it not pay eventually?
– I am not worrying about whether the Federal Capital will pay in 200, . 500 or 1,000 years. We shall not be here then.
– Does not the honorable senator think that it will pay in 50 years?
– No. I come now to the subject of the proposed withdrawal of the per capita payments. Senator Barwell dealt with the matter largely from the point of view of the early history of the Federal movement, and the events that preceded its consummation. I am totally opposed to. the withdrawal of the payments. We should realize that while the Commonwealth has a domain in which it has to incur considerable expenditure, the States also have large financial commitments, and if the per capita payments are withheld, the State Treasurers will be seriously embarrassed. . I am speaking particularly from the point of view of the Treasurer of Tasmania. The States have to raise by way of taxation the revenue required to carry on their respective systems of organized government. They have to provide the police force required to maintain the public peace. They have to deal with public health and education. An ever increasing sum is required for educational purposes. They have further to provide for a State judiciary, and all the institutions that are vital to modern civilization. In short, they have to supply nearly all our public utilities with the exception of the Postal Department. These services cannot be carried on without substantial revenues. I have heard it said thatno moral obligation rests upon the Commonwealth to pay the surplus revenue to the States, but I contend that there is a very material obligation upon it to do so. Prior to federation Tasmania derived 74 per cent. of her total revenue from the Customs House. When she entered the Federation she necessarily vacated the field of Customs taxation; but she, in common with the other States, certainly anticipated that she would have returned to her by the Commonwealth a substantial proportion of the Customs and excise revenue.
– The people of Tasmania would not otherwise have agreed to Federation.
– Quite so. Tasmania, having handed over her Customs revenue and placed an over-lord, in the shape of the Commonwealth Government, over her, is now told that she can raise her revenue by imposing direct taxation. Is that fair? When the Federal convention was held in 1897-98 -
I refer particularly to the sittings of the convention at which the question of finance was dealt with, the whole Federal scheme was very nearly wrecked, because the representatives of the States could not come to a definite understanding as to what was to be returned to the States.
– The Braddon clause saved the situation.
– The Braddon “ blot.”
– It was so described at the time; but no one could suggest a substitute for it. What is the position that now confronts Tasmania? It is contended by some that there is no moral obligation on the part of the Commonwealth to return to the States any part of its Customs. Lean only say that had there not been an understanding on the part of Tasmania that she would be refunded a portion of the revenue received from Customs and excise duties, she would not have joined the Federation. An express provision for the return to the States of a portion of the Customs and excise revenue for all time was not inserted in the Constitution, for the reason that while several of the States imposed protective duties, New South Wales was a freetrade State. I appreciate the difficulties which confronted the framers of the Constitution in forecasting the probable position in subsequent years. To have made the Constitution rigid, in this respect might have presented great difficulties. But I remind the Senate that when Mr. Deakin was dealing with the per capita payments in 1909 he felt, as did others, that the spirit underlying the financial bargain made in establishing the Federation was that a considerable amount of the Customs and excise revenue should be returned to the States. He then said -
There is no power on the States’ part to raise Customs and excise revenue, but a right to share in such revenue, originally for all time, and under the Constitution finally passed, for ten years.
The States are now being told that they can raise money by imposing further direct taxation.
– At that time, the Commonwealth had not entered the field of direct taxation to any great extent.
– That is so, and that is the reason why nearly every honorable senator who has spoken has stated that the per capita payments were to be made from revenue derived from Customs and exicse duties. At that time there was no Federal income taxation, and only a small amount was received from land taxation. Were the proposal of the Commonwealth Government to vacate the field of direct taxation altogether, the position would certainly be improved; but it is proposed that the Commonwealth shall vacate that field to the extent of only 40 per cent. Forty per cent, of the income tax payable by individuals resident in Tasmania would, according to the Treasurer’s figures, be £80,629. A number of Tasmanian members of Parliament, being seriously concerned about the position, approached the commissioner of taxation for Tasmania, who informed them that that amount could not be obtained from a 40 per cent, tax on the incomes of persons resident in Tasmania. It would be insufficient to make a bald statement of that nature without figures to substantiate it. I have the figures. I asked the following question of the Minister representing the Treasurer on the 30th June last - ‘
His reply was -
The best mathematician among us could not prove that 40 per cent, of £156,733 is £80,629; it is only £62,693. As a matter of fact, the Commissioner of Taxation in Tasmania says that the amount derivable from a tax on the incomes of persons resident in that State would not produce more than £105,000, in which- case 4.0 per cent, would only be about £42,000. Honorable senators will, therefore, see that if the Treasurer of Tasmania accepted the figures of the Commonwealth Treasurer, he would be in a serious position at the end of the year. Unless the State Treasurers are given a much longer period in which to make adjustments, they will be faced with serious difficulties in preparing their budgets. The Commonwealth Government proposes to allow a period of only one year. No State Treasurer can budget properly unless he knows some time beforehand what amount he is likely to obtain from the Commonwealth. He knows approximately what, his revenue from State
taxation will be, but when he has to depend upon the Commonwealth the proposition is very doubtful.
– If adjustments were made over a period of five years, would that meet the case?
– A period of five Tears would certainly be better than a period of only one year. It has been said that Tasmania would be very much better off under the Treasurer’s proposals than she would be if the per capita payments were continued. Let us, in this connexion, consider the decline in Tasmania’s production since 1901. The following table shows the amount of production per head of population in each State and in the Commonwealth, as a whole, for the years 1901, 1914, and 1923-24:-
The trouble with Tasmania to-day is that her production, per head, is not being maintained. It is only 73 per cent, of the production, per head, of the Commonwealth as a whole. As estimates of taxation are usually based on production, honorable senators will see from the figures I have submitted from the Treasurer, the reduction that has taken place in the assessments since 1920-21, and, therefore, how serious is the position of that State. In 1901, the gold produced in Australia was valued at £21,816,772 or nearly 20 per cent, of the total primary production of the Commonwealth. By 1923-24, that production had decreased to £3,143,824. or less than 1 per cent, of the total. Tasmania has been seriously affected bv that reduction.
I desire now to refer to the Government’s housing proposals. The Treasurer, in his budget, stated -
The question of the housing of the people affects the comfort and well-being of the individual, and the efficiency of the individual is necessary to the national welfare and progress.
That is true. History furnishes many examples of men who have impressed the world by their soundness of heart and moral worth - men who have improved the conditions of their fellows - who admitted that their influence for good was due to their early home training. The problem of dealing with slums and with the housing of the poorer sections of the community has always been a difficult one in Qld World countries. Between 1851 and 1914, many measures dealing with the housing of the people of Great Britain, were introduced into the British
House of Commons. Then came the great, war. A report issued by the International Labour section of the Geneva Convention shows that the housing problem has been acute throughout Europe since the war. It has been acute, too, in Australia, although, to some extent, the position has been alleviated by the work of the Repatriation Commission. The reason for the acuteness of the housing problem is that great numbers of persons who were on the land were attracted to the cities, which promised many inducements and high wages. Overcrowding iu cities was thus greatly intensified. Private enterprise could not meet the demand, and building costs to-day are practically double what they were in pre-war days. That means that rents are greatly increased. Honorable senators will readily understand that unless real wages also increased materially, the cost of housing was bound to become a serious problem in the lives of the people. The difficulty can be overcome only by means of a subsidy. The Government, like Dickens - that master painter of pen pictures, who was able to show how slum conditions affected the moral fibre of the people - feels that reform should first take place in the homes of the people. Mr. Fisher, late Minister for Education in Great Britain, said that bad housing and bad morals went together. With that statement I agree. I have here a table, which sets out the number of occupied private dwellings in Australia, New Zealand, the Union of South Africa and the United States of America -
The following is a comparison of the occupancy of private dwellings in the metropolitan areas with those outside those areas throughout Australia : -
It will be noticed that although the increase in the total number of dwellings during the period from 1911 to 1921 was . 24 per cent., yet the increase in the number occupied by owners and purchasers was 77 per cent., the increase in metropolitan areas being 83 per cent., and in extra-metropolitan areas 74 per cent. The following table shows the percentage of private dwellings in Australia occupied by owners who were employers or employees a* the time of the.. 1921 census ^
The percentage in the case of adult employees indicates what an opportunity there is for a workers’ home scheme. In addition, females in Australia occupied 73,734 dwellings as owners. Of these females, 8,157 were employers, and 4,500 were employees. I have also had prepared a table showing what the States are doing in this very important matter of housing the people. It sets out the particulars thus : -
I may add that State and Commonwealth schemes for building homes for returned soldiers have been excluded from the above conspectus.
