10th Parliament · 1st Session
Mr. Speaker (Hon. Sir Littleton E. Groom) took the chair at 2.30 p.m., and read prayers.
– I noticed in thepress to-day varying statements as to the decision arrived at regarding the disposal of H.M.A.S. Sydney. Is the Minister re presenting the Minister for Defence in a position to reply to the question I asked last week regarding this matter?
– The matter is still under consideration. A reply will be furnished to the honorable members question as soon as possible.
Accommodation fob Workmen - Sale of Liquor - Offer of Messrs. doulton and cot.
– I wish to ask the Minister for Home and Territories the. question arising out of a resolution recently carried by workmen employed at Canberra. They complain of the poor camping accommodation provided for workmen, the majority of whom have to live in 6 feet x 8 feet tents and bag humpies. They also call attention to the fact that a man who became ill at Redhill Camp, a distance of 2½ miles from the hospital, was charged 14s. for transport by the Canberra Commission ambulance. Will the Minister look into the complaints, and see if anything can be done to remedy them?
– If the honorable gentleman will give me particulars of the complaints made, I shall have them inquired into, and furnish him with a reply at an early date.
– In view of the fact that the Canberra Commission has practically reported that liquor regulation at Canberra is a farce, when will the referendum of the residents of the Federal Territory be taken on the question of the sale of liquor there; and can the Prime Minister give the House any idea as to who will be considered permanent residents of the Territory?
– I recall to the honorable member’s mind the fact that when this matter was dealt with in this Parliament the determination come to was that the local option poll for the Federal Territory area should be taken at such a time and upon such conditions and terms as the Parliament might determine after the transfer of the Seat of Government to Canberra.
– Has the Cabinet yet come to any decision regarding the offer of Messrs. Doulton and Coy. of a panel for the Federal Capital?
– The very generous offer made by Messrs. Doulton and Coy. has been considered by the Cabinet. It is believed that the panel offered might very suitably be incorporated in the war memorial to be erected at Canberra. The offer of the panel has been referred to the War Memorial Committee, but its reply has not yet been received.
Mr.BOWDEN.- Has the Prime Minister yet come to a decision as to whether the House will be called upon to meet next week on Monday? Honorable members are anxious to be in a position to make necessary arrangements, and the right honorable gentleman said that possibly he would be able to make a statement on the subject to-day.
– I propose to speak to the Leader of the Opposition on this matter. The meeting of the House next Monday depends upon whether the States Grants Bill is passed this week, because it must be sent to another place on Tuesday next.
– Suppose it does not get through here at all?
– I cannot consider impossible suggestions. If the measure is passed by this Blouse on Friday it will be unnecessary for us to meet on Monday, but if it is not passed on Friday, it will be necessary for the House to meet on Monday in order that the measure may be sent to another place on Tuesday.
– Yesterday I asked a question of the Minister for Markets and Migration concerning a promise he made some time ago that the wine bounty would be continued. I was referred to the Minister for Trade and Customs, and as the season is getting on, I now ask that honorable gentleman whether he has any information to give the House on the subject?
– The matter is being considered, but is not quite finalized. Until its consideration is completed, no definite reply can be made to the honorable member’s question.
– I ask the Minister representing the Minister for Defence if ho can say when tenders will be called for the East- West aerial mail service?
– The Government hopes to be in a position to call for tenders in the very near future. The conditions to be imposed are still under consideration.
– Is the Minister for Trade and Customs aware that big timber industries, and particularly milling industries, are suffering by reason of the large importation of timber from overseas? What steps is the honorable gentleman’s department taking to see that the timber industry of Australia is given a chance of continued existence?
– It is alleged that the timber industry in Australia is suffering very acutely from importations of timber from abroad. An inquiry extending over a very long time has been made into the conditions of the industry, and I understand that the inquiry was closed only yesterday. Many hundreds of sheets of evidence taken during the inquiry have to be considered. They will be considered as soon as possible by the Tariff Board, and the board’s report will then be brought under the attention of the Government.
Prohibition of Preservatives
– Will the Minister for Markets and Migration lay on the table of the House, for the information of honorable members, a copy of the British regulation dealing with the prohibition of the use of preservatives in export butter?
– I shall have a copy of the British regulation laid on the table of the Library.
– Recently, when at Port Said, I was shown by officers connected with the War Graves Commission the site selected for the Australian war memorial there. I was told that the work of erecting it had been delayed because the plans had not been received from Australia. I ask the Minister representing the Minister for Defence whether the plans for the Australian war memorial at Port Said have yet been forwarded to that place, and, if not, will the honorable gentleman take steps to see that they are completed and forwarded at the earliest possible date?
– I have not yet seen the plans referred to. I shall make inquiries, and let the honorable member know the position.
asked the Treasurer, upon notice- 1.Is it a fact that the services of several Federal Taxation officials who were transferred to the New South Wales Department of Taxation consequent on the amalgamation of the Federal and State Taxation offices are to be dispensed with ?
– I hope to be in a position to furnish this information within the next few clays.
asked the Prime Minister, upon notice -
– The replies to the honorable member’s questions are as follow : -
asked the Minister for
Works and Railways, upon notice -
– The replies to the honorable member’s questions are as follow : -
asked the Minister for Health, upon notice -
– The replies to the honorable member’s questions are as follow : -
Wealth Conscription for Military Purposes
asked the Treasurer, upon notice -
Whether he will, before budgeting for Defence expenditure for the next financial year, consider the new French policy of wealth conscription for military purposes so as to guarantee that any future war in which Australia may be engaged will be profitless to the wealthy and big financiers?
– The Government policy in regard to the financing of Defence expenditure will be disclosed in the budget.
Recommendations of Royal Commission
asked the Prime Minister, upon notice -
Can he inform the House as to the action taken by the Government to carry out the recommendations of the royal commissioner on the affairs of Norfolk Island, particularly in regard to the system of local government, mail services, land settlement difficulties, encouragement of local industries, and provision of an efficient system of magisterial jurisdiction?
– The majority of the suggestions made by the royal commissioner on Norfolk Island affairs have been given effect to. It was considered desirable that, before arriving at a decision in regard to the more important suggestions, such as those relating to the system of local government, land settlement difficulties, the administration of justice, the functions of the Executive Council, and the Public Service, the
Acting Administrator, Mr. M. V. Murphy, who has had extensive experience of Norfolk Island, and the new Administrator, Colonel Sellheim, should be given an opportunity of submitting their views on the proposals. Immediately the views of these officers come to hand the suggestions will be dealt with.
asked the Minister for Markets and Migration, upon notice -
– The information is being obtained.
– On the 2nd of March the honorable member for Swan (Mr. Gregory) asked, inter alia, the following questions : -
The following answers to these questions have been received from the Government of Papua: -
The following papers were presented : -
Commonwealth Film Censorship- Report for year 1926.
Ordered to be printed.
Air Force Act and Defence Act- Regulations Amended- Statutory Rules 1927, No. 20.
Canned Fruits Export Charges Act-Canned Fruits Export Charges Regulations- Statutory Rules 1927, No. 14.
Canned Fruits Export Control Act-
Canned Fruits Export Control (Fees and Expenses) Regulations - Statutory Rules 1927. No. 15.
Canned Fruits Export Control (Poll and Election of Board) Regulations - Statutory Rules 1926, No. 156.
Canned Fruits Export Control (Preparation of Rolls) Regulations - Statutory Rules 1926, No. 134.
Canned Fruits Export Control (Licences) Regulations- Statutory Rules 1927, No. 16.
Customs Act and Commerce (Trade Descriptions) Act -
Commerce (Export Dairy) Regulations - Statutory Rules 1926, No. 182.- Regulations Amended -
Statutory Rules 1926, No. 176.
Statutory Rules 1927, No. 11.
Dairy Produce Export Charges Act - Regu lations Amended - Statutory Rules 1926, No. 118.
Dairy Produce Export Control Act - Regulations Amended - Statutory Rules 1926, No. 99.
Dried Fruits Advances Act - Dried Fruits Advances (Repayment) Regulations - Statutory Rules 1926, No. 96.
Dried Fruits Export Control Act -
Dried Fruits Export Control Regulations -Statutory Rules 1926, No. 55.
Regulations Amended -
Statutory Rules 1926, Nos. 107, 149.
Statutory Rules 1927, Nos. 2, 10.
Export Guarantee Act - Ohanez Grapes Assistance Regulations - Statutory Rules 1926, No. 169.
Land Tax Assessment Act - Applications for relief from Taxation during the year 1925-26.
Quarantine Act - Quarantine RegulationsStatutory Rules 1927, No. 8.
Debate resumed from 8th March (vide page 195), on motion by Dr. Earle Page -
That the Bill be now read a second time.
Upon which Mr. Charlton had moved, by way of amendment -
That all the words after the word “ That “ be omitted with a view to insert in lieu thereof the following words : -“, in view of the State Governments’ heavy financial responsibilities, the bill be withdrawn.”
.- Last night we all enjoyed the forceful and eloquent utterance of the right honorable member for Balaclava (Mr. Watt), who was good enough to prescribe a test to apply to the proposals of the Treasurer (Dr. Earle Page), and also incidentally reminded us of two very great historical facts which he considered should be taken into consideration in the course of this debate. He suggested that the test to be applied to the bill was whether it proposed a fair arrangement between the Commonwealth and the States; but I should say that the real test should be whether the proposal is fair to the people of the Commonwealth; because the aim and end of all governments, whether State or Federal, should be the welfare and happiness of their citizens. Accepting the test which the right honorable gentleman, has suggested, I propose to apply it first to some of the arguments that have been offered by the Opposition; next, to the alternative suggested by the right honorable member for Balaclava; and, finally, to the proposals of the Treasurer. Let me take, first of all, the contention that the further, consideration of this matter should be deferred to a constitutional session to be held at some unmentioned date in the dim and distant future. I can understand such a suggestion “from the Labour party; but while it is the kind of bait that may catch political youngsters, I doubt whether it will catch grown men. The success of their effort to have postponed an item of government policy that ought to be carried into immediate effect would make the hearts of honorable members opposite rejoice. One could easily imagine them chuckling, and picture perspiring Labour orators on the platform telling their hearers that the delay in putting such an important proposal into operation was due not to any suggestion on their part that a constitutional session should be held, but solely to the incapacity of the Government to carry out its own programme. There is a more important reason why Labour members are endeavouring to prevent the passage of this bill. For some time the Government has been engaged in the formulation of schemes for housing and national insurance, which are now nearing completion. Moreover, the
Prime Minister has announced his intention to convene a conference of State Premiers in the hope of evolving a satisfactory scheme of child endowment. Honorable members opposite realize that if these proposals are enacted by the present Government, the Labour party will be robbed of a good deal of political capital at the next election. It is quite apparent from their speeches that they anticipate that the discontinuance of the per capita payments will strengthen the financial resources of the Commonwealth, and by postponing or defeating this measure they will restrict the capacity of the Government to carry out its policy. The interjections of protest from honorable members opposite suggest that I may be misjudging them. I have no wish to misjudge even the Labour party; but if I have done so honorable members themselves are responsible, because in 1910 they fought determinedly to end the per capita payments. Now in 1327, however, they oppose similar legislation, because it is introduced by their political opponents. Honorable members opposite may be high-souled patriots, but even the angel Lucifer and his comrades fell a great distance from grace. If their purpose in putting forward the amendment to delay the bill is not to make political capital for use at the next elections, what end do they expect to achieve ? The amendment implies, if it implies anything at all, that this Parliament cannot consider a realignment of the financial border between States and Commonwealth, apart from all the other changes in the Constitution that have been proposed from time to time. That view is opposed to experience and common sense. The Labour Government in 1910 did not refer the Surplus Revenue Bill to a special session devoted exclusively to a general revision of the whole Constitution. That measure was dealt with in an ordinary session, and there is no reason why a related measure should not be considered now by this House apart from all proposed amendments of the Constitution.. The only question we have to consider is whether the proposal is in the interests of the Australian people. If it is, there is neither need nor justification for further delay. Another dilatory suggestion has been advanced from a different quarter. The Government is advised to withdraw the bill, drop its purpose entirely from their minds, and seek to establish harmonious relations with the State Premiers. When the representatives of the States have been brought into line, presumably the proposal may be revised. The gentleman who made that suggestion, and those who support it, are incurable optimists. The speech of the right honorable member for Balaclava (Mr. Watt) recalled to my mind that, on a memorable occasion, the State Premiers took the initiative in this matter. He was then Premier of Victoria, and the late Mr. Kidston was Premier of Queensland. Not often does Divine Providence place two men of such outstanding character in high administration positions at the same time. These two champions of the States attempted to bring their fellow Premiers into line. By the proposal they put forward, the States had everything to gain and nothing to lose - a prospect more calculated than anything else to stir men to action. The period of the Braddon “ blot “ had expired, and these worthy gentlemen feared that the States might cease to enjoy a proportion of the Customs and excise revenue. They, therefore, approached the Commonwealth with the wise sort of proposal that one might expect from a man like the right honorable member for Balaclava. They sought to have their proposed per capita payments made a permanent provision of the Constitution. Their effort waB abortive. I repeat that the conjunction in high political office of two men of such outstanding qualities as the late Mr. Kidston and the right honorable member for Balaclava does not often occur, and in lesser humans the same inspiration is very rarely to be expected. Those who think that they can bring all the Premiers into line with Commonwealth Ministers expect too much. My experience as a member of a State Cabinet is that there is no prospect of State Ministers agreeing with Federal Ministers, because the States demand everything and are prepared to grant nothing. The position is rendered more, difficult when Labour governments are in office in the States. Only an optimist expects Labour Premiers to act in harmony with a Nationalist Prime Minister. I remind honorable members that already attempts have been made to induce the State Premiers to confer upon this matter ai>d come to an amicable arrangement. I was a member of a State cabinet at the time when such a proposal was made. I am not at liberty to disclose what I learnt in the Cabinet, but my experience was sufficient to convince me that it is impossible to get even State Nationalists into line with Federal Nationalists on a fifty-fifty basis. The only likely basis of agreement is for the Commonwealth to give, and ask for nothing in return. It is easier for a camel to pass through the eye of a needle than to get the State Premiers to agree to this or any other scheme by which they will lose something they now enjoy. Those who suggested a further conference with the State representatives must know that, even if agreement were likely, such a course would involve considerable delay. If this scheme for the re-arrangement of the financial relations of the Commonwealth and tho States is for the benefit of the citizens of Australia as a whole, to postpone it for even three months would be to show callous indifference to the welfare of our constituents. I do not think that any honorable member would be consciously guilty of that, although such a construction might be placed on their attitude by the public. The right honorable member for Balaclava was too experienced a politician to endorse the proposal of the Labour party, so he suggested that the Treasurer should withdraw the bill and tackle something bigger ! If there is anything bigger than the enactment. of this measure in the face of the opposition that is offered to it, I do not know what it is. If the measure is worth passing, we should pass it at once; but if it is of no use, instead of postponing its consideration, we should scrap it altogether. The right honorable member for Balaclava last night, compared the proposal that he made to the States when he was Acting Prime Minister with that of the Treasurer. The present proposal can be shortly stated. The Treasurer proposes to discontinue the collection of moneys that are now handed over to the States in the form of per capita payments, and in lieu, thereof, to allow the States themselves to raise a similar amount of money by additional taxation. It is a perfectly simple proposition and not difficult of solution when one goes fully into the details. The Treasurer realizes that there must be an interregnum between the time when the Commonwealth ceases to collect the taxation, and the time when the States impose and collect it. So that the States will not he penalized thereby, he has promised to continue the payments until the States themselves have provided the necessary legislation and machinery for collecting the tax. This W111 prevent the States from suffering in any way under the changed conditions. The right honorable member for Balaclava referred to his own proposal. Under his scheme the par capita payment was to be reduced by 2s. 6d. each year until it reached the sum of 10s. and then, after the lapse of a short period, that amount also would cease to be paid to the States. The right honorable member said last night that the proposal of the Treasurer reminded him of sudden death by a surgical operation, without chloroform. The proposal of the right honorable member would ensure certain death, without anaesthetics, by slow torture; but this important proposal ought not to be dismissed with spectacular displays of rhetoric. It is of serious concern to the country. If the Federal Treasurer’s proposal were carried, what would be the position of the State Treasurer ? The whole transaction would be finished within a year or eighteen months, and during that time the attention of the people would he focussed on the change. They would know that the readjustment of taxation forced upon the State Treasurer would be due entirely to the Commonwealth Government’s refusal to act as a collecting agency for the States. The change, therefore, would not be used politically against him, because he would be in a position to explain clearly the reason for levying additional taxation, assuming, of course, that he did not propose to levy more than was necessary to compensate for the loss of the per capita payment. If the proposal of the right honorable member for Balaclava were adopted, I should not like to he a State Treasurer. Adjustments would be necessary every year, and public memory being short, any explanation by a .State Treasurer that additional taxation was necessary because of a change in financial relations brought about four or five years previously, would be received with suspicion. It would always be open to dishonest political opponents to misrepresent the position. In addition, the taxpayers would be irritated by continual annual increases in their assessments. 1 am certain that they would prefer a straight-out increase in taxation to one spread over several years, with thepossibility of a new Treasurer imposing taxation in addition to that warranted by the discontinuance of the per capita payment. There arc other advantages possessed by the proposal of the Commonwealth Government. If the other proposal to extend the misery over a period of years were adopted, it would mean that the Federal authorities could not scrap their collecting agencies in the various States, nor could they effect a saving in any way equal to that anticipatedunder the present proposal. We should also have the spectacle of harassed State Treasurers and irritated taxpayers, without any effective saving in the Commonwealth administration. The present proposal is infinitely superior to that of the right honorable member for Balaclava. It is well known that the Constitution gives exclusive right to the Federal Parliament to impose Customs and excise duties, and to control the machinery for their collection. At the inception of federation, the only field of taxation open to the Commonwealth was that of Customs and excise. If that position existed to-day, there would be no problem of financial relationships to solve. Imagine for a moment what would have happened if the Commonwealth had not been forced into other fields of taxation. Any excess revenue beyond the Commonwealth’s needs would manifestly have to be handed to the States for the benefit of the taxpayers who provided it.
– The “vicious principle” would still be there.
– There is no vicious principle involved in handing excess revenue to the States. The honorable member has not a grip of the question at issue.
– I am quoting the Treasurer’s remarks.
– I am not defending the Treasurer’s remarks. I am concerned, not with his arguments, but with my own. If there were an excess of revenue, the States ought to have it. At the inception of the Commonwealth, it was estimated that, approximately, three-fourths of the revenue from Customs and excise would not be required by the Commonwealth, and it was arranged that, for a period, the excess should be paid to the States. The right honorable member for Balaclava reminded us last night that federation would have been impossible if those supporting it had insisted on the inclusion in the Constitution of a permanent provision that Customs and excise revenue should be returned to the States. Federation, therefore, does not rest upon the idea that for all time there should be a return of Customs revenue to the States; on the contrary, it rests, as the right honorable member for Balaclava reminded us, on the compromise that terminated the proposal to include in the Constitution a permanent provision of that character. The men of ability and foresight that gathered together in the Convention, and afterwards had the more difficult task of effecting a compromise to bring about federation, knew perfectly well that it might not always be possible to meet the expanding needs of the Commonwealth out of Customs and excise revenue.
– It was originally provided that for all time three-fourths of the Customs and excise revenue should go to the States.
– The honorable member has missed my point. In the Constitution framed by the Convention that provision was made; but, in order to bring about federation, there had to be a compromise, and, as the right honorable member for Balaclava clearly showed, federation was possible only with that compromise. The compromise was on the question of including a permanent provision in the Constitution for the return of Customs and excise revenue to the States, and the location of the Federal Capital. There was another feature that the right honorable member for Balaclava was good enough to call our attention to. He pointed out that he and Mr. Kidston framed a proposal, to take the place of the “Braddon blot,” for a permanent return to the States of 25s. per head. But that proposal was rejected by the people, and the right honorable member did what I should have attempted to do if I had been in his place - he belittled the decision. The honorable member for Henty (Mr. Gullett) said that the decision was by a paltry majority of 25,000; and the right honorable member for Balaclava said that the question was not settled on its merits, but because the fortunes of Mr. Fisher and his party were vising, and those of the Liberals declining. If we could call f.rom their tombs all the democrats between Julius Cossar and Mr. Lang, and interrogate them as to how majorities on plebiscites were obtained, they would say that it was because of the rising fortunes of this faction and the declining fortunes of that faction. It is useless to tell us that we must disregard a decision because the majority was only 25,000. We must abide by that decision. If the right honorable member had been on my side he would, in terms that it is impossible for mc to employ, have castigated any person who had dared to rise in a democratic assembly, and say that the decision of the people, constitutionally registered, should be ignored. Two attempts were made to include this permanent provision in the constitution, and both failed : one because it was necessary to make a compromise in order 0 effect federation, and the other because the people would not accept it. What is the use of honorable members saying that we cannot pass this bill without interfering with the spirit of the Constitution ? The Constitution is based on the proposal that at some time the return to the States of part of the revenue derived from Customs and excise should cease. But at what time? If we turn to the act passed by the Opposition party when it was in power, we find that the period expired seven years ago.
– The act says “ Or until Parliament otherwise provides.”
