10th Parliament · 1st Session
The President (Senator the Hon. Sir John Newlands) took the chair at 3 p.m., and read prayers.
Captain Lancaster’s Description
– I should like to know if the Minister representing the Prime Minister has seen in the press a statement by Captain Lancaster who recently flew from Britain to Australia to the effect that between Newcastle Waters and Camooweal he had travelled over hundreds of miles of desert ? Will the Government bring under the notice of Captain Lancaster that the country he describes as a desert contains some of the finest pastoral areas in Australia, capable of carrying millions of cattle and sheep, and inform him that he is evidently under a misapprehension in giving a description which if allowed to go uncontradicted may do a considerable amount of damage?
– I presume that Captain Lancaster’s opinion was based on observations from a height of probably a thousand feet, or more. I have travelled through that country and it struck me as being some of the finest pastoral land we have in Australia, covered as it is with splendid Mitchell and Flinders grasses.
[3.5] . - There is a general desire that our proceedings should terminate to-morrow in order that honorable senators from distant States may reach their homes before Easter, but the Government is anxious to pass a bill which has still to come to us from another place. I ask leave, therefore, to move -
That Standing Order 68 be suspended until the end of this month for the purpose of enabling new business to be commenced after half-past ten o’clock at night.
If the Bill reaches the Senate to-night the suspension of this Standing Order will enable it to be taken to a stage that will allow of its consideration to-morrow.
Motion (by Senator Sir George Pearce) agreed to -
That Standing Order 68 be suspended until the end of this month for the purpose of enabling new business to be commenced after half-past ten o’clock at night:
– In view of the dissatisfaction in the industrial arena produced by recent arbitration awards, I should like the Minister representing the Attorney-General to ask the AttorneyGeneral if he does not think it would be an advantage to give a holiday to some of the lawyer doctrinaires who act as arbitrators, and to remodel our industrial tribunal on the lines of wages boards, allowing employers to choose representatives from the employing side, and employees to choose representatives from the employee’s side, both parties appointing an umpire?
– I shall convey the honorable senator’s suggestion to the Attorney-General in connexion with a bill which is new before another place.
The following papers were presented : -
Audit Act - Transfers of amounts approved by the Governor-General in Council - Financial Year 1927-28 - Dated 14th March, 1928.
Contract Immigrants Act - Return for 1927.
Immigration Act - Return for 1927.
Superannuation Act - Regulations amended - Statutory Rules 1928, No. 24.
New Guinea Act - Ordinance No. 7 of 1928 - Appropriation (No. 2) 1927-28.
Pacific Cable Board and Amalgamated Wireless (Australasia) Limited
asked the Minister representing the Postmaster-General, upon notice -
In view of the fact that the directors of the Commonwealth Bank send to each member of Parliament a copy of their annual balance sheet, will the Postmaster-General see that copies of the annual reports of the Pacific Cable Board and the Amalgamated Wireless Company are forwarded to all members of the Federal Parliament desiring to have them?
– The copies of the reports of the Pacific Cable Board and the Amalgamated Wireless (Australasia) Limited received by the PostmasterGeneral’s Department are only sufficient for the use of that department, and none are, therefore, available for distribution. It will be arranged, however, for copies tobe made available in the Library for perusal by honorable senators.
The following bills were read a third time : -
Beer Excise Bill.
Commerce (Trade Descriptions) Bill.
Debate resumed from 23rd March (vide page 4120), on motion by Senator Sir George Pearce-
That the bill be now read a second time.
– Before the curtain is rung down on this act of humiliation, this tragic despoiling of the States, I propose to move the following amendment: - 6. (1) Notwithstanding anything contained in this act for the first ten years after the passing of this act there shall be paid to each State 25s. per head of its estimated population.
The PRESIDENT (Senator the Hon. Sir John Newlands). - I take it that the honorable senator is indicating his intention to move an amendment when the bill is in committee.
– Yes. For greater accuracy and in order to make my meaning clear to honorable senators, I propose, with your permission, Mr. President, to direct the attention of honorable senators to a diagram which I have prepared, and which, I believe, will assist them to comprehend my argument more clearly. The diagram, as honorable senators will observe, contains three figures whose superficial areas approximate the amounts proposed to be paid under three respective schemes. All these figures start from a common line representing the present financial year. The scale is half an inch to £1,000,000. The first, shown in red, represents what would be the natural development of the per capita payment of 25s. over a period of 58 years, which is the term fixed under the financial agreement attached as a schedule to the bill, and then on to 65 years. It starts with the payment this year to the States of £7,584,000, the amount mentioned by the Prime Minister when explaining the agreement to another place, and shows the expansion which would take place as population increased, and as the resourcesof the Commonwealth were developed. It shows that at the end of the period of 58 years the payment would be in the vicinity of £25,000,000 per annum. I arrive at this amount by computing the increase in population on the accepted basis of 2 per cent., which would mean, in the 58th year, a population of 19,630,000, or, in round figures, 20,000,000 of people. If the per capita payments were continued, as I contend they ought to be, the several States of the Commonwealth would receive from the Federal Government £25,000,000 in that year.
I turn now to the second figure, printed in black. It represents what will be the position of the States under the proposal embodied in the bill. Its shape, as honorable senators will observe, follows that of a spade, an implement used for the purpose, amongst others, of digging graves. As a matter of fact, this agreement virtually represents the financial grave of the several States. It begins, as honorable senators will see,with a slightly better scale of payments. Like the mermaid, it begins well and ends up anyhow. A mermaid is usually depicted as having a well-shaped head, comely features, and shoulders of the approved Grecian model; but there her beauty ends. The same may be said of the scheme as accepted by the State Treasurers. It begins well, but during the 58 years’ period instead of expanding as does the figure setting out what would be the effect of continuing the old per capita payments, it contracts. After the end of the term, payments to the States practically cease. In the 58th year, namely, in 1986, the payments to the States will consist of £7,584,912; the capitation amount for the year 1926-27- £801,000, the yearly contribution of 2s. 6d. to a sinking fund for existing debts; £163,865, covering the increased interest on transferred properties, and a variable annual sum representing 5s. sinking fund in respect of all future debts calculated not to exceed £100,000 per annum, but commencing at £84,000. The total will be £13,800,000. In the following year, however, 59 years from the commencement of this financial agreement, the States will be in receipt of only £5,200,000, and this annual payment will go on until it is time to make another attack on the States. The last crumb will be gobbled up by the Commonwealth. In the total for the 58th year the Government improperly includes the payment of £165,000 a year as interest upon transferred properties. This is done to make the Government’s scheme appear more magnanimous than it is. This payment of interest on the capital value of transferred properties should have no place in the calculation. We might as well include in the cost the stationery and furniture in this Senate. Another item improperly employed is £100,000, which is to De set aside annually to finance a borrowing policy of £40,000,000 per annum.
I turn now to the third figure in the diagram which outlines what would be the position of the States under my proposal. For the first seven years it runs side by side with the scheme for which this agreement provides, but there it parts company. The per capita payments widen, but not at the same rate as is indicated in the graph dealing with the old per capita payments, because I propose to reduce the amount from 25s. to 20s. a head then and thereafter.
I remind honorable senators that this chamber is upon its trial, and therefore, it should take action to avert this deadly blow which is being aimed at the States’ financial security. I wish the Senate to stand up to allotted task. The Government’s proposal will mean financial unification. Within the 58 years covered by the agree ment, the Commonwealth Treasury will be relieved of about £30,000,000, including £7,000,000 for war debts, £1,000,000 for repatriation services, and £20,000,000 for interest upon war indebtedness. This amount of £30,000,000 will definitely end 40 years hence, ,or eighteen years before the scheme reaches maturity, and to that extent the Com monwealth will be saved £30,000,000, That means that; with the £20,000,000, saved from the payment to the States the Commonwealth will be a gainer to the extent of £50,000,000 in the 58 years. That will be the position when it will reduce the States to the receipt of a miserable dole of £5,200,000 a year. When the words, “until the Parliament otherwise provides “ were placed in the Constitution, it never entered the minds of the fathers of federation that this would be the destiny of the States’ pass. “Until the Parliament otherwise repudiates “ are the words that should have been employed, for this is an act of repudiation. That term would have truly and honestly expressed the present position. The six States are entitled to a substantial share of the Commonwealth revenue, and yet we find that the amount will eventually be reduced to £5,200,000. Even that is an inflated figure, because it is calculated on the basis of an impossible borrowing rate. The sum of - £100,000 annually is employed to sustain a borrowing policy of £40,000,000 a year, which is perfectly absurd. We shall never borrow £40,000,000 a year for the simple reason that the money lenders will check us long before that sum is reached. What would we do with £40,000,000 a year for the next 58 years ? Yet the sum of £100,000 is used in this deceptive calculation in order to obtain a favorable verdict from this Parliament, and, in particular, from the Senate. To make the position plainer, the Commonwealth undertakes to pay to the States 5s. per cent, as sinking fund on all future borrowings. For this purpose “the annual sum of £100,000 is used and payable to the States. In the 53rd year - the peak’ ‘year - the payment would be £5,300,000, and this sum would never increase if the Commonwealth borrowed for ever at the rate of £40,000,006 a year. In the previous calculation I have used £5,200,000 instead of £5,300,000 on account of the reduced amount, namely, £84,000, payable for this year; but that is immaterial.
I appeal to honorable senators with all the earnestness at my command to reject this agreement. I point out that, if they pass this bill, they will assuredly sign the death warrant of the States’ financial -security and independence. If they do, the fault will be on their own heads. I shall fight the measure to the last ditch,:¥nd to the limit of my endurance in Western Australia. I will not allow such a fraud to be perpertrated on the people. The late Chief Justice Griffith described “ as an act of fraud under the Constitution” something far less serious than this. This chamber is the custodian of the rights of the States. It is the supposed citadel of State rights. We are here to see that they get a fair deal, and they are entitled to natural justice. The present necessities of the States should not be dealt with as merchandise, as this Government is doing. No doubt normal times will return. Fiftyeight years hence, Western Australia, on a most moderate estimate, should have a population of 1,500,000. When that time comes, the grant to Western Australia under this financial agreement will amount to 30d. per head of the population. Thirty pieces of copper - not even silver - to the betrayed in this case, and not to the traitor !
– Order! The honorable senator’s time has expired.
