15th Parliament · 1st Session
The President (Senator the Hon. J. B. Hayes) took the chair at 11 a.m., and read prayers.
Senator A. J. McLACHLAN (South
Australia - Postmaster-General). - I lay on the table a copy of notes exchanged on the 30th May, 1938, between His Majesty’s Government of the United Kingdom, the Commonwealth of Australia and New Zealand, and the Government of India on the one hand, and the Government of Sweden on the other hand, regarding reciprocal recognition of documents of identity for aircraft personnel. The agreement embodied in the exchange of notes became effective on the 1st July, 1938.
Senator FOLL laid on the table the reports and recommendations of the Tariff Board on the following subjects: -
Foundry moulding machines.
Rib knitting machines; cylinders and sinker rings for hosiery machines.
Remote controlling units for car radio sets.
Citizen Air Force Unit in Tasmania - Bunbury Aerodrome.
asked the Minister representing the Minister for Defence, upon notice -
– A reply will be furnished to the honorable senator as early as possible.
asked the Minister representing the Minister for Defence, upon notice -
If it is a fact that the Bunbury Council has not the power under the Municipal Act to spend municipal funds on the aerodrome at Bunbury, will the Government give further consideration to the question of taking over the ground and completing the work, or make financial provision whereby the work could ha carried out, in view of its importance from a defence view-point?
– The Minister for Defence has supplied the following answer : -
It is understood that, under the Municipal Act, the Bunbury Council has not power to expend its funds on the improvement of the local aerodrome. The Bunbury aerodrome is not suitable for Air Force purposes, and is not required as a government civil aerodrome. In these circumstances the Government does not propose to take over the aerodrome and no further funds can be made available from Defence Department Votes for the improvement of the aerodrome in question. Under the terms of the Federal Aid Roads and Works Agreement moneys paid by the Commonwealth may be used for the development of aerodromes and the Bunbury Council might apply to the State Government of Western Australia for a grant for this purpose.
East-west Road - Land Forces.
asked the Minister representing the Prime Minister, upon notice -
Ceduna and Kalgoorlie with the ultimate object of constructing a national highway between these towns?
– The Prime Minister has supplied the following answers: -
asked the Minister representing the Minister for Defence, upon notice -
– The Minister for Defence has supplied the following answers : -
Bill read a third time.
Debate resumed from the 3rd Novem ber (vide page 1188) on motion by Senator Foll -
That the bill be now read a second time.
– This is a very small but important bill, and I do not intend to oppose it. It is essential that it should become law before noon to-morrow. Tens of thousands of pounds are involved in the passing of this validating measure. I enter ft protest against the manner in which government business is done, particularly in the Senate. Some time ago, the Government and Opposition parties agreed that the Senate should adjourn for a fortnight. It was then discovered that, because of the lack of business capacity on the part of Cabinet Ministers, that adjournment was not possible, as this bill had to be passed. I am noi in possession of Cabinet secrets; that is a pleasure to come. I know, however, that at that time, the Government was not aware of the fact that it was essential to pass this bill by the 5th November. The proposed adjournment did not take place, the Opposition, as usual, being willing to meet the wishes of the Government. “We now have 25 hours before all the fat would be in the fire, if the bill were not passed.. Ministers ought to know their duty sufficiently well to see that the Parliament does not take risks of this kind. If the measure were not passed by noon to-morrow, persons who have been paying certain duties to the amount of tens of thousands of pounds, under duties which have not been considered by the Parliament, would have the right of action against the Government for the recovery of that money. Since we are all interested in the protection of the Consolidated Revenue of the Commonwealth, we desire to prevent a raid of that kind upon it.
The Government has been definitely directed by the Parliament to submit tariff schedules for consideration within six months of the time of tabling them. That instruction was not hurriedly decided on. The agitation to have a better mid more satisfactory arrangement with regard to these schedules proceeded for years. Since a definite direction has been given to the Government, these validating bills should not be necessary. Surely six months is a sufficient period to allow for the confirmation of schedules submitted to the Parliament. In July, 1934, this Senate decided that, within three months, the Minister for Trade and Customs should bring the schedules forward for consideration, but the Minister claimed that that was too short a period, and, eventually, six months was agreed to by the Government as a reasonable period. On this occasion the six months is almost exhausted, yet we have to pass this bill to-day because Ministers have not done their job. I think that I can sense the difficulties under which the Government is working. The elements in the composite Ministry do not mix satisfactorily. The Country party is the freetrade party, every member of which wants all the protection he can get for the articles he has to sell, and no protection at all on the things which he desires to purchase. This is the antedeluvian, the Rip- Van-Winkle party. The Government is trying to live with it in decent companionship, but oil and water do not mix well. A kind of emulsion is obtained, but it is a mushy mixture. Another section represented in the Government is the low tariff party. This does not believe in protection; it wants revenue duties. As far as a customs duty provides revenue, it cannot give protection. A real protectionist policy, of course, would not bring in any revenue. The misery of the Government is completed by the fact that it has to contend with sixteen senators on the Opposition side, who believe in adequate and full protection of Australian industries. I appreciate the difficulty in which the Government finds itself.
Last night, the Minister (Senator Foll) tried to make a good case out of a bad one. He said that these duties are of only a temporary nature, having been imposed to overcome the difficulty which had arisen out of the abandonment of the licensing system as part of the trade diversion policy. He explained that reports on the various items involved had been called for from the Tariff Board, and that, pending those investigations, temporary protective duties had been imposed, but had not been confirmed by Parliament within the six months allowed by law. Every word he uttered was perfectly true, but there was no excuse for this failure to do the job as the Senate and the Parliament as a whole have directed the Government to do it. The Government could have afforded to call this chamber together much sooner than it did. If it were not for the approaching Christmas holidays, I should say that the Government should keep the Parliament in session for a much longer period than is intended. It could have insisted that the Tariff Board should speed up its procedure, so that its reports would come in more quickly, but the Government would still nave in its path the Ottawa Agreement, which provides that it cannot do certain things without the approval of the Tariff Board. That is another trouble which the Government has brought upon its own head. It is time that the need for validating bills ended. If the difficulty can be overcome by the passing of a validating measure, there is no sense in retaining on the statute-book the legislation to which I have referred. All that the Government needs to do from time to time is to say that, as the Tariff Board’s reports have not all come to hand, other validating measures must be passed through Parliament. If it were not for the fact that the situation which confronts us is inescapable, the Opposition would vigorously oppose this bill; but because we on this side appreciate the difficulty confronting the Government we shall not obstruct the passage of the measure.
– At the invitation of the Minister, I propose to make a few comments on this bill. Like the Leader of the Opposition (Senator Collings), I do not propose to oppose its passage, but I wish to comment on some of the things that have happened and of which this bill is one of the consequences. In May, 1930, the Minister directing negotiations for Trade Treaties (Sir Henry Gullett) took upon himself the responsibility of instituting in this country a novel and, I suggest, most dangerous method of dealing with Australia’s overseas trade. Neither he nor the ‘Government which, of course, must accept the responsibility, could possibly have foreseen the consequences of the policy then adopted. That action was taken on the eve of Parliament going into recess and, consequently, consider able time elapsed before it was possible for honorable members to express their views regarding it. As the trade diversion policy of the Government was subjected to a good deal of criticism only yesterday I shall not comment on it further. One of the main reasons for the introduction of that policy, as given by the Minister at the time, was the desire to divert trade from certain countries to other countries. In respect of the United States of America, the idea was to divert * trade from a bad customer country to countries which were better customers of Australia. But in respect of Japan, the Government did not have that excuse, and, therefore, other excuses were given, none of which, in my opinion, justified the action taken. It is interesting to examine some of the results of the trade diversion policy. Honorable senators will recall that, at the time, Japan was one of our best customers, for that country’s purchases from Australia were greatly in excess of Australia’s purchases from Japan. The new policy was put into operation towards the end of the financial year 1935-36. During that year Australia imported from Japan goods o the value of £4,900,000. In return, Japan brought goods valued at £14,000,000. These figures have been supplied by the Statistician, and, like those which I shall give presently, are all expressed in sterling. In other words, ‘ Australia had a favorable balance of trade with Japan to the value of over £9,000,000. During the following year goods to the value of £4,000,000 were imported from Japan, but that country bought from Australia goods valued at only £7,700,000. That is to say, Australia’s favorable balance dropped from over £9,000,000 to £3,700,000 in one year. For the year ended the 30th June last, the Statistician’s figures show that Australia purchased from Japan goods valued at over £5,300,000, or more than the value of the imports for the year immediately prior to the introduction of the trade diversion policy. In return, Japan bought from Australia in 1937-38 goods valued at only £4,700,000. In other words, a favorable trade balance of over £9,000,000 has, during the period that the trade diversion policy has been in operation, been converted into an unfavorable trade balance of over £600,000. I am sure that is a result which the Minister did not anticipate. I am not stupid enough to suggest that the whole of that variation is due to the trade diversion policy. I, personally, am not prepared to make an estimate of the amount by which that policy has affected the trade figures, but the Minister will indeed be courageous if he suggests that the whole of the difference is due to causes other than the trade diversion policy. In 1935-1936 the United States of America was what we in Australia might describe as a badcustomer country. In that year Australia purchased from the United States of America goods valued at £13,900,000 and sold to that country goods valued at over £7,800,000. That is to say, Australia had an unfavorable balance of trade of about £6,000,000 with the United States of America. In the following year, our imports from that country dropped by approximately £1,000,000, whereas our sales to it rose to nearly £15,000,000, thereby converting an unfavorable trade balance of £6,000,000 to a favorable trade balance of about £2,000,000. In passing, I point out that a large portion of that business was represented by gold bullion sent to the United States of America - a commodity which I suggest most countries are willing to accept from us. During the year ended the 30th June last, Australia’s purchases *from the United States of America totalled £17,700,000, whilst that country purchased from Australia goods, including some gold bullion, the value of which I have been unable to ascertain accurately, to the value of £8,600,000. During those three years the wonderful trade diversion policy of the Government increased the unfavorable trade balance of £6,000,000 in 1935-1936 to about £9,000,000. Whatever outside factors may have operated to influence that trade, I repeat that the Minister will be courageous indeed if he tries to dissociate the influence of the trade diversion policy from the effects I have mentioned.