– The Queensland Government cannot cope with the number of applicants for homes in that State.
– I have nothing to say on that point. My purpose in having these particulars epitomized was to show what the States were doing. I am in favour of the Government’s housing scheme, but I do not believe in its method of financing it.
– We have not yet had details of the Government’s scheme.
– No; but it was referred to in general terms in the budget, and I am now dealing with it only in general terms. The Treasurer proposes to obtain from the Commonwealth Bank money for the housing scheme. I think I can point to a better source. The Commonwealth Government is committed to a scheme of national insurance. Senator Barwell said just now that no report had yet been received from the National Insurance Commission. The honorable senator was in error. A report was handed in to the Government on the 3rd March, 1925, and the Ministry, therefore, has had ample time to consider it.
Any scheme of national insurance must necessarily involve millions of pounds. The figures relating to the receipts and expenditure of the National Health Insurance Scheme in England, which I propose to put before the Senate, will, I am sure, surprise honorable senators, and will give them some idea of the amount of money that will be available for housing purposes when the Commonwealth adopts a similar system. They are as follow : -
The following figures showing the investment of the funds of the scheme make very interesting reading: -
I now direct attention to figures calculated from the national insurance scheme for Australia, drawn up by the royal commission and placed before the Government eighteen months ago, and which I submit might very well go hand in hand with the Government’s housing scheme -
It willbe seen from these figures that a Commonwealth national insurance scheme would provide the Government with very considerable funds which could be used for its housing scheme. The figures used for administration costs were calculated on the same basis as in the British scheme.
I wish now to refer to the subject of Commonwealth standards, in connexion with which an association has been establishedby the Commonwealth Government for the purpose of bringing about economy in methods of manufacture. Great economic advantage can be obtained by standardization. Already about 20 different national standard associations have been established throughoutthe civilized world, andthese associations have done extraordinarily good work in bringing aboutreductions in the cost of manufacture. They can do even more than that. Employment can be stabilized, as the manufacturer in . periods of temporary trade depression can manufacture to stock’, knowing that future orders will be for a standard product. The Standards Association of Great Britain was established in 1901, and has been in active operation ever since. In 1918 the Commonwealth Institute of. Science and Industry, under the old regime, endeavoured to introduce a system ofstandards for Australia. It called a meeting of engineers, manufacturers, and producers, at which it was unanimously decided that something should be done. Nothing, however, was accomplished until 1922, when the Institute ofEngineers was invited to take the matter up. This it did inFebruary, 1922, and in October of the same year the Engineering Standards Association was gazetted.I propose to give a resume of the functions of the association.
The Australian Commonwealth Engineering StandardsAssociation was founded as I have said; in October, 1922, when the appointment of members of the main committee of the association was gazetted. The main committee is constituted of three representatives of the Commonwealth Government, one representative of each of the State Governments, six representatives of the Institute of Engineers, Australia, three representatives of the Australasian Institute of Mining and Metallurgy, three representatives of the Australian Chemical “Institute. Subsequently the Associated -Chambers of Manufactures of Australia and the Associated Chambers of Commerce of the Commonwealth of Australia were each invited to nominate a representative. The objects of the association include inter alia: - (a)To prepare and promote the general adoption of standards in connexion with engineering structures, materials, matters and things and from time to time to revise, alter and amend the same. (b) To co-ordinate the efforts of producers and users for the improvement of engineering materials, processes and methods.
The functions of the main committee, in which the control of the association is vested, are as follows : -
The association does not undertake the preparation of standard specifications on its own initiative. When a recommendation is received from an interested party for the preparation of a specification for any particular product, material, or process, the project is referred to the association’s State committees by which an exhaustive investigation is made as to the need of the proposed specification. The reports of these investigations are considered by the main committee, and if such consideration is favorable, a sectional committee is established to undertake the particular work involved. Every possible care is exercised to ensure that all interests concerned in the work of such a sectional committee are adequately represented in the personnel of the committee as finally constituted. Provision is made, however, to ensure that consuming interests shall predominate. Sectional committees may appoint sub and panel committees to. consider . special, phases of the work under review, and in these instances the conservation of interests must be also provided for.
The reports of sectional committees in due. course are submitted to the main committee and if approved, are published as tentative standards. The main committee does not concern itself with the technical details of a standard, but considers the procedure followed in the. formulation thereof, the adequacy of the representation of interests concerned, and the action by which the standard was adopted by the sectional committee. Standards are published in “ tentative” form for a period of twelve months, to enable recommendations for their amendment resulting from their use during this period to be submitted for consideration when reviewing the specification with a view to its publication as an Australian standard.
These Australian standards have been very largely adopted by employers and employees, manufacturers, and producers, and are to-day being extensively embodied in various college text-books. The University authorities have also appreciated the work done by the standards committees, and have decided to include its standards in their text-books. Summarizing the position, it may be claimed that benefits accruing under standardization include the following : - From the point of view of the manufacturer, less capital is tied up in raw material, stock, jigs, and templates, storage space, repair parts, &c. More economical manufacture is assured through increased production, less idle equipment, reduced overhead charges, elimination of waste in experimentation and design, greater ease in securing raw materials, and so on; more efficient labour and better service to the trade in supplying better quality of product with more prompt delivery; more efficient sales force; increased rate of turnover; easier financing; and fewer stoppages of work. The retailer benefits by the increased rate of turnover, decreased capital investment in stock and storage space, reduced stock depreciation, decreased overhead charges, and better service at lower prices, with quicker and more reliable deliveries. The consumer gains in the opportunity to obtain a product of improved and guaranteed quality at a lower price, with better service in the way of prompt deliveries.
One of the most important functions that standardization can perform to-day is the building up, on a national interindustrial basis, of a consensus of expert opinion in regard to the inter-relations of industry and the relations of industry to the public. Standardization thus leads to the realization of economy in a very large measure. It constitutes an important economic factor for both producer and consumer, and, if it should result in increased efficiency in trade and industry, it is indeed a matter of moment to public economy.
– Will standardization interfere with the production of articles of the best quality?
– It may ensure efficiency; but is it not possible that it may interfere with the production of articles of the highest standard?
– No. Honorable senators are aware that there are in Australia, in connexion with electrical systems, a great many voltages, frequencies, and different types of machines all performing similar classes of work. If manufacturers have to keep the templates, patterns, and other paraphernalia necessary to the manufacture of machines of a variety of designs, the cost must necessarily be greater. But if the engineer, manufacturer, and user confer in the preparation of the specification of a machine that will meet all requirements, there can be no loss of efficiency. The Australian Standards Association does not say to a manufacturer, “ Here is our specification ; you must either accept it or reject it.” Under the procedure adopted by it, a specification which has been considered and prepared by experts in the particular branch concerned, remains for twelve months as a tentative specification, and if, at the end of that period, no objections have been raised, it becomes the Australian standard specification. [Extension of time granted.] For the information of the Senate, I submit the following table showing the number of sectional committees of the Engineering Standards Association that have been formed and the number of specifications published by them and approved for issue: -
I desire now to make a few observations upon the Council of Scientific and Industrial Research. I am exceedingly pleased that the Government took steps to reorganize the Institute. Very eminent gentlemen have been appointed to the Council, and a considerable amount of excellent work can be anticipated. The Estimates make provision for certain expenditure under separate headings, of which an example is “ Stock diseases and pests - investigation, including cattle tick, buffalo fly, £5,400.” The total estimated expenditure is £35,300. I should like the Minister (Senator Pearce) at a later stage to supply details indicating the manner in which those figures have been made up. I sincerely trust that it is not the intention of the Council to publish bulletins written in a manner that does not appeal to the average farmer. I desire the Council to follow the example which has been set by a big experimental station in England, by indicating practically what can be produced, the extent of the production, and its probable cost. Applying a simile that has been employed by an economist in the United States of America, “The national table is wobbling.” His illustration consisted of a table, on one end of which were secondary industries, and on the other end primary industries. The former were well stabilized by Customs duties, arbitration courts, and other aids to industrial stability, but there were no legs at the other end of the table bolster ing up the primary industries. This Council, however, can bolster them up. I know that the Prime Minister (Mr. Bruce) is very anxious that action should be taken to assist Tasmania, and I sincerely trust that the Government will take steps to that end. In the earlier portion of my speech I referred to Tasmania’s production, amounting to only 73 per cent. of the production per head of the Commonwealth as a whole. That position can be rectified by the Council of Scientific and Industrial Research. It is, in my opinion, necessary to establish experimental plots in Tasmania to educate the farmers, agriculturists, and pastoral- ists as to what it is possible to produce. I am perfectly well aware that the Council has not the equipment necessary to undertake the work which falls within some of the items that appear in the Estimates. I trust that the figures are included, not merely as an eye-wash, but as an indication that the Government is extremely anxious to aid primary and secondary industries. It is within its power to do so, particularly in the State that I have the honour to represent.