– It was at least contemplated that at some time the arrangement would be term iiia tod. It is immaterial to my argument what the period is; I am assuming that, because the people said, that the arrangement was not to be permanent, they contemplated that at some time it should cease. If that bc so, at: what time should it cease? The opponents of this measure would have ns believe that; the revenue from. Customs and excise is not intended to be the primary fund for meeting the needs of the Commonwealth. I cannot understand any honorable member suggesting such a thing. Undoubtedly that fund was looked upon from the commencement as being the fund out of which, if possible, the needs of the Commonwealth should be met; but unforeseen emergencies, some of them extremely unfortunate, prevented that idea from being carried out. If it is the primary fund out of which the needs of the Commonwealth should be met, and if it is millions of pounds less than is necessary to meet the needs of the Commonwealth, then it is an exhausted fund, and there is no excess to hand over to the States. How, then, can honorable members justify the maintenance at the public expense of a large, elaborate, and costly bookkeeping system to divide between seven governments a fund that is not sufficient for one of them? Such a proposal is like the peace that “passeth all understanding.” There is no chance of bringing about a reduction of taxation, which is the reform most desired by the people, if we maintain departments merely for the purpose of solemnly dividing among seven governments funds that are not sufficient for one of them. If the Customs and excise revenue is millions of pounds short of what is necessary for the needs of the Commonwealth, common sense dictates that wc should cease dividing the fund. If an honorable member does not take the unusual view that 25s. out of that fund has n peculiar value not attached to any similar amount, I cannot understand why he wishes, at great expense to the Commonwealth and the States, to divide the Customs revenue. If that revenue should be millions short, the Commonwealth could take the whole of it, thereby saving the taxpayers all the expense of maintaining the costly bookkeeping system now in operation. That is one saving that could be effected, and, because of the advantage that the public would derive from it, I support this bill. Any person who clamours for a reduction in taxation, and calls upon the Government to do something to remedy the financial aftermath of the war, and yet declines to support the bill, displays a lack of business acumen. At the 1923 Conference between Federal and State mini- sters there was no difference of opinion between the State Premiers about handing over the Customs and excise revenue to the Commonwealth. The conference carried a motion agreeing to the adoption of that course on the condition that the Commonwealth withdrew from the field of income taxation. I remind honorable members opposite that although I was not present at that conference, I was kept well informed of its proceedings. I have had considerable parliamentary and ministerial experience, and at that time I was a member of the New South Wales Government. The Premiers at that time saw the effect of the Commonwealth continuing to divide the Customs revenue between seven authorities at considerable expense and without benefit to anybody, and realized that the States could raise the same amount of money from other sources. But they wanted to drive the Commonwealth out of the field of income taxation, and that was the cause of the dispute which is still in progress.
Honorable Members. - Hear, hear!
– I ask honorable members who are cheering me so helpfully to tell the House later whether they approve of the Commonwealth quitting altogether the field of income taxation.
– Taxation of the incomes of individuals, certainly. I am prepared to take that platform to-morrow.
– Nobody is more anxious than I am to see the Federal Government retire from that field, because I know it would result in a reduction of the financial burden of the people. But, suppose the Government was able within six months so to arrange its affairs as to enable it to abandon, at all events for the present time, the raising of new revenue by income taxation, could anybody foresee what might happen tomorrow, let alone four years hence ? As we cannot lift the veil of the future we should be foolish legislators, indeed, to abandon the right to re-enter, in a case of great national emergency, the field of direct taxation. The Commonwealth must reserve to itself the .right to go into that field again, although we hope that it may never have occasion to do so. To comply with the present demands of the States would be inimical to the welfare of the Commonwealth. The proper way in which to distribute between the Cornmon wealth and the States the revenue derived from income taxation is a matter of opinion. The Treasurer may say that the Commonwealth should retain 60 per cent, and the States have the remaining 40 per cent.; others may favour a distribution on a fifty-fifty basis. 1, personally, may feel disposed to curtail the Federal revenue from that source in order to compel the Government to live within its income for the benefit of the taxpayers. Whatever the decision on the point may be, the Commonwealth must reserve to itself the right to re-enter the field of income taxation, should a great national emergency necessitate it. That is precisely the question now in dispute between the States and the Commonwealth. If the Customs revenue at any time becomes greater than the needs of the Commonwealth, the surplus should be handed back to the States. It is clear that the Commonwealth could raise all the revenue it now requires in the field of Customs and income taxation, and, so far as the Government can see, for some year ahead. Then why compel it to expend money in maintaining the machinery necessary for collecting land tax, estate duties and entertainments tax? Nothing could be more farcical or indefensible. So long as this system continues the men who oppose its abolition are making it impossible for themselves or anybody else to reduce taxation. Take the land tax for instance. Just as in the Commonwealth sphere it is appropriate that certain taxes should be raised and distributed bv the Federal Government, so the States, who control the land, ought to have the sole power, except in some great national emergency, to levy taxes upon the land, and expend the money raised in that way. Let me point out to those wizards of finance, or incurable pessimists, who say that if this bill is carried the States must become bankrupt, that New South Wales could raise sufficient revenue by way of land tax to meet all the State Government’s expenditure in that part of the Commonwealth. The estate duty is another tax that, possibly, might be left to the States, since they have the machinery required for its collection, and the rate of tax could be increased without increasing the cost of collection.
Now, when there are assets in one State only, both a State and a Commonwealth return must be submitted. The lawyers benefit - though I do not mind that - but Ave should consider also the expense to the community that could be avoided by abolishing the double taxing authority. It would be quite as easy for the Labour Premiers, whose views were probably expressed by the honorable member for Dalley (Mr. Theodore), to turn aside for once from increasing railway freights and fares, and so adding to the burden of the primary producers, and give their attention to beneficiaries who get from large legacies that for which they have not worked. Why should not these persons pay a bigger contribution to the cost of government out of the handsome gifts that they receive, but have not earned? They could well afford to do it, and should do so, seeing that the money would go to maintain conditions which make it possible for them to live in happiness and comfort. Personally, I should like to see the entertainment tax abolished. The Treasuries which after the passage of this bill would collect it could easily recoup themselves for the amount by increasing the death duties. Every year that we delay dealing with this matter costs those who provide the taxes and maintain the Common wealth well over £100,000 in hard cash as well as incalculable trouble. I cannot understand why anybody should oppose a measure which is designed to give such great relief to so many people. Those who do not think anything of saving £100,000 a year cannot be trusted to reduce taxation. It is the man who looks after the pennies who makes reduction possible. If the Treasurer shows that he is trying to reduce the burdens of the taxpayers, he is entitled to our encouragement and support. I have often heard Labour orators tell their audiences that the rich man always passes on increased taxation to the poor man. They point out that the merchant increases the cost of clothing, boots, and shoes, and the land-owner increases rents to cover extra taxation. I am neither affirming nor denying that this is so; I am merely repeating what I have heard frequently preached from Labour platforms. It is also said that the lawyers pass on increased taxation by increasing their charges. I know that that is so. It may be admitted, however, that increased taxation does fall upon the underdog, though in what proportion I cannot say. In these circumstances, I remind honorable members opposite that if they refuse to lighten taxation, they are merely continuing the sufferings of the underdog. If the Labour party of to-day puts the advantage that it may gain in embarrassing the Government by opposing this measure before its desire to help the workers of the country, whether they be the men who toil as primary producers in the field, or as miners in the bowels of the earth, or as tradesmen, or sweat in our factories, they are not following the good example that their party set in 1910. If they maintain their opposition to this measure, one can only conclude that their concern for political advantage is greater than their concern for the working people whom, we are always being told, they represent.
.- This bill has already been exhaustively and severely criticised by the Leader of the Opposition (Mr. Charlton), the honorable member for Yarra (Mr. Scullin), the honorable member for Dalley (Mr. Theodore), the right honorable member for Balaclava (Mr. Watt) and other honorable members whose arguments I do not intend to repeat. I wish to refer to the speech just delivered by the honorable member for Barton (Mr. Ley). In the course of his remarks the honorable member said that the bill was hard enough to justify-
– I did not say that.
– That is what I understood the honorable member to say. If he did not say that, he said that his arguments in favour of it were hard to justify. However the honorable member put it, I entirely agree with him. The honorable member told us repeatedly during his speech that he was a lawyer, and it struck me that if ever we have had an example of special pleading in this Chamber, he has been guilty of it to-day. His attitude reminds one of the scribes and Pharisees who, according to the Scriptures, strained at the gnat but swallowed the camel. I well remember that the honorable member was associated with a certain Government in New South Wales which protested vociferously against the proposal of this Commonwealth Government to abandon the -per capita payments, and ultimately accepted the Prime Minister’s decisions, like the other States, only under duress. The negotiations on “ that occasion have been fully discussed during this debate, and it is quite apparent that the various State Governments were forced to accept the Government’s financial proposals so that they might submit an alternative. The honorable member for Barton comes into this House with a somewhat shattered reputation, from his party’s stand-point, as an authority of what is right, if one may judge by his attitude towards liquor traffic legislation, and the subsequent Ne. Temere measure, which were dealt with in the New South Wales Parliament during his term as Minister. I have no desire to discuss at length the political record of the honorable member; but the speech he has just delivered indicated throughout that he had no real faith in this bill, and did not believe1 in its principles. The honorable member should have contributed a logical . and well-considered speech on the measure, instead of which he gave expression to a tissue of vague and nebulous generalities. A great part of his address was occupied by a consideration of ‘ the financial proposals made by the right, honorable member for Balaclava (Mr. Watt) in 1919, but that is not the subject now before honorable members. That proposal might have been justified by the circumstances that existed in 1919. When the right honorable member for Balaclava submitted it to the State Premiers, he pointed out that the abatement of per capita payments was necessary because the Commonwealth has reached its taxable limit, and could not continue to provide the revenue necessary to make them. He stated that the Commonwealth was carrying tremendous burdens arising from its war commitments, and that, on account of the higher protective duties which were being imposed at that time, there must be a diminution of Customs revenue. In all the circumstances, the right honorable member said that he feared for the solvency of the Commonwealth if the existing arrangements were continued. Events since have not justified those anticipations. Since then, on account of the inadequate protective policy of this Government, the Customs revenue has increased to an alarming and even a disastrous extent from the point of view of Australian industries. However, the manner in which the right honorable member submitted his proposal on that occasion was in direct contrast to the manner in which this Government has approached this vital subject. On that occasion the proposals were put forward in a courteous and conciliatory fashion, and the Treasurer of the day indicated that he was prepared to listen to argument and alternative schemes. On this occasion, as has been repeatedly stated in the course of this debate, th» Commonwealth has placed a gun at the head of the States, and adopted a stand-and-deliver attitude. The action of the Government iri making this a vital party measure is iniquitous and immoral, because the question is one which this Parliament should examine from the stand-point of the national welfare of Australia. It is obvious from the discussion in the chamber and within the precincts of the House that a number of Government supporters would, if it were not for the activities . of the party Whip, vote against the Government on this question.
– So would the honorable member for Barton..
– Yes; that honorable gentleman possesses such an easy legal conscience that in different circumstances he might oppose the bill. A number of Government supporters, including many with extensive administrative experience and financial knowledge and ability, such as that possessed by the right honorable member for Balaclava (Mr. Watt), have declared their opposition to the bill. Some honorable members on this side of the chamber have said that whilst they, do not agree with the political views of that honorable member, they recognize that his long’ political service in State and Federal politics makes him an authority whose opinion must be treated with a great deal of respect. It was obvious that the speech of the right honorable member, which was delivered in a non-party manner, yet was so lightly referred to by the honorable member for Barton, made a profound impression upon every one, and undoubtedly enhanced the reputation and prestige of the right honorable gentleman. There are other honorable members who have had experience in Federal and State politics who also realize that complex financial problems are encountered in carrying on the responsibilities of government. There are others on the Government benches who will shortly, I believe, have the courage to denounce the Government in this matter; but there are some who evidently lack the necessary moral courage when matters of grave importance come before the House to freely state their opinions, who merely interject, but do not contribute any constructive suggestions for the consideration of honorable members. The Treasurer may be likened to a political Delilah, -who has seduced Samson Bruce from the principles he enunciated a few years ago, and has delivered ‘him unto the handsof the Country party Philistines, because, in 1922, the Prime Minister declared that the per capita payment could not be abandoned under the existing constitutional circumstances. Should the Government successfully emerge with a small majority from the division on this bill its prestige will be irretrievably damaged, not only in the House, but throughout the Commonwealth, and it would appear that before long Samson Bruce will bring the Nationalist Government to ruin. The assumption underlying the proposal to withdraw from the field of direct taxation is that the revenue derived from Customs and excise will continue on the present basis.
– That will also affect the States.
– If the honorable member who has just interjected gets his way, we may some day have a freetrade government in power, when our Customs revenue, apart from purely revenue duties, would immeliately vanish. Unless we resorted to a purely revenue tariff on a low scale, the Commonwealth Parliament would be compelled to re-enter the fields of taxation which it is now proposed to vacate. We have to visualize what may happen in years to come if this Parliament vacates the fields of taxation which the Constitution specifically provides that it may operate in, and in which the Constitution concedes a plenary power. It has been said that the withdrawal of the per capita payment is contrary to the spirit ofthe Constitution, and that the collection of taxes by the States in the spheres which the Commonwealth proposes to vacate will be rendered very difficult. The honorable member for Barton, who said it would be quite easy for the States to collect the taxation now collected by the Commonwealth has overlooked a vital point stressed by the right honorable member for Balaclava, the honorable member for Yarra, and other honorable members on this side of the chamber. There are practical difficulties in the way. There are, for instance, elective Upper Houses in some of the States whose constitutional powers are so extensive that they can control the situa.tion. The honorable member for Barton has also overlooked one difficulty that has already been alluded to - the collection of taxation on aggregated incomes. As an ex-State Minister and a lawyer, he should know that there are insuperable difficulties - legal, constitutional, political, and administrative - in the way of the States taxing aggregated incomes. In such States as Tasmania, South Australia, Victoria, and Western Australia, the elective Upper Houses will control the situation, and reject proposals for increased taxation, even when the States are handicapped by deficits, and are unable to secure sufficient revenue to meet the cost of government. Those Governments will then be forced to take the line of least resistance.
– Does the honorable member suggest that the Commonwealth Parliament should determine the incidence of taxation for the State Parliaments ?
– I am dealing with the difficulties that will be created for the State Parliaments by the Commonwealth vacating the field of land taxation, and I also mentioned the position that will arise in connexion with the aggregation of incomes.
– Surely the Parliaments of the States have the power to say what taxation shall be imposed, and the manner in which it shall be levied?
– It is difficult to secure the imposition of an effective land tax by State legislation. It cannot be gainsaid that land taxation is a powerful instrument in the breaking up of big estates.
– Big city estates!
– Despitethat interjection, the Treasurer must recognize that land taxation has played an important part in the breaking up of extensive country estates. It is likely that the governments of the States will be compelled to adopt the line of least resistance, and to increase railway freights in order to escape deficits. What will be the position of honorable members of the Country party, who so glibly advocate this proposal of the Government, if the withdrawal of the per capita payment results in the primary producers having to pay greater railway fares and freights? There can be no doubt that those who vote for this proposal will be responsible if it is found impossible for the States to make good the loss caused by the withdrawal of the per capita payment by the imposition of a land tax, and they are compelled to increase railway freights. I contend that the Commonwealth has neither a moral nor a strictly legal right to make available Commonwealth funds for the construction of roads, the provision of wire netting, or the establishment of a housing scheme. At the present time millions of pounds are being so expended, but the constitutional difficulty is avoided by the money being handed over to the States in the way of financial assistance. The Constitution never contemplated the Commonwealth’s embarking on a housing scheme, the making of wire netting grants, or the construction of roads. Section 51 sets out the functions, duties, and obligations of the Commonwealth, many of which have never been exercised. In the petrol tax case, which was decided recently by the High Court of Australia, the issue was, not whether the Commonwealth had the constitutional power to build roads, but whether it had the power to render, financial assistance to the States in any form it deemed fit. On that point the High Court ruledthat the Commonwealth was technically right in the action which it took.
– It was a very unfortunate judgment.
– The Commonwealth has no constitutional power to itself undertake the construction of roads. If it attempted to do so the States could challenge the validity of its action. In his work, TheCommonwealth of Australia Constitution, Professor Harrison Moore says -
In the Commonwealth the proceeds of taxation are not the unqualified property of the Commonwealth Government; they are subject to the provision of the Constitution whereby “ surplus revenue “ belongs to the several States, and, in fact, a considerable part of chapter IV. of the Constitution is devoted to the adjustment of the financial relations of the Commonwealth and the States. This right of the States at once suggests a limitation upon’ the objects of appropriation, and gives the States a locus standi for challenging appropriations which may appear ultra vires. The power of the Commonwealth to appropriate money is no exception to the rule that the Commonwealth Government is one of specific and not general powers. Section 90, authorizing financial assistance to any State, and section 105, providing for taking over the public debts of the States, may be accounted for independently, but at least point in the same direction.
There was a specific direction in the Constitution that the Commonwealth should take over State debts at the commencement of federation. The people of Australia, at a referendum which was held in 1910, amended that provision by agreeing to the deletion of the words, “ at the comencement of federation,” andthus reaffirmed and emphasized this constitutional provision. That is the only important referendum’ proposalthathas been agreed to since the establishment of the Commonwealth. It was carried by an overwhelming majority, the voting being as follows : -
That was a clear mandate to the Commonwealth Government to deal with this vexed question. Instead of devoting its time to vote-catching devices, and adopting the role of a government of magnificence and political philanthropy, this Government would be better advised if it gave its attention to the problem of the constantly increasing burden of State debts. When the Treasurer is faced with these questions, his answerinvariably is that they are contingent upon his having a surplus. It is surprising that, when an election is in progress, the honorable gentleman can always claim to have shown a surplus in his management of the finances of the Commonwealth. If the receipts and expenditure of the Commonwealth were properly dealt with, and the money which is now spent on housing, wire netting and roads were not disbursed, a tremendous surplus could always be obtained, and the Commonwealth would be constitutionally compelled to return it to the States under the direction which is contained in section 94, and reads -
After five years from the imposition of uniform duties of Customs, the Parliament may provide, on such basis as it deems fair, for the monthly payment to the several States of all surplus revenue of the Commonwealth.
The Commonwealth has been enabled to evade that legal claim because each successive Treasurer has so arranged his accounts that there has hot been any surplus revenue. Clearly the financial clauses of the ‘Constitution contain a legal direction to the (Government to grapple with the problem of States’ debts. I shall not deal further with that matter. Why does the Government not proceed with urgent legislative work, such as the tariff items that were tabled in this House last year? A number of industries are being slowly strangled, and are beseeching this Parliament to succour and assist them. Child endowment, also, is a burning question, and occupied a foremost place in the platform of the Government at the last election. Where are those proposals ? Where are the other fulsome and flowery promises that were made by the Prime Minister during the last election campaign ? Actually we have had Parliament closed down for six months to enable the right honorable gentleman to go abroad and emulate his great exemplar, Don Quixote, by tilting at windmills in Great Britain, America, and elsewhere, and coming back from a conference with nothing accomplished other than a number of pious resolutions that mean nothing. The people of Australia arc losing patience with this Government because of its dilatoriness in dealing with some of the social problems with which it is confronted. There is no justification in pre-election pledges for this measure.
Nor is there any justification for it in public opinion at the moment. But there is a clamant demand, throughout the Commonwealth that our industries shall not be allowed to die, that our social problems, including child endowment, national insurance, and other vital subjects, shall be dealt with. The Government, by its arrogance and its attitude in regard to this bill and other proposals, and by the manner in which it has handled public business during the past eighteen months, has created the difficulties with which it is beset. We all remember the deportation proceedings and the referenda bungle. Everything that this Government has touched it has mismanaged, and, unfortunately, it has involved the people of Australia in the expenditure of hundreds of thousands of pounds by these bungles. The policy of the Government ever since it assumed office after the last election has been to put the cart before the horse. Its chief stock-in-trade appears to be bluff, bounce, bluster, and bombast when it comes to the presentation of important proposals of this kind. The Prime Minister would appear to be suffering from a form a megalomania as a result qf junketing abroad. Recently we had the spectacle of the right honorable gentleman speaking to the people of the Mother Country with all the airs of a dictator or an emperor. Now he conies to this House and reintroduces this measure in a speech which, it cannot be suggested, had anything of definite clarity about it. He adopts the role of an egotist, as when a few months ago he asked the people not to let him down. This bill is a proposal to let the people of Australia down. The Government would be wise to drop it.
– I listened with interest to the several speakers who have taken part in the debate, and I have to confess that many honorable members have handled this intricate problem with marked ability. I cannot help being impressed, however, with the fact that, with the exception of one who may be looked upon as an oracle since he has not yet committed himself, none of the Nationalists or Country party members representing New South Wales have spoken against the measure. Country members and Nationalists from both that State and Queensland are on the side of the Government. It is remarkable that in those two great States, which have had experience of Labour rule, the opinion is almost unanimously against the view expressed by Labour representatives in this Parliament. The position is different in Victoria. This State has never had experience of Labour rule. It has never been under the heel of Labour in the same sense as the two northern States have been. Consequently they view this bill in a different light. The time may come - the Lord send that it does not - when Victoria, as a result of bitter experience of Labour rule will wake up and come into line with the northern States on measures such as this.
– Is that the motive of the bill?
– I do not suggest that it is. But that, at all events is one reason why I am supporting the bill. I have no hesitation in saying that the adoption of this measure will protect Australia should Labour get to power in the Commonwealth. There appears to be a split amongst the representatives in South Australia, but Western Australian members appear to be fairly strongly against the bill.
– There is no split in South Australia.
– I am afraid that my honorable friend will be surprised when the vote is taken. However, there is no split amongst our friends from Western Australia, though that State will benefit from the bill. Members from that State have told us that they are prepared to row their own canoe. Consequently they are opposing this bill. When the Main Roads Bill was before this House the same honorable gentlemen declared that Western Australia did not want money for main roads. That act, I remind them, benefited Western Australia to the extent of £1,500,000 at the expense of the eastern States. It is worth remembering also that the Western Australian Government did not wait for the constitutionality of the Commonwealth main roads proposals to be tested in the Court, but signed it immediately. It is almost impossible in the debate on such a measure as this to avoid traversing ground covered by previous speakers; but 1 do not propose to do that at any length. The right honorable member for Balaclava (Mr. Watt) last night simplified the position by certain important admissions. He admitted that the States, in their opposition to the abolition of the per capita payments, were not standing on their moral rights. He said also that they did not depend upon their legal rights, and that he did not regard the bill as a contravention of the federal spirit. Other speakers have referred to what is known as the Braddon “ blot.” Although I was not in public life at the time, I remember the controversy that waged around the insertion of that section of the Constitution.The Commonwealth commenced by taking over a number of departments, including the Defence Department, which it had to finance, the Postal Department, which more or less financed itself, and the Department of Trade and Customs; and the arrangement was that, after paying the expenses of these departments, the Commonwealth would hand back to the States threefourths of the Customs and excise revenue. Some of the States, including New South Wales, at the inception of federation had an old-age pension scheme in operation. Consequently when the Commonwealth Government became re- sponsible for invalid and old-age pension payments throughout Australia, those States that had schemes inoperation benefited considerably, because they were relieved of taxation to meet their charity votes. In the course of time it was found that the Postal Department was becoming more expensive, and that the Commonwealth was obliged to enter into other obligations, including the construction of the East-West railway, which was regarded as an integral part of the agreement with the State of Western Australia.