– I do not intend to speak at length in regard to the financial agreement because I have previously touched on various phases of it. I congratulate the Government on the outstanding feature of the bill, and that is the provision it makes for loan redemption and debt management. The establishment of .1 sinking fund for existing and new debts, and the common management of our borrowing are steps in the right direction. Previous efforts have, been made to bring about this desirable arrangement; but never before has it been accomplished. It will eliminate competition in borrowing, and do much to enhance the credit of Australia. The debts of the Commonwealth and the. States at the present time amount to £1,040,000,000 and the annual interest bill is £53,000,000 per annum, which is practically three-quarters of our total revenue from taxation. If our credit were as good as that of New Zealand, and it were possible to convert all our loans at the present time, we should save no less than £1,500,000 a year, in interest alone. About a fortnight ago, New Zealand stock was quoted on the London market at £3 per cent, better than our own, and South African stock was £3 5s. per cent, better than comparable Aus tralian loans. It is evident that the present proposal will mean much to Australia if it brings about, as I believe it will, the enhancement of our financial status in the’ eyes of the world. On the 24th April, 1927, the Commonwealth borrowed £11,700,000 at 5 per cent., and for every £100 it received only £98. On the other hand, New Zealand, on the 3rd of May, of that year, borrowed £6,000,000 at 5 per cent., and its loan realized £99 10s. That the agreement will enhance our credit is shown already by world opinion. The London Economist, of the 25th June, 1927, observed -
In recent years Australia laid itself open to criticism on the grounds of over -borrowing If Mr. Bruce’s scheme leads to the strengthening of the Federal Loan Council, and to th> adoption of a more conservative financial policy, he will have performed a useful service for Australian credit.
At about the same time the London Times made the following comments on this arrangement -
These factors should lead undoubtedly to the strengthening of the credit of the individual State Governments. The proposals are characteristically statesmanlike and courageous, and seem calculated to make a substantial contribution both politically and financially to the strength of the Commonwealth.
The London Financial Times on the 18th June,; 1927, published the following : -
There is no doubt that the scheme will ensure for the States better terms in the money market, and enhanced credit and greater security for the borrower.
I could make many other quotations from London and New York newspapers, which indicate that in the future the effect of this agreement will be to enhance our credit. They believe that we shall not embark on any wild orgy of borrowing, that a proper sinking fund has been established, and that, as the Commonwealth Government will stand behind the States, our credit will be improved, with a resultant financial saving to Australia. I wish to touch on one phase of the agreement. I have supported it from the beginning, because it makes provision for a minimum and not a maximum payment to the States. The Prime Minister (Mr. Bruce) gives the assurance that he will treat the States equitably and justly. If that pronouncement had not been made, I could not have given my support to these proposals, because I believe that South Australia has a just claim for further consideration. The Government of that State appointed a commission to consider the effect of these proposals, and that body investigated the matter fully and exhaustively. The States of “West Australia and Tasmania have had special grants incorporated in the agreement, but South Australia could not advance its claim at that time, and therefore it must be dealt with after the agreement has been completed. A perusal of the draft Constitution Bill will show honorable senators that by clauses 91 and 92 the annual expenditure of the Commonwealth was limited to £300,000, and the payment on account of transferred services such as the Post Office, Defence, Customs, &c, was limited to £1,250,000 per annum. On a population basis the cost to South Australia was to have been only £30,000 per annum. That was impressed on the people. But those provisions were amended at the Melbourne Conference, and as the measure finally emerged it provided that not more than one-quarter of the net revenue from customs and excise should be retained by the Commonwealth Government, the States being assured of at least 75 per cent. The net receipts from customs and excise in South Australia in the financial year 1901-1902 amounted to £698,000, and the payment made to that State was £615,000. Therefore it received very little short of what the Commonwealth collected. In 1910 the position had not materially altered. In that year the net revenue from customs and excise in South Australia was £1,085,721, and the payment to that State was £803,000. It appears to me that the per capita arrangement entered into subsequently was to some extent fatal to the
States, It is hard to believe that they realized that the customs and excise revenue would increase tremendously, and that the per capita payments would remain practically stationary. In 1910-1911 the net receipts in South Australia from customs and excise amounted to £1,087,000, while the per capita payment to that State was only £514,000. The former increased rapidly, until in 1926-1927 they totalled £4,150,000; but on the other hand the payment to South. Australia advanced very slowly, and id that year was only £703,000. In addition to customs and excise the Commonwealth has collected by way of direct taxation twice as much as it has paid back under the per capita system. I realize that the Commonwealth Goverment has had to raise a greater amount of revenue ; but we cannot ignore the fact that the States also have had to impose heavier direct taxation. Some of the States have been more adversely ‘affected than others. The amount of subsidy received by South Australia in 1901-1902 was £615,000, and in 1926-1927 only £703,000. Owing to the growing needs of the State the Government was forced to raise by way of direct taxation £266,000 in 1901-1902, and £2,798,000 in 1926-1927, while the estimated receipts from that source for the current financial year are £3,641,631. Honorable senators must realize what this heavy direct taxation means to the States. In some of the States, particularly South Australia, the burden of taxation is becoming unbearable. Railway freights have been raised to such an extent that the railways cannot compete with motor transport. To raise the rates further would result in additional losses. In 1907-S the taxation per head of the population in the various States was as follows: - New South Wales, 13s. 9d. ; Victoria, 15s. lOd. ; Queensland, 19s. 3d.; South Australia, £1 5s. 3d. ; Western Australia, £1 ls. lOd. ; Tasmania, £1 8s. Od. It will be seen that with the exception of Tasmania, South Australia was the most heavily taxed State at that time. But the position in South Australia to-day is even worse than it was then. The estimated taxation per. head of the population for the current financial year is: - South Australia £6 6s. .Id.; ‘Tasmania, £4 19s. 10d.; and
Queensland, £5 5s.8d. The comparison with Queensland scarcely gives the true position, because in that State direct taxation is levied to cover losses on the railways.
– It is taxation all the same.
– If their railways were a paying proposition, direct taxation in Queensland would be less.
– The accumulated railway dificit of Queensland which now amounts to £16,000,000, has never been made up from direct taxation.
– Until last year the railway deficit in South Australia had not assumed such large proportions. To show that the heavy burden of taxation is having a bad effect on industry I desire to quote from the report of a royal commission which investigated the effect of federation on South Australia -
Every effort is being made to reduce expenditure. Where economies are possible they are being effected. The estimated expenditure of the Railways Department for the year 1927-28 has been reduced to a figure £376,874 below the actual ependiture for the year 1926-27 by means of a drastic policy of retrenchment and the provision of less service to the community. Nevertheless, the Government proposes to raise an additional £1,100,000 during the current financial year by increased charges for services and by increased taxation, which will have the effect of making the charges for the main services and the taxation per head in South Australia higher than in any other State in the Commonwealth. Even with this burdensome taxation there will still be an amount of £250,000 per- annum being paid from loan which should be paid from revenue, and a further sum of £250,000 per annum, for depreciation which should be paid from revenue. The difficulty and gravity of the task which still faces the State will be seen by the fact that the total amount received from income tax for 1926-27 was only £1,359,437. The difficulty of raising increased taxation has been so great that the Government has been forced to raise increased revenue by what is virtually a tax on the users of the metropolitan waterworks and sewers and the harbours. The charges for these services have been increased so as to return a profit of about £200,000 per annum after paying all charges for working expenses, maintenance, and interest.
The difficulties of the States have been increased by certain enactments of this Parliament, and in particular by our tariffs. Material required for railways and water supply is subject to heavy import duties, with the result that the cost of development, particularly in a dry
State like South Australia, is high. The policy of protection, while increasing the revenue of the Commonwealth and assisting the manufacturing States, has had the opposite effect on other States. Most of the manufactories of the Commonwealth are situated in New South Wales and Victoria where coal is obtainable at lower prices than in the other States. The protective policy of the Commonwealth has built up those States where coal is accessible. The report of the royal commission to which I have referred shows that the number of factories per head of the population in South Australia has declined during recent years in comparison with the other States.
– What does South Australia manufacture ?
– That information is not material at this stage. I was pointing out the effect of high duties on a primary producing State like South Australia. The secondary industries of New South Wales and Victoria, have benefited at the expense of the rest of Australia.
– Are we not in the same position in Queensland?
– To some extent, yes. In 1908 the estimated value of production per head of the population on the basis of 1911 prices was as follows: Manufacturing, New South Wales, 9.36; Victoria, 10.09; South Australia, 10.21. In 1924-25 it wasManufacturing, New South Wales, 13.35 per cent; Victoria, 14.81 per cent.; and South Australia, 11.053 per cent. Although South Australia had headed the list of States in 1908, its production per head of the population is now a good deal under that of New South Wales and Victoria. In the manufacture of boots and shoes, the number of workers employed is as follows : -
Queensland also has a slight increase. The figures in relation to employees of flour mills are as follows : -
– The Common weal fcu cannot be blamed for that.
– What I claim is that the policy of -protection has been a far greater advantage to New South Wales, which has coal within its own borders, than it has been to South Australia.
– What bearing has that on the agreement contained in the bill?
– It has a considerable bearing on the attitude of South Australia to the agreement. South Australia is not at all satisfied with its position, and claims that, like Western Australia and Tasmania, it should be given a special grant. Already it has submitted a claim for £750,000 per annum and were it not for the fact that I believe the Commonwealth will treat the State fairly I should not support the bill. I want to show the effect the price of coal has on industries in South Australia, the conditions under which we receive it and the price we pay for it compared with the price that is paid for coal by factories and railways in New South Wales.
– South Australia would not get its coal any cheaper if the per capita payments were continued.
– I am not saying that it would. But it appears to me that during the whole term of 58 years the States will not be receiving as much as they would have received under the per capita system, and there is every reason for asking for special consideration for- those which have suffered from the effects of Federation. In support of that contention I quote the following paragraph from the report of the commission : -
Seeing how vital a factor is coal under . modern economic conditions it is interesting to trace the history of its production from the mine in New South Wales to the consumer in South Australia. The wages and conditions of the miners are fixed by a special coal tribunal created by the Federal Government. Upon leaving the mine the coal is handled by the members of the Waterside Workers’ Federation, whose wages are fixed by the Federal Arbitration Court. The coal is brought to South Australia in vessels on the Australian Register operating under the Commonwealth Navigation Act, which prescribes generally the conditions of maritime services on the Australian coast, while the wages of the seamen are fixed by the Federal Arbitration Court. Upon arrival in South Australia the coal has again to be handled by members of the Waterside Workers’ Federation, _ whose wages and conditions are fixed by the “Federal Arbitration Court. The combined effect of the various Commonwealth activities .mentioned above- adds considerably to the price and explains, in some measure, why the South Australian railways Iia ve to pay 42s. 3d. per 1tone for their coal, compared with 17s. 4d. per ton as paid by the New South Wales railways, and why coal costs 43s. per ton on trucks at Port Adelaide, compared with 26s. 7d. per ton in ship at Newcastle.
Those are the conditions under which South Australia gets its coal, and they make a vital difference to the cost of running the State railways.
– Would the honorable senator have the Commonwealth Government convey coal to South Australia free of freightage cost?