– This motion gives honorable senators an opportunity of dealing with a number of matters that do not arise in the ordinary business of the Senate. The loan indebtedness of the Commonwealth and the States must cause the various Treasurers a great deal of concern. Amongst other matters, the budget-papers refer to the proposed separation of the finances of the Commonwealth and the States. I think it was Senator Barwell who said that in theory that might be all right. I go further than that, and say that, so far as it is practicable to do so, such a policy ought to be adopted. It must be remembered, however, that the financial relations of the Commonwealth and the States have been interwoven ever since the establishment of federation. That could not be avoided. Prior to federation the States had large commitments, the principal of which was interest upon loans. One can readily understand the anxiety, even apprehension, of the States at that time, as to what their position would be under federation. It must be admitted that, in a measure, they were taking a leap in the dark. I am sure that every honorable senator will give to those who were in the forefront of the movement to establish federation, and were responsible for the framing of the Constitution, the credit which is undoubtedly their due. They performed their work faithfully and well without anything to guide them as to what was likely to follow. The sources of revenue of the States, following Federation, were of necessity somewhat limited. Prior to that time, many of them derived the bulk of their revenue from Customs and excise duties. I regret that, at present, there is between the States and the Commonwealth a feeling that should not exist.
– Does the honorable senator think that it is real?
– I do.
– It is political feeling, and that does not go very deep.
– I do not view the matter in that light. Those of us who move about amongst our constituents know that such a feeling does exist. I am not arguing that there is justification for it; but it must be obvious to the Government that the best results can be achieved only by the closest co-operation between and co-ordination of the work of, the Commonwealth and the States. This is the one subject that comes directly within the province of every honorable senator, because the Senate is a States House, and we should jealously safeguard the in terests of the States when interference with their rights is threatened, and it is considered that any suggested action by the Commonwealth Government might affect prejudicially the government of their people. Recently certain financial proposals were placed before the Treasurers of the various States, but did not prove acceptable to them. I do not say that those representatives exhibited a reasonable spirit. I understand that they declined to discuss the proposals in detail. It is most unfortunate that they and the Treasurer of the Commonwealth did not reach a closer understanding. The budget speech outlines an entirely new financial arrangement, and one which the Treasurers of the States have never had an opportunity to discuss. They had refused to advance counter proposals at the conference, and the Commonwealth Government, perhaps, thought that it was justified in submitting to this Parliament fresh proposals without affording those who were directly affected by them an opportunity to discuss and pronounce upon them.
– The representatives of the States did not advance any proposals. They merely resisted those of the Commonwealth on the ground that they had a moral right to the per capita payments.
– I admit that they were somewhat to blame for their refusal to discuss more fully the. proposals which were submitted to them. On the other hand, it must be remembered that at a later date the Prime Minister turned down the request of the representatives of the States to engage in further discussion.
– They did not break any fresh ground.
– It seemed to me that no consideration had been given to the Commonwealth proposals, which would have been better understood if, before submitting them to this Parliament, the Treasurer had called a conference of the State Treasury officials, and acquainted them of the exact nature of the proposals. I do not say for a moment that the case put forward by the Treasurer is without merit, but the suggestion that the proposals should not come into operation for twelve months will not serve any useful purpose.
– There ia disagreement as to the actual figures.
– There is a great difference of opinion regarding the figures submitted by the Commonwealth and those prepared by the States.
– Who should be the better judge?
– I do not know that the Commonwealth should be. I remind the honorable senator that, about 1923, or earlier, when the State Treasurers first discussed the Commonwealth proposals, it was clearly show that the Federal figures were wrong. At any rate, those submitted on behalf of the Commonwealth have never been reconciled with those put forward by the States.
– Is that a good argument against the proposals?
– I contend that there is no guarantee that the same revenue will be available to the States under the Commonwealth proposals as is now enjoyed bv the States.
– The Federal Treasury officials ought to have at their disposal more reliable information on the point than the State Treasurers.
– The revenue will be collected on the same basis this year as in 1925-26. The Commonwealth Treasurer proposes to levy income tax having a certain incidence, and yielding to the Commonwealth a certain revenue, which he outlined in the memorandum submitted with the proposals. But I cannot see how the State Treasurers can levy taxation having the same incidence, and providing the same amount of revenue as that now received by the Commonwealth Treasurer. Take the matter of the aggregation of incomes. The State has not the machinery for the aggregation of incomes.
– But the Commonwealth undertook to provide the basis for that aggregation, because it has the necessary figures.
– But each of the States must pass the legislation required to give effect to the proposals, and that legislation would have to sot out the incidence of the taxation.
– The States can tax on aggregate incomes just as the Commonwealth does. They do it now in some cases in regard to deceased estates.
– Apart from the aggregation of incomes, I do not think that the States will “be able to realize the amount of tax that the Commonwealth Treasurer now receives, without considerably increasing the rate of the income tax. Before the war, practically the only revenue available to the Commonwealth was that derived from Customs and excise duties, and from the land tax; all the other fields of taxation were available to the States, I think that every State realized, during the war period, that it should not encroach more than was absolutely necessary to balance its ledger upon any avenues of taxation that could be left to the Commonwealth to enable it to prosecute the war. The Commonwealth was compelled at that time to enter fields of taxation into which it would not otherwise have gone. Nobody imagined for a moment that its revenues, other than from direct taxation, would have increased in the substantial manner that has been indicated by the Treasurer’s surpluses from time to time. The States have been looking to the Commonwealth to vacate the field of direct taxation, and make it available to the States as it was prior to 1914. I am not favorable to the proposals outlined by the Commonwealth Treasurer.
– Two States are worse off than Tasmania.
– That is of no consolation to me as a representative of Tasmania.
– Is any State better off than Tasmania would be under the Commonwealth proposals ?
– I view the matter as it will affect the State that I represent. From year to year since the inception of federation every State has been budgeting from this source of revenue.
– It is unfortunate that the population of Tasmania has declined.
– Is it not a bad principle that State Treasurers should be allowed to budget ou annual payments by the Commonwealth.
– I do not know. During the first ten years of federation they were encouraged to budget in that way, and they were further induced to do so by the passage of the Surplus Revenue Act, -which provided for the capitation payments. It is regrettable that the Commonwealth’s proposals are now being forced upon the States. We, in this Parliament, represent exactly the same people as those for whom the State Parliaments legislate, and since Commonwealth and State taxpayers are identical, why should there be such an urgent desire to separate Commonwealth and State finances? It seems to me that the best results are to be obtained by the closest co-operation between the State and Federal authorities. The State Governments have borne the heat and burden of the day. Although Australia has made great progress under federation, the Commonwealth as a whole is indebted to the States for the spade work that they have done. They have their commitments to meet, and rather than do anything to cause hostility between them and the Commonwealth, we should endeavour in every way to work harmoniously with them. Proposals such as the withdrawal of the per capita payments under the present bill certainly create friction.
– Could the States be made the sole taxing authority?
– It is generally agreed that each government should be responsible for raising the revenue that it expends.
– The closer to home the taxing authority is, the better.
– All governments waste money; but the States have to give much closer scrutiny to their expenditure than is the case with the Commonwealth. The expenditure of public money can as safely be entrusted to the States as to the Commonwealth.
As details of the Government’s housing scheme are not yet available to honorable senators, I shall refer to it only in a general way. While I do not say that there is no necessity, for a housing scheme, I point out that each State has its own organization already in existence, and that this work could with advantage be undertaken by them rather than, by the Commonwealth. With the Commonwealth Government embarking on a housing scheme, conflict between the State and Federal authorities is inevitable.
– The Commonwealth has not been particularly successful with its housing ventures in the past.
– I do not propose to refer to that now. The Commonwealth Government was at one time responsible for providing homes for soldiers in Tasmania, but I believe that that work is now entrusted to the State.
– Under an agreement with the Commonwealth.