– The East- West line cost the Government nothing; it was built out of the profits from the note issue.
– It cost the Commonwealth Government a good deal of money, and is costing a considerable amount in interest to-day. The making of the Federal Capital in New South Wales also cast a heavy financial burden upon the Commonwealth. Because of these various demands upon its resources, this Parliament had need of more of the revenue it raised, and a payment of 25s. per capita to the States was substituted for the distribution of surplus revenue under the Braddon “ blot.” When the capitation payment was agreed to, the Commonwealth had practically, no debts, but because of direct war loans and post war obligations to the soldiers, and the increase of the invalid and old-age pensions, it accumulated a debt of about £400,000,000. This Parliament would have been justified in discontinuing the payments to the States immediately after the war. However, the country was blessed with a series of good seasons, and both wool and wheat sold at high prices in the overseas market. Because of the general prosperity of the country and the increase of Customs duties, from time to time, the Commonwealth has had sufficient revenue to pay its way. That condition may not obtain to-morrow, and the Government is well advised to look to the future. If the per capita payments are withdrawn, the States will become more self-reliant. Some honorable members have pleaded for the independence of the States. They will be far more independent when they are self-supporting than they are to-day. No State can be said to be independent which each year looks to this Parliament for a charitable vote. The fields of direct taxation now harvested by the Commonwealth are open to the States, and I predict that if Commonwealth revenues are withheld from the States, and State Governments have the responsibility of raising the revenues they spend, the people will take a livelier interest in local politics. I listened with much pleasure to the speech of the honorable member for Dalley (Mr. Theodore). His record, as Premier and Treasurer of Queensland for many years, is largely responsible for the presence of so many Nationalist and Country party members in this Parliament. Yet the honorable member had the temerity to lecture this House on fina nee. Certainly his speech was very temperate and quite different from what I had expected of him. I compliment him on the tone of his address, but its value is discounted by the facts annually disclosed regarding the finances of Queensland. The right honorable member for Balaclava (Mr. Watt) also held office as Premier and Treasurer in a State Parliament. It is unfortunate that some honorable members, when they enter Federal politics, bring the atmosphere of the State Parliament with them. They forget that they have exchanged parochial politics for wider and more important fields of legislation. This applies particularly to honorable members who formerly were State Premiers or Treasurers. I also was a member of a State Parliament, but, not having been a minister, the taint of parochialism does not seem to have stuck to me. I recollect that after the Premiers’ Conference, in Melbourne, in 1933, Sir Arthur Cocks, the then Treasurer of New South “Wales, was very bitter in his denunciation of the Commonwealth Government. He said that the figures submitted to the conference by the Federal Treasurer were wrong. Summarized, his grievance seemed to be that the Federal Treasurer had said that the Commonwealth Government’s scheme would benefit New South Wales to the extent of £500,000 per annum, whereas, according to Sir Arthur Cocks’ reckoning, “the benefit would be only £499,999. Unfortunately, the Cabinet supported him, although the speech of the honorable member for .Barton who was a member of that ministry, indicated that ministers were not unanimous. It is a pity that the Commonwealth’s proposals in 1923 were not accepted. What objection can there be to the Commonwealth vacating a certain sphere of taxation and allowing the States the exclusive right to collect in it? The persons from whom the States will collect are those from whom the Commonwealth collects now, but, unfortunately, owing to the confusion of Commonwealth and State finance - the Commonwealth collecting money which the States expend - blame is often placed on the innocent party. Mr. Allan, the Premier of Victoria, in his policy speech a few days ago, said that, if the per capita payments are discontinued, the Victorian Parliament will be required to increase its income tax collections by £2,150,000. The contribution of that sum should not be very hurtful to the taxpayers of Victoria, because the Federal Treasurer has announced that Commonwealth taxation to a corresponding amount at least will bc repealed or reduced. The proposal now before us is that the readjustment of taxation shall be the subject of a conference between representatives of the Commonwealth and the States before the end of the next financial year, lt is my honest conviction that the Federal Treasurer should endeavour to withdraw entirely from the field of income taxation. Such a step would be in the interests of “the taxpayers. I notice that the Evening News, of Sydney, which is bitterly opposed to the present Commonwealth Government in regard to many matters, said in a recent leading article -
We have no objection to ending the capitation payments to the States and leaving to each government the raising of its own revenue.
That is my view, and I cannot understand why there should be any opposition to such an eminently sane proposal, especially as the States already have in operation machinery for the collection of income taxation. The right honorable member for Balaclava (Mr. Watt) and one of the Melbourne newspapers view with alarm the prospect of the Victorian Parliament having to collect an additional £2,150,000 of income taxation. They wonder whence the money is to come. If Victoria is ever afflicted with a government like that led by Mr. Lang in New South Wales, or that formerly led by the honorable member for Dalley (Mr. Theodore) in Queensland, it will realize how easy it is to get an extra £2,150,000 from the people. Mr. Lang is annoyed because he has not been able to secure the passage of a bill that would increase the burden of taxation in New South Wales by £7,000,000.
– The honorable member for Barton said that the money could be obtained from the land.
– Yes, and Mr. Lang evidently thinks so, too. The founders of federation, who were undoubtedly able and far-seeing statesmen, predicted that the Commonwealth would cost the people not more than 2s. 6d. per head, “the fee for the registration of a dog.” In the light of later events, we know that those statesmen could not see so very far ahead. In any case, the Australian people are not bound for all time by what was done by the founders of the federation in the light of the knowledge they then possessed. We hear much talk of the spirit of federation. But, during the ordinary natural growth of Australia, conditions have altered. Apart from that, the great war upset all old bases of calculation. The present Commonwealth Government has been very forebearing in regard to the matter now under discussion. Twelve months ago this proposal was brought before Parliament, and I believe that had it been proceeded with then very little outcry would have been raised, even in Victoria, but as the days go by opposition to it seems to increase, and to-day it is viewed with alarm by many people. I am unable to understand the opposition of the Labour party to the bill. When we find honorable members opposite defending State rights we have reason to be suspicious. More difficult to understand is the antagonism of the Melbourne press. Any government that is persistently attacked by the press must eventually fall, and I warn the newspapers of Victoria that they are paving the way for Labour control of the Commonwealth treasury bench. That happened in New South Wales politics. The newspapers attacked the Nationalist Government continuously until the eve of the general election, when they had to eat their words, and say to the electors, “ Vote for the Nationalists; do not vote for Labour.” But for three years they had been working for the Labour party by poisoning the minds of the electors, and the eleventh hour antidote was too late. Prior to the recent by-election in the electorate of Dalley, one Sydney newspaper was constantly attacking the Bruce Government, but when the extraordinary vacancy occurred, and an election was imminent, that journal had to return to its Nationalist colours in order to oppose the Labour candidate, and once more the present Prime Minister became, for the time being, a boro. This dangerous inconsistency is a feature of the Melbourne newspapers also. The attitude of the Morning Post surprises me, but it seems to have been able to summarize under twelve headings all that could be said in this House in a fortnight against this bill. That journal’s objections were: -
That objection has been well answered by the honorable members for Balaclava and Barton.
There may be something in that contention, but my opinion is that all agreements made in regard to the transfer of essential services have been honorably observed by the Commonwealth.
I do not know what the right honorable gentleman said in Brisbane in 1922, but since that time a general election has been held, much water has run under the political bridge, and the circumstances to-day are entirely different from those that obtained then.
That may be a fair argument as coming from the Morning Post, but I am not prepared to accept it as an argument from members of the Opposition, who support a government that abolished the Upper House in Queensland in defiance of the voice of the people. For years past in Queensland and New South Wales the will of the people has been flouted.
I remember seeing in a Sydney newspaper a picture of a number of sucking pigs enjoying themselves. Some of the larger ones had more fighting strength than the smaller ones, and were thus able to obtain more than their fair share of nourishment. Those pigs were supposed to represent the States of this country, and although it was not a pretty picture, it was to some extent true. When the Braddon clause was included in the Constitution it was necessary that the wants of the infant States should be satisfied; but when it was deleted, and the payment to the States was reduced to 25s. per head, a weaning process was started. Now that the States have reached manhood, they should be weaned entirely, and allowed to conduct their own affairs. It is proposed to give them the right to govern themselves. They have said that the Federal Government is stealing their rights, but, as a matter of fact, it is trying to give their rights back to them, to give them the right to raise all their taxation instead of only part of it, and to make them more autonomous.
It will not deprive Victoria of £2,150,000. It might similarly be said that it will deprive New South Wales of £3,000,000 per annum, and South Australia of about £1,000,000 per annum. Those States will merely be deprived of the opportunity of obtaining the money from us, and will be given the opportunity of collecting it themselves.
If, for all their schemes, the States had to collect money directly from the people, half the experimental legislation now indulged in would not be attempted, and half the mistakes now made would be avoided.
– Would it not be well to have the same check upon the Federal Government ?
– Probably so, but that is not now under consideration. The Treasurer showed last June that the people of Victoria would benefit under this proposal to the amount of from £80,000 to £100,000. The Commonwealth proposes to abandon more in taxation than the States will have to collect. Naturally the State Treasurers want as much easy money as they can get. There is no doubt as to what would be the result of taking a vote on this question in the Queensland, New South Wales, or Victorian Parliament. In the Victorian Parliament the Labour members and Nationalists have unanimously declared that they do not want this measure; but I have no doubt that the people, if we took a plebiscite, would not range themselves behind the politicians, who have an axe to grind. The man in the street is not worrying about this issue. I have had a chat with a few citizens of Victoria, and find that they honestly admit that they do not know anything about it. One man said that he did not know “what was wrong with the Melbourne press. “ We have,” he added, “ a Victorian Prime Minister and five Victorians in the Ministry and I do not see why this State should be dissatisfied.” He said he was prepared to trust Bruce, and did not want any dictation from the press. I spoke to half a dozen men who do not know anything about the measure, and are not interested in it, but are prepared to follow the Prime Minister. The higher one goes in political circles, the more opposition one finds to the bill. State Premiers and Treasurers regard the proposal as serious; but it is not serious.
There is no doubt about that, and it will also force the Commonwealth Government to abandon a certain amount of taxation- and the man in the street will be as well off as he was before. It looks to me like tweedledum and tweedledee.
That may be so. It has not the unanimous sympathy of members of this House, In fact, few bills brought down by the Government are unanimously supported by this House.
I fail to agree with that. It does not matter to the taxpayer whether he pays taxes out of his right-hand or his lefthand pocket, whether he pays them to the Federal Treasurer or to a State Treasurer, or whether ho pays them in the form of income tax or in some other less direct way. The people can stand only a certain amount of taxation, in whatever form it is levied. The people of the States will take more interest in politics when they know which Government is pinching them; they will become more alive to their own interests, and on election day will vote accordingly. I congratulate the editor of the Morning Post on being able to compress into a nutshell the speeches that have taken four or five days to deliver in this chamber. Another Melbourne newspaper is very strong in its opinions. Yesterday, four or five good speeches were delivered by honorable members. The honorable member for Henty (Mr. Gullett) was reported in black type, and after him “ the Minister also spoke,” although the Minister’s speech was equally worthy of publication. One argument that has been used is that the road-making grant is similar in principle to the per capita payment, and that if one is abolished the other should be abolished also. I do not regard them as similar. The Government is building a railway in northern New South Wales, and is subsidizing the State of New South Wales in the carrying out of that great national work. In South Australia the Government is building the great NorthSouth line, and to that extent is subsidizing the Government of South Australia. Later I hope the Commonwealth will come to the assistance of the States in the work of unifying the railway gauges. We cannot expect Victoria, although it is a prosperous and comparatively thickly populated State, to tear up its railway lines and convert them at its own expense to a 4-ft. 8½-in. gauge. The roads of this country are a national asset, and belong to the nation as awhole, rather than to the separate States. That is why this Government provides money for roads. Even if the States come to an agreement with the Commonwealth as to the taxes that the Commonwealth should abandon, special provision will still have to be made to assist Western Australia and Tasmania. It is impossible to link together the money to be spent on roads and the taxation that the Commonwealth proposes to abandon.I congratulate the Treasurer on this proposal; and if the States administer their affairs honestly and straightforwardly, the result will be beneficial to them.
.- We have heard some good speeches on this bill, but those in opposition to the proposals of the Government contain the better logic. The proposal to terminate the per capita payments has been well heralded, and I am not one of those who say that the Commonwealth has not given the States notice that something of the kind must be done. The change must be made, but whether it is proposed in the right form is the question that is agitating the minds of the community. It has been stated by some of those who have opposed the scheme, that it is “ unification by strangulation.” I do not know whether that idea dominates the mind of the Treasurer; he did not say so much, but, personally, I am sorry that the strangulation did not take place at birth. The result would then have been more in consonance with the vote given for federation. If a vote of the people were taken to-day, on the value of unification, they would vote for unification rather than for what we know as federation.
– Does the honorable member favour unification?
– I do. It is idiotic that a nation, possessing an island continent should have the many costly systems of government that Australia has to-day. Those who study politics or take an active part in public life are anxiously waiting for the benefits of federation to materialize; but up to the present time they certainly have not become apparent. If the subject of unification were referred again to the people, and no misrepresentation took place, I am sure that the electors would favour it. On two occasions I voted against federation.
Mr.Killen. - Does not the honorable member favour decentralization?
– Yes; but the development of this country would go on just as well under a central form of government as under the present system of administration, if there were a strong desire to accomplish it. The aggregation of large estates is, relatively speaking, practised to a larger extent now than formerly. “When George Fyfe Angas came to South Australia-
-(Mr. Bailey). - I am afraid that the honorable member has allowed the interjection to draw him from the discussion of the bill before the House.
– I am attempting to show that, instead of the per capita payment being terminated, the bill should be withdrawn, and the attention of the people focussed on the wider issue of altering the Constitution. The centralization, to which the honorable member for Riverina (Mr. Killen) has referred, took place even at the time of Australian colonization.
-Would it not be just as great if there were one central government at Canberra?
– Whether the Government were located at Melbourne, Sydney, Adelaide, or Canberra, all would depend on its attitude towards decentralization. I presume that the honorable member is referring to the breaking up of large estates, and the opening up of our pastoral lands for agricultural development. I should like to know from the Treasurer whether the purpose of the bill is to effect unification by strangulation.
– The Government’s proposal makes unification more easy of accomplishment.
– Is it the Government’s intention to bring it about by this means?
– The Treasurer believes in unification.
– Not in unification of the kind advocated by the honorable member.
– Prior to federation I listened with interest to ex-Senator Sir Josiah Symon, who was a strong advocate of the federal union. He delivered three addresses - one on federation, another on confederation, and a third on unification. As a result of his speeches, I came to the conclusion that unification was best for Australia. That is why I voted against the acceptance of the draft Constitution. In doing so, I was guided by the statements and opinions of as high a legal luminary as was to be found in the Commonwealth. In the lapse of time I have been confirmed in my judgment. Ministers would be acting more in keeping with their responsibilities if, instead of proceeding with the present bill, they summoned a constitutional session, and consulted the people as to necessary alterations of . the Constitution.
– When we urged the adoption of that course five years ago, we could only get four votes for it in this House.
– Possibly so ; but I hope that the Treasurer adheres to his ideal of unification.
– In my own way, yes.
– The honorable gentleman advocates a special brand of unification. Had he denied that he was a unificationist, I should have reminded him that on the 13th August, 1917, at the Provincial Press Conference at Brisbane, he gave an address entitled, “A Plea for Unification.”
– Is that the speech in which “ the watch-dogs switched on the light”?
– No. It was the occasion on which the Treasurer urged that the Constitution should be altered, because the Commonwealth was too large to be managed under the present system of government. He advocated the formation of. more and smaller States.
– That is not unification.
– There are many brands of it ; but I advocate the variety that the people expected to get 25 years ago when they voted for federation. It is true that we are one people, and that we have one flag and one destiny; but the various States are still plodding along the paths that they traversed before federation was consummated.
– They have not yetattained government through one Parliament.
– No, although that was evidently their desire prior to the union. The honorable member for Dalley (Mr. Theodore), at least, did something as Premier of Queensland in the direction of meeting the public demand for a reduction in the number of parliaments and administrations. He gave tangible evidence of a desire to manage public affairs in the interests of the taxpayers. The right honorable member for Balaclava (Mr. Watt) clearly traversed the history of federation, and if there was anything to be gleaned from his argument, it was that the States had a moral right - even an actual right - to the per capita payment. From the inception of federation it was made clear that the States could not subsist on thin air. But the limitation was placed in the Constitution that the payment to thom of three-fourths of the Customs revenue should be made for a period of ten years only. The honorable member for Henty (Mr. Gullett), and the right honorable member for Balaclava, have asserted that it was the ascendancy of the Labour party and the decline of the Liberal party that was responsible for what happened in 1910; but I do not hold that view. I had then begun to take an active part in Labour politics, and our argument at that time was that the
Commonwealth should not be tied down to the per capita payment for all time. The Commonwealth Parliament, prior to the 1910 election, was discredited because it was not sufficiently progressive, and the electors returned the Labour party to power.
– Because they were told that they could trust the Labour party to protect the States.
– Yes, and the subsequent Parliament faithfully carried out its trust. In the following three years, some of the finest legislation ever enacted was passed by the Fisher Government. It was only by the merest chance that in 1913 the Liberals were returned to office. They had only a majority of one in this House, while in the Senate the La.bour party was in the majority. Therefore, it was not the rise of the Labour party that determined whether the payment of 25s. per head of the population to the States should be permanent or made terminable at the will of this Parliament. It was but right that the Parliament should not be hampered in any way. I well remember seeing a cartoon in the Sydney Bulletin, depicting Australia as a racehorse held in check by a leg chain marked, “ the Australian Constitution.” I believe in unwritten powers for the Commonwealth - powers that can be altered from time to time. Wherever we live between Cape Yorke and Cape Northumberland, we are Australians, and we should not indulge in the petty bickerings that are too frequently heard regarding such matters as the per ca-pita payment. If the revenue of the Commonwealth will not admit of that grant being made, it will have to go by the board. Assuming that the tariff gave effective protection, and that the Customs revenue did not meet even one tithe of the cost of government, what would there be to hand back? Where could 23s. per head, or even 10s. per head, as suggested by the right honorable member for Balaclava, be found? When all is said and done, we must remember that, although we speak of the States as States and of the Commonwealth as a Commonwealth, it is the one body of people that is concerned, and must provide all the revenue. The right honorable member for Balaclava put his finger on the spot when he said that our problem was how to settle our financial relations on a reasonable and an equitable basis. I do not think the States will argue about per capita payment so long as they are assured of sufficient revenue to meet their obligations and develop their territory. But the development of Australia should be looked at from an Australian point of view, and not from that of any one State. The present proposal is, in effect, that the States shall be robbed of their most easily collected revenue, and be obliged to accept, in lieu thereof, revenue of which the cost of collection would be heavy. As every honorable member knows, it would be extremely difficult for any State, even for Queensland, to secure legislative authority for imposing extra probate, income, land, and amusement taxes. My feeling is that it does not matter how our taxes are collected, nor who collects them, so long as the requirements of all parties are equitably met in the most economical way.
– Our proposal is that the taxes should be collected in the most economical fashion.
– In my opinion, the Commonwealth could most economically collect these taxes.
– Four years ago we proposed that it should do so, but that was not acceptable to the States.
– The central government should have all necessary power in these matters, and should make a devolution of powers to the States. The States should be treated equitably. Because the bulk of the Customs revenue is collected in Melbourne and Sydney - even on goods that are afterwards transported to, say, Western Australia - it is not fair that New South Wales and Victoria should receive the bulk of the revenue. Western Australia and other similarly situated States are entitled to reasonable treatment. Although the eastern States have most of the importing business, we should consider ways and means of giving to the other States a fair proportion of the Customs revenue. This proposal is neither comprehensive nor progressive. We have had 25 years of federation. It may be said that the machine has become clogged. To put it in another way, we are living in a wooden building which has got out of repair, and we really need an up-to-date reinforced concrete structure. All kinds of arguments, relevant and otherwise, have been used in the course of this debate. The Minister for Markets and Migration (Mr. Paterson) discussed public borrowing policies, and argued that the provision of sinking funds improved our credit overseas, and made money available at a cheaper rate. But who could prove such a contention? I do not think that a sinking fund would make a difference of lid. in £1,000,000. When Mr. Tom Price was Premier of a Labour Government in South Australia years ago, he adopted what I believe to be the only reasonable and sensible plan for managing national debts. At his instigation a measure was passed which provided that all surpluses should be devoted to the reduction of the public debts. I trust that the Labour party will never depart from that principle. Public debts should not be incurred without provision for their liquidation. We have a duty to posterity in this matter. Unfortunately the government which succeeded Mr. Price’s Government in South Australia discon tinued his policy. But that did not lessen the facility with which South Australia could obtain money overseas. Honorable members will recollect that, during the war, that magician of high finance, the right honorable member for Balaclava said that to float a £20,000,000 loan on the local market would destroy Australian industries, and that Mr. Fisher would be well advised to raise his proposed local loan in five instalments. It is now history that, in less than five year3, £400,000,000 was raised by local loans. The right honorable member for Balaclava did not know his book. Not only was that amount raised, but Australian industry never thrived as it did during those years. I am well aware that the seasons have a great deal to do with the prosperity of this country, but in those five years our manufacturing industries made remarkable strides. The argument of the Minister for Markets and Migration, that the provision of sinking funds offered greater inducement, to financiers abroad to invest their money in Australia, is all moonshine. For other reasons, I, of course, agree that we should establish sinking funds in order to liquidate our national debts. Quite recently the South Australian Labour Government made provision for a sinking fund, and appointed a board to manage it. I should like to know whether the next government will continue that policy, for, after all, it depends upon successive governments whether schemes of that kind will bo effective. The right honorable member for Balaclava quoted figures to show that in the last five years the various States had borrowed immeasurably more than they ever borrowed in a similar time previously, and that the national indebtedness has grown much faster than the sinking funds. It ha3 been stated that the Commonwealth must retain the right to invade the field of direct taxation in any time of emergency; but it would appear from the remarks of some honorable members that they consider that the Commonwealth improperly entered it in the first place. I disagree with that. Unquestionably, the reason why the Commonwealth imposed direct taxation was that it had to meet extremely heavy war commitments. Why should we attempt to develop the Commonwealth on indirect taxation?