Another aspect of this subject interests me greatly. Every honorable senator will agree that in this country it is necessary that both, primary and secondary resources shall be developed. There is no difference of opinion regarding that principle ; but, having listened to the Leader of the Opposition, I am convinced that there is a great difference of opinion as to methods. The Government’s trade diversion policy is likely to give a wrong impression to investors and manufacturers in this country. Possibly, some manufacturers, or some groups of individuals, have been encouraged to start industries in Australia under the shelter provided by the trade diversion policy, but all honorable senators know that once an industry has been established in this country - irrespective of the necessity for it, or of its economic soundness - it is difficult to get any government to do what, in some instances, it ought to do, namely, allow competition to decide whether or not that industry should continue.
– The dice are loaded against Australia all the time-
– I could give many illustrations in support of the point that I have raised, but I shall content myself with two. About three years ago the sheet glass industry was started in this country by a very strong and, I suggest, a most efficient and prosperous company.
– Is it a crime for a company to be efficient and prosperous?
– Efficiency and prosperity arel audible attributes of any company. I give to that company credit for its achievements. However, as we know only too well, many industries in this country depend not only for their prosperity, but also for their very existence on overseas markets. Belgium was our principal buyer of barley, and we can see from the Government’s treatment of that country in connexion with glass imports, how far it was prepared to assist our barley-growers. When it was threatened by the Australian glass organization, and its manager said that the removal of the duty on glass would result in the displacement of, I think, 300 men in that industry, the Government showed very clearly that it was prepared to jeopardize the interests of our barleygrowers, although by so doing, it jeopardized the employment of many more employees than are engaged in glass manufacture in this country. It decided to maintain the high duty on glass. I make no complaint about the efficiency or prosperity of this glass company, but it i3 interesting to study its trading operations since this incident in order to see just how severely it would have been hit, as it claimed it would have been, had the Government reduced the duty. At that time, its £1 shares were quoted at about £4 on the open market, and during the last three years, it has paid an average dividend of 15 per cent. A company in so strong a position could surely improve its efficiency, if pressed a little, or, at any rate, compensate itself for any losses sustained in a particular section of its operations and so avoid the dismissal of any employees.
As the result of the Government’s trade diversion policy, certain industries have sprung up which, when investigated by the Tariff Board, may be found to be not vital to this country and also uneconomic. 1 am. anxiously waiting to see what action the Government will take should my forecast prove to be correct. Will it refuse to accept any recommendation from the Tariff Board that duty on imported articles similar to those produced by such companies should be reduced, or take the stand that such actions would expose these hot-house industries to outside competition ?
I protest against the very clumsy and harmful way in which this Government has handled fiscal matters on many occasions. By a method, which I have already described as novel, it has encouraged the establishment of uneconomic industries and then asked the Tariff Board to investigate those industries. I do not reflect upon the integrity of members of the board, but that body must naturally be sympathetic towards industries which have been commenced under these conditions. I am aware that the Government is really anxious that more industries should be established, but it should first of all select industries which are considered to be vital to the economic welfare of this country. Of course, with defence requirements so much in the public mind, we must establish some industries, irrespective of whether they may prove to be economic or not. However, there are industries of another class which, whilst being quite desirable, perhaps, should not be encouraged unless they prove to be economic. These should be thoroughly investigated by the Tariff Board before the Government commits itself to the imposition of tariff duties for their protection. The Government would be well advised not to encourage willy-nilly the establishment of new industries, but to approach this matter on some well-defined plan. It should not encourage industries which, while proving of benefit to one section of the community, will definitely harm another very great and important section in this country.
– In his very able speech, Senator McBride has shown some of the consequences arising from the trade diversion policy of this Government. Had that policy been placed before Parliament before it was initiated these dangers could have been obviated. The schedules covered by the bill now under consideration should have been submitted to Parliament at least within six months of their introduction; but that has not been done, so we are now being asked to validate them until May of next year. As I have previously intimated, I believe in parliamentary control of the Executive. This continual usurpation by the Executive of the rights and privileges of Parliament cannot be allowed to pass without protest. Although I agree with the Leader of the Opposition (Senator Collings) that at this late hour we have no alternative but to pass this measure, I believe that Parliament should insist that all tariff schedules shall be submitted for consideration to Parliament within the time prescribed by law. The period of six months is the maximum period prescribed, and Parliament never intended that the Government should deprive itself for that period of the opportunity to consider any tariff schedule. On this occasion when the Government asks for a further extension of that period we should make it perfectly clear that Parliament will not stand for this practice of leaving these matters till the last moment and then requesting Parliament, as a matter of urgency, to pass them. The announced policy of the Government is that it will be guided by the expert opinion of the Tariff Board. The tariff is a highly scientific matter, and for this reason the board has been set up to advise the Government from time to time as to whether, in the economic interests of Australia, it is advisable that certain duties should be imposed or reduced. In this instance, however, the Government has not acted upon the advice of the Tariff Board, but in anticipation of that advice. When the Government lays down a particular policy it should adhere to it, except in extraordinary circumstances. As Senator McBride has pointed out, this practice of imposing tariffs without previous reference to the Tariff Board has resulted from the blunders made by the Government in connexion with its trade diversion policy. As a further result, industries have been established which may be found by the Tariff Board to be uneconomic. Except in cases of the utmost emergency, we should first seek the advice of the Tariff Board before imposing any new duties or reducing existing duties, and not act first and then call in the board virtually to say whether the Government has acted rightly or wrongly. Should the board find that the Government has acted rightly in imposing these particular duties, for instance, such a statement is virtually of little use to the community. Should it find that the Government’s action is wrong, the Government will be placed in an embarrassing position, because it cannot reduce the duties without considerably disorganizing the industries concerned. Therefore, although I intend on this occasion to support the Government, I protest against this measure. Within the last six months the Government has had ample time to bring these schedules before Parliament. In any case, it should not have imposed these duties without first consulting the Tariff Board. If the circumstance were urgent, that body could have been instructed to report immediately on these matters. The Government has failed to justify its action in this occasion, but it leaves us no alternative; we must pass the measure.
– -I support the remarks of the Leader of the Opposition (Senator Collings) concerning the necessity to pass this measure, but I cannot allow some of the statements made by Senator Wilson and Senator McBride, particularly the latter, to pass without comment. I am not very familiar with the work of the Tariff Board, but I know the effect which some of its recommendations have had upon Australian industries. In considering Senator McBride’s suggestion that the Government should plan for Australian industrial development, we must first ask why customs duties are imposed and a Tariff Board appointed. Are customs duties imposed to protect industries or to produce revenue? If duties are imposed solely for revenue purposes I can only say that revenue should not be obtained in that way. It is suggested that we should have a plan of industrial development, but I remind honorable senators that in 1932 Australia had inflicted upon it the United Kingdom and Australia Trade Agreement Act which contains the Ottawa Agreement, Article 9 of which reads -
His Majesty’s Government in the Commonwealth of Australia undertakes that protection by tariffs shall be afforded only to those industries which are reasonably assured of sound opportunities for success.
Article 10 provides -
His Majesty’s Government in the Commonwealth of Australia undertakes that during the currency of this Agreement, tariffs shall be based on the principle that protective duties shall not exceed such a level as will give United Kingdom producers full opportunity of reasonable competition on the basis of relative cost of economical and efficient production, provided that in the application of such principle special consideration may be given to the case of industries not fully established.
– That is very sound.
– It may be sound in the opinion of the honorable senator, but it contains many weaknesses. In considering the value or otherwise of Article 10, we have to consider the conditions under which production is carried out in the United Kingdom. Great Britain has a large population, and British manufacturers are not only able to undertake mass production, but also can dispose of their goods readily in an extensive home market. In Australia where we have a population of only 7,000,000 persons, mass production on the same scale cannot be undertaken, and the local market is also restricted. Is it suggested that Australian manufacturers, in the circumstances I have mentioned, can compete successfully with British manufacturers ?
– But the Tariff Board has to take into consideration the relative costs.
– That may be so, but all factors are not fully considered by the board. Honorable senators opposite holding freetrade views suggest that Australian manufacturers should be able to compete with British manufacturers who are able to engage in mass production and consequently produce at a much lower cost. That is impossible. Moreover, a representative of British manufacturers is permitted to attend meetings of the Tariff Board.
– The Australian manufacturers give evidence and he states the view of British manufacturers.
– He naturally wishes to protect British manufacturers and everything he does must be to the detriment; of Australian manufacturers. It may be only a coincidence that the Ottawa. Agreement-
– It is a coincidence that Australian industry has flourished since the agreement has been in operation.