– That shows that, in the opinion of the Commonwealth Government itself, the best authority to undertake this work is the State Government. If schemes of this kind are to be undertaken by governments, it is preferable that the States, and not the Commonwealth, should carry them out. The Commonwealth should deal with questions of a purely national character. Important as housing may be, it is, nevertheless, not the function of the Commonwealth Government. Rather than embark on this undertaking, the Commonwealth should make cheap money available to the States to enable them to supplement the schemes already in existence.
– Does the honorable senator suggest a subsidy?
– I am pointing out that, in order to avoid duplication and increased overhead expenses, which must necessarily affect the cost of houses, the work of providing homes for the people should be left to the States. There are many other matters calling for attention by the Commonwealth Government.
As an opportunity will be given later to deal with the Government’s road policy, I shall not make detailed reference to it now. I desire, however, to say that, while the Commonwealth Government is to be commended for its recognition of the necessity for good roads throughout the Commonwealth, this also is a matter which, in my opinion, should be left to the States, which already have the machinery necessary for carrying out the work.
– The Commonwealth has not interfered with chat machinery.
– I recognize that; but the Commonwealth proposes to make the money available only under certain conditions. The works to be undertaken must first be approved by the Commonwealth. Moreover, the States are required to contribute 15s. for every £1 advanced by the Commonwealth; the original proposal was on a £1 per £l basis. In the case of Tasmania, £75,000 will have to be provided by the State. The Commonwealth proposes to raise the money which will be expended in roadmaking by means of a tax on petrol. I shall not refer to that other than to say that, in my opinion, no more equitable way of raising the money could be found than by the imposition of a tax on petrol. Nevertheless, as the tax will be paid by the motor users in the several States, it would be better if the Government were to make the money available to the States, imposing no conditions other than that it should be expended in road construction. Why should the Commonwealth require the States to contribute 15s. for every £1 advanced to them? It would be sufficient if the States were required to submit annual returns showing how the money had been expended. That some of the States object to the Government’s proposals is not to be wondered at. They are not so much concerned with the source from which the money is obtained as with the conditions under which it may be expended.
– The suggestion of the honorable senator is that the Commonwealth Government should collect the money, and hand it to the States, and yet have no voice in its expenditure.
– There is no reason to suppose that the States will expend the money less wisely if they are not subject to some control by the Commonwealth.
-Judging by the way some of the States spent money in soldier land settlement, some control appears to be desirable.
– I do not propose to deal with that subject now; but I remind the honorable senator that the Commonwealth Government was not entirely free from criticism in relation to some of its repatriation activities. The making of roads is distinctly the function of the States. In this connexion they have done good work in the past. That they did not do more was due entirely to their restricted revenues. Until about five years ago Tasmania spent from loan as much money in making roads and bridges as did all the other States combined. Successive governments in Tasmania, realizing that in broken country with a wet climate good roads were necessary for the development of the State, constructed many excellent roads.
– The other States constructed their roads out of revenue derived from rates.
– The rates levied in the other States do not exceed those levied in Tasmania. Tasmania is not so much concerned with the making of new roads - in that respect she has been ahead of the other States - as with the necessity for maintaining in good condition roads already in existence.
The Treasurer’s speech contains a reference to prospecting for oil. I have no complaint to make regarding the money that has been expended in boring for oil in Australia. I think that every effort should be made to ascertain if there is flow oil in the Commonwealth. The results so far do not encourage the belief that there is; but our oil shale deposits are enormous and of immense (value to the Commonwealth. Hitherto they have not been successfully exploited because suitable retorts have not been employed; and I believe that I am correct in saying that no official in the employ of the Government has had any experience in retorting. It is of the utmost importance that this business should be developed on sound lines, because there are millions of tons of shale in both New South Wales and Tasmania rich in oil content, which, I am sure, will one day prove of great value.
– Does the honorable senator think that our shale oil propositions will be able to compete with flow oil?
– Yes. This matter should be investigated by the Council for Scientific and Industrial Research. It properly comes within the province of that body. Those who have been engaged in the business for the past fifteen years have been beset by difficulties which, with scientific handling, should be solved. I hope that something will be done in this direction in the near future.
Turning now to the Postal Department, I direct attention to the desirability of providing better postal and telephonic facilities for people living in outback districts. The adoption of the slot telephone bureau system would be appreciated in country centres where, under present arrangements, an opening fee is charged if a person wishes to use the telephone after the ordinary closing hours. I understand that the department does not view this proposal with favour. I agree that a good deal has been done already to improve tlie services in many country districts, but it is very desirable to encourage settlement by providing the most modern facilities for the people. Silting suspended from 6.27 to 8 p.m.
– I congratulate the Treasurer (Dr. Earle Page) upon the early presentation of the budget, which constitutes a record, and establishes a precedent by which Governments should be guided in the future. I also express my appreciation of the service rendered by the officers of the Department of the Treasury who. in assisting in the preparation of the budget, have accomplished a creditable task. It is interesting to note that in 1910 the budget was presented on 1st August; in 1911, on 7th September; in 1912, on 26th October; in 1914, on 3rd December; while that for 1915 was not brought down until the following year. During the debate on this motion an attempt has been made by some honorable senators to criticize the Country party. In the first place, I wish to refer to some of the remarks uttered by the Leader of the Opposition (Senator Needham), who evidently considered the Country party of such importance that he devoted a good portion of his time to a criticism of its activities. Amongst other things he said that “ This is evidently a one-man government, as the work of the country could not proceed during the Prime Minister’s absence in Great Britain.” On the other hand we are told that the Treasurer is controlling the Government. Surely those statements are contradictory. He also said that the Country party was diminishing in strength, and, in effect, that it was dying.
– It is dead!
– The honorable senator will find it difficult to prove his statements, particularly when the representation of the Country party in this chamber has increased to four, whilst that of the party to which he belongs has decreased. He also said that “ The Country party, which once had individuality, has now lost it, and has become entirely absorbed by the Nationalists.” The Country party is represented with the Nationalists in the composite Government, but it has not been absorbed by the Nationalist party, and has not in any way lost its identity. The members of both parties went before the electors with a joint policy, and their action met with the general approval of the people.
– If the Country party had not received the support of the Nationalists, it would not have” obtained a single seat.
– The electors approved of a composite government, and returned its supporters with an overwhelming majority. I can understand the Leader of the Opposition criticizing the policies of the Nationalist and Country parties, but I do not know why Senator Duncan should have referred to certain statements of the present Treasurer before the composite^ Government was formed. At the time to which the honorable senator referred the Country party had no representation in the Cabinet, and was justified in criticizing the actions of the Government then in power. On the hustings many bitter statements were made by the members of both parties, and it is absurd for Senator Duncan to suggest that Dr. Earle Page should withdraw certain statements he made as leader of a party which was then in opposition. Would the honorable senator ask the right honorable gentleman who was then Leader of the Government to withdraw some of the things he said ?
The Leader of the Opposition further said that the expenditure incurred by this Government during recent years has been of no practical advantage to Australia. The amounts of expenditure from revenue he quoted were -
Those amounts are exclusive of part IV. of the budget, which relates to payments to or for the States. During the four years mentioned our expenditure, according to these figures, increased by £9, 200,000, and the Leader of the Opposition urged that although the Treasurer had supported a policy of economy when in opposition, he, as Treasurer, was now going with a rapid stream of extravagance and making no effort to stem it. If we refer to page 8 of the budget-papers, we find that the figures quoted by Senator Needham included the expenditure on business undertakings, which was £11,552,000, and that in relation to territories of the’ Commonwealth amounting to £385,000. The details of the £11,552,000 incurred on business undertakings are on page 293, and include the Post and Telegraph Department and Commonwealth railways. The actual revenue from these sources in 1925-26 was £11,164,906. On page 4 of the budgetpapers the actual expenditure of the Post and Telegraph Department is given as £10,654,000, and the receipts as £10,815,251, so that the receipts and expenditure practically balance. Since the present Treasurer has been in office the ordinary postage rate has been reduced from. 2d. to1½d., and telephone charges owing to the zoning system, have been decreased by about £100,000 per annum. It cannot, therefore, be said that these departments have been extravagant. To ascertain the true position the figures in relation to the business undertakings should be excluded. As the Postal Department has been operating on reduced revenue, economy must have been exercised to enable it to show a profit. If we exclude the Postal and Telegraph Department and the Commonwealth railways, we find that the total expenditure for 1922-23 was £55,128,685, that of business undertakings amounting to £9,370,615, and war and statutory departmental expenditure £45,758,069. For the year. 1925-26 the total expenditure was £64,321,473, that of business undertakings amounting to £11,937,226, and war and statutory departmental expenditure £52,384,247. Deducting the expenditure on business undertakings, we find that the increase has been from £45,758,069 to £52,384,247 - £6,626,17S, not £9,200,000 as stated by Senator Needham. The difference of nearly £3,000,000 is accounted for by increased expenditure upon the post office, from which a corresponding revenue has been received. Let us examine this increase of £6,626,178. Old-age pensions account for £2,828,366, science and industry £350,000, prospecting for oils and precious metals £100,000, wine bounty £217,109, and iron and steel bounty £195,733. The defence expenditure in 1922-23 amounted to £3,409,167, whilst in 1925-26 it was £7,353,828, an increase of £3,944,661. Debt redemption was re sponsible for £1,000,000. The total of those increases is £8,635,869. I ask honorable senators whether they do not consider them to be absolutely necessary. Senator Needham has asked what we have received in return for our expenditure. Would ho agree to cut down the votes for old-age pensions, science’ and industry, prospecting and the wine bounty? As a South Australian representative,, I hope that the wine bounty will not be reduced, because it has been the means of keeping the grape-growers on their holdings, and has saved the industry from ruin. It must be remembered that a great deal of Government money is invested in the vineyards. On the remaining items of expenditure there has been a reduction of no less a sum than £2,000,000.
