House of Representatives
28 July 1903

1st Parliament · 2nd Session

Mr. Speaker took the chair at 2.30 p.m. and read prayers.

page 2617


Sir LANGDON BONYTHON presented a petition from 182 residents of Kadina, South Australia, and the surrounding district, praying that a sum of money be placed on the Estimates for the construction of a new post and telegraph office, in the town.

Petition received and read.

Mr. GLYNN presented seven similar petitions.

Mr. BATCHELOR presented a similar petition, signed by 107 persons.

Mr. POYNTON presented seven similar petitions, signed by 66 persons.

Petitions received.

Motion (by Mr.. Thomas) negatived -

That the petitions be read.

Mr. BATCHELOR presented a petition from 30 residents of South Australia, praying the House to pass a measure to prohibit the importation, manufacture, and sale of intoxicating liquors in British New Guinea.

Petition received and read.

Mr. AUSTIN CHAPMAN presented a petition from the Chamber of Manufactures, Sydney, and 1,100 other residents in New

South Wales, praying the House to speedily pass the Bonuses for Manufactures Bill.

Mr. WILKINSON presented a similar petition signed by 1,030 electors of New South Wales.

Petitions received. .

page 2618

ESTIMATES (1903-4)

Mr. SPEAKER reported the receipt of messages from His Excellency the GovernorGencral, transmitting Estimates of revenue and expenditure for the year ending 30th June, 1904, and Estimates of expenditure for additions, new works, and buildings, for the year ending 30th June, 1904, and recommending appropriations accordingly.

page 2618


Mr. SPEAKER reported the receipt of a message from His Excellency the GovernorGeneral recommending that an appropriation be made from the Consolidated Revenue for the purposes of this Bill.

page 2618


Mr. SPEAKER reported the receipt of a message stating that the Senate hod agreed to the modification made by the House of Representatives in its requested amendment.

page 2618


MINISTERS laid upon thetable the following papers : -

Despatch received from the Secretary of State for the Colonies in reference to the Pacific Cable and the Eastern Extension Telegraph Company’s agreement.

Papers relating to the Financial Statement 1903-4.

Estimates of Revenue and Expenditure for year ending 30th June, 1904.

Estimates of Expenditure for additions, new works, and buildings for the year ending 30th June, 1904.

The CLERKlaiduponthetablethefollow ingpapers:-

Annual report on the military forces of the Commonwealth of Australia, by Major-General Sir Edward Hutton, K..C.M..G.

Commonwealth Military Forces, conversion, disbandment, and reorganization of corps.

Commonwealth Military Forces, establishments.

page 2618




– I desire to ask the Minister for Home Affairs. if, in view of the importance of the report of the Capital

Sites Commission which has been presented to Parliament, he will approve of the printing of the expert evidence - taken by the . Commissioners ?

Minister for Home Affairs · HUME, NEW SOUTH WALES · Protectionist

– I do not quite understand how it is possible to differentiate between the expert evidence taken by the Commission, and the other testimony which was submitted. I learn, however, that during my absence last week the question of the wisdom or otherwise of printing the evidence taken by the Commissioners was referred to the Printing Committee, and that that body decided not to print it. I am having a prtcis of the evidence made which will embody its salient points, and that I think will meet all requirements.

page 2618



– I wish to ask the Minister for Home Affairs if it is true that supernumerary, clerks in the Commonwealth electoral offices at Brisbane are often kept at work until 6 p.m. instead of 4.30 p.m., and are sometimes required to work two or three hours after tea without extra pay, except an allowance of Is. 6d. for tea money


– It was only a few minutes ago that I learned of the honorable member’s intention to ask this question. The reply to the first part of it is as follows : -

Yes. ‘ According to the terms of their engagement, the office hours may be until 6 p.m., should the exigencies of the service necessitate it. Some of these officers have worked after 6 p.m., but instructions were recently issued discontinuing the practice.

No overtime has been paid.

Even if they remain in’ the office till 6 p.m., they do not work more than eight hours daily, and as a great deal of work has to be performed, not only in the Brisbane office, but also in the electoral offices in the other States, I think that these officers should be employed a reasonable number of hours.

page 2618




– I wish to ask the Minister for Home Affairs if he has yet received the report of the New South Wales Electoral Commissioner delimiting the- boundaries of the new Federal electorates in that State ?


– I have not received the document in question, but I saw

Mr. Houston in Sydney last Saturday morning, and he informed me that the report would be in my hands within a day or two.

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asked the Minister for Home Affairs, upon notice -

  1. Have the superannuation rights of officers of the transferred services been preserved by the Commonwealth ; and, if so, in what way ?
  2. Were the funds arising from the contributions of those officers to the State superannuation scheme of New South Wales also transferred to the Commonwealth ?
  3. If not, what has become of those contributions, and why were they not transferred?
  4. In the event of a demand being made in respect of those contributions, in what manner would such demand be provided for ?

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

  1. Yes ; under section 84 of the Constitution Act their existing and accruing rights are preserved, and all amounts due to the officers for pensions or retiring allowances are paid to them by the Commonwealth.
  2. No. 3 and 4. The matter has not yet been dealt with, as during the bookkeeping period the whole amount of the pensions and retiring allowances is, under the provisions of the Constitution, debited to the State.

page 2619




asked the Minister for Defence, upon notice -

  1. . Whether he will direct the attention of the General Officer Commanding to the following extract from his minute of 14th May. now lying on the table of the House, and dealing with the strategical importance of the proposed Western Australian transcontinental railway: - “It will therefore be seen that the construction of the railway as contemplated would, under existing circumstances, confer no advantage to Australia in its present condition of military disorganization and unpreparedness ?”
  2. In connexion with the above expression of opinion by Major-General Sir Edward Hutton, will the Minister inquire from him whether there would be anything inconsistent with military strategy in commencing the construction of this railway three years before it might be required in a scheme of efficient defence- the completion of the railway in question being estimated to take three years ?
Minister for Defence · SWAN, WESTERN AUSTRALIA · Protectionist

– The answer to the honorable member’s questions is as follows : - 1 and 2. Yes.

page 2619


BUDGET (1903-4)

In Committee of Supply :

Treasurer · BalaclavaTreasurer · Protectionist

Mr. Chairman, I feel perfectly satisfied that honorable members will sympathize with me in the task which I have to perform, for it is a difficult and complicated one. No great mass of figures can be very interesting, and for that reason I, in turn, sympathize with honorable members who have to listen to, and endeavour to follow, the financial statement which I have to make - a task which to most of them must be a somewhat difficult one. I ask the Committee to remember, when we are dealing with these figures, that they do not relate to any one particular State. If we bear that fact in mind, we shall realize that although the figures, in the aggregate, may appear to be large, they have in reality to be divided into six separate amounts. Thus, while I may speak, for example, of an expenditure of £30,000 to £40,000 in relation to any work, honorable members must not fall into the mistake, so often made in the various States, of believing that the whole of that amount has to be found by any particular State. When certain Bills providing for expenditure have been before the House people in my own district have often said to me - “ What an immense amount Victoria has to pay in connexion with that matter. I see that the Government are going to spend £30,000 or £40,000.” But when their minds have been disabused of the misapprehension under which they laboured - when they have been told that the expenditure would be divided over the whole Commonwealth - the figures have not loomed so largely in their eyes. Another complication in regard to the presentation of the Budget at the present time arises from the fact that when I first entered upon the consideration of this subject, I found that an immense amount of arrears, representing something over £300,000, was associated with the first half-year. I felt that if I included those figures in the ordinary Estimates for the year, the result would be that the people would be told, and would believe, that we were incurring an expenditure to that extent, in excess of the amount which had been expended during previous years. In addition to that, that amount would be deducted from the true expenditure of the previous years, and the amount made to appear double. Therefore 1 was forced for the first and second years to adopt the practice of “having, not only the Estimates for the year, but also Estimates of arrears for the previous year. I am glad to say that the amount has been reduced to £30,000, and for the future I propose to allow the amount to go in with the ordinary Estimates without making special provision, because we may rely that at the end of each financial year, do the best we can to pay our accounts - and we made the best effort we could this year - there will always be a certain amount to carry forward, either in consequence of accounts not having been sent in, or in consequence of accounts not having been paid by reason of some difficulty. I have circulated, as usual, for the information of honorable members, a large amount of statistical information, and I propose to ask them to allow me, as they did last year, to go through the different papers without attempting to get in advance of the particular one I am dealing with, and in order to shorten as much as possible the remarks- I have to make, I propose, with concurrence, to give the mere results, and not to quote an immense number of figures. If I >vere to quote the figures which would be absolutely necessary for all the States, I should have to occupy a period of time which would tax the patience of honorable members. I shall give, as far as possible, the results of the figures, and, in the edition of Hansard which will be published tomorrow morning, full details will be given for the information of honorable members. If they will kindly take the Budget papers, they will find on page 1 an account of the total receipts from the past year and comparisons with what . we expect- to get during the current year. In 1902-3 the receipts came to £12,105,878, which was £535,774 over the amount I estimated. That, in itself, is a somewhat large excess upon the estimated revenue; but it does not represent more than 5 per cent, at the outside. I shall point out shortly the special circumstances which occasioned that somewhat large increase. It was made by the receipt of £570,153 over my estimate from Customs, and a shortage of £39,750 in the Postal revenue. In New South Wales we collected £4,391,000, which was £305,860 over my estimate, made up of £284,242 from Customs, and £19,298 from the Post-office. In Victoria we collected £3,126,892, which was £198, 897 over my estimate, made up of £196,514 from Customs, and £1,601 from the Post-office. In Queensland we collected £1,563,895, which was £33,115 over my estimate ; the Customs brought in £54,066 more than I expected ; but, unfortunately, the Postal receipts were below my estimate to the amount of £22,776. In South Australia, the total collections amounted to £946,936, which was about £2,953 under my estimates. The Customs realized £9,727 over the estimate, but the Postal receipts showed a decrease of £12,720. In Western Australia, including the collections under the special Tariff, we received £1,621,811, which was £9,617. under my estimate; the uniform Tariff yielded £130 over my estimate, but the Post - office yielded £18,801 below the estimate, while the special Tariff yielded £8,467 over the estimate. In Tasmania we collected £455,344, which is £10,471 over the amount I anticipated. The Customs yielded £17,007 over the estimate, but the Postoffice returned £6,352 under the estimate. With regard to the Post-office we find that there has been a considerable falling off in the amount of the Estimates. That, as I mentioned when I- was delivering the Budget statement last year, has to some extent been accounted for by the reductions of rates made by Parliament in the Post and Telegraph Rates Bill. I am told by the Department that it is anticipated that the loss in consequence of the reductions made, will for this year amount to a sum of £65,000. In addition to that - more especially in the two States where the losses have particularly occurred, South Australia and Western Australia - they are brought about by no action of ours in any way. They are brought about by the fact that a contract was entered into by certain States with regard to the Pacific Cable, which has largely reduced the revenue estimated to be received by South Australia and Western Australia - -in South Australia to the extent of £12,000’, and in Western Australia, of £4,000. Other States made bargains with the Eastern Extension Company, which resulted in a loss in terminal and other charges to the extent of £12,700. So that, independently of what we might have done by general reductions, those two items alone would go a long way to account for the loss. I pointed out when I delivered the last Budget statement what I thought would be the loss occasioned by the fiction of Parliament in reducing the rates ; but still I hoped that the revenue would como in to an extent almost sufficient to counteract those losses. My anticipations in regard to that matter have been fairly well borne out. Honorable members will probably notice that the increases with regard to Customs collections appear very large indeed £570,000. That is accounted for principally by two items. For sugar we received £61,537 over the estimate - that is to say, more imported sugar was brought in than was anticipated ; whilst from the grain duties, where I anticipated to receive £83,550, I actually received £519,086 over that estimate. Whether the action taken by Parliament in’ regard to that matter was right, or whether it was wrong - I am not concerned with that at the present time - in consequence of the very large amount that was collected from the grain duties and from sugar, my estimate or the various States interested was under the mark. But leaving out those two items, the amounts estimated were very close to the amounts actually received. In New South Wales, we received £272,409 extra from grain duties, and the total increase above the estimate was £284,242. In Victoria, we received.£l 48,884 more from grain than was anticipated, and£75,000 from sugar, in consequence of the very large amount of imported sugar which came into this State. The two together make £223,884, the actual amount received above the estimate in Victoria being £196,514. In Queensland the increased receipts from the grain duties amounted to £68,530, and the total increase above the estimate was £54,066. In South Australia the grain duties realized £5,584, the total increase above the estimate being £9,727. In Western Australia we received £17,104 from grain duties, and my estimate was just realized. In Tasmania we received £6,575 from the grain duties, and the total increase was £17,007. The following tabulated statement may make the figures more easy of reference by honorable members : -

So that honorable members will see that, with regard to what has been alleged as to my desire to underestimate the amount which was to be derived from Customs revenue, so far as last year is concerned, that criticism has very little foundation in fact. With regard to the Customs, I have on every occasion endeavoured to get as near as I possibly could to the exact amount that we were likely to receive. I keep in the Treasury a record of the receipts for each item under the Tariff, and I have each month’s takings at the end of the eleven months. I deduce from those results what I consider will be a fair estimate for the following year. At the same time, I have asked the collectors in the various States, from the information which they have, and from their special local knowledge, also to prepare estimates for my guidance. Having the two Estimates, I consider, them both. As a rule, the figures agree very closely, but in some cases we may not, perhaps, agree, and in those cases I send back the figures to the Collector for further consideration, and after receiving his explanations of local circumstances, I form my own’ view as to the amount which will actually” be received. My desire is not’ to in any way underestimate the amount likely to be received, but to place before honorable members what I consider a fair and just, estimate of our total revenue. At the same time, we require to be very careful that we do not estimate to receive more than we really think we shall receive, because if we do so we shall be inviting the State Treasurers to believe that they will get back a certain surplus at the end of the year, whilst they may not get back that amount. The blame will then be put upon the Federal Parliament or the Federal Treasurer of having misled the State Treasurers, and of having induced them to make provision for the expenditure of money which they will not have to expend. It is far better therefore that we should be £200,000 or £300,000 better off than we expected at the end of the year, than that we should be to a similar extent worse off. Under all the circumstances I always try to keep as near as possible to what I believe will be the actual figures, without exceeding in any way a fair estimate. If honorable members will look at the bottom of page 1 of the Budget papers, they will find Estimates’ for this year. I am afraid that these, and some other matters to which I shall have to refer, will not be very pleasing information for some of the State Treasurers. Honorable members will see that the total estimated- revenue from all sources for this year is set down at £11,566,175, which is £539,703 ( less than the actual amount collected during the year just passed. The decrease is anticipated principally from customs to the extent of £578,153, and I anticipate an increase from Post-office collections of £45,350. I calculate that the decrease in New South Wales will amount to £338,704 in Victoria, to £82,297, Queensland, £86,1 13, Western Australia, £50,351- £41,467 of that amount being due to a falling-oft’ in the special Tariff of Western Australia in consequence of the further reduction of onefifth of their rates on Australian goods - and in the case of South Australia and Tasmania I hope to have increases of £5,571 and £12,191 respectively. The following statement sets out the whole of the figures in a manner which will allow them to be easily compared : -

When honorable members come to study the papers in which these figures are given they will find the fullest information I can possibly give them on page 1a. I set out there the whole of the details of the various items of our receipts, and show the variances which I expect during the current year. On page 2 honorable members will find the record with regard to the’ Postoffice. As I have already mentioned, I anticipate that I shall receive from the Postoffice £45,350 more than the receipts of last year. These are the figures for the different States : - New South Wales, £925,000, an increase of £18,202 ; Victoria, £640,000, an increase of £17,499 ; Queensland, £302,000, an increase of only £1,276 ; South Australia, £257,000, an increase of £1,520 ; Western Australia, £229,000, an increase of £3,901 ; and Tasmania, £97,000, an increase of £2,952. Honorable members will, therefore, see .-that the total anticipated receipts from our Postoffice during the current year amount to £2,450,000. The figures are all set out in the following abstract : -

On pages 3 and 4 of the papers honorable members will find the fullest details with regard- to the receipts from Customs and Excise. I have taken each division, and I have shown the amount anticipated last year, the amount actually collected, and the amount which I anticipate this year. So that the State Treasurers and those interested in the correctness of my figures will have an opportunity of ascertaining whether I have been working on right lines in dealing with the figures which I submit to honorable members. If honorable members will look at the bottom of page 4 they will find the summary, which works out as follows : - I expect to receive in New South Wales £3,125,000, a decrease of £353,742 on last year’s estimate ; in Victoria, £2,400,000, a decrease of £99,014 ; and in Queensland, £1,175,000, a decrease of £86,066. In Western Australia I anticipate to receive £1,150,000 from the uniform Tariff, a decrease of £12,530, and from the special Tariff £192,000, a decrease of £41,467. In two States only do I anticipate an increase. I anticipate an increase of £5,273 in South Australia, making the total collections in that State £695,000, and in Tasmania I look for an incraese of £9,393, bringing the collections in that State up to £370,000. In all, I expect to receive from the uniform Tariff during the current year £8,915,000 ; and from the special Tariff in Western Australia £192,000, making a total of £9,107,000. These figures are tabulated in the following statement : -

Again, we have to deal with the very large falling off which I anticipate in the Customs receipts ; and I desire to point out to honorable members the decreases in four leading items. Prom State imports, the particulars of which are given on page 5, we received last year £223,000, and this year we expect to collect £136,000 only, a decrease df £S7,000. The amounts paid by States on Government imports are as follow : -

Then with regard to sugar, I expect, for reasons I shall give later on, to collect £40,000 less. As to grain and some other agricultural duties, I have allowed about £200,000, which shows a falling off of £450,000 as against the collections of last year. We have yet to collect these duties for some months, but there are already large stores of wheat and other grain in stock. I have had to rely on information received from Collectors with regard to this matter, because it is one on which

I have no special knowledge ; bub the figures supplied to me show that the amount I have stated will be about the falling off as compared with last year. And then the reduction in the special Western Australian Tariff means a decrease to the extent of £40,000 ; the four items I have mentioned, therefore, account for the reduced receipts to the extent of £617,000, against the anticipated reduction of £578,000. Honorable members will see, with regard to the anticipation in connexion with the Customs, that although there is this very large falling off, it is accounted for to a great extent by those few items, and there are other matters which we were forced to take into consideration when making up our minds as to the amount likely to be derived from the Customs during the year. We know full well that in all the States there is a cry for retrenchment in connexion with State expenditure.

M r. Higgins. - State expenditure 1


– There is a cry also for retrenchment in connexion with loan expenditure ; and I see by a statement made by the Treasurer of New South Wales that he hopes in the near future that no more .than £500,000 per annum will be expended out of loan moneys in that State.

Mr Watson:

– Is it not £1,500,000?


– The figures I saw were £500,000 ; but even an expenditure of £1,500,000 would be a large falling off from that to which New South Wales has been accustomed. I thought £500,000 was a very small sum, and probably £1,500,000 will be nearer the requirements of New South Wales during the year. With a large falling off in State expenditure, there must necessarily be a smaller spending power on the part of the masses of the people, and therefore a less consumption of imported goods. In addition, it is clear from investigations I have made, that there has been in many lines an increased manufacture of goods in New South Wales. There has been a very large increase in the consumption of Australian goods by the States of New South Wales, Queensland, and Tasmania, and not quite so large an increase in the consumption of other States. But, although we may fairly anticipate a good season this year, I think that honorable members who have studied the question will agree with me that we are not justified in expecting to obtain any real benefits from it until towards the end of the financial year. That being so, I have felt compelled, not to swell my estimate of the revenue likely to be received, though I have exceeded the estimates sent to me from some of the States, and especially that sent to me by the Collector of Customs in New South Wales. That officer is an able man, but he takes a pessimistic view of the possibilities of Customs revenue in that State during the present year. I feel, however, that in the figures I have placed before honorable members, I have gone as far as I can in estimating the amount likely to be collected. Of course I hope that my estimate will be exceeded. I was glad for some reasons to see my estimate of revenue exceeded last year, because that enabled some of the States to have surpluses instead of heavy deficits, though I was sorry that the additional amount collected came chiefly from a particular line of duties, because that meant- a very large loss to those connected with the farming and producing interests of the Commonwealth. In making this estimate I have a very disturbing element to deal with in connexion with the revenue to be collected by means of the sugar duties. Those duties bring us in an immense amount of revenue, but it is almost impossible to accurately determine how much imported sugar will be used next year. Last year most of the imported sugar came to Victoria, and threw me out in my estimate to the amount of nearly £100,000.

Mr Reid:

– Was that sugar upon which a duty of £6 a ton had to be paid ?


– Yes, £6 per ton being .the duty upon imported sugar, while the excise du tj’ upon Australian sugar is £3 per ton, and we have to pay a bonus upon all sugar produced by white labour. I anticipate that this year all the sugar produced in New South .Wales will be grown by white labour, and will amount to about 20,000 tons, and that in Queensland 25,000 tons will be grown by white labour, and 65,000 tons by black labour, making the total production by white labour 45,000, and the total production ‘by black* labour and by white labour 110,000 tons. As I estimate the consumption of the Commonwealth at about ISO, 000 tons, probably 70,000 tons will be imported. Honorable members will be pleased to know that, as the result of the white Australia policy, whereas only 12,255 tons of sugar were produced in Queensland by white labour last year, I am advised that this year about 25,000 tons, or just twice as much, will be so produced. I expect to receive £330,000 from the excise duties upon sugar and £420,000 from the import duties, a total of £750,000. Last year my estimate of the revenue to be received from sugar was £735,500, and the actual collections amounted to £790,000. As I have mentioned, it is very hard to distribute that amount amongst the various States. I have, however, done it as best I’ could. I take it that a large proportion of the imported sugar will, undoubtedly, be used in Victoria, which will again receive the advantage to be derived from the heavier duty. Another point to be considered is that, whereas last year we had to provide for sugar rebates to the extent of £60,000, we shall be called upon this year to provide an extra £30,000 for bonuses. I feel certain, however, that although honorable members might object to some items of expenditure, theywill not be prepared to raise any quibble against our providing the additional £30,000 necessary to assist in carrying out the policy approved by Parliament.

Mr Conroy:

– I object to the bonus, and. always did.


– On page 6 of the Budget papers honorable members will find what we call the Inter-State adjustments, arid if they will study them they will find them very interesting. The figures show the movements of goods which are imported into one State, and sent into another. Honorable members will recollect the provision in the Constitution that where duty is paid in one State, and the goods are consumed in another, we have, during the bookkeeping period, to credit the amount of duty to the consuming State. That, like many other ‘requirements of the bookkeeping classes, gives us an immense amount of work, and causes some irritation amongst those who have to furnish the necessary information. The figures at the foot of the columns, on page 6, show that this year we are expecting New South Wales to be debited with £100,000 as against £75,607 19s. Id. last year. Victoria will be . debited with £210,000 as compared with £196,152 3s. 9d., whilst Queensland will receive credit for £125,000 as against £114,935 10s. 9d.; South Australia will be credited with £22,000 as compared with £21,183 13s. 8d.; Western Australia will be credited with £53,000 as against £37,842 13s. 10d., and Tasmania will receive credit for £110,000 as contrasted with £97,798 4s. 7d. last vear. The full particulars are given in the following statement : -

These figures will show honorable members that what may be called the distributing trade of the Commonwealth is carried on principally in the States of New South Wales and Victoria, and that the volume of such trade in Victoria is about twice as great as that in New South Wales. The latter portion of the statement, which relates to Excise, is also very interesting. It shows that New South Wales sends away a very large quantity of tobacco, and that Victoria exports considerable quantities of spirits, beer, and tobacco, and - ah item that my right honorable friend the leader of the Opposition has frequently found interesting - starch. Queensland, on the other hand, imports beer largely - I believe principal from Tasmania - and also tobacco and starch. South Australia sends away spirits and imports tobacco in large quantities, and Western Australia imports tobacco extensively. It is evident, therefore, that the tobacco-manufacturingindustry of Australia has, to a large extent, become centered in New South Wales and Victoria. Tasmania sends away large quantities of beer, and, in return, takes obacco.

Mr Watson:

– How does her sugar go out - in the form of jam ?


– Yes. I suppose so. Honorable members will see from these figures that, although from the- producing point of view they have much to commend them, the State Treasurers may regard them from an entirely different aspect, because the more largely we consume Australian-made goods, the more rapidly will our revenue returns decrease. There seems to be no doubt whatever that, with regard to excise goods as well as others, as time goes on and we become more united as a people, and more accustomed to dealing with one another, there

must be a large falling off in our imports. Page 7 gives honorable members the population in the different years upon which we have calculated our various percentages in order that they may, if necessary, check them. On page S are set out particulars for the past three years - month by month - of the net amount collected from Customs in each State. Honorable members are thus afforded an opportunity of comparing them, and of noting the increases or decreases which have occurred. Then I have prepared - as I did last year - a number of tables for the information of the House, and these will be found upon page 9 and the following pages. Table B shows at a glance the total Customs and Excise revenue collected during the various years. They are as follow : -