– I was about to say that it may be only a coincidence that when the Ottawa Agreement was adopted Great Britain appointed a High Commissioner in Australia, in the person of Sir Geoffrey Whiskard, to watch British interests. A report of the Broken Hill Proprietary Company Limited, published, I think, in 1933, after the adoption of the Ottawa Agreement, stated that that company proposed to establish the tin-plate industry in Australia. Had the industry been established it would, in its initial stages, have given employment to at least 1,500 men. The cost of installing the plant was estimated at about £5,000,000, and when it was in full operation permanent employment would have been provided at Newcastle for about 2,000 employees. Additional work would also have been made available in connexion with tin-mining and subsidiary industries. At present, approximately 60,000 tons of tin plate is imported annually from the United Kingdom. About that time a statement appeared in the press to the effect that the president of the South Wales Tin
Corporation was proceeding to Canberra to inform the Government that the establishment of the tin-plate industry in Australia was contrary to the spirit of the Ottawa Agreement. Nothing further was done in the matter. Article 11 reads -
His Majesty’s Government in the Commonwealth of Australia undertakes that a review shall be made as soon as practicable by the Australian Tariff Board of existing protective duties in accordance with the principles laid down in Article 10 hereof, and that after the receipt of the report and recommendation of the Tariff Board, the Commonwealth Parliament shall be invited to vary, wherever necessary, the tariff on goods of United Kingdom origin in such manner as to give effect to such principles.
In a report issued by the Broken Hill Proprietary Company Limited only a few months ago, Mr. Darling, the chairman of directors, said that his company was considering the establishment of the tin-plate industry. That statement was made just before several Commonwealth Ministers visited Great Britain, at a cost of £17,000 or £20,000, to confer with British Ministers on a. revision of the Ottawa Agreement. Their visit was unsuccessful.
– I rise to a point of order. I direct your attention, Mr. President, to the fact that all the items covered by this bill are embodied in the general tariff schedule, and are not in any way affected by the Ottawa Agreement.
The PRESIDENT (Senator the Hon. J. B. Hayes). - In the circumstances, mentioned by the Minister, I must ask the honorable senator to confine his remarks to the items covered by the bill.
– I shall defer any further comments I have to make on the subject until a later date. The Leader of the Opposition has expressed the views of the members of the Opposition, and, I believe, of the majority of the people outside, concerning the policy which the Government should adopt in matters of this kind.
– in reply - I agree with the Leader of the Opposition (Senator Collings) that it would have been better had this measure been introduced earlier, but as honorable senators are aware, the circumstances which have prevailed during the last two weeks have been somewhat unusual. The business of Parliament was practically suspended last week owing to the tragic aeroplane accident, and this week a good deal of time has been occupied in the House of Representatives in debating a motion of want of confidence moved by the Leader of the Opposition in that chamber. In reply to Senator McBride, who said that the recommendations of the Tariff Board are likely to be affected because certain industries have already been established, I may say that I tabled only to-day four reports from the Tariff Board in three of which the board definitely recommended against the grant of tariff protection to existing industries. These relate to foundry moulding machines, hosiery knitting machines, and remote controls for car radios.
– Does the Government propose to adopt those recommendations?
– Yes. Some honorable senators have objected to the imposition, before the receipt of recommendations from the Tariff Board, of duties which it is now desired to validate. It is not the policy of the Government to vary protective duties without prior inquiry by the Tariff Board, but in this case the circumstances were unusual. It was undesirable to delay the alteration of the system of importation under licence until the Tariff Board had had an opportunity to investigate conditions in the various industries affected. If the Government had waited until the Tariff Board had made a complete investigation of the various items covered by the schedule now under consideration, there would have been considerable delay, and I think that Senator Wilson and Senator McBride would have been even more critical.
– I was very critical when the restrictions were imposed.
– I know the honorable senator’s views, and I respect them, but as I have explained, the action taken by the Government was unavoidable. The industries affected by the schedule now before the Senate came into existence under the Government’s trade diversion policy, and in the absence of advice from the Tariff Board we are not able to state definitely what rates of duty are neces sary to enable them to carry on. Senior officers of the department were consulted in the matter, and the Government accepted their recommendation as to the rates to be imposed on the understanding that the items would be submitted to the Tariff Board for a complete investigation. When the report of the Tariff Board is received the Government will give to it careful consideration and do what it deems necessary in the interests of all concerned.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 and 2 agreed to.
Clause 3 (Validation of collections under tariff proposals).
– This clause validates tariff increases up to the 4th May, 1939.
Can the Minister give an assurance that the Tariff Board’s report will be available before that date ? It seems to me that we are validating these duties a long way ahead. Nearly two years have elapsed since this calamitous administrative blunder, known as the trade diversion policy, was made by the Government. I should like to know when the investigation will be completed and the Tariff Board’s reports made available.
– Two reports are already in the hands of the Government, and several hearings are being conducted at the present time. The Government is urging the board to expedite its inquiries, and I am hopeful that before the date fixed in this clause all of the board’s reports will have been received.
Clause agreed to.
Title agreed to.
Bill reported without requests; report, adopted.
Bill read a third time.
Debate resumed from the 19th October, 1938 (vide page 899), on motion by Senator Foll -
That the bill be now read a second time.
– The Opposition will support this bill wholeheartedly, although it has some objections to it, and to the circumstances of its introduction.
– It will be welcomed by the honorable senator’s friends from the smaller States.
– lt is strange how great minds think alike. ‘Whilst Senator Cooper was making that interjection I had the same thought. “Western Australian senators on both sides were full of wrath earlier in the week at the outcome of a certain division, the word “ sugar “ was hurled across the chamber, and subsequently I accused one honorable senator of “ pointing the bone “ at me. I draw the attention of honorable senators representing the three smaller States to the fact that in connexion with State grants the only friends upon whom they can depend, in season and out of season, are the members of the Labour party. We have always supported proposals to make grants to those States, and have offered criticism .only on occasions when, in our opinion, the amounts proposed to be allocated were too small, or when the methods proposed to counteract State disabilities were not of the right kind. Honorable senators who have studied the fifth report of the Commonwealth Grants Commission must admit that it reveals a vast amount of work, and is a very valuable document. Its thoroughness is an effective answer to those who suggest that another body should be set up, and high salaries paid for work which is already being done more efficiently and economically by the existing commission. Let us for a few moments cast our minds back over the history of the Commonwealth since federation to ascertain how the need arose for a body such as the Commonwealth Grants Commission, lt is undeniable that some States have suffered disabilities under federation. These disabilities were easily discoverable and easily assessable. No elaborate investigation should have been necessary. The Commonwealth Government had merely to recognize that they existed and to pay wha tever compensation was necessary out of Commonwealth revenue to the less fortunate States in order to put them on the same footing as other components of the federation. However, we have long since got away from that principle. We aro not now concerned so much with real disabilities of individual States as with their budgetary positions. There are other details with which I do not now propose to deal; but the fact remains that in estimating the amount which should be paid to the various States by way of compensation for disabilities suffered under federation consideration of the budgetary position is a determining factor.
– The bud»getary position of the Commonwealth is also a consideration.
– I should not be surprised if that were so. Under the present unsatisfactory method of making allocations a spendthrift State, because of its financial difficulties, can secure a larger grant than that given to another State having a more prudent financial policy. It means that the thrifty States will not receive the same consideration. If I were a State Treasurer, I should see to it that the budgetary position of my State was such that there would be no escaping the fact that I was particularly hard up and due for a dole. That is why I object to the present method of assessing the grants. I do not think that the smaller States desire to be treated as mendicants for Commonwealth largesse. I cannot imagine that South Australia is satisfied with being a mendicant annually, any more than are Tasmania, and Western Australia. I suggest to the Minister that he should place my proposal before the Government, although I have a suspicion that, as it comes from the Opposition, he will not do so. The time has arrived when the whole matter of State disabilities should be placed on its original basis, and that the smaller States should know that they are not receiving a charitable dole, but something to which they are fully entitled. These States do not want charity; they merely ask for justice. The only real friends of the smaller States are the members of the Opposition. We have always supported these payments, and believe that they should be more liberal, and based upon justice rather than charity.
.- It has been laid down by the Commonwealth Grants Commission that special grants are justified when a State, through financial stress from any cause, is unable to discharge its functions as a member of the federation, and that the grants should be determined in accordance with the amount of help necessary to make it possible for a State to function at a standard not appreciably lower than the average for the other States. Tasmania claimed double the sum it is to receive under this bill. It is to be paid £410,000, which is £165,000 less than was received last year. The question is whether Tasmania is functioning as efficiently as it should in the interests of the community, as laid down by the Commonwealth Grants Commission. The commission took into consideration the taxable capacity of the State, the various government services undertaken, and so on, and gave its decision accordingly. At the outset I draw the attention of the Senate to certain anomalies in the figures incorporated in the report of the commission. For some years the population of Tasmania has been declining. Over the last seven years the State has lost nearly 1,000 people annually. The following table shows comparatively the extent to which the population varied each year from 1931 to 1937, according to figures compiled by the Commonwealth Statistician, and the Commonwealth Grants Commission respectively: -
It will be seen that the figures vary to a marked degree. The report of the commission states that the taxable capacity of Tasmania is higher than that of Queensland, but that assertion has been contradicted by the Premier of Queensland, Mr. Forgan Smith, who, in the course of a statement published in the Queensland Worker, said -
Queensland had a higher income per head than any other State in the Commonwealth, and the second highest in the world, being beaten only by California.