– No. But it is owing to these artificial conditions that the price of coal in South Australia has been increased, and the heavy price we have to pay for coal I think entitles the State to special treatment under this financial agreement. The price of coal in Adelaide affects the price of gas and electric current. The latter is double the price in Sydney, while gas costs 7s. 7d. compared with 5s. 9d. in Sydney and 6s. 8d. in Melbourne. The Commonwealth tariff has increased the cost of developing our back country. The State is striving to place new settlers on the land, and every new settler means additional customs and excise revenue to the extent of £9. The States are thus doing work which builds up the Commonwealth customs revenue, and for that reason South Australia claims to be in exactly the same position as Western Australia and Tasmania, and equally in need of a special grant, because of the disadvantage it is suffering through the effect of the Commonwealth customs tariff. I trust, therefore, that . the Commonwealth Government will give serious consideration to the claim of the State for special treatment under this agreement.
– The agreement contained in the bill now before the Senate can rightly be described as one of the most important we have ever had to consider. When the Commonwealth Constitution was under consideration at the Federal Convention the greatest difficulty was experienced in arriving at a satisfactory basis for dividing the Commonwealth and States finances so as to ensure the future of the Stages. At the instance of Sir Edward Braddon, provision was made for the return to the States of 75 per cent, of the customs and excise duties. Every endeavour was made by those who were representing the various colonies to find some other solution of the problem, and the section of the Constitution which provided for the payment to the States of 75 per cent, of the customs duties was then described, and has since been known as the Braddon Blot. Whenever efforts were made to review that provision of the Constitution it was a time of extreme anxiety to the States. All State Premiers and Treasurers, irrespective of their politics, approached the question with extreme anxiety. The division of the finances of the Commonwealth and the States has been one of the most contentious matters that has ever been discussed by Commonwealth Prime Ministers and Treasurers with’ State Ministers. When the States Grants Bill was before this chamber, I opposed the abolition of the per capita payments. I said that I believed that their abolition would mean the severance of the last financial link that bound the Commonwealth to the States; that while I was prepared to admit that the Commonwealth Government would give favorable and even generous consideration to the position of the States, it was only right and proper that those who represented the States in the Senate, and also State . Ministers should know exactly what the Commonwealth’s proposals were before we were asked to agree to repeal the legislation that since the inception of federation had formed the basis of Commonwealth and State finances. The right honorable the Leader of the Senate claims that the agreement now under consideration is the result of a conference between the States and the Commonwealth, and that it is a satisfactory conclusion of what for some time has been a.«very contentious matter. While I must accept the position as I find it, being assured by the right honorable gentleman that the agreement has been signed by all the States, I claim that the States had no alternative but to agree to the terms laid down by the Commonwealth “Government.
– They accepted under duress.
– I would not say that. I take it that the Government was acting as it thought best, and believed that it was treating the States equitably.
– The representatives of the States were invited to submit alternative proposals.
– I admit that they were; but it must not be forgotten that the per capita payments, to which they were entitled, had been withdrawn. There can be no doubt that the States always understood that they would participate in the customs revenue raised by the Commonwealth Government. While the Commonwealth has heavy financial commitments, the expanding needs of the States also mean that, with the progress of the years, their financial needs are becoming more urgent. For many years they enjoyed the exclusive right to revenue from certain forms of taxation, and prior to federation State Treasurers could budget for the year’s expenditure with a fair degree of certainty. Generally speaking, their finances were easily adjustable. That is not the position to-day.
– Is it not a fact that the revenue of every State is increasing ?
– That is so; but owing to their rapid development their expenditure also is steadily expanding. We should bear in mind that the same people are being governed in their respective spheres by the Federal and State Governments. Therefore we should not have the anomaly of State Treasurers being in financial difficulties, while the Commonwealth Treasurer each year is able to show a surplus.
– Does not the honorable senator think that the position of the States is due to bad management ?
– Certainly not. I do not admit that members of State governments are less competent to manage their affairs than are Ministers of the Commonwealth Government, nor do I admit that members of State legislatures are less capable of dealing with their peculiar difficulties than are members of this Parliament to deal with federal problems. They are all representatives of the same people, and without reflecting in any way upon those who may not have sat in State parliaments, I suggest that those who have are in a better position to appreciate the difficulties of the States than are representatives in this Parliament who have not had that experience.
– Is it not the first duty of the States to live within their income?
– I have yet to learn that the customs revenue which is the principal source of Commonwealth income, is the exclusive prerogative of the Commonwealth Government. The States have a right to a fair share of that revenue. I remind the honorable senator also that the principal expenditure incurred by State governments is in connexion with the management of their railways and the development of their education systems. It is essential that these public services should be efficiently controlled, and to do this large sums of money are required. In my opinion the day is not far distant when the Commonwealth should be called upon to accept some financial responsibility for expenditure on education. It is very desirable that we should have one system for the whole Commonwealth. It has been said that government is finance, and finance is government. If we accept that doctrine we must recognize the claims of the respective States to some reasonable share of the Commonwealth revenue. “Without it they are not in a position to meet their commitments except by unduly taxing their people. This agreement has been accepted by the States, and it has to be submitted to the people in the form of a referendum. I find myself in a difficult position. I oppose the abolition of the per capita payments because I believed that the States were justly entitled to a fair share of the surplus of the Commonwealth revenue. This was laid down as a guiding principle at the inception of federation. The Government has determined that the capitation payments shall not be continued, and as a result we are now called upon to pass judgment on this bill and the agreement which it covers. I am loth to support the proposal ; but I realize to the full the responsibility that must be mine if I vote against the bill. “While other honorable senators may regard the agreement as just and equitable,I submit that, because of their increasing financial responsibilities, the States are entitled to more generous treatment. I hesitate, therefore, to supportthe agreement, believing that it will work to the disadvantage of the States.Ifear that the States will be obliged to seek further financial assistance from the Commonwealth if the agreement is ratified. In my opinion this is a step towards unification. I do not suggest that the Government is taking it by design; but, if we mark the progress that has been made by the Commonwealth Parliament in the last fifteen yearsin the direction of the peaceful absorption and penetration of the rights of the States, we must come to the conclusion that in another fifteen years the States’ means of raising revenue will have been restricted to such an extent that little will remain of their sovereign rights as we know them to-day. Whether or not the change will be in the interests of the Commonwealth, time alone will tell. Personally, I have my doubts on the matter. This process of absorption and penetration by the Government of the Commonwealth is depriving the States of those activities that were expressly allotted to them under the Constitution. I support the agreement only because it is the best offering to-day. I have no alternative but to vote for the bill, because it embodies an agreement made between the Commonwealth and the States.
-Why speak regretfully ?
– Whether I am speaking hopefully or regretfully, I take the responsibility for my own vote, and leave the honorable senator to follow the dictates of his own conscience.
– The subject of the per capita payments, about which’ a good deal has been said, is not really the issue before the Senate. We are now considering whether this is a just and a reasonable agreement. The money thatany Government raises is drawn from the pockets of the taxpayers, whether they are considered as the inhabitants of the respective States, orare regarded collectively as the people of the Commonwealth. If the States receive less under this agreement than would have been paid to them had the per capita system been continued, either the Commonwealth will take more money than heretofore from the pockets of the taxpayers, or agreater sum. will remain in their possession. I do not think that the charge canbe sustained that the Commonwealth is collecting more than is required for its commitments, although it has been said that the Government is doing that by reason of the roads grant. Nobody will deny that this Parliament legislates to-day upon lines that were not contemplated when Federation was inaugurated. The people alone can prevent the continuationof that policy. Whether they reside in Queensland or Western Australia, they have the power of expressing their opinion on this as on every other matter through the ballot box. I have no doubt that the electors generally have a good idea of what is taking place.
– They know what they have to pay, at any rate.
– Certainly ; and I think that they are asked to pay a great deal too much, both in Federal and State taxation. The cost of government is constantly increasing. The Commonwealth should return portion of its revenue to the States, not only because of the heavy obligation incurred by the States in supplying the services that they rendered prior to the establishment of federation, but principally because the union took from them their chief sources of revenue, and those moneys that were most easily collected. Under the Constitution, the Commonwealth was obliged to return a specific proportion of itscustoms and excise revenue to the States; but, even before the expiration of the 10 years’ bookkeeping period, during which the Braddon section operated,that system broke down and became inoperative by reason of a judgment of the High Court. In 1908 the court ruled that money appropriated by. this Parliament, and not actually expended, was expended within the meaning of the act, and was justifiably deducted from the customs’ and excise revenue.
Frequent endeavours have been made by governments of all shades of political thought to alter that position. The argument that the States will lose by the withdrawal of the per capita payments presupposes that, but for this action of the Government, those payments would have continued for all time. But, to my mind, the arrangement would have been varied, if not abolished, in the near future. If it had not been varied in the manner now proposed, it would have been changed in some other way that, perhaps, would not have been so beneficial to the States as the present agreement.
– Is this alteration beneficial toWestern Australia?
– I cannot say. I am not, like Saul, “also among the prophets.” The Premier of Western Australia, Mr. Collier, remarked that the proposals of the Commonwealth Government were very attractive, in that they provided a larger contribution to the States for a number of years than they would have received under the per capita system. He added that it was difficult to say for how long the States would benefit under the scheme, because, after all, it was purely a matter of speculation. It was stated in another place that the States would lose this, that, or the other amount ; but, as Mr. Collier remarked, the exact sum is merely a matter of speculation. Although the agreement has been accepted by the various States, it is not like the laws of the Medes and the Persians; it can be altered. It is unthinkable that we should tie the hands of the States in such a manner that they would be unable to get out of their bonds for 58 years. The arrangement could be altered later if experience of the present agreement showed that it was inequitable or injurious in its effects. The agreement provides that the Commonwealth shall take over the net debts of the States. That will be distinctly unfair to those States which have made an effort to provide for the extinction of their public debts by the establishment of a sinking fund. Western Australia stands in a very good, perhaps the foremost, position in that regard. Tasmania, also, has done a great deal in a similar direction ; but the other States have made practically no provision.
– Does the honorable senator consider that special consideration should be given to those States which have made that provision?
– The Commonwealth should calculate the percentage which the net debt of a State like Western Australia bears to the gross debt, and take over a like percentage of the debts of the other States.
– Has not that factor been taken into consideration?
– The gross debt of Western Australia is £70,705,000, and the net debt £61,000,000.
– Western Australia is given credit for her sinking fund.
– She gets credit for her sinking fund; but, at the same time, the Commonwealth proposes to take over her net debt. Some of the States have not made any effort to liquidate their indebtedness, and, therefore, they do not occupy a similar position. A good deal has been said in regard to the miserable pittance which the various States will receive under the sinking fund arrangement. It does not make any difference what money is actually paid ; the effect of the arrangement is that the Commonwealth will pay one-third of all existing debts and one-half of all future borrowings of the States. The basis of the sinking fund is that the debts shall be extinguished in a given time. As the Commonwealth is to contribute one-third of the total sinking-fund payments in relation to existing debts, the effect is that she will repay one-third of those debts; and, as she is to provide one-half of the sinking fund to liquidate future borrowings, in effect she will repay onehalf of those borrowings. Reference has been made to unification. I remind honorable senators of the Labour party that, on one or two occasions in the past, they have propounded socialistic schemes which, if agreed to, could have been financed only by the abolition of the per capita payments. It was even suggested that those payments should be abolished to enable their schemes to be put in operation.