– That would simply mean that the man with a large family would have to bear a far heavier proportion of the burden than he should.
– That is so. There is nothing immoral in the Commonwealth imposing direct taxation. The honorable member for Henty (Mr. Gullett) showed quite clearly last night that the war was responsible for the Commonwealth imposing direct taxation. The principle was laid down that those who could not render active service overseas should meet the cost of the war. That was the theory of the thing, but it did not work out in practice. No investor in war loans suffered even a casualty, whereas nearly 60,000 of our soldiers paid the supreme sacrifice. To-day Australia is required to provide £21,000,000 annually to meet the interest on her war indebtedness; and £9,000.000 is necessary for war pensions and repatriation purposes. That money is now drawn from direct taxation. If the Government evacuates those fields of taxation it will simply mean, as the honorable mem ber for Hindmarsh has said, that the wealthy man will escape contributing any further, except in a general way, towards the cost of the war, and that the poor man with a large family will have to pay a good deal more than he should pay. It will be a blot on the escutcheon of Australia if this Bill is passed. The imposition of direct taxation by the Commonwealth should not cease until our war obligation has been liquidated. It has been stated that direct taxation has been reduced by £6,000,000 within the last few years. For the financial year ended the 30th June, 1923-24, direct taxation amounted to £3 0s. 5d., and indirect taxation to £5 16s. 8d. per head of the population. For the financial year 1924-25, the last year for which the figures are available, direct taxation was reduced from £3 0s. 5d. to £2 13s. 6d., and indirect taxation was increased from £5 16s. 8d. to £6 6s. Sd. per head of the population. It will, therefore, be seen that the indirect taxation from which bhp. Commonwealth proposes to obtain its revenue has been increased, whilst the direct taxation which it is proposed shall be collected by the States, has been decreased. If our war liability is to be liquidated in a proper manner, it is unreasonable and immoral to place upon the States the responsibility of collecting direct taxation, as that will mean breaking the pledge given to the people when direct taxation was first imposed by the Commonwealth. The suggestion of the Leader of the Opposition (Mr. Charlton), which has been supported by honorable members on this side of the chamber, that the bill should be withdrawn, and the representatives of the Commonwealth and the States should meet in conference, is a fair one, as it is only by that means that the whole subject can be thoroughly discussed. If the Commonwealth Government vacates the field of direct taxation, it will, in effect, be stabbing in the back those soldiers whom it promised to support, and relieving a portion of the community of a financial responsibility which should rest upon it until our war liabilities have been discharged. If a large proportion of the revenue we are at present receiving were used in defraying our national debt, my opposition would not be so pronounced, but a large portion is spent in paying interest at rates varying from 4½ to 6 per cent, on money raised for prosecuting the war. If the Labour party had been in power during the whole of the war period the Commonwealth would not be faced with a war debt such as we have to-day, as it was willing to carry on those war activities which the Commonwealth should rightly undertake, and honour also the pledge of our Leader at that time of contributing “ the last man and the last shilling,” which was wrongly construed in some quarters to mean that we would eventually conscript the manhood of this country. That we did not propose to do. If the Government which succeeded the Labour administration had adopted the proposal of the honorable member for Hunter, which embodied a common-sense idea, and one which all patriots would have supported, the Commonwealth would not now be faced with a tremendous war debt.
– What was the proposal ?
– That all income beyond an amount necessary to maintain an average household should be taken for the benefit of the nation. Terrific fortunes were amassed by profiteers, many of whom, as the present Treasurer should know, could have been shot down from the steps of this building.
– I ask the honorable member to connect his remarks with the question before the Chair.
– I am dealing with direct taxation, which, as I have said, was imposed in the first place for the purpose of prosecuting the war, and, I submit, is germane to the question before the House. It has been said that honorable members on this side of the chamber, while freely criticizing the policy of the Government on this and other questions, do not submit alternative proposals. In this instance,I suggest, as an alternative, that the time is ripe for going to the people with a sane scheme of unification. Surely we can dispense with the six State Parliaments and six Governors, and be governed by one Australian Parliament, thus abolishing a good deal of the duplication of effort and unnecessary expendi ture which at present exists. The right honorable member for North Sydney (Mr. Hughes) knows that direct taxation was imposed solely for the purpose of meeting our war commitments, and it is unreasonable to propose that we should forgo our rights in that respect.
Mr.Scullin. - Some have suggested that we should repudiate our responsibility in the matter of war loans.
– The time is coming when, as suggested by the right honorable member for Balaclava, we shall have to curtail our borrowing activities, and settle our war debts, as is being done in some other countries. The time is approaching when some readjustment of the financial relations between the Commonwealth and the States must be made; but the present proposal is not fair to the States. Any Commonwealth Government going’ to the country on a proposal for continuing to impose direct taxation would be returned with a large majority. It is easy to imagine the position arising in which, our commitments having been deliberately made so heavy that a surplus would not be available, other methods of raising taxation would have to bo employed. If this proposal is carried, and the Commonwealth vacates the field of direct taxation, it will be found that the power of the Liberal or Nationalist partyhas declined, and that of the Labour party, which put the finances of the Commonwealth on a proper basis in 1910 in spite of the policies then enunciated, has increased. At that time the Labour party, which strongly opposed the purchasing of a Dreadnought with borrowed money, was returned to power, and did such good work that it left behind it a record that has never been approached. The Government should not attempt to strangle the States in this way; but, to use the metaphor of the right honorable member for Balaclava, should invite them into the operating-room, feel their pulses, and see if their hearts are strong enough to stand the operation. This is not an ordinary operation, but one which may make the States sterile for many years to come. If the Government carries its proposals in this instance, the people will shortly demand a proper system of unification, so that, with the assistance of certain subsidiary agencies, we can proceed as a united body in the interest of the whole Commonwealth. I oppose the bill.
– After listening to the speech of the honorable member for Adelaide (Mr. Yates), I must say that, with the exception of one definite utterance, he left me in doubt as to whether he was supporting or opposing the bill. For a time I felt that at least one member of the Labour party was supporting the Government. But the honorable gentleman qualified his statement by saying that he wished the bill to be withdrawn. Apparently he approves of it in general terms, but thinks that the time is not ripe. That suggestion has been made by other speakers in opposition to the bill. If it were adopted, and if the bill were withdrawn, there would be a shout of derision from one end of Australia to the other. The Federal Government would be the laughing-stock, not only of its opponents, but also of its friends, and the State Premiers and State Treasurers, who are raising all this outcry about the per capita payments, would chuckle and say, “ Once more Ave have bluffed the Commonwealth Government.” These State Ministers have been pursuing this policy of bluff for a long time. My own opinion of them is that, whilst they are very estimable gentlemen who are trying to discharge their State obligations, they are not the kind of people who, so far as this Parliament is concerned, are worth losing a great deal of sleep over. Their general attitude towards Commonwealth Ministers -has always been one of more or less discourteous hostility. The allegation that, in the negotiations between the Commonwealth and the States, all the hostility comes from the Commonwealth Ministers cannot be sustained. Those who study the reports of the numerous conferences that have been held, and the negotiations that arc continually being carried on between the Commonwealth and the States, must come to the conclusion that all the forbearance and all the courtesy are on the side of the Commonwealth leaders, irrespective of party, and that all the cantankerousness and hostility emanate from the State Ministers. Only the other day the Premier of New South South Wales, the famous Mr. Lang, accused the Treasurer (Dr. Earle Page) of being a weakling. Other political opponents take the contrary view; they declare that he is too strong. The Treasurer’s action in persisting with this bill, notwithstanding all the abuse and misrepresentation to which he has been subjected by the Premiers and Treasurers of the States, demonstrates conclusively that, whatever other faults ho may have, at all events he is not a weakling. As the Leader of the party to which I belong, I feel that the Treasurer deserves much stronger support in this House than he is receiving from honorable members on this side of the chamber. It is largely for that reason that, as a member of the Country party, I feel it my duty to dispel the notion that has been carefully disseminated by a section of the press in Melbourne, that not only are the Nationalist supporters of the Government hopelessly split over this issue, but that the Country party also is only being kept in its place by the stern discipline of the party whip. With two exceptions, the Country party is solidly behind the Government on this issue. Because of its attitude towards this proposal, I think it may be claimed for the Country party that it is more national in spirit than many of those who criticize it. Opposition to the bill from Government supporters boils down to two gentlemen belonging to the Country party who are known as. “ State righters,” pure and simple, and the conservative “ rump “ of the Nationalist party. In every big political party there is a certain conservative dross which, rising to the surface, causes a good deal of trouble until it is skimmed off and thrown away. I believe that, so far as this measure is concerned, this political dross to which I refer, will not be in evidence much longer. We have heard a good deal about the intentions of the framers of the Constitution. The same cry has been raised on every previous occasion, when any measure has been brought forward to grant additional powers to the Commonwealth. We have always been told that it was against the intentions of the framers of the Constitution. Actually no honorable member can say definitely what were the intentions of those who moulded the Constitution. Those who have studied the Constitution and have gone to the trouble of reading the debates of the Federal conventions, and, therefore, may be regarded as authorities as to the intentions of the framers of the Constitution, are themselves at sixes and sevens. There is no accepted authority in Australia as to the real intentions of the founders of the Constitution upon a number .of controversial issues. This issue was very prominently before the people in 1910, when the Federal Labour party was rising to its great triumph. Mr. Andrew Fisher, the then leader of the party, raised the effective cry that the Commonwealth should not be bound by the dead hand of the past. Mr. Fisher’s party was in favour of the per capita payments, but was against having the principle embodied in the Constitution. The State Premiers also were hostile. Sir Charles Wade, then Premier of New South Wales, was absolutely opposed to per capita payments at all. He wanted a continuation of the previous system. The Premier of one other State said it was an insult to offer the people of Australia so much per head. That was the opinion ten years after Federation. Mr. Fisher, as I have shown, did not wish to be influenced by the dead hand of the past. Federation then was only a matter of yesterday. It is now 27 years since Federation was inaugurated, and seventeen years since Mr. Fisher raised that cry, .and still we hear the same objections to-day. When some authority can definitely inform us as to what were the intentions of the framers of the Constitution, we shall have some reason, for accepting their interpretation of the Constitution.
– There is no reason why we should be bound by their interpretation.
– I agree with the honorable member for Fawkner. As I have already said, no one is in a position to state just what were the intentions of the founders of the Constitution. Will honorable members who raise this cry suggest that the wise men who took part in the Federal convention debates 30 years ago would express exactly the same views on this important issue if they were at tending a similar convention to-day? Obviously they would not. Yet we had the right honorable member for Balaclava (Mr. Watt) last night suggesting that the framers of the Constitution were the repositories of all the political wisdom that Australia has ever had. They were wise men in their day, it is true; but we are 27 years wiser to-day, and it is about time that we “ scotched “ this cry whenever it is raised in opposition to proposals to the granting of extended powers to the Commonwealth Parliament. We may be sure that as the framers of the Constitution were wise in their generation, they would be wise enough to-day to sanction the doing of many things which the small Australians of the present generation say we should not do.
– Most of them were unificationists
– Another cry we have heard in opposition to this bill is that the time is not ripe. That objection also is raised whenever an attempt is made to extend the powers of the Commonwealth. We heard it only the other day in connexion with the referenda questions, and with as much force from representatives of the Labour party as from the conservative sections of the Nationalist and Country parties. A survey of the political arena discloses a conservative clement in all parties; an element with its mind steeped in the past, and its influence is detrimental to national progress. We cannot get away from the same old crowd, every time any constitutional reform is contemplated, whether referenda questions or per capita payments. This fact should make all big Australians a little bit suspicious. We are always being told that these reforms are either against the intention of the framers of the Constitution, or that the time is not ripe. There is not the slightest doubt that the time has come for an extension of the functions of the Commonwealth, but I do not agree with those honorable members opposite who say that unification is the solution of all our difficulties. I do not agree with them because I doubt their sincerity, since we hear of this demand for unification only when some extension of Commonwealth power is asked for. Opponents of such proposals then say “No, we do not want that. We want unification.” In other words, they want something that they cannot get. The result of the several referendum appeals to the people has shown conclusively that there is an overwhelming majority against unification. The Treasurer suggested that he favoured one kind of unification. I should like to have further details from the honorable gentleman. I doubt if he meant just what honorable members opposite mean. No authority in politics is quite clear as to what particular form of unification would bo most acceptable to Australia. Ideas on the subject are too nebulous. Only a few months ago we had the spectacle of alleged unificationists like the honorable member for Dalley (Mr. Theodore) and the Premier for New South Wales (Mr. Lang), who, on one occasion said he would wipe out all State Parliaments, rising in their wrath and declaring that they would not trust the Commonwealth Parliament as far as they could kick it. Apparently when these so-called unificationists have an opportunity to test their theory, they fall down in a fright. There is no justification for believing that the people of Australia desire unification. Wc have to face the facts as we find them. The outstanding need of the moment is an extension of the powers of the Commonwealth Parliament. It needs a little more elbow room. This extension has been denied to it in the industrial sphere, but I feel sure that we shall get it some day. In the field of finance more elbow room is needed, but we find “ State righters “ in this Parliament and outside insisting that an extension of authority in the direction sought was never intended by the framers of the Constitution, and that the time is not ripe. We shall have to push these opposing influences aside, and declare that if the time is not ripe we must make it ripe. Something will have to be done to bring this issue to a head. The only way will be to intimate to the State Premiers and Treasurers that as they have not offered any suggestion, the Commonwealth Government is going on with the proposal, and they can take it or leave it. We shall never achieve anything unless we adopt that attitude. A great deal has been said about the need for remodelling the Constitution. We are told that nearly everybody is in favour of the Common wealth discontinuing the per capita payments, “ provided this “ and “ provided that,” but every opponent of this bill has suggested that the proper course is to defer action for another year, two years, or possibly five or six years, when a constitutional session can be held. They do not say when, if ever, a constitutional session will be held, but they utilize the indefinite prospect of it as another excuse for deferring a decision on this subject. Probably when the constitutional session is held, these gentlemen will still favour procrastination, and try to make the session abortive. A financial issue, such as that involved in the bill, might wreck any constitutional session. It is far better that it should be dealt with now, so that it may be subject to at least twelve months’ trial before a constitutional session is held. We may be sure that if this proposal is put on the business paper for a constitutional session, State Premiers and Treasurers and their supporters in this House will endeavour to convert the session into a financial one, and no progress will be made towards the solution of the real problem of constitutional revision. We are told that the States must receive a fair deal. I have never sat in a State Parliament, but I have studied very closely State politics in New South Wales and Victoria, and, to a lesser extent, in Queensland, aud I claim to know a good deal of the trend of politics and policies in the State legislatures. I have never discerned any foundation for the suggestion that the States are not getting a fair deal. On all occasions of conflict between them and the Commonwealth, the latter has given way. Whenever the .States have dug in their heels, the Commonwealth has yielded for the sake of harmony. Upon no occasion has the Commonwealth deliberately baulked the States in respect of their rights, but frequently the legitimate aims of the Commonwealth have been frustrated by the cantankerousness and anti-Federalism of the States. In this Parliament there has never been any sign of hostility te the States, but there has been deliberate antagonism to the Commonwealth on the part of the State Parliaments. Those honorable members who have made such a song of the hostility of the Commonwealth to the States have been unfair to this Parliament, because the history of negotiations between the Federal and State authorities does not furnish any warrant for such a charge. So much is heard of State rights that one would think that they had been divinely handed down to us on stone tablets. State politicians trade upon the anti-Federal prejudices of the people to inflame them against the Commonwealth Parliament. During the last referendum campaign, it was very noticeable that State politicians of all parties adopted towards the Commonwealth an attitude of suspicion and distrust. The whole burden of their speeches was that the Commonwealth could not be trusted, no matter what party was in power. The very men who had praised the right honorable member for Flinders (Mr. Bruce) as a heaven-sent leader said that they would not trust him with the powers for which the Commonwealth was asking, and, similarly, State Labour politicians said they would not trust even a government led by the honorable member for Hunter (Mr. Charlton). Hostility to the Commonwealth is being carefully fostered by the State politicians for their own ends. They are jealous of this Parliament, and that jealousy is largely responsible for the opposition to this bill. Another regrettable fact is the tendency of former State politicians to bring into this Parliament the anti-Federal spirit of the States. The speeches of some of them have reeked with anti-Federal bias. The speech of the right honorable member for Balaclava (Mr. Watt) was founded upon State rights; there was nothing Federal or national about it. The speech of the honorable member for Dalley (Mr. Theodore) was anti-Federal. Outside this House the honorable member poses as a great federalist; inside the chamber he has shown himself to be a Staterighter. Men who have been responsible for the financial muddles in which their own States are floundering have not remained in State politics, to clean up the mess they caused, but having sought sanctuary in this Parliament, they attempt to teach us how the finances of the nation should be handled. No doubt it is helpful to the House to have the advice of men who have been State Treasurers for long periods, but when they are advising the Commonwealth to adopt a course that led their own States into financial difficulties, we must hear their precepts guardedly. I do not wish to make invidious distinctions, but it is obvious that one State is in such a hopeless muddle that its representatives in this chamber should be concerned as to its future, and should welcome any proposal by the Commonwealth Government which is likely to give relief. Instead of doing that, they condemn the Government’s proposals as an infringement of State rights. The Prime Minister and the Treasurer have shown clearly that this bill will not deprive the States of anything. It will merely cast upon them the obligation they were under for a number of years to live upon the direct taxation which they themselves raised. Some honorable members think that it is an injustice to ask the States to raise their own revenues, and the honorable member for Dalley said that no State Treasurer would like to be obliged to levy increased income tax. I do not doubt that; nearly all State Treasurers have already imposed fairly heavy income taxation, but if they wish to spend lavishly, it is right that they should have the responsibility of raising the money. All of them are trying to live beyond their means. They produce budgets, not characterized by prudence and common sense, but designed to tickle the ears of the multitude. Popularity is the sole basis of State finance. Without exception, the State budgets are extravagant, and some honorable members ask us to help the State Treasurers to maintain that extravagance. I have obtained from the Commonwealth Statistician figures showing the increase of revenue expenditure in the States since federation in comparison with the increase of population. I do not say that these figures are an infallible guide, but they give a good indication of the direction in which the States are travelling. The increases since 1901 have been -
The increase in the expenditure from revenue has been altogether out of proportion to the benefits which have been conferred upon the community. A fact which is never stressed in this Parliament is that the States are not giving to their taxpayers a fair deal. The taxpayers are divided into two sections, half in the city and half in the country, and the latter arc not getting a full share of the benefits of public expenditure. Railway construction has practically ceased, no irrigation works are in progress, and, except in Western Australia, and some small soldier settlements in other States, there is practically no progress in land settlement. But in all the capital cities enormous expenditure is being incurred. That is where the money is going, and the ex-State Treasurers who seek sanctuary in this Parliament ask us to continue that system. If we do, we must accept responsibility for the consequences. The following comparison between 1901 and 1936 - estimated - indicates what will happen if the present rate of expenditure in proportion to the growth of population continues for another ten years -
– The value of the figures depends upon the value of the permanent assets that are being created.
– Generally speaking, permanent assets are created, not out of revenue expenditure, but out of loan expenditure, and the following table shows the increases of population and loan expenditure from 1901 to 1926 : -
That proves conclusively that the States are spending disproportionately to the growth of their populations. When I speak of population I mean that half of the population which is receiving 75 per cent, of the benefit of the expenditure. In spite of all this we find a deplorable financial condition of affairs in all the States. I cannot cite the figures for every State, but the honorable member for Dalley (Mr. Theodore) said that no State Treasurer to-day could show anything but a deficit. The New South Wales Government, which is the largest spender of all, showed a deficit of £2,176,000 for the last eight months ; even in Victoria, which has been better managed and financed than the other States, there is a deficit; and there are very large deficits in Queensland and the other States. In spite of this heavy loan expenditure and enormous increase in expenditure from revenue, in comparison with the relatively slow increase in population, the State Treasurers cannot even now handle the business. There must be some definite cause of that, and it is to be found in the fact that a large part of the money has not been spent on legitimate development, but on social experiments that have not been of very great benefit to the people, who would not be much worse off if the experiments had not been made. That, however, has not been the whole cause, for much of the financial muddle is due to the fact that the State Governments have developed their territories solely with the idea of promoting the interests of the large capital cities. The result is that we have decreasing populations in country districts, and rapidly increasing populations in the cities, where there are traffic problems with which the State authorities cannot cope.
– Does not the policy of the Commonwealth Government accentuate that?
– I cannot see that it does.
– By the tariff.
– That opens up another question. I admit that one effect of the tariff has been to increase the populations of the big cities. Ninety per cent, of the factories of this country are in the cities, and throughout the whole of New
South Wales there are no factories except butter factories in the country areas.
– Centralization appears to be the tendency in all countries.
– The tendency is not so great in other countries as in Australia. No other country_ has half ^ its population concentrated in six capital cities. How will this paltry £7,500,000 help the States out of the muddle? We have been told that if they lose this money there will be chaos ; but there will be chaos whether they lose it or not. The muddle cannot continue for ever.
– This bill may hasten the end.
– The sooner the States are prevented from continuing this suicidal policy of spending all they can borrow, and all they can raise by taxation, the better it will be for Australia.
– If the honorable member would consider the growth of the Commonwealth debt since 1910, he would probably find the increase very much greater than the increase in the indebtedness of the States.
– That does not affect my argument. We have the pathetic plea reiterated throughout this debate that the States will be smashed by the adoption of this proposal. The figures I have quoted are intended to show that the States are smashing themselves. The £7,500,000 that the Commonwealth Government proposes to take away from them, and the increase in their powers of direct taxation, will not make a scrap of difference, except that an extravagant treasurer like Mr. Lang will will not be able to boast without justification that he has not increased taxation. The Commonwealth Government will be able to say it surrendered some taxation; but, after all, the effect on the people will be very little. The real objection of the State Treasurers to increasing direct taxation is that nearly all their governments have expensive programmes of social experiment to carry out.
– The same statement might be made of the party to which the honorable member belongs.