– Can the honorable senator show what benefits have been received from the expenditure on defence?
– I have no desire to engage in a debate upon the defence expenditure. Would the honorable senator advocate the cutting down of that vote? The real test of economy is the economy that is exercised in departmental expenditure. Senator Needham did not quote the figures that relate to that expenditure. I shall. They are as follows : -
There has been a reduction of £158,334, although the population has increased by 600,000. That is a very fine performance, and I doubt whether any other Government in the world could show a similar result.In 1921-22 the cost of the Commonwealth departments per head of populationwas 10s. 9d. The estimate for 1926-27 is 9s. 2d. Senator Needham also touched upon the net debt of the Commonwealth. He showed that in 1922-23 it amounted to £335,000,000, and in 1925-26 to £338,000,000, an increase of £3,000,000. This Ministry came into office in February, 1923, and in order to make a just comparison we must take the figures as at the preceding June. The net debt on the 30th June, 1922, was £339,002,105, whilst at the 30th June, 1926, it was £338,841,476. Duringthat period it decreased by £160,629. That is a true comparison, because the figures cover the period during which Dr. Earle Page has been Treasurer.
A vital matter which will make this budget historical is the proposal to abolish the per capita payments. This has been dealt with very fully this afternoon.
– It was dealt with well.
– The conclusions that I draw are different from those of some honorable senators who spoke this afternoon. I am in agreement with the proposals, because I regard the per capita payments as inequitable. The States that have large populations derive the greatest benefits in addition to other advantages which the federation confers upon them. The States are resisting the proposals of the Commonwealth upon moral, not upon constitutional grounds. Section 87 of the Constitution reads: -
During a period of ten years after the establishment of the Commonwealth, and thereafter until the Parliament otherwise provides, of the net revenue of the Commonwealth from duties of Customs and of excise, not more than one-fourth shall be applied annually by the Commonwealth towards its expenditure.
The first portion of that section, as was pointed out this afternoon, did not appear in the Constitution as originally drafted; it was inserted at a later period. It can be seen that the matter was to be left in the hands of the Federal Parliament after the lapse of tcn years. It was evidently intended that Commonwealth charges should be met first out of Customs and excise. That field of taxation was handed over to the Commonwealth exclusively. The framers of the Constitution were fearful lest it should be invaded. Senator Barwell stated that he had fully read the debates that took place at the conventions which were held prior to the establishment of federation. I have not had that opportunity, but I have perused some of the speeches which were delivered on this phase of the matter particularly. At the Federal Convention, which was held in Melbourne in 189S, Mr. (afterwards Sir George) Reid said -
I point out that this will make a peculiarity in the position of the Treasurer of the Commonwealth, which needs only to be stated to be seen at once. The Treasurer of the Commonwealth, when re is constructing his fabric of ways and means, will have the strongest possible temptation to look on Customs and’ excise as an unsatisfactory method of raising revenue, because he only gets 5s. out of every ?1 raised in that way, whereas, from other forms of taxation, he gets the full pound raised. Now, I must say, it is scarcely a scientific piece of legislation to put that temptation in the way of the Treasurer to make him discriminate as to methods of taxation.
– That was the argument of the New South Wales members generally; but, subsequently, they “ caved in.”
– The report continues -
Mr. Barton. ; You may make him impose direct taxation.
– We may. If, for example, I had anything to do with the Commonwealth finances, and I found myself in a difficultyshould I go to a source of revenue which would only return to me 25 per cent, of the produce? No; I should go to a source which gave me the whole pound. I only put this view as one objection to this proposal, because it makes the position of the Commonwealth in a peculiar 6tate_. inasmuch as one form of taxation . will give the Treasurer 100 per cent, of the ‘taxes raised, and the other only 25 per cent. We know what may be the consequences of anything of that sort.
– That is diametrically opposed to the Braddon clause, which was subsequently agreed to.
– -Yes. But eventually the restriction to ten years was inserted.
– That was put in by .the Premiers at a conference.
– And afterwards it was carried. I find that members were divided during those debates. Mr. Reid’s opinion was voiced in these words -
I have spoken so often on numbers of attempts to put what is called a guarantee in this ‘bill that I do not intend to repeat what I have said. Honorable members are very familiar with my views on this point.
Mr. Barton took the same stand; he said ;
This clause amounts to a guarantee, and I have all along been, and I am still, opposed to implanting in this Constitution any financial guarantee to the States.
It will be seen that a great difference of opinion existed among those who were at the convention. The Commonwealth was given the sole right to impose Customs duties. The members of the convention seemed to be unanimous in the opinion that the Commonwealth should not invade the field of direct taxation, but that the imposition of direct taxation should be the prerogative of the States.
– Except in special circumstances such as war, which was mentioned.
– The circumstances would have to be most exceptional. Interest on war loans, the cost of providing war pensions and oldage pensions, and defence expenditure, now amount to £43,000,000, several millions more than the Customs returns. Surely the first charge for that expenditure should be against the field of taxation handed over exclusively to the Commonwealth. From the debates at the Federal Convention it will be seen that the desire expressed by the representatives of the States was to restrict the Commonwealth to Customs taxation. The State Premiers also have agreed to the cessation of the per capita payments on certain conditions. The report of the Premiers’ Conference in 1923 shows that.
– Only on the condition that the Commonwealth withdrew from the field of income taxation.
– Yes. The following table indicates the amount of revenue that the direct taxes of the Commonwealth yielded in 1921-22: -
The cost of collecting those taxes amounted to over £600,000. Already one step has been taken towards the elimination of the duplication of the cost of collection, and surely, if it can be done, we are justified in saving the whole of that sum. The proposals submitted by the States were -
When Mr. McPherson was putting the case on behalf of the States, he said -
I think that, if we could accomplish something like that, we would really be getting back to first principles; because, while we realize that you have the power to collect direct and indirect taxation,when we federated it was” generally assumed that you were going to stand out ofthe field of direct taxation. Of course, the war came along, and you exercised your right, very properly, and came into the field of direct taxation. At a later date we hope that the Commonwealth will see its way to relinquish direct taxation altogether.
Senator Barwell represented South Australia on that occasion, and he said -
We want to get back to the principle that the Commonwealth should operate entirely and exclusively within a certain sphere, and that the States should operate entirely and exclusively within another sphere.
– We still want to get back to that principle.
– We are now taking one step in that direction, leaving only a small amount to be adjusted. The honorable senator further stated -
The first principle is that the States should have control of direct taxation, and that the Commonwealth should rely upon Customs and excise revenue.
At that time nothing was said by the State Premiers regarding the so-called moral right of the States to the per capita payments. Great misconception exists in the public mind on that matter. Many people have told me that it is monstrous for the Commonwealth to withhold those payments and give nothing to the States in return. But, of course, honorable senators know that the Federal Government proposes torelinquish the land tax, the entertainments tax, the estate duty, and 40 per cent. of the income tax. I point out that the taxes to be relinquished will greatly exceed the amount at present paid to the States by way of capitation grants; the Commonwealth Government guarantees that after collecting those taxes for one year every State will be £50,000 better off than previously.