– What were those schemes ?
– I cannot name them at the moment ; but I can distinctly remember their having been brought forward.
– Does the honorable senator say that we advocated the abolition of the per capita payments?
– In the past, yes.
– Oh, no! The honorable senator is altogether astray.
– The appointment of the Development and Migration Commission, which received the approval of a majority of the States, has gone a’ long way towards unification, and the taking away of the sovereign rights of the States. Every State in Australia welcomed the appointment of that commission, and none more so than Western Australia. The commission decides what public works in the States shall be financed out of the loan of £34,000,000 made to the Commonwealth byGreat Britain. If there were a real desire to preserve the sovereign rights of the States a move in that direction ought to have been made when it was proposed to appoint that commission ; yet no such action was taken.
– Honorable senators who sit on this side objected to the appointment of the commission, and fought the bill.
– For the reason that positions carrying very big salaries were to be found for one or two men.
– That was not the reason. We said that it was work which should be undertaken by the Commonwealth Government, not by a commission.
– I supported the abolition of the per capita payments when the States Grants Bill came before the Senate in Melbourne. I believe that the agreement which we are now considering will benefit the people of Australia and result in a more harmonious relationship being established between the States and the Commonwealth. I am not able to indulge in prophecy, but I sincerely trust that the agreement will be of advantage to the States. I do not believe that any man who holds such a responsible position ‘as that of Premier of a State would sign the agreement under duress. Those gentlemen would have been acting quite within their rights if they had opposed it and put forward counter proposals. In my opinion this arrangement is the very best that they could have made. If in the future it is found not to be to their advantage the people of Australia will be quite capable of handling the position. They will not regard their hands as having been tied.
– It is an obligation of the Senate to preserve the -fights of the States, and it has full control over all legislation that is introduced. This is a national, not a party matter. I have listened to and studied the mass of figures that has been quoted during the debate, and I must confess that, to a man with only a modest education, they are most confusing. Many men are able to juggle with figures, and give those that are false an appearance of truth. I have in my mind a man who juggled with figures not long ago. A bank manager informed me that in that respect he was the cleverest man he had met. In politics some men are just as clever at juggling with the welfare of the nation as with shillings and pence. It has been said that the States have agreed to this proposal. That may be so; but it is my opinion that the Premiers of the States were caught napping. They were not as intellectually alert as one would expect them to be. Even though this bill is passed, will it not be necessary for the agreement to be approved of by the people at a referendum?
– The Constitution will have to be amended. Inferentially the rejection of that amendment by the people would mean the rejection of the agreement. The clauses that are to be submitted are contained in the agreement.
– I can see what is in the agreement, but I should like to know what lies behind it. Since the inception of federation the financial relations of the Commonwealth and the States have constituted one of the most difficult problems with which we have had to deal. An honorable senator has asked whether this agreement means unification. It is -true that one section comprising the Government advocates unification; but, like the moth, it works quietly. .If the object is unification, why not propose it openly? I know that at one time the Labour party advocated unification; but I do. not know whether that is so to-day-. I am no unificationist; nor am I a federalist. I have no more time for the federation of the States than for the federation of trade unions or churches. Federation has not been the success that we were led to expect it would be. Now, after 27 years’ experience of the Constitution, we are asked to alter it in order to injure the States. It is true that the State Premiers have accepted the agreement; but they had no alternative. It was a case of Hobson’s choice - they were offered this agreement, or nothing. We a.re told that for a period of five years the States will be better off under this agreement. But what about the generations yet unborn? We should remember that we are legislating not so much for the present generation as for those which will follow.
– Even the present generation will be vitally affected by this agreement.
– That is so. If this bill becomes law it will not be long before many now living will curse it. I am a strong advocate of State rights, and I entered the Senate as such. I never have been a federalist; indeed, I fought against federation, because, in my opinion, federation means the damnation of any country.
– What is the use of fighting against federation now?
– While I live I shall fight for my principles. I have suffered for them before; but I still survive. In considering this measure we must not lost sight of the possibility of a change of government. What would happen if the Labour party were returned to power at the next election? Honorable senators may say that that’ is not at all likely ; but I have lived long enough to see many unlikely things come to pass. Under federation South Australia sustains a loss of £750,000 per annum. It is true that under this agreement that State will gain for a few years; but what will happen then? And what will be the position at the end of 58 years? The framers of the Constitution were men of vision. One of then, Sir Edmund Barton, said -
The whole principle of federation depends on the framing of a constitution which maintains an even line of justice between the general authority and the provincial authority. To depart from that on one side or the other would seem to me to be a forgetfulness of the interests of Australia, or of the interests of one’s own colony, We cannot do away with the solvency of the several States. If we do, those States die, and we have no longer a federation, but a legislative union. . . .
Another of the founders of federation, the late Sir George Reid, speaking at the third session of the convention, held in Melbourne in 1898, said -
Can we suppose for a moment that the Federal Parliament would listen to a man who showed by his proposals that he had not been able to reconcile the financial wisdom of the Commonwealth with the financial security of the States? Because the two things are absolutely bound up.
In a letter written by Sir GeorgeReid on the 13th August, 1909, to the Honorable John Murray, the Premier of Victoria, the writer said -
It seems to me that there is, whilst the matter remains open, an increasing danger of an arrangement which can be determined in a short time, not by conference or compromise, but by the will of the Federal Parliament. Time is on the side of your opponents. … I am more responsible than any man for the termination of the Braddon clause. But I never wished to allow the States less than a fair share of customs and excise revenue, which is the only way in which the States can receive revenue from the masses of the inhabitants.
– Why did the framers of the Constitution agree to the inclusion of the words “until the Parliament otherwise provides”, unless they realized that a time would come when an alteration would be necessary ?
– I do not agree that they foresaw such a time. The late Sir George Reid said that the States should have a fair share of the Commonwealth revenue.
– What is the honororable senator’s view of a fair share?
– At least, the per capita payment of 25s. should be continued. The share of the States should certainly be on a per capita basis. The payments should increase automatically either with every increase of Commonwealth revenue or with the growth of the population.
– Under the per capita system of payment, Victoria and New South Wales would benefit at the expense of the other States.
– That may be so ; but is one State to be sacrificed because another might get a little more? Must we always consider these questions only from the stand-point of Victoria and New South Wales, Have not the other States some rights? The weaker States must be protected. Men likeO’Connor, Lyne and Symon, never imagined that the day would come when a Federal Government would say to the States)’ as the spider is reputed to have said to the fly, “Will you walk into my parlour?”
– No notice is taken nowadays of the giants of the past.
– I do not say that the Government thinks otherwise than that it is doing right in introducing this measure; but the question I have to determine is whether I can vote for the agreement in view of its effect on future generations.
– It can be varied. Senator VERRAN. - The variation of these matters depends upon what Government is in power. I have lived long enough to know that one Government has no consideration for what has been done by another. It will upset a previous Government’s- decision if it does not believe in it. We cannot, therefore, rely on the future, and I feel that, in the circumstances, I must vote against the acceptance of the financial agreement embodied in this bill.
– This is a bill to approve of an agreement which has been signed, subject to parliamentary approval and the concurrence of the people of Australia, by the Government of the Commonwealth and the Governments of the six States. Possibly it is the most important financial measure that has ever come before the Senate, providing as it does for the permanent and final settlement of the financial relations between the Commonwealth and the States. The problem of settling those relationships has occupied the attention of every Commonwealth Government, and it was the most difficult problem that faced the founders of the federation. It is quite unnecessaryf or me to go over the history of the various negotiations between the Commonwealth and the States. They are fresh in the minds of honorable senators, and the whole position was thoroughly reviewed during the’ debate that took place on the States Grants Bill. At that time the Prime Minister made it abundantly clear that his Government had no intention of inflicting any injustice or hardship on the States or of exercising its full legal rights by withholding from the States the financial, assistance they had enjoyed under the Surplus Revenue Act. On the contrary, he said that he was prepared to negotiate with them if they would meet him with a sincere desire to arrive at a fair arrangement. Ho said-
If the States will meet us we are prepared to consider any scheme and any method that may be suggested. It is our desire not merely to give the States absolute justice, but, so far as lies in our power, to deal with them generously.
I propose to show that he has lived right up to the full measure of his promise. The representatives of the States met the Commonwealth Government in conference in Melbourne in June, 1927, and in Sydney in the following month, and a full report of the debates that took place has been supplied to honorable senators. It makes most interesting reading. I propose to quote somewhat freely from it. The conference was probably one of the most momentous that has taken place between the Commonwealth and the States. We find that five of the States were in agreement with the main principles of the financial proposals submitted by Mr. Bruce. We have heard quite a lot during this debate about the States having the point of the bayonet levelled at them as if they were being bludgeoned into thi3 agreement, or, to put it vulgarly, as if the Commonwealth was “ putting the boot into them.” In this document I fail to find any evidence of any such intention on the part of the Commonwealth, or of any outcry on the part of the Premiers to indicate that that was the attitude assumed by the Commonwealth. I propose to read extracts from the debates at the conference. Any honorable senator who has studied the report of the proceedings at the conference will have his mind absolutely disabused of the idea that representatives of the Commonwealth and the States met in any hostile or cantankerous spirit. The Honorable J. T. Lang, Premier and Treasurer of New
South Wales, who was at the conference was, in the main, agreeable to the Commonwealth’s proposals. He said -
I am prepared to accept as the basis of contributions to the States the amounts set out in the schedule of the Act to abolish the per capita payments.
With regard to the establishment of a sinking fund he said -
I am prepared to go just as far as the Commonwealth desires that the States should go in establishing a sinking fund.
Dealing with the transferred properties he said -
The Commonwealth proposal in this respect is absolutely acceptable to me.
As to the establishment of the Loan Council, he stoutly expressed the view that “ With regard to borrowing the Commonwealth and the States should be absolutely free to do as they saw fit individually “ ; and he was of the opinion that, “ individually they could secure better terms than united “. This is what he had to say on that score -
The Commonwealth should not ask the sovereign States to give up their rights and hand themselves over shackled hand and foot to a Loan Council which, in effect, will be a Commonwealth Authority. I judge what has happened in the past is likely to occur in the future. If the Commonwealth has these extended powers, I do not think it will hesitate to use them. For these reasons T must state definitely that I entirely object to bind New South Wales to a Loan Council, anr] for me to agree to the insertion of such a provision in the Constitution would be practically to betray the sovereign rights of the State of New South Wales.