In my opinion, the Premier of Queenslandwas right and the commission wrong.
The commission castigated the Government of Tasmania on the ground that company taxation in that State is not so high as it should be. I have already pointed out that Tasmania is losing population every year. The policy of the State Government is to attract-new industries, in order to enable the State to retain its own people. To do this it is considered necessary to provide cheap electrical power, and to impose lower taxes than are levied in the larger States; otherwise it would be impossible for Tasmanian industries to compete with those on the mainland. That policy is, in my opinion, justified as far as Tasmania is concerned. I consider that it is not proper to assess the taxable capacity of a State on the figures for any one year. The financial position during several years should be examined. The rates of income tax imposed in Tasmania in the past have been amply justified. The rates have now been brought into line with those in the other States ; but, in view of the loss of population, the low rates of tax on incomes over £400 per annum were justified by the fact that Tasmania was anxious to induce people from overseas to reside in that State. It had in mind such persons as retired Indian army officers.
Regarding the severity of company taxation in Tasmania, it is well known that practically all the metals extracted in that State are sold on the open market. Consequently, the prices realized fluctuate a great deal. Again Iclaim that the taxable capacity of a State should be assessed on the result of its operations over more than one year. Of the dividends of companies, £703,410, or 97 per cent., was paid outside Tasmania. If that sum had been paid in the State, the purchasing power of the people would have been increased to that extent, and the State would have a higher taxable capacity than it now possesses.
The position of Tasmania with respect to primary industries should receive serious consideration. I have before me a statement which was posted to me a considerable time ago, when a controversy occurred between the Commonwealth Government and the Treasurer of Tasmania. This statement sets out what has been done by the Commonwealth in assisting primary producers in Tasmania, as compared with the assistance rendered to them in the other States. The statement was supplied by the Treasurer of Tasmania, and sent to various newspapers throughout the Commonwealth, but 1 understand that the publication of it in the Tasmanian press and elsewhere was refused. It was then forwarded to the Parliamentary representatives of Tasmania in the belief that they would make use of it. The statement is as follows: -
All informed persons know that this State has a relatively larger rural population than any other State in the Commonwealth. Taking all forms of assistance to primary producers, from loan and federal revenue money, the assistance given to Tasmania, in this direction, compared with the assistance given to all States taken together, was clearly shown in ‘the following table, which was of an indisputable character, since it was compiled from the figures supplied by the federal Treasurer in his budget for 1937-1938:-
The total of £553,246 given to Tasmania during the six years to help primary producers, represented £2 8s. 4d. a head of the mean population of that State over that period, whilst the £20,832,373 given to all States, including Tasmania, represented a per capita payment of £3 2s. 3d. of the mean population of Australia during the same period. The assistance to primary producers in Tasmania, the most rural of all the States, was thus very seriously below the Australian average. As a matter of fact, the most badly treated States in this regard were Tasmania and New South Wales, the figure for New South Wales being even worse than that for Tasmania. New South Wales received only £2 0s. 4d. a head of the mean population of that State during the six years. Queensland was nominally very much lower than any other State, the per capita amount being £1 3s. 9£d., but that figure disregarded sugar; when sugar was taken into consideration, no injustice was done to Queensland. The figure for Victoria was £2 10s., for South Australia £9 Os. 3d., and for Western Australia £9 ls. 9$d. Had Tasmania been treated on the same basis as South and Western Australia, that State would have received considerably more than £2,000,000, instead of only £553,246. The federal contribution to Tasmania’s revenue in 1936-37 was only £8S3,859, representing £1 ls. 4d. out of every £100 of the Commonwealth Treasurer’s enormous total revenue of £82,807,977, whereas in 1904-05 the Commonwealth Treasurer contributed £2 5s. 2d. out of every £100 of his revenue to Tasmania, and in 1913-14 £1 lis. Id. It is a mere statement of fact to say that out of every £100 of Tasmanian revenue, Commonwealth money represented £30 7s. 9d. in 1904-05; £27 5s. 3d. in 1913-14; and only £25 6s. 9d. in 1936-37. The assistance given by the Commonwealth to primary producers in the several States for the seven years ended the 30th June, 1938, was as under -
Those figures show that Tasmania has not had a fair proportion of the amount granted to the States for the assistance of primary producers, a fact which should be taken into consideration when grants to the States are being considered.
The Commonwealth Grants Commission commented on the railways of Tasmania. I worked in the Railways Department of that State for twenty years, and know what the difficulty is. The real cause of the disabilities is that although the railways of Tasmania cost only £6,500,000, already £15,000,000 has been paid in interest, and the original cost has not been repaid.
The State has to meet interest on that money each year; and until it has been paid the railways cannot make a profit. Honorable senators will see that it is an absolute impossibility for a small State like Tasmania to show a profit on its railways in such circumstances, particularly when good roads are provided to compete with them.
– Will not the raising of fares enable the railways to show a profit in the future?
– On page 64 of its report, the Commonwealth Grants Commission said -
The problem raised is an important one for the Commission. The Tasmanian railways are apparently in a hopeless financial position, and the burden on the State may possibly exceed the economic benefit to the community.
The position is as I have just stated ; the railways cannot be expected to show a profit while they are burdened with a heavy liability in respect of interest. The report continued -
This position may be due to inefficient management, either politically or from the technical point of view, or it may be that railways are an uneconomic proposition for a State with a population of 230,000 in an area of17,000,000 acres of which only 7,000,000 acres are alienated. If the former be . the case, it would be unjust for the loss to be reimbursed to the State by the Commonwealth through the special grant.If the latter be the case some action should be taken to cut the loss. If the situation is allowed to drift the special grants will help to perpetuate an uneconomic position.
– That would apply to any State.
– The Tasmanian railways are rendering good service, and if the burden of interest were removed, they would compare favorably with the railways of any other State. The commission’s report went on tosay -
Much of the increase in expenditure during the last two years has been due to the fact that salaries and wages have been restored-
Apparently, the commission regards as unnecessary expense the provision of decent wages and conditions to the workers -
Allowing for the factors which have been responsible for the marked increase in working expenditure, namely, the restoration of salaries, better services, involving more train mileage, heavier goods traffic, re-organization of theLaunceston workshops and the introduction of the 44-hour week, the increases in personnel and in expenditure on salaries and wages are much higher than those of the other States.
That is not a fact. Any Arbitration Court judge will admit that wages and salaries in Tasmania are lower than in any other State. When the basic wage award was given, railway workers in Tasmania received an increase of 3s. a week. In Victoria, Queensland and New South Wales the increase was 6s. a week for outside workers and 5s. a week for men in the railway service. It will be seen, therefore, that the wages of railway workers in Tasmania compare unfavorably with the rates in the other States. I do not know how the commission arrived at its figures.
Although Tasmania expends considerable sums in providing primary, secondary and technical education for its young people, many hundreds of them have to leave the island to obtain employment. The Tasmanian education system is one of the best in the world, and that State is entitled to some compensation for the benefit which other States derive from it. A conference held at Burnie recently to deal with maternal and child welfare passed a number of resolutions, including the following: -
That this conference advocates the better understanding of the pre-school child.
The reply given by the State Government was -
The Commonwealth Government, throughits Health Department, is providing funds for this purpose, without in any way consulting the education departments of the various States. It is felt that the Commonwealth Government should have arranged for the co-operation of the Education Department in this matter, as the department possesses all the machinery for the training of teachers. At present, the functions of the Education Department cannot be extended to cover this very necessary work through lack of finance. A federal subsidy would overcome this.
This matter should be dealt with by means of a special subsidy to the States for educational purposes. By a backdoor method, the Commonwealth Government is doing something for the education systems of the States which should be done through the State education departments.
The work of the area schools in Tasmania, which teach domestic science and technical subjects, is of value to the mainland of Australia as well as to Tasmania. The figures which I have cited show the extent to which the young people of Tasmania migrate to the mainland. The Burnie conference passed the following further resolution: -
That this conference expresses satisfaction with tlie occupational training of boys and girls in the area schools, and advocates the extension of that training.
To that resolution, the State Government replied -
The Labour Government which pioneered these facilities for high education in areas not served by high schools has, within the past three years, established seven area schools in various parts of the State. At the present time, fifteen other sites are under consideration, and in the new year it is hoped that finance will be available for the establishment of further schools of this splendid type.
The seven area schools already established in Tasmania are situated at Sheffield, Hagley, Wesley Vale, Ringarooma, Cygnet, Geeveston and Mole Creek, and it is hoped that four additional schools will be established soon. Some consideration should be given by the Commonwealth Government to the valuable work being performed by these area schools.
Sitting suspended from 12.45 to 2.15 p.m.
– To illustrate the value of that work, I shall relate an incident which took place at Mole Creek. On a visit to that school I saw an auto-tray which struck me as a remarkably good piece of work. When I asked the teacher which pupil had built it, I was introduced to a boy, between thirteen and fourteen years of age, and was told that in his ordinary class this lad was an absolute “ dud “, being no good at all at arithmetic or any other of the ordinary subjects. The teacher added that so soon as the lad was transferred to the technical school his talent for carpentering, joining, and cabinet-making was discovered, and that when he realized that he would need a knowledge of arithmetic for calculations in this work he immediately knuckled down to learn that subject and made good progress in it. This lad, I suggest, would have been lost to the State as a useful citizen had it not been for the opportunity presented to him by technical training.