– Is that not a gamble ?
– I do not think so; but if any State loses over the transaction it should be recompensed.
– How could that be done?
– By means of a special grant, as in the case of South Australia. In that State the Federal taxes to be surrendered are as follow : -
According to that statement South Australia would be £28,117 better off than under the proposed arrangement. The adjustment grant amounts to £23,000, so that under the Federal proposals the taxpayers of South Australia will gain £51,117, if the Treasurer’s figures are realized. The Premier of South Australia, Mr. Gunn, recently stated -
The Commonwealth Government claimed that the income tax figures were based on the actual assessments for 1924-25, but mention was not made of the fact that during the year under review many assessments had been made which were not rightly attributable to the previous year. That position arose through the delay consequent upon the amalgamation of the Taxation Departments. Figures available in the Taxation Department of this State showed that tax totalling between £300,000 and £400,000, added to the tax for the year 1924-25, rightly belonged to the previous year, and represented a carry-over of tax assessed but not collected, and tax on assessments not made until after the close of the financial year to which they belonged, namely, 1923-24.
The Premier of South Australia questioned the Federal Treasurer’s figures, and said that that State, in order to secure a return equal to the per capita payments, should receive, in addition to the proposed grant of £23,000, a further sum of £110,000, making a total of £133,000, in order that it should not suffer under the proposals. In other words, if we deduct the £50,000, to which extent the Commonwealth guarantees that the States will be better off, South Australia, if Mr. Gunn’s -figures are correct, will lose £83,000 a year, and will lose it, not tor one year only, but for a period of years. All that South Australia will get back is a grant for one year of £23,000.
– Then the honorable senator is not in favour of the abolition of the per capita payments ?
– I am in favour of the principle, but in giving effect to it no State should be permitted to suffer financially.
– How is that to be prevented ?
– In order to equalize matters the States which suffer should receive a special grant.
– For all time?
– For at least five years, after which the matter could be reconsidered. If the Federal Treasurer’s figures are correct, I have no fear in regard to South Australia, but if Mr. Gunn’s figures are realized - and they, can be tested only after a year’s trial of the proposed financial arrangement - that State will lose no less than £83,000 per annum. It is impossible to say who is right and who is wrong.
– Surely the Commonwealth Treasurer’s figures are more likely to be correct?
– The whole of these proposals are based on the figures of the Commonwealth Treasurer. I want the position of the States to be safeguarded in the event of those figures being incorrect.
– Is the honorable senator prepared to take the risk of South Australia losing £83,000 per annum?
– No . Should the Federal Treasurer’s figures be incorrect, the whole position would have to be reviewed. I rose only to say that, while I agree with the principle underlying the Government’s proposals, I want to safeguard the interests of the States. I shall leave any further remarks on this subject until the bill dealing with it conies before us.
Senator PAYNE (Tasmania) 18.46].- A perusal of the Treasurer’s budget speech shows that it’ refers to many matters of great importance to the Commonwealth, in addition to those concerning finance. With one or two of them I propose to deal before touching on the financial proposals of the Government as set out in the budget.
Special reference is made to the continuance of the Government’s road policy. I do not agree with Senator Barwell that the assistance offered by the Commonwealth is in the nature of an intrusion in the domain of the States. Irrespective of whether the States agree with the Government’s proposals, they are not justified in regarding the offer in that light. I am pleased that the Government has seen its way clear to propose a more-extensive and comprehensive roads policy than that which has existed in the past in connexion with the roads grant schedule, and that during the next ten years the sum of £20,000,000 will be made available for road construction and maintenance.
– The money will be provided by the people.
– Yes; and so it should be. While agreeing with the Government’s policy, 1 feel compelled to protest against the method which is to be adopted to obtain the money to be devoted to road-making. I am entirely opposed to the Government’s proposal to impose a Customs duty of 2d. per gallon on petrol. The Government and its supporters have on many occasions stated that the construction of roads is of national concern, and that its roads policy is in the interests of the people as a whole and not of any one section only. Every one will admit that for the proper development of Australia an effective transport system is essential. If the scheme is a national one, the financial responsibility should be borne by the whole of the people, and not by only one section. For that reason I am opposed to the proposed petrol tax. No one would suggest that the owners of motor vehicles, whether such vehicles are used for commercial purposes or otherwise, should be unduly penalized. Motors have come “to stay. Nothing is more calculated to assist in the development of this country than the petrol-driven machine. Old methods of transport are obsolete, and in order to keep up to date Australia must have petrol-driven vehicles. Already the several States have imposed taxes on motor users with the object of obtaining revenue for the construction and maintenance of roads. It is not fair that, in addition to those taxes the Commonwealth Government should call upon them to pay a tax on petrol. It is proposed to spend the sum of £20,000,000 on roads in Australia during the next ten years. That represents £2,000,000 per annum. During each of the last two years the Commonwealth Government has expended £150,000 or £160,000 on road construction and maintenance. We must remember that the roads which will be constructed with this money will be available, not only during our life-time, but also during the life-time of future generations.
– Proper Toads should last for centuries if properly maintained. So far as I can see, there is only one way in which to carry out a comprehensive policy at the expense of the whole community. I suggest that the Government should issue road bonds with a currency of ten years.
– Is it a sound policy to borrow money for road construction ?
– Certainly. It is as sound as to borrow money for the erection of post offices.
– Does the honorable senator assume that a national roads policy will continue for only ten years ‘f
– No; it can be a continuous policy extending over a period of 100 years, or more.
– Who is to pay the interest?
– If road bonds at 5^ per cent, for a period of ten years were issued, the interest would be £110,000 per annum. In addition, a sinking fund should be provided in order that the whole liability may be discharged in ten years. That would represent an additional £160,000 per annum. The Commonwealth’s contribution for the first year would be £270,000. _ That policy, could be continued for all time, if necessary.
– And, if necessary, we could borrow more money to repay the bonds!
– A proper sinking fund would redeem the bonds in ten years.
– If the roads are to last for half a century, is it necessary to liquidate the debt in ten years?
– My calculation is on a ten year’s basis. I hope that this policy will be continued for many years, because, in a period of ten* years, we could only do a small proportion of what is required. If the Commonwealth Government were to issue each year, bonds to the value of £2,000,000, that amount would be available for road construction each year. Under a continuous policy, bonds to the value of £2,000,000 would also be issued each succeeding year. At the end of ten years the first £2,000,000 would be redeemed.
– What would he the cost of interest and redemption in the tenth year?
– I have not the figures with me.
– Under that scheme the liability for interest and repayments would soon amount to £2.000,000 a year.
– The first year’s contributions from the general revenue to the sinking fund would amount to £160,000, and the interest payable to the bondholders would be £110,000, making a total of £270,000, which would be paid by the whole of the people.
– There would be £2,000,000 in interest and sinking fund falling due annually towards the end of the ten-year period.
– I am sure that the proposal, upon examination, will be found to be perfectly sound. However, I shall conclude my references to- the roads scheme by saying that it is absolutely unfair to suggest that a small section of the people should be called upon to meet the financial obligations that will arise from this roads policy if it is put into operation. The liability should fall upon the whole of the people.
The Treasurer’s budget, speech makes special reference to the appointment of a commission to carry out the development and migration proposals of the Government. We all hope that very good results will be the outcome of the Government’s scheme. I wish to impress upon the Senate the urgent need for the introduction of a larger population at the earliest possible date to provide a larger home market for our primary producers. It has been suggested that the introduction of migrants in considerable numbers will seriously affect the Australian labour market, and accentuate our unemployed problem. I take the view that our object should be to place migrants on our undeveloped country areas rather than to add to the congested populations of our cities and larger towns. I have no desire to see adult Australians displaced in employment by migrants. I believe that, with- out interfering with our present labour conditions, employment can be found for all who may come to Australia. For the information of the Senate I should like to read a short extract from an article written by Mr. Curtis Lampson, and published in a recent issue , of John Bull on the growing need- in England for agrarian reform. The writer- states -
Certainly drastic steps ought to be taken, for we have approximately 11,000,000 acres of arable- land lying idle, and at the same time we import a great deal of agricultural produce and food which we ought to produce in this country. Last year Great Britain imported nearly £400,000,000 worth of meat, bacon, cheese, and butter. Certainly 90 per cent, of these imports could have been produced in this country. In the matter of enabling a small man to- own the plot of ground that he cultivates, we are much behind many other European nations. … The future, therefore, of agriculture in this country lies in live stock and dairy produce, the production of which can be organized on a thriving basis by subdividing the appropriated land into small holdings. The welfare of the nation and its people must be made the primary object in the governing of the country.