– The Commonwealth has the money, but the States have not. At every election the political parties compete against one another in offering big bribes to the electors. Three years ago, in New South Wales, it was widows’ pensions; now it is child endowment. The Labour party puts forward such schemes, and the other parties, in order to have a chance at the polls, have to say, “We will give you that, too.” Competition between the political parties is occurring in every State of the Commonwealth, and it is because the State Governments are forced to attempt to redeem their extravagant promises that they are getting into such a financial muddle. And the deplorable feature of it is that while they are spending large sums of money in doles, and are building big cities, they are not developing their States outside the cities. There is no new railway construction work being done in the country districts of New South Wales, and I doubt whether any is being done in the other States. How will the withdrawal of £7,500,000 from the States affect their development, seeing that, although they have the money, they are” not developing to-day, and have no intention of developing? I should be very pleased to hear any honorable memberattempt to counter my argument that the States are not doing their jobs to-day in developing their areas, and that, therefore, the withdrawal of the money will not bring them to ruin any faster.
– What will happen if the Commonwealth comes back to thefield of taxation it now proposes to Burren der ?
– There is that danger, and that is the only valid objection, if there is one, that I have heard to the bill. I should like to see the Commonwealth get out of the field of direct taxation entirely, and would have no hesitation in voting for a proposal to do so; but the scheme now submitted is a good beginning. The States seem to me to resemble naughty school boys, who know that they are due for a hiding, and are seeking to postpone it by “ wagging “ behind a corner. The Commonwealth is big enough to carry the blame, especially as it has a blameless conscience. We have nothing to fear from what the State Treasurers may say. If they find, at the end of twelve months, that they are in the deplorable mess that they now say they expect to be in, they will have to come to the Commonwealth and say, “We cannot do it. Our job is now impossible. We are ready to reconstruct. We will meet you in conference, not in an arrogant, but in a conciliatory, spirit, and will try to unravel this financial tangle. Now that our job is impossible, we have to abandon the bluff and come down to firm earth. We will meet you with a view to reconstructing, in the interests of the people, not only of the States, but also of the Commonwealth.” The weaker States, for which the honorable members for Swan (Mr. Gregory), and Forrest (Mr. Prowse) are so concerned, will then receive proper consideration, of which they have no chance at present. All they can do now is to come cap in hand to the Federal Parliament for doles.
– And the honorable member would place them in that position for all time.
– Under the scheme of reconstruction, which is bound to come in any case, those two States may be placed on a proper footing in relation to the stronger States, which now have a stranglehold on them. Honorable members are acting foolishly in the interests of those States by opposing this bill; the proposals of the Treasurer will tend to put the weaker States on a level with the stronger States. I commend to honorable members the view that the bill is the biggest step yet taken towards a constitutional session. If it is not passed the States will not meet the Commonwealth in a constitutional, or in any other, session; but they will be forced to do so if they have to show where their revenue is coming from, and how they are spending it. They will then say, “ Hold your office, and we will place all our cards on the table, and strive to bring about a general financial reconstruction.”
– That eminent British statesman, Edmund Burke, said of the Cabinet Ministers of his time, “ They defend their errors as if they were defending their inheritance.” That is characteristic of the attitude of the Treasurer, and those who support his proposal; they are convinced in their own minds of the error of their political ways, but, having adopted an adamant attitude, they are seeking to save their faces, even though to do so means imperilling the States, and destroy ing the good-will that should exist: between the Commonwealth and the Slates. When 1 hear honorable members who support the proposal say that public opinion is not aroused on this subject, I conclude that they are not correctly gauging public opinion, and are not. aware of the hostility to this proposal among persons of all shades of political thought. When they are challenged as to why they declare that there is no opposition to the measure, they say, as the honorable member for Brisbane (Mr. D. Cameron) and the honorable member for Eden-Monaro (Mr. Perkins) did this afternoon, that complete ignorance exists on the subject. If they are serious in that contention a rude awakening awaits them, because there is a feeling throughout the length and breadth of Australia in opposition to the Government’s attitude towards the claims of the States. Persons of all shades of political opinion are taking up sides against the Government, because of a conviction that it seeks to exercise a coercive power that ill becomes the Commonwealth Parliament that is legislating for the same people as those governed by the Parliaments of the States, whose future financial relations with the Commonwealth should not be prejudiced as proposed under the bill. I do not champion the principle of State rights: but declare for the broader vision and outlook that becomes a true Australian. I expect the Commonwealth, however, to honour its obligations under agreements or understandings with the States. Until Parliament has otherwise provided - and I place special emphasis on that word “provided” - the per capita payment, as such, should be continued. While the Government declares its intention to abolish this particular form of assistance, it proposes to continue it under another name for a further twelve months. The attitude of the Treasurer shows that the Government is not approaching the subject in the sincere attitude that the people certainly have a right to expect. The correct procedure would have been to convene a conference with the State Premiers for the discussion of ways and means, and the discovery of an alternative that would be mutually agreeable, and subsequently this Parliament should have been invited to endorse the arrangement.
– The matter was discussed in conference, and the States insisted on the payment as a moral right.
– I know that conferences have been held, but, until a mutual understanding or agreement is arrived at, the Government is not entitled to withdraw the payment. Such action would mean a serious dislocation of the financial affairs of the States, and it would not be a proper attitude for this Parliament to assume.
– Does the honorable member contend that this Parliament should not take action until the States agree on the matter?
– It is certainly desirable that we should express our opinion upon it; but we should not be asked to withdraw the assistance before the States have arrived at a mutual understanding with theCommonwealth as to what alternative shall be adopted for the future. The Treasurer can take little or no comfort from his suggestion that this Parliament should not await the pleasure of the States before determiningwhat action it should take. For a considerable time the Government has shown that it is not settled in its own mind as to what is the correct course to pursue regarding an alternative; it has suggested several. Even on the major question the Prime Minister has previously expressed decided views contrary to those now advanced. The Prime Minister (Mr. Bruce) was Treasurer in 1922, and, when addressing the Brisbane Chamber of Commerce in that year, ho gave a very definite assurance of his belief that the per capita payment should be continued. He said -
Hesupportedthe claim of the States for a continuance ofthe per capita payments, and foresaw what has since become one. of the principal arguments used by all of them - the difficulty of getting,by additional local taxation, an a mount suficient to compensate for the loss of the revenue received from the Commonwealth.
An extract from the speech, as reported in the Daily Mail, reads as follows: -
The pay men t to the. States amounted to £7.022.500. As matters were in Australia, this could not be done away with.Possibly, the future helda different form of government in store for Australia. Certainly, we had many Governments, tothe point ofbeing overgoverned; but, until there came some changes in the basis of government in the Australian States, the payment must be continued.
I pass on to the conference of Commonwealth and State Ministers, held in May,. 1923. The Prime Minister met that conference in a spirit, not of conciliation, but of arrogance, which did not make for harmony. Even then, the proposal he submitted was not that the per capita payments should be abolished, but that they should be suspended for five years. The honorable member for Herbert (Dr. Nott), thought fit to challenge the consistency of the honorable member for Dalley (Mr. Theodore) on this issue. He stated that the honorable member for Dalley adopted an attitude at the Premiers’ Conference in 1923 which is entirely different from that which he now takes. The honorable member for Herbert was not generous enough to tell us that the conduct of the honorable member for Dalley in 1923 was governed by the adamant stand taken by the Prime Minister, who insisted upon the suspension of the per capita payments. It was in that circumstance that the Premiers’ alternative proposal was submitted, always having in mind that if it did not prove to be a satisfactory solution of the difficulty the per capita payments would be resorted to at the end of five years. The position of the honorable member for Dalley to-day is quite consistent with that which he took in 1923. The 1923 conference failed to reach an agreement because the ex-Treasurer of New South Wales (Sir Arthur Cocks) was so incensed by the uncompromising attitude that the Commonwealth assumed that he would not consider either the proposal or the alternative. I know that a conference was held last year between the Commonwealth and State authorities with the object of reviewing financial relations, and that it was disbanded because the State representatives held that they had a moral right to the pen capita payment. Without discussing the merits of that position, I assert that the failure of last year’s conference is nojustification for the adoption of the coercive methods which the Commonwealth is now pursuing. The States should not be compelled to agree to what they consider to be an inequitable arrangement; and this Parliament should not be placed in the position of forcing the States, under duress, to accept unjust treatment. The Treasurer (Dr. Earle Page), during the course of this debate, has said, by interjection, that the State Governments have now agreed to the Commonwealth main roads proposals.
– The agreements are actually prepared.
– The States have been forced by special circumstances to agree to the Commonwealth proposals.
– No honorable member would like such terms as those of the Commonwealth roads agreements with the States to govern his private concerns. As a matter of fact, the Commonwealth roads policy was pirated from the South Australian Labour Government, with an apology of a kind.
– The only thing wrong with that statement is that the Prime Minister made his declaration before the South Australian Premier made his.
– The merits of the main roads agreements may not be discussed under this bill.
– At the 1923 conference the following statement, which appears on page 35 of the report, was made by the Prime Minister: -
I ought to point out that the suggestion is, it this thing is done by agreement, to suspend the per capita payments for five years. If it is not done by agreement, that is another matter, and action in some other direction would have to be taken.
Silting suspended from 6.30 to8 p.m.
– The impression conveyed to the Premiers who attended the 1923 conference was that the per capita payment was to be suspended and not abolished. The Treasurer (Dr. Earle Page) expressed surprise at the feeling of uncertainty displayed by the State Premiers towards his proposals on that occasion, and showed indignation because they were not prepared to readily concede to him the right to dictateto themterms concerningthe financial relationship between the Commonwealth and the States. When we remember that the figures submitted by him to the 1923 conference were grossly misleading, there is every justification for the disinclination of the State
Premiers to accept any proposal made by him.
– In what way were the figures misleading?
– In the first place, the figures submitted were for a year of abnormal productivity, and account had not been taken of the alterations in the deductions and the exemptions. The figures submitted were for a period before such alterations were made.
– Surely it was definitely stated that they were the figures of a particular year?
– The State Premiers and Treasurers were under the impression that they were considering figures then in existence.
– I pointed out at the the conference that the figures were for a specific year.
– If the position is as the Treasurer states, it shows how illconsidered was his scheme since it was based upon a set of circumstances which did not actually exist.
– They were the latest actual figures available.
– The Treasurer was not acting fairly to the conference in presenting fictitious figures.
– They were the actual figures.
– The honorable gentleman cannot escape his obligations to the country and to the States. He is solely responsible for creating so much mistrust in the minds of the State Premiers in connexion with the present proposal. The inability of the States to operate in fields of taxation to be vacated by the Commonwealth is apparent, as there will be difficulty in the matter of the aggregation of incomes and interest on Commonwealth war loans cannot be taxed These are some of the reasons why State Ministers had every reason to take strong exception to the attitude of the Treasurer on that occasion. Let me quote the views expressed by a gentleman not of the same shade of politics as myself, but who regards the public affairs of this country from a totally different viewpoint. I refer to an ex-Treasurer of New South Wales, Sir Arthur Cocks, who at the time had as a colleague the honorable member for Barton (Mr. Ley). On page 1665. of the
New South “Wales Hansard, of the 16th October, 1923, Sir Arthur Cocks is reported as having said -
Some time ago the Federal Government endeavoured to get all the States into tine to forgo- the 25s. per capita annual payment, and to transfer a certain proportion of the income tax now collected by the Federal authorities to the various States. The peculiar needs of each State and the difference in regard to the taxation of companies in the various States made it impossible for any Government having a due regard for the welfare of New South Wales to accept either of these proposals. It is established beyond all doubt that in connexion with the first offer, whereby the Federal Government was to relinquish collecting income tax on all incomes under £2,000, the figures placed before the public were inaccurate, so far as New South Wales was concerned, to the extent of nearly £000.000; and, in respect to the second proposal, whereby the Federal Government was to take over taxation upon the companies and restrict the State to a limited taxation thereon, the figures submitted for our consideration ultimately disclosed a discrepancy of over fil.000,000 of money.
What has the Treasurer to say to that?
– Sir Arthur Cocks could not substantiate that statement.
– Sir Arthur Cocks has occupied a very important place in the public affairs of this country.
– He was recalled by the State Labour party from the AgentGeneralship.
– That has nothing to do with the case.
– It shows what a State Labour government thought of him.
– Let us deal with the subject on its merits, instead of shifting our ground as the honorable member i3 endeavouring to do. I ask the honorable member for Gwydir to be manly enough to recognize the merit of this argument.
– Mr. Lang said-
– I shall deal with the honorable member presently. Sir Arthur Cocks went on to say -
If the State had fallen into line with the proposal as put forward, a course that was strongly urged upon us, the additional amount of taxation which would have been necessary to put upon the people of New South Wale’s would have been of an overwhelming and disastrous character.
That is what an ex-Treasurer of New South Wales had to say concerning the taxation that would have to be imposed in that State in order to recoup it for the loss of the ner ca?nia payment. Sir Arthur Cocks further stated - 1 wish to state deliberately that if, in the near future, any attempt be made by the Federal Government to reopen the question of the cessation of the per capita payments, it can only be looked upon by this Government as an act of political treachery. On the other hand, if the Federal Government attempt to force an exchange of taxation upon the various States, and retain for their own purposes for all time the revenue that they receive from the Customs and the excise, a permanent and intolerable burden will be placed upon the* people of New South Wales. It must be borne in mind that the proposals which suit the sister State of Victoria in regard to company taxation would be disastrous if applied to New South Wales, by reason of the fact that we would lose £1,250,000 of taxation that we now receive from companies. This would force upon any Government, irrespective of party, the necessity of entirely revising their income tax basis and increasing the individual contributions to such an extent as to add heavy additional burdens upon the great bulk of those who are paying income tax on small and moderate incomes to-day.
He clearly indicated that by abolishing the per capita payment, the States would be compelled to, impose additional burdens upon those earning comparatively small incomes.
– The incidence of taxation would be a matter of State policy and one which a State Government should determine.
– How ungenerous it is of the Treasurer, to endeavour to secure an advantage at the expense of the States, by requiring them to levy taxation upon persons who can ill afford to pay it. The honorable member for Barton was a colleague of Sir Arthur Cocks, who clearly stated that to alter the basis of the financial relationships between the Commonwealth and the States in the manner proposed was absolute political treachery. It was rumored throughout the House, and understood by some honorable members, that the honorable member for Barton was on this bill going to take a decided stand against the Government.
– Is the honorable member quoting the comments of Sir Arthur Cocks on the proposals submitted to the 1923 conference?
– Yes. The honorable member for Barton, in supporting the bill, endeavoured to indulge in a certain amount of cheap heroics; but I ask the honorable member to read a portion of the speech delivered by Mr. Loxton, who was once a member of the party to which the honorable member belongs, as reported in New South Wales Hansard of the 11th October, 1923. I shall be sufficiently generous not to quote that gentleman’s remarks. The honorable member should play the game in this House, and realize that there is a general desire on the part of honorable members to be consistent, and to assist in some practical way to put the politics of the country on a better level than they are to-day. The honorable member for Eden-Monaro (Mr. Perkins) is not supporting the bill upon its merits, but, because of the possibility of some other Government coming into power. If he thinks that he is going to determine the public policy of this country beyond the term of this Parliament he is greatly mistaken. The honorable member is assisting in making laws for to-day, but I remind him that he is not a dictator of to-morrow. He may endeavour to use his powers in this Parliament to determine the future of the people, but the return of a Labour Government will determine the future policy of the country during its term of office and exercise of power, irrespective of the present wishes of the honorable member. Although he might feel that he is protecting the interests of a certain section from the actions of a future Labour government, I remind him that he has no power to prevent such contingencies. Therefore, it would have been as well if he had dealt with this issue on its merits and considered carefully how it will affect the financial relationships of the Commonwealth and the States. The agreement made in 1910 to grant 25s. per head of the population had a definite relation to the amount of the Customs and excise revenue. In round figures it represented about 50 per cent, of the total income from those sources. Since then there has been an extraordinary increase in revenue from this form of taxation, with the result that the per capita payment of 25s. now represents only about 19.1 per cent, of the total Customs and excise revenue of the Commonwealth. It would appear, therefore,, that there is urgent need for a revision of the payments, with the object of bringing them more into line with our ideas of equity. South Australia has suggested that 50 per cent, of the Customs and excise revenue should be paid into a fund and disbursed to the States in Accordance with their needs. That propos.il is really on the basis of the 1910 agreement. All honorable members, I believe, acknowledge that the present system is neither as scientific nor as equitable as it raigh* be; but that does not justify the Government’s proposal to discontinue the payments altogether at this moment and thus seriously to dislocate the finances of the various States. I trust that, even at this late hour, the Ministry will recognize its obligation to the States and the people whom we represent. No differentiation can be made between Federal and Stateelectors; they are the same persons, and they have every right to be considered in all proposals that so vitally affect them. The figures submitted by the Treasurer in support of the Government’s scheme are unreliable. The honorable gentleman spoke of a natural increase in gross incomes of 6 per cent, per annum. As far as South Australia is concerned, and I believe the position is the same in the other States, instead of an increase in gross incomes there has been a contraction.
– The figures for last year show that there has been a bigger increase.
– It is easy for the Treasurer, across the table, to deny the accuracy of what I am saying. I should be obliged if the honorable gentleman would quote his authority for that statement. My informant is the Deputy Commissioner for Taxation in South Australia. It is only right that, in these matters, we should know exactly where we stand. I want, not figures which the Treasurer himself may have manufactured, but information from some reliable outside authority whose statementmay be accepted without reservation. The aggregation of incomes has been mentioned during the debate. It has been stated that the States have power to tax the aggregate incomes of their citizens, and that it would be lawful, as well as expedient, for the States to adopt the principle. Let me tell honorable members what the right honorable the Prime Minister (Mr. Bruce) had to say on this subject a.t the Premiers’ conference in 1923. This statement by Mir.
Bruce is to be found on page 32 of the report of that gathering -
There is only one other proposition - that the Commonwealth should take over the whole of the income taxation, because it is the only body which can tax aggregate incomes.
I thought it my duty to quote that statement of the Prime Minister, so as to give the right honorable gentleman an opportunity to reconcile, if he can, his declaration of to-day with his statement at the conference in 1923. In view of the Government’s declaration that its policy is to protect Australian industries, I am astounded that it should propose to withdraw from the field of direct taxation.
– That is the point.
– If the Government intends to meet all its obligations, including commitments arising out of the war, from Customs and excise revenue, then it is clear that instead of the tariff being protective in its incidence it is merely a revenue-producing tariff, and as such cannot effectively protect Australian industries.
– A revenue tariff is the most pernicious system of taxation.
– It is poor consolation to those who have invested capital in Australian industries, and are employed in the secondary industries, to know that the Government proposes to look to its Customs and excise revenue for all the money necessary to carry on Commonwealth activities. If we had an effective tariff, one which was truly protective in its incidence, instead of revenue from this source increasing in volume from year to year, it would steadily decrease, and consequently the Government would be obliged to look elsewhere for its income. Ministers must answer to the people for their stand upon this vital issue. The Government’s proposal will enable the wealthiest sections of the community to evade their taxation obligations, with the result that these burdens will fall on the shoulders of those least able to bear them. The field of direct taxation proposed to be vacated was entered by the Commonwealth in order to meet its war obligations. No one will dare to say that those obligations have disappeared. As a matter of fact, we find that in some respects they have been added to, so there is no justification whatever for this proposal to relinquish that source of revenue. The Government’s proposal to meet those obligations from Customs and excise revenue is really tantamount to a proposal to remit taxation of those who can best afford to pay it, and to place it upon the shoulders of those least able to pay. The bill will make the position of the people increasingly difficult and irksome. Both the Treasurer and the Prima Minister have shifted their ground from time to time in regard to this proposal. I am reminded of the logic of Walt Whitman’s lines -
Do I contradict myself ? Well, I contradict myself.
Am I inconsistent? Then I am inconsistent.
The Treasurer would do well to take those words to heart, for they very aptly fit his position and that of his political chief. Time will prove the futility and the injustice of the proposals which the Government has submitted in this bill. The measure will not make for the peace, progress, and prosperity of the Commonwealth. On the contrary, it will prove unduly burdensome and irksome, and I feel sure that those honorable members who support it will have good reason to regret their action. The Government is guilty of a misuse of power in submitting this bill, which is wrong in principle and unfair in its incidence, and will be injurious to the people of the Commonwealth.
– Before I deal with the arguments that have been advanced for and against the bill, I propose to say a few words about the principles that underlie the Constitution and the Federal pact upon which it is based. In its very nature a federation involves a division of rights and powers. I agree with the statement that the test of a measure is its probable effect upon the people. That is the supreme test. The people of the Commonwealth have, in their wisdom, appointed as their servants two instrumentalities, giving to the one authority in certain specified matters over a sphere as wide as the continent itself, and to the other authority, within the boundaries of each State, over many matters which concern the people more intimately. Ours is the majesty, the pomp, and the glory of authority. We exercise functions, many of them remote from the daily lives of the people, yet necessary and most appropriate to the nature of the federal instrumentality created by the Constitution. The State Parliaments, on the other hand, are concerned more with the every-day affairs of the people. The right honorable member for Balaclava (Mr. Watt) dwelt last night at considerable length on the extent and variety of the functions of the States. We have to bear in mind that the present distribution of powers has existed for 27 years with the authority and approval of the people, who have resisted every effort to amend it. Assuming that the people know what is best for themselves, and applying that test to this measure, we must assume, therefore, that they wish things to continue as they are. But all of us do not hold that view. Speeches have been made during this debate in disparagement of both antifederalists and unificationists. For my own part, I have always been in favour of the extension of the powers of the Commonwealth. To that end I led every light prior to the last one for the amendment of the Constitution. But not even my bitterest enemy has ever said I am a unificationist. I speak, therefore, as one having authority and knowledge of this matter.