The unkindest cut of all directed by the Commonwealth Grants Commission against Tasmania was in respect of the system of municipal government in that State. Of all the work done by the Labour Government in Tasmania, 1 think its outstanding effort has been its endeavour to clean up the municipal government scandals. Honorable senators no doubt are aware that the property franchise applies in local government elections in Tasmania. It is almost impossible to get through the Upper House any legislation designed to bring about a better state of affairs in municipal government. Paragraph 183 of the report of the Commonwealth Grants Commission states-
A problem of a different character arises from the Tasmanian system of local government. Tasmania has an area occupied of about 10,000 square miles and in this area 49 municipalities and a number of marine boards function. The proportion of the revenue eaten up in overheads must be excessive. Municipal rates and valuations are low, and a large proportion of rates is overdue. Naturally these municipalities lean on the Government for support in providing services which in other States are provided by the municipalities at the expense of the property owner. Thus, the financial position of the State Government is worse than it should be. A reorganization of the local government system seems to us to be urgent.
I emphasize that that reorganization was commenced in Tasmania long before the commission ever gave consideration to the matter. For a number of years the State government has been pointing out that municipal valuations are unduly low, and it has endeavoured to force the councils to institute a proper rating system. It has gone further and appointed commissions to take over local government in certain areas. I suggest that it is stretching the matter a little too far if the Grants Commission is expected, in assessing grants, to take into consideration the system of municipal government in existence in the smaller States. I repeat that the Government of Tasmania has done its best work in trying to improve the system of local government, and it accomplished a good deal in that direction long before the Commonwealth Grants Commission considered the matter at all. The grant to Tasmania should be considerably increased. The commission, in its report, states that whilst the position in Tasmania - revealed satisfactory -progress and increased community income, it is necessary to view the situation of the State as a whole- with restrained optimism, for, owing to the small population and limited resources capable of economic development, the Government of the State is faced with problems which are more difficult that those which confront other governments.
Notwithstanding that admission, the commissionhasthis year reduced the grant to Tasmania. In the year prior to federation, Tasmania collected £466,000 in customs and excise duties, whereas the Commonwealth grant to that State this year amounts to only £410,000. In view of this fact it is pertinent to remark, I suggest, that to avoid the disintegration of the Commonwealth, we need to guard against injustice from within rather than armed aggression from without.
– I pay a tribute to the Lyons Government for having established the Commonwealth Grants Commission. That legislation represents one of the foremost steps yet taken in connexion with public finance in this country. Grants in aid are inherent in all political systems ; they are an absolute necessity in all federal systems. Hearing some honorable senators talk, one would imagine that State grants are something that are purely attributable to what we know as the smaller States. On the contrary, grants have been paid to all States of the Commonwealth since the inception of federation, and without them no State could carry on. At the outset of federation it was realized that certain transfer pay- ments would be necessary from the central government to State governments in order to enable the latter to carry on, and the Constitution at the outset provided that annual grants should be paid to the States of an amount representing three-fourths of the total customs and excise revenue. The Constitution itself does not provide the basis of distribution of that amount as between the States, but it is interesting to note that had that system been followed up to the present, the States would have been receiving in Commonwealth grants an amount of £30,000,000 annually as compared with the total for the year 1937 of £15,007,000. The grants paid to the States for that were: - New South Wales, £4,500,000; Victoria, £3,100,000; Queensland, £1,900,000; South Australia £2,600,000; Western Australia. £1,700,000; and Tasmania, £1,008,000.
– That was the accumulation of many years of waiting.
– That was the grant paid to the States by the Commonwealth Government during the year ended the 30th June, 1937. The basis of that grant was twofold : First, payments made under the Financial Agreement; and. secondly, payments made on the recommendation of the Commonwealth Grants Commission.
I wish to examine the principle upon which grants to the States should be made, that is, transfer payments from the central government to State governments. I submit that the Constitution itself decided that principle. This problem is not new. It was considered by the framers of the Constitution who realized that transfer payments from the Federal Government to the State governments would be necessary. On what principle were those payments to be made? That was the question which presented the greatest difficulty in federation. The problem was to arrive at a formula, or a basis, for transfer payments from the Commonwealth to the States, and, finally, a general principle - equality of opportunity - wias laid down. It is mentioned time and again in the Constitution that in whatever part of the Commonwealth an Australian citizen be resident he should be entitled to equality of opportunity with a resident in any other part of the Commonwealth. I shall refer to only three sections of the Constitution which, I submit, make that principle perfectly clear. Section 117 reads -
A subject of the Queen, resident in any State, shall not be subject in any other State to any disability or discrimination which would not be equally applicable to him if he were a subject of the Queen resident in such other State.
I submit that that is a clear declaration of principle by the framers of the Constitution - whether a person resides in South Australia, or Victoria, he or she should have equality of opportunity. Is that the case to-day? A person resident in
South Australia can move to Victoria and pay only half of the income tax that he would have to pay in South Australia. Section 51 of the Constitution reads -
The Parliament shall, . . . have power to make laws for the peace, order and good government of the Commonwealth with respect to -
Taxation, but so as not to discriminate between States or parts of States;
Bounties on production or export of goods, but so that such bounties shall be uniform throughout the Commonwealth.
Again, in section 99 we see this principle of equality of opportunity made clear -
The Commonwealth shall not, by any law or regulation of trade, commerce, or revenue, give preference to one State or any part thereof over another State or any part thereof.
The same principle is further set out clearly in section 96. I submit that the guiding principle of transfer payments from the Commonwealth to the State Governments should be the principle of equality of opportunity. As I mentioned previously, grants are not inherent in the federal system purely. The British Government, for example, pays annually to the County of Kent a grant of £1,538,000, of which £438,000 is for elementary education, and £247,000 for higher education. So we see the same principle in operation in the British Constitution, providing for transfer payments from the central to local governments. We, in Australia, have realized that, owing to the huge area of this country, a certain form of decentralization is essential, and we have built a new system, a federal system, for the purpose of adjusting rights and benefits as between various parts of the Commonwealth. The commission is gradually reverting to the principles laid clown by the framers of the Constitution as one can see by reading its latest report. For instance, paragraph 105 states -
We arc attempting to estimate grants which will enable the less fortunate States to give their citizens fair Australian standards.
It would appear that Australian citizens in whatever part of the Commonwealth they may reside shall be on a basis of equality. In paragraph 59 the commission states -
Our methods aim at bringing the claimant States up to a fair Australian standard and if the additional claims made by them are correct, and they are enabled to achieve large surpluses, our methods would be open to question.
That is a point with which I shall deal later. At the end of paragraph 62 the commission states -
In other words, the factor of financial distress is becoming less, and the grants tend more to represent an adjustment of the unequal effects of federation on State finances.
The commission is approaching very closely the original principles laid down by the framers of the Constitution - that citizens of the Commonwealth wherever resident shall be entitled to a fair Australian standard and equality of opportunity. Wherever the commission has laid down that principle little criticism can be offered, but in giving effect to it, the commission descends from the high plane of fairness and imposes penalties and punishments. In effect it states that the less populous States shall be perpetually kept in servitude and below the Australian standard. I protest strongly against citizens of South Australia being denied the right to enjoy the Australian standard. In paragraph 85 the commission states -
The principle so far adopted is not that we should give the States equality in social services, but that we should allow the claimant States to function at a fair standard. In our opinion the amount we allow should enable a State to give its citizens the social services that they are reasonably entitled to expect.
The social services that South Australian citizens are entitled to expect is 10 per cent, below the Australian standard. Why should a citizen of South Australia, merely because he be resident in that State be forced to accept a standard 10 per cent, below the Australian average? In dealing with the social services for 1935-36 the commission stated that the net expenditure per capita in South Australia was 57s. 8d. whereas the average for all the States was 67s. 7d. South Australia is therefore 10s. per capita below the Australian standard. Instead of South Australia being entitled to bring its social services up to the Australian standard the commission states that it is entitled to a standard 10 per cent, below the Australian average. The commission also states -
The effort required has been expressed as a percentage on normal social service expenditure, but this docs not mean that a claimant State should of necessity bring its social services to that level, but that its savings, in comparison with the normal standard of revenue and expenditure in all respects should bc equal to 10 per cent, on normal social expenditure.
According to the principles laid down by the commission the claimant States are entitled to the Australian standard, but they are expected to operate on a standard 10 per cent, below the average. In consequence of this decision South Australia has on this item alone been deprived of £159,000. That State is forced either to keep its social services below the Australian average or raise its taxes above the Australian average to enable it to bring its social services up to the Australian standard. Accepting the principle that South Australian citizens should not be subject to taxes higher than the Australian average, we find that merely because South Australia is a claimant State it is not to ‘be entitled to the Australian average, and that it must make greater sacrifices than its wealthy neighbours by imposing taxes higher than the Australian average. South Australia has been robbed of £361,000.
– Why is South Australia so poor?
– The Commonwealth tariff has been costing that State £2,000,000 annually for many years.
– But what have the wheat-growers in that State been receiving?
– The Leader of the Opposition, who, apparently, objects to South Australia receiving a fair deal in matters of this kind, overlooks the fact that Australians pay £5,000,000 annually to assist the Queensland sugar industry. Do honorable senators opposite, and particularly those representing Queensland, suggest that South Australia should be denied the right to enjoy the Australian standard?