We must remember that Mr. Lang had very little if any experience of the workings of the Loan Council and subsequently the other State Premiers who had that experience did their best to persuade him to come into it, by telling him how well and smoothly it worked, and what a good institution it was. Mr. Forgan Smith, Acting Premier of Queensland, approached the subject before the conference in a very broad and tolerant spirit. He ‘heartily approved of the Loan Council. Speaking of Queensland he said -
For a period of twenty years it would gain considerably under the proposals as submitted.
Then he went on to say -
There can be no doubt as to the advantage of the sinking fund proposals. They mean that, instead of the various Commonwealth and State authorities competing in the money market, they shall go as an organized body to the organized financiers. No one is so innocent as to believe that there is no organization or co-ordination of work on the part of those who control and to a large extent, are responsible for the success or otherwise of our loan flotations. It is right, therefore, that we should organize so that we can go on the loan market as one borrower. By having one Australian security and establishing a sinking fund we shall secure better terms than we can hope to obtain while we have the States endeavouring to raise individual loans. The proposals in this regard are sound….. I have only to say, in conclusion, that while we come here as representatives of the several States and the State Governments, we should endeavour to approach the consideration of these matters from the point of view that we all represent the same people, and I am convinced that if we do so we shall be able to lay down the basis of a scheme calculated to give general satisfaction.
That was the spirit adopted by the Acting Premier of Queensland throughout the Conference. Mr. Hogan, Treasurer and Premier of the State of Victoria, was, with some minor reservations, in agreement in- the main with the scheme now put forward, and was heartily in favour of the Loan Council. He had quite a number of worries, particularly about soldier settlements, a subject which he desired to stress . at the conference. He said -
I am not in a position to State definitely to-day the final opinion of the Government of Victoria regarding the proposed Loan Council, but I agree strongly with the view put forward by Mr. Bruce and Mr. Forgan Smith that all the States would be infinitely better off if there was one borrowing authority instead of seven. “ Unity is strength “, and to say that the six States and the Commonwealth would be stronger separately than if united, is to deny a truth which is as certain as the law of gravitation. I am prepared to approach this matter in the same frame of mind as that adopted by Mr. Bruce, Mr. Forgan Smith, and Mr. Lang; I am ready to consider alternative proposals and amendments in an endeavour to arrive at a just and equitable settlement. I hope that before this conference concludes a settlement will be found. The proposal now before us is infinitely better than that submitted by the Commonwealth previously and unanimously rejected by the States.
Mr. Butler, the Treasurer of the State of South Australia said that he was struct by the soundness of the Prime Minister’s argument when explaining the Commonwealth’s proposals. On the whole he agreed with these, but he suggested that special consideration should be given to what he termed agricultural States, of which South Australia . was one. He favoured the establishment of the Loan Council on the ground that it would restrict extravagant borrowing. Mr. Butler said -
The present proposal has three advantages over that which preceded it - it makes provision for the payment ‘ of a portion of the interest on the State debts; it provides definitely for a sinking fund for all debts; and it provides for a Loan Council, which will act as a common borrower for the Commonwealth and the States. . . . The Loan Council is a natural corollary of the scheme. I cannot conceive of any Commonwealth Government taking over the huge loan liability from the States without having some protection. I have not the slightest objection to the loan expenditure of my State being reviewed by what I regard as an independent tribunal. The Loan Council will probably restrict the borrowing of the Commonwealth- more than of the States. The Commonwealth is prepared to have her loan expenditure reviewed by a council composed mainly of State representatives. That, certainly, will not interfere with the sovereignty of the States. It gives to the States as a whole the opportunity to review the expenditure of each State, but good rather than harm will come from that. The Loan Council may restrict -extravagant borrowing, but it will not restrict legitimate borrowing.
I turn now to the attitude taken up by the Hon. P. Collier, Premier and Treasurer of Western Australia. He stated that while recognizing the many valuable features embodied in the Government’s proposal, he hesitated to take any steps without further consideration. He did not doubt the advantage of the establishment of the Loan Council, but he feared that it might restrict the borrowing activities of his own State. He stated -
I am certain that, operating through the Loan Council, we shall be told that we must curtail our borrowing. It may be argued that if we agree to the proposals now before the conference, we shall be surrendering our rights of independent borrowing; but, after all, we shall only be giving power to our sister States, and it matters not whether this authority is vested exclusively in the Commonwealth or in the several States. As I see it, those proposals are the greatest steps yet taken towards the unification of State finances since the inauguration of the Commonwealth. , ; ,
I come now to the views expressed by the Hon. J. A. Lyons. Premier and Treasurer, of Tasmania. He said that the new proposals were . infinitely better ‘ than. those submitted previously. The following is an extract from his speech at the conference : -
Mr. LYON’S. I can quite understand the objections which some representatives have to constitutional provision being made for the establishment of a Loan Council, thinking that the operations of such a body may be of disadvantage to the States ; but it is my experience - I think Mr. Collier will support me in this, as he and I have had more experience on the council than perhaps other representatives - that there has been no antagonism between the States, or between the Commonwealth and the State representatives.
Mr. Collier. If I were sure that the proposed council would work as smoothly as the one now in existence, I would have no objection to offer.
Mr. LYONS. We should be guided by experience, and if Mr. Lang, who is hostile to the constitutional proposal, had become a member of the council, he would be of the same opinion. The State representatives on the Loan Council do not endeavour to take advantage of each other; but try to understand each other’s difficulty. Certain objections may be raised to the proposal, but from our experience we must admit that one borrower is preferable to a number competing with each other.
These quotations indicate clearly the trend of thought at the conference. On the following day the States Treasury officials, who were present with their Ministers, carefully examined the proposals in camera, and the result of their conclusions is to be found in the agreement which is attached as a schedule to the bill now before the Senate. I heartily support the bill, because the proposals contained in it aim at a settlement, on a permanent basis, of the financial relations of the Commonwealth and the States. Under the agreement the States will be assured of a permanent arrangement for their financial stability. It makes for the consolidation and improvement of the credit of Australia as a whole, and it should ensure our being able to obtain loans upon more favorable terms than otherwise would be possible. It makes provision also for the establishment of a proper system of national debt redemption. This Parliament already has that power with regard to the redemption of the Commonwealth debt, including our gigantic war loans, but under this bill the power is extended to the whole of the debts of the Commonwealth and the States, past, present and future. I am optimistic enough to believe also that it will put a most effective brake on reckless borrowing. The agreement represents a truly harmonious settlement of what may be regarded as the most difficult problems that have confronted us since the inception of federation. I sincerely trust that the people of Australia will agree to the insertion in the Constitution of the proposed new section 105a to give effect to the proposals which, I believe, are in the best interests of the nation.
Listening to the debate this afternoon I came to the conclusion that some honorable senators appear to be under a misapprehension as to the nature of the agreement. They affect to believe that it is an absolutely rigid instrument, incapable of alteration in any shape or form. If they had had the privilege which was mine on the 14th December, of hearing the right honorable the Prime Minister (Mr. Bruce) moving the second reading of this bill in another place, any doubts which they might have had on this point would have been dissipated. The Prime Minister explained to members of another place the meaning of the proposed new section. Its terms are so important that it is advisable that I should quote at least certain of its sub-clauses. They are as follows: -
These indicate that the agreement is not by any means an absolutely hard and fast arrangement. When the States Grants Bill was under discussion in this chamber, it was claimed by several honorable senators that the States would be robbed if it were agreed to. In certain quarters there appears to be a disposition to regard the people of the States and the people of the Commonwealth as separate entities. Actually we are one and the same people. It matters not if we pay ? 1 in taxation to the Commonwealth and ?1 to the States, or whether we pay ?2 to the Commonwealth and nothing to the States. To suggest that under this agreement the States will be down and out at the end of 58 years is to talk arrant nonsense. There is not a scintilla of truth in such a suggestion. For the reasons which I have given I intend heartily to support the bill.
– Honorable senators who have taken part in this debate have already considered in detail the agreement which it is proposed to ratify under the bill which we are now discussing. The agreement is the culmination and the crystallization into the language of an act of Parliament of negotiations that have been in progress for many years. At every Premiers’ conference one or other of the provisions contained in it was considered by representatives of the States, fortified with the carefully weighed opinions of their financial advisers. Whatever its political aspect may be, I am satisfied that its financial aspect and its probable effect on the States have been well considered by disinterested people who as much as any member of Parliament, have at heart the interests of the Commonwealth and the States. In the circumstances we may very well ratify the agreement. I repudiate the talk about coercion of the States, and I do so because matters have turned out more happily than I had supposed possible when the States Grants Bill was under the consideration of the Senate. At that time, I must confess, I did not take as hopeful a view as the Government did; I did not think that the States would come to a conference when they were, apparently but not really, facing a blank wall. I now quite understand the reason that prompted the Government to reject an amendment that I proposed in the States Grants Bill - an amendment which embodied one of the principle features of the agreement now under consideration, namely, the provision for taking over the State debts, and the imposition of a compulsory sinking fund. I fully recognize that it is only right that a Government should not have any matters of policy suggested to it by a private member. If that was in the mind of the Government, it rightly rejected my amendment, which is now one of the not least important parts of the agreement. The accusation of coercion is unfounded; it is unjust to say that such an idea was ever in the mind of anybody. The States having the assurance of the Prime Minister (Mr. Bruce) - an assurance that I think they have every reason to respect - that their interests would not be jeopardized, met again and acted absolutely as free entities.
– Free agents?
– Free entities. The quotations made by Senator Sampson from the report of the last conference of Commonwealth and State Ministers point to that.
– He read parts of the report only.
– Exactly ; but on reading the whole report, one finds that the contention that there has been coercion by the Commonwealth is not tenable. Certainly on one or two occasions there was some question of coercion by certain of the States; but that, of course, was a plan that would not work. Seeing _ that the agreement has been arrived at, not hurriedly, not in a month or a year, but as the result of careful and cautious consideration, not only by the Premiers and Treasurers of the States, but also by their responsible officials, wc may dismiss the fears for the present and the future that have been expressed by some honorable senators. It is quite true, as has been said that the protection of the States is the special care of this chamber, but let me point out that on no subject, that I am aware of, have the States had so much opportunity to protect themselves as they have with regard to this’ agreement. Under these conditions I have not the least objection to the bill ; indeed, I have every desire to support it. In so doing, I emphazie that the agreement embodied in the schedule is not a hurried one, and further, that any amendment to the schedule would necessitate throwing the whole agreement into the melting-pot.
– A good job, too!
– That .is a matter of opinion, not of fact. An honorable senator, holding certain views strongly, may try to influence, but is not likely to endeavour to coerce, other members of this chamber. Believing the bill to be for the good of Australia, and beneficial to the separate States, I have not the least hesitation in supporting the second-reading.