Table C gives the receipts per head, which, no doubt, will prove interesting to honorable members. It is as follows : - In passing, I may mention that during the present year I anticipate deriving from the Commonwealth a revenue of *£2* 5s. 5d. per head, as against *£2* 8s. 9£d. received last year, and *£2* ls. 5¼d. per head which was collected in 1900, when oneState was, to a very large extent, under a free-trade policy. Of course, last year, as I pointed out, was an exceptional year from a revenue-producing stand-point. Comparing- the year 1903-4 with that of 1900, I find that the amount per head is about the same in Victoria, whilst in New South Wales there is, of course, a very large increase. In South Australia there is a small increase; in Queensland and . Tasmania there has been a large falling off - which is accounted for by the unfortunate decline in their revenue ; whilst iu Western Australia the fall is becoming heavy. Doubtless this fall is accounted for by the font that in the previous year Western Australia contained more male inhabitants than it does at the present time. Of course, that condition affects, to a considerable extent, the consuming power of a State, and reduces the amount of revenue colleoted per head. I have also endeavoured to obtain information regarding the proportion which the Customs and Excise revenue bears to the total revenue of each State. Unfortunately I have not been able to secure complete information in this connexion, but I will take care that it is supplied in the later Budget papers which will be issued. So far as I have the particulars, they are as follow : - I omitted to refer to table D, upon page 9. That table gives the percentages which the total receipts of the States bear to the percentages of the population. It will be seen that iu New South Wales and Queensland the percentages are very much alike. In Victoria, South Australia, and Tasmania, the percentages of the Customs receipts are much smaller than are their percentages of population. That, I take it, is accounted for by the larger manufacturing interests in those particular States. Of course, in Western Australia, which is a disturbing element in any attempt at calculation, the rate of imports greatly exceeds its percentage of population. The details are tabulated in the following statement : - Upon page 10 I have endeavoured to give effect to a desire which I have often expressed in this Chamber regarding the amount that should be collected from Customs and Excise in the various States. I have always held that as far as possible we should endeavour to collect from these sources an amount sufficient to cover thenew expenditure, and to enableus to return to the States about the amount of revenue they were collecting in the year 1900. The figures are given for each year, but honorable members will find towards the bottom of the page a statement comparing the returns for the three years . ending- 1903-4 with those received by the several States during the year 1900. That, statement is as follows : - It will be found from those figures that it is estimated that during the three years New South Wales will have received from the Commonwealth 3,687,599 more than she obtained durin1900, thatSouth Australia will have receive £69,518 more, and Western Australia £554,676 more. Victoria, on the other hand, will have had a shortage to the extent of £71,020, Queensland a shortage of £1,085,645, and Tasmania a shortage of £410,676. {: .speaker-L2G} ##### Sir William McMillan: -- The figures show the totals received during the three years, in excess of the returns for 1900. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- Yes ; they extend over the three years. Including the estimated return for 1903-4, the States altogether will receive back £2,744,452 more than they obtained during 1900, whilst . Western Australia will also have the benefit of a special Tariff yielding £627,036. {: .speaker-F4R} ##### Mr Watson: -- The right honorable gentleman only compares the returns for the three years of Federation with the year 1900 - not with the three years preceding Federation. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I compare the returns of each year since the establishment of Federation. {: .speaker-F4R} ##### Mr Watson: -- But not with the years' 1898, 1899, and 1900. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- No ; I have always made a comparison with the returns for the year immediately prior to Federation. {: .speaker-KPM} ##### Mr McCay: -- Should not the right honorable gentleman divide the returns for the three years since Federation? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I am giving honorable members all the figures. They will find the returns for each year since the establishment of the Commonwealth compared with those for the year 1900, and a comparison of the returns for each of the three years of the existence of the Federation. I have always felt that the most which we are called upon to do is to return to the States a revenue equal to that received by them during the year immediately prior to Federation. I do not think that there was any disturbing element in that year. {: .speaker-F4R} ##### Mr Watson: -- The high- -water-mark was reached in several of the States in 1900. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- The high water-mark may have been reached, but I have taken the returns for 1900 as a guide. I have always thought that it is a fair and reasonable thing to say to the Treasurers of the various States, . " You . collected during 1900 a certain revenue, and as long as we can return to you an amount representing as nearly as possible what you collected during that year you will have no cause for complaint. I find that several of the States are complaining of the loss of revenue which is said to have been occasioned them by the establishment of Federation, and I have had these figures compiled in order to. show that there is really no justification for that complaint. {: .speaker-KW6} ##### Mr Thomson: -- The Treasurer has given the States the full advantage in the comparison he has made. {: .speaker-KWT} ##### Sir GEORGE TURNER: -Very likely. On page 12 of the Budget Papers honorable members will find another comparison which, I think, will be regarded as a perfectly fair one. The table compares the Customs and Excise returns received during the 30 months immediately prior to Federation with those derived during the 30 months dating from 1st January, 1901. {: .speaker-KDD} ##### Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT -- That is a fairer comparison. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- A perusal of the table will show that during the 30 months dating from 1st of Jannary, 1901, New South Wales received a revenue amounting to £3,025,729, in excess of that which it obtained -during the preceding 30 months; that Victoria had an increase' of £485,675, and that we returned to South Australia - where many complaints have been made that the - Commonwealth has. swallowed up all the money which they have raised by means of extra taxation - a sum ef £121,543 in excess of the revenue they received during the correspondingperiod immediately prior to federation. Western Australia, under the uniform Tariff, received an increase of £485,901, as well as an increase of £435,036 under the special Tariff. In Queensland and Tasmania, there was unfortunately a decrease to the extent of £647,028, and £208,514 respectively. The totals- show that from 1st January, 1901 - when the Commonwealth was established - to 30th June, 1903, we collected Customs and Excise duties, £3,263,306 in excess of the amount that was collected by . the several States during the 30 months immediately previous to Federation. That will appear more clearly from the following statement : - I think? therefore that any complaints that may have been made by the States ' Treasurers, or other persons, to the effect that Federation has largely reduced their revenue from this source, are shown to be groundless. We returned to most of the States during this period far more than they collected during the corresponding period immediately prior to the establishment of the Commonwealth. Unfortunately there are two States, Queensland and Tasmania, with which we can never satisfactorily deal. {: .speaker-KYR} ##### Mr Kirwan: -- Has the Treasurer a comparison of the Post-office receipts since Federation, as against the returns before the establishment of the Commonwealth. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- Not on a similar basis. , There is a comparison of Post-office receipts for three years during the Federation. {: .speaker-KPM} ##### Mr McCay: -- Is the new ' expenditure debited on page 12 % {: .speaker-KWT} ##### Sir GEORGE TURNER: -- This table has nothing to do with new expenditure. The previous table I used had to do with new expenditure taken from- the amount collected during the. year. The next table simply shows that we expect to collect from the Defence Department something over £4,000. The following tables on pages 13a and 14 show in a short form .the amounts which we collected last year, and expect to collect this year from the various sources of revenue. . On page 15, I have set out a comparison of all sources of revenue going back to the date of the establishment of the Commonwealth. This, of course, is one of the tables which have to be prepared, because in three years' time the Treasurer will have' to submit to the House some mode of dividing the surplus. I am compiling these tables as a reliable source of information for him, remembering the great difficulty I have had in endeavouring to find out the expenditure or the receipts in various States to enable me to prepare certain statements with which I have to deal later on. A comparison near the top of the page shows the amounts collected from the Custom! as compared with those for the year 1900. I anticipate that New South Wales will be £1,339,219 to the good; Victoria, £57,515 ; South Australia, £55,996 ; and Western Australia £205,254; while Queensland and Tasmania will be to the bad £386,486 and ' £119,151 respectively. The total excess to be collected this year from Customs and Excise, comparing the revenue with the collections for 1900, is estimated at £1,152,347. The particulars are tabulated as follows : - In the item Post and Telegraphs, there is, unfortunately, a misprint . in the column for New South Wales; it ought to be plus £18,000, not minus £18,000. I hope that honorable members will recollect that error in making comparisons. I have dealt with the receipts for tha past year, and the estimated receipts for the current year ; and I have endeavoured to explain how it was that the receipts were more than my estimate, and to give a satisfactory explanation of the reason why during the current year I expect that the receipts from various sources will fall off to the large extent I have mentioned. I now propose to deal with the question of expenditure. On page 16 honorable members will find a comparison on what we call a cash basis. I shall compare afterwards the cost of the departments during the year, which, of course, is different from the cash. The cash is the amount which we pay in connexion with a department during the year, although it may include arrears for a previous year. The cost of -a department, on the other hand, is simply what it actually costs during that year, whether we pay or not. ' It is fair, I think, to compare the cost in one year with the cost in the previous year. If we compared simply the cash expended in one year with the "cash expended in the previous year the latter would have borne far heavier arrears than a subsequent year would have done, and therefore the comparison would not be fair, and would be unduly in favour of a subsequent year. To put the matter on a fair and plain basis, I have made my comparisons with regard to expenditure on a cost basis, and not on tho actual cash expended during the year. The table, however, shows, for financial reasons, the amounts which were expended, and we find that the total expenditure for . 1902-3 - transferred and other expenditure - came to £3,901,000. That was £350,147 less than the estimate. This year we provide £4,320,449, being £418,690 more than the actual expenditure of last year. ' But if we compare estimate with estimate, the extra amount asked for this year comes to £68,543. The following table shows the items : - The details of the amounts provided, the amounts expended, and the increase this year are as under : - Those who desire to study the figures will find full particulars on pages 17, 17a, and 18. Turning to page 18 of the papers which I have circulated, 'there is there set out a comparison of the cost in each year of the variousserviceson the basis of the Estimates. The document to which I particularly desire to draw the attention of honorable members commences at page 21. I have been trying for a very long time j>ast to ascertain from State financial reports, and from the States themselves, what each Department really costs during the year. I can find out what is expended by the Departments during the year, but I discover that certain expenditure in connexion with a Department may be saved. In many cases lump sums have been voted but were unexpended. It is impossible to ascertain, in connexion with all the Departments, the amounts which were unexpended. In regard to one State I was trying to find out what the.Post-office expended on salaries, and I discovered that increments were made, not alone from the Treasury, but from the Attorney-General's Department. No one would dream of looking over the Estimates from the AttorneyGeneral's Department for increased expenditure in connexion with the Post-office unless he was well acquainted with the finances of the State. The Public Service Act happened to be administered by that particular depart ment, and a lump sum had been placed on the Attorney-General's Estimates. To avoid that sort of thing in future, and to enable us to have, since federation, a true comparison of the actual cost of every Department, I have brought altogether in the table to which I have directed the attention of honorable members all the items of expenditure. I have charged to each Department every vote that I think is fairly chargeable against that particular Department, no matter what department Ministers consider the amount expended to concern. Honorable members will find the three years compared in these figures, so that they will see whether the different items affecting the Departments have been increasing or decreasing. But I will ask them in making these comparisons, and also in dealing with the question of estimated expenditure this year, not to overlook one fact. The . estimated expenditure will probably be somewhat larger than the actual expenditure during the year. That has to be taken into consideration, because we have to provide for items, the total amount of which may not be expended. Circumstances may occur under which no portion whatever of the amount voted will be expended. However, I can assure the Committee that in consideration of the large amount asked for, I requested the Ministers administering the different departments to go carefully through the Estimates and cut them down as much as they could. I took a hand afterwards at the same business. So that I do not think there is likely to be any large saving during the course of the year. Still, of course, there will be some amounts in which we can save, and if they are really savings the result will be all the better for the States. With regard to some of the unexpended amounts last year, I cannot possibly claim them as savings. They are not savings. The amount by which the Estimates of the Defence Department has been reduced is an absolute saving; the amount affecting the Post-office was an actual saving. After providing about £40,000 for the minimum wage there was a saving of £10,000. In new expenditure there was a saving of £50,000, but £30,000 of that is to come into this year's Estimates with regard to electoral expenditure which could not- be got into last year's expenditure. And in " new works " there was also a considerable amount unexpended. I shall very shortly point out the effect of this upon this year's finances. The following table gives the full details : - Under the heading " Governor-General," we *Are* asking this year for £16,015 against a total expenditure of £12,436 last year - an increase of £3,579. This is accounted for by the fact that last year, in consequence of certain matters between the States and the Government, moneys which would have been payable in. connexion with the Government houses were not expended, and this year probably something on account of last year will have to be provided in addition to the full amount required for this year. Parliament last year cost us £105,219, and this year we are asking for £1S6,028. The considerable increase is accounted for chiefly by one item of £79,000 for electoral expenditure. That is expenditure in the preparation of our rolls, and the expenditure which will be involved in connexion with the general elections. The preparation of the rolls, and the portion of the Home Affairs Department fairly chargeable to the parliamentary vote as being entirely used for parliamentary purposes involves an expenditure of some f.33,000 or £34,000, and' my honorable colleague, the Minister for Home Affairs, has anticipated that he can carry on the general elections for a sum of £45,000. {: .speaker-F4P} ##### Mr Reid: -- That is exclusive of the £34,000. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- The £34,000 is, of course, for the collection, preparation and printing of the rolls, and various other expenses connected with the rolls. But my honorable colleague believes that £45,000 will cover the total expenditure on the elections throughout the Commonwealth. {: .speaker-F4P} ##### Mr Reid: -- That is on the assumption that the elections for both the Senate and the House of Representatives will be held on the same day. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- That is necessarily assuming that the elections for both Houses will take place on the one day. Comparing that with the total cost of State elections throughout the Commonwealth, and bearing in mind the fact that in many of the States we have nowpractically double the former number of electors, I think that if the Minister for Home Affairs can carry out the elections for that amount of money no one will have any cause to complain, or to say that in that respect - as they have wrongly said in other respects - the honorable gentleman is inclined to be a little extravagant. {: .speaker-F4R} ##### Mr Watson: -- It cost nearly £40,000 to carry out one election in New South Wales under the electoral officer there. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I cannot, of course, point out all the increases in expenditure, but there is one item here to which perhaps I should draw special attention. Honorable members will find that it is proposed, if Parliament agrees, to provide a sum of £200 for a bust of our first Governor-General. For the Department of External Affairs we are asking £34,925 against an expenditure last year of £33,041. In. this Department as in many others a considerable portion of the increase is accounted for by the fact that we are now compelled to pay. for postage and telegrams. This counts as expenditure against the Commonwealth, but as honorable members are no doubt aware, it is only a bookkeeping entry, as the money is charged back directly to the States. That accounts ip this case for some portion of the increased expenditure, and there are also a few small increases to junior clerks in this particular Department. The AttorneyGeneral asks for £9,915, as against an expenditure of £2,497 on his Department last year. The increase of £7,418 is accounted for by the appointment of a Crown Solicitor at £2,300, which includes the salary of the Crown Solicitor and provision for his clerks, and the necessary books and requisites for his office. I am satisfied that the appointment was absolutely necessary, because the majority of the complaints of delay which were made against the Customs Department were really accounted for by the fact that we had to send our work to the States Crown Solicitors, and as those officers had their own work todo, they could not do our work as, promptly as it would otherwisehave been done. It was absolutely necessary to take this step, and the appointment which has been made, will, I believe, *pive* general satisfaction. In view of the High Court Bill becoming law, £4,500 is provided for the expenditure in connexion therewith; but the Judges' salaries will, of course, be provided by special appropriation. {: .speaker-KHC} ##### Mr Higgins: -- The estimate" is for the half-year only ? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- It is for a little more than the half-year. In the Department of Home Affairs, the expenditure is increased from £28,851 to £37,114, an increase of about £8,263. That increase is accounted for by the fact that, in many of the branches of the Department, the officersat present employed were only engaged for a very small portion of last year. In fact, some of the positions have not yet been filled, the Minister for Home Affairs holding back the appointments until he fmd& them absolutely necessary. In this Department, again, the expenditure on postage and telegrams has to be considered ; and, as honorable members will see when they investigate the items, this means a considerable amount. For the Treasury I am asking for an increased expenditure of £1,202- for £14,839, as against £13,637 last year. In this Department the expenditure on postage and telegrams has its effect also ; and I have been forced, in order to get the work done within a reasonable time during the day; . to appoint three or four junior clerks, who are commencing at £40 per annum, and will gradually work up to better positions. In the Customs Department my late colleague managed to reduce the expenditure, and the amount asked for is £276,231, as against £276,766 expended last year. But last year overtime was allowed in this Department, and that was paid for by the public, and credited and debited to revenue as occasion required. That practicehad not previously been adopted ' except, I believe, in one or two of the States, and we do not propose to adopt it this year, but to pay the money into a trust fund, and if there be any balance not required for the services of the officers, to then pay it into the general revenue. Otherwise our expenditure would be undulyinflated. I may say with regard to the revenue generally that, in many cases where I found that States were in the habit of crediting receipts to votes instead, of to revenue, I have discontinued the practice, and that has made a considerable apparant increase in the expenditure of the Commonwealth, when, as a matter of fact, there has been no increase. Then coming to the Defence Department, at which honorable members. always like to have a worry, I find that, excluding new works and buildings, but taking into account the expenditure in the Department itself on rent, repairs, and various other items, an amount of £707,341 is asked for, as against £700,695 actually expended last year. {: .speaker-F4P} ##### Mr Reid: -- Does that include the £200,000 under the proposed naval agreement ? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- No; only £106,000. {: .speaker-F4P} ##### Mr Reid: -- Then there will be another £100,000. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- If my right honorable friend will allow me, I shall deal with all those matters later on. The Amount I have mentioned includes £106,000 for the existing subsidy in connexion with the Auxiliary Squadron ; so that, as against the actual expenditure of last year, we are asking for an increase of £6,646. Of course, it is hardly fair, for reasons which I propose to give very shortly, to base our calculations in regard to this particular Department, on the actual expenditure of last year. I intend to leave my colleague who is in charge of this Department to explain, either during the debate if the expenditure be challenged, or when his Estimates are under consideration, the manner in which he has made the reduction. But I wish, in passing, to point out that the Defence Department Estimate of last year was £762,014, and the Committee then expressed a desire that this year the amount should not exceed £700,000. As a matter of fact, my right honorable colleague has reduced it to £677,000, though part of that reduction - an item referring to new rifles, and amounting to £15,000 - has been transferred to a special vote. The Government intend to ask for a certain amount for armament and equipment, because it was the general opinion of the Committee that expenditure of that nature should not be included in the annual vote, but should be submitted as a special vote, so that Parliament might each year appropriate such a sum as it might deem reasonably necessary for the purpose. Part of the extra expenditure which the Department has had to meet this year has been for rents, repairs, and similar items, and amounts to something over £5,000. Generally throughout the Estimates we have had to provide more for repairs this year than was expended last year, though on the whole we I do not provide more for such expenditure than was provided last year. {: .speaker-F4R} ##### Mr Watson: -- The head-quarters expenditure is creeping up as usual. {: .speaker-KWT} ##### Sir GEORGE TURNER: -The Minister for Defence will be able to give a very reasonable explanation of that. Thereare transfers from other parts of the Estimates which make reductions which must be taken into consideration. Large savings were made last year because recruiting was to a great extent stopped owing to the want of re-organization of the forces. It is proposed this year to recruit up to nearly the full strength of each regiment, which, of course, will mean a heavier expenditure than last year, but considerable reductions have beenmade in the expenditure upon the permanent forces. In regard to the partially - paid forces, the Minister for Defence has determined to deal equally with the men in the various States. We found that although in some of the States men have been treated as partiallypaid, in other States- they have been classed as volunteers. It is thought wise, however, to place them all on the same footing,and to give them uniform rates of pay. This has been done as far as possible, the old rates of pay being slightly reduced in some of the States and slightly increased in others. We found, however, that in Tasmania, because of the position of the State Treasury, and the heavy loss which that State has. been called upon to suffer, we should not be justified in creating partially-paid forces, because to do so would mean to the State an extra expenditure of about £5,000. We hope that next year, however, we shall be able to do so, and we have no doubt that those who have for many years belonged to the volunteer forces of that State will not take umbrage because this year we cannot incur the extra expenditure necessary to pay them. The Government considered the matter very carefully, and I asked the Minister for Defence, as a special favour to Tasmania, not to provide for partially-paid forces there. In many of the States we have to provide for an increased expenditure upon ammunition, but I do not propose to go further into details in connexion with the expenditure of the Defence Department. {: .speaker-K4E} ##### Mr Conroy: -- The right honorable gentleman does not appear to have placed that expenditure in the general vote, nor can I see the Thursday Island expenditure there. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- If my honorable and learned friend will study the papers which I have laid upon the- table in the light of the explanation I am giving, he will find that I am placing before the Committee a correct synopsis of them. I am giving the Committee all the information in my power, whether it supports or tells against the Government proposals. I have not attempted to hold back anything. Honorable members who study the papers will be able to reconcile my statements with them, but if they cannot, and will drop me a line, I shall be only too glad to resolve any difficulties they may have in making comparisons, because, of course, they cannot be expected to pick. out and compare items as easily as I or the officers of my Department could do. In connexion with the post-office, I am asking for a considerably increased vote. The expenditure last year amounted to £2,406,193, and we are compelled after considerable cutting down of expenditure to ask for £2,525,758, or an increase of £119,565. Of this increased amount, £6,000 will have to be paid to officers whom it is proposed to retire on account of their exceeding the age of 65 years. Then we intend to spend £10,000 additional upon repairs to buildings and supervision of works. The Pacific cable will involve us in a loss of £30,000. This will be charged against the States that were interested in that particular bargain, and not against the Commonwealth as a whole. We have provided for an increased expenditure upon the Vancouver mail service, to the extent oi! £6,700, the Tasmanian cable will involve us in an extra expenditure of £2,250, and the Western Australian mail service will cost us £1,250. more than formerly. These items represent £56,000 out of £119,000. Then there are the increments. AVe find that the total amount of the increments will be about £50,000. I shall give the details in another table. Fortythree temporary employes have been made permanent, and this will cause an 'addition to the salary vote of £6,000. This amount will to some extent relieve the temporary vote ; and also the expenditure in connexion . with new works and buildings. Therefore, as a matter of fact, it will not add to the total expenditure, although it will be an increase so far as the Post-office Department is concerned. {: .speaker-F4R} ##### Mr Watson: -- It is not new expenditure. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- No ; we are not treating any such items as new expenditure just now. Two hundred and thirteen new appointments, distributed over the Commonwealth, have been asked for, and the salaries payable, in connexion with these will amount to £15,000. . This, will bring up the total increase under the bead of salaries to £71,000. During the year, however, we expect to save £25,000' by retirements and by filling up vacancies, by the appointment of officers paid at lowersalaries than those received by the former occupants of the positions. So that the increments, the provision for the minimum, wage, and the new appointments will represent a net increase of £46,000. Honorable members may contend that the expenditure in connexion with the Post-office should not increase, but it must be remembered that we have largely reduced the telegraph chargesand that the change has involved a considerable increase of work, and the appointment of additional officers, whilst at. the same time we have lost revenue. Then the ever-continuing extensions of the telephone and telegraph systems lead to increased charges for maintenance, and also for salaries, because we have to employ a certain number of additional officers to> attend to the larger volume of work. Them as the number of employes has to be increased as the country is opened up, we have to provide for an addition to the salary list. Therefore, taking all the circumstances into consideration, although there is apparently a large increase in the expenditure of the department, it is one that can be fully justified. It certainly will not compare favorably with the increase in the revenue, but the expenditure has been occasioned by our own action in reducing the telegraph charges, for the benefit of those who use the telegraph service, and in increasing the minimum wage, so that justice might be done to a number of officers who have been in the service for a number of years, and who have attained their majority. I have informed honorable members that we expect an increased expenditure of £30,000 in connexion with the sugar rebates. {: .speaker-F4P} ##### Mr Reid: -- Would that be under the new or the old system *1* {: .speaker-KWT} ##### Sir GEORGE TURNER: -- The amount expended would be the same under either system. The additional expenditure will be occasioned by the increased production of sugar grown by white labour in Queensland. The £32,000 provided in the year 1902-3 for compensation in connexion with the Defence Department will not be a recurring item. The total expenditure for which I am is £4,320,000 as against £3,834,000 for last year, an increase of £4S5,000. But honorable members must always bear in mind that we hope to save a certain proportion of that amount. I shall be glad if it is possible to effect a saving of £85,000, but I am not very sanguine that it is. Perhaps it may be as well' for me to point out how that total increase is made up. In this connexion, I may mention that the compensation payments have increased by £10,000 this year in consequence of the retirements which I have mentioned, and which have enabled us to make savings in other respects. For the supervision of public works in the various States we shall pay an additional £6,000. For repairs we are providing an extra £12,000, for mails and cables, an additional £40,000, for rebates upon sugar, £30,000 j «.nd for postal and railway charges which we have now to pay, but which previously we had not, £16,000 ; making a total of £254,000. The additional expenditure this year is largely occasioned by the item, " Works and Buildings." Upon these we propose to expend £270,000 more than was expended last year. That will account for a total expenditure of £524,000, as against £485,000, the balance representing savings made in other directions. The following table summarizes the extra expenditure : - If honorable members will turn to page 29, they will see a table having reference to new works and buildings which will interest them. The details in connexion with these works and buildings will be found at the end of the Estimates. They are epitomized in the following table : - As honorable members are aware, we deal with this particular item as a separate one, and not as a part of the ordinary annual charges of the year. Last year we provided for an expenditure in this connexion of £365,000. The amount appropriated was something more than that, but it included expenditure incurred in the previous year. The sum appropriated was £365/185, but the total amount expended was only £153,698, thus leaving an unexpended balance of £211, 487. That fact creates all the difficulty, because this year we have to re- vote the amount which was unexpended last year. As honorable members are aware, our votes cease upon the 30th June, and if the total amount voted last year had been expended, the sum for which I am now asking would have been considerably reduced. {: .speaker-K4E} ##### Mr Conroy: -- Does the Treasurer mean expended or paid ? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- The sum expended is the . amount of cash that has actually been paid. This year I am asking for £422,000. Of that amount we are charging £407,000 as transferred expends ture. Of that amount there is, in the Works Department alone, independent of telegraphs and telephones, an amount of £82,000 which is a re-vote for works, most of which are now in progress. Part payments have been made, but that sum is required to complete the undertakings in question. In addition, there is a sum of £15,000 which is required for the purchase of certain new machinery that has been obtained. for the Government Printing-office - machinery which belongs to the Commonwealth Government, and which is branded to distinguish it from that which is the property of the State Government. In point of fact this particular sum is chiefly required for the purchase of linotypes and other machinery which is intended to expedite our printing. Since the establishment of the Federation we have done very well in the matter of Commonwealth printing. We have been getting our printing done in the various Government Printing-offices of the States at actual cost price. In Victoria we have had, free of charge, the use of the buildings and machinery of the State Printing-office.But I have discovered that, when both the State and Federal Parliaments are in session it is too much to expect that the machinery in the Government Printing-office should be able to expeditiously carry out the printing required by both Legislatures. The type used in the Victorian State rolls is kept standing year after year, and in these circumstances I found that, as the Federal rolls had to be prepared, it would either benecessary to purchase type or new linotype machinery for that purpose. After giving the matter the most earnest and careful consideration, I determined that, as we should have, sooner or later, to purchase linotypes for this work, it would be, in the best interests of the Commonwealth, to provide for their acquirement now, instead of purchasing a considerable quantity of. type, which would be locked up in connexion with our rolls, and would not be available for other purposes. Another return, the details of whieh I shall give presently, relates to an expenditure of £75,000 on various items relating to what I may term defence armaments. I have taken up the position, that in view of the great falling off in the amount of revenue which the States Treasurers will receive, and the extra expenditure which will be incurred this year,, we should keep the vote for new works and buildings as low as we possibly can during* the current year. Honorable members may find that no provision has been made forsome of the works which they would like tohave carried out in their various districts. When dealing with loan moneys Parliaments, as a rule, are generous. But when we have to provide for new works and buildings out of revenue, as this House wisely determined we should do, a Treasurer is a little more careful in passing any item. If complaints are made as to the failure to make any provision for certain works I trust that honorable members will not blame theMinisters in charge of the Departmentsconcerned. As a matter of fact, nriy colleagues have requested me to provide for them, and, therefore, honorable members must' blame the unfortunate Treasurer, whohas generally to stand the brunt of such attacks. {: .speaker-KHC} ##### Mr Higgins: -- The Treasurer says that this House wisely determined that new works should be constructed out of revenue, although he brought in a Bill to provide for certain new works out of loan moneys. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- When I introduced that Bill I explained that' I did soonly because the States themselves could not afford to provide out of revenue for works which might have been carried out by means of loan money. Personally, I was glad that this House declined to allow loan moneys to be voted for the purpose, and I said so at the time. That decision, however, has prevented' us from carrying out various works, and especially in Victoria. There, is for example, the undergrounding of the telephone system in Victoria, which I should ' like to see accomplished. But as the revenue stands at the present time we cannot provide for these works out of revenue. As we have no power to borrow we must rest satisfied with what we have until times improve, and the States themselves can afford to allow the necessary expenditure to come out of revenue. Mr.REID. - The Government did what we told them to do, and the Treasurer says now that we were wise in making them do so. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- That is often the case. I often agree that the Committee know a great deal more than I do, and I am very glad to accept the advice of honorable members in many directions, because I feel that their experience is probably greater than my own. I never hesitate to back down when I think I am wrong, or when I believe that the numbers are against me. Honorable members will see that the amount unexpended last year was exactly one-half of that for which I am asking that provision shall be made dur ing the current year. If that money had been expended last year, this year's expenditure would have been correspondingly reduced. Honorable members know the familiar illustration of an honorable member crossing the floor in a division and thus making a difference of two. In the same way, the non-expenditure of money set apart for the construction of various works last year doubles the amount which I thought of asking the Committee to provide this year. To a very large extent it accounts for what, to those who do not reason out the matter, would appear to be an unreasonably increased expenditure. So far as the details are concerned, I shall not ask honorable members at the present moment to look at the Estimates, but I shall give them a brief summary. We have provided for an expenditure of £5,000 in connexion with the Customs Department, £2,300 being a re-vote ; in defence, £29,539, of which £9,539 is a re-vote; and in post-office buildings, £102,932, of which £69,876 is a re-vote, to cover works which were provided for last year, and some of which are in course of construction. {: .speaker-K4E} ##### Mr Conroy: -- Could it not be put to a trust fund? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- No, because the Constitution requires me at the end of each month to hand back to the States the' money which has not been expended. I sometimes wish that I could form a trust fund, although, perhaps, the money might be put to a wrong use. When we come to deal with the " other expenditure,"' I shall point out how our inability to form a trust fund does iucrease the expenditure for this year.For telegraphs and telephones we have provided £194, 8 12. It is practically the same amount as we provided last year ; but we spent only £ 1 02, 948. The expenditure on works during the last two years and the current year will be very little more than the amount expended on works in the same Departments by the States in one year. I shall give the figures presently. I have mentioned that £75,000 has been provided on the Estimates for armament for the defence forces. Of that sum, £30,000 is required to provide for rifles and an ammunition reserve. The full amount of ammunition required for the year is provided on the Estimates, and this expenditure on a reserve will be necessary, as we have a larger number of rifles. {: .speaker-F4R} ##### Mr Watson: -- Ridiculously inadequate ! {: .speaker-KWT} ##### Sir GEORGE TURNER: -- We have a reserve which is sufficient for our existing rifles, but as we get new rifles we must necessarily increase that reserve. Honorable members will also be asked to vote £22,000 for equipments of various kinds ; £5,000 for purchasing and mounting a gun at Fremantle; £13,000 for a reserve of ammunition for our fixed defences - that I understand is required to supplant black powder with smokeless powder - and £5,000 towards re-arming the *Cerberus,* which will cost £20,000.. These sums amount to only £75,000. {: .speaker-F4R} ##### Mr Watson: -- It is not enough. If they would cut off a few of the frills and spend more there it would be better. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- The amount asked for by the General Officer Commanding to place the defence forces in a thoroughly equipped condition is £480,000, I and he proposes that a sum of £125,000 should be voted each year. I have not seen ray way to go the full length of his proposal this year, because we must have some thought for the unfortunate position in which States Treasurers are placed. {: .speaker-F4R} ##### Mr Watson: -- Cut out some of the other items from the military vote. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- If my honorable friend can show some means of doing that, he will find a very strong supporter in myself. I have always felt that the large amount set.down for the Defence Department is unnecessary ; but others hold that the forces have to be maintained in a certain way, and the experts say that a certain number of officers must be employed for the purpose. We have to be guided by our expert adviser; but if that expert advice can be shown to be wrong, and that money can be saved in that direction, well and good. However, if we employ an expert at a large salary we must . be guided, to a considerable extent, by his advice. Mr.Watson. - The Government have refused to be guided by him in the most essential part of his recommendation - the provision of arms and equipment. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- No; he has asked for the sum of £125,000 a year, and I have not felt justified in providing theextra £50,000 this year. Let us hope that next year the States finances may bein a condition to bear the increased charge. Some of the States really cannot do so now. Look at the State of Queensland, with a. heavy falling off in its revenue. Look at the State of Tasmania - one of the most loyal to the cause of Federation - struggling hard to nmke up for the loss which it has sustained. We must give some consideration to these States, seeing that the expenditurehas to be distributed on a population basis.. On page 30, honorable members will find the expenditure in each State brought together for their information in a form different from the one with which I have beendealing, and which deals with departments only. I was asked last year to furnish this, return, because honorable members experienced considerable difficulty in ascertaining from the other return the amount which would be expended during the year in a particular Stateand the detailsof thatexpenditure. They are tabulated for this year- in the following statement : - Here I give the amount which it is proposed to expend this year in the various States for "transferred" and "other" expenditure. Page 3 also gives some information which I was asked to supply as to the distribution of the cost of the Auxiliary Squadron, Thursday Island defences, and King George's Sound defences. I have on page 34 shown the percentage of the total receiptsand expenditure for the years 1901-2 and 1902-3, and the estimated receipts and expenditure for the year 1903-4, compared with the percentage of the total population, pared summarizing that information for the I have also had the following table preconvenience of honorable members : - {: .speaker-KHC} ##### Mr Higgins: -- Does the Treasurer propose to charge the £200,000, which is to be paid annually under the naval agreement, to " transferred " expenditure *1* {: #subdebate-10-0-s1 .speaker-KWT} ##### Sir GEORGE TURNER:
BALACLAVA, VICTORIA · PROT -- That is to be charged - as the sum of £106,000 is now charged - as transferred expenditure. But under the new agreement, as under the old, the amount is to be distributed on a population basis. Now come to deal with the interesting subject of "other" expenditure. I have been compelled this year - but the Treasurer will not have to do so next year - to set out that expenditure in two forms. The first, given on pages 36 and 37, shows the actual cash expenditure in each year, irrespective of when the liability was incurred. That raises the old question of the arrears being heavier in cne year than they were in another, and causes that table to be of little use for purposes of a fair comparison in endeavouring to ascertain what is the cost during any particular year. I find that the total " other " expenditure in 1901-2 came to £275,862. In the following year it amounted to £316,217, and honorable members will possibly be astonished to see that this year I am asking for £434,946. I hear a whisper - and probably there will be a louder whisper outside - that this is far above the estimate of £300,000 which was formed at the Convention as to the cost of federation. But I hope to be able to give a satisfactory explanation. These payments include the non-recurring items in connexion with New Guinea, the "celebrations," the sugar rebates, and all fresh expenditure, whether caused by federation or not. If honorable members will look at pages 38 and 39, they will get what I call the true comparison with regard to our- " other " expenditure, and the true cost of federation so fatas " other " expenditure is concerned. The following is an epitome of the items : - The figures work out in this way. For 190] -2 the cost of Federation was £207,914, oils. Id. per head. In 1902-3 the expenditure caused by Federation was £212,188, oris. 1^-d. per head. For 1903-4 the expenditure is estimated at £324,946, or ls. 7fd per head. This does not include an item of £20,000 for New Guinea, as that amount, or £15,000 of it at all events, was being paid by the States, and would probably have been continued by the States for the purposes of carrying on New Guinea. It does not include the item for sugar rebates, which amounts this year as I have mentioned to £90,000, and it does not include special non-recurring expenditure, amounting in 1901-2 to £33,000, and in 1902-3 to some £8,000. T have already, in dealing with the cost of the Departments, explained the various items of new expenditure, pointing out that we have to bear close on £80,000 this year for electoral expenditure. Surely no fair critic of our expenditure would say that the whole of that amount should be charged to one year? It relates to three years,' and some of it relates to more than three years. I have included the whole of that sum in the £325,000, but, considering the matter in all fairness, I say that we are entitled to divide that amount between three years. If we do that we shall find that the new expenditure of this year, the real cost of Federation, independently of the sugar rebates, which are not a fair charge against us in calculating that expenditure, amounts to the sum of £275,000. {: .speaker-KDD} ##### Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT -- The electoral expenditure may be again required in less than three years. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I think that every honorable member, including the honorable member for South Sydney, hopes and believes that it will last for the full three years. Those figures deal with the new expenditure so far as I think it necessary to give the amounts. Full details are given in the papers, and the summary on page 39 shows for each year what I consider the expenditure caused by Federation, the expenditure not caused by Federation, the sugar rebates, the non-recurring items, and the total. I believe that if we consider this expenditure from an equitable and fair point of view, we can come to no other conclusion than that, so far as new expenditure is concerned, there has not been any extravagance at all - I was going to say that there has been no undue extravagance, but I really believe there has been no extravagance at all. {: .speaker-KRO} ##### Mr A McLEAN:
GIPPSLAND, VICTORIA · PROT -- Why is the amount for the sugar rebate left out ? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- My honorable friend may know that it is the custom outside to take the mere estimate, that no one fathers, of £300,000 a year for new expenditure occasioned by Federation. I do not desire, nor do I think I am bound to include in that expenditure an item which was never dreamt of when the estimate in question was framed. {: .speaker-KRO} ##### Mr A McLEAN:
GIPPSLAND, VICTORIA · PROT -- Should we have had the sugar rebate expenditure but for Federation ? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- No; we should not. {: .speaker-KRO} ##### Mr A McLEAN:
GIPPSLAND, VICTORIA · PROT -- I could understand the right honorable gentleman leaving it out when dealing with the original estimate. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I have pointed out that I have split the amount up for that very purpose. We know that people are careless in looking at these figures, and if it goes forth to the world that the expenditure has reached a certain amount, some will immediately say, " Why you promised that the expenditure would not exceed £300,000." No one can tell who was responsible for the estimate of £300,000, and the fact is not taken into consideration that it did not provide for a large number of matters which have now to be provided for in the ordinary course. {: .speaker-L0Y} ##### Mr Wilkinson: -- The estimate was made before Queensland joined the Federation ? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I am not certain as to that. {: .speaker-KIN} ##### Sir William Lyne: -- That is so. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I always had a doubt in my own mind as to whether or not this estimate of £300,000 was made when it was thought that Queensland would not join the Commonwealth. {: .speaker-KPM} ##### Mr McCay: -- Some of the items of the estimate clearly allowed for six States. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I know ; and had it not been for the circumstance mentioned by the honorable and learned member for Corinella, I should have been prepared to assure the House that when that estimate was prepared, Queensland was not in any shape or form represented - that that expenditure was believed to be independent of Queensland. But there are certain provisions in regard to the number of senators and representatives which prevent my giving that assurance, although I believe the intention was as I have stated. I have given the full figures ; but I say that those who criticise the new expenditure and compare it with the rough estimate of £300,000, have no right to take New Guinea, the sugar rebates, or the celebrations at the opening of the Commonwealth Parliament into consideration. Unless we make it perfectly clear here that those amounts are not to be included, our critics and the reformers outside will tell the public that we have increased the estimated expenditure to over £400,000. I must place the information in tine form in which I have presented it, because I wish those who criticise us to be absolutely fair. I do not wish the public throughout Australia, who have little opportunity of seeing details, to get *a* wrong impression, or be led away by the ideas promulgated by people, for some reasons of their own, into the belief that this Parliament is so absolutely extravagant as it is said to be. {: .speaker-KCO} ##### Mr Glynn: -- They mix up policy with machinery. {: .speaker-KHC} ##### Mr Higgins: -- They confuse expenditure caused by federation, and expenditure caused bv Parliament. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- One is expenditure caused by policy, and the other is expenditure, the natural result of federation. {: .speaker-KRO} ##### Mr A McLEAN:
GIPPSLAND, VICTORIA · PROT -- If we take credit for giving the people a " white" Australia, we ought to tell the people what that costs. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I have told the people, as plainly as 'possible, that this year the "white" Australia policy will cost £90,000, as against £60,000 last year; but I object to have that expenditure included when people are making a comparison of our expenditure with a pre-federation estimate. The cost of federation was then estimated by some at £300,000, by others at . £500,000, and by others again at £700,000. I do not think the people were led into federation by any estimate that the cost would amount to the first mentioned sum, nor do I think that estimate affected the decision one iota. The people were determined to have federation ; and I know that when I pointed out that they would have to pay for it, I was told that I was not a true federalist, and that the "young pitriots," as they were then called, were going to oust me from the office which I then held. {: .speaker-KRO} ##### Mr A McLEAN:
GIPPSLAND, VICTORIA · PROT -- The Treasurer told the people the honest truth the first time he spoke on federation at St. Kilda, and he was then taken to task. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I was very much taken to task for that speech afterwards. It is interesting to have, as far as we possibly can, some comparison with regard to the revenue and expen diture in the Postal Department. Until all the buildings are transferred, and we are able to charge interest, it is impossible to prepare what we could regard as a commercial balance-sheet. In. connexion with the transferred buildings we are waiting for the States to send in particulars of the various claims they have to make against us; and the,n we shall have to give compensation. The fact has to be borne in mind that if we do have to compensate the States, and interest is a part of that compensation, that interest will be a charge which will lessen the amount of the surplus I shall mention presently as being distributable amongst the States. {: .speaker-KPM} ##### Mr McCay: -- Has it been decided to compensate the States in cash *1* {: .speaker-KWT} ##### Sir GEORGE TURNER: -- No. So far as I am concerned, there will be no cash compensation. But if the compensation takes the form, as it probably will, of our assuming a certain portion of the States debts, then we shall have to provide inte- rest, though, on the other hand, the States will have to pay for the use of their buildings. I do not want to enter into a discussion of that question, beyond saying that I believe my own system of dealing with the balances only was the best after all, although the States did not see its advantages. {: .speaker-KPM} ##### Mr McCay: -- But the Treasurer has not absolutely abandoned that idea? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I have not ; but I have very little chance of getting it adopted. On page 40 of the printed matter which has been distributed is shown the receipts and expenditure in the Postal Department during the three years. They are compared in the following table : - In the first year, ending June, 1902, the receipts exceeded the expenditure in New South Wales by £30,512; in Victoria, by £724; and in South Australia by £30,499. Queensland was to the bad to the amount of £107,837, Western Australia to the amount of £33,118, and Tasmania to the amount of £15,713, the total receipts under expenditure being £94,933. It is only fair to say, however, that that amount includes £37,149 for new works and buildings which, when the departments were under the control of the States, would have been paid for out of loan money, and not charged as Postoffice expenditure. Coming to the year which ended on the 30th June, 1903, we find that in New South Wales the receipts exceeded the expenditure by £14,289, in Victoria by £24,065, and in South Australia by £178. {: .speaker-KPM} ##### Mr McCay: -- How does the right honorable gentleman account for the falling off with regard to South Australia? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- Because of the reduction in charges, especially in regard to the Eastern Extension Company's business, and latterly because of the Pacific cable. In Queensland the expenditure exceeded the receipts by £137,230, in Western Australia by £55,362, and in Tasmania by £10,307, a deficit or falling off amounting altogether to £164,367, although £141,535 of that amount was expended upon new works and buildings which, under the old system, would have been paid for out of loan money, so that the real falling off was only £22,832. This year we shall feel still more the effect of the extra expenditure that has to be incurred and the losses in connexion with the Pacific and Eastern Extension Company's cables, and I estimate that in all the States the expenditure will exceed the receipts by the following amounts : - New South Wales, £61,709; Victoria, £7,615; Queensland, £159,993; South Australia, £21,577 ; Western Australia, £100,842 ; Tasmania, £21,766 ; a total of £373,502, of which £297,744 is for new works and buildings. As those works and buildings are to be paid for out of revenue, we must charge them against the expenditure of the Department, but it must be remembered, when our expenditure is submitted to criticism or comparison, that we are paying out of revenue large amounts which formerly would have been paid out of loan money. {: .speaker-F4R} ##### Mr Watson: -- Is there an)' allowance for interest on loans for buildings? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- No. Until we settle upon the value of the transferred buildings, it will not be possible to formulate what might be called a balance-sheet. In the meantime I am giving the best information obtainable in regard to the working of the Post-office. In the year 1902-3 we actu allly expend ed £2, 5 6 9 , 0 1 7 , an in crease of £101,213 on the previous year, but that increase is more than accounted for by the expenditure of £104,386 upon new buildings. This year we ask for a vote of £2,823,502, or £254,485 more than the actual expenditure of- last year, but £156,209 is for works and buildings. I have also included in the cost of the Department the cost of the cen tral. staff, though, perhaps, I am not in strictness bound to do «o. That amount is debited to the various States. We hope that there may be some saving upon the Estimates, but as after the Minister had dealt with them I reduced them by nearly £50,000. I think that they have been pared down to the bone, and that there is not much chance of any saving being made. I feel, however, that the Postmaster-General, and those responsible for the expenditure of the Department generally, must consider, at the earliest opportunity, whether an effort cannot be made to reduce the expenditure of Queensland more nearly to the amount of revenue collected there. I know that that State has had bad times, and I realize the difference between such a vast and scantily-populated territory and a small and closely-populated State such as Victoria. The vastness of Queensland necessarily means a heavy expenditure in providing and working post-offices, telephones, and telegraphs, and requires the provision of allowances and other expenditure which' is not required here, but I still think that the Queensland expenditure is too large," and I intend to ask the Postmaster-General to see if it is not possible to more thoroughly investigate all its details, so as to bring it nearer to the receipts of the State. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- ^ Is a very large amount provided for new works next year *1* {: .speaker-KWT} ##### Sir GEORGE TURNER: -- No, the expenditure is not very heavy. My honorable friend will find the details in the Estimates for new works and buildings. In those States where times have been hard we have tried to keep down the expenditure on public works as much as possible. {: .speaker-K4I} ##### Mr HUME COOK:
BOURKE, VICTORIA · PROT -- Why is the Treasurer charging the cost of new works to the transferred expenditure of the Commonwealth ? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- When I brought in my first financial statement, I placed a certain sum on the Estimates for the expenditure upon new works which, I thought, could be constructed out of revenue, and I provided for a larger expenditure out of loan money, but as honorable members determined that no loan should be raised, the whole amount had to be paid out of revenue. My honorable friend is again anticipating a statement I was going to make. The reason for the arrangement is this : We cannot fairly expend a large amount of- money on new works and buildings in one State, and a smaller amount in other States, and yet make them all contribute upon a population basis. That might be done if the States had a common purse, but the figures which I will give later will satisfy my honorable friend that it would be absolutely unjust to pay for works on that basis now. The States which could least afford expenditure upon new buildings, and the extension of telephone and telegraph lines, would have to pay for such works in States which could, well afford to pay for them, and would derive the benefit from them, as the revenue obtained from such expenditure would be credited to the States in which it was collected. Therefore it is only fair to charge the expenditure as transferred expenditure, upon the understanding, as I informed the Committee twelve months ago, that when we come to arrange with the States with regard to compensation for works and buildings, new works and buildings will be treated in exactly the same_ way as old works and buildings. In the meantime we are not using the revenue of the States which are not well off to pay for works and buildings erected for the benefit of States which are better off. I shall give my honorable friend the figures later on, which show the effect on each particular State of the system I have adopted. {: .speaker-KHC} ##### Mr Higgins: -- The cost of new buildings will be charged against the State which enjoys them ? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- Yes, for the time being : but when we come to take over the new buildings, we shall have to adjust matters with the States upon a population basis. Some States will hand over buildings far in excess of their proportion, whilst others will give us less than their proportion upon a population basis, and there will have to be an adjustment. But whatever happens, I hold the very strong view that wherever the State derives an advantage from the use of Post-office buildings and telegraph lines, it will have to be charged something for the use of those particular buildings and works. The next of the Budget papers, pages 41 and 42, contain information taken from the front pages of the Estimates of Receipts and Expenditure, and were inserted for the purpose of completing the information for those who have not a copy of the Estimates. In dealing with the information contained on page 43, which relates to payments to State and Commonwealth Departments for services, I desire to point out that a considerable amount of our expenditure is really made up of mere bookkeeping entries so far as the States are concerned. This statement shows the amount we have had to provide for railway and similar services, and for postage, telegraph, and telephone charges. Honorable members will be surprised to see that the total amounts to £345,858. That is ,an expenditure for which we have to provide on our Estimates ; but, as a matter of fact, it is a mere bookkeeping entry, because the whole of the money goes back to the States. On page 44 will be found a statement of the receipts and expenditure of the Trust fund, now amounting to £207,406. I propose to consider whether I cannot invest a certain portion of that money in some State Government securities, with a view to deriving interest from it. A very small amount, I think about £8,000, is on fixed deposit; but I consider, after looking carefully into the matter, that it will be possible to derive a certain amount of interest by investing the greater part of the fund, and keeping at current account only sufficient to meet our every day requirements. Upon page 45 will be found a statement showing the amount of surplus or deficit in connexion with the finances of each State for the past year. Two States had a surplus - Victoria £153,199 - occasioned wholly and solely by the extra amount we were able to give back to her, and Western Australia £108,466. Three States had deficits - New South Wales, £247,575'; Queensland, £191,341; and Tasmania, £116,022. I have not been able to obtain complete information with regard to South Australia, but I believe that they have a small surplus. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- Were those figures supplied by the States Treasurers ? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- Yes ; but I have also worked them out from the information which I have been able to obtain, and from the returns available. They do not include any accrued deficits, but are, so far as I can give them, the figures properly relating to the last financial year. When I was Treasurer of Victoria, I always made it a rule to deal with the deficit or the surplus for the year, as the case might be, and never to bring forward a surplus or a deficit from the previous twelve months, and I have followed that rule in the present case, so far as my information would permit. We have often heard of the "Braddon clause," the section of the Constitution which provides that we must not use for Commonwealth purposes more than onefourth of the total Customs and Excise revenue. Fortunately, except in the case of Queensland, we have been able up to the present to return to the States a sum far and away beyond that which would have been available to them if we had taken full advantage of our right to spend one-fourth' of the total Customs and Excise revenue. I shall not trouble honorable members with the details, but simply state that during the three years since Federation was established, we gave back to the States, as is shown in the last column of the table, £888,741 in 1901-2, £1,144,469 in 1902-3, and it is estimated that £622,634 will be returned in 1903-4 more than we were legally bound to return. The figures are tabulated in the following statement : - In consequence of this, New South Wales has received £1,091,508 ; Victoria, £65S,607 ; South Australia, £235,084 ; Western Australia, £627,456, of which £157,000 would come from one-fourth of the special Tariff ; and Tasmania, £97,S29. Unfortunately, we had to encroach upon Queensland's threefourths during the first year to the extent of £20,188, and this year we expect to have to do so to the extent of £49,239. Last year we gave back a sum of only £14,787 in excess of the three-fourths to which Queensland would be entitled. This is what has induced me to look more closely into the expenditure in connexion with that State, in order to ascertain whether it would not be possible to place her in a better position, and make her finances compare a little more favorably with those States which are more fortunately situated. On the whole it -is evident that we have not gone to the full length that we might have proceeded in connexion with Commonwealth expenditure. The papers from page 48 onwards show the actual figures for each particular State, and the mode we have adopted in making the calculations and arriving at the figures which I have given. Now I have to deal with the figures given on page 54, which those who take an interest in our finances here or elsewhere will find to be very interesting. A comparison is made of receipts, payments, and the surplus returned to the States during the three years. In 1903-4 we estimate to give to the States £7,251;464, as compared with £8,200,457 last year. Therefore, there will be an immense falling off, so far as the estimates of the States Treasurers are concerned, and that is why I stated that the information I had would not be very pleasant reading for them when they came to study it from the States point of view. Last year was what we may regard as a boom year, owing to the fact that we received £535,000 more than we expected, and that we refrained from expending £350,000, which was provided for on the Estimates. That accounts for a difference of £885,000 ; and this year we shall give back to the States £948,993 less than last year. The following statement shows the surplus which it is estimated will be returned to each of the States in the vear 1903-4 :- {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- That will be a very serious matter for the States. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- Yes ; but last year the States had all the benefit of the increase in the revenue. I am afraid, from what I have heard, that they are calculating upon receiving this year as much as last year. {: .speaker-F4P} ##### Mr Reid: -- Do they want another drought next year ? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I hope not. {: .speaker-F4P} ##### Mr Reid: -- Then how can they expect to receive as much revenue? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- They cannot possibly expect so much. They must know that it was owing to the drought that we had a very large amount of extra revenue last year, although it may be fairly said that if we had had no drought there would certainly have been an increase in other directions. No doubt there would have been some increases, but the fact remains that, owing to the failure of our harvest last year, we received a large amount of revenue which would not otherwise have been collected. {: .speaker-KDD} ##### Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT -- But it decreased the' purchasing power of the people. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- To some extent it did, but to nothing like that extent. {: .speaker-F4P} ##### Mr G H Reid: -- To nothing like the increased amount of Customs revenue. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- But even admitting that we shall hand back to the States £949,000 less than we returned to them last year, we shall still be keeping within our margin by the amount of £622,000 which I have mentioned. In addition to the sums that I have charged in the Estimates against the States, there are others which may still further reduce the amounts to be returned to them. For example, the Naval Agreement Bill involves the payment of an additional £94,000. That will have to be paid this year, and will constitute a transferred expenditure, which will be payable upon a population basis. {: .speaker-F4N} ##### Mr Fisher: -- That is, if the Bill passes ? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- Of course I am assuming that the Bill passes. I have not included that amount in my figures, because I can only base ray calculations upon what I know to be the law of the land. {: .speaker-L1D} ##### Mr Henry Willis: -- That additional subsidy does not require to be paid until six months after the Bill is passed.' {: .speaker-KWT} ##### Sir GEORGE TURNER: -- If I recollect the terms of the agreement aright, we have to pay a year in advance. Assuming that the Bill is passed before the prorogation of Parliament, the amount in question will be payable during the current financial year. Then there is a sum of £15,000 or £20,000 in connexion with other Bills which have not yet been dealt with, and these two amounts, if provided, will still further reduce the surplus that we shall have to distribute amongst the States. {: .speaker-KPM} ##### Mr McCay: -- Has the right honorable gentleman included the expenditure consequent upon the establishment of the High Court ? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I have included it in the Estimates for the AttorneyGeneral's Department. These two sums, however, will appear as special appropriations in connexion with Bills which have yet to be passed. Then, Tasmania may receive the benefit this year of £11,000, which, it is said, was collected and wrongly credited to Victoria and some of the other States. In Queensland, there is a sum of about £26,000 deposited on sugar, and in Victoria a sum of £20,000 similarly deposited, and these may affect to a small extent the amounts I have mentioned. When the Naval Agreement Bill comes into operation some of the States will have to pay up their arrears in connexion with the present agreement. So far only two of the States have carried out their obligations under that agreement. By some means or other the others have dropped intoarrears for a year. Accidentally, I will assume, they have forgotten that the payment was due, and have allowed their contribution to fall into the next year's expenditure. Thus the sum of £37,000 will need to be provided by New South Wales, £9,000 by South Australia, £5,000 by Western Australia,, and £4,000 by Tasmania. {: .speaker-F4P} ##### Mr G H Reid: -- Surely New South Wales did not drop behind *1* {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I do not say that Nev South Wales dropped behind last year, but at some time, probably far back, New South Wales got into arrears in her payments by one year. The Imperial authorities have not pressed us for those payments, and I have not felt justified in including them in these Estimates. Upon page 55, and the following pages of the Budget papers, honorable members will find what I call our "account current" with the different States, which shows our transactions with the States during the past three years. It sets, out the amounts that we have collected from the various Departments, the sum expended in connexion with them, and the revenue which the Commonwealth has returned to the States. These figures, which, of course, represent a cash basis, will form interesting reading to honorable members who desire to investigate the position of their individual States, whilst they will also furnish information to the States. Treasurers who necessarily have to rely upon the Federal Treasurer for an explanation of their positions. At the Convention, it will be remembered, many of us held that the Commonwealth should have only one pocket and one purse, that all receipts should go intothe one pocket, and all expenditure should be paid out of the one purse, as by that, means we should avoid bringing into existence the hateful bookkeeping system. Within the next three years the Commonwealth Parliament will have to determine the very important question of whether weshall continue the bookkeeping system with all the trouble which it involves in returning to the States the actual amounts collected within their borders, after debiting them with their own expenditure, orwhether we shall adopt the true Federal spirit by declaring that we shall have only one pocket into which all our revenue shall go, and one purse out of which all our expenditure shall be paid. Undoubtedly, the adoption of the latter' system would simplify the transactions of the Treasury, and shorten to an enormous extent the Budget statement. It is well, therefore, to show the Parliament of that day the effect which such a system would have had upon the States had it been in operation during the years that have passed. I . will not include the first year of the Federation, because it affords us no guide whatever. If, however, honorable members will look at the year 1902-3, they will see that if we had distributed the surplus revenue collected by the Commonwealth upon a population basis, and had included Western Australia, New South Wales would have lost £172,000, and Western Australia £580,000, whilst Victoria would have gained £373,000, Queensland £143,000, South Australia' £173,000, and Tasmania £62,000. This year New South Wales would lose £751, and- Western Australia £511,000, whilst Victoria would gain £223,000, Queensland £132,000, South Australia £11 8,000, and Tasmania £39,000. The exact figures are as follow : - Looking at these figures, it will be seen that when the time comes for us to consider this question, we shall not be able to deal with Western Australia in the same way that we can deal with the other States. As in the past we have made a special exemption in favour of Western Australia, so if we are to deal justly with its people' we shall require to make a still further bargain with them. Of course, I hold that as the years go by the revenue collected in that State will decline considerably both in amount and in its average per head of the population. That will be occasioned by the rising generation, by the greater volume of trade with the Eastern States, and by increased production within its own borders. Upon page 63 of the Budget papers I desire to present to honorable members another view of this matter. Leaving Western Australia out of consideration, they will see how much closer we should approach to the percentage distribution, although even here the senior State, New South Wales, would be the one which would have to make the sacrifice. But, having regard to the wealth and resources of New South Wales - and probably the desire she would show to assist her less fortunate sisters - having regard to the much larger production and increased trade with the other States that she will probably have in the course of three or four years' time, as well as the reduced amounts which will be collected, and remembering the ever-increasing expenditure which must necessarily continue in New South Wales, with its large area,as compared with the smaller States,' I believe that at the end of the five years' j/eriod the results will show that, in connexion with these matters, we approximate very closely to a population basis of distribution: Up to the present, however, the result of the distribution of the surplus on a population basis would have been that, for the year 1902-3, New South Wales would have borne the whole burden. We were aware of that fact at the time of the Convention,, and, therefore, we did not attempt to make any provision in the Convention to force the population basis of distribution upon the States at the outset of the Commonwealth. What many of us did urge, however, was that there should be a sliding scale of reduction, and that at the end of five years a *pro rata* distribution should come into force. If the distribution had been made on a basis of population, during 1902-3 New South Wales would have borne the burden of expenditure to the extent of £393,727, which would have been distributed as follows : - Victoria would have benefited to the extent of £1 82,087 ; Queensland, £62,200; South Australia, £115,342 ; and Tasmania, £34,0.9S. This year there would have been a very marked difference if the surplus had been distributed on the basis of population. The amount to be returned to New South Wales would have been reduced by nearly £200,000, or, to speak exactly, to£l98,314. {: .speaker-K4E} ##### Mr Conroy: -- That is the estimate? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- That is the estimate, and it will prove to be not very far from the actual figures. The other States would have benefited as follows : - Victoria, £55,719; Queensland, £60,744 ; South Australia, £67,486 ; and Tasmania, £14,365. The following tablecompare the figures for this year with those for the year 1902-3. The figures for Western Australia are omitted : - I am gradually building up figures relating to this matter, as well as many other returns for the information of the Minister, whoever he may be, who will have the very responsible, task of advising the House as to the course which should be adopted at the end of the bookkeeping period. {: .speaker-KCO} ##### Mr Glynn: -- Western Australia would not lose much on the basis of the male population. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- Ido not know so much about that. The honorable and learned member must not forget that the present state of affairs will very rapidly be changed. A large number of women and children are going to Western Australia with a view of permanently settling there ; and the vising generation must also be taken into consideration. The honorable member for Bourke induced me to make a statement, rather in advance of the point at which I intended to place it before the Committee, in regard to the relative effect of charging new works and buildings on the basis of the expenditure in the different States and on the basis of population. If honorable members will turn to page 64 of the Budget papers, they will find full information supplied to them in regard to that matter. The following table presents the figures in tabulated form : - They show that in 1902-3 Victoria would have provided, on the basis of population, £18,703, and Tasmania £5,233 more than the amount expended in the respective States. In other words, if they had been charged on a population basis, those States would have been called upon to provide the amounts I have named in excess of the expenditure which actually took place within their boundaries. The excess would have gone to, and have been expended by the other States as follows-: - New South Wales, £5,081 ; Queensland, £12,589 ; South Australia, £2,880; and Western Australia, £3,386.' The estimate for this year shows that, on a population basis, Victoria would have been debited with a sum exceeding the amount actually expended within her boundaries by £42,643; and Tasmania, £4,618 ; but Queensland would have remained in practically the position that she now occupies. {: .speaker-KWL} ##### Mr Tudor: -- Does the right honorable gentleman mean to say that works and buildings representing the excess amount named would have been carried out in Victoria? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- No; assuming that the same works and buildings had been carried out, Victoria would have paid, on a population basis, the sum I have named in excess of what she is actually called upon to pay'for works within her own boundaries; while New South Wales would have benefited to the extent of £3,071, South Australia to the extent of £2,417, and Western Australia to the extent of £41,797. Thus honorable members will see that unless we were to adopt the plan of taking one State as a basis - and we should have to take the State which had the smallest spending power - and calculating the expenditure for all the other States upon that basis, any charging of the expenditure for new works and buildings upon a population basis would be unfair and unjust to the States. If we adopted that course, and simply said that we were going to take as a basis the State receiving the least revenue, the other States such as New South Wales and Queensland, and especially Western Australia, which require to be developed, would not be able to have that amount expended within their boundaries, which we might otherwise fairly expend, provided that, for the time being, we deducted it from the revenue received by them. {: .speaker-L17} ##### Mr Wilks: -- New South Wales so far carries the burden. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I am sorry that the honorable member has made that remark. He surety could not have followed my statement. {: .speaker-L17} ##### Mr Wilks: -- I have done so. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- New South Wales does not now bear - and has not at any time during Federation borne - one shilling on account of any other State. She has had her revenue collected for her and returned to her. I am sorry that my honorable friend should have made such an interjection, because it will be taken up by those who desire a handle for the assertion that New South Wales is carrying the burdens of all the other States. As a matter of fact, she is carrying none but her own burdens, and will not be required to do so during the bookkeeping period. {: .speaker-K4E} ##### Mr Conroy: -- But she has to collect £1,500,000 more than was necessary. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- She gets -it; and evidently she wanted it. I am not going to be led into any discussion of the fiscal question. We have settled that matter. {: .speaker-K4E} ##### Mr Conroy: -- Have we? The Treasurer should wait until the elections are over. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- We have settled the question for the time being, and at the general elections we hope to settle those who desire to reopen it. The finances of New Guinea have now a greater interest for us than ever they possessed before, and I have obtained the best information available in regard to the position of the Possession. We ascertained some time ago that it was drifting to the bad, and that the estimated collections would be less than the anticipated expenditure. We are told, as a matter of fact, that the expenditure would be far larger than the amount for which provision was made. The Minister for External Affairs, however, brought the matter very forcibly before those charged with the control of New Guinea, and the result is that on a re-estimate for the year 1902-3, they hope to have a surplus of £270, while they expect to get through the current year with a surplus of £101. They were told distinctly that the Commonwealth provided a subsidy of £20,000 for New Guinea, that that amount could not be increased, and that it was necessary that they should keep their expenditure within that sum and the revenue derived by means of their own collections. {: .speaker-K4E} ##### Mr Conroy: -- Do away with that expensive steamer if they cannot keep within bounds ! {: .speaker-KWT} ##### Sir GEORGE TURNER: -I have asked them many a time to do so, but there seems to be an understanding with the British Government that the steamer is to be kept running, although, unfortunately, they have ceased their contribution of £3,500 a year, which, if continued, would have made a great difference ' to the Possession. In many of the States we have been accused of gross extravagance in connexion with our new expenditure and I have endeavoured to show that that was without any justification. I believe that everything possible has been done to keep the new expenditure within reasonable limits. As regards the transferred Departments, it is said in some States that there is extravagance. I have been trying for a very long time to get a fair comparison between the year in which we took over the Departments and the last year in which they practically had. control of the expenditure for nearly the whole year. For the few months of the year in which we took control, we had to continue expending on the basis of their own estimates. Honorable members will hardly realize the great difficulties I found in ascertaining what the real expenditure for a Department was. I could find out easily enough the real expenditure in a Department, but as I pointed out earlier, when justifying the preparation of certain tables as to the cost of the different Departments, it was the difficulty of getting the information which forced me into framing those tables. {: .speaker-JWG} ##### Mr Fowler: -- Has the right honorable and learned gentleman got any figures at all for Western Australia? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I cannot get figures which would justify me in making a comparison. There isno fault to be found with their statistics, which are very well kept. The fault is that they are far away from us. Lump sums were voted for expenditure in connexion with the different Departments. From their financial statement, the expenditure could not be traced into the different departments to which it was fairly'chargeable, and, rather than make a rough approximation, I preferred to leave the State out of my calculations, because it is one in which development is rapidly going on, in which the expenditure must rapidly increase, and from which I have heard no complaint of any extra expenditure in connexion with the Departments. {: .speaker-JWG} ##### Mr Fowler: -- The complaint is that the Government are not spending enough. {: .speaker-KWT} ##### Sir GEORGE TURNER: -We could easily get over that. I do not propose to take honorable members through all the details of this statement, which has been prepared by a very competent and painstaking officer. In Queensland, New South Wales, and Victoria he has had an opportunity of investigating every figure, and checking it with the Treasury officials. I have not yet been able to spare him to visit South Australia and Tasmania, and I have some doubt as to whether I have not shown a smaller expenditure in those States in 1900-1 than I should be justified in showing. However, this table shows that, taking all the States except Western Australia, we ask this year for an expenditure of £3,152,549, while the actual expenditure for the year when the States had practical control was £3,066,691, being a difference of only £S5,85S. So that on the whole no one can properly accuse us of extravagant expenditure. For the three departments - Customs, Defence, and Post-office - we have increased the expenditure in New South Wales b)' £34,548, increased the expenditure in Victoria by £16,000, decreased the expenditure in Queensland by £21,000, apparently increased the expenditure in South Australia by £32,000, and apparently increased the expenditure in Tasmania by £23,000, although I am not very certain with regard to the figures for the last two States. In the figures for our own three years I have included the new expenditure on the transferred departments - possibly it is right to do it, though I do not know that I was bound to do so - but I "have given the worst comparison against the Commonwealth. I have included£31,000 for 1901-2, £28,000 for 1902-3, and£29,000 foi 1903-4 If honorable members will look at the table relating to the loan expenditure on the next page, they will find that there has been a marked decrease. Again, taking 1900-1 we find an expenditure of £450,000 for that year, of which £31,000 was paid out of revenue and the balance out of loan account ; and having to provide for the requirements of last year, to a great extent, as well as those of this year, we ask for an expenditure of only £340,000. Taking this year and last year together, we shall have not spent in those two years much more than was spent in the year in which we took over the Departments. That, no doubt, is accounted for to some extent by the fact that, having to take the money out of revenue, and knowing that some of the States could badly afford to bear the expenditure, we have been more careful than if we had been dealing with loan moneys which would come to us fairly easily, and, as the saying is, would probably go easily. {: .speaker-KPM} ##### Mr McCay: -- Does the- right honorable and learned gentleman mean that to compare like with like absolutely, we are entitled to deduct all these figures as to the cost *1* {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I do not go that length ; but I say that I compare what we now pay out of revenue with what the the State in the year in which we took over the departments paid out of. revenue. First, I compare revenue with revenue, and then I compare the loan and revenue expenditure on works and buildings with the revenue expenditure which we now provide for works and buildings, and by that means I have two separate comparisons which are absolutely fair. {: .speaker-KPM} ##### Mr McCay: -- What I want to know is, whether the sum of £3,066,000 cost of transferred Departments in 1901-2 includes only £31,000 out of the £450,000 spent on new works? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- It does not include the £31,000, because we are not including in 1903-4 any moneys spent out of revenue on a similar class of works. The honorable and learned member will see that I compare absolutely like items - in the first instance, those which we now pay out of revenue and which were paid out of revenue by the States, and then those which we now pay out of revenue, and which were paid by the States in some instances out of the loan account, and, in a few instances, out of revenue. That is a fair comparison. If we wanted to take the total expenditure, of course it would tell very largely in our favour. {: .speaker-KPM} ##### Mr McCay: -- Do the figures relating to the cost of transferred departments exclude -works ? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- They exclude works and buildings ; they represent the ordinary cost of administration of a department including the cost of the central offices. As regards South Australia and Tasmania, I am not altogether satisfied with the comparisons, but even if we take the figures from those States, we shall find that, in South Australia there was an increase of only £8,000 in 1901-2 as compared with 190O-1, and no increase in 1902-3, and that the great increase is in the expenditure proposed for this year. The same thing will apply in the case of Tasmania, in which there was. an increase of £9,000 in 1901-2, and a decrease of about £1,000 in 1902-3. The charges levelled against us up to the present time have related to the actual expenditure up to the end of 1902-3, because there was no means of knowing what the estimated expenditure for 1903-4 would be. The following table compares the various items : - I have prepared an explanation of the larger increases for this year concerning the States of South Australia and Tasmania, so ' that those who represent them may have the fullest information. It is- set out hereunder : - I want to say with regard to this comparison that, while it shows that we really are not spending more on transferred Departments - except in the cases I have mentioned - there are a number of circumstances which have to be taken into consideration and which show that we have made very large savings indeed, although the total figures may show a little extra expenditure. On one item alone, ammunition, we have had to provide immense sums in some years. The ammunition reserve had been depleted to a great extent. In Victoria it had run down to, I think, 500,000 rounds. Of course we could not stand that. We had to make provision for a reserve of ammunition. Looking at the loan expenditure, and investigating the matter, as well as I could, from public documents, I have a strong feeling .that some of the States provided considerable sums for ammunition out of their loan funds in the yeal1 1900-1. We know also that many of the States were forced to postpone repairs of public buildings. They were so hard up financially that they had to put off the work from time to time, the consequence being that the Commonwealth had to bear the burden of a good deal of .that necessary work. Then there was the military enthusiasm which was in existence some years ago. and which meant all-round increases in the expenditure upon the Defence Departments to a very large extent indeed. In Victoria we established rifle clubs. I have not a word' to say against them. They are good, and the money is well spent. But in the year when we took over the Defence Department the expenditure was nothing like what it had been in previous years. We know that in Queensland, as was shown from an extract read by the honorable member for Moreton, the Government deliberately increased their defence expenditure by about £80,000 in the year in which the Commonwealth was going to take over the Department. They probably thought that the Commonwealth had to pay the whole of the money. {: .speaker-F4N} ##### Mr Fisher: -- Some of the State Ministers did, I am sorry to say. {: .speaker-KWL} ##### Mr Tudor: -- Queensland was not the only State that ran up the defence expenditure ; Victoria was a bad sinner. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- They all did it. In all the States the forces were increased, but little, if any, provision was made for the payment of them. Volunteers were turned into partially-paid men, which meant a heavy expenditure. Then there was one item which it is difficult to calculate, but which, I should say, meant a saving then but an extra expenditure now of £40,000 or £50,000- the fact that so many of our men were in South Africa, and that the pay and contingencies in connexion with them had not to be provided in the year before Federation. Then new mail services were entered upon, and extra amounts were paid or promised to the Railway Departments for services rendered. We have had to bear the burden of paying these extra amounts year after year. The whole of the Eastern Extension Cable expenditure is now borne by Tasmania, but used to be divided amongst the other States. That is the reason why the Tasmanian expenditure is increased. In Victoria it was said that we must not enter Federation on worse terms than those prevailing in the other States. A penny post was therefore established, and that meant a large reduction in revenue, and a considerable increase in expenditure. There has been during these years a general extension of the- telephone and telegraph services,from which we get extra work, and which demand extra money to keep the services in repair, and provide the salaries of the men engaged in working them. It also happened that at about the time when the Commonwealth was inaugurated, the reclassification of the Public Service became due in New South Wales. That reclassification took place, and meant a heavy increase, which we had to bear, and which had not been- provided for by the State. In Victoria we had for many years been making our public servants do work of a superior class at a lower rate of pay than they should have received for the services they were rendering. The Reclassification Board's report came before Parliament, and was adopted. That meant for only half of the year 1900-1 a very large extra expenditure, the whole of which we now have to bear. One significant fact - as showing the procedure in increasing the expenditure in the States, as compared with our increased expenditure - is that the Estimates of the various States for transferred Departments for 1901 exceed the Estimates of the same States in the year 1900 by £200,000. That fact shows the amount to which the States were rapidly increasing their expenditure. In addition to that, we now pay out of revenue for all our public works. Our critics do not give us credit for doing that, though many of them know it as well as we do. They take the total expenditure, show that we are spending a certain amount of money, and say - " We used to get through on a lesser amount when the Departments were under State control." But they do Hot show that a very large proportion of the expenditure is not really an increase, because we now charge against revenue expenditure which previously had been borne out of loan funds. If that fact were taken into consideration it would account for a very large sum. I have already pointed out that during the last year we have increased the facilities of the public with regard to cables and mails to the extent of £40,000. In consequence also of action taken by the States' themselves prior to the year 1900-1 in paying increments to the public servants - these increases having nothing to do with our legislation or our action - we have had to bear heavy burdens. {: .speaker-KYD} ##### Mr Poynton: -- And which the States would have had to pay if there had been no federation. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- They amount, to £25,000 or £30,000 a year extra. These facts, and others which honorable members will no doubt think of, may present themselves as a foundation for explanations by which honorable members in their own States may be able to show to the people that while we are charged with all this extravagance in every direction, if we were treated justly and fairly by our critics, and if they would make inquiries and satisfy themselves with regard to the correctness of the figures they use, thev would have to admit that the administration of the transferred Departments has been as economically conducted as was ever the case under the States regime. That admission, I am glad to say, was frankly made by the Treasurer of NewSouth Wales, when he was making his Budget statement last year. And it is the fact. I am perfectly certain that it can be shown that there has been very little, if any, expenditure incurred on the transferred Departments, which is not absolutely justifiable and necessary for the proper carrying out of the services in the different States. When our critics tell the public that the amount of money which the States have had to raise by further taxation has been occasioned by our extravagance, they do not point out to them the extra amount we are paying the States from the Customs and Excise revenue ; nor do they tell the public of the great expenditure and loss occasioned in the working of the Post-office, for which we are not responsible, but which was occasioned by the action of the States before entering the Federation, in consequence of agreements made with the Eastern Extension Company and the Pacific Cable Board, and in other directions. I feel very strongly on this subject, because the Commonwealth has been unfairly criticised. I see letters in the newspapers from people who dare not sign their names to them, and who make the most incorrect statements, to say the least of it. I do not say that they do so deliberately. Probably they fall into errors from want of knowledge. But I say to those persons who desire to write and criticise with regard to these matters, that if they want to criticise fairly and honestly, the proper course is for them to ask for the correct figures, and use them, and not to pick out isolated figures which they may find in any statement, and by using them lead astray people who have no time to inquire into the details for themselves. They are misled by statements in the newspapers to the effect that the Federal Government is extravagant in this direction, or that the .Federal Parliament is squandering their money, I say that such statements have no real foundation in fact,'and that if they are to be made in future, those who make them should give particular instances, that we may have an opportunity of showing to the people of the Commonwealth that all these charges made against us are real lj' unjustifiable. {: .speaker-KYT} ##### Mr Knox: -- Will not the right honorable gentleman add the information which he has now conveyed to the Committee to the valuable papers which he has already supplied ? {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- I think we have a sufficient number of papers supplied. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I take, for instance, the illustration of my own Department - and this applies to a very great extent to all the new Departments throughout the State*. If the States had desired to make savings they had every opportunity to do so. With the exception of junior officers at about £40 a year, I have taken all the officers of my Department from the States services. If the States Governments have had the alleged number of " unnecessary officers, there should have been no necessity to fill up the vacancies created by the transfer of these officers. Most of thu money previously paid to these officers could have been absolutely saved, and that would account for a considerable sum of the new expenditure we have to incur. I believe that, as a matter of fact, in my Own State, a very large sum was actually saved in consequence of my taking officers from the Treasury and Audit Departments of that State. At page 69 of the Budget-papers it will be found that I have set out, for the information of honorable members, the figures connected with the difficulty with which we have always to contend in connexion with increments. The increments in the various Departments throughout the States, for which we have to provide this year, amount to £46,401. That is a considerable sum. It increases our expenditure, and it is due mainly to the operation of States laws, because, so far as I recollect, very little alteration was made in the law in most of the States as the result of our own Public Service Act. {: .speaker-KWL} ##### Mr Tudor: -- Does that sum include the special increment to Victorian transferred officers under the Victorian Act ? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- Yes ; in the case of those who are getting it, but not in the case of others. If honorable members will look at page 70, they will find a return showing the effect of our action with regard to the minimum wage. During last year we expended £39,617 in consequence of the minimum-wage provision of the Public Service Act. That is the amount of money which we gave to public servants in the lower grades, after allowing for the increments which, in the ordinary course, they would have obtained, so that the real cost of the action of Parliament in connexion with the minimum-wage provision was a sum of £39,617 last year, and there will be an extra amount of about £10,000 required this year. That is the burden which has to be borne as a result of that provision. {: .speaker-L17} ##### Mr Wilks: -- The newspapers have made out that it would amount to £90,000. ' {: .speaker-KWT} ##### Sir GEORGE TURNER: -- This,, of course, is an item which will be diminishing year by year, because, while the salaries of a great many of the public servants have been fixed at a certain rate, a large number would have been getting increments in due course, and the amount will therefore be gradually reduced. This, however, is an item which we also bear upon our estimated expenditure for this .year, and which, of course, was not borne by the States in the year when the services were handed over to the Commonwealth. The answer from the States Treasurers will naturally be that this is the result of our own action, but in spite of having to provide for that very large amount of money, the expenditure for which we are asking this year in connexion with the transferred services is very little in excess of the cost of those services at the time they were taken over from the States. {: .speaker-KRO} ##### Mr A McLEAN:
GIPPSLAND, VICTORIA · PROT -- The right honorable gentleman estimates the cost under this item to be about £50,000 for this year ? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- The cost for this year is estimated to be £48,316. {: .speaker-KWL} ##### Mr Tudor: -- Even taking that into account, the amount is very little more than the expenditure on the transferred services would have been under the States. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- It is very little more, about £S5,000 altogether. On page 71 of the papers .will be found a summary of the allowances paid ' to our public servants. In the Defence Department, of course, allowances have been practically abolished, except foi1 rations and similar items. {: .speaker-K7U} ##### Mr Crouch: -- They have been added to the salaries. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- Yes; they have been added to the salaries. The officers are paid practically the same amount, but in the way in which the. salaries of officers were previously paid, no one was a bit the wiser as to the amount actually received, because an immense number of allowances had to be provided for. On pages 71 and 72 honorable members will find full information with regard to the different allowances made in connexion with the new Departments. The allowances for new Departments and central administrations amount to £565 ; those in connexion with the Department for Trade and Customs amount to £4,409 ; and in connexion with the Department of the PostmasterGeneral to £54,759. In Queensland, South Australia, and Western Australia these allowances amount to a very large sum indeed. I suppose that is' necessarily so, in consequence of the scattered nature of the population, and the great area of those States. {: .speaker-F4N} ##### Mr Fisher: -- And the extra cost of living. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- Yes; there is extra cost of living, tropical allowances, and similar expenditure. I find that the amounts are made up chiefly of allowance's for quarters, rations, and forage. We can easily understand that in such States it is necessary to provide for this expenditure by way of allowances, rather than to provide for it in the more expensive way of having rented offices. However, it does appear to me that the amount for allowances is still very large, and I propose in connexion with this matter to ask the Postmaster-General's Department especially to have an investigation made to see exactly what these . allowances are. I have to a great extent all the details for each individual, but I did not think it worth while to incur the very heavy expenditure of publishing those details in a return. {: .speaker-KW6} ##### Mr Thomson: -- In connexion with the Post-office, the allowance for quarters has been taken into the salary now *t* {: .speaker-KWT} ##### Sir GEORGE TURNER: -- In some of the States that is so, but these appear to be allowances that are given in addition to salary. The answer in defence of this expenditure will probably be that if we did not give allowances for quarters we should have to increase the salaries to an equal amount to enable the officers to obtain those' quarters. My honest belief in connexion with all this expenditure is that it is carefully checked by the responsible officers, and that it would be very hard indeed to find items in connexion with which we could make savings to any considerable extent. There may be instances in which the allowances made are too large, but they do not amount to much when we look at the enormous expenditure which has to be incurred in connexion especially with the Postoffice Department. On page 73 particulars are given with regard to the different Departments and the number of persons employed, which may be of interest to honorable members. The last set of papers with which I shall trouble honorable members are, shortly, some statistics with regard to imports and exports. They are compiled from the best information I have been able to obtain from the various States. Some difficulties arose in consequence of different methods of compiling statistics in different States; but I believe that they are now being compiled in a more uniform manner, and will be of more assistance to honorable members on that account. From these documents I glean that comparing 1902-3 with 1901 - and I am not able to go further - the imports into New South Wales were £3,500,000 less, whilst there was a small increase in the case of Victoria and a small falling off in Queensland. They were £1,000,000 less in South Australia; £1,250,000 more in Western Australia, and in Tasmania about £100,000 more. Of course, Victoria and New South Wales, as I pointed- out when dealing with the question of adjustment, distribute very largely ; and the total falling off in the whole of the Commonwealth appears to be about £3,250,000. I do not know that value is a reliable guide as to the quantity of imports, because values in the case of many of the items, frequently change ; and it is difficult to get a fair method of comparison. At page 78 I give the fullest information I can get as to the values of oversea imports for the calendar years 1898- 1902, and for the six months ending 30th June, 1 903, and in the next page I show returns for the three years of the imports and duty collected; and this will afford some very interesting reading to honorable members if they desire it. Then I show the exports, and the particulars of the gold and bullion, which are included. I should have been glad if some better information could be given for the use of our commercial classes. Information is given in the customs interchanges published in the various States, but, as I say, these have been kept on varying systems ; and it would mean very large expense to collate and republish them. However, this matter is under the consideration of the Minister for Home Affairs, who is endeavouring to ascertain whether it is not possible, without much extra cost, taking into consideration what the States pay at present, to have a department formed for collating all such information, and dealing generally with Commonwealth statistics. As it is now, we have to rely on the various States, and even on the question of population, when I want information at the end of the year to enable me to readjust the annual distribution, I find .it very hard to get the statisticians of the States to agree in their figures. I had hoped, as my last Budget paper, to place before honorable members a complete return with regard to loans - a return showing the States interested, the dates when the loans fall due, the rates of interest, the amounts of principal and interest, and whether payable in London or in Australia. The return is prepared as far as it can be by the Commonwealth, but for greater accuracy it has been sent to the different States in order that it may be fully checked ; because I do not want to make use of it until 'I am assured that it is absolutely correct. At the same time, acting on a suggestion made last year by the leader of the Opposition, I want to get the best return I can from the different States showing how the borrowed money has been invested. As soon as I get the. desired information, I propose to circulate it for the benefit of honorable members, to whom it will be absolutely necessary later on when we come to deal with the very important question of whether we shall .take over the States loans. The information will be necessary when discussing the conditions under which we shall take such a step, and whether we shall take the whole or part of the loans, and to enable us to decide as to their value, according to the length of the terms and the varying rates of interests. I am not prepared at the present time to give the House any advice as to how we should deal with the subject of those loans.- Many people regard it as an absolutely simple matter, which would cause no trouble ; but I have been thoroughly investigating it, and I find, on going into details as I have been doing for some time past, and on taking all the circumstances into consideration, that it is a matter which will require, at the hands of this Parliament, the most careful and earnest consideration before we arrive at a decision. I have been blamed because I will not immediate!)' rush in and do something - either take the loans over as they are, or take over the responsibility of the interest - and it has been urged that Victoria, in the absence of any such action, may suffer a loss. Honorable members may be perfectly assured that if I could, with justice to the Commonwealth, have done anything in this matter in connexion with my own State, I should not have been backward. I do not want to mention Victoria in any way, excepting as the State which has the first loan for a large amount falling due. But some time ago I had, from the best and most reliable sources in the old country, full advice as to the taking over of the loans at the present time. On .that information, and also as the result of my own inquiries and investigations, I have no hesitation in saying that I should not be justified in placing before the House at the present time any scheme in connexion with the matter. {: .speaker-F4P} ##### Mr Reid: -- That is the general matter of the whole of the public debts % {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I am not going to deal with the matter piecemeal. {: .speaker-F4P} ##### Mr REID:
EAST SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906 -- Not if the Treasurer can save one State £750,000 ? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I do not think I can save one State £750,000. {: .speaker-F4P} ##### Mr Reid: -- Then the Commonwealth security is not a half per cent, better than the security of the State *1* {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I would not say that. {: .speaker-F4P} ##### Mr Reid: -- I .hope the Treasurer would not. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I am going to consider the interests of the whole of the Commonwealth. My honorable friend may sneer as much as he likes, but I have given as much earnest consideration to this matter as has any man. I am not going to sacrifice the future interests of the Commonwealth for the present interest of any State. {: .speaker-F4P} ##### Mr Reid: -- Hear, hear ! Who wishes the Treasurer to do so ? {: .speaker-KWT} ##### Sir GEORGE TURNER: -- Those who want me to deal piecemeal with, or to rush, the matter would force me into that position. When the Treasurer of Australia, whoever he may be, dealswith the question, it will have to be dealt with on a comprehensive basis. Looking at all the surrounding circumstances, if the Commonwealth were to goon the London money market as another borrower, without having some sort of an understanding with regard to the various loans that will in the future be placed on the market by the States - without workingin concert with those States in the flotation of loans - I say on the information I have obtained from the highest sources in Great Britain, that it would be detrimental to us. If we now attempted to float the loan which is spoken of so much, we should be forced - we could not help ourselves - into accepting a price which we should notbe justified in accepting for Commonwealth securities. I contended in the Convention that the Commonwealth should be compelled to take over the whole of the States loans at. once ; but, like many other ideas which men form, this idea, I have since seen, was utterly, and absolutely wrong, and I am glad the Convention reversed the decision which it came to on my motion in regard to making such action compulsory. The Commonwealth must have an absolutely free hand; and be in a position to deal with this matter quickly, when we have advice from the best sources that the proper time has arrived to go on the money market. If we attempt to take any other course, we may possibly temporarily benefit one or other 'of the States, but I am certain we shall permanently and seriously injure the Commonwealth. Under the circumstances, I have refrained from doing anything in connexion with the loans, feeling that I should not be justified in taking any other course. As soon as I get an opportunity, I think I shall ask the Treasurers of the various States to meet me in conference. There is no desire whatever to work adversely to the States ; the only desire is that the Commonwealth and the States should act in concert, and the opportunity will be presented when loans fall due. We cannot afford to have the Commonwealth going into the market and borrowing money for the purpose of paying off State loans at the very same time that the States are rushing for new loans with a view to getting ahead of the Commonwealth. That course of procedure would be unwise in the interests of the States, and of the people who make up the population of both the States and the Commonwealth. Under all these circumstances, I feel that a strong and earnest effort should be made to come to an amicable arrangement with the States. No one would dream of attempting to control 'their expenditure. We know that States like Queensland, New South Wales, and Western Australia, must incur heavy expenditure in developing their large territories, and we have no desire to interfere with them in regard to that expenditure. But all who give the matter the thought which it deserves will see that it is surrounded with difficulty, whether we take over the whole or only part of the loans of the States. When we take them over we must do so either wholly or *pro ratâ,* according to the population of the States; but before we can do anything at all we must make some arrangement under which the States and the Commonwealth can work amicably, so that they will not be competing' one against the other in the London money market. The matter is one to which I have given earnest consideration, though I have taken no part in its public discussion, because I thought it unwise to do so. The information which I have obtained, however, shows me that it would not be well to deal with the matter piecemeal. To do so would cause irritation, soreness, and injury. We can deal with it only after we have given thoughtful and careful consideration to a comprehensive scheme embracing the whole of the loans taken over. If I remain in office, I hope to have the privilege of placing such a scheme before honorable members later on. They may rest assured that no effort will be spared by me to prepare such a scheme, and to enable the Commonwealth to obtain fair terms on the London money market, instead of being at the mercy of those who want to injure the credit of our securities, knowing that we must obtain money by certain dates or make default in the payment of the loans, and to make us " sweat for " the money we borrow. I do not wish either the Commonwealth or the States to be at the mercy, of the money market in regard to future loans, and therefore, in taking over the loans of the States, and making provision for their reduction or conversion, we should give ample time for the operation, and not deal with the matter piecemeal. When, later on, I place certain facts which are within my knowledge before honorable members, they will agree that I am taking the right course, and they will see that idi the Government desire is to come to an amicable understanding with the States. I feel sure that the proposal to contribute 1 per cent, towards a sinking fund will meet with the approval of honorable gentlemen ; but when the fact that a sinking fund must be provided for is taken into consideration, it will be found that the great saving in interest will be a saving which will go towards the redemption of the States debts. {: .speaker-F4P} ##### Mr Reid: -- That will not be a bad thing. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- It will be a good thing ; but it will not be quite what those who talk so glibly of the millions that we can save ai-e thinking about. They think that the States will have so much more revenue to apply to the remission of taxation, or to increase their expenditure. That is not what will happen. The greater part of our money is borrowed at 3 per cent., a large amount at 3-J per cent., and some at 4 per cent, and higher rates, and it is only in regard to loans at 4 per cent, and at higher rates that there will be any saving, apart from the sinking fund. *On* the loans at 3 per cent., and at 3£ percent., there will be a loss. On the loans at 4 per cent., the accounts will come out square, if the Commonwealth stock is floated at par, and there are no expenses. The saving will be on a few loans at 4£, 5, and 6 per cent., but it will be a mere trifle. Having given the matter all the consideration I can, I feel that the time is not opportune to deal with this subject ; but when my information leads me to believe that it is opportune, and I have come to an amicable arrangement with the States, I I shall be ready to deal with the matter in a comprehensive fashion. I have extended my remarks beyond the time I originally intended to speak j but, as I have already pointed out, I have to make a financial "statement which affects, not only the Commonwealth, but each of the six States. So long as the Federal Treasurer gives them back more than the amount he anticipated would be returned to them, they will not grumble ; but if they receive £100,000 or £200,000 less, trouble, will commence, and all the difficulties which occur in connexion with their finance will be laid at his door. I hope, therefore, that my estimate of revenue will be fully realized ; and I believe that it will. I hope, too, that better times will come more quickly than I have anticipated, and that with a larger revenue arising from the increased spending power of the people, and perhaps a saving on the proposed expenditure, I shall be able to return to the States even more than I estimate. If so, I shall be content to be blamed for having over-estimated the expenditure, or underestimated the revenue, and perhaps have it imputed that I did so for some wrong or improper purpose. The States have to a great extent to depend upon the action of the Commonwealth in the collection of revenue, and the amount returned to them. They are at our mercy. The Commonwealth has a right to expend more than we ask the Committee to authorize the expenditure of ; but, although that is so, the Government do not feel justified, after a consideration of all the facts, and knowing the difficulties with which some of the States are surrounded, to propose a larger expenditure, though there are many works which might well be undertaken by us if the States could afford to forego some of their revenue. The States in which those works should be constructed, however, are States in which, because of their financial position, it would not be justifiable. That is why I have not gone as far as the Minister for Defence pressed me to go, and have provided only £75,000 instead of £125,000 for certain purposes. ' That saving may appear a small amount, but it is an amount the expenditure of which some of the States would seriously feel. . I thank honorable members for the *kindness* and courtesy which on this occasion, as on all previous occasions, they have extended to me. I have curtailed my remarks to a considerable extent by refraining from the mention of details, unless I found it necessary to mention them. But, as I have to provide material for honorable gentlemen who wish to deal with these matters when before their constituents, and who have to address people who will not trouble to look into the details themselves, and are easily led away by statements in regard to totals, I have felt compelled to go more thoroughly into the subject than I should have done under other circumstances. As it is necessary for me to obtain supply to tide the Government over this and the following month, I should like to substitute for the usual motion on these occasions a motion which will cover the introduction of a. Supply Bill. Honorable members have intrusted me with a vote of £75,000 to meet urgent demands. I have not spent much of the money, as I. have kept back as muchexpenditure as possible. I have circulated amongst honorable gentlemen a scheduleshowing on what basis I desire a twomonths' supply. They may rely upon my assurance that we wish to provide in this way only for the ordinary expenditure of the year ; nothing is included for new worksor buildings. I am financing the works now in progress out of my advance vote, and I have declined to sanction the undertakingof new works and buildings until the House has voted money for them. I should mention, however, that 1 am asking for money topay the increments to which employes of the fifth class are entitled. Those increments are due to them practically as a matter of course. But I have allowed the increments of the more high-paid public servants, which are consequent upon thefavorable report of the Public Service Commissioner, to stand over until the Estimates for the year have been dealt with. Under these circumstances, and without any desire to close the debate, I propose to take the steps necessary to have the Supply Bill passed. {: .speaker-F4P} ##### Mr G H Reid: -- I should like to have the ruling of the Chairman upon the point whether the motion which the Treasurer desires to move will permit of the free discussion of the .financial statement. The Supply Bill would meet the financial necessities for two months only, and upon such a Bill it would never do to have a discussion covering the financial business of the whole year. . I would suggest the adjournment of the debate upon the financial statement, after I have made one or two remarks, so that we may then proceed to deal with the Supply Bill, which the Treasurer is so anxious to have passed. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- It is suggested that the proper course for me to pursue will be to ask the House for two months' Supply, which, I take it, will be granted, and then to move that the first item in the Estimates be agreed to. {: .speaker-F4P} ##### Mr G H Reid: -- I would strongly suggest that we should follow the historical rule and preserve the continuity of the discussion. If a Supply Bill founded upon urgency is required, we shall be ready to go into Committee without entangling it with the discussion of financial matters, which will occupy a considerable time. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- There will be some debate on the Supply Bill. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- I hope not. I have made my financial statement at the earliest possible date - earlier than most State Treasurers - and, with my officers, I have been working night and day, Saturdays and Sundays, in order to bring about this result. {: .speaker-K4E} ##### Mr Conroy: -- It is usual in England to make, the Budget speech in the first month of the financial year. {: .speaker-KWT} ##### Sir GEORGE TURNER: -- No doubt my honorable and learned friend, when he becomes Treasurer, will be able to present his financial statement at an earlier date. I have no desire to prevent any reply that the leader of the Opposition or any other honorable member may desire to make, and, perhaps, under all the circumstances, I had better adhere to the usual course. I therefore move - >That the first item on the Estimates (Senate, £6,782) be agreed to. {: #subdebate-10-0-s2 .speaker-F4P} ##### Mr REID:
East Sydney -- The Treasurer has given us a most painstaking bookkeeper's view of the history of the Commonwealth during the past twelve months, but, with every appreciation of my right honorable friend, which I have freely shown on many occasions, I must express my sense of profound disappointment that he has not dealt with some of the larger aspects of Federal policy during the past year. We have had a new departure in the shape of a Federal Tariff, which was to confer upon the Commonwealth enormous benefits, and it would have been extremely interesting to the Committee and to the public, after one complete year of the'history of the Tariff, if the righthonorable gentleman had, without going much into fiscal disputation, made some observations with reference to that particular matter. So far as I can see, the Treasurer, in the figures which he has just laid before us, confirms to a wonderful degree the wisdom of the Oppositionin shaping the Federal Tariff. I grant that the Tariff was not shaped by the Opposition alone, because a number of honorable members who were not connected with the Opposition helped us most materially on many occasions ; but, speaking generally, the Tariff, as brought down, was estimated in a normal year to produce £8,900,000, and that was the amount which the Government proposed to raise in ' order to carry out the objects which the Treasurer has mentioned in reference to the financial operations of the States. We know that the Opposition cut down that Tariff in such a way that the Government said that the revenue would be reduced by from £1,000,000 to £1 , 500,000. But after the burdens of the people had, as it was alleged, been diminished by that amount, and after making allowance for the revenue received owing to the drought and other unexpected calamities, the Tariff realized a little more than the amount the Government estimated before a single reduction had been made. The tea and kerosene duties alone which were struck off the Tariff would have represented revenue amounting to between £500,000 and £600,000. Our forecast has been absolutelycorne out, although we had not the advantages of the services of the officers in thePublic Departments, and the resuit is that, notwithstanding that the public were relieved of an enormous amount of taxation, the Treasurer has had to come forward and say that he received last year no less a sum than £9,685,000 - that is, £785,000 more than he ever asked the country to give him. {: .speaker-KWT} ##### Sir George Turner: -- The right honorable gentleman is leaving out £250,000 from Western Australia, and also £250,000 representing the duty on imports belonging to the States Governments. {: .speaker-F4P} ##### Mr REID: -- I am quoting the Treasurer's figures. I thought they were so. plain that a child could understand them, but the moment we use them my right honorable friend discloses a number of matters which do not appear on the face of Iris statements. They seem to have been very well prepared. {: .speaker-KWT} ##### Sir George Turner: -- All the figures are there. {: .speaker-F4P} ##### Mr REID: -- We know that the revenue amounted to £9,685,000, including the fodder duties, the receipts from which were swollen owing to the drought, but looking at the actual estimate for the next year, we find that it is enormously in excess of that originally adopted by the Government. {: .speaker-KWT} ##### Sir George Turner: -- That estimate includes £500,000 that was not included in the calculation. {: .speaker-F4P} ##### Mr REID: -- I am sorry for that, because we want figures which we can understand. I am taking the actual total given by the Treasurer. {: .speaker-KWT} ##### Sir George Turner: -- The right honorable gentleman knows very well that the figures include the revenue from imports belonging to the States Governments, and also the returns under the Western Australian special Tariff. {: .speaker-F4P} ##### Mr REID: -- I am taking the figures as they were presented by my honorable friend the Treasurer. He has made a foot-note in reference to a clerk who is in receipt of £250 a year, and who seems to have got into the Department for Home Affairs. There is, however, no foot-note concerning the £250,000 to which my right honorable friend refers. The heading here is "Estimates of revenue for the year ending 30th June, 1904, compared with actual receipts for 1902-3," and the different States are given in their order together with the revenue which has been collected in each of them. I have no desire to enter into details at the present moment. I am merely pointing out that in spite of the ruthless reduction of the Tariff burdens, the Treasurer himself admits that his revenue returns have been up to his expectation, and that he does not require more during the ensuing year. Where are the traces of the advantages which we were to receive from all these taxes? Why, instead of people coming into the country they are going out of it at a faster rate than they ever did before. Victoria unfortunately has grown accustomed to an exodus of people during the past ten years, but since the establishment of the Federation a similar exodus has begun in New South Wales. There are actually more people going out of New South Wales than there are entering it, and the head of the Department of Labour and Industry - a worthy protectionist whose figures we may accept - reports that the result of the operation of the present protective Tariff for the year 1901-2- - a policy which increased the taxation of the people from £1,700,000 to £3,500,000 was that 1,600 additional hands had been put into factories at a lower rate of pay than that which previously obtained, of which number **Mr. Schey** declares that 1,500 were under eighteen years of age, and 400 or 500 so young that they had to obtain school-exemption certificates. These are matters which we have to consider to some extent. May I suggest to my right honorable friend that I see no provision in these Estimates for giving effect to the policy of the Government in connexion with the various measures that are to be submitted during the present session ? In connexion with the selection of the Federal capital site, I notice that a sum of £1,500 is provided. What a mockery of the question? These Estimates cover a period ending upon the 30th June of next year. If the Government would straightforwardly declare that they do not' intend to touch the capital site question, every one would know exactly what they meant. But to talk about submitting resolutions to this House, and of selecting the site during the present session" whilst only providing £1,500 upon the Estimates for the purpose, is simply throwing contempt upon the matter. Let us have it dealt with in some straightforward manner. Let the Government intimate that they do not intend to touch it if they choose, but do not let them attempt to impose upon the public simply by assuming an air of intense earnestness. Then we have been told that a Conciliation and Arbitration Bill is to be put through Parliament without delay. Yet not a penny has been provided on the Estimates for the purposes of that measure. The right honorable gentleman might say that he had not done so because he did not know whether the Bill would be passed. But what is the use of furnishing honorable members with figures relating to expenditure for the ensuing year, if some notice is not taken of expenditure consequent upon the establishment of Courts of Conciliation and Arbitration, of the Inter-State Commission, and of the appointment of a High Commissioner ? {: .speaker-KWT} ##### Sir George Turner: -- Did I not say in my stabemenb bhab £20,000 was provided for bhe purposes of cerbain Bills which have nob yet been dealt with? {: .speaker-F4P} ##### Mr REID: -- My honorable friend certainly did not mention it in any prominent way, because, with the exception of about two minutes, I sat here continuously during the whole of his statement. He must have referred to it in a very modest way. Do I understand that he does propose to expend £20,000 upon all these matters *t* I see that provision to the extent of £4,500 is made in connexion with the establishment of the High Court. There is no mistake about that matter, although the Judiciary Bill has not yet passed both Houses of Parliament. My honorable friend, the Attorney-General, looks after the palladium of the Constitution all right. In his opinion, that High Court is a far more anxious matter to the public than is any other court. It is proposed to expend only £1,500 upon the selection of the Federal capital site, whilst £4,500 is provided for the salaries of officers of the High Court - not for the salaries of the Judges. {: .speaker-009LR} ##### Sir Edmund Barton: -- The Judges' salaries will be the subject of a special appropriation. {: .speaker-F4P} ##### Mr REID: -- I am quite aware of that. I have heard of such things before. We have, really two financial sbatements before us - the expenditure shown uponthe Estimates ofthe Treasurer, and a number of liabilibies whichthe Government fully intend to impose upon the public during the ensuing year, but which are not mentioned in the accounts at all. Since the Treasurer has given us a volume of figures upon other matters, he might have reserved one page for the special expenditure which is likely to arise during the next twelve months under the deliberate policy of the Government. Let me remind himthat whilst sometimes criticism in reference to extravagance is quite unjust, at others it is fully warranted. Personally, I never object tothe people crying out for economy, irrespective of whether they are right or wrong. It is a cry of whichthey might well have made use in Australia during the past 40 years. It is because they cried out for too much extravagance during that period that we are confronted with our present troubles. I am delighted to hear them demanding economical administration. But I wish to point out that although the only sources of Commonwealth revenue are' the Customs and the Post and Telegraph Departments, that revenue represents £12,000,000 a year, apart from the enormous revenues of the States. That amount represents twice as much per head of the population, as does the revenue of the United States, and we all know the profligate extravagance of United States Tariff, which averages 40 per cent, *ad valorem* upon its imports. {: .speaker-F4R} ##### Mr Watson: -- The result is low, because the internal production is so great. {: .speaker-F4P} ##### Mr REID: -- But in spite of that, our revenue is twice as large as the revenue of the United States. {: .speaker-F4R} ##### Mr Watson: -- Our internal production has not increased. {: .speaker-KNJ} ##### Mr Mauger: -- Because we have not got an American Tariff. {: .speaker-F4P} ##### Mr REID: -- That is the cure for all our exbravagance - anobher 20 per cent, upon the people. I would remind the honorable member for Melbourne Ports that that policy has driven thousands of citizens out of Vicboria duringthe pastten years. The Government of Victoria on several occasions attempted another turn of the screw,' but to their intense surprise they discovered that the more they turned it the more the people left the country. {: .speaker-KHC} ##### Mr Higgins: -- They went to New Zea land, which has a higher Tariff. {: .speaker-F4P} ##### Mr REID: -- The NewZealand Tariff is in no' sense a higher one. In many respects the Commonwealth Tariff is worse than the old Victorian Tariff, because under the latter there was an enormous free-list. When some honorable members talk of Victoria as having been a protectionist State, bhey should remember bhab virtually it adopbed a policy which was half f ree-trade. Underthe existing Tariff,things have reached such a state that when a roan brings a little marble dust into Australia, he is charged 20 per cent, upon it because there is a duty upon wrought marble in connexion with statues and tombstones, and because it is marble wrought into dust. That is a glorious way of encouraging in dustry by a vigilant administration of the Customs Tariff. After many fights in this House, and in the other Chamber, we absolutely determined that cartridges should be admitted free of duty. The Customs authorities, however, have insisted that the. lead which the cartridges contain shall pay 5s. per cwt., because there is a duty upon metal in another part of the Tariff. These are absurdities which would bring contempt upon any Tariff. I dc not wish to say anything more about that, because he who was formerly the live man of the Ministry is now out of it. But I do hope that in any change which may take place in the constitution of the Cabinet, my right honorable friend, the Treasurer, will see that it is his duty to maintain the position which he now occupies, because, however much we may differ in politics, honorable members are agreed that the right honorable gentleman is absolutely the best Treasurer in the present administration. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- Does the right honorable member forget **Sir William** Lyne's two financial statements *1* {: .speaker-F4P} ##### Mr REID: -- He fortunately left the country. We had quite enough of **Sir William.** One year was almost sufficient to ruin New South. Wales. I believe that the honorable gentleman has brought portion of his working machinery over to this State, and that he has made some provision for the gentlemen who used to post him up in his figures. All the derelicts in the public service of Australia cluster round the Minister for Home Affairs. I desire now to go a step further. I do not wish at present to refer to the details of the revenue - exclusive of the fresh items which are to be introduced during the year* - which the Treasurer has submitted to us. At page 28 of the Budget papers, the right honorable gentleman sums up the cost of each Department, and sets forth the total expenditure. The table shows that the total expenditure was £3,735,583, during the year 1901-2 j and £3,834,937 during 1902-3; and that the estimated expenditure . for 1903-4 is £4,320,449. The figures for the two years 1901-2, 19<>2-3 apparently include certain payments on account of the previous years, for there is a statement at the head of the return setting forth that - This statement shows the cost under the year during which the service was rendered, although some of the payments were not actually made in that year. {: .speaker-KWT} ##### Sir George Turner: -- That is the cost during the year. {: .speaker-F4P} ##### Mr REID: -- So that the figures for each of the years 1901-2, 1902-3, I presume include payments on account of the previous year which were made after the year had expired. {: .speaker-KWT} ##### Sir George Turner: -- Yes. {: .speaker-F4P} ##### Mr REID: -- Therefore, in spite of the fact that the totals for 1901-2, 1902-3 were increased by payments made after the year in which the services were rendered was over, the figures for 1903-4 show an increase of £485,512 over those relating for 1902-3. {: .speaker-KWT} ##### Sir George Turner: -- The estimate for the year 1903-4 provides for payments for the full year, just as the others did. {: .speaker-F4P} ##### Mr REID: -- They are framed on the same basis *1* {: .speaker-KWT} ##### Sir George Turner: -- Yes. {: .speaker-F4P} ##### Mr REID: -- Taking the estimate for 1903-4 as being framed precisely on the same basis as" the return for the previous years, we find that there is an increase of £485,512 on the expenditure of the preceding twelve months. I am not saying for one moment that .that increase may not be fully justified. Until I shall have had time to analyze the figures I simply wish to draw attention to the fact as one which must be carefully considered. With reference to the duties on agricultural produce, it seems to me that it is one of the most sinister effects of the ' policy of protection that, during a time when food for man and beast was so difficult to procure all over Australia, the Commonwealth raised more than half-a-million sterling by way of import duties upon such articles - articles that were required to save starving stock which were to consume Australian fodder when our years of plenty came. Now that our time of plenty has come, our stock has gone ; it is dead ; it has disappeared ; but we have made this gain out of the bitter calamity and ruin of the people of Australia. We have added to their burdens by taking nearly £600,000 more out of them than the Government ever dreamt of obtaining in this way. The collection of these duties, too, added to the value of every bushel and every ton of this produce which was produced by people who were fortunate enough to have any crops at all. What is the result *1* Extravagant Governments expend this halfamillion of money - that is one fault of every Treasurer, and a bad one, too- - and now when a normal year comes along, the revenue will go down half-a-million, there will be a cry as to the shortage in revenue received from the Commonwealth, and perhaps the Treasurer personally will be blamed. It is very easy to condemn people, but I have every sympathy with those farmers of South Australia and certain parts of Victoria who have been sweated for many years under a protective policy without obtaining anything out of it in return. It was natural that when the national calamity of the drought occurred they should want to make something out of these duties. They said, "We have had the burdens of protection on us for so many years for the benefit of the towns of Australia, and now that the drought has come, we are entitled to have what we can get out of this policy." There is nothing to be said about that; but it is a great pity that our system of raising revenue should be so inflexible - so unfortunate - that it adds so largely to the burdens of the people at a time of the greatest want and distress. I do not wish to go into details so far as New South Wales is concerned, but if ever a country in the world had no excuse for financial trouble, it is that State ; especially in view of the enormous revenue which the Treasurer has presented to it. That revenue, of course, has come out of the pockets of the people. But in spite of the £1,700,000 of new revenue, we find that they are in difficulty over their finances. The Treasurer may fairly be indignant at unjust criticism against himself and his management, but I hope he will remember that in these times it is a grand thing to find the people intent upon the details of the public expenditure, whether it be that of the States or of the Federation. We should not resent criticism on their part, because they have to bear the burden. {: .speaker-KWT} ##### Sir George Turner: -- We do not resent any criticism, provided that it is conducted on proper lines. Mr.REID. - We never consider that any criticism which affects ourselves is proper. But the right honorable gentleman is aware of the venomous attacks to which every man who has to administer the finances of any country is exposed, although he has probably had less than the usual share of such criticism. The question of the Victorian loan is too important to speak of off-hand. I have listened with great attention to the Treasurer, but I shall defer any remarks which I may have to make on that subject until I can look more fully into the accounts. I must say, however, that I do not follow the remarks which the Treasurer has offered upon the subject, nor do I at present feel at all satisfied with the statement which he has made with reference to that particular loan. I shall defer my observations in regard to that matter, and I suggest that in order that honorable members may have an opportunity to study these accounts, some reasonable adjournment should be allowed. {: .speaker-KWT} ##### Sir George Turner: -- I propose that the debate be adjourned until Tuesday next. Mr.REID. - I think that will do very well. With the concurrence of the Committee, I think that the general motion should be withdrawn for the time being, in order that we may have only the question of Supply before us. Motion, by leave, withdrawn. {: .page-start } page 2665 {:#debate-11} ### SUPPLY BILL (No. 2) *Resolved* (on motion by **Sir George** Turner) - >That a sum not exceeding £595,659 be granted to His Majesty for or towards defraying the services of the year ending30th June, 1904. Resolution reported arid adopted. *Resolved* (on motion by **Sir George** Turner) - >That the standing orders be suspended in order to enable all steps to be taken to obtain Supply, and to pass a Supply Bill through all its stages without delay. *In Committee of Ways and Means :* Motion (by **Sir George** Turner) proposed That towards making good the Supply granted to His Majesty for the services of the year ending 30th June, 1904, a sum not exceeding £595,659 be granted out of the Consolidation Revenue Fund. {: #debate-11-s0 .speaker-K4E} ##### Mr CONROY:
Werriwa -- It wasmy intention originally to oppose this motion, but in view of the fact that the Treasurer desires to get all payments sent away, and that he has given such a full explanation of the Estimates, I do not propose to take that step. In the circumstances I think I see my way clear to give my assent to the course he has proposed. I am one of those who have always objected to any suspension of the standing orders, especially in connexion with the passing of accounts, and it is only in the unusual circumstance that the Estimates have been submitted to us almost simultaneously with the consideration of this question of Supply that I raise no objection. {: #debate-11-s1 .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- I understood the Treasurer to say, in the course of his Budget statement, that he intended paying at once the increments due to the officers of the fifth class. {: .speaker-KWT} ##### Sir George TURNER: -- Yes. We intend to pay them at the end of the month. Question resolved in the affirmative. Resolution reported and adopted. Bill presented, and passed through its remaining stages. {: .page-start } page 2666 {:#debate-12} ### BUDGET (1903-4) {:#subdebate-12-0} #### In Committee of Supply : {: #subdebate-12-0-s0 .speaker-KWT} ##### Sir GEORGE TURNER:
BalaclavaTreasurer · Protectionist -- In order that the debate on the Budget may remain open, I formally move - >That the first item on the Estimates (The Senate, £6,782J be agreed to. Progress reported. {: .page-start } page 2666 {:#debate-13} ### CONCILIATION AND ARBITRATION BILL Bill presented and (on motion by **Mr. Deakin),** read a first time. {: .page-start } page 2666 {:#debate-14} ### QUESTION {:#subdebate-14-0} #### EASTERN EXTENSION TELEGRAPH COMPANY'S AGREEMENT Debate resumed from 24th July *(vide* page 2609), on motion by **Sir Edmund** Barton - >That this House ratifies an agreement entered into between the Government of the Commonwealth and the Eastern Extension Company, a copy of which was laid on the table of the House on Thursday, 2nd July. > >That this resolution be communicated to the Senate, with a request for its concurrence therein. Upon which **Mr. Kirwan** had moved, by way of amendment - >That all the words after the word "House," line 1, be omitted, with a view to insert in lieu thereof the following words : - "Is of opinion that the Conference proposed by the Secretary of State for the Colonies between representatives of the various partners in the Pacific Cable should be held before any agreement is arrived at between the Government of the Commonwealth and the Eastern Extension Company." {: #subdebate-14-0-s0 .speaker-F4P} ##### Mr REID:
East Sydney -- I do not wish to discuss the particular merits of the arrangement which the Prime Minister has made with the Eastern Extension Telegraph Company, because there are a number of matters which, to my mind, are of infinitely greater importance. I remember well, as Premier of a State, using .all the influence I could bring to bear in favour of the establishment of an all -British cable between the United Kingdom and these parts of the Empire. In my efforts to bring about that result I worked most cordially with the Premier of Victoria, the Premier of Queensland, and the Premier of New Zealand. There were other colonies which did not join in the project ; they had, perhaps, geographical reasons for not viewing the matter in exactly the same light as we did. But so far as New South Wales, Victoria, Queensland, and New Zealand were concerned, there was a most cordial union in the direction of establishing a Pacific Cable of the character I have referred to. Our influence, exerted through a number of years and helped by Canada, was at last effectual. It induced the Imperial Government to take a step quite outside their traditions. With all their vast interests in electric telegraphic communication they had never joined in a partnership connected with an ocean cable, and it was a new . departure of great significance and importance for them to do so. When they were persuaded to join with Canada and the States I have mentioned, the project, of course, came within the field of practical politics. In due course this partnership was entered into. It entailed a serious pecuniary liability upon the Imperial Government and Canada and the Australian colonies concerned. The spirit of the arrangement was really one of partnership. The Eastern Extension Telegraph Company is a very great and enterprising body, and its negotiations have sometimes been attended with a singular success. It may also be said that they have sometimes been conducted with a large, amount of secrecy. Until the Pacific Cable project loomed upon the horizon, its charge for messages was no less than 9s. 4d. per word, and when efforts were made to get that enormous charge reduced, they met with no success worth mentioning. It was only when this Imperial project was brought forward that the company wisely adopted quite a different attitude. But the change from the charge of 9s. 4d. per word then, to the charge of 3s. per word to-day - : which represents an enormous amount to the mercantile community of Australia - was substantially brought about by the Pacific Cable project. If it had never been started, the public of Australia would now have been paying exorbitant rates for their messages. I do not look upon this very powerful company as in any sense a benefactor. It has been an entirely commercial institution from the first. It has tremendous influence, and has very able men in charge of its interests. No doubt when the Pacific Cable project came into view its attitude changed ; it suddenly evinced a desire to meet the convenience and wishes of the Australian Governments in every possible way. I remember that on one occasion its agent waited upon *me* when I was Premier of New South Wales. We did not get far enough to know the nature of the concessions exactly ; but he began the interview with me on the basis of making concessions, and I immediately confronted him with this question - " Is not your object that of stopping the Pacific Cable *1"* He had to admit that it was, and I said " Good-day." That was the length and nature of the interview he had with me. I felt that as the representative of a State which was engaged in endeavouring to induce the Imperial Government to join in this great enterprise, involving a very large amount of responsibility, with no sort of fairness or propriety could I listen to proposals which were obviously'designed to injure its prospects. That was the result of the company's approach to me while I was at the head of the Government of NewSouth Wales. It seemed to meet with much greater success when I left office. I retired in September, 1899, and it was able to induce the Postmaster-General in the succeeding Ministry - **Mr. Crick,** who is a very able man - to enter into an agreement, and the Postmaster-General of Victoria, **Mr. Gurr,** entered into an identical agreement on behalf of his Government. {: .speaker-L0K} ##### Mr Salmon: -- Which they would not ratify. {: .speaker-F4P} ##### Mr REID: -- I am coming to that. I desire to take the matter in its order. {: .speaker-009LR} ##### Sir Edmund Barton: -- Did **Mr. Gurr** go so far as to sign? {: .speaker-KNJ} ##### Mr Mauger: -- Yes. {: .speaker-F4P} ##### Mr REID: -- There was an arrangement made- {: .speaker-KNJ} ##### Mr Mauger: -- Which the Treasurer of Victoria repudiated. {: .speaker-F4P} ##### Mr REID: -- This arrangement was arrived at by the Postmasters-General of New South Wales and Victoria. It is a singular circumstance and by no means to the credit of Australian conduct in public affairs, that that agreement was kept secret. The agreement was not signed until sixteen days after the Pacific Cable agreement had been signed as between the Imperial Government and the Governments of- Canada, New South Wales, Victoria, Queensland and New Zealand. If it had been known, the Pacific project would probably never have been adopted by the Imperial Government, or by Canada or New Zealand. But I do not know enough of the interior history of the matter to say more than that those are the dates. The agreement was arrived at between **Mr. Crick** and **Mr. Gurr,** but was not committed to writing until sixteen days after the Pacific Cable partnership was entered into. I have got the exact dates in the most authentic way. The Pacific Cable partnership was signed on the 31st December, 1900. On the 16th January, 1901 - that is, sixteen days afterwards - this agreement between New South Wales and Victoria was signed. That is the date of the written agreement ; but, of course, the terms of the agreement itself were arrived at long before that date. It must have been some months in negotiation. {: .speaker-JOC} ##### Mr Batchelor: -- It was signed in South Australia long before. {: .speaker-F4P} ##### Mr REID: -- That is a different thing. South Australia did not enter into the Pacific Cable agreement at all. The States on the other seaboard - Western Australia, South Australia, and Tasmania - signed an agreement with the Eastern Extension Company in the year 1900. I do not remember the date, but I know that *it* was in that year, after the Federal vote had been taken, and Federation had become an accomplished fact. I admit that the present Federal Government had no sort of responsibility for any of the matters about which I am now talking. But still there they are {: .speaker-KIN} ##### Sir William Lyne: -- Can the right honorable member say whether anything was kept secret in New South Wales ? {: .speaker-F4P} ##### Mr REID: -- Strange to say, I cannot speak for New South Wales so promptly and effectively as for Victoria, because I have information which is absolutely authoritative so far as concerns Victoria. {: .speaker-KIN} ##### Sir William Lyne: -- I think that the right honorable member is wrong so far as concerns New South Wales. {: .speaker-F4P} ##### Mr REID: -- All I can say is, that an arrangement to come to an agreement was arrived at long before the 16th January, 1901. There was a Conference about it. SirWilliam Lyne. - It was agreed to by the two Postmasters-General, just before Federation. {: .speaker-F4P} ##### Mr REID: -- But the Eastern Extension Company were pulling the strings for many months before that. I do not blame them, however. They are a private business company, and they were the pioneers of cable communication between Australia and Europe. There can be complaint about their pushing their interests. They are simply a clever business concern, holding a big stake and naturally anxious to fortify their position to she best possible advantage. So that my remarks are in no sense a censure upon them. I know that I am correct in saying that this agreement was kept secret, even from the knowledge of the Victorian Government, because when it came to the knowledge of the Victorian Government they repudiated the act of their own PostmasterGeneral. That is a statement which I am in a position to make. I know that it is absolutely correct that the Victorian Government, having a proper sense of its relations with the other Governments concerned in this Pacific Cable enterprise, absolutely refused to ratify the act of their own colleague in coming to that agreement with New South Wales. We shall all admit that that was a very strong course for a Government to take. I do not know that it was followed by the resignation of the Victorian PostmasterGeneral. Such a proceeding would often be followed by resignation. But, be that as it may, the Victorian Government stood out of that arrangement and would have nothing to do with it. {: .speaker-F4R} ##### Mr Watson: -- It was lucky for the Commonwealth perhaps that they did. {: .speaker-F4P} ##### Mr REID: -- It may be so. What I wish to point out is this. I want studiously to refrain from criticising the terms which the Commonwealth Government have arranged in themselves. I do not know enough to say whether, from a business point of view, those terms are good or not. Therefore, I do not say that they are bad. But what makes me refer to this matter in the most earnest way is that the Commonwealth above everything should try so to conduct its affairs as not to expose itself to imputations upon its course of conduct, imputations upon the good faith of Australia. And these imputations have been made in no uncertain terms by the Government of Canada and the Government of New Zealand. Those two Governments, when they heard of the agreement which is now before us, protested in the strongest possible language. Honorable members can see the papers for themselves. I am referring to the second document in the parliamentary paper which has been circulated. The document is dated the 6th March, 1903. The Prime Minister of Australia had cabled under date of 5th March, informing the Governments of Canada and New Zealand what this Government proposed to do with the Eastern Extension Company, subject to the approval of Parliament. I make my observations now on the basis that practically this matter is referred to us, and that we, in dealing with it, must really very carefully consider the position of the matter. The Government of Canada made the following protest : - >Canadian Government protests against action your Government. Concession made by New South Wales to Eastern Telegraph Company, regarded by Canada violation of spirit of agreement under which Pacific intentions of cable core was constructed. {: .speaker-009LR} ##### Sir Edmund Barton: -- And the protest was made concerning an agreement to which we were no parties, but which we found existing. {: .speaker-F4P} ##### Mr REID: -The protest is not against the action of any State Government, but against the action of the Commonwealth Government. {: .speaker-009LR} ##### Sir Edmund Barton: -- Not substantially. {: .speaker-F4P} ##### Mr REID: -- I may say from my point of view substantially. I am not going to criticise the Prime Minister as to his *bona fides* in the first place, and as to his absolute ability and efficiency in conducting this matter. I approach it from another point of view. I do not criticise the details of the arrangement. As I have said, I am not competent to do so. I have to deal with, the matter from a wider point of view altogether. The first point that struck me was the strong language which is used by **Sir Wilfrid** Laurier - a man of studied moderation, as . all of us know, in all his sayings and doings - in connexion with this arrangement of the Commonwealth Government - nob an arra,ngenaent of the States. It is quite correct that the Federal Government cannot be held responsible for things done before they came into existence. But what we are asked to approve of is what the Federal Government have done, for if these things are to be mei-e matters of form, and when the Government have made their arrangements, we are simply to be recording clerks to ratify them, I am merely wasting time. But in view of the attitudetaken by the British, the Canadian, and the New Zealand Governments, I feel that we, at least, owe their representations the courtesy of examiiiation. The Canadian Prime Minister goes on to say, in speaking of something which happened before - Action proposed now - That is the action of the Commonwealth Government. - nothing less than extension objectionable concession for a period of years to other parts of the Commonwealth. This agreement was framed after Federation had been accomplished. The Commonwealth really began its existence on the 1st January, 1901, and this agreement was signed in New South Wales sixteen days after the Commonwealth had been proclaimed and the Federal Ministry had been formed. {: .speaker-KIN} ##### Sir William Lyne: -- Which agreement? {: .speaker-F4P} ##### Mr REID: -- The New South Wales agreement was signed on the 16th January, 1901. {: .speaker-KIN} ##### Sir William Lyne: -- That agreement was signed by **Mr. Copeland.** {: .speaker-F4P} ##### Mr REID: -- I am not talking now of the Pacific Cable agreement, but of the other agreement with the Eastern Extension Company signed by **Mr. Crick.** I have here a copy of the agreement to which I refer, and I find that it is dated 16 th January, 1901. Honorable members will see that that was sixteen days after the Commonwealth was proclaimed, and after the Federal Government was formed. {: .speaker-KFJ} ##### Sir John Forrest: -- -The Post and Telegraph Departments had not been taken over then. {: .speaker-F4P} ##### Mr REID: -- The Post and Telegraph Departments were not taken over until the 1st March, which was very soon afterwards. {: .speaker-F4R} ##### Mr Watson: -- The agreement ought not to have been signed under the circumstances. {: .speaker-F4P} ##### Mr REID: -- Though this agreement was not signed until the 16th January, we know that it was come to by the parties days and days before. The negotiations, which formed the basis of this long legal agreement, were not a matter of an hour, or a day. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- The negotiations had been carried on for six months before. {: .speaker-F4P} ##### Mr REID: -- Yes, I have no doubt they had. I desire to be very careful in any statements I make about the matter. The honorable member for Parramatta ' was Postmaster-General before **Mr. Crick.** He has, therefore, special knowledge of this matter, and I accept his statement that the Eastern Company and **Mr. Crick** had been hammering away at this agreement for months before. I think that **Mr. Gurr** committed the Victorian Government, so far as he could, long before the date I have mentioned, and that matter was a subject of discussion in the Victorian Parliament. {: .speaker-KIN} ##### Sir William Lyne: -- The agreement between **Mr. Crick** arid **Mr. Gurr** was come to a few days before the agreement was signed. {: .speaker-F4P} ##### Mr REID: -- I am sorry the New South Wales Government did not act in the same way as did the Victorian Government in the matter. When the agreement came before the Victorian Government they repudiated it, feeling that with their obligations to the mother country, to -Canada, and to New Zealand, they were not in a position to be so smart as to be partners in one concern, and then get special advantages from another, the only consideration for which was that those special advantages would be given to the detriment of the Pacific Cable. These business companies do not give anything for nothing, and they did not enter into this agreement; giving something to New South Wales, except upon a well founded certainty that it would give them something as against the Pacific Cable ; that, in fact, it would enable them to fight the Pacific Cable to greater advantage. {: .speaker-009LR} ##### Sir Edmund Barton: -- One thing it gave them was perpetuity. {: .speaker-F4P} ##### Mr REID: -- That was one thing, I suppose. As I say I do not know the details, and I desire to avoid making any statements about them, but we do not need details to know what the Eastern Extension Company were driving at. They were driving at making the Pacific Cable as great a failure as possible, and the greater the failure the larger the contribution that England, Canada, and New Zealand must make as partners in this concern, because the losses have to he divided amongst the different partners. This is the agreement **Sir Wilfrid** Laurier refers to in complaining of the Commonwealth Government, and which he regarded as nothing else than extending objectionable concessions, obtained in an objectionable way, beyond New South Wales into other parts of Australia. -I have great respect for the newspapers that are so terribly eager in connexion with this agreement with the Eastern Extension Company. I have the greatest possible respect for the press ; but we must remember that there is a distinction to be drawn between subjects upon which the newspapers speak from a disinterested point of view, and a subject in which they are concerned as very large customers of the cable company. We must be doubly careful of the attitude taken by a newspaper, however patriotic its intentions may be, in dealing with a matter which affects one of the largest items of expense in its daily business. I have, therefore, not been at all overcome by the strong and united support which this agreement has secured in many quarters. in the press of Australia. **Sir Wilfrid** Laurier refers to the fact that - >Canada assumed large share responsibility of Pacific intentions of cable core. Believed that all colonies, parties to contract, would do everything possible to direct business over a new line. Canadian Government much regret that departure from that understanding, which has already occurred against their protest, and now urge upon Government of Commonwealth .that no further extension granted to Eastern Extension Company. In other words he says - " That was bad ; that was wrong. Do not extend that injury and that wrong" all over Australia. It is rather a singular thing, as showing how these busy representatives of companies get inside the official circle, that the next document in these papers is not a reference of this reply from the Prime Minister of Canada to the Prime Minister of the Commonwealth to the company for a report and explanation, but a letter from **Mr. Warren,** of the Eastern Extension Company, to the Department with reference to Canada's protest. {: .speaker-009LR} ##### Sir Edmund Barton: -- It was published in the press. {: .speaker-F4P} ##### Mr REID: -- I was just going to say that probably this telegram was published in the press, and this 'gentleman very naturally, perhaps, wrote this letter with reference to it. ' {: .speaker-F4R} ##### Mr Watson: -- The right honorablegentleman will see that the- letter is dated six days later. {: .speaker-F4P} ##### Mr REID: -- Yes ; I see that. There is a long document added here to thatletter. Then the Prime Minister of New Zealand supports the protest of the PrimeMinister of Canada. On the 13th May he cabled to the Prime Minister of the Commonwealth to this effect - >With profound regret learn agreement signed. Sincerely hope Parliament will not ratify itHave written you fully on the matter. **Mr. Seddon** sent another telegram two days later To rectify an error of past Australian Stateadministration in respect Eastern Extension Co. , by doing an injustice to those who joined with the States of Victoria, New South Wales, and Queensland to construct the Pacific Cable, is a heavy price to pay. Please to learn you approvemy letter with an open mind. That seems very pleasing, but I see no trace of the open mind in this matter, because the matter was permitted to go on without delay. I have no doubt the Prime Minister showed a most open mind, but what he did was to go. on without taking the slightest notice and without the slightest delay. {: .speaker-009LR} ##### Sir Edmund Barton: -- All I said in my telegram was - i Regret you deplore signature Commonwealth, agreement Eastern Extension Company. Shall await with interest your letter containing reasons for preferring perpetuity of the old agreement. {: .speaker-F4P} ##### Mr REID: -- Exactly; and the Prime Minister had signed the agreement some days before he sent that telegram. {: .speaker-009LR} ##### Sir Edmund Barton: -- The word "approve " was not the word used by me, and there may have been a misprint. The Clerk at the table informs me that he thinks the word was " await." {: .speaker-F4P} ##### Mr REID: -- All I can say is that I am sorry we cannot trust parliamentary documents, which we naturally think are correct. I will read the communication in any way either the Clerk or the Prime Minister suggests. {: .speaker-009LR} ##### Sir Edmund Barton: -- The Clerk explains to me that he does not think there was a misprint, but that the word occurred in the telegram ; he only suggests, as would appear to anybody, that the word " approve" could not have been the word used by me. {: .speaker-F4P} ##### Mr REID: -- In other words, there is no evidence that what I have read is not a faithful copy of the original telegram, but the expression is so awkward, that there is strong presumption that it is not a faithful copy. {: .speaker-009LR} ##### Sir Edmund Barton: -- That is extremely unfair. {: .speaker-F4P} ##### Mr REID: -- .Does what I have said not plainly describe the position? If the Prime Minister will say that there has been *si* misprint and that the word was not in the original telegram, I shall accept his statement. {: .speaker-009LR} ##### Sir Edmund Barton: -- I will not say the word was not in the original telegram ; but it does not apply to my telegram and, therefore, I think there was a mistake in transmission. {: .speaker-L0K} ##### Mr Salmon: -- The Prime Minister could not approve of a letter written only four days before. {: .speaker-F4P} ##### Mr REID: -- I am not talking of the telegram of the Prime Minister of New Zealand, but of the telegram of the Prime Minister of Australia. The telegram which contains the word "approve "is **Mr. Seddon's** telegram of the loth May ; but I am directing attention to the telegram of the Prime Minister of Australia, sent on the previous day, in which he says - >Regret you deplore signature Commonwealth agreement Eastern Extension Company. Shall await with interest your letter containing reasons for preferring perpetuity of the old agreement. {: .speaker-009LR} ##### Sir Edmund Barton: -- The agreement then being signed, that was only courteous. {: .speaker-F4P} ##### Mr REID: -- Exactly ; and it was very courteous on the part of the Prime Minister to await with interest something which could not possibly Have the slightest effect on the transaction. But, unfortunately, **Mr. Seddon** was so led away by this extreme courtesy that he was quite pleased. That was the effect of this language on **Mr. Seddon,** who was protesting against the agreement being signed. {: .speaker-F4R} ##### Mr Watson: -- He was told some days previously that it had been signed. {: .speaker-F4P} ##### Mr REID: -- But the words seem to offer some glimmer of hope to **Mr. Seddon.** We must remember that the agreement was still subject to the approval of Parliament, and **Mr. Seddon** may have been given a glimmer of hope that, after all, this, as it seemed to him, serious mistake might be put right. {: .speaker-009LR} ##### Sir Edmund Barton: -- Will the right honorable gentleman kindly look at my telegram of the 11th May? {: .speaker-F4P} ##### Mr REID: -- I do not want to read all the correspondence, but the telegram referred to is as follows : - >Agreement with Eastern Extension Company signed. Copy by mail. It is a fact that the intimation was sent to the Prime Minister of New Zealand that the agreement had been signed, but I think I am correct in saying that before it was signed **Mr. Seddon** had addressed a communication to the Prime Minister of Australia asking him not to take any such step. {: .speaker-009LR} ##### Sir Edmund Barton: -- That is so. {: .speaker-F4P} ##### Mr REID: -- I am sure the Prime Minister would not have left **Mr. Seddon** in the dark until after the thing had been done; but it is perfectly clear that **Mr. Seddon** entertains strong objections. {: .speaker-009LR} ##### Sir Edmund Barton: -- While in London I told both the Prime Minister of Canada and the Prime Minister of New Zealand that I had virtually assented to the agreement, but that some of the terms remained to be settled in detail. I told them that although I had undertaken to enter into the agreement, and that my present intention was to do so, I would, nevertheless, inform them before it was signed ; and that brought forth the protest. {: .speaker-F4P} ##### Mr REID: -- I accept the statement of the Prime Minister. This matter was broached in London, and the Prime Minister of Australia put himself in the position that he would not sign the agreement without informing the Governments concerned. **Mr. Seddon,** on the 11th May, wrote very strongly in protest against the agreement, and gave a number of reasons for his objections. He mentioned, for instance, that this was a partnership for the construction and maintenance of the Pacific Cable known as " the all-red line" - - each party to the contract naturally depending and relying upon the other not to do anything that might prove inimical to the undertaking. Then **Mr. Seddon** pointed out - >The extreme rates charged by the Eastern Extension Company, enjoying, as it did, a monopoly, was one of the causes that impelled the several contracting parties to join together and construct and maintain the Pacific Cable. Here was what I may call a patriotic enterprise, in which the Imperial Government, contrary to all established rule, had taken a liability and, of course, the Prime Minister of Australia took over, along with , other difficulties of his position, the honorable responsibility connected with the Pacific Cable. This is one of the first occasions that I can remember when such an Imperial concert was ever arrived at - when, in a matter of Imperial and Australian interests,' the Imperial Government joined, in a business-like way, as a partner in an enterprise of the kind. It must not be forgotten that we were pressing this enterprise on the Imperial Government, and that the Imperial Government never proposed or suggested the Pacific Cable. The suggestion came from the colonies, Canada included. The appeal and the pressure were from us, and the Imperial Government joined at our repeated and earnest request. Honorable members will see from the documents that the Imperial, New Zealand, and Canadian Governments asked one little favour from the Commonwealth Government. They tried, of course, to prevent the signature of the agreement - they tried, no doubt, to prevent the Commonwealth Government from making any agreement with the Eastern Extension Company - but what those Governments plainly said was - " We regard this agreement as fraught with danger and injury to our partnership with you, and we ask you, as our partner, to talk this matter over with us at the board of the partnership before you commit yourself to this agreement with our opponents." With great respect to the Prime Minister and his colleagues, I say that that request should not have been refused. I admit that the Prime Minister was in a most embarrassing position. He inherited practically from both sides. He inherited what had been done in New South Wales, Victoria, and Queensland, with reference to. the Pacific cable, and also what had been done by the other States with reference to the Eastern Extension Company, and it would be most unfair not to fully and freely acknowledge that his position was one of great embarrassment. He had not created the difficulty at all. {: .speaker-F4R} ##### Mr Watson: -- Could he have got out of it? {: .speaker-F4P} ##### Mr REID: -- I shall, in a few words, tell the honorable member what my view is. I shall apply the rules of everyday life to the circumstances. We should be at least as considerate in our dealings with the Governments of Great Britain and Canada as we should be in our dealings with a private individual in the street. If possible weshould be more considerate in our anxiety, not to expose ourselves to reproaches on .the part of our great partners- in an Imperial concern. What supreme and desperate interest had the Commonwealth Government in settling this matter without consulting Great Britain, Canada, and New Zealand ? What particular kind of pressure was brought to bear upon them ? Of course the pressure from the Eastern Extension Company was immense, because they kept on saying to the Prime Minister, in effect, " Do not listen to Canada or New Zealand or the Imperial Government, but listen to us ; settle matters with us." Upon that the Prime Minister might well have said " Now, personally, I am inclined to think that this is the best I can do in a very difficult position, but since these great partners of ours in a concern to which I am committed - this great Imperial Pacific project - have asked me to talk it over with them at the partnership board, I do not see how you can complain if I ask you to postpone this matter so as to enable me to explain to my partners the true position in which I find myself." I think that that, would have been done in private life. I think that the man who wished to enter into a new arrangement before he talked it over with his partners would give them a strong right to complain ; that- is my point. The Prime Minister is not responsible for the difficulties created by what occurred before he took office, but the appeal from the Imperial Government, and from Canada and New Zealand was one to which he should have listened. That is all I have to say. The Imperial Government were clearly very anxious that this request for a' conference should be acceded to by the Commonwealth Government, because various communications passed between the Governor-General and the Secretary of State for the Colonies.-, in connexion with the matter. The agreement was not signed until the 11th of May, and in the meantime a despatch had been sent by cable from the Secretary of State for the Colonies to His Excellency the Governor-General on 2nd April, 1903, and must have reached Australia within two days. Therefore, the cable must have been in the hands of the Prime Minister on 4th April, or five weeks at least before the agreement was signed. The despatch reads as follows : - i *Se* your telegram of 27th March - >The telegram referred to was a very properone, in which the Prime Minister asked the Governor-General to tell the Secretary of State for the Colonies that the Government were about to enter into an agreement with the Eastern Extension Company. Then details of the agreement were given. The concluding sentence of that telegram was - > >My responsible advisers request that you would be good enough to inform the Pacific Cable Board of the action intended to be taken. > >That board represented all the partners in the Pacific cable, so that the Prime Minister acted with perfect propriety in sending the telegram, and in thus taking care that the different partners in the concern should know what he was about to do. Five weeks before the agreement was signed the Secretary of State for the Colonies cabled as follows : - > > *Re* your telegram of 27th March. ... I hope that before agreement is submitted to Commonwealth Parliament your Ministers will consent to questions arising out of it being discharged at a conference between representatives of various partners in Pacific cable. {: .speaker-009LR} ##### Sir Edmund Barton: -- The word " discharged " was evidently inserted in mistake for the word "discussed." {: .speaker-F4P} ##### Mr REID: -- Yes; that is probably a mistake. Then there is a reference to some of the documents relating to the case j and the despatch concludes in these words - Please telegraph views of your Ministers as soon as possible and let me know. When may I expect copy of agreement ? On the 11th of April, 1901, a despatch was sent from the Colonial-office to the AgentGeneral for Victoria, inclosing certain resolutions passed by the Pacific Cable Board. {: .speaker-009LR} ##### Sir Edmund Barton: -- That was in connexion with the agreement entered into by New South Wales two years before. {: .speaker-F4P} ##### Mr REID: -- Yes ; I see now that that has nothing to do with the sequence of events with which I am dealing. I shall pass over these old documents and refer to the telegram sent by the Prime Minister to the Governor-General on 6th April, 1903. At that time His Excellency was evidently not in the same State as the Prime Minister, and thus this communication by wire became necessary. It reads as follows : - Shall be pleased if Your Excellency will inform the Secretary of State for the Colonies, in reply to his telegram of 2nd instant, that Ministers do not think they can reasonably be asked to submit the question whether the Commonwealth should enter into proposed agreement with Eastern Extension Company to a conference, which course must conduce to further delay in the settlement of the subject. That is an attitude which I think the Prime Minister should not have assumed. When the Secretary of State for the Colonies supported the views of the other partners in the Pacific Cable to the extent, at any rate, of suggesting a Conference before the agreement was finally signed, I think that the Prime Minister made a mistake in not acceding to the request. The delay of a few months could not have been attended with any serious results, except to the Eastern Extension Company. It is clear that the company wanted to shut down at once, because the less daylight that was admitted, and the less opportunity that was offered for reconsideration, the better it would suit the company as a business concern after they had brought the Commonwealth Government into line with their own views. In a telegram sent by the Prime Minister to the Agent-General of New South Wales, on 6th April, 1903, the following remarks occur : - I have replied to Secretary of State declining proposal for Conference. Consider that no good result could follow. That is where I join issue with the Prime Minister. This good result would have followed : The Commonwealth would have shown a proper desire to listen to representations made by those whom it had induced - that is to say, that some of the Australian States before the establishment of the Commonwealth had induced - to enter into this partnership. I think that the partners in this enterprise had an absolute right to be allowed to discuss the matter. In private life, once *a* man enters into a partnership in a particular line of business, he is not justified, however embarrassed he may be with agreements, in concluding an agree ment with an opposition firm without talking the matter over with his partners. {: .speaker-KDD} ##### Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT -- But the Secretary of State for the Colonies was a partner to the original blunder which was made by New South Wales. {: .speaker-F4P} ##### Mr REID: -- May I suggest to the honorable member that this matter is marked by a series of blunders? I admit that, but I go a little further. I want my honorable friend to remember thatit was not a blunder of the Imperial Government, or of the Governments of Canada or New Zealand, who were our partners in the movement for the establishment of the Pacific Cable. Of course, we know that if Governments anticipated want of consideration being extended to them in entering into agreements with rivals in the same line of business, they would take measures to have their positions defined as lawyers would define them. But when Governments enter into State undertakings, they do not draw up agreements as lawyers do, to guard against all sorts of contingencies. The presumption is that there will be a free exchange of opinion before anything is done by one partner which the other partners might consider prejudicial to their interests. I think that the Prime Minister took up a wrong position in regard to this matter. He said that "further delay must result " from the adoption of the course suggested. But I would point out that a good deal of delay had already occurred. These things were done in 1900 and 1901. The appeal by the Secretary of State for the Colonies for a conference was made in 1903. Surely if two years were occupied in getting the Commonwealth Government into accord with the Eastern Extension Company, the partners in the Pacific Cable might have been allowed a few months to talk the matter over. Whom would the adoption of such a course have injured *1* Would the sleep of the Government, or of the members of this House, or of the great body of the people of Australia, have been disturbed if the matter had not been settled immediately *1* Of course, a postponement might not have suited some individuals who had large business transactions, and who naturally desired to get their cables despatched at the cheapest possible rate. With them, of course, a reduction of Id. per word upon their messages was a serious consideration. But I hold, that when Governments enter into an honorable 'partnership, their attitude should be entirely different from that which the present Ministry have assumed. To show honorable members how seriously this matter is viewed by the Imperial Government, I shall quote some extracts from the long despatch from the Secretary of State for the Colonies which the Prime Minister very fairly laid upon the table of the House this afternoon. That document covers four foolscap pages of typewriting, so that **Mr. Chamberlain** evidently considers it a matter of some importance. Under date the 18th June he communicates to the GovernorGeneral this despatch, of which the Prime Minister was courteous enough this afternoon to hand me a copy, so that I have an advantage over other honorable members. I have looked through the communication very carefully, and I am sorry that it is not in print. {: .speaker-009LR} ##### Sir Edmund Barton: -- It only came to hand about the end of last week. {: .speaker-F4P} ##### Mr REID: -- It is a pity that it is not in print. {: .speaker-009LR} ##### Sir Edmund Barton: -- I have done the best that I could with it. {: .speaker-F4P} ##### Mr REID: -- If the discussion continues until the usual hour, I should like the Prime Minister to consent to its adjournment. {: .speaker-009LR} ##### Sir Edmund Barton: -- I shall not object to that course being followed if there are other honorable members who wish to speak. {: .speaker-F4P} ##### Mr REID: -- Then the Prime Minister might consent to this communication being printed ? {: .speaker-009LR} ##### Sir Edmund Barton: -- Certainly, and I should like the Printing Committee to know that. {: .speaker-F4P} ##### Mr REID: -- The document impresses me as one which has been written with a great deal of earnestness. I shall select one or two passages with a view of proving that. The despatch " acknowledges the receipt of the Governor-General's telegram of the 8th April, expressing the inability of Ministers to agree to my suggestion." This matter, therefore, rose above the level of a protest from the Governments of Canada and New Zealand. It reached a point at which the Imperial Government expressed a desire that a conference should take place. We dragged the Imperial authorities into this matter. They began by fighting a very powerful English syndicate - one of the most powerful in Great Britain. The Imperial Government had no kudos to gain by opposing the very distinguished men who comprise the Eastern Extension Company, which, I understand, is allied to another great company. However, they yielded to our persuasions. But what I deplore -is this : There have been some departures in our methods of legislating in Australia, which must be considered objectionable upon the ground that they trend towards socialism. Some people are prone to think that I make a sort of fetish of the word "free-trade," but putting that consideration aside, I confess that I never feel alarmed by the application of such terms as " socialism." Indeed some of the grandest undertakings in the world might fairly be described by that term. But the socialistic aspect of this agreement is one of the happiest kind. The Imperial Government was induced to break through all its rules of abstaining from these enterprises in order that it might join us in this scheme for the establishment of an allBritish cable, connecting the mother country with the great Dominion of Canada, with New Zealand, and with the Australian Commonwealth. This partner took the matter up on behalf of the smaller partners concerned, and made ail appeal to the Prime Minister to hold his hand until a Conference could take place. Some honorable members are very keen upon the question of State enterprises - often with wisdom - and they go much further than I do. I hold that some of the most beneficent features of Australian Governments have been termed " socialistic " departures, such for example as the State ownership of the railways. Although some losses may have been incurred by the States in their control of the railways ; upon the whole I think that the people have derived infinitely more advantage under that system than they would have if the lines had been run by private companies. 