– The Queensland representatives on this side of the chamber have always supported financial grants to the claimant States, and all proposals to assist any form of primary production.
– In the matter of taxation the index figure for South Australia is 103 as against an Australian average of 100. Instead of South Australia receiving £101,000 to enable it to reduce taxes to the Australian standard it is penalized to that amount. Again it is rendered poorer than its wealthy neighbours.
– What i» the Queensland figure?
– It is very high, but Queensland cannot have it both ways. The commission states that if a State gets above the Australian standard in the matter of social services it must tax its citizens above the Australian standard in order to pay for the additional services provided. That is fair and just, but it is definitely unfair and unjust that the standard of the claimant States should be kept below the average. The claimant States wish to stand on their own feet; but while, taxes are higher and social services lower in one State than in another, wealth is being drawn from the weaker to the stronger States. The policy of the commission of making financial grants to South Australia, Western Australia and Tasmania on this penalty basis is merely perpetuating the differences between the richer and the poorer States. We do not wish to adopt a parochial attitude, but to ensure that an Australian citizen wherever resident in the Commonwealth shall be entitled to the Australian standard. As a result of the. two departures made by the commission from the principles it has laid down, South Australia has been deprived of £361,000. If the representatives of Western Australia and Tasmania will study the positions of those States from the same angle, they too will find that the States which they represent have been- penalized. I ask the Government - I expect the support of the Opposition in this matter - to adopt an Australian national outlook. I realize that under a unitary or federal system transfer payments are essential. Although Australian citizens should have equal opportunities, regardless of the portion of the Commonwealth in which they reside, the Commonwealth endeavours to represent that as a result of federation the claimant
States are beneficiaries. Such statements are definitely misleading, and do not convey the facts. 1 refer to the statement, on page 125 of the report, showing the allocation among the various States of Commonwealth revenue and expenditure. I suggest that Treasury officers placed facts before the commission in order to influence that body to recommend lower grants to the claimant States. Let us examine the position to see how much of Commonwealth revenue is spent in the various States, and how much is collected in the form of taxes. It has been frequently stated that, as a result of federation, South Australia gains £1,500,000, Western Australia £1,300,000 and Tasmania £1,200,000. These are the figures put forward by Commonwealth Treasury officials in an endeavour to show that the claimant States are actually beneficiaries as the result of federation. But I ask honorable senators to notice how expenditure is appropriated. Defence expenditure, for instance, is allocated on a population basis. We have had an opportunity, during the last few weeks, to consider defence and works estimates for the current financial year, and we have discovered that although the total of the proposed expenditure on defence is £.16,000,000, South Australia will receive only £200,000. It cannot be argued that that allocation is on a population basis. I am not complaining that the proposed expenditure on defence is too great; my contention is that the suggestion that the money is to be spent according to the population of the various States is definitely misleading.
– Total expenditure for the Navy applies to the whole of Australia, not to any one State.
– That is true, but to suggest that Commonwealth defence expenditure is allocated on a population basis is definitely unfair and misleading. The States which benefit by defence expenditure in terms of pounds, shillings and pence are those in which the money is actually expended. The same may be said of Commonwealth expenditure on various departments. Canberra, New South Wales and Victoria benefit most from expenditure as such. I should like to make it clear that 1 am not complaining of Commonwealth expenditure on defence, or where the Government spends it; but I am protesting against the misleading statements which suggest that this expenditure is on a population basis and therefore Western Australia, South Australia and Tasmania are beneficiaries. I am a strong believer in federation. I think that all States, whether claimant or otherwise, get advantages out of it, particularly in regard to defence; but it is ridiculous to suggest that the States benefit equally as the result of expenditure on defence, central administration, war services and the like. As a matter of fact, if we take this year’s figures given by Treasury officials, it can be shown that, instead of South Australia being a beneficiary to the amount of £1,500,000, as the result of federation, the position is reversed by a very large amount. I urge Government supporters and members of the Opposition to strive for an Australian outlook. In recent weeks there has been much talk about the futility of the parish-pump outlook, and representatives of the smaller States have been criticized merely for doing their duty in putting forward claims on behalf of those States. The fact that those of us who represent claimant States do the work for which we were elected docs not mean that we have a parishpump outlook. On the contrary, we have a national outlook. We contend that it. is impossible to develop a truly national policy without equality of opportunity in every part of the Commonwealth. There cannot be a national outlook while some States which are rich keep other and less fortunate States poor. We desire a national outlook, and we are prepared to play our part; but we demand equality of opportunity and justice for all States of the Commonwealth. The Commonwealth Grants Commission has done excellent work in laying down certain principles. If those principles are carried out faithfully, we shall in time develop an Australian outlook.
Recently, at my request, a well-known actuary in South Australia ascertained the amount that would be necessary for the Commonwealth to pay to South Australia to enable that State to reduce its taxation to the average of Victoria and maintain its social services at the same level as those of that State. According to these calculations, the Commonwealth would have to pay £2,232,000 to South Australia. To maintain the same standard in Western Australia and Tasmania, the payments would have to be £1,168,000 and £8S6,000 respectively. These figures are available to any honorable senator who desires to see them. South Australia is entitled to the Australian average of taxation and social services, and I am prepared to fight until that right is acknowledged.
– I am not opposed to the bill, but I think that I can prove to honorable senators on both sides that the Commonwealth Grants Commission has not recommended payments on an adequate scale to the smaller States. Even the amount proposed to be granted to Tasmania under this bill is far below the sum which would bc allocated if that State were treated in the same way as it was in the early days of federation. Reference is made in the report of the commission to the Tasmanian State railways. The commission did not consider the deplorable condition of railway rolling-stock when the Ogilvie Government assumed office a few years ago. A considerable sum had to be spent to recondition it in the interests of public safety, and large numbers of men were given employment on that work. The average age of railway engines in Tasmania is 40 years. Until they had been overhauled, some of them were unsafe for the travelling public.
– The honorable senator cannot blame the Commonwealth Government for that.
– Of course not. I am referring to the attitude of the Commonwealth Grants Commission, which recommended a reduction of the grant for this year on the ground that unnecessary expenditure had been incurred on the Tasmanian railways. The expenditure was fully warranted. The commission also, unfairly in my opinion, argued that unnecessary expenditure was involved in increased salaries to railway employees. The Commonwealth Arbitration Court made the award under which such payments are made.
– I do not think that that matter was referred to by the commission in the way suggested by the honorable senator.
– That is my interpretation of the commission’s report. It also dealt with the expenditure of, and rates imposed by, the municipal authorities in Tasmania. I agree with Senator Lamp that the Government of Tasmania is doing all in its power to overcome difficulties which exist in connexion with local government in that State. If the commission had investigated thoroughly the tax burden in relation to the income of the people of Tasmania, its reference to these matters might have been warranted. I believe that the majority of workers in Tasmania, particularly primary producers, are paying more in rates and taxes to municipal authorities than they can rightly afford. Figures relating to public expenditure in Tasmania, compared with that in other .States and the Commonwealth itself, show that this year the increase of public expenditure in Tasmania was only £2,796, which on a population basis is less than 3d. a head. Comparable figures from other States indicate that Tasmania is doing everything possible to keep its expenditure within reasonable limits. The increased expenditure proposed for the coming year by the Commonwealth and the various States, and the amount per head of the population which this expenditure represents, are shown in the following table : -
The Government of Tasmania has done everything possible to exercise economy, and it is far from the fact to say that the Commonwealth has been very generous in its treatment of the smaller States, particularly Tasmania. I assert definitely that no generosity has been displayed towards Tasmania, either by the Commonwealth Government or by the Prime Minister (Mr. Lyons). Everything that Tasmania has received, it is justly entitled to.
– What did the new cable between Tasmania and the mainland cost?
– That is entirely a Commonwealth responsibility. The cable should have been provided 50 years ago. The honorable senator might as well ask the cost of establishing telephonic communication throughout the mainland States. The amount of Commonwealth revenue, the financial assistance granted to Tasmania, and the sum which this assistance represents in every £100 of Commonwealth revenue are seen in the following table: -
Had the Tasmanian Treasury received in 1937-38 the same proportion of the total Commnowealth revenue as it obtained 34 years ago, the assistance would have amounted not to £841,859, but to £2,020,263. If the scale of Commonwealth assistance had been the same as 24 years ago, Tasmania would have received not £841,859, but £1,386,601. If its grant in 1937-38 had been the same as in 1936-37, it would have received not £883,859, but £954,220. The _ figures which I have mentioned, and which cannot be disputed, show that there has been no increase of Commonwealth generosity. On thecontrary, there is clear proof of the ever-growing financial superiority of the Commonwealth and a significant decline in the proportion of Commonwealth assistance received by Tasmania. Tasmania does not come to this Parliament begging for something to which it is not justly entitled. When it makes an application for financial assistance, it is merely asking for something which it has lost and is trying to regain. This is not the only instance of Tasmania’s disabilities through joining federation. A financial statement issued by the late Hon. Stafford Bird shows that the actual revenue of Tasmania for the year 1900 was £1,054,980, of which £466,218 represented receipts from State customs duties. During that year, those receipts represented 44 per cent, of the total revenue of the State. Tasmania lost that revenue when it joined the federation, and, in addition, it lost one of its best paying propositions - the post office. Therefore, I contend that Tasmania made a greater sacrifice than any of the colonies which joined the federation in 1900.