Senator PAYNE (Tasmania) [5.40 J. - This measure is of such far-reaching importance that every honorable senator is justified in making a contribution to the debate, no matter how small it may be, in order that the people may know the views of their representatives. Coming, as I do, from a State that has had very great financial difficulties for many years, not through any fault of its own, but through circumstances over which it has no control, I find that the subject matter of the bill is of vital interest to the people of Tasmania. I have endeavoured to look at the measure from the point of view of not only a Tasmanian, but also a citizen of Australia, and a representative of one of the States of the Commonwealth. .It has been said to-day, and I heard it remarked prior to this debate, that the Commonwealth Parliament is morally bound to continue the original payments to the States for an interminable period. Quotations have been read to-day from speeches delivered by the late Sir Edmund Barton, and many others, that would convey the idea that their impression was that that was the intention of the founders of the the Constitution. It should be generally realized, however, that it was never the intention under the Constitution to make any arrangement regarding financial assistance to the States interminable, because it was definitely provided that the payments to the States should continue until the Parliament otherwise provide. The day arrived when it was found necessary in the interests of the Commonwealth that the distribution of the customs revenue should be ended, and a new system known as the per capita payment of 25s. was instituted. But even that was not made interminable. Those who have had the idea that these arrangements should last for all time, fail to realize the possibilities of Australian development. We have had to meet liabilities that’ could not have been foreseen. I particularly refer to the enormous liabilities incurred owing to Australia’s participation in the Great War. Such liabilities as these have made it necessary to do something to ensure, first of all, that the States would not be losers, and in the second place, that the Commonwealth would be able to carry out its programme of development. I have looked through the agreement carefully, and I find one item - it was mentioned by Senator Carroll - that needs close attention. I refer to the fact that the Commonwealth will relieve the States immediately of one-third of their loan obligations, and with regard to future loans, will take the responsibility for half the amounts borrowed.
– If the honor-‘ able senator calculates that on the basis of Senator Needham’s figures, he will see what it means.
– How are the States to be relieved in regard to immediate borrowing ?
– It is provided that the obligations will be eventually met by means of a sinking fund, and if the Commonwealth contributes 50 per cent, to the fund in respect of new loans, it follows that it will meet half the obligations. The agreement proposes that the Commonwealth shall contribute 2s. 6d. of the 7s. 6d. per cent, to the sinking fund for the liquidation of existing loans.
– That is because the per capita payments are being taken away from the States.
– Exactly. It is clear to me that the agreement will be distinctly advantageous to certain States; that aspect of the matter was fully considered by the State Premiers, and I have no doubt that it influenced the Premiers of the smaller States more than any other fact in agreeing to the ratification of the agreement. It is also provided that, for the years 1927-1920, 5 per cent, shall be paid by the Commonwealth on the transferred properties in lieu of 3J per cent., and at the end of that period, the Commonwealth will take over the whole of the obligation.
– Very liberal treatment.
– Yes. I have endeavored to analyse the agreement to see whether Tasmania will be worse off or better off in future under it, and the only conclusion at which I can arrive is that the arrangement will eminently suit my State. From another point of view, I believe that the agreement will be advantageous to the whole of the States. It provides that no State may independently go upon the money market to float loans ; but all loans must be arranged after due consideration by the Loan Council. No loan must be raised by a State without proper provision being made for its liquidation by means of a sinking fund.
– The States are now partners in their loan transactions.
– Quite so. United in that way, the States shouldbe able to secure far better terms than if they were rival borrowers. It should be recognized that the Commonwealth Government has no desire to inflict injury upon any State; it wishes to assist them as far as possible by making a substantial contribution to the amounts required for their future needs.
– The States were compelled to accept the best terms they could get.
– They were invited to confer with the Commonwealth authorities as to the best arrangement to be adopted. I admit that the first proposal contained features that I could not support. But the Commonwealth authorities, realizing that the point of view of each State must be considered apart from all others, invited the Premiers and Treasurers of the various States to meet them in conference and make any suggestions which they considered would be likely to result in a mutually satisfactory agreement.
– What was the good of their making suggestions when the Commonwealth Government had told them definitely that the per capita payment was to be withdrawn?
– All that the Commonwealth told them was that the per capita system had to come to an end.
– It was already ended.
– Exactly. If the Commonwealth Government felt that it was imperative that that system should be ended and a more satisfactory one evolved, it would have been undeserving of the confidence of the people of Australia if it had not taken action as early as possible to bring together the Premiers of the States to discuss this most important subject. Senator Sampson has quoted extracts from the speeches of two or three Premiers, which show conclusively that they realize that under this agreement their States will have greater financial stability than they have had for very many years. I should be the last to support a measure which I thought would inflict an injustice upon the people of Australia. The argument that this agreement will bring certain States to the poverty line, and hamper their developmental programmes, will not hold water, because the Constitution gives to each State the right to apply to the Commonwealth Parliament for special assistance. That provision will not be affected by this agreement. Any State which, through unforeseen circumstances, finds it necessary to call upon the Commonwealth Parliament for special assistance, will have the right to do so; and I have no doubt that any such request will be fully considered and, if the circumstances warrant it, granted.
– The proposal contained in the bill is much fairer than the system of per capita payments.
– I do not consider that the per capita system is a fair one. In the future certain States may lose a portion of their population to other States. Tasmania is put to the expense of educating its boys and girls. Its educational system is equal to that of any other State in the Commonwealth; but, through no fault of its administration, but entirely on account of its isolation from the mainland and the operation of certain legislation, thousands of young people have for some years been crossing Bass Strait to Victoria, New South Wales and Queensland, where they have given of the best that is in them.
– For which they get no capitation payments.
– Certainly they do. The per capita system favours the rich. not the poor. Senator Lynch has argued that under this agreement the rich will be made richer and the poor poorer.
– That will be the direct result.
– I have followed carefully the argument which the honorable senator used, but I consider that the result will be the opposite of that which he predicted. Some compensation will be given to the States that contribute materially to the wealth of other States to which their people migrate.
– The sympathies of the honorable senator lie in the direction of those Tasmanians who stay at home and who have votes, not those who go abroad.
– Thank goodness I have a soul above votes; they do not enter into my consideration of this question. I have many good friends in Tasmania who disagree with my views on this matter, but I am satisfied that the majority of the people of that State will appreciate the ratification of this agreement, the result of which will be the strengthening of the weaker States. It may reduce to a certain extent the assistance which hitherto has been given to the larger States; but they are better able to look after themselves than the smaller and poorer ones. I shall conclude by expressing my gratification at the fact that, out of the many attempts which have been made by Commonwealth Governments to bring together the representatives of the States, an agreement has eventually been arrived at. I have no hesitation in according to it my hearty support, because I believe it will tend to improve the stability of the individual States and benefit the Commonwealth as a whole.
[5.57]. - I have been somewhat struck by the tone adopted in this debate by certain honorable senators, who have referred to the Commonwealth in terms which would lead one to suppose that it is a foreign body, in the shaping of whose destinies Australians do not share. As a matter of fact, it has the same taxpayers and the same voters as the States. I also draw attention to the adulation that the per capita system has received. I could understand the representatives of New South Wales and Victoria bowing down before that system, which suits them admirably, but that a representative of any of the smaller States should have aught that is good to say about it is surprising. There is a test which can easily be applied. If the per capita system is just and equitable to States like Western Australia and Tasmania, why do they find it necessary to approach the Commonwealth for special grants? The fact that they do is the strongest possible condemnation of the per capita system, and proves that it is inequitable and unjust to those States.
Senator Needham analysed what he said would be the position of Western Australia under this agreement over a perio’d pf 58 years. I agree with one speaker who said that it is dangerous to adopt the role of a prophet, and forecast .what will happen in 58 years. The honorable senator compared the estimated benefits to Western Australia under the agreement with the amount which that State would receive under the system of per capita payments. There was no guarantee that that system would survive the next elections, yet all his forecasts and prophecies were based upon the assumption that it would continue for the next 58 years! Assuming that it was a permanency - a very tall assumption - he arrived at the conclusion, that had already been arrived at by an honorable member from Western Australia in another place, that under the agreement that State will be worse off to the extent of £20,000,000 than it would be under the per capita system. The obvious inference is that, in his opinion, this agreement is not sufficiently liberal to Western Australia. I point out, however, that the views of the Leader of the Opposition in this chamber are in strange contrast to those of the Leader of the Opposition in another place. That gentleman said that his is a good bargain for the States and a bad one for the Commonwealth; that we are giving away too much; and that the agreement ties the hands of the Commonwealth. I commend to Senator Verran Mr. Charlton’s references to certain coming obligations of tie Commonwealth respecting such matters as child endowment, unemployment insurance, widows’ pensions, and industrial arbitration, because a good deal of significance attaches to them. What did he have in his mind when he made those references, except that those schemes should be financed by the Commonwealth at the expense, if necessary, of the payments to the States and that the States would have to re-adjust their finances accordingly. Apparently the interests of the States were not to be considered. The views which he expressed, however, are consistent with those held for some years by the Labour party. But for the opposition, of that party, the per capita system would have been embodied in the Constitution in 1910, when the Liberal party proposed to make it permanent. That scheme was opposed by the Labour party, and the electors rejected it.
Let us now consider Senator Needham’s attempt to belittle the agreement by making an unfavorable comparison with a permanent per capita system. His party would oppose that system just as strenuously to-day as they did in the past, if the Government brought it forward. The comparison which he has made serves little or no purpose. . He has compared assured payments with payments under the per capita system which cannot be assured; in other words, a certainty with an uncertainty. But quite apart from that aspect, his figures are altogether astray, and do not truly represent the position. In the first place, his estimates of payments to Western Australia have been based on an estimated increase of population at the rate of 3 per cent, per annum. Where is that increase to come from? It cannot be the result of the natural increase, which is only l£ per cent. It can be achieved only by immigration on a large scale, which he. and his party are always attacking. Are we to understand that they are likely to have a change of heart, which will lead them to support immigration? That is the only way ±o ensure an increase in the population at the rate of 3 per cent, per annum. The population of Western Australia admittedly has doubled since the inception of federation ; but an analysis of the figures shows that that is largely attributable to the boom which was caused by the discovery of gold in the early days. The increase in the last six years has been, approximately, 2.65 per cent., as compared with the average Australian increase of 2.1 per cent. For the sake of argument, let us agree that that high rate of 2.65 per cent, will continue for the next 58 years. On that basis the per capita payments would amount to £66,000,000, not £74,000,000, as stated by the honorable senator.