1 admit that from some points of view better results would have been obtained under private ownership, but our railways are the arteries of our country, and should, therefore, be national. The Pacific Cable is a State enterprise, which we induced the Imperial Government, and some of the other States, to enter, and it is especially unfortunate that this attempt at Imperial harmony should have been marred in any way. It is easy to talk about Imperial unity ; but could not the Prime Minister have sacrificed the Eastern Extension Company for two or three months at the shrine of Imperial harmony and unity ? What is there about the Eastern Extension Telegraph Company that requires us to sacrifice a cordial relationship with our partners in a great Imperial concern ? Did it take up this attitude with the Commonwealth Government : " Unless you accept this agreement without further delay, we shall withdraw our offer " ? Surely not ! The Prime Minister would know well how to deal with any person who took up" such a position when he was considering the propriety of consulting the Imperial Government on a. matter of mutual concern. It seems to me that the gentlemen of this company have unhappily infected the Commonwealth Government with their restless eagerness to get this question settled, and that the Commonwealth Government, absolutely in good faith, but from an error of judgement, have not listened to the request repeated by the Secretary of State for the Colonies in this despatch. **Mr. Chamberlain** went on to say - >The Governments of Canada and New Zealand hold that the agreement between the New South Wales Government and the Eastern Extension Telegraph Company, of which the agreement negotiated by your Ministers 'is in effect a recognition and an indorsement - > >The significance of it is that the Commonwealth Government adopt and indorse the New South Wales agreement by their action. {: .speaker-009LR} ##### Sir Edmund Barton: -- It would have operated. {: .speaker-F4P} ##### Mr REID: -- In a limited sphere. {: .speaker-009LR} ##### Sir Edmund Barton: -- Yes, as far as that is concerned. {: .speaker-F4P} ##### Mr REID: -- It could not operate in at State which had repudiated it. {: .speaker-009LR} ##### Sir Edmund Barton: -- No, but the Constitution imposed it upon us. {: .speaker-F4P} ##### Mr REID: -- What ! the necessity of not listening to the request for a Conference *1* {: .speaker-009LR} ##### Sir Edmund Barton: -- No, the carrying out of the New South Wales agreement. ' {: .speaker-F4P} ##### Mr REID: -- I do not say anything about the New South Wales agreement. All I say is that there is nothing in that wretched agreement to compel my right honorable and learned friend to act wrongly towards the Imperial Government or the Government of Canada, or the Government of New Zealand. {: .speaker-009LR} ##### Sir Edmund Barton: -- I have not done so, as the honorable and* learned member will see. {: .speaker-F4P} ##### Mr REID: -- It is a matter of opinion. I only join with great humbleness in the request expressed by the august gentleman whom my right honorable and learned friend has been guided by in matters of great, concern. {: .speaker-009LR} ##### Sir Edmund Barton: -- " Yes, **Mr. Chamberlain."** {: .speaker-F4P} ##### Mr REID: -- But my right honorable and! learned learned friend says " Yes-no " now;. {: .speaker-009LR} ##### Sir Edmund Barton: -- The boot is on the» other leg. {: .speaker-F4P} ##### Mr REID: -- My honorable and learned friend said - "Yes, **Mr, Chamberlain;"** but in the matter of the Eastern Extension Telegraph Company there seems to be a power greater than **Mr. Chamberlain.** It is a wonderful development of forces. What ubiquitous representatives the company lias? I have seen a number of them - highly zealous, most persuasive, and most plausible gentlemen. My interview took half a minute. I knew exactly what they came about, and said " Good day." That was my attitude - a short cut. The Prime Minister will have a great deal to explain before he can show an overwhelming reason in the action of the New South Wales Government, which the Victorian Government honorably repudiated, to justify his extending this agreement over all Australia in such a hurry. Is it to be said that after the matter had been smouldering for two years, it could not, even at the request of the Imperial Government, wait a month or two longer *1* **Mr. Chamberlain** goes on to say :- - involves an important deviation from the essential conditions which existed at the time of the completion of the contract for the construction and laying of the Pacific cable, and on the basis of which they entered into that contract, and I had hoped-- Of course, this distinguished gentleman spoke with studied courtesy, and with no unnecessary adjectives. I had hoped that the suggested Conference, by affording facilities for an exchange of views not possible in the ordinary course of correspondence, would have resulted in' an adjustment satisfactory to all parties. I therefore received your telegram with much regret. That is as strong language as a Secretary of State can use; and surely if a Conference could possibly bring about such a result as that, **Mr. Chamberlain** spoke advisedly in expressing such regret, because these frictions between Governments are most deplorable. AVe never know the result of misunderstandings of this nature. We never know what the end of them may be. Some day it may be our fate to come along with a thoroughly good and patriotic project, to which we shall ask the concurrence of the great Dominion of Canada, the Colony of New Zealand, and the Imperial Government, and they may remind us of the fact that when they were partners with us in this matter their combined influence was not great enough to secure the courtesy of a Conference, or of an exchange, of opinion, before an irrevocable step was taken. **Mr. Chamberlain** goes on to say - This regret is all the greater because such a Conference would have proved a convenient means of disposing of two other matters connected with the Pacific cable, involving not so much questions of ordinary working (on which of course the Pacific Cable Board can decide by a majority) as questions affecting the basis of the partnership in the cable. I refer, in the first place, to the question of terminal rates on Pacific Cable messages, as to which the situation is as follows : Great Britain levies no terminal rates in excess of the ordinary internal rate, Canada having no Government telegraph system is not in a position to levy them, and in New Zealand the charge for handling Pacific cable messages is, allowing for the fac? that such messages are treated as urgent, practically identical with the internal rate. In Australia, however, a rate of 5d. per word is levied, as compared with an internal " urgent " rate (for the area served by the Pacific Cable) of approximately 2d. That is to say, an urgent rate in Australia is 2d., but in the case of " Pacific " messages 5d. is levied, which they resent as an unfair burden on the Pacific Cable. {: .speaker-009LR} ##### Sir Edmund Barton: -- Because we made an urgent rate of 2d. under our Post and Telegraph Rates Act for urgent telegrams, they suggest that 5d. was a profitable rate. {: .speaker-F4P} ##### Mr REID: -- But **Mr. Chamberlain** never flies rashly to unsound conclusions. {: .speaker-009LR} ##### Sir Edmund Barton: -- Those who advised him may have done so. {: .speaker-F4P} ##### Mr REID: -- The right honorable gentleman should not suggest that. **Mr. Chamberlain** goes on to say : - In other words, the Pacific Cable Board are charged two and a half times as much for the use of the Australian land lines as the ordinary public of New South Wales, Victoria, and Queensland. Suppose that it is absolutely a mistake. One of the benefits of people, meeting together at the same table is to clear up misapprehensions. So that the reply that this is inaccurate is not an answer to my argument. My point is that it is most unfortunate that these misunderstandings and false impressions should not be removed, not by an ultimatum, but by a friendly Conference. As I believe that the despatch will be printed by to-morrow, I shall not take up time by. reading the whole of it. I shall expect honorable members to do it. {: .speaker-KW6} ##### Mr Thomson: -- - Are not New Zealand and Great Britain charging the ordinary internal rates ? {: .speaker-F4P} ##### Mr REID: -- According to the language of this despatch they are not. {: .speaker-KW6} ##### Mr Thomson: -- They are charging their ordinary rates. {: .speaker-F4P} ##### Mr REID: -- Yes. **Mr. Chamberlain** says that Great Britain levies no terminal rates in excess of the ordinary rates. Their point is that the "Pacific" messages have to pay an internal rate higher than the ordinary internal rate ; it may be entirely wrong. There are some other complaints referred to in the despatch. Referring to the defence on behalf of the Australian Government, **Mr. Chamberlain** says - >As to the soundness of this defence, His Majesty's Government would raise no doubts, if the Pacific Cable Board were on the same footing us an ordinary cable company. All through the despatch a soreness is exhibited. The Imperial Government did not go into this enterprise with a view to making a profit. They did not go into the Speculation as a private individual goes into a great enterprise. It was all responsibility to them. It is all loss to them as a Government, as it is to all the Governments at present to a very large amount. But, as that hypothesis is clearly not tenable, the arguments advanced by your Ministers do not appear to be relevant to the question. That is rather severe ; because, after all, **Mr. Chamberlain** has the best advice from the Post-office authorities in England. He considers that "the arguments hardly appear to be relevant to the question," and he says the question is simply this - >Has one partner in the Pacific Cable scheme the right, by imposing on Pacific Cable messages terminal rates in excess of its internal rate, to make a profit not shared in by all the partners ? As the various Governments joined in the scheme on the basis of a *pro rata* distribution of all expenses and profits, this question can, in the opinion of His Majesty's Government - and, as you are aware from my despatch No. 9.1 of the 21st May, in that of the Canadian Government also - be answered only in the negative. The other question is that of the exemption of the stores of the Pacific Cable Board, and upon this point **Mr. Chamberlain** says - >The other matter is the question of the exemption of the stores, &c. , of the Pacific Cable Board from Customs duty, and of the repairing ship of Board from harbor dues. That is a very important point. Under this agreement the Eastern Extension Company's stores are to -be exempt from duties, and its repairing ship from harbor dues. Such exemption has hitherto been refused by your Ministers, and I have not yet received their reply to the despatch (No. 229 of the 8th December last) in which I requested a reconsideration of the situation. But I trust that when it reaches me I may find that they are prepared, after such consideration, to treat the Board's stores like all other public stores, and the Board's repairing ship as favorably as Continental powers treat the repairing ship *Monarch* {: .speaker-009LR} ##### Sir Edmund Barton: -- We are letting in ' the company's material, or, rather, refunding the duties, and we propose to do the same in the other case. {: .speaker-F4P} ##### Mr REID: -- The Eastern Extension Company have the benefit of this agreement, which exempts them all over Australia from the payment of any Customs duties - not by force of law, because the Minister cannot undo the law, but by remission of duties. In other words, one of the effects of this agreement is that all through Australia the company pays no duties upon its stores, or. upon anything that is required in the service of the company. All its stores are admitted free of duty, and it pays no harbor dues. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- It is also free from income tax. {: .speaker-F4P} ##### Mr REID: -- We have no Commonwealth income tax, so that that does not matter so far a$ we are concerned. We can quite understand our partners in this cable looking with some uneasiness on concessions of this sort being given to the company, because the Pacific Cable was established in consequence of the exorbitant rates which this monopoly used to exact from the Australian public. There is a strong line of difference to be drawn between the liberality of an enterprising business concern when it is free from pressure and taking a business attitude, and its liberality when a rival comes upon the scene. I do not give the company the benefit of one atom of consideration for having entered into this agreement. They have a valuable consideration in return, or- they would not have entered into it. Governments may do these things, but business concerns do not. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- And there is a paying minimum under this agreement - £350,000 worth of cable business. {: .speaker-F4P} ##### Mr REID: -- My honorable friend was Postmaster-General in New South Wales, and knows the details of this matter. I am not fighting about details, but am dealing with broad principles. **Mr. Chamberlain** goes on to say - >I much regret that, although the principle involved in this matter is virtually identical with that involved in the matter of the terminal rate, the Canadian Government also have refused to grant the exemption for which the Board have applied, and lam therefore addressing a despatch to them 6n the point to the same effect as this. So that in this matter the Canadian Government also seem to be open to criticism. Then **Mr. Chamberlain** says - >The situation appears to me to point conclusively to the necessity for a closer definition of the basis of the partnership in the Pacific cable, and a clearer statement of the mutual obligations of the partners. That is pretty strong language. A partnership in the ordinary understanding of business implies certain obligations. The history of this matter seems to be that these parties to the Pacific cable entered into the arrangement in spirit, and, in fact, in harmony with that understood relation ; and it is no wonder that they now begin to ask 'for a clearer and more lawyer-like definition. **Mr. Chamberlain** says - >And no more conventional way of attaining this object suggests itself to me than the appointment of a Conference authorized to deal finally with all the various matters of principle in dispute. I venture to hope that on reconsideration, your Ministers Will recognise that a continuance of the present state of things is fraught with prejudice to the interests ot the Pacific cable itself, depending as they do so largely on the harmonious cooperation of the partners, and I trust that I shall receive an early intimation of the readiness of your Ministers to fall in with my suggestion, and to nominate a representative with the necessary powers. If, unfortunately, your Government should still feel itself unable to comply with my request, I have to beg that they will furnish me with alternative proposals for dealing with the serious points of difference that have arisen between the partners in this undertaking. That is a remark which we might have expected. Your Government are aware that Great Britain joined the combination chiefly from the desire to meet the wishes of Canada and Australia and New Zealand, and that they would not of their own initiative have proposed the new precedent that has been created in this case. Are we going to take a course of conduct which will lead the Imperial Government in the future - in matters perhaps of infinitely greater concern - to view our overtures with distrust ? It is a very serious issue. We are a very young Commonwealth. Just as in the case of a young firm beginning business it is of the greatest possible importance that its action should be so guided as to-, command the highest respect, so in the case of a young Commonwealth it is important that we should command respect from other parts of the Empire, even though unfortunate differences of opinion may remain. Then **Mr. Chamberlain** says - >It is of the greatest importance that the experiment should be a success in every way, and that it should contribute to the unity of the Empire ; My right honorable friend the Prime Minister must remember that this is one of the chief planks in **Mr. Chamberlain's** policy - the union of the Empire - and not be a source of irritation and division. It is natural that differences of opinion should arise. But unless some tribunal or other meansfor settling such differences amicably can befound, I fear that there will be no hope that, in the future such co-operation will be again accepted by the different parts of the Empire. Those are memorable words to come from, the Imperial Government. They are about as strong words as were ever addressed toany Government, and they come with double significance from the present Secretary of State for the Colonies. Surely, if we are prepared - if even my protectionist friends opposite are prepared - to a certain extent to modify our principles in order to promote the spirit of unity, even in Federal matters of internal policy, we can render at least to our partners in this great patriotic enterprise, such absolute amplitude of consideration as toshow that those who enter into honorable obligations with us are in safe hands, and that their relations with us, though they may lead to differences of opinion, will not lead to reproaches and want of consideration. {: .speaker-L17} ##### Mr Wilks: -- Sharp-shooting *1* {: .speaker-F4P} ##### Mr REID: -- No ; I do not desire to use any ill-judged expressions in this matter, because it is altogether too important. I discharge my duty as one of those who had no slight share in persuading the Imperial Government to join in this enterprise. During the whole of my term of office in New South Wales I used all my influence to bring this great project about, and I would not listen for a moment to the overtures of this other company. I owe it tothe action I have taken in connexion with this movement to express, so far as I can, my absolute sympathy with the position taken up by the Imperial Government, the Government of Canada, and the Government of New Zealand. My determination, so far as I am concerned, and so far as my vote carries me, is to be no party to putting the stamp of the Commonwealth Parliament upon the agreement until the partners with us in that great enterprise can at least say that we were prepared fully and frankly to listen to their representations before we made it irrevocable. {: #subdebate-14-0-s1 .speaker-KIN} ##### Sir WILLIAM LYNE:
Minister for Home Affairs · Hume · Protectionist -- I should not have said anything upon this matter had it not been for the accusations of a breach of faith which have been made against the New South Wales Government of which I was Premier. I think I shall be able to show, in a few words, that if there was any breach of faith it was in another direction. This matter had been discussed for a considerable time, and what was attempted and desired was to get a reduction of the rates charged by the Eastern Extension Company. The action taken was, I think, from the very first, well known to the Imperial Government. 1 believe that every step that was taken was known, and when the matter came to be considered by the Government of which I was Premier, the then Government of Victoria, on the 3rd May, 1900, sent one of its Ministers, **Mr. Watt,** to confer with a' member of the New South Wales Government in reference to the matter. **Mr. Watt** and **Mr. Crick** came to an understanding. {: .speaker-009LR} ##### Sir Edmund Barton: -- Was it not **Mr. Gurr?** {: .speaker-KIN} ##### Sir WILLIAM LYNE: -- No ; I refer to **Mr. Watt.** I am going a little further back. **Mr. Watt** and **Mr. Crick** same to an agreement as to what should be assented to by the two Governments. That is shown in a memorandum contained in a Victorian parliamentary paper which I obtained from the Library here. That was not a definite arrangement, and nothing came of it but further negotiation. At this stage, I can say that a paper came from **Mr. Chamberlain,** suggesting the course which was ultimately taken, or very nearly that course. It suggested that the Eastern Extension Company should be bound down to a certain charge, and should be prevented from raising that charge. It was really upon that recommendation, whichlsawfirstin adespatch, thatltook any action in the matter or assented to any action being taken. A short time afterwards a Conference of Premiers took place in Sydney, at which, I think, my honorable friend the honorable member for Gippsland, then Premier of Victoria, was present. This question was discussed at that Conference, and, if my memory serves me right, the Premier of Queensland was very an xiou s that we should not make an agreement with the Eastern Extension Company. I remember that I had a vigorous argument with him upon the subject. No finality was arrived at on that occasion, but there was an understanding that whatever was done in the future should be done by Victoria and New South Wales in concert. After that, further negotiations took place, and I either wrote to or saw my right honorable colleague, **Sir George** Turner, upon the subject. I think I saw the right honorable gentleman, and suggested to him that there should be a further meeting between **Mr. Crick** and **Mr. Gurr,** his Postmaster-General. He agreed, and sent **Mr. Gurr** to Sydney, just about the time of the inauguration of the Commonwealth. They had a conference, and I was informed by **Mr. Crick** that **Mr. Gurr** was acting for the Government of Victoria, and that they had come to an understanding. There is a document amongst the papers - it is not here, but it is amongst the papers, I presume, in the Post-office - containing the signatures of **Mr. Gurr** and **Mr. Crick** to an understanding as to what should be inserted in the agreement, and to **Mr. Crick** signing the agreement and the Victorian Government doing the same. {: .speaker-KW6} ##### Mr Thomson: -- Was that a recommendation to their Government ? {: .speaker-KIN} ##### Sir WILLIAM LYNE: -- No ; I understood from **Mr. Crick** distinctly that **Mr. Gurr** acted for the Victorian Government, and it was upon that distinct understanding that I agreed to **Mr. Crick** signing the document. {: .speaker-KHC} ##### Mr Higgins: -- Why all this hurry just before the Commonwealth took over the Post-office ? {: .speaker-KIN} ##### Sir WILLIAM LYNE: -- So far as I was personally concerned I was in no hurry I do not think that I ever had an interview with a representative of the Eastern Extension Company upon the subject. I left the matter entirely in the hands of **Mr. Crick.** {: .speaker-KHC} ##### Mr Higgins: -- As a rule, a Government going out of office does not enter into novel agreements ©f this nature. {: .speaker-KIN} ##### Sir WILLIAM LYNE: -- The Government was not going out of office. {: .speaker-KHC} ##### Mr Higgins: -- It was going to hand over the Post-office Department to the Commonwealth Government. {: .speaker-KIN} ##### Sir WILLIAM LYNE: -- If the honorable and learned member will past his memory back, he will no doubt remember that there was a strong desire expressed by the public, and especially by commercial men, that there should be a reduction of the cable rates then charged. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- By the Chamber of Commerce. {: .speaker-KIN} ##### Sir WILLIAM LYNE: -- The Chambers of Commerce expressed that view also. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- Two or three men there did it all. SirWILLIAM LYNE.- This matter had been proceeding for a very long time, and when it had reached the point, as I understood, that Victoria and New South Wales had agreed to act in concert, and had come to an understanding, I saw no. harm in having the agreement signed. {: .speaker-KJI} ##### Mr Isaacs: -- I do not think the Victorian Government ratified **Mr. Gurr's** action. {: .speaker-KIN} ##### Sir WILLIAM LYNE: -- I propose to tell the honorable and learned member how, when, and why they did not ratify it. As I have said, my information was that **Mr. Gurr** was acting for the Victorian Government, as **Mr. Crick** was acting for the New South Wales Government. I had told **Mr. Crick** that whatever agreement was come to within certain lines would be agreed to by the New South Wales Cabinet, and I understood that similar instructions had been given to **Mr. Gurr** by **Sir George** Turner. After the agreement was signed, I think, **Mr. Seddon** came over toVictoria, and I believe he had an interview with the Victorian Government. As I was given to understand afterwards, his protest against the agreement being signed had a great deal to do with Victoria's not ratifying **Mr. Gurr's** action. **Mr. Philp,** the Premier of Queensland, also made a protest. The first I knew of the objection of the Victorian Government to the signing of the agreement was after **Mr. Seddon** had been to Melbourne. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- I made half-a-dozen protests. {: .speaker-KIN} ##### Sir WILLIAM LYNE: -- I know ; the honorable member is always protesting. {: .speaker-L17} ##### Mr Wilks: -- What about the harbor picnic held over it ? {: .speaker-KIN} ##### Sir WILLIAM LYNE: -- I do not know anything about it. {: .speaker-L17} ##### Mr Wilks: -- **Mr. Crick** gave a harbor picnic in connexion with it, which he called a " symposium of labour," or some such fancy name. {: .speaker-KIN} ##### Sir WILLIAM LYNE: -- I know nothing about that. Personally, I took no action in this matter. I acted upon the recommendation of my colleague, **Mr. Crick,** who had taken a considerable amount of interest in the subject. That is the action that was taken by New South Wales, and I do not think that New South Wales or its Government can be blamed in the smallest degree. If there is any blame attaching to any one, it may be in another quarter, but I do not wish to say anything about that. I felt very sore' that I. should have been led into an understanding that the two Governments would act together. I had the fullest confidence that the Postmastei'General of ' Victoria was acting for the Government of that State, and when I conferred with the Postmaster-General of New South Wales I thought that was the time to take action, and sign an agreement which I thought would also be signed by Victoria. My only wish is to clear this matter up. I am sorry I have not been able to get the papers connected with the affair; but I think I have given a' resume of what led to the signing of the agreement in connexion with which the Government of New South Wales has very unfairly and improperly been charged by the leader of the Opposition with a breach of confidence. **Mr. JOSEPH** COOK (Parramatta).The Minister for Home Affairs does not make matters very much better by his statement. I am quite prepared to believe that he does make matters a little worse for **Mr. Chamberlain,** who, I admit, has adopted an attitude which is not quite so strong and consistent as the attitude which he usually adopts regarding great public questions. There can be no doubt that **Mr. Chamberlain** had two minds on this question ; that he first of all favoured the South African connexion as against the Canadian connexion, and it was only as a last resort, and at the earnest solicitation of these colonies, that he was induced to come into the Pacific agreement. That, I think, is made perfectly clear by the memorandum submitted by **Mr. Warren,** who quotes **Mr. Chamberlain** as being distinctly in favour of the all-red route, *via* South Africa, in preference to the route *vià* Vancouver. But that is not the point - that does not absolve the want of faith on the part of the New South Wales Government, which has been so justly complained of. I say frankly and fearlessly that the one outstanding feature in these negotiations is the splendid faith kept throughout by the Victorian Government. That it is which makes me inclined somewhat favorably to the proposal now before the House. At first sight I regarded the proposal of the Prime Minister as an excellent arrangement. I thought, for instance, that he was only extending to the two remaining States the agreement already entered into by four of the States. I find, however,, that in the new agreement there are some very radical departures from the agreement previously entered into by the New South Wales Government, and the two agreements are by no means similar. The agreement which the Prime Minister has made goes very much further in the direction of concessions to this already favoured company than did the old original agreement. {: .speaker-KDD} ##### Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT -- But it limits the concessions. {: #subdebate-14-0-s2 .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- It does ; but in return for the limitation, the company, in my judgment, has got the better bargain. I want honorable members, in considering this matter, to get into their minds, first of all, that these are competing companies. It is quite evident that there is not traffic enough to keep two companies remuneratively employed, and there must be, and will be, severe competition for the trade already existing. The very reason for the construction of the Pacific Cable lay in what were considered to be the exorbitant charges, and generally, if I may use the term, the monopolistic behaviour, of the Eastern Extension Company. I am quite prepared to admit that this company has done a great deal foi- the Empire in one way and another, but that has only been incidental to the doing of a very much better business foi- themselves on each and every important occasion. Take, for instance, the making of this new agreement, and consider the concessions in the rates which this company ostensibly has so generously given to Australia. Will honorable members believe that the company, since the beginning .of its existence, have never taken the slightest financial risk in connexion with this cable? From the very first, they have always had fixed in the agreement an irreducible minimum, which conditions their own operations and certainly conditions their rates. For instance, whenever they have reduced rates from time to time, they 'al ways had a stipulation in regard to a minimum revenue per annum. When they reduced the rate some years ago from 9s. to 4s. 3d. per word, it was stipulated that at no time must the revenue of the company go below £220,000 per annum, and similarly when they make an agreement for further concessions they stipulate that these should only be granted when the revenue of the company exceeds £350,000 per annum. Presumably these minimum tariffs are payable tariffs ; indeed, we know that they are. This isa very rich company, which earns huge dividends out of the stipulations . which they place in the agreements. We should keep in our minds that the Eastern Extension Company has never done anything to injure its own business, or anything which involves the slightest financial risk. That was the state of affairs when some years ago the subsidy became exhausted. As honorable members know, the company were paid a subsidy of £32,000 per annum for twenty years, and when at the termination of that period, we asked them to make a new arrangement, they said they proposed to build an all-red cable *via* South Africa, which would take the place of our projected Pacific Cable. In return, however, they asked for an extension of the subsidy for another twenty years ; that is to say, they proposed to lay down a second cable at a cost of about £600,000, and asked for a subsidy of £650,000, spread over the period I have mentioned, and, at the same time, they did not propose to give a penny concession in the rates. But the marvel to my mind is the conduct of South Australia. That State, as is well known, is a beneficiary under the Eastern Extension Company's arrangement ; that is to say, there is in that State a land line which benefits, with the Eastern Extension Company's cable, from our traffic. And so fatuous - I can call it nothing else - was the South Australian Government that they would have entered into a new agreement to pay the subsidy for twenty years, and, presumably, the old rates for the same period, merely in order that they might get business in connexion with the land line. Since the' rates have been lowered, however, South Australia is losing the plums which she thought she had ; and we must ' remember always that that is where the trouble arose. The company were astute enough to make a business arrangement with South Australia and Western Australia, and they managed somehow or another to get Tasmania to join In New South Wales, when I was in office, the other States Governments- would not negotiate with the company unless the latter gave a substantial concession in the rates. The States Governments declined to grant any further subsidy, and that was the state of affairs when I left office. Then **Mr. Crick** came on the scene, and one or two active gentlemen in the Chamber of Commerce of New South Wales began to agitate. These gentlemen said - " Why should South Australia get all those benefits while we could share by making an agreement, which would not make any difference to the Pacific cable." **Mr. Crick** fell under that influence, and subscribed to the agreement. I remember protesting as vigorously as I could through the newspapers against the agreement, but I got nothing for my pains, except the ridicule of **Mr. Crick.** There was one party at the time that could have prevented **Mr. Crick** from entering into what I call a dishonorable agreement. That was the labour party in New South Wales, and that was the time when they ought to have taken a firm stand. Some of their members did so, but the party, as a whole, did very little on that occasion, or they might have prevented **Mr. Crick** from entering into this dishonorable agreement. He entered into it with the results that we now see. He wholly ignored the partners in the Pacific cable ; he grabbed at the plums which the Eastern Extension Company held out to him, and held out, for the moment, to the New South Wales Chamber of Commerce. If ever there was a time when the Minister should have stood up and informed the Chamber of Commerce in that State that they must wait for another twelve months before they obtained these concessions it was then. We must remember always that the difference between the rates which formerly prevailed and those granted under the New South Wales agreement would have been secured immediately after the completion of the Pacific cable. Therefore, the only concession which the New South Wales Government gained was a reduction of rates for about eighteen months. On the other hand, by waiting they would have obtained other concessions. They would have kept faith with the remaining partners in the Pacific cable, and would have placed that cable upon a commercial and financial basis of success. That is what we have to remember : that we have assisted the Eastern Extension Company so to compete with the Pacific cable as to bring about the loss that we have to face at the present moment. But for this arrangement, that loss would have been turned, if not into a profit, at least into a balance between expenditure and revenue. These are the gains that we have lost in rushing hastily into this agreement. In thus rushing hastily into it, we not only broke faith with our partners in the Pacific cable, but lent ourselves to a loss of £90,0.00 a year on the operations of the Pacific cable. {: .speaker-009LR} ##### Sir Edmund Barton: -- Where would the Pacific Cable Board have been if we had allowed the old agreements to stand in perpetuity ? {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -For the next twelve years, at all events, they would have been no worse off financially than they are. I hope to show presently that they would have been better off, because, if we had not entered into this new agreement with the Eastern Extension Company, we should not have been obliged to do some of the things which this new agreement imposes upon us. For instance, it would not have been necessary to construct a line at a cost of £20,000, as we are now proposing to do, foi- the express purpose of facilitating the business of this company. {: .speaker-009LR} ##### Sir Edmund Barton: -- Which line ? {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- I am speaking of the new line which the Government are about to construct. I understand that in the Estimates which have just been placed before us we are asked to agree to an expenditure of £20,000 upon the construction of a new line between Sydney and Adelaide. {: .speaker-009LR} ##### Sir Edmund Barton: -- The provision for special wires in this agreement is precisely the same as that which appeared in the old one. It does not mean the construction of a new line, and we do not propose to construct it, for the Eastern Extension Company. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- It would not have been necessary to construct' the line if the New South Wales Government had not entered into the agreement. {: .speaker-009LR} ##### Sir Edmund Barton: -- We are not proposing to construct it for the company. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- The Government tire proposing to construct it because of that agreement. It is only a mere quibble to say they are not. {: .speaker-009LR} ##### Sir Edmund Barton: -- They would have had the use of wires under the four agreements. The honorable member forgets those agreements. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- I am not going to cast very much blame upon the right honorable gentleman. I should not have blamed him at all if he had taken care to see that the agreement now before us gave the company no further privileges than they enjoyed under that entered into by New South Wales. It is because he did not do so that I find fault with him. I find fault with him first of all for failing to consult the remaining partners in the Pacific cable, and secondly because he gave the Eastern Extension Company concessions over and above those already made in the old agreements. If honorable members turn to the terms of this agreement they will see at once what further concessions have been given to the company. A perusal of Articles 8, 9, and 10, set out on page 12, of the correspondence and papers relating to this matter, will show precisely the immense advantages which this company will gain over and above those given to it in the agreement made by New South Wales. It was provided in the agreement made by the New South Wales Government that if the company once reduced its rates it could not raise them. An article similar to Article 9, in the agreement now before us, was recited in that made by New South Wales, but there was one important difference. In this agreement there is a proviso at the end of the article which restricts this limitation which the company voluntarily entered into with New South Wales. The article is as follows : - >From and after the opening for traffic of the Pacific or any other competing cable- They do not want these concessions until competition begins - nothing in this agreement contained sholl prejudice the right of the Extension Company and the Cis-Indian administrations to at any time reduce their proportion of the rates for the Commonwealth traffic including Government and press telegrams and at pleasure to raise them subject to the maximum limits in each case fixed by this agreement. What does that mean *1* This company is a rich one. It has a great fighting fund, amounting to .about £1,000,000,^ to enable it to meet any emergencies of this kind, and having regard to its world-wide ramifications, it would pay this company to carry the Australian traffic for nothing if by doing so it could discredit the Pacific cable scheme. I take it that if the Pacific cable succeeds it will be only the beginning of State owned cables. This is not the last we shall hear of proposals that Governments should own their own cables. In connexion with the consideration of nearly every Postal Estimate in the House of Commons, a discussion is raised as to the advisableness of the Home Government acquiring the cables for themselves. Therefore, this is but the thin end of the wedge, and rather than that the Pacific cable should succeed, it would pay this rich company, with its ramifications and interests extending throughout the whole world, to run this cable at a great loss, if by doing so it could beat the Pacific cable out of existence. In my judgment, that is clearly the reason for the insertion of these articles in the agreement. The Eastern Extension Company desires the right, if met by any competition with the Pacific cable, to reduce its rates to a point lower than that at which the Pacific cable could pay ; and they desire also the privilege of raising them as soon as they have beaten their opponent out of the market. ' I submit that we have no right to give these concessions to a company for .the purpose of enabling it to beat out of existence a scheme in which we, as part owners, are interested {: .speaker-009LR} ##### Sir Edmund Barton: -- It cannot raise them above the maximum rates fixed by the agreement. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- But it can lower them. {: .speaker-009LR} ##### Sir Edmund Barton: -- Yes. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- I object to it being allowed the right to lower them for a temporary purpose, and to raise them as soon as it has beaten its competitor out of the market. {: .speaker-009LR} ##### Sir Edmund Barton: -- Is that a freetrade argument : that the public are not to have cheap cablegrams'? {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- No;" it has nothing to do with fiscalism ; it is a business argument. I submit that I have no right to give privileges to my opponent when I know they are designed to enable him to beat me in competition with him. {: .speaker-KYD} ##### Mr Poynton: -- I thought the honorable member complained of the high rates charged by the Eastern Extension Company. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -Yes; and we should still have, had to pay those high rates, but that we entered into business as competitors with this company. We have no. right to allow this Government to do anything which would make our cable scheme a non-paying one. I have just been endeavouring to explain to the House that it would pay the Eastern Extension Company to carry all cablegrams over the Australasian section for nothing in order to beat its competitor out of the market. {: .speaker-KCO} ##### Mr Glynn: -- The Pacific Cable Board were the first to suggest the sending of free messages as an experiment. {: .speaker-009LR} ##### Sir Edmund Barton: -- Yes; they wanted to send press telegrams free for three months, and their own manager reported against the proposal. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- That would be a very good suggestion if we had the cable established on a sound basis. That is one of the greatest advantages to which I look forward. I hope that as the result of the multiplication of cables we shall, before long, secure far more complete news of what is going on in other parts of the world. Our first object should be to make the Pacific cable pay, and we have no right to bring the rates for messages down beyond a reasonable point. The great body of the people are not directly interested in cheap cable rates. Those who are directly benefited are few in number, and will not be called upon, except in the same proportion as other members of the community, to foot the Bill for any loss that may result from the reduction of the rates. Therefore, we ought to take a wider view of the question than to consider simply whether the rates for cables should be reduced to cable users. The Prime Minister proposes by this agreement to help the Eastern Extension Company to compete against the Pacific cable in an unfair and unreasonable way. {: .speaker-KYT} ##### Mr Knox: -- The Prime Minister has promised that the Pacific Cable Board shall, as far as possible, enjoy facilities equal to those granted to the Eastern Extension Company. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- Yes, but we do nob want equal consideration of that kind. We cannot afford to send messages over the Pacific cable at the same low rates that might be charged by the Eastern Extension Company. That company would be content to conduct its Australian business without any charge at all for a time if it could succeed in ruining the Pacific cable, and we should be no parties to any arrangement that would permit of that being done. We have already secured reasonable rates, and we should not give the Eastern Extension Company power to reduce them further for the purpose of entering into undue and unfair competition with their rivals. Keeping in mind the fact that the Eastern Extension Company is a competitor of the Pacific cable, we have no right to agree to Article 16 of the agreement, which provides that - >The Federal Government shall at all times afford to the Extension Company similar advantages and facilities to those (if any) afforded to any competing cable as regards uniformity of terminal rates hy all routes. Why should we bind ourselves to give our competitors the same facilities that we enjoy ourselves ? Is that what an ordinary business corporation would do *1* Would they turn round and say to a competitor who wa3 trying to beat them out of the field. " We shall bind ourselves to extend to you whatever advantages we enjoy." I have yet to learn that we are bound to go out of our way to give a competing company every chance that we may happen to possess, particularly when we have had to pay very heavily for the privileges we enjoy. The article to which I have referred, and others, are departures from the agreement made with the State of New South Wales, and, having regard to the fact that the Eastern Extension Company is competing with the cable in which we are interested as partners, are most unfair. I wonder that the Prime Minister when he read over the agreement, and saw in almost every article of it the words " competing cables " did not stop arid ask himself - "What can be the meaning of all these concessions which are to operate only when the competition begins " That is where we have fair ground for complaint against the Prime Minister, and I hope that even at this late period he will hark back upon some of the conditions of the agreement, and confer with the other partners in the Pacific cable. It may be said that, in return for these concessions, we are securing a limitation of the terms of the agreement. But twelve years is a long time to which to look forward. {: .speaker-009LR} ##### Sir Edmund Barton: -- Not so long as for ever-. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- It will be practically as long, if our competitor is enabled to make mincemeat of our business in the meantime. The Pacific Cable now involves an annual loss of £90,000, and, if the proposed agreement is ratified, there will be nothing to prevent the Eastern Extension Company from increasing that loss to £190,000 per annum. If they can do that for a period of twelve years we may say "good-bye to State owned cables," because we shall not be disposed to buy out the Eastern Extension Company after an experience of that kind. If no further concessions were being made to the company, I should have been disposed to agree with the action of the Prime Minister, subject to consultation with his partners, but the agreement proposes not merely to extend existing privileges, but to confer others which will place the Eastern Extension Company in a position of great advantage. The company have a large fighting fund at their disposal, and worldwide ramifications, and would be content to run the Australian business at a loss if they could by that means preserve intact their interests elsewhere. I have nothing but admiration for the astuteness of, the Eastern Extension Company, and I have wondered at their world-wide ramifications. They seem to be able to exert influence even in the remotest parts of the earth, and it is marvellous what they can do when they have any special object to serve. I had hoped that the right honorable gentleman with his experience would have seen that this agreement was a plain one, which gave them no further advantages than those which they now possess. Had he done so no one would have complained of its extension under the circumstances. There is one reason why we ought if possible to make the agreement apply to Victoria and Queensland just as it does to New South Wales. It seems almost a piece of presumption for an advocate from a State which enjoys a concession in the matter of rates to declare that Victoria shall be denied similar advantages. Had this agreement merely extended existing conditions I should have little ground for opposing it. But since it strikes at the very root of the Pacific cable enterprise by giving power to the Eastern Extension Company to compete unfairly against it, we have a right to ask the Prime Minister to consult his partners in that undertaking before placing such a powerful weapon in the hands of a rival company. I do not desire to say any more upon this matter. The view which I- take of it is quite sufficient justification for the vote which I shall give. I shall cast that vote with profound regret, because I sympathize with the Prime Minister in the circumstances in which he is placed. He succeeded to this heritage of difficulty and trouble, and, according to his lights, has done his best. But I doubt very much whether he stopped to consider the importance of some of the articles which have been inserted in the agreement for the express purpose that I have stated. Had lie done so, I cannot conceive that he would have consented to it. Those articles vitiate the agreement so much as to make it a matter of duty with me to vote against it. {: #subdebate-14-0-s3 .speaker-KW6} ##### Mr THOMSON:
North Sydney -- Whilst I agree with some of the arguments of the honorable member for Parramatta, I cannot indorse the whole of them. I consider that having entered into a cable competition, the Commonwealth should be prepared to fight. The cables with which it competes were in existence before the States chose to become part proprietors in a cable of their own. So long as powers are not given to the Eastern Extension Company which will confer upon it an undue advantage, I do not think we have reason to complain of any departure in the agreement made by the Prime Minister, from the terms of the agreement which was entered into by the Government of New South Wales. {: .speaker-009LR} ##### Sir Edmund Barton: -- The article in this agreement which the honorable member for Parramatta quoted just now is identical with the corresponding article in the agreement made by the State Government. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- Is that so in respect of all the articles which I quoted ? {: .speaker-009LR} ##### Sir Edmund Barton: -- No. But in respect of the ninth article, upon which the honorable member laid special stress. {: .speaker-KW6} ##### Mr THOMSON: -- That may be so. I would point out to the honorable member for Parramatta that the New South Wales agreement, according to his reading of it, contained a power to reduce the rates, but did not confer upon the company the power to again resume higher rates. It would be even worse for the Pacific Cable, if after a reduction hud been made, the lower rates had to continue than if they had not. However, that is not the point which impresses me most in the consideration of this question. I am quite willing to admit that in negotiating another agreement the Prime Minister has done the best possible under the circumstances, and has at least reduced what was formerly an interminable agreement to one for ten years only. Should evils arise during that period, they can - be adjusted at the end of it, because it will be within the power of the Commonwealth to act in certain directions in which, under the previous agreement, it had not power to move. But even if we admit that the New South Wales agreement which was made with the Eastern Extension Company at the eleventh hour was a proper one to make, I can see no justification whatever for the Commonwealth, as one of the partners in the Pacific Cable, refusing to extend to the other partners the courtesy which we should expect to receive from them if they desired to enter into arrangements to which we entertained decided objections. Nothing can excuse such conduct. Regarding the action of New South Wales, I should like to quote the opinion of one member of the present Government. In a letter from **Mr. Seddon,** of New Zealand, to the Prime Minister, that gentleman says - >Subsequent to the granting by **Mr. Crick,** PostmasterGeneral of New South Wales, of concessions to the Eastern Extension Company, a conference of Postmasters-General was held in Melbourne, the Honorable Mi-. Drake representing Queensland, the Honorable Mr. Duffy representing Victoria, and the Right Honorable **Mr. Seddon** representing New Zealand. The conclusion arrived at was that to 'grant extensions to the Eastern Extension Company similar to those granted by New South Wales, would practically amount to a breach of faith with the other contracting parties to the Pacific cable, and with the aproval of the several Governments of New Zealand, Victoria, and Queensland, the terms stipulated by the Eastern Company were rejected. That was the opinion expressed by the present Postmaster-General as to the agreement with New South Wales. In the Prime Minister's communication to His Excellency the Governor-General, which was forwarded to the Secretary of State for the Colonies, the right honorable gentleman gives his reasons for concluding the agreement. He says - >The matter is one fully within the powers of this Government. Legally it may be, but if the Government had entered into partnership with other dominions of the Empire, and with the seat of Empire itself, they were not morally free to act, and the matter, therefore, was not " properly within their powers." It ought to have been considered and dealt with in the light of our moral obligations to our partners in the Pacific Cable. The communication continues - The existence of an agreement of practically an interminable duration with four States of Australia is a fact that cannot be ignored. It is not as if the Commonwealth were making an entirely new departure. We are only seeking to make the best of circumstances as we find them. The determination to make the agreement has been reached with the full conviction that the relegation of this matter to its former condition would be a lasting injury to the Pacific Cable in which we ourselves have large proprietary rights to safeguard. {: .speaker-009LR} ##### Sir Edmund Barton: -- We have the largest rights. {: .speaker-KW6} ##### Mr THOMSON: -- Surely the other parties to that agreement, having proportionate shares in the cable, can be trusted to do the best in their own interests and those of the Pacific Cable itself. If the Prime Minister's refusal to meet in conference was based upon the assumption that the other parties to the agreement might do something which would harm the Pacific Cable, we must suppose that they were very poor business men who would have so little regard to the interests in the cable of their own States, that they could not be induced to arrive at the same conclusions as those reached by the Prime Minister himself. {: .speaker-KJI} ##### Mr Isaacs: -- How are we to get Australian uniformity ? {: .speaker-KW6} ##### Mr THOMSON: -- If the other parties to the Pacific Cable were as astute, as reasonable, as alive to their own interest, as is the Prime Minister, surely they would be able with the representatives of Australia to come to a conclusion which, if not exactly the same as this, would be equally in the interests of Australia? {: .speaker-KJI} ##### Mr Isaacs: -- That is hardly an answer to the question. If this agreement is rejected, how are we to get Australian uniformity in regard to telegraph rates ? {: .speaker-KW6} ##### Mr THOMSON: -- There is no reason to suppose that the arrangement would be rejected. The honorable and learned member apparently concludes that the other parties to the agreement would not consider the position as it exists in Australia. If the other parties are all going to act on that basis through the whole period of their partnership, what will happen ? Each one will be a law unto himself. Each one, when he sees what he thinks to be of interest to his particular State, will take advantage of the opportunity to enter into an agreement. Surely, we must have some uniformity of action if we are to have uniformity of interest ! Whilst I am not finding fault with the terms of the agreement which the Prime Minister arrived at, surely the first .step which he should have taken was to ascertain if a Conference in London could arrive at a decision ! Being in touch with the head quarters of the Eastern Extension Telegraph Company in London, they could have more rapidly sounded the company than we could in Australia. Surely the business-like step - at any rate the more morally correct step - to take, having regard to our responsibility to the other partners in the cable, was to appoint a representative to a conference with this instruction - " We must have some arrangement under which we can get equal rates in Australia, and we leave you to consider the matter and to negotiate, if need be, with the head-quarters of the company in London, an arrangement which will secure that result in the best interests of the Pacific Cable." I consider that the maintenance of absolute honour in our dealings with any States with whom we have entered into an arrangement ought to be our principal pride, and that in giving cause for doubt, as we have done, to other dependencies of the Empire and to the British Government itself, we are not taking a desirable course. I think that even now it would be much better to allow a conference to take place rather than that any slur should be cast upon us of improper or dishonorable action. An insinuation of this kind has come from different quarters ; although it is politely expressed, still it is there. I think it would be better to trust to the willingness of the other parties to the Pacific Cable, to put Australia on a footing which would enable us to have equal rates, and with them to come to an agreement with the Eastern Extension Telegraph Company, possibly on the lines of the agreement which the Prime Minister has provisionally made. I do not think that any difficulty would occur if the matter were put before a Conference of intelligent and fair men, and it was explained that the arrangement to which objection is taken, was ente red into not by the Commonwealth, but by certain of the States in the Commonwealth ; and that the agreement with the Eastern Extension Company was a necessary recognition of the arrangement, which, while it would give substantial benefit to the Commonwealth, would not inflict injury on the Pacific Cable. {: .speaker-009LR} ##### Sir Edmund Barton: -- I have been asking in vain to be told in what way the Pacific Cable is likely to be injured by the new agreement, and nobody connected with it has been able to tell me. {: .speaker-KW6} ##### Mr THOMSON: -- That is not the point. Would not the partners in an affair of that sort naturally say, " We claim the right of conference. In an important matter like this we think we should be consulted " *1* {: .speaker-009LR} ##### Sir Edmund Barton: -- They say, " We are prejudiced by the agreement," and when I ask them how they are prejudiced they are unable to tell me. {: .speaker-KW6} ##### Mr THOMSON: -- They are prejudiced in this way : that arrangements are being made behind their backs, without their consent, in connexion with the cable to which they agreed to become partners in the expectation of good faith prevailing among all those interested. In my opinion that attitude is a very undesirable one. If all the partners were to follow in the future the example which we should be setting them, then it would be a very unfortunate combination, and I agree with **Mr. Chamberlain** that the sooner some method of adjusting a matter such as this is arrived at, the better it will be for the prospects of the Pacific Cable undertaking. He has illustrated some other matters which certainly require adjustment, and for that purpose I think there should be some proposal made which would effectually prevent a thing of this sort recurring. I think that even now it would be better, in justice to the other partners in the cable, to give the opportunity for holding a conference with the full assurance that what is most reasonable would be agreed to by those who we presume are reasonable nien. . {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- I rise in personal explanation, at the earliest possible moment, to make known the fact that one of the articles to which I have taken exception is in the New South Wales agreement. I did not know until to-day that there was such a foolish article in that agreement. I find, further, that the Prime Minister is acquitted of having gone any further than the article. {: .speaker-009LR} ##### Sir Edmund Barton: -- Will the honorable member repeat to me the number of the other articles in which he says I made differences ? {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- No. 16 is the other article . I referred to - >The Federal Government; shall at all times afford to the Extension Compaq' similar advantages and facilities to those, if any, afforded to any competing cable as regards uniformity of terminal rates uy all routes. {: #subdebate-14-0-s4 .speaker-K7U} ##### Mr CROUCH:
Corio -- I think the proposed agreement is a very business-like arrangement, and very much to the advantage of the Commonwealth. My only regret is that we have got any advantages for the Commonwealth under it. If there are three partners to an agreement, and one partner subsequently makes an arrangement, even for the advantage of the partnership, by which he gets advantages to himself, I think that the other parties may very well feel suspicious. There is throughout the correspondence an impression that Australia is in some way taking advantage of the position which has been created by the contracting State of New South Wales and others before the new agreement was entered into. I only wish to point out that there are distinct advantages obtained for Australia which are not given to the other partners in the Pacific Cable Agreement. ' Those advantages are, first, that Australia will have the right of reduced charges to South Africa. That is a matter which cannot be of the slightest concern to . the other contracting parties. There is also to bea reduction of rates to India and the East. That cannot be a disadvantage to Canada and Great Britain. The third advantage is that there is a right of purchase. It appears to me, however, that the other contracting parties might say - " if you can secure these advantages to Australia by this arrangement, it is probable that, by waiving them, larger concessions might have been obtained for the other partners." That seems to me to be the only objection. Otherwise I think that the Prime Minister has approached a very difficult position and made the best terms possible out of it. If an ordinary .business man found his hands tied, as the hands of the Prime Minister were tied by the agreement made by some of the States, he would have nothing to do but to make the best arrangement possible.' The Prime Minister had to accept the existing condition of affairs and make the best of things. There are only two minor matters to which I should like to draw his attention. In paragraph 6 of the agreement it is provided that the Eastern Extension Company can, if it chooses, apportion the rates in any way it likes. The paragraph says - >Nothing herein or in the said schedule contained shall prevent the Extension Company from varying the apportionment of an3' rate, provided the total rate is not increased, and the proportion payable to the Commonwealth is not reduced, beyond the limits contained in the said schedule. {: .speaker-009LR} ##### Sir Edmund Barton: -- That is in the old agreement. This, of course, is an agreement undertaken with the recognition of the fact of the existence of the old one. {: .speaker-K7U} ##### Mr CROUCH: -- I am sorry that that provision was not left out. We have a cable rate of 2s. to South Africa. The paragraph which I have quoted will prevent cables coming from New Zealand over the Pacific Cable through Australia to South Africa, because the Eastern Extension Company might so apportion its rates as to increase the charges on cables corning from outside the Commonwealth over the Pacific Cable. In other words, the Eastern Extension Company can block any business coming over the Pacific line by altering its proportionate rates. The company can make a re-arrangement of the rates to South Africa or to any port in South Africa, or to St. Helena, or to any point at which its cable touches, so that the rates for any business coming through the Commonwealth from New Zealand over the Pacific line would be so increased as to be absolutely prohibitive. There is one other point. I do not see why four States only are to have the advantage in regard to income tax and charges. The agreement says that - >The Commonwealth shall pay to the Extension Company such sums as will be sufficient to recoup . . . any moneys which the Extension Company are required to pay .... for wharfage rates .... or any income tax in the States of New South Wales, South Australia, Western Australia, and Tasmania. Why four' States only *t* {: .speaker-009LR} ##### Sir Edmund Barton: -- Those were the only States that were in the agreement. {: .speaker-K7U} ##### Mr CROUCH: -- Why should Victoria, because she has kept to an honorable agreement, have income tax paid by her through the Commonwealth Government on account of the Extension Company ? {: .speaker-009LR} ##### Sir Edmund Barton: -- There is nothing to prevent Victoria from taxing the company. The company did not ask us to relieve them of the Victorian income tax, and we did not offer to do so. {: .speaker-K7U} ##### Mr CROUCH: -- But the Commonwealth has to pay it - >The Commonwealth shall pay to the Extension Company such sums us will be sufficient to recoup. So that Victoria will pay her portion. {: .speaker-009LR} ##### Sir Edmund Barton: -- Victoria is included in the agreement as it was before. It gets the advantage of the agreement, and has to take the burdens of it. {: .speaker-K7U} ##### Mr CROUCH: -- On the whole I am pleased with the agreement, though it would have been better if we had said that we were only making the best terms for the Pacific Cable partners rather than that we were making the best terms for ourselves. {: .speaker-009LR} ##### Sir Edmund Barton: -- Anything we get out of this will not be at the expense of the Pacific Cable. {: .speaker-K7U} ##### Mr CROUCH: -- Every concession made to us is made at their expense, and there are things which we shall gain. For instance, we have power te buy out the Eastern 'Extension Company with its plant and line. This would give the impression that we took such power, altogether irrespective of the rights of the other partners to the cable agreement for our future advantage. It looks as though the Pacific partners had been neglected. But wo have to remember that the Eastern Extension Company's line has been of great advantage to Australia, and we hope that it will be of advantage in the future. At any rate, I shall vote for the adoption of the agreement. {: #subdebate-14-0-s5 .speaker-K4E} ##### Mr CONROY:
Werriwa -- I regret that the Prime Minister has made this agreement, assuming that he had to do so. Certainly, New South Wales had entered into an arrangement with the Eastern Extension Company. .So far as that is concerned I believe that the *precis* of the agreement was telegraphed to **Mr. Chamberlain,** and that his assent was practically given to it. He would have been perfectly within his rights in trying to arrange for a modification. The great mistake the Prime Minister made was when **Mr. Chamberlain** in his despatch of the 22nd of March, as the representative of Great Britain, suggested that there should be a conference, and went on to say - > **Mr. Chamberlain** will be prepared, in communicating the resolutions of the board to the representatives in this country of the several Governments concerned, to send also copies of this letter, and to suggest that their Governments should appoint representatives for a special conference to consider the whole question with representatives of His Majesty's Government. The mistake made was in holding the conference and in entirely ignoring the suggestion made. The date of that despatch was the 22nd of March. Just before that date we find that New' Zealand had a conference of PostmastersGeneral, representing Queensland, Victoria, and New Zealand. That conference came to the decision that an agreement entered into with the Eastern Extension Company would be a breach of faith with the other contracting parties to the Pacific Cable, and the terms offered by the company were rejected. I think **Mr. Seddon** was quite right when he contended that - The material change contemplated should not be made without the consent of the other contracting parties to the Pacific Cable agreement I really do not see how we can escape the contention that these parties ought to have been consulted. I do not think that it lies within our province to discuss whether the proposed arrangement is a good or a bad one. It seems to me that we cannot enter into that. Personally, I cannot say that I altogether disapprove of the agreement that has been made, but I do disapprove very much of this action being taken without the other contracting parties to the Pacific Cable agreement being consulted. There has been a distinct breach of faith, and as the Prime Minister has forgotten the duty which he owed to the Commonwealth to maintain a high standard of honour in dealing with the matter, it is incumbent upon this House to reject the motion now brought forward. If the right honorable gentleman can volunteer any explanation, I for one shall be very glad to hear it, because I cannot understand how he came to overlook the fact that the other contracting parties were not consulted. We should have some explanation on the point, and until they are consulted - 1 have no other course open to me but to adopt the attitude which I should have adopted had no arrangement been made with the Eastern Extension Company, and that is to insist that Parliament itself shall see that a conference is held with the other contracting parties to the Pacific Cable agreement. If they are not satisfied that the arrangement now proposed with the Eastern Extension Company is a good one, we must simply go without it. Having entered .into a partnership, as we did in this case, I cannot see how one of the contracting parties can take it upon itself to alter the terms of the agreement without consultation with the other parties. {: .speaker-009LR} ##### Sir Edmund Barton: -- We have not altered any of the terms of our agreement in connexion with the Pacific Cable. . {: .speaker-K4E} ##### Mr CONROY: -- The point is that we have neglected to confer with the other parties to that agreement before entering into the agreement which the Eastern Extension Company now propose. I admit that there was a strong feeling in the States at the time that one State should get the benefit of a reduction in cable charges and another should not. I have little doubt that it was the strong representations made on that point which caused the Prime Minister to neglect the duty of consulting with the other parties to the Pacific Cable agreement. If this agreement were brought before the other parties to the Pacific Cable agreement, and were consented to by them, I should not be quite prepared to vote for it, but I feel that the other parties to the Pacific Cable agreement should first give their consent to it or express their approval of some other agreement of this nature. Until that is done there is no course open to us but to reject the present motion. {: #subdebate-14-0-s6 .speaker-KED} ##### Mr KENNEDY:
Moira -- I do not quite understand the objections which have been taken by those who oppose this agreement entered into as it has been by the Prime Minister subject to the ratification of Parliament. After going through the correspondence very carefully and reviewing the situation, I cannot see where the interests of those who are parties to the Pacific Cable agreement are prejudiced in the slightest degree. {: .speaker-K4E} ##### Mr Conroy: -- That is not the point. The point is that we have entered into an arrangement with these other partners, and it is proposed to alter that arrangement without consulting them. {: .speaker-KED} ##### Mr KENNEDY: -- We have not altered that arrangement. {: .speaker-009LR} ##### Sir Edmund Barton: -- A party in equity complaining of another must show as some foundation for his suit-that action has been taken to his prejudice. {: #subdebate-14-0-s7 .speaker-KED} ##### Mr KENNEDY:
MOIRA, VICTORIA · PROT -- The agreement which we are asked to enter into here does not prejudice the interests of the parties to the Pacific Cable agreement in the slightest degree. {: .speaker-KYR} ##### Mr Kirwan: -- The Commonwealth is accused of a breach of faith, and the conference would show whether the Commonwealth has committed a breach of faith or not. {: .speaker-KED} ##### Mr KENNEDY: -- 1 do not think the question of a breach of faith is raised at all. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- Yes ; the other parties to the Pacific Cable agreement raise the question. {: .speaker-KED} ##### Mr KENNEDY: -- This correspondence shows that it was at the request of the Prime Minister of Canada and the directors of the Pacific Cable Board that the Secretary of State for the Colonies came into the matter in the first instance, but we must consider the situation from our own standpoint. We must not forget the fact that four of the States had entered into an agreement with the Eastern Extension Company which was binding for all time. {: .speaker-K4E} ##### Mr Conroy: -- That was not the Commonwealth. {: .speaker-009LR} ##### Sir Edmund Barton: -- They became part of the Commonwealth. {: .speaker-KED} ##### Mr KENNEDY: -- When the Post and Telegraph Departments of the States, passed over to the Commonwealth the obligation in connexion with those agreements passed over also. I have a very vivid recollection of the feeling expressed in Victoria some three years ago, notwithstanding what may be said to the contrary, with respect to the attitude the then Government took up in not following the course that had at that time been taken by New South Wales and the other Stateswho had entered into an agreement with the Eastern Extension Company. {: .speaker-KYR} ##### Mr Kirwan: -- Those are facts which should be placed before a Conference. {: .speaker-KED} ##### Mr KENNEDY: -- That puts me in mind of the old aphorism that " we should not do to-day what we can put off till tomorrow." That is a course to which I have a decided objection. If it could be shown that there is anything wrong in this agreement, or that it should not have been entered into, I could understand it. {: .speaker-009LR} ##### Sir Edmund Barton: -- That is the point which the leaderof the Opposition so cleverlyavoided. {: .speaker-K4E} ##### Mr Conroy: -- is there not a strong probability that this will diminish the returns from the Pacific Cable by one-fourth -or one-fifth 7 {: .speaker-KED} ##### Mr KENNEDY: -- If some objectionable features in this agreement could be pointed out, or if some breach of faith in connexion with it could be shown, I could understand further delay being demanded ; but why should the people of Victoria be subjected to an undue charge for cables for -another twelve months *t* They have had to submit to it now for two years, and why -should there be a further delay on the principle that we should not do to-day what it is possible for us to do to-morrow *1* We have had too much of that kind of thing, . -and we should be prepared to accept some little responsibility. {: .speaker-009LR} ##### Sir Edmund Barton: -- Victoria would not be subjected to undue charges, because even ~if we had not the agreement the charge of 4s. 7d. per word would be reduced by the company to 3s. {: .speaker-KED} ##### Mr KENNEDY: -- That is another point, but it has not been shown that further concessions have been made under this agreement than by any of the -States who entered into the former agreement with the Eastern Extension Company. I think it was the honorable member for Parramatta who said that further concessions were being made under this agreement to the Eastern Extension Company, beyond those already given under the separate agreements entered into by the four States. We have already concessions given to the Commonwealth, and I think it will be -an advantage eventually to the parties to the Pacific Cable agreement, that the agreement now proposed to be entered into with tho Eastern Extension Company is practically limited to ten years from the date of signing, with the right of purchase eventually. Those -aro distinct concessions. {: .speaker-F4S} ##### Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- No doubt, that is an -advantage. {: .speaker-KED} ##### Mr KENNEDY: -- Those are advantages worthy of consideration. Viewing the situation from every stand-points, I can discover no valid objection to the agreement as entered into by the Prime Minister, and I shall give it my support. Debate (on motion by **Mr. Glynn)** adjourned. House adjourned at 10.20 p.m.

Cite as: Australia, House of Representatives, Debates, 28 July 1903, viewed 22 October 2017, <>.