It is evident that there is a growing feeling amongst thinkers in the Mother Country along the lines indicated by the writer of that article. This kind of feeling has some significance for Australia, because Great Britain is our best customer. We have to rely to a great extent upon British markets for the absorp- tion of our surplus primary products.. The fact that there is a growing agitation in England for the fuller utilization of idle lands there indicates how necessary it is that we should do something quickly to secure a larger population in Australia for the consumption of our primary products.
For many years we have, been wasting our valuable timber resources. Unless we take steps to stop the drift, we shall be in serious difficulties. We have magnificent forest reserves, but unfortunately vast areas have been denuded for commercial purposes without steps being taken to replace the used timber. Afforestation in Australia is in its infancy, but it is reassuring to know that, a scheme has been outlined in Tasmania to repair some of the damage that has been done in the past. The proposal emanates from the head of the Afforestation Department in Tasmania. Briefly, the suggestion is that the Imperial Government should finance a scheme under which many thousands of British boys, who have to be cared for in State institutions and Dr. Barnardo’s Homes, would be transferred to Australia, and provided with useful employment in colonies under the direction of the Afforestation Department. The lads would receive a useful training in afforestation and in the growing of primary products. The money would be advanced by Great Britain for a term of 40 to 45 years. At the expiration of that term the forest plantations would be profit-earning, and then the whole of the liability would be liquidated in eleven years. It is suggested that the boys should be grouped in four colonies, each containing about 50 boys. They would be living under ideal conditions, and would receive very useful training. At the age of about eighteen years they would be able to leave the colonies and obtain work as farm assistants. It is expected that they would then have from £80 to £100 each. This scheme would not in any way interfere with the Australian labour market. It would ensure a steady inflow of very desirable immigrants, and at the same time it would be instrumental in building up the timber resources of the Commonwealth. I know that afforestation schemes are in operation in all of the States, but no scheme that I know of has underlying it the principle of migration.
– Great Britain already has 1,500,000 unemployed people, and yet the honorable senator proposes that we should lean further upon the Mother Country.
– The honorable senator has totally misunderstood the proposal. This scheme is to relieve Great Britain of some portion of her unemployed. Under whatever migration policy we adopt, every effort should be made to prevent increased unemployment in Australia, and the introduction of healthy boys will be of great advantage to Australia, because it will not be long before they become productive units.
I wish now to deal with the question of the adjustment of Commonwealth and State finances, concerning which a good deal has been said by honorable senators who have preceded me. I have endeavoured to analyse the position, and to determine whether the financial proposals of the Government will or will not be of advantage to the State which I represent. The Tasmanian Government has, I know, expressed strong opposition to the scheme, but that does not influence me in the least, as I have to exercise my own intelligence. If I believe the proposals of the Government will benefit Tasmania, although they may be somewhat distasteful to the State Government, I shall support them. After studying the figures available, I have come to the conclusion that Tasmania would benefit if the proposed scheme were adopted. I have, however, been informed by capable financial authorities that the figures submitted in the budget-papers cannot be realized by the States.
– That is a certainty.
– It is not. It is true that the State Commissioner of Taxation says that he cannot possibly raise the revenue which the Federal authorities say he can; but the Commonwealth Government has undertaken to collect the revenue for one year, and if it is less than is estimated, it will give to the State an amount equivalent to that shown in the table.
– But the Commonwealth is in a position to raise revenue which the States cannot possibly collect.
– It is provided that an adjustment can be made so that the States will not suffer, and that the Commonwealth will collect the revenue for the current year. If the Government will extend the term for five years, I shall support’ the proposals. That is a fair proposition, because most of the financial arrangements made with the States have extended over a term of years. The Braddon ‘ ‘ blot “ was in operation for ten years, and the next arrangement was for a period of ten years; but we are now asked to adopt a new system which is to remain in force for only one year. As the scheme will affect the whole financial arrangement between the Commonwealth and the States, the Commonwealth Government should be willing to carry on for at least five years the arrangement it proposes for only one year.
– The whole basis is wrong. The State debts ought to be taken over.
– That is another way out of the difficulty.
– Does the honorable senator suggest that the whole of the State debts should be taken over by the Commonwealth ?
– No; only sufficient to cover the loss incurred by the States in consequence of the withdrawal of the per capita payments. It is clearly provided in the Constitution that the financial arrangements between the Commonwealth and the States may be adjusted by the Commonwealth taking over a portion of the State debts.
– Is the honorable senator in favour of the interest on the debt being paid out of Customs duties?
– The honorable senator apparently ignores the fact that the payments to the States are made up from the whole of the revenue of the Commonwealth, including that received from Customs duties.
I wish to express my gratification at the magnificent record achieved during the last few years in reducing the war debt, in addition to meeting our ordinary liabilities, by £28,500,000. Out of a total war expenditure of £500,000,000 approximately £200,000,000 has been provided from revenue, thus leaving our war debt at, approximately, £300,000,000. It is a wonderful record, and one which I dc? not think can be equalled by any country, including Great Britain.
– There are so many subjects mentioned in the budget that, in the limited time at my disposal, it would be impossible forme to discuss more than a few. I should, however, be lacking in my duty if, after all the statements we have heard concerning the best methods of raising revenue, I failed to place on record what I regard as the modern canons of taxation. It is positively humiliating and absurd to hear honorable senators expound their theories concerning the method of raising our national revenue.
– Does the honorable senator propose to submit a new theory ?
– No; it is my intention to extricate the honorable senator and some of those with whom he is associated from the morass which has engulfed them for so long. The honorable senator, I believe, understands the theory which I intend to elaborate, but for reasons best known to himself he carefully refrains from expressing his opinions on it. Some honorable senators recently elected to this Chamber should be supplied with the information I have to give, and if I place it at their disposal they will perhaps be. spared the necessity of giving utterance to the erroneous views expressed by many of those with whom they are now associated.
– What does the honorable senator suggest?
– Senator Thomas and Senator Pearce could give an interesting discourse upon the same subject, but I believe Senator Pearce could handle the subject more effectively than Senator Thomas and I combined. Unfortunately, however, the Minister has for some years been associated with a number of gentlemen who have good intentions, but whose views on taxation are far from being up to date. The following canons of taxation are to be found at page 406, chapter 3, volume 2, of the memorial edition of the writings of Henry George: -
The best tax by which public revenues can be raised is evidently that which will closest conform to the following conditions : -
That it bear as lightly as possible upon production - so as lease to check the increase of the general fund from which taxes must be paid and the community maintained.
That it be easily and cheaply collected, and fall as directly as may be upon the ultimate payers - so as to take from the people as little as possible in addition to what it yields the government.
That it be certain - so as give the least opportunity for tyranny or corruption on the part of officials, and the least temptation to law breaking and evasion on the part of the taxpayers.
That it bear equally - so as to give nocitizen an advantage or put any at a disadvantage, as compared with others.
– Those principles; have been exploded ages ago.
– That is an erroneous idea. In Queensland local taxation is imposed and collected in strict accordance with the principles I have just enunciated, and Senator Thompson cannot deny that the system has worked satisfactorily. . No objection has been taken to that method of taxation in the local government of Queensland during the last 40 years. Instead of having been exploded, it is firmly entrenched in Queensland, and is working exceedingly well. The progress of Brisbane to-day is almost as great as that of Sydney, mainly on account of its system of taxation.
– Oh, no!
– Men who come from Queensland are not found suggesting that Great Britain should finance Australia, as Senator Payne has suggested she should. I cannot imagine any man in his normal senses making such a suggestion. This country is unequalled in many respects, and is surpassed in none.
Any man who holds out his hand for a dole from Great Britain ought to be heartily and everlastingly ashamed of himself. That attitude is typical of Tasmanians. Their training appears to have made them determined to at all hazards collect something from somebody. One becomes tired of listening to the perpetual wail that Tasmania is in a state of poverty. This system of taxation is adopted by the local governing bodies in New South Wales, and no city in the Commonwealth is making progress as great as that of Sydney.
– - Does the honorable senator “believe that Henry George is responsible for the adoption in Australia of the taxation of unimproved land values ?