We have to remember that the present constitutional position was deliberately created by the people, who have given to the States certain definite functions, and vested in them certain powers, thus creating moral, and, if you like, legal rights to sufficient revenue to discharge the duties entrusted to them. It would be absurd to suppose that the people vested the States with power to control education, police, land, railways, and the hundred and one things which fall with,r their purview, and yet denied them the means with which to exercise these powers. Wo must assume, therefore that the distribution of powers gave authority, explicit or otherwise, to raise revenue sufficient for their exercise. The honorable member for Barton (Mr. Ley) stated that Mr. Fisher, who was responsible for the Surplus Revenue Act of 1910, was opposed to the continuance of the per capita payments. That emphatically is not true. I was Attor ney-General in his Cabinet, and am able to speak with assurance on that point. We were opposed to inserting in the Constitution the per capita agreement, which had been made by representatives of the States and of the Commonwealth. We had already found by experience that in some respects the Constitution was not sufficiently elastic to meet the requirements of a progressive community and, therefore, we did not consider it proper for the Parliament of that day to legislate for posterity. Accordingly the arrangement for the payments to the States was embodied in a statute, but we always regarded it as an agreement. It was an agreement d,:liberately entered into without duress of any ‘lort. Upon the provisions of that agreement the country was unanimous, the only difference between the two political parties being as to whether or not the arrangement should be placed in the Constitution. The electors endorsed the agreement, but preferred that it should be enshrined in a statute rather than be embodied in the Constitution. Statutory authority was given to it. At the expiration of ten years it- had come to be regarded as an integral part of the financial machinery of the Federation. It has now been in force for seventeen years, and I emphasize the point that, until the Treasurer introduced this measure some months ago, no one had suggested the revocation of that agreement or understanding by force majeure. Certainly an alteration ormodification of the arrangement had been suggested, but only suggested. There was no gesture of defiance; there vas nothing in the nature of an order issued by a superior to an inferior. In he light of all that has come and gone, we are entitled to ask why this measure is being forced down our throats. What new set of circumstances has arisen to create a position so entirely foreign to that to which we have been accustomed for the last 27 years? Why should this Parliament be seeking to force an arrangement down the throats of the State Parliaments, which are equally under the protection of the Constitution which created the Federation. Whatever the States were originally, they are now sheltered by the Constitution. Their powers are limited by its provisions and, being limited, are clarified, strengthened, and sanctioned by it.
It has been said that the justification for the Government action is the mandate of the people. I cannot accept that view. We all recollect very well the circumstances under which the last general election was held. I have the extract read by the honorable mem-‘ s ber for Herbert (Dr. Nott), from the Prime Minister’s policy speech, embodying all that is material to this claim that there was a mandate from the people for the discontinuance of the per capita payments. I shall not read it, because it is too long - the Treasurer may do so later - but I am confident that of the 6,000,000 people in Australia, not 100 read that speech through. I do not admit for a moment that, it supports the contention that, the Government has a mandate to abolish per capita payments by force. The issue was not before the people. Not one honorable member can say that, during the last general election, he was asked a definite question in regard to this proposal. Certainly no one asked me a question concerning anything except the danger that was staring us in the face - the issue upon which the election turned, and but for which the composition of this Parliament would be very different from what it is. Having been returned on the crest «f that gigantic flood of public opinion, how can anybody say that the presence of a tiny paragraph in the Prime Minister’s speech regarding the financial arrangements - a tiny globule in a great body of foaming waters - is a mandate from the people ? There could not be a mandate unless the proposal was presented to and understood by those who are supposed to have said, “You must, or you may do this thing.” The people knew nothing of this proposal. There was no mandate to do anything, except to take such steps as were necessary to prevent a recurrence of that unhappy state of affairs which disturbed the country at that time. That we have a mandate to do that is undeniable, and perhaps it would have been well if we had attended to that business. No one will say that, at this moment, the public is better protected against a recrudescence of the evil than on the day when the election was held. That was the vital issue at the polls. Whatever view honorable members opposite may take of it, no one will deny that it went to the very root of our national and economic well-being. Certainly they will not deny that it was the great, nay, the only, issue before the people. There was not a whisper during the campaign that the continuation of the per capita payments would create financial, industrial, or commercial disturbance. The system had gone on its way serenely for many years. I do not say for one moment that a government is not entitled to legislate on matters not mentioned at an election. The first business of a government is to govern; but when it legislates without such authority, it should do so only in matters that are urgent, and were unforeseen when it appealed to the people. This matter was not urgent; neither was it unforeseen. The system had been going on for many years, and many conferences had been held in regard to it. The right honorable gentleman who is at the head of this Government had expressed a very definite opinion, which has been quoted by the honorable member for Hindmarsh (Mr. Makin), in which he ranged himself in unambiguous terms with those who believed that the per capita payments should continue, no matter what could be said against them, until a re-distribution of the powers of the Commonwealth and the States had placed their relations on a different basis. To that no exception can be taken. But when we remember that in 1910 this was a people’s question, :t gives us reason to pause and think. Much has been said about this being a people’s question, and about the effect the proposal will have upon them. Then let us ask the people about it. They are able to say whether it is good or evil. When, but a little while ago, the right honorable the Prime Minister led us into a hastily conceived campaign to amend the Constitution, which, he declared, placed us in an intolerable position, leaving us without power to deal with a matter upon which we had a distinct mandate, he aimed a blow, so the State righters said, at the heart of the States. What did the people say ? Why, they smote him hip and thigh ! There never was in the history of the Common- wealth such a debacle. I have led three referendums, but the proposals I submitted never received such . a stinging rejection as those so strongly recommended by the right honorable gentleman. In the face of this verdict of the people in favour of the States and against the Commonwealth, how can it be said that the people have given this Government authority to remove from the statute-book this provision safeguarding the State’s finances, which has now been with us for seventeen years?
It is said that the per capita provision embodies a “ vicious “ principle, and that it is inequitable. Let us consider those two statements. I am not going to say whether the principle is vicious or not, because in relation to the per capita agreement such a word means nothing. But if by “ vicious “ honorable members mean that it is wrong, my reply is that whether it is wrong, or not, this principle received the approval of the founders of the Constitution. The Braddon clause embodied it. It was endorsed, after ten years’ experience, by a new party that had risen up, the members of which were, to a very large extent, opposed, as I was, to the Federal bill. I, at any rate, was one of the leaders of the anti-bill movement. Yet this party, which has always stood for wider powers for the Commonwealth, supported the per capita agreement. There is yet another reason why we must reject the argument that this principle is “ vicious,” and it is that the right honorable gentleman himself or his Government has adopted it. He has calmly imposed a tax on petrol, and has handed over the proceeds to such of the States as have bent the knee to Baal and signed his agreement. To those who have not signed he has not given a penny. In New South Wales this principle, whether it is vicious or not, so operates that every motorist in the country pays 2d. a gallon to the Commonwealth Treasury, and the State gets no road0 and no twopence. But I must get off this question of roads because on it I am a fanatic.
The right honorable gentleman finds himself in a most awkward position. I am not a mind-reader - T am merely a member of -Parliament - but if in 1922 I had said what he said, that I was a firm sup porter of the principle of per capita payments, and had later found myself associated with a man who had determined to wipe them out by force, I should be hard put to it to find reasons for my action. Politics, like adversity, make us acquainted with strange bedfellows. Now, although I sympathize with the right honorable gentleman, I cannot accept, as a reason why we should agree to this measure, his statement that the per capita system of payments is inequitable, in that it gives to those who least deserve it. But whether it does or does not is not material. The bill leaves the inequality, if there be any, untouched. The right honorable gentleman knows that perfectly well. The argument to which he probably attached the greatest weight was that, as time went on, and impish fate turned a jaundiced eye upon him, there might come into power another government bitten with a desire to put into force some great scheme of reform. This is probable enough. One never knows what may happen in this world. And so the right honorable gentleman feels that, in order to prevent these wellmeaning but misguided men from doing these things, he must remove temptation from their path by getting rid of the loot. In support of this laudable enterprise he suggests that we should support this measure. The intentions of the Prime. Minister are honorable, but utterly futile. I know my honorable friends on> the other side perfectly well, and weall know human nature. If Labour in . the future should occupy these benches, does the right honorable gentleman think that anything he can do, or that all of us can do, will stop them, when they have a majority behind them, from giving effect to a programme which the people have elected them to put into force? The right honorable gentleman might as well attempt to tie up a Bengal tiger with Coates’ cotton, as endeavour to arrest the progress of the Labour party when it has a majority.
The honorable member for Barton (Mr. Ley) said this afternoon that we had to choose between two evils, and that in his opinion the suggestions made by the right honorable member for Balaclava (Mr. Watt) were not so good as those of the Treasurer. The honorable member entirely missed the point of the argument. The right honorable member for Balaclava, who put forward certain proposals in 1919, discussed those proposals with the Premiers. And that is all he did do. I have never suggested that there is anything sacrosauet about the per capita payments; but I do say that there is an agreement to pay them, that this agreement was solemnly entered into by the States and Commonwealth, endorsed by the people, and given statutory authority, and that the per capita payments can properly be abrogated only by agreement, or by the direct authority of the people. If the servants of the people cannot agree among themselves as to how they shall carry out the will of their masters, then they should appeal to the people. The people, and they alone, should direct them. No one else has the right or authority to do so. The right honorable member for Balaclava in 1919 put forward certain proposals. Whether they were good or bad is not to the point, but whereas the right honorable member for Balaclava submitted his proposals to the Premiers, and accepted their refusal, the present Treasurer forces his down the throats of the Premiers, and they are expected to submit whether they like it or not. The difference between the two methods is the difference between civilization and barbarism, between peace and war. The States and the Commonwealth are equally the servants of the people. We discuss matters with our equals; we give orders to our inferiors; wo fight our enemies. We, who are partners in this Federal pact, ought not, merely because we have a majority in this Parliament, to treat the other parties to the pact as if they were enemies or inferiors. It is true that we have a majority; but this majority did not come here authorized by its masters to do this thing. That is the point.
The Premiers rejected the proposal of the right honorable member for Balaclava, and there the matter ended. It need not have ended there, because the right honorable gentleman was a member of the strongest Government that has ever held office in this Parliament. It was not a composite Government made up of factions, but a united party of 50 members, and as everyone knows who remem bers the circumstances of that time, it was only necessary to hold up one’s hand in this place and any legislation one wished would have been passed. I remind my honorable friend, however, that although we had the power, we did not abuse it. The honorable the Treasurer has, by a turn of the wheel, come into office, and because the Premiers have not accepted his proposal, he is seeking to coerce them. I admit freely that the Premiers can be very irritating. At times they are extremely difficult to got on with, but I have never attempted to force things down their throats. The honorable gentleman has. To that we strongly object. The honorable member for Barton said that he preferred the Treasurer’s proposal because it was sudden death with an , anaesthetic, whereas the other was slow torture. It is evident that running in the honorable gentleman’s mind were the lines -
If it were done. . . Thentwere well
It were done quickly.
I can imagine the Prime Minister, a little reluctant, being addressed by his coadjutor the Treasurer -
Give me the daggers.
The Government has no authority from the people to abolish per capita payments. No circumstances have arisen to change the situation that existed at the time of the election. Since then, there has been a direct reference to the people in regard to a readjustment of the powers of the States and the Commonwealth. On that occasion the people showed unmistakably that they were supporters of the States’ attitude, and not of that of the Commonwealth. Many of us are very sorry that the people rejected the referenda proposals; but, in the face of that rebuff, I venture to say that the proper course for the Treasurer and for the Government to adopt is to submit this matter to the people, either by way of another referendum, or by the time-honored method, which has much to recommend it, of another election. It must not be thought that in anything I have said I have suggested that the Government is not actuated by the best motives; but, we are told that the road to hell itself is paved with good intentions. I can well understand the attitude of the Treasurer: Ho has become tired of continued rebuffs, ho has put forward very many perfectly good schemes, which have been rejected again and again. He is annoyed; he is angry. He has a majority, and what is the use of having a majority unless one uses it? That being the principle upon which he is working, be brings down this bill, and is determined to pass it. Although it is clear that if anything is of a non-party character this bill ought to be, we are told that it is to be made a party matter. That is quite wrong. But the reason why it has been made a party measure is obvious. If it were not, the bill would not stand one chance in 50 of being carried. I shall say a word or two on that aspect later. For the present, what I have said may sink in a little.
We are told that the bill has been brought forward to put an end to a condition of affairs that the Commonwealth has long outgrown; that the war created an entirely different set of circumstances, and placed upon the Commonwealth huge obligations. That is true, but as the honorable member for Henty (Mr. Gullett) pointed out last night, it is also obvious that the war is, financially at, any rate, still with us, imposing upon us and on generations yet to come very great burdens. Those burdens ought to be fairly apportioned among all sections of society. We have to ask ourselves what would be the effect of this measure upon the taxpayers of this country. It is suggested that the bill would make for economy. Some people have a passionate desire to reform others, and their lectures on economy are worth going miles to hear. For years in this Parliament we heard the honorable the Treasurer, as a private member, speaking of the virtues of economy. Now that he is placed in a position of authority, he still continues his noble work, and never tires in his efforts to reform the spendthrifts in the States! He is the more determined to do this at the present time because, -by an unhappy chance, in five of the States Ave have Labour Governments. In this way Ave are to kill two birds Avith the one stone. The Treasurer gets the credit of preaching economy, and at the same time puts a dagger under the fifth rib of our brothers, the Labour Premiers, We embarrass them. Wo compel them to shoulder the unpopular taxes; we denounce their profligate expenditure; we create a very awkward situation for them ; and, in short, enjoy ourselves thoroughly. As for ourselves, we spend money left and right, and seek every day for some new thing upon which avc can lavish millions.
I come back again to the poor taxpayer. From his stand-point it does not matter very much whether he pays taxes to the State or the Commonwealth. Both are instrumentalities through which the people govern themselves. Some day the people may devise better or different instruments. But, at the back of the States and the Commonwealth are the people. What effect is this bill going to have upon their pockets? Are they going to pay less? Are they going to get better value for their money? The Treasurer said that the field of taxation he is willing to hand over to them would yield a larger sum than they receive under the per capita agreement. Assuming this will be so. where would the additional money come from. It would come out of the pockets of the people; but not from the same people. Customs and excise taxation is the most ingenious method ever devised for taking money from the people. The confidence trick and the thimble and pea arc fools to it. A virtuous person can avoid going to such haunts of vice as the racecourse, and, if he does go, can avoid being victimized by the thimble and pea trick. But nobody can escape paying Customs and excise duties, and what is more, the people do not realize that they are paying them. This is the kind of thing that appeals to the Treasurer. If and when he has palmed off the unpopular flaxes upon the States he will be able to go through the country on his tours, and the people will say, “ Lo, here comes a man after our own heart.” He gets rid of the entertainments tax, and all the little children say, ‘’ God bless Dr. Page.” He gets rid of the land tax, and not the little children, but a few wealthy people, bless him. There are a few people who would benefit by the change, but those few, at present, contribute a good deal. Under the Treasurer’s proposal they would pay less. As my friend, the honorable member for Henty (Mr. Gullett) pointed out last night, nature, and especially a nature like that of the Treasurer, abhors a vacuum, and so this los3 which has to be made up will be made up by taxing the many instead of the few. There is no other way. So far as the land tax is concerned, what this proposal means in plain English is that, instead of estates of moderate size escaping with small payments, they would have to pay an added sum sufficient to make up for the loss on the great estates, that could not be taxed by the States individually. As I pointed out in this House when speaking on the proposed grant of wider powers to the Commonwealth, there are some things that the States cannot do. lt is evident, on the Treasurer’s own showing, that this bill will not result in a saving to the taxpayers, lt may be Jones who will pay instead of Smith, but the Jones who will have to pay will be Jones, the man on the basic wage, or the small land-owner. lt is very curious that the Treasurer who, when he first entered this House, advocated, with considerable force and earnestness, lower duties, should deliberately seek to divest himself of aH forms of taxation except the hated revenue taxes, which increase the cost of living to the man on the land. It is also most curious that since the honorable gentleman has been in office, the revenue from Customs and excise has grown out of all knowledge. He asks the people to accept this proposal because it will make for economy. But it will not save the taxpayer’s money. Let hi- 1 show where’ the taxpayers by and large - the whole country - will not have to pay the same amount of money as before. The honorable member for Barton (Mr. Ley), who was hard put to it in coming to the defence of this bill rather hurriedly, was naturally a little at a loss to know what to say. He spoke of what would be saved by abolishing the bureaucratic staffs that now exist in the Federal Taxation Department. I point out, however, that if some were abolished, others would have to be created by the States, and in the aggregate the co<!t. of collection would be greater There can be no doubt about that. The Government is on the horns of a dilemma. Either the States will get the same amount of money - the Treasurer says they will get more - or they will get less, in which case there will be chaos in regard to some of the State instrumentalities. If there is not sufficient money to carry on the business of the .country the people will suffer. In place of progress there will be stagnation and unemployment. When there is disturbance of the financial equilibrium it reacts upon the whole community, and saps that feeling of confidence in the future, upon which, to a large extent, prosperity depends. Here is a financial edifice that has endured for 27 years. The people have never for a moment indicated that they desire to change radically the design of the building; but the Treasurer proposes to pull down one of its main pillars. At best, that will disturb the financial equilibrium of the States. It will embarrass and hamper them, and do good to nobody except the honorable gentleman himself.
I do not say that there is no other way of meeting the need of the States except that of the per capita payments, but I do contend that none of the arguments put forward during the debate will justify any honorable member in voting for the bill. It will not benefit the people. We hear from some quarters about the demand by the wage-earner for ah increase in the basic wage. This will not lessen that t demand. The demand for increased wages is caused by the increase in the cost of living, the Treasurer, depending, as he will, upon high Customs revenue to make both ends meet, is not likely to do anything to reduce that cost. Why should we pass this bill? It does not go to the root of the trouble of public finance. It will not reduce public borrowing. It will not lessen public expenditure. The right honorable member for Balaclava (Mr. Watt) told us something last night which should be blazoned from one end of the land to the other. He said that, in the last six years-
– Since 1921.
– We had borrowed £176,000,000. Are we to go on borrowing at this rate? It is a condition of affairs that cannot continue, and still leave the body politic normal. Whether Labour,
Nationalist, or Composite Government is in power, this cannot go on. Yet this bill does nothing to remedy the evil. It will not reduce borrowing. It does not set up a council to control borrowing. It leaves these vital things just as they are. It is a proposal which does nothing except, perhaps, for the Treasurer of the Commonwealth. Possibly it simplifies matters for him. At any rate, the Treasurer has set his mind upon it, and has determined to force it down the throats of the State Treasurers. But it will not help the people. If it would do something to reduce or regulate borrowing; if it would put the State debts upon a proper footing, or, as the right honorable member for Balaclava said last night, create a sinking fund that would really do something to provide for the redemption of debts as time went on it would stabilize our credit and improve it. If it would put an end to competition in borrowing as between State and State, by forming a loan council to control borrowing, it would be worth while. But it does none of these things. It simply transfers to the States some taxes now collected by the Commonwealth, and retains to the Commonwealth the whole of the Customs and excise taxation from which 25s. per head, or about £8,000,000 per annum, now goes to the States. And that is all it does. If we pass it, it must throw the finances of the States into confusion, and increase the amount of taxation which the great bulk of the people have to pay. It will lift considerable taxation from a few, the very rich, and place it on the shoulders of the rest of the community.
As I have said, the Treasurer has a passionate desire to reform others. He, the Prime Minister, and, in fact, all of us, deplore the condition of the State finances. All seem to be on the borders of bankruptcy. And yet no one takes much notice, which is perhaps the most serious symptom of all. It has become well-nigh the normal condition of things, and is so regarded. What the people want is good government, and a reduction in taxation. Briefly, they want the best possible government at the least possible price. The Treasurer points to the extravagance of the States. He preaches economy, but he does not. practise it. Since this Government - I speak with particular reference to the Treasurer, of course - has been in power, we have had large increases in taxation. I used to sit in the Prime Minister’s chair, and listen to the present Treasurer speaking, as a private member, from the Country party corner about the virtues of economy. I very well remember sitting there with the honorable member for Warringah (Sir Granville Eyrie) when we had to submit to a reduction of £500,000 in our Defence estimates which the present Treasurer compelled us to accept. Last night, the Minister for Markets and Migration gave as one reason why this bill should be passed the fact that the Defence expenditure, without including the amount for naval construction, totalled £5,500,000, or thereabouts. I do not know what the estimate was when the honorable member for Warringah was in charge of the Defence Department’s Estimates in this House.
– It was not enough.
– I cannot get the reply that I want from my honorable friend, but at least I have this, that although the amount proposed by the then Government was really not enough, it was cut down on the motion of the present Treasurer. Now, when these very people are in office they come forward and plead with tears in their eyes for more money in order that they may provide for adequate defence. And this is advanced as one reason why we should repeal the per capita payment to the States.
It was in his advocacy of reduced taxation that the present Treasurer shone most brilliantly when he was a private member. But what is his record ? When my Government went out of office the Commonwealth taxation per capita totalled £8 17s. Id. annually. Last year it was £9 ls. 6d. It is in this way, of course, that economy shows itself most effectively ! The net increase from 1922-3 to 1925-6 was 4s. 5d. per head of the population. We must add to this the petrol tax, which averages 6s. 8d. per head, and makes the increased taxation per capita no less than 12s. Id. as the result of four years’ administration by this most economical Treasurer ! It is from such a rostrum as this, and from the mouth of a champion economist like the Treasurer, that sermons are preached to the offending State Premiers in respect of their extravagance. When Satan reproves sin in this fashion it is difficult for Christians to know what to do.
This measure will probably occupy our attention for the best part of a fortnight, yet no one is able to say why it should have been introduced at- this, or, in fact, an any juncture. We know that it is not urgent, because it was brought before us six months ago and dropped. While the Prime Minister was in England upholding the banner of Australia, the Treasurer travelled about the country reiterating ad nauseam that he proposed to go on with it. His right honorable leader was no doubt staggered to hear this when he returned to Australia. I have said that this bill will engage our attention for a fortnight, and we can ill spare so much time. I ask honorable gentlemen do they remember that this Parliament was elected in December, 1925 ? Do they realize that seventeen months have elapsed ? Do they remember that we were returned to give effect to a great programme ? Do they know that, among other things, we were pledged to carry out big reforms in the industrial sphere which are impossible without great constitutional reforms 1 This was to have been a constitutional session. We were told last August it was essential that the Constitution should be so amended, or the Commonwealth would topple. All this has been put aside. We have heard no more of it. Instead, this little bauble has been brought forward, and now fills the centre of the stage. This session must necessarily be very brief. His Royal Highness, the Duke of York, is coming to Australia, and we cannot carry on business while he is here. We must rise very soon, and nobody knows when we shall again be able to deal with serious business. We are told that we must transfer to Canberra by the 9th of May. Whatever we shall do after that I do not know. It is certain, however, that another six months must elapse before we can say one useful word about these many pressing problems which, at election time, we were told must be dealt with without delay. The constitutional session should be held now, if we are going to do anything useful in the way of amending our Constitution.