The benefits to Western Australia under the agreement include interest payments as follows: - Fixed contribution of £473,432 per annum, which, in 58 years, will amount to £27,459,000; and an increased interest payment in respect of transferred properties totalling £11,047 per annum, which in the same period will amount to £641,000; making a total of £28,100,000, compared with the estimate £66,000,000 under the per. capita system - apparently a loss of £37,900,000. But that tells only half the story. Allowance must be made for the benefits that will accrue under the sinking fund provision. The Commonwealth will contribute at the rate of 2s. 6d. per cent, on existing debts and at the rate of 5s. per cent, on all new borrowing, for that period of 58 years. Accepting Senator Needham’s estimate of £4,000,000 per annum as the amount that Western Australia will borrow, the total sinking-fund contributions of the Commonwealth will in 58 years redeem a debt of £66,000,000. During the period of 58 years, Western Australia will receive interest payments amounting to £37,900,000 less than would have been paid to that State had the per capita system been continued. She will, however, reap the benefit of sinking fund contributions by the Commonwealth, which will redeem a debt of £66,000,000. Senator Needham took no account of the accrued benefit to the States by reason of the advancement of Australia’s credit which this agreement will effect. We have only to look to Canada, South Africa, and New Zealand to see what we can expect when this agreement is in force, and the Loan Council is operating. New Zealand and South African stocks are quoted on the London market at about £3 10s. per cent. better than comparable Australian stocks. In the case of South Africa particularly, with her racial problem, that is significant. “Will honorable senators say that the security offered by South Africa is greater than that which any Australian State can offer? The position is due entirely to our foolish, competitive and unregulated borrowing system, and to the absence of a proper sinking fund provision in some of the States.
Both Senator Chapman and Senator Verran referred to a royal commission appointed by the South Australian Government to inquire into the effect of federation on that State.
– What was the personnel of the commission?
– I shall deal with that presently. Let me refer first to the inquiry into the disabilities sufferedby Western Australia through federation. The Commonwealth Government did not appoint three Western Australians to undertake the investigation. Instead, it appointed three gentlemen from the eastern States, who were in no way connected with Western Australia. They made an impartial investigation, and heard evidence from all sections of the community, not merely from civil servants in the employ of the Western Australian Government. The South Australian Government, on the other hand, appointed a royal commission of South Australians. Evidently it was determined to get a favorable verdict.
– The commission was appointed merely to obtain data for future use.
– I thought that the honorable senator said that the commission appointed by the South Australian Government was comparable with that which investigated the position of Western Australia. If I have misunderstood him I shall not pursue the subject further. Listening to Senator Chapman’s speech one would have thought that the Commonwealth Government was a foreign institution. Both he and Senator Herbert Hays referred to economies effected by the States, and to the heavy burden of taxation in all the States. I ask those honorable senators to name one responsibility now shouldered by the States which was not theirs in 1914. With the exception of the reduced purchasing value of the sovereign, the war did not add one responsibility to the States. On the other hand, I could name half a dozen responsibilities assumedby the Commonwealth since 1914 as the result of the war. I need only mention the war debt and the interest thereon, war pensions, and repatriation. Liabilities totalling £30,000,000 per annum have been added to the Commonwealth since 1914. Yet some honorable senators would have us believe that the States are the unfortunate victims and that in some way the Commonwealth is to blame. Apart from the reduced purchasing power of the sovereign, the States are in no worse position to-day than they were in 1914. That disability, however, is suffered by the Commonwealth as well as by the States.
– The States have to meet increased expenditure for developmental purposes.
– Senator Chapman devoted considerable time to explaining the disadvantages suffered by South Australia by reason of her lack of coal. I ask what that has to do with the financial agreement. Surely the honorable senator does not suggest that the continuation of the per capita payments would result in coal being found in South Australia. If there had been no federation South Australia would still suffer the disadvantage of lack of local coal supplies.
– I said that Victoria and New South Wales, whose coal mines made secondary industries possible, benefited most from the tariff.
Senator Sir GEORGE PEARCE.Senator Carroll referred to the difficulty which will be experienced in connexion with the net debts of the States. If he will turn to the agreement he will see under the heading “ Permanent provision ; Taking over States public debts “ that it provides -
Subject to the provisions of this part of this agreement the Commonwealth will take over on the 1st July, 1929 - (1) The balance then unpaid of the gross public debt existing on 30th June, 1927; and (2) all other debts of each State existing on the 1st July, 1929, for moneys borrowed by that State which by this agreement are deemed to be moneys borrowed by the Commonwealth for and on behalf of that State - and will in respect of the debts so taken over assume as between the Commonwealth and the States the liabilities of the States to ‘bond holders.
The Commonwealth will make to the States payments towards sinking funds not already provided for and also contribute to sinking funds already established. In the case of Western Australia or Tasmania the moneys so paid will not be applied to the extinction of the debts, say of Queensland, but to the debts of the States concerned. It will be seen therefore, that the arrangement does no injustice to Western Australia.
asked whether the agreement would lead to unification. It will not. The Constitution originally provided that the Commonwealth might take over the debts of the States existing at the time of federation. Senator Verran will agree that it would be foolish for the Commonwealth to take over the debts of the States which existed then and not those which have been incurred since federation. All that this agreement does is to seek the approval of the people to alter the Constitution so that it will apply to all the debts of the States.
Sitting suspended from 6.15 to 8 p.m.
Senator Sir GEORGE PEARCE.I have shown Senator Verran that provision is made in the Constitution for taking over the State debts, and, therefore, it cannot be said that that feature of the agreement is a step towards unification. There are two other main features of the agreement to which I desire to refer. The first is the formation of a permanent Loan Council, and the second the proposed establishment of a sinking fund for the liquidation of all debts, payments into which are to be made by both the States and the Commonwealth. No one would argue that the formation of a Loan Council is a step in the direction of unification. On the contrary, it is a step in the direction of co-operation. In any case, if the States feel that the Commonwealth is wrongfully using its power on this council, they have the predominating voice; five of them can block the Commonwealth if they choose to do so. But, surely, no one would argue that in order to avoid the Scylla of unification, we should run on the Charybdis of making the Commonwealth, whose borrowing powers are also to be limited by the council, subservient to the States. What is sauce for the goose is sauce for the gander. If the formation of a Loan Council is a step in the direction of unification that has not yet been demonstrated.
In regard to the interesting graph ‘ Senator Lynch has displayed, all I have to say is that graphs are very instructive provided they are complete; but, unfortunately, the honorable senator’s is not complete, inasmuch as it does not show the liabilities of the States. It shows that during the 58th and the 59th year there will be a drop of £8,400,000 in Commonwealth contributions to the States; but it does not show that in the same year there will be a drop of £3,000,000 in the liabilities of the States. Because their present debts will have been wiped out, and their necessity to contribute interest and sinking fund in respect of those debts, consequently, will have gone, there will be a drop in the annual liabilities of the States amounting to £30,000,000, so that, allowing for the £8,400,000, they will actually, be in that year in a better position to the extent of £21,600,000’. So much for that argument. Can any one say that it is a step in the direction of unification when for the first time the finances of the Commonwealth and of all the States are put on a sound basis, to provide that from the time this agreement is adopted, when any Government comes forward with a proposal to borrow money, it must at the same time ask its taxpayers to make pro vision not only for the payment of interest on the money that is borrowed, but also for a sinking fund to meet the debt when it becomes due! That is sound finance. I cannot see how it can make for unification. What might tend to unification is to have six States and the Commonwealth as competitors in the loan market. In 1923-4 there was full competition in a money market that was beginning to drop. State after State came into the market that year, and each, as it came in, had to raise the rate of interest, until the last State to enter the market offered 6 per cent., and had to pay’ &i per cent., taking into consideration the actual amount at which its loan was floated. Last year, New South Wales stood out of the Loan Council, and not only had to pay a higher rate of interest for its money, hut also found the London money-lender laying it down as a condition of providing the money that the State should make due provision for a sinking fund.
The steps we are taking now are not leading in the direction of unification; they are leading in the opposite direction. The one thing that can bring about unification in Australia is the financial embarrassment of the States. This agreement is making for the financial soundness of the States. If the States are sound financially, and if the opinion of the people of Australia remains as it is to-day in favour of the federal form of government as opposed to a unified form, there is not a line in this bill that will help towards unification. I, therefore, commend the bill to honorable senators in the full belief that we are now taking a step* in the right direction - a step in the direction of the solvency of Australia, sound finance, and economy.
Question resolved in the affirmative;
Bill read a second time.
Clauses 1 to 5 agreed to.
– In accordance with the intimation I gave during the second-reading debate, I move -
That the following now clause be inserted: - “6. (1) Notwithstanding anything contained in this act for the first tcn years after the passing of this act there shall be paid to each State for each year thereof a sura equivalent to 25s. per head of its estimated population.
For the first year following ten years after the passing of this act, and thereafter for each succeeding year, there shall be paid to each State a sum equivalent to 20s. per head of its estimated population.
For the purpose of computing the sums payable under (1) and (2), all moneys paid in liquidation of the debts of the States for the payment of interest and other purposes under the act, shall be deemed to be part of the total amount required to be paid on the per capita basis.”
It would be a great help to me if when out-lining my reasons for moving this new clause I could get some expression of honorable senator’s support such as always seems to come automatically to the assistance of Ministers in the shape of “hear hears “ ! The amendment needs to be considered side by side with certain matters that have been raised during the debate on the second reading. It has been said that this agreement has been entered into between the Commonwealth and the States in the freest possible way. Senator Kingsmill said there was no such thing as coercion about it, and that sentiment was endorsed by other honorable senators, if not orally, at any rate, by their silence. I contend, however, that the States were compelled to enter into it. There is no moral law to compel any one to accept or respect an agreement entered into in the circumstances in which this agreement has been entered into. When an individual is compelled to enter into an agreement against his will, he cannot be held to it as a consenting party. If that were not so we should have no freedom in entering into agreements of a mutually beneficial character. I shall cite evidence for my assertion that the States were compelled to enter into this agreement. The first witness I put in the box is the Premier of Western Australia. When Mr. Collier returned to his State, he was reported in the West Australian, of 27th July, 1927, to have said -
The States had been forced into the position of having to consider an alternative arrangement.
No compulsion? If Mr. Collier has correctly stated the position there was undoubtedly compulsion. The next witness I put in the box is the Acting Premier of Queensland. Speaking at the conference of Commonwealth and State Ministers in Melbourne on 27th June last, he said -
I think it better that we should take the initiative and deal with the matter ourselves rather than have the position forced upon us at a later date.
His language there is plain. It indicates that, in his view at all events, the States had no option but to accept the proposals placed before them. The word “ forced “ was used by the Acting Premier of Queensland. Where force is employed, there must be an absence of freedom. Notwithstanding what other honorable senators have said, the remarks of the Acting Premier of Queensland clearly show that there was coercion. The last witness I propose to summon in support of my contention is the Premier of New South Wales, whose view was interpreted by Mr. Lyons, the Premier of Tasmania, in these words -
Mr. Lang said that if he accepted the Commonwealth Government’s proposal, he would be recreant to the trust reposed in him by the people of New South Wales; but if theyhad a right to make a choice between the per capita payment and the new proposals, that objection would be removed.