– Unquestionably. Such a system was not heard of before 1879, when Henry George first published his book, Progress and Poverty. It has been in operation in the shires and municipalities of New South Wales since the beginning of this century. Even conservative Sydney has not taxed improvements for many years. If you care to build a home for yourself in Hobart, the council in that city - which is an obsolete body - immediately pounces upon and penalizes you in proportion to the amount of capital you invest and the labour you employ. That is a reason for the constant wail by Tasmanians that their State” is poverty-stricken. They have not the sense to remove taxation from people who are prepared to invest money and make the State progress. I have in mind the case of a man who built in Macquariestreet, Sydney, 64 residential flats. He is not taxed according to the amount he invested or the labour he employed. He pays no more than the man who possesses next door an ordinary three-story building. That system of taxation accounts for the fact that the citizens of New South Wales do not adopt the cadging attitude which is typical of the Tasmanians. They pay their way. Taxation is removed from industry, and people who invest their money are not penalized. I cannot understand any man saying that this idea is dead and buried.
– Sir Austen Chamberlain made a similar statement in the House of Commons the other day.
– The honorable senator ought not to pay the slightest attention to Sir Austen Chamberlain. He is quite out of date. That type of man is in control of England to-day. The examples I have given could be multiplied all over Australia. Certain areas in South Australia, and even in Victoria, are being rated for local purposes according to the unimproved value of the land. Queensland has a land values tax, not precisely on the lines laid down by Henry George, but, nevertheless, one that is not too bad.
– It is the worst system of land taxation in Australia.
– It is regarded as the most scientific method of taxation in the Commonwealth. I do not agree with it. The most scientific and up to date, and the fairest system of taxation is the local rating system, which is to-day enjoyed by the citizens of Sydney. A ratepayer has no difficulty in computing the amount that he has to’ pay. There is no corruption, and no evasion. Payment is made in proportion to the value of the land which you own, whether you are a widow, a returned soldier, or any other type of individual. That system could be adopted with immense advantage by the Commonwealth. We merely tax foreign-made goods.
– The Commonwealth taxes land according to its unimproved value.
– With a £5,000 exemption.
– Who introduced that provision?
– It was engrafted on the platform of the Labour party at the interstate triennial conference that was held in Brisbane in 1905 by gentlemen like Senator Lynch, Mr. W. A. Holman, Mr. J. C. Watson, and others, who for one reason or another are not now associated with the Labour party. In the language of Shakespeare, “ The evil that men do lives after them.” The evil which was done at that conference continues to live after those whose names I have mentioned have ceased to belong to the Labour party. Doubtless some fine day an alteration will be made. There is not a £5,000 exemption under the system which is adopted by Queensland and the Sydney municipalities.
We were told this evening that 11,000,000 acres of vacant land in England is suitable for cultivation, andyet the extraordinary statement was made by Senator Payne that the British Government, which is now paying about £60,000,000 per annum in unemployment doles, should be asked to finance a number of English boys to grow trees in Tasmania. I hope that the British authorities will not be beguiled by proposals of that nature. What is wrong with England that she does not settle her boys in their own country? Great Britain, for its size, is probably as wealthy as any part of the world.
– Would the honorable senator say that of a freetrade country?
– Great Britain never was and never will be a freetrade country. A revenue tariff is collected on tea, sugar, tobacco, and practically everything that is good to eat or drink. I have endeavoured to ascertain from various sources how much rent is paid per annum by the people of Great Britain to the blueblooded landlords for the right to live in the country which they call their own. Some time ago I addressed a letter upon this subject to a gentleman residing in London, who is adjudged to be well informed on the matter, and I received the following reply - 43 Barton Court,
Chelsea, 8.W. 3, 1st July, 1926.
Senator J. Grant,
The Senate, Melbourne, Australia.
Dear Sir, -
Thank you for your letter of the 21st May, which has been sent on to rae. Unfortunately, however, there are no available statistics as to the rents paid in Great Britain in respect of capital land value, as distinguished from improvements. So far as I am aware, the latest information bearing on the subject is that collected and set outin Note Q, “ Probable Land Value of Great Britain,” in my book “ Land Value Policy” (1924), of which note I have pleasure in enclosing a copy. I am also sending for your acceptance, under another cover, a copy of a new book of mine just published, “ Our Land and How to Make it So.”
I am, yours faithfully, (Sgd.)J. Dundas Whits.
It would appear, from the book referred to that the total unimproved value of the land in Great Britain is approximately £3,000,000,000, but the owners of that wealth contributed to the national revenue last year only about £2,000,000, as against £900,000,000 collected from the people by means of Customs taxation, income tax, and other taxes on industry. Yet honorable senators like Senator Thomas coll England a freetrade country! We are frequently assured that Australia has adopted a protectionist policy; but I again remind honorable senators that the real object of our fiscal system is to produce revenue. According to the Estimates for next year the Treasurer expects to raise by means of our so-called protectionist policy the sum of £40,500,000. Does not that convince every honest protectionist that, so long as that enormous revenue is received, the hated foreign goods manufactured in low-wage countries will still ‘be allowed to enter Australia ? The Government expects to derive from the land tax £200,000; from the income tax, £6,450,000; from estate duties, £50,000; and from the entertainments tax, £50,000; a total, with the Customs revenue, of £47,250,000. A number of other items of revenue bring the grand total to £51,382,000. Nobody would resent a protective tariff that would exclude foreign goods more than the present Minister for Trade and Customs (Mr. Pratten).
I have taken a keen interest in the establishment of the Seat of Government at Canberra, and for a number of years I have seized every opportunity to encourage those who desire to make their homes or engage in business there. The Government did not make building allotments available at Canberra until public opinion in favour of the adoption of that course could no longer be resisted. Then a few allotments were offered to the public on the leasehold system to the highest bidder, with re-appraisements at the end of the first 20 years, and every 10 years thereafter. That system leads to speculation in land,which was never contemplated in . connexion with Canberra. I have it, on unimpeachable authority, that land which, in 1924, was obtained for a few pounds by persons who had no intention of building on it, has since been disposed of at a premium of £1,100. In some cases, I understand that a premium of £1,500 has been asked to secure blocks. The demand for land at Canberra is so keen that persons who desire to build there are willing to pay enormous sums to obtain it. Itis my intention to move for the appointment of a select committee to inquire into, and report on, this matter. The regulations ought to be altered to allow for more frequent re-appraisements. So long as the present regulations remain in operation, speculation in land at Canberra will continue. In fairness to the progress of Canberra, the existing state of things should not longer be allowed. The commissioners, no doubt acting under instructions from the Government, refuso to make other blocks available, so that persons who desire to build at Canberra are compelled to pay large sums if they wish to secure land there. The commissioners and all concerned, should be placed beyond’ suspicion. The commissioners should be instructed to make land available wherever required, provided that the lessees pay at auction the annual upset rental. By adhering to its policy of having re-appraisements made every 20 years, the Government has made land speculation at Canberra possible. The only way to prevent further land speculation there, is by having more frequent re-appraisements. The profits would then go to the commission. Wo are told that Canberra is now asink into which millions of money has been, and will still be, poured. That could be stopped if land were made available for persons who desire to build there.
I desire to refer to the infamous proposal of the Government to impose a tax on petrol. In this connexion, I am ata loss to find language in which to express myself adequately. It is characteristic of this Government that on every possible occasion it penalizes industry. If a man earns a fair income, the Government pounces upon it in the form of an income tax; if he dies and leaves a widow, his estate is taxed. This petrol tax is a new abomination. At one time in New South Wales, drivers of vehicles had to pay a toll for the privilege of travelling along the roads.
– That is the position now, at the Spit, Sydney.
– Unfortunately, that is so. The result is that the land-owners at Manly have had the value of their property increased by £1 a foot. The toll imposed on motorists who cross the bridge at the Spit is an unfair tax upon them. I am glad that the same system is not to be adopted in connexion with the Sydney Harbour bridge. I cannot imagine how any Government can have the effrontery to impose a tax upon petrol. Already the motorists of Australia are being penalized in many ways. It would appear that everything possible is being done to prevent the use of motor vehicles in this country. I have no objection to a. nominal licence-fee being charged to ensure that drivers of motor vehicles shall be competent, or to a small registration fee being imposed on motor cars; but I do object to motorists being called upon to pay a tax in proportion to the number of miles travelled. I ask leave to continue my remarks at a later date.
Leave granted ; debate adjourned.
Senate adjourned at 10.13 p.m.
Cite as: Australia, Senate, Debates, 4 August 1926, viewed 22 October 2017, <http://historichansard.net/senate/1926/19260804_senate_10_114/>.