According to a statement made recently by the Commonwealth Treasurer (Mr. Casey), in addition to the amount already received by the Tasmanian treasury in 1936-1937, the sum of £358,381 was paid into trust funds. I shall not dispute that, but I shall make a few comments on the statement. We find that the sum of £358,381 was paid into various special trust funds, which sum, I agree, was not included in the Tasmanian revenue. I shall show how Tasmania received this money, and how much it contributed towards it, as well as towards similar payments to other States. I draw pointed attention to the fact that, whilst Tasmania was allotted £358,381 under various headings, the other five States received £7,622,832. The following figures show comparatively the amounts paid to Tasmania and the other States: -
Although the Commonwealth Government made available a sum for farmers’ debt adjustment, the grant had a tag tied to it which should have been removed before the money reached the governments of the States. Whilst the Treasurer is very ready to bring these figures under the notice of Tasmania, he omits to point out that similar assistance was given to the other States. Far from Tasmania receiving generous treatment in that regard, it got only what it was entitled to, and, possibly, not as much as that, in comparison with the other States, both large and small.
A few years ago a bounty amounting to about £3,000,000 was paid with regard to wheat, and Tasmania’s share of it was £1,800, which works out at a fraction over 2d. per head of the population. But to that £3,000,000 Tasmania had to contribute its full share, and calculated over the population of the whole Commonwealth, the cost worked out at between 7s. and 3s. a* head. Therefore, Tasmania also contributes its share of the assistance given to the other States, including those which are not claimant States.
The Commonwealth Grants Commission took into consideration the fact that Tasmania will benefit from the increased expenditure on defence. This was also considered by the Loan Council. But what is this increased expenditure? In May last an expenditure of £1S3,000 in Tasmania was intended, but notwithstanding that the defence vote has been considerably increased since then, the expenditure in that State is now set down at £176,000. I claim that Tasmania has received worse treatment than that meted out to any of the other States; expressed in the vernacular, Tasmania gets it “in the neck” every time. Although Tasmania is playing its part in various ways in the defence programme of this country, contributions by the State government out of Consolidated Revenue for the construction of works of value from a defence point of view have, apparently, not been taken into consideration by either the Commonwealth Government or the Commonwealth Grants Commission. Like the other States, Tasmania expends from its Consolidated Revenue considerable sums in providing educational facilities and maintaining the health of its people. thereby fitting them to defend their country, whilst, by maintaining its railways in good order, and constructing roads that State is doing much that will be of value to the nation in an emergency. In view of these facts, more consideration should have been given to that State by the Commonwealth Grants Commission, and also by the Government in its allocation of expenditure under the accelerated defence programme. A study of the figures which I have supplied, as well as those cited by my colleague, Senator Lamp, will convince honorable senators that Tasmania suffers great disabilities under federation. I do not wish it to be thought that I am advocating secession when 1 direct attention to those disabilities, but I ask honorable senators opposite to break their silence and tell the Government of its duty to the smaller State*. I conclude by saying that if the position be analyzed it will be found that the treatment of Tasmania by the present Commonwealth Government is similar to the treatment of the Jews of Austria and Germany by Herr Hitler.
– I join with other honorable senators from the claimant States in protesting against the reduction of the grants to those States recommended by the Commonwealth Grants Commission in its Fifth Report, and accepted by the Government.
– Does the honorable senator agree with Senator Aylett’s concluding remarks ?
– Certainly not. I do not agree with Senator Aylett that the weaker States are as badly treated by the Commonwealth Government as are the Jews of Germany and Austria by Herr Hitler, but in my opinion, the honorable senator made out a- strong ease in support of his contention that a great injustice is being done to Tasmania by the tremendous reduction of the grant to that State this year. I speak on this subject annually although it seems rather futile to do so, because the Government has not yet deviated in the slightest degree from the recommendation of the Commonwealth Grants Commission. In 1936-37, when the commission recommended that the grant to “Western Australia should be reduced to £500,000- £300,000 less than the amount advanced during the previous year - the Government accepted its recommendation without question, notwithstanding that the reduced amount included a loan of £44,000 which had to be repaid. Although the Government rarely adopts any of the recommendations of the multifarious royal commissions which are appointed to do work which, in most instances, could be done better by government departments, the recommendations of the Commonwealth Grants Commission appear to be sacrosanct. It is interesting to compare the ready acquiescence of the Government in the representations of the Commonwealth Grants Commission with its reluctance to give effect to the recommendations of the Royal Commission on the Wheat Industry. That body recommended a complete rehabilitation of the wheat-growing industry, including assistance to distressed farmers.
– Were its findings over brought before Parliament?
– Yes. That body recommended that distressed farmers should be given assistance to restock their farms, buy machinery, erect fencing, provide water supplies, and, generally, put their farms on a sound basis. I venture the opinion that, had its recommendations been acted upon, our rural industries would have been in a much better position than they are to-day. Indeed, it is more than likely that, they would not have required some of the assistance already voted to them, such as that provided in the legislation passed in connexion- with farmers’ debt adjustment, f approve of that legislation, but I urge that, even at this late stage, the Government should accede to the request that n has received from the Government of Western Australia, and probably from other State authorities also, that some of the money voted for debt adjustment should be applied to the revitalizing of the wheat-growing industry and other rural industries and the granting of that practical assistance which the royal commission recommended. That assistance would not only have been of real value to the primary producers, but also it would have added to the prosperity of Australia; but it was not given. Similarly, the recommendations of the Royal Commission on Monetary and Banking Policy have, for the most part, been ignored, although I have every confidence that a mortgage bank will be established before Parliament rises for the Christmas adjournment. In view of the way in which the recommendations of other royal commissions are treated by the Government, one can only express amazement that the unjust and cheeseparing recommendations of the Commowealth Grants Commission in connexion with the weaker States are always accepted by the Government in, into. The situation is the more strange when we reflect that, the Cabinet includes distinguished Ministers representing the claimant States. Apparently, the Government and the Commonwealth Grants Commission are influenced more by the budgetary position of the Commonwealth than by the disabilities of those States under federation.
I listened with interest to the remarks of my optimistic colleague from South Australia (Senator Wilson) who referred to the fair words of the Commonwealth Grants Commission, and pointed out that the commission had expressed the desire to take steps towards providing greater equality of opportunity to the weaker States. I admit that those words are in the commission’s report. Whenever 1 mad the remarkably clever journalistic efforts of the chairman of the commission, Mr. Eggleston, I think of the old adage, “ Fine words butter no parsnips “. I can never reconcile that gentleman’s fine words and promises with the ultimate recommendations contained in the commission’s report, and the fines and penalties imposed on the States, Western Australia in particular. As to the commission’s report, I am inclined to say that “ Deeds speak louder than words “.
– An Inter-State Commission is needed.
– Before I agree with the Acting Minister, 1 desire to know the constitution of such a body. Should an Inter-State Commission be appointed, I hope that its personnel will commend itself to the majority of the people of Australia, and particularly that vigorous young men, chosen from the Public Service or the universities, will not be overlooked in favour of less desirable persons when appointments are being made. Reference has been made to the lack of equality of opportunity as between the States. So far as I can see this condition of affairs is rapidly becoming more glaring. Senator Aylett has told us of the migration which is taking place from Tasmania to the Mainland. That beautiful island, apparently, does not afford opportunities to absorb its natural increase of population. This development is a reflection on the federal system of government under which the smaller States arc being squeezed all the time. To some extent Western Australia has benefited from the remarkable impetus given to the mining industry during the last few years, which has provided a real source of employment and created a measure of prosperity in other parts of the State. Senator Wilson referred to the disparity between opportunities presented in the different States. We find, for instance, that New South Wales, the Mother State, which possesses about one-third of the wealth and population of the Commonwealth, is in the fortunate position that, it does not find it essential to impose any State Land tax. We are repeatedly reminded of the advantage enjoyed in that respect by residents of New South Wales when we realize the high land values in both the metropolitan and rural areas of that State. Yet under, the financial agreement, New South Wales receives substantial and handsome annual grants from the Commonwealth, and I have never heard of any suggestion that that State should be fined because successive governments have been in the fortunate position of being able to carry on without levying land tax, although every other State has found it necessary to impose such a tax in order to balance its budget. In Western Australia land tax is imposed on all land without exception, and it is fairly high. I can imagine what a fit Mr. Eggleston would have if the Government of Western Australia decided to abandon its land tax. To be quite fair, I admit that during the depression agricultural farming properties were and are now exempt from the tax. Another example of the disparity between the opportunities afforded in the different States is provided in the Australian Capital Territory, residents of which are exempt from State income taxes. I have no doubt that many citizens on retirement will choose to reside, or invest their money, in the Territory because of this advantage. It is a wonderful benefit when We consider that in Western Australia, for instance, there are in operation an income tax, a vermin tax, a land tax and a financial emergency tax, which is the equivalent of the unemployment tax levied in the eastern States, and is as high as ls. in the £1. In view of these facts no one can say that there is equality of opportunity as between the States, so far as taxation is concerned. The report of the Commonwealth Grants Commission contains the following table showing the grants recommended and paid to the States during the five years it has been in existence : -
I direct particular attention to the footnotes to this table. In view of the fact that a large portion of the wheat belt in Western Australia has suffered severely from drought during the last four years, why is this system of making special advances, which are to be deducted later, applied in respect of Western Australia only? Such a practice, I suggest, is unfair and paltry. If the Commonwealth Grants Commission thought that Western Australia was entitled to a grant of £500,000 in respect of the year 1936-37, why should it have (included in that amount this advance of £44,000, or why should it have included the special advance of £136,000 if it thought that for 1937-38 Western Australia was entitled to a grant of £575,000? Those two special advances really have a string tied to them.