I wish to say a word now about an entirely different aspect of the question. This measure creates a most invidious position for honorable members of the Nationalist party. This is a composite government, and members of the Nationalist party support it. Many of those members who are now listening to me will be compelled most reluctantly, when the division bells ring, to vote for this bill. The Government has made a party measure of a matter which the Nationalist organizations in some, if not all, States have denounced. I venture to say that it would be impossible to get 25 per cent, of the members of the Victorian Nationalist organization to vote in favour of the bill. What an unfortunate position for the members of the party to occupy! They are told by this composite Government that they must support the bill, but they look around and see the organization to which they owe their positions denouncing it. Honorable members may vote for the bill, but oven if it passes that will not be the end of it. This bird will fly high, yet surely come back to roost, when honorable members least desire it. The Government proposes to hold this sword of Damocles over the heads of its supporters until 1928, so that this measure will come into force about six months before the next general election. Any good that is in it will not be seen before the election, but the evil in it certainly will. This measure will antagonize the States. It is going to make them still more bitter against the Government and those who support it. It is going to make it impossible for use to carry any amendments of the Constitution. It is going to weld the Labour forces into a solid phalanx against us. They will vote solidly against the bill, and will pose, and properly too, as the friends of the States. What are my friends here going to pose as?
The consequences of this measure will grow and develop and reach their acute bursting point just about the time that we shall have to appeal to the peopleOn whose side shall we range ourselves? The question was not before the people at the last election, but it will be at the next. We shall then be asked to give au account of our stewardship. What are we going to say? I intend to say that I am against this attempt to force the States to their knees, that I deplore the association of the right honorable the Prime Minister with the Treasurer, to whom, this measure is due. The organization of which I am a member is opposed to this bill; so also are the vast majority of the people. The State Governments, whether they be Labour, Liberal, or National administrations, are opposed to it. There is no mandate for it. There is no reason for it. It will benefit none ex.ent, perhaps, a few very wealthy land-owners. Perhaps it ls to secure their support that it is brought forward, or perhaps it is to benefit those little children concerning whom I spoke earlier. Whatever may be the reason for its introduction, it is not brought forward to benefit the people or in response to any public demand. It is not brought forward because of anynew set of circumstances, but merely because the Treasurer has determined that it shall be brought forward. I am not going to condemn him, for his action. If he believes in the bill let him push on with it ; but as for me, I am going to oppose it and do all I can to make it impossible for him to give effect to it. I remind the honorable gentleman that fifteen months must elapse before the measure can become operative. He may think what he likes. He has here, perhaps, the numbers to give effect to it, but I do not believe that it will ever become law. If it does, and becomes operative, then I venture to say that on an appeal to the country some party will say, “Return us, and wc will repeal it.” Such a promise will appeal to a great many. What position we as a party will be able to take up I do not know. Those honorable gentlemen who can evolve a reason why we should do in 1927 what was wrong and unthinkable in 1922 will, perhaps, supply the answer.
– The measure before the House has been submitted to Parliament in accordance with the definitely declared policy of the Government at the last election.
– That is not so.
– There is no room for doubt upon that question in the mind of any one who refreshes his memory by reading the relevant portions of the Prime Minister’s policy speech, which I propose to quote. The right honorable member for North Sydney (Mr. Hughes) asserted that there was only one issue at the last election, that nothing else was before the people. Later, he was good enough to say that the Prime Minister had placed before the country a great programme which contained several items to the postponement of which he objected. Either statement may be correct, but both cannot be right. In the Prime Minister’s policy speech this subject was referred to in unmistakable terms. I shall read the relevant portions of that speech, After referring to the fact that there had been now more than 25 years’ experience of federation, the Prime Minister, speaking at Dandenong, went on to Bay-
The ideal which the framers of the Constitution had before them was to weld Australia into one great nation, while preserving to the States their rights of selfgovernment. The greatest problem that had to be faced in the realization of this ideal was the question of Commonwealth and State finance. This question was dealt with by the States surrendering to the Commonwealth sources of revenue far in excess of the requirements of the Commonwealth. Of this revenue for the first ten years three-quarters was handed back to the States, and since the expiration of that period a per capita grant of 25s. has been made by the Commonwealth to the States. The whole basis of these arrangements, however, was destroyed by the Great War.
Having briefly enlarged upon that subject, he said -
The result of these fundamental changes is that the Commonwealth to-day is raising revenues in order to provide the per capita payments to the States. This is contrary to the basic principle of national finance that every government shall have the responsibility of raising the revenue which it is expending.
He further said that for the purpose of discussing this subject-
– Why not read it all?
– I understood the right honorable gentleman to say that he was prepared to make up his mind on the policy speech without reading it through, and had not read it.
– The Minister should continue.
– I am prepared to read more if honorable members so desire. The payment of a population grant was, he said -
Contrary to the basic principle of national finance that every government should have the responsibility of raising the revenue it expended.
Is not that the issue we have been discussing in this House? Is not that the proposition upon which this bill rests? Is not that the proposal to which the Prime Minister was referring when he plainly stated that the continuance of the capitation grant was inconsistent with a basic principle of national finance? The Prime Minister went on to speak of the special position of Western Australia and Tasmania, and concluded this portion of his speech by saying -
The Government is giving careful consideration to the questions raised as a result of the investigations of the Western Australian royal commission, and proposes in the near future to invite the States to attend a conference for the purpose of reconsidering the financial relations between the Commonwealth and the States and dealing with the disabilities suffered by certain States with a view to laying down a basis for our national development in which the Commonwealth and the States will co-operate. At this conference an opportunity will be afforded to consider all questions affecting the relations of the Commonwealth and the States, including the question of new states.
That conference was held in 1926, in accordance with the Prime Minister’s promise to representatives of the States, who were doubtless entitled, from their own point of view, to adopt the position, with respect to Commonwealth and State finances, that there was only one possible solution of the problem, and that was the continuance of the payments. The States were adamant and would not make any agreement involving their surrender. The Prime Minister made it perfectly plain that the existing system upon which the financial relations of the Commonwealth and States was based was, in the opinion of the Government, unsound, that it could not be allowed to continue, and that he proposed to ask the representatives of the States to attend the conference for the purpose of evolving an alternative system. When that conference was held, the States, as they were fully entitled to do, said that they insisted upon the continuance of the present system, and would not consider anything else. In view of that attitude, we are now asked to accept the position that any alteration of the financial relations be-, tween the Commonwealth and the States should be preceded by some agreement. That means that so long as any State or a substantial number of States, withhold agreement, nothing can be done, and matters must remain as they are. I submit that an earnest attempt has been made to arrive at an agreement upon this matter, that the States have deliberately refused to enter upon any discussion of an alternative to the per capita payments, and that the responsibility, therefore, devolves upon this House of considering whether the payments shall be allowed to continue. Appeals have been made to the Government - the last was by the right honorable member for North Sydney - to approach this subject in a kindly and friendly manner, with a view to securing State co-operation. The right honorable gentleman has at all times been so distinguished for the mildness and gentleness of his own methods that it is difficult to resist the appeal. I suggest, however, that every effort to arrive at an agreement upon this subject with the representatives “of the States has failed. They have taken up a position which prevents discussion, and the matter must therefore be determined by Parliament. That has been the view, T think, of all representatives of the Commonwealth who have had the responsibility of dealing with this subject, which has been under consideration on many occasions.
A conference on this subject was held in 1909, legislation was introduced in 1910, and, in 1919, when the right honorable member for Balaclava (Mr. Watt) was Treasurer, another conference was held. There were further conferencss in 1920, 1923, and in 1926. It cannot, therefore, be said that this subject is being sprung upon the people, or that it is in any way being rushed. At the conference in 1920 the then Prime Minister (Mr. Hughes) dealt with this matter, and in plainly expressing his views, said -
– What is the honorable gentleman quoting?
– 1 arn about to quote from the official report of the conference, and I think it is only proper to say that the right honorable gentleman in expressing the view of his Government was asking the States to attend a convention to discuss the matter. The right honorable gentleman on that occasion said -
In all the circumstances-
He was referring tq the war - since the money conies out of the pocket of the taxpayer, whether in State or Commonwealth, I cannot see my way to say that the per capita payment shall continue. We shall hear all you have to say, hut the position we take up now is, in view of what has been said, and the attitude of the States in regard to the referendum, and in regard to the expenditure of public money, and the offer by the Commonwealth to commit itself to an expenditure of very many millions - £4,800,000 for the railway gauge, and onequarter of the increased expenditure on the Murray waters scheme, or not less than £8,000.000 - that we cannot continue the per capita payment. Notwithstanding the offer of the Commonwealth to engage in the expenditure alluded to, we can arrive at no sort of agreement. In all the circumstances, we must ask you to adjust your finances upon the assumption that the per capita payment will be reduced as set out by Mr. Watt.
– Was any attempt made to take it from the States?
– That was the policy, as stated by the right honorable gentleman at that conference. I presume it was the considered policy of the then Commonwealth Government. It is true that it was not persevered with by them.
– Quite right; that is exactly what I said.
– The position is apparently fairly summarized in a question which the right honorable gentleman put at the same conference. Mr. Fihelly, who represented Queensland at that gathering, asked whether the Prime Minister (Mr. Hughes) had any sense of equity, and said -
Either it is a fair thing to continue the subsidy to the States, or it is a fair thing to take it away from them.
To that Mr. Hughes replied -
Do you want equity or do you want the per capita grant ?
– What is the date of the conference?
– I am quoting from the report of the Premier’s conference held in May, 1920. Honorable members will, I hope, remember that I have said that, allied to the declared policy of the then Commonwealth Government, was a proposal for a convention; I do not wish to be misunderstood on the point.
This bill proposes the repeal of the Surplus Revenue Act, and provides for the making of equivalent payments to the States during the coming financial year, and the granting of financial assistance to the States of Western Australia and Tasmania. The bill itself shows upon its face that it is intended to hold a conference with the States, if the States are prepared to attend a conference, and meet and discuss these important matters with representatives of the Commonwealth. At that conference the whole position will be open to discussion, subject to the decision which this Parliament is asked to make, that, the population grant is wrong in principle. The Government is taking the responsibility of asking the House to do that. It would, be easy for the Government to say, “ We will abandon our policy and merely have a conference with the States.” I suggest, however, that there is a question of principle involved in this, and that the Government would be unworthy of its position if it were ready to take any of these easy methods of retreat. The House is asked to determine whether or not the population grant is sound in principle. Unless other legislation were brought in to >alter what the Prime Minister, in his policy speech, described as the unsound principle upon which the per capita grant had been made, the Government would not be endeavouring to carry out the policy proclaimed by him during the last election campaign.
– The Prime Minister said it would be ocnsidered. The Ministry is getting worse every step it takes in this matter.
– May I remind the honorable member who has just interjected that what the Prime Minister said was that a conference would be called to deal with the issue. That conference was called, and it was impossible to arrive at an agreement, because the representatives of the States would not discuss any alternative scheme.
– Now the Government proposes to abolish the payments altogether.
– The conference having been held, and no result having been achieved, the question is whether we should wait indefinitely. The suggestion blow made is that these matters can never be dealt with unless the States agree with the Commonwealth. That is the question which I wish to approach now. The people have expressed their opinion on this particular issue. The will of the people with respect to these matters is to bo found in the Commonwealth Constitution itself. The right honorable member for Balaclava (Mr. Watt), who has a very full knowledge of this subject, referred to the history of the Federal Conventions. He referred to the referendum of 1898, when section 87 of the Constitution did not have the ten-year limitation in it with respect to the return of three-fourths of the Customs and excise revenue to the States. The right honorable gentleman spoke also of the Premiers’ Conference, at which an arrangement was made for the imposition of a ten-year limit upon the constitutional right of the States to share in the Customs revenue; but, probably by inadvertence, he did not mention that the Constitution was submitted to the people again at a referendum in June, 1899, and was adopted in its present form, so that the provisions of the Constitution represent the will of the people upon this matter. Those provisions are to be be found in sections 87 and 94. I shall not weary honorable members by reading them, but I should like to remind them that they provide that, after the first ten years of federation, this Parliament has the right to determine the basis upon which the surplus revenue of the Commonwealth, if there be any, shall be paid to the States. Those sections impose upon this Parliament, not only the right, but also the responsibility, of determining this question.
– Do not those sections deal with the method of payment until Parliament otherwise provides?
– Yes: the point I am making is that they place entirely within the powers of this Parliament the power to determine the matter They have been discussed and determined by the people, and there is no doubt as to the powers of this Parliament to deal with the per capita payments as now proposed. It is obviously important, however, that the States should be consulted. That has been done already, and it is proposed to consult them again. As far as the strict legal position is concerned, however, this Parliament has full power to act. The question which arises under section 94 is with respect to payment to the several States ofall surplus revenue to the Commonwealth. That section states -
After five years from the imposition of uniform duties of Customs, the Parliament may provide, on such basis as it deems fair, for the monthly payment to the several States of all surplus revenue of the Commonwealth.
If there is surplus revenue, it should be distributed to the States. This matter has been litigated in the High Court, and it was laid down by that tribunal, in an action brought against the Commonwealth by one of the States, that the responsibility of determining whether or not revenue was surplus rests with this Parliament. That is to say, the matter is entirely in the hands of this Parliament. The real question which arises on the present occasion is this : Is the Commonwealth bound to raise surplus revenue in order to be in a position to pay over surplus revenue to the States? That, I suggest, is not the only question but one of the real questions to which we should direct our attention.
As long as the States receive money from the Commonwealth, it is clear that they are dependent on the will of this Parliament. I put it that, speaking generally, it is a sound principle that Parliaments should be responsible for raising the revenues which they spend. I say, speaking generally, because, in some cases, it is impossible to apply that principle, and it should not be operated unwisely. The Constitution provides for the giving of financial assistance to the States on certain terms and conditions; but the essence, of the Federal system is that there shall be separate sovereignty in the Commonwealth and the States; that the Commonwealth and the States shall have full powers within their respective domains. The essence of sovereignty is independence of external control. Comparisons have been made between the grants made by the Commonwealth Parliament to the States on the one hand, and grants made by State Parliaments to municipal councils on the other hand. The position is entirely different. Municipal councils are the creation of State Parliaments, whereas the States and their Parliaments are in no sense a creation of the Federal Parliament. They are independent entities not deriving their existence or power from the Commonwealth, and the principle of federation is that within their spheres each shall be independent, and as sovereign as circumstances permit. The existing provision does not satisfy that Federal criterion, because the States arc entirely dependent for a large proportion of their revenue upon the will of the Commonwealth- Parliament, which will may be changed at any moment. Disguise tho position as we may, the States are in a position of absolute financial insecurity, because this Parliament is able, by merely repealing a statute, to deprive them of a large proportion of their revenue. I propose to show how the Government’s proposal will improve their position. There is, and should be, no j ricans of binding this Parliament in respect of the exercise of its legislative powers, l t must retain the right to legisla!>. under all its powers at any time, as it thinks proper. But, if the proposed scheme be adopted, tho State? will, from a practical point of view, be in a more secure position than they occupy to-day. If some scheme can be devised at the proposed conference, under which liabilities of the States will be assumed by the Commonwealth, to that extent the States will be in a secure position, so far as they can be secure without an absolute abrogation of Commonwealth powers. Accordingly, this bill and the proposed conference offer to the States a degree of financial security which is not obtainable by any means other than an amendment of the Constitution, which nobody has yet suggested.
The fundamental financial provision of the Constitution, upon which this bill is based, is that the Commonwealth has exclusive power in relation to the imposition of duties of Customs and excise. In all other fields of taxation, the powers of the Common wealth are concurrent with those of the States, but if there are to be duties of Customs and excise, as there must be, they must be imposed by the Commonwealth, which must receive the revenue. The Federal authority need not, as a constitutional matter, raise any other revenue ; that is a matter of policy to be determined by this Parliament. But Customs and excise revenue is the primary source of Commonwealth finance, because that revenue, at least, the Commonwealth must receive. A policy of Customs and excise duties is devised for the protection of industries or the taxation of luxuries, and not for the raising of money to be handed back to the States. It is difficult to conceive of any Parliament framing a Customs and “excise policy in accordance with protectionist principles or for the taxation of luxuries, and then saying, “That will produce a certain amount, but we shall have to find some more money to hand back to the States, and, therefore, we shall increase the duties.” It is impossible to devise any coherent policy of Customs and excise duties which, within its own limits, would provide for the payment of moneys to the States, and there is no obligation upon this Parliament to attempt to frame such a policy. Certain Commonwealth charges and expenses are inescapable, notwithstanding the derision with which I have heard that word received during this debate. It is all very well to say that statutes can bc repealed, but can we repudiate the interest on our war loans, or the obligations in respect of war and oldage pensions? Certainly not. These inescapable charges absorb the whole of the Customs and excise revenue, aud the. Commonwealth is imposing direct taxation to the amount of about £7,600,000 merely in order to raise money to hand over to the States. If the Customs and excise revenue exactly equalled the expenses of the Commonwealth, would it be suggested that the States were still entitled to a share in that revenue? If the primary fund upon which the Commonwealth has to depend is completely exhausted by undoubtedly legitimate and inescapable charges, how Cnn it be suggested that, there is any surplus in which the States are entitled to share? The claim of the States to a share in that revenue is not only unjustified by any provision in the Constitution - which is the only expression of the will of the people - but is also futile and unintelligible when the financial position is closely examined.
I come now te the proposal which the Commonwealth submitted to the States, and which they, up to the present, have rejected It has been criticized from many points of view, and particularly by the honorable member for Henty (Mr. Gullett), upon the ground that it involves an abandonment of direct taxation by the Commonwealth. I remind the honorable member that 60 per cent of the Commonwealth income taxation will remain, and that represents a very substantial sum indeed. The ‘honorable member appeared to assume that direct taxation, once lifted, will never be reimposed. It is of the essence of the Government’s scheme that the States, which are confined by the Constitution to direct taxation, are to raise their own revenues to make good what they lose through the discontinuance of the per capita payments. Therefore, the picture which the honorable member for Henty drew, of the results of the abandonment of direct taxation, does not truly represent the effects of the adoption of the Government’s proposals.
– But the States may be driven to impose higher railway freights, for instance.
– That is a different point. The honorable member for Henty submitted a most interesting argument based on the assumption that all Commonwealth direct taxation would be abolished, and that therefore direct taxation would be largely reduced in Australia. The reply to that argument is, first, that the Commonwealth would keep in operation no less than 60 per cent, of the income tax, and, secondly, that the States would, by their own legislation, raise an amount approximately equal to the amount now paid in per capita grants. The honorable member for Henty (Mr. Gullett) objects to the Commonwealth reducing direct taxation; but the honorable member for Dalley (Mr. Theodore), at the last Premier’s conference which he attended, urged and besought the Commonwealth to go out of the field of direct taxation entirely. Accordingly those who are opposing this measure are doing so for diametrically opposite reasons.
The proposals of the Commonwealth involve not absolute and final remission of direct taxation, but a redistribution of taxation. The position at present is that, where a taxpayer pays, say, £100 under certain heads to the Commonwealth and the States - let us suppose £70 to the Commonwealth and £30 to the States - he shall pay, say, £50 to the Commonwealth and £50 to the States. So far as the taxpayer is concerned, the change will make very little or no difference.
With much surprise, I have heard repeated in this chamber what has been said again and again outside, that Customs revenue is easy money, and that money raised by direct taxation is hard money, the raising of which exposes a government to criticism. It has become almost a commonplace among opponents of these proposals, to be accepted as a matter of course, that a government raising money by indirect taxation receives no criticism, whereas one raising money by direct taxation is exposed to the concentrated fire of public opinion. But what do we find? I think I may apply, not unfairly, my experience in this House. I have never heard any attacks made upon the Government for maintaining the land tax, the entertainments tax, the probate duties, or the income tax; but the honorable member for Wimmera (Mr. Stewart), the honorable member for Swan (Mr. Gregory), the honorable member for Forrest (Mr. Prowse), and the honorable member for Perth (Mr. Mann) criticize the imposition of indirect taxation. If one may assume that these honorable members are representative of their constituents, as we all deem them to be, may we not fairly say that our experience in this House shows that indirect taxation is criticized much more than direct taxation? Is not that our experience from day to day, and from week to week, and does not every honorable member know it? The suggestion that it is easy to raise money through the Customs, .and that a government is immune from criticism in so far as it derives its revenue from that source, is very far from the fact. A government is open to criticism however it raises its revenue; but in the Commonwealth sphere the criticism is against indirect rather than direct taxation.
There has, apparently, developed suddenly a general admiration of the present system of Commonwealth taxation, and we have learned that the system is not to be touched; that it is sacrosanct; that it is almost perfect; and that it must not be altered, because abandonment of any of the taxes is in some way wrong in principle. Certain of our taxes represent policy. The tariff and excise duties, for example, represent a definite policy. The land tax represents a policy which, I understand, when it was imposed aimed at breaking up large estates in the country, but which raises a large amount of revenue from valuable properties in the cities. Until recent years, however, that tax had a distinct effect in breaking up estates in the country. The rest of our taxation has been imposed simply to raise money, and for no other purpose, and taxation imposed simply to raise money is not based upon any wonderful principle with which it is improper to interfere.
The Commonwealth Government has submitted to the States certain figures, which are before honorable members in a paper which has been circulated to them. Those figures have been challenged only in very general terms. I am well aware that various representatives of the States have said that the States cannot raise this money, or that there is something wrong with the Commonwealth figures; but I have not yet been sufficiently fortunate to hear any direct attack upon any particular figure in the statement. The source of every figure is stated in a footnote, in order that any honorable member may turn up the authority for the figures upon which the statement is based, and determine for himself whether they are correct. There is not a figure, except those that are mere additions, to which there is not a footnote showing how it has been arrived at.
– The States have challenged them,
– All the States have done is to challenge them in general terms.
– South Australia has appointed a commission.
– -That State has appointed a commission to consider the position of South Australia in relation to the Commonwealth - quite a natural thing for it to do. Although I am aware that the former Premier, Mr. Gunn, made the general statement that South Australia could not raise the amount- mentioned, no details have been given.
– Has not the commission power to investigate the figures?