I emphasize the word “ right “. According to Mr. Lyons, Mr. Lang’s view was that if the State Premiers had the “ right “ to make a choice, the objection would be removed. Mr. Collier, who endorsed the opinion of Mr. Lyons, then interjected -
We should all be campaigning in favour of the continuance of the per capita payment, showing clearly that the interpretation which Mr. Lyons placed upon Mr. Lang’s remarks was that no other course was open to the Premiers - than that they had to accept the Commonwealth’s proposals - take it or leave it. With these representatives of the States to support me, I repeat that the States accepted the agreement under duress. It is useless for any one to say that no pressure was brought to bear upon them because this Parliament has already abolished the capitation grants, and there was nothing else for the States to do but to eat humble pie.
For the moment I shall not comment on the remarks of the Leader of the Senate as to the position of Western Australia, I shall have an opportunity to do that later. I propose now to consider some of the reasons advanced by this Government and supported by a number of honorable senators, in support of the view that the per capita payments tended to make the rich States richer and the poor States poorer. I take the opposite view and for very good reasons. Senator Payne is opposed to the continuance of the capitation payments. As we all know, Tasmania is losing its young people who are migrating to the other States. Under the per capita system, the mainland States would receive larger payments from the Commonwealth owing to the exodus of population from Tasmania, while that State would suffer owing to a reduction in its population. The honorable senator omitted to mention thatthe young people who left his State were no longer his potential supporters. No doubt he thought it would be more to his advantage to study the interests of those who remained in the State and who, perhaps, would vote for him at future elections. Under the Government’s plan the Tasmanian who stayed in Tasmania would be provided for, but the State which received the young Tasmanian would get nothing at all for him. We can understand how selfish motives sometimes intrude in a debate on such a measure as this. We should, however, take the broader view and consider how these financial proposals will affect the whole of the States. The history of development in every country shows that as the population increases the people push out to the newer areas which progress at a relatively higher rate than the earlier settlements. That was the experience in Canada, and it has been the experience in Australia. In Canada settlement first took place in the maritime provinces of Ontario, Quebec, New Brunswick, and Newfoundland. Later, the people went north and west. Development was much more rapid in the newer than in the older provinces. We may expect, therefore, that the smaller States of to-day will be the more populous States of to-morrow. The Government has been wanting in courtesy to honorable senators in not having placed before them reliable information as to the position of the several States during the currency of this agreement and the old per capita scheme. Virtually we have been told, as the States have been, that we must accept it or reject it.
– Order! The honorable senator has exhausted his time.
[8.27]. - Naturally the Government cannot accept the amendment, and I ask honorable senators not to support it. At my request the Treasury officials have supplied me with an interesting set of figures. These show that, in the first year of the agreement, the payments by the Commonwealth to the States will exceed the total of the per capita payments by £900,000, and that, over the first period of ten years, assuming that the annual borrowings of the States will total £30,000,000, the States will receive under the agreement £89,500,000, as against £85,000,000 which they would receive under the per capita payments, which are embodied in Senator Lynch’s amendment. This means that, for the first ten-year period, they will receive under the agreement £4,500,000 more than they would get under Senator Lynch’s amendment. Taking the second ten-year period, again assuming that the States borrow £30,000,000 a year, which is considerably less than the present rate of borrowing, they will receive under the agreement £187,000,000, and under the per capita payments provided for in Senator Lynch’s amendment - 25s. per head for the first ten years and 20s. per head for the second ten years- only £168,000,000, for a total period of twenty years. The gain to the States under the agreement will be £19,000,000. In the final 38 years of the term, the States might receive an advantage under Senator Lynch’s amendment.
– The Minister says that the States “might” receive an advantage.
– Yes; I use the word advisedly, because it is entirely a matter of speculation. It is obvious that, as the Commonwealth develops, the rate of borrowing may increase or decrease.No one can say what will be the progress of Australia during the next twenty years. There are some pessimists who hold that only the outer fringe of the Commonwealth is capable of development. Australia has no areas that are not capable of considerable development; but it is a matter for speculation as to how much borrowing will be found necessary beyond that period of twenty years. That is the uncertain factor that would determine whether the States would lose or gain under the agreement, as opposed to Senator Lynch’s scheme, in the last 38 years. The position, so far as we can see it, is that the States would receive, under Senator Lynch’s proposal, £19,000,000 less than under the agreement.
– That is for the first twenty years. For the other 38 years the matter is left to conjecture.
– It is necessary to guess what will be the rate of borrowing, and whether Australia will have reached that stage of development at which she will borrow merely for the purpose of loan conversion, or whether her borrowing will have been intensified through science providing means to convert what has been regarded as valueless land into profitable use. The proposed new clause invites this Parliament to revoke a previous decision, because both branches of the legislature have already declared against the per capita system, and for a very good reason. Two States have found it inequitable, and have asked the Commonwealth for financial assistance, in addition to the per capita payment. Now honorable senators from a third State, South Australia, point out that’ the per capita system does not give it sufficient funds, and it can make out a good case for additional financial help. So we have half the States declaring that they are able to demonstrate that the per capita arrangement operates inequitably. But there is another feature of the proposed new clause that should be considered. It is not an amendment of the agreement, but of the bill, and there would be no more certainty for the States under this proposal than there was under the SurplusRevenue Act. That portion of the measure could be amended at any time. Any future Parliament could say, “We do not agree with this. We shall repeal it.” Its repeal would not affect the agreement at all; it would not be a repudiation of the agreement. Therefore, any future Parliament could undo what Senator Lynch now proposes should be done. The proposed new clause would inflict a loss on the States certainly for the first twenty years, and confer a doubtful benefit for the remaining 38 years. It would have no permanency; it would be no part of the agreement, and it asks the Parliament to satisfy itself by reviving an arrangement that it has already rejected. For those reasons, I ask the committee not to accept it.
– When my time expired I waa drawing attention to the position in Canada. We must consider what has happened in other lands in order to judge whether the capitation system is good or bad. I have already pointed out that, in the older provinces of Ontario and Quebec, the population has remained comparatively stationary, while in the new provinces it has increased at a very rapid rate. During the 20-year period from 1901 to 1921, the increase in population in Quebec was only 2 per cent., and in Ontario, only 1.7 per cent. The people were rushing to the new territories such as there represented in Australia by Western Australia and Queensland and the Northern Territory. During that 20-year period, the population in the province of Manitoba increased from 255,211 to 610,118; in Saskatchewan, from 91,279 to 757,510; in Alberta, from 73,022 to 588,454; and in British Columbia, from 178,657 to 524,582. The rates vary from 6 per cent. to 36 per cent. Would not the withdrawal of the per capita payments cause manifest injustice to the newer provinces in Canada, the equivalent of which in this country is found in Queensland and Western Australia. The capitation plan grows with the growth of population, whereas the Government plan develops at a snail-like pace up to a certain point and then remains fixed for all time. The thirteen colonies that in 1790 comprised what was known as the United States of America, then had a population of slightly over 3,000,000, and the present population of those areas is now 43,000,000; but the total population of the United States of America is now 117,000,000. Iu fact, a new and infinitely greater America has grown up outside the America that was known to the world in the 18th century. How would a capitation system apply there? Why it would starve the new and greater America and Canada, and that is exactly what is going to happen in this country under this agreement. In other words, two-thirds of the present population of that country is found beyond the borders of those thirteen colonies, the equivalent of which in Australia is represented by New South Wales and Victoria. Those figures con tradict the theory that the per capita system favours the old-established States - that it makes the rich richer and the poor poorer. The newer States of Australia will increase in population to such an extent that they will eventually far outnumber the present inhabitants of the old established areas. Under the Government’s proposal, the more sparsely populated States will become poorer, and no allowance will bo made for the increase in population, which is the vital point, while the older established areas will be made comparatively richer, the exact opposite of the Ministerial nonsense. I think that 1 have disposed of- the sophistry about the per capita system making the rich richer and the poor poorer.
The Leader of the Government stated that the agreement would favour Western Australia. I understood him to say that that State would receive under it £94,000,000 during the 58 years as against £66,000,000 under the per capita system. The Minister has agreed that the population in 1986 will be not more than 13,700,000. He must also admit that the amount payable under the per capita system in that year would he £25,000,000, giving an advantage to the States of over £8,000,000 as compared with the present agreement. The right honorable senator sought to make out his case by handling figures in such a mystifying way as to lead us to believe that the agreement would be of benefit to the States in the meantime. I have worked out the figures, as well as the officers of the department, and I challenge contradiction upon them. The Government tells- us that it will’ apportion £100,000 a year for 58 years to support a borrowing policy to the extent of £4,000,000 a -year :over that period. Even accepting the amount of £40,000,000, which is an excessive figure, the total sum to be paid in respect to the liquidation of those vast loans would be £142,000,000 at the end of 53 years, and £168,000,000 at the conclusion of the 58-year period. Therefore, the Federal Treasury would pay to Western Australia not £90,000,000, but only about £16,000,000. The figures stand out in flat contradiction of the Minister’s statement. Manifestly Western Australia will get the worst of the deal. The diagram that
I prepared is as plain as the noonday sun. It shows that under the agreement the total payment by the Commonwealth to the States will increase from £8,600,000 to £13,800,000 in 58 years, whereas under the per capita system it would increase from £7,500,000 to £25,000,000, on the basis of a population of 19,600,000, in the same period. These figures give a true contrast of the two systems. Of course, they are not regarded favorably by the Government, for the simple reason that they picture the position so clearly, and on that account the Minister did not pay very much attention to them. I am reminded of a gentleman in New York, whose municipal administration was subjected to rather severe criticism. He is reported to have said - “I do not mind what the printers say about me; it is the pictures as kills me.” It is my picture that kills this proposal of the Government.
– What about the tail to your black figure in the diagram ?
– It represents a payment of about £5,000,000 at the end of the 58 years.
– But does it not go on for ever?
– It goes on ad infinitum, that dole! Whenyou arrive at the 58th year you can borrow until the crack of doom, but you need not pay more than £5,300,000 a year to keep going a borrowing rate of £40,000,000 yearly. That £5,300,000 is all that the States will receive, and if the rate of increase in proportion in Western Australia is not greater than the average, which is unthinkable, her share will be about £360,000 ayear, after 58 years from now. For the Commonwealth on a population of 20,000,000 that will represent something in the neighbourhood of 5s. a head. Bearing in mind the experience of other countries, and having a knowledge of Western Australia’s vast untenanted spaces, it can be asserted with confidence that there will be a rush of population to every corner of that State until it becomes as closely settled as are those on the eastern seaboard. Its people will then feel the hardship of this iniquitous system. On their behalf I speak.
The TEMPORARY CHAIRMAN.The honorable senator has exhausted his time.
Question - That the proposed new clause (Senator Lynch’s amendment) be agreed to - put. The committee divided.
Majority . . . . 12
Question so resolved in the negative.
Proposed new clause negatived.
Schedule agreed to.
Title agreed to.
Bill reported without amendment; report adopted.
Senate adjourned at 8.59 p.m.
Cite as: Australia, Senate, Debates, 28 March 1928, viewed 22 October 2017, <http://historichansard.net/senate/1928/19280328_senate_10_118/>.