– ‘Were they not made specially for drought relief? Senator E. B. JOHNSTON. - That did not prevent an eminent member of this Parliament from declaring during the last election campaign, that the grant to Western Australia for 1937-38 had been increased from £500,000 to £575,000. In his speech in the House of Representatives on this subject the Treasurer (Mr. Casey) mentioned these two amounts but, according to the report published in Hansard, he made no reference to the fact that the Commonwealth was to recoup itself of nearly £200,000 of the total sum. In effect these advances were nothing but election sops. Furthermore, the Commonwealth Grants Commission has instituted a system of penalties which hits Western Australia particularly hard, because successive governments in that State have had sufficient vision to endeavour to o.pen up that State by settling people on the land, particularly in the wheat belt, and by building railways to open up our farming areas, and to the the gold-fields, the commission claims that Western Australia has spent too much in those directions. A few years ago it attacked Western Australia in connexion with its expenditure on its group settlement scheme in the south-west portion of that State, although both the Commonwealth Government and the Imperial Government were partners with Western Australia in the venture in that they agreed to pay annually a share of the interest on the capital expended. Despite this arrangement, the Commonwealth Grants Commission claimed that too much money had been spent on that scheme, and it inflicted a penalty on Western Australia, leaving it, in effect, to carry the baby. I object to these special advances being charged up against Western Australia, and Western Australia only. No string should be attached to any grant made to a State. I repeat my protest against the Treasurer’s action in giving the impression that the grants to Western Australia for the last two years amounted to £500,000 and £575,000 respectively. He made no reference at all to the Government’s paltry action in deducting the special advances to which I have referred.
– It is hardly fair for the honorable senator to describe the Go vernment’s action as paltry. Those advances were made at the request of the Government of Western Australia. They were “ on account “ grants, and the -State Government was aware of the conditions under which that money was advanced.
– The Commonwealth Government, I submit, could have acted more generously. Those advances were a mere detail to this rich Government, which could very well have overlooked them when it was making its grants in aid. I have in my possession a cartoon depicting the chairman of the Grants Commission, Mr. Eggleston, as a schoolmaster, standing over the smaller States who are shown as his pupils, and imposing fines on them. In another cartoon, he is shown wielding a hig rubber stamp - the Commonwealth Government - which approves of every recommendation, and every fine and penalty which schoolmaster Eggleston suggests. I urge the Government to go into this matter more thoroughly and to treat the recommendations of the Commonwealth Grants Commission in the same way as it treats the recommendations of eVery other royal commission, accepting only what its own judgment approves and rejecting that of which it does not approve. If it followed that course it would not approve of these two special advances of £44,000 and £136,000 being charged up against Western Australia, particularly when the other smaller States are not subjected to similar treatment. I submit that the Government, in charging up these amounts against Western Australia, completely disregards the immense value of the work which 460,000 people in that State are doing in developing one-third of this continent. Recently I had an opportunity to visit Darwin. I was very pleased to learn that the energetic Minister for the Interior (Mr. McEwen), accompanied by some of the senior officers of his department, had not only travelled through northern Queensland, the Northern Territory and the north-west of Western Australia, including a part of the Kimberley district, but had also visited Perth. It is the duty of every member of the Commonwealth Government, and in fact, every member of this Parliament, to visit the Northern Territory, and the north-west portion of this continent in order to enable them to realize the difficulties with which the settlers in those parts of Australia have to contend. In Western Australia 460,000 persons are trying to develop and populate a State which in area is about one-third of the Commonwealth. Unfortunately, a large portion of the western State has experienced severe drought, and notwithstanding that depressing fact, the Commonwealth Grants Commission has reduced the grant to that State this year by £44,000 to pay off an old advance. The Government is spending millions of pounds on defence, but most of the works are being constructed in Victoria and New South Wales. The real defence of Australia can be provided only by a more equal distribution of population, and the expenditure of money on a more equitable basis. The Government should assist to remove some of the difficulties with which the people in the north-west of Australia are confronted. To. day the white population in that vast area is considerably less than it was twenty or 25 years ago. This Government and this Parliament should adopt a broad Australian outlook, particularly as the north-west with its meagre population is a menace to the whole of Australia.
– Justice will be done only when a Labour government is in power.
– A Labour government was in office in the federal sphere seven years ago. I would be the last to criticize that government, realizing as I do the insurmountable difficulties with which it was confronted. Mr. Scullin and his Ministers faced their task with remarkable courage, but it must be remembered that some of its emergency legislation, including the Premiers plan, could not have been passed but for the support of the Opposition in this chamber. The people in Western Australia who have experienced drought conditions during the last four years need more than justice; they need generous treatment. The Government has approved the recommendations of the Commonwealth Grants Commission in which the grant to Western Australia this year has been reduced by £44,000. Moreover, we are informed by means of a footnote to the report that next year that State is to suffer a further reduction of £136,000, as compared with the grant of two years ago, made, incidentally, just before “the general election, when the total was £500,000. Shortly after that election the grant was reduced as was to be expected. I object to the commission’s policy, and refuse to accept the basis upon which it makes its recommendations, because they are opposed to the Constitution which provides that there shall be no discrimination as between States. Discrimination has already been shown by reducing the grant paid to Western Australia two years ago. Moreover, the commission is not giving effect to the intention of the act under which it was appointed. It has decided that grants shall be based on “ needs “ as interpreted by it and that the liabilities and losses imposed upon the weaker States as a result of federation shall be disregarded. The first grant of £450,000, to Western Australia, was made on the recommendation of a royal commission appointed by the Bruce-Page Government in 1925 to report on the disabilities of that State under federation. Disabilities were then the keynote of the inquiry. The Commonwealth Grants Commission has> decided that disabilities imposed by federal legislation are to be disregarded. I direct the attention of honorable senators to the position which will arise in consequence of the iron ore deposits at Yampi Sound being allowed to lie dormant. Western Australia should be compensated for the disability experienced in consequence of the embargo imposed by the Commonwealth on the export of iron ore.
– Does the honorable senator suggest that Western Australia or the company should be compensated ?
– The State and also the company. The commission has refused to consider disabilities imposed by federal policy such as an embargo on the export of iron ore which was done by a .regulation. Surely that is a disability. Unless Western Australia’s disabilities under federation are considered as they should be, effect cannot be given to the desire expressed by honorable senators on both sides of the chamber that Western Australia should be compensated for the losses which will be incurred in consequence of the embargo mentioned. I ask leave to continue my remarks at a later date.
Leave granted; debate adjourned.
Motion (by SenatorFoll) agreed to -
That the Senate, at its rising, adjourn till Wednesday, the 16th November, at 3 p.m.
businessof the senate– australian Military Forces.
Motion (by Senator Foll) proposed -
That the Senate do now adjourn.
– I protest against the action of the Government in adjourning the Senate until the 16th November. Honorable senators on this side of the chamber were elected to give effect to the wishes of the people whom they represent, and, although they are anxious to proceed with the business with which the Senate has yet to deal they are to be deprived of the opportunity to do so. The discussion on the Estimates and budget papers has not been completed and further consideration has yet to be given to the State Grants Bill and other measures. From time to time complaints have been made both inside and outside this chamber concerning the way in which business is rushed through, and although important proposals have yet to be disposed of, the Senate is not to sit next week. When we re-assemble the members of the party to which I belong will concentrate upon improving the conditions of those whom we represent.
– I take this opportunity to direct the attention of the Minister representing the Minister for Defence (Senator Foll) to a reply which I received to a question based on a statement which appeared in a section of the press. Every one will admit the value of the press to Australia. The Primp. Minister must feel grateful for the criticisms offered concerning the actions of his Government, and for the suggestions made concerning a reconstruction of the Cabinet. Personally, I feel that the press has rendered a great service in awakening the public conscience to the necessity for adequate defence. A statement appeared in the Sydney Morning Herald on the 1st November, which must have given satisfaction to many of those who read it, to the effect that the Minister for Defence had stated that Australia has an army of 100,000 men for its defence. Such a statement to persons such as myself requires examination and explanation. The paragraph read -
The Minister for Defence stated to-day, amongst other things, that Australia could mobilize a force of nearly 100,000 men, comprising permanent forces 10,170, citizen forces- 38,000, and 50,000 rifle club members.
Question resolved in the affirmative.
The following papers were pre sented : -
Copy of Notes exchanged on the 30th May, 1938, between His Majesty’s Governments in the United Kingdom, the Commonwealth of Australia and New Zealand and the Government of India on the one hand, and the Government of Sweden on the other hand, regarding the reciprocal recognition of Documents of Identity for Aircraft Personnel.
Science and Industry Research Act - Twelfth annual report of the Council for Scientific and Industrial Research fortheyear ended 30th June, 1938.
Canned Fruits Export Control Act - Regulations amended- Statutory Rules 1938,. No. 101.
Customs Act and Commerce (Trade Descriptions) Act - Regulations amended - Statutory Rules 1938, No. 102.
Senate adjourned at 4 p.m.
Cite as: Australia, Senate, Debates, 4 November 1938, viewed 22 October 2017, <http://historichansard.net/senate/1938/19381104_senate_15_157/>.