– I have no doubt that it will examine them. At the conference in 1926 the States’ representatives refused to examine them, and since then they have not pointed out to the Commonwealth Government any error in them. One of the recent acts of the Commonwealth Government was to offer a royal commission, with one member appointed by the States, for the purpose of examining the figures; but the States refused to agree to the appointment of it. The Government has done everything possible to show the accuracy of the figures by stating their sources, and by giving the States an opportunity of examining them, and, if they could do so, of demonstrating where they were wrong.
I wish to deal with one point on the subject of aggregation. Several honorable members have said that it is beyond the power of the States to aggregate, for the purpose of taxation, any property, whether in the form of land or not, under the land tax or estate duty acts, or incomes under the income tax acts. That statement 4 has been made by several honorable members, but none has cited any authority for it except the honorable member for Dalley (Mr. Theodore), who referred to a case decided in the High Court, in which it was determined that certain legislation of the State of Queensland was invalid. That was a case in which I appeared for the State of Queensland, and, unfortunately for my client, failed to convince the High Court that T was right. The point decided was that a Commonwealth statute having declared that interest from Commonwealth loans should be exempt from State taxation, a Queensland act which brought exempt income into account for the purpose of determining the rate of tax was invalid. It is the first ease reported in volume 29 of the Commonwealth Law lie-ports. The reason for the decision was that the Queensland legislation was inconsistent with a Commonwealth statute providing that no State hurden should be placed upon a taxpayer by reason of his receiving interest upon Commonwealth loans. That decision has no application to the subject of aggregation. No authority has been cited in support of the proposition that the States cannot legally aggregate, and although I have examined the matter I am not aware of the existence of any such authority. But for many years, as honorable members know, the existence of double taxation has caused much trouble. Two countries sometimes tax the same individual. A person resident in one country may be subject to taxation in respect of income derived from another country. This occurs when a resident of Great Britain draws his income, or part of it, from a dominion. For many years the British Government has taxed persons who reside for more than six months of the year in Great Britain, upon profits and gains from any business, wherever carried on, from any profession wherever* practised, and from property wherever situated. That principle of aggregation has for many years been a well-recognized principle of income taxation in Great Britain. “No lawyer, so far as I am aware, has yet suggested that it is illegal. The Parliament of the Commonwealth has as full a power to impose income taxation as the Parliament of Great Britain, and that power has been exercised by it. The Commonwealth tax on absentees whose property is situated in Australia is analogous to the British practice. If we wished, we could amend section 10 of our Income Tax Assessment Act, and impose a tax on income derived from any source whatever, and not merely from sources in Australia, as is done in Great Britain. An actual example was referred to, I think, by the honorable member for Brisbane (Mr. D. Cameron), which shows what the States have been doing for many years. In 1892 a Succession and Probate Duties Act was passed in Queensland, and it was provided in it that for determining the rate of succession duty there should be aggregated, so as to form one estate, the value of all the property passing under the will, whether situated within or outside Queensland. That measure remained in operation and was re-enacted in 1918, when, I think, the honorable member for Dalley had something to do with the government of that State, Appeals have gone to the Privy Council; but I have never found that the act has been challenged on this point. Many thousands of pounds must have been paid in duty under it, and one would have thought that there would have been some lawyer in Queensland who would have tested its validity had its validity been questionable. I am not aware that the act has ever been impeached, or that any suggestion has been made that it is impeachable on the ground of unconstitutionality. I have dealt only with the legal possibility of aggregation. As that has been challenged without any authority being cited in support of the proposition that in some way it is unconstitutional, I have thought it kroner to place before honorable members the material upon which I founded my view - that there is nothing unconstitutional in this proposal.
– Does that mean that each State has the right to tax, at the aggregate rate, a citizen who may have property in six States.
– Yes ; each State would be able to tax such an individual on the aggregate of all his property, if its Parliament thought proper, or determine the rate of his assets according to his aggregate income, which would probably be a more reasonable thing to do. But the legal right does not depend on the extent to which the State Parliament may authorize the aggregation. The Queensland law uses aggregation of property only for the purpose of determining the rate of taxation upon property in Queensland. If a similar principle were applied by all the States, each would collect at the aggregate rate that it had determined for itself upon the property or the income within that State. It would, of course, be highly unpopular for a State to venture further than that, but the propriety of doing so would be a matter for the parliament of the State to determine.
– Does section 117 of the Constitution affect the taxing power of the States?
– I do not, as at present advised, regard that section as standing in the way, because, for example, a New South Wales act, saying that all persons subject to the law of that State deriving income from other States should pay in n certain way, would apply to them whether they resided in New South Wales or not, just as absentees who derive income from Australia have to pay the Commonwealth income tax.
It has been said that the States could not raise from the fields of taxation which are proposed to be abandoned the money needed to compensate them for the cessation of the per capita payments. May I again invite attention to the figures and the footnotes which have been circulated ? These figures show the actual proceeds of tho existing Commonwealth taxation. A footnote indicates that land tax was reduced by 20 per cent, in 1922-2?!. The entertainment tax has also been reduced, it formerly applied to every ticket of more than 6d. in value, but now it only applies to tickets valued at 2s. 6d. or more. The proceeds from that tax have fallen from £675,000 to £320,000 ; and this has been by reason of the reduction in the rate of tax, and not by reason of any falling-off in the productive field. Income taxation produced £1.6,790,000 in 1921-22, and it is now producing only about £11,000,000. The rate of tax has been reduced three times recently by 10 per cent., 10 per cent., and 12£ per cent, respectively. Seeing that much larger sums have been raised in these fields of taxation than they are at present yielding, except in the case of estate duties, which have not been altered, how can it be suggested that there is no taxable field from which the States could raise the money which the Commonwealth is now raising if it were necessary for them to do so? If the States wished to obtain a larger revenue than that which they at present receive from the per capita payments, all they would have to do would be to readjust their rates of taxation. Obviously there is a large margin in the three fields which I have mentioned.
Among the critics of this proposal there appear to bc some people who are honestly unaware that the Government is proposing to reduce Commonwealth taxation to the extent of the amount paid to the States in capitation grant. This subject has been looked at far too much as if it were merely the abolition of the capitation grant. It is really the abolition of the per capita grant and a reduction of Commonwealth taxation to an amount, at least equivalent, and on the figures more than equivalent, to that which is now paid to the States. Let me take the case of my own State of Victoria for a moment. If the Commonwealth proposal were adopted there would be a saving to the Victorian taxpayers of more than £125,000 upon tba only figures which have yet been submitted to the public. The Victorian Treasurer (Sir Alexander Peacock) denies that this is so, but he has given no details to support his denial, nor has he challenged a single figure i,n the Commonwealth statement. This statement shows from whence every figure is derived. Sir Alexander Peacock gave an interview to the press yesterday on this subject, and as a Victorian I ask the forbearance of honorable members whilst I deal briefly with the eight points which he submits for the consideration of the Victorian people. The first point is as follows : -
The Federal Government neither asked for nor obtained a mandate from the people at the general election.
I have already read that part of the policy speech of the Prime Minister which dealt with the capitation grant. It stated quite definitely that the Government considered that the present scheme was based on unsound financial principles, and expressly declared that the matter should be re-examined.
– The word “ abolition *’ does not appear at all.
– The part of the speech dealing with the per capita payments reads as follows: -
The whole basis of these arrangements, however, was destroyed by the Great War. . . The result of these fundamental changes is that the Commonwealth to-day ls raising revenues in order to provide the p»r capita payments to the States. This is contrary to the basic principle of national finance that every government shall have the responsibility of raising tho revenue which it is expending.
– I read the report of the speech in. the Argus, and I do not remember reading that.
– I assure the honorable member that it appeared in the Argus. I had some difficulty in securing the copy of the speech from which I have just quoted, and I obtained a copy of the Argus and found that those precise words appeared in it.
Some honorable members apparently wish to frighten the Government by referring to supposed decisions of government supporters outside of Parliament, and by references- to the general elections. The Government regards this as a matter of principle of the greatest urgency and importance, alike to the Commonwealth, the States, and the people of Australia as a whole. Any honorable member is entitled to the opinion that this is wrong. But it is surely not suggested that, though the Government sincerely believes that a proposal, important on the ground of principle, and affecting the whole future of the Commonwealth, should be introduced to Parliament, it should be abandoned because some of its supporters outside of Parliament are opposed to it. The Government is not prepared to abandon this proposal. Sir Alexander Peacock’s second point was -
The majority against the federal referen- dum proposals last September was increased because the people were incensed against the Federal Government for a proposed tyrannical misuse of power in respect to the abolition of the payment of 25s. a head of population annually to the States.
– “Will the AttorneyGeneral say that there was anything definite in the policy speech declaring that the Government intended to abolish the per capita payment?
– Yes ; the Government stated that, in its opinion, the per capita payments were founded upon an unsound principle, and that the whole question would have to be re-examined. That is quite plainly stated. It can hardly be said that the second point made by Sir Alexander Peacock is a reason against these proposals. Is the Government never to attempt to give effect to its policy? Is there no responsibility upon it at all? Is it, simply because there is opposition from some of its supporters, to abandon any proposal that it may make? The third point made by Sir Alexander Peacock was stated as follows: -
There would have been no federation (he spoke as a member of the Constitutional Convention) without a financial partnership between the Commonwealth and the States regarding tho distribution of Customs and excise revenue.
The history of the matter shows that the partnership was limited for ten years. It was that change in the federation scheme, and the Federal Capital proposals, that caused New South “Wales to agree to federate. The partnership lasted for ten years and was then terminated in accordance with the Constitution. The fourth point made by Sir Alexander Peacock is stated as follows : -
It wa3 impossible for Victoria to incorporate in its taxation system the direct taxation the Federal Government proposed to relinquish, and it would be forced to throw the income tax system now in force into the melting pot and mould a new scheme with a distribution over a much larger area than at present. The alternative was to cut down services now considered essential.
It is obvious that if the Victorian Parliament is prepared to increase its probate, land, and income taxes, it will be able to recoup itself for the loss of the per capita payments. Amended taxation laws may be necessary; but are we to accept it as a principle that the States are not to amend their taxation legislation? The fifth point is -
It was fair for all classes of the community to contribute to the upkeep of social services to fulfil the primary functions of government, and that this contribution was secured by receiving a share of Customs and excise revenue. The members of the State Parliament, who were closer to the people by reason of greater numbers and smaller constituencies, had voted unanimously against the abolition of per capita payments, and the press had voiced similar protest.
– What was the honorable gentleman’s own attitude at the last election ?
– I said on the platform that I was in favour of the finances of the Commonwealth and the States being separated, so that each should assume responsibility for raising the money it expended, and that, if I were returned, I would do all I could to bring about a more sensible system of finance than existed in the capitation grant. I have already submitted that this is a question affecting not the levying of direct taxation, but the redistribution of direct taxation between the Commonwealth and the States. The sixth point reads -
It was as unfair for the Federal Government to put special grants for Western Australia and Tasmania in the same bill as the abolition of per capita payments as it would be to tack a tariff bill on to an appropriation bill.
That point has not been taken, in this House, and is rather a matter for honorable members, who, up to the present, have not found it embarrassing, or, if they have, delicately refrain from mentioning it. The seventh point reads -
Victorian members of the Federal Parliament, whether members of the House of Representatives or senators, would be unmindful of the interests of Victoria if they voted for the abolition of per capita payments, and would take a decided step towards reducing the status of the State whose interests they should guard.
I have endeavoured to give reasons why the adoption of this policy would be financially advantageous, particularly to Victoria, and would improve its status. I have also endeavoured to show that it is in accord with approved Federal principles. The eighth and last point reads -
The injury Victoria would receive if the Federal bill were carried would be intensified by the knowledge that it had provided a majority of the salaries of members of tho Ministry which had submitted the bill.
Whatever our views may be upon the bill, it is unnecessary for me to answer a statement of such a character in this House.
– Order ! The Minister’s time has expired.
.- As I am usually a supporter of the Government, and intend to vote against this bill, I do not wish to record a silent vote. I propose, therefore, to discuss briefly some of the considerations that will determine my vote. The question that the House is asked to decide is whether the per capita payment to the States, which has been in existence for the last seventeen years, is to be discontinued. For the first ten years of the Commonwealth’s history, the governments of the
States were entitled to the return of three-fourths of the Customs revenue. Then, by agreement with the States, the Federal Parliament determined upon a. per capita payment of 25s. I emphasize that that was done after consultation with the States, and by agreement with them. That arrangement still exists, but this Parliament is now asked to put an end to it. Why should that be done? That is the simple question which I, as a representative of the people, have to ask myself. We are told by the Government that under the Constitution it rests with the Federal Parliament to say whether this arrangement is to continue. It is true that the Surplus Revenue Act provides that the arrangement shall continue until Parliament otherwise provides, and no one suggests that the Federal Parliament has not the right to terminate the per capita payment if it so desires. But would that be a fair thing to do? That is the whole question. I agree that the State Governments have no constitutional or legal right to the continuance of the arrangement made_in 1910, and it may be said that they have no moral right. But the States have a moral right to fair treatment at the hands of the Federal Government, which is all they ask. I suppose we mav assume that the Parliaments of the respective States represent the opinion of the people of those States, and, if that is so, the opinion of the people as expressed through the State Parliaments is that the payments should continue.
– That is the unanimous opinion of the State Parliaments.
– Yes. Five of the State Parliaments are controlled by Labour Governments; but I remind the Government that the sixth parliament is controlled by a composite government in which the National and Country parties are represented as they are in the Commonwealth Government. The composite Government of Victoria is in agreement with the Labour Governments of the other States in demanding that the payments be continued. We have been asked to say that the measure should be treated as a non-party question. I say that it should be treated as a party question, and if it were, it would certainly be defeated, because it is a plank in the platform- of every party represented in this House that the per capita payments shall continue. If the members of this House are true to the platforms of the parties to which they belong, they will vote against this bill. The Labour party, as we know, is pledged to the continuance of the per capita payments. As for the Country party I have, within the past day or two, had placed in my hands the constitution and platform of the State and Federal Country party, which is represented in the present Government. Three of the Ministers in this House are members of the Victorian Farmers’ Union, which is the organization behind the Country party in the State of Victoria. There is no suggestion in the rules and platform of the Victorian Farmers’ Union or the Country party in Victoria that it favours the withdrawal of the per capita payments, which we are now told represent a vicious principle of finance. I turn now to the platform of the National party, to which I am proud to belong. The National Federation is the organization behind that party in Victoria, and, indeed, throughout Australia. One plank in its platform reads -
The maintenance of the 25s. per capita payment to the States until such time as a satisfactory alternative is agreed to.
That is the position in which we, as members of that organization, find ourselves. So far as the Victorian members are concerned - I do not know so much about the Nationalist members in the other States - that organization is behind all Nationalists, and assists them in their candidature. The Prime Minister himself was selected by the National Federation to contest the Flinders division iu 1918, and I am sure that subsequent events have proved that the Federation was amply justified in its selection. Among those present at the annual conference of that organization, a few months ago, were the Attorney-General for Victoria (Mr. Eggleston) and Senator Pearce, as representing the Commonwealth Government. After hearing those two gentlemen the Conference resolved that until full consultation had taken place between the Commonwealth and the States no action should be taken in respect of the per capita payments. Thus members of the party to which I belong are practically pledged to the continuance of these payments. Let us consider for a moment what we are now asked to do. The honorable the Attorney-General (Mr. Latham), who has just resumed his seat, solemnly maintained that we had a mandate from the people to discontinue the per capita payments and that the bill now before the House was in accordance with the declared policy of the Nationalist party as outlined by the Prime Minister during the last election campaign. I absolutely deny the correctness of that statement. The Attorney-General told us that in the opinion of the Government these per capita payments, representing the collection by the Commonwealth of money which the States were to spend, were a violation of a fundamental principle of finance, and that it was the intention of the Government to call the States into consultation to consider - I think these are the very words he used - ‘‘the problems arising out of the existing financial relations between the Commonwealth and the States.” The Prime Minister in his policy speech went on to say, and this was the gist of his argument, that the existing conditions in Australia rendered necessary “ a re-examination of the financial relations between the Commonwealth and the States.” This policy is in accordance with the platform of the organization behind the Prime Minister, an organization which, I think he will admit, rendered valuable service in the last election ia returning this party in the strength in which it finds itself to-day. I have read carefully the GovernorGeneral’s speech, which is supposed to foreshadow the legislation proposed to be brought down by the Government, and I cannot find in it any reference whatever to a proposal of the character of the bill now under discussion. Honorable members may recall that the GovernorGeneral’s speech emphasized that the financial position of the Commonwealth was sound and reflected the general prosperity of the people. That was all that was said about the financial outlook, and, curiously enough, following almost immediately on that passage in the speech came this statement-
The election has shown that the people of Australia are determined to maintain law and order.
In other words, the Government, through the Governor-General, said - “ We recognize that the real meaning of the state of parties as the result of the recent election is a declaration ou the part of the people that they are in favour of the maintenance of law and order, and will support the Government in dealing with certain sinister influences that have been at work in the community hitherto.” That, I submit, was the mandate. Die Attorney-General stated that on the public platform during his election campaign he gave utterence to the sentiments he expressed to-night. No doubt he did, but how many of the hundreds of thousands of electors heard him? Besides, he was not speaking on behalf of the Government: he was expressing the opinion of an individual who in no way bound tho Government. The Attorney-General twitted the right honorable member for North Sydney (Mr. Hughes’) with the fact that he and his Treasurer (Mr. Watt), in 1920, had foreshadowed the withdrawal of the pot capita payments. Last night the right honorable member for Balaclava explained very ably and fully what induced the then Government to make that suggestion. It is an extraordinary fact that the right honorable gentleman, who with his Treasurer in 1920 made that proposal, should in 1922, have had as Treasurer the proBent Prune Minister, who in the course of a speech before the National Democratic Council at Brisbane dealt with federal finance, and, particularly, the special appropriations. The slogan of his speech was “ Stable Government and Sound Finance.” Up to that time the finances of the Commonwealth had included the per capita payments to the States, and the right honorable gentleman, in referring to the special appropriations said :
As mutters now stand in Australia, the per capita payments cannot be done away with. Possibly tho future may hold in store for Australia a different form of government. Certainly we have many Governments in Australia, possibly to the extent of being over-governed. But until there has been a change in the basis of the forms of governments of thu States these payments must be continued.
That was his opinion as Treasurer in the Hughes Government in 1922.
So far as I know there has been no change in the basis of the form of government of the States, and the right honorable gentleman, who then said that until that change occurred the per capita payment must continue, to-day says, although that basis has not been changed the payments must cease. One naturally seeks the reason for this change of policy. As the right honorable member for Sydney said to-night in tho course of a witty and able speech, there is no urgency about this proposal: the present arrangement has been working satisfactorily for seventeen years, lt has been suggested that the man responsible for the bill now before us is the present Treasurer. Whether or not that is so I do not know. But a prominent member of -the Victorian Farmers’ Union a few days ago in conversation expressed tho view that the present Federal Treasurer was, especially in financial matters, a superman. I did not consult the dictionary as to the meaning of “ superman, “ but I suppose it meant in thi3 instance a man who occasionally lauds himself and those who follow him in the. soup. If this be tho meaning of the term, I think the Treasurer may have some claim to the soubriquet. We have been told by the Government that although the States are totally opposed t» this scheme, it will benefit them. The Federal Treasurer and those associated with him may be greater financiers than the men connected with the State Governments. If that is so, the latter are surely entitled to more considerate treatment. They are charged with grave responsibilities in the administration of their respective States. The speech of the right honorable member for Balaclava last’ night helped me to realize the extent, variety, and importance of the functions discharged by the State Governments, and the financial burdens they involve. The leaders of the State Parliaments deserve consideration, and they declare that this proposal, if accepted by this Parliament, will dislocate their finances. Like the right honorable member for North Sydney, I am unable to understand how the Treasurer reconciles his statements to the States that under his scheme they will get more money, and to the taxpayers that they will pay less
One reason given by the Federal Government for forcing this arrangement on the States is that the State Governments, being human, are not likely to entertain a proposal which means the surrender of money that hitherto has been easily obtained. My experience is that there is just as much human nature in Federal as in State governments. The Federal government is as eager to acquire as the State governments are loth to relinquish money that comes to them comparatively easily. After all, it is a matter for amicable arrangement between the States and the Commonwealth as to how the money shall be allocated. We are told, and it has been emphasized over and over again by the Federal Government, that this is a matter peculiarly for this Parliament; that it is for this Parliament to say whether the payments shall continue. Surely it is for the people to say, through, I admit, this Parliament. This Parliament is the instrument through which the popular will, in regard to this and other matters, must be expressed ; but I say we have no right to discuss and decide a matter like this which has never been before the people of Australia. We ought to hold our hands. The Government should say, “ In view of the oxpress opinions of the State governments, the State Parliaments, the people, and a very large section of the Federal Parliament, we shall stay our hands. We shall call the States into consultation, as was foreshadowed in the policy speech, for the purpose of considering the whole financial relations between the Commonwealth and the States.”
– They have done that.
– They have not done it as I say it should be done. Each side should go into consultation uncommitted to any view. Let the problems be discussed on their merits. If the Government has a scheme, let it place it before the States, and if after it has been discussed by them and, in the press, and by thepublic, the States refuse to accept it, let the Federal Government say to the people at the next election, “ We have consulted the States, we have threshed the matter out, thoroughly, and we think that in the interests of the Commonwealth the scheme we have propounded ought to be accepted. If we are returned to power the first thing we shall do will be to put it into execution.” The Government could then come down and say, with perfect truth, that it had a mandate from the people. This bill is going to a division in the House, and in that connexion I wish to make an appeal to honorable members. Admittedly it is a matter of great importance, both to the people of Australia and to the States, and it ought to be decided on its merits. It would be a calamity if any vote cast in this House on a question, which will have such far-reaching and important effect upon the various interests of the Commonwealth, were dictated by any other feeling than that, of conviction. Some honorable members might be tempted, out of a feeling of mistaken loyalty to the Government, to cast a vote in favour of the bill because they think not that it ought to be oassed, but that the Government ought to be saved. The Constitution provides for the continuance of the arrangement until the Parliament otherwise provides, but not, as has already been pointed out, until some government that happens to be in power so determines. Therefore, every vote ought to be cast strictly on the merits of the question, and it is because I consider the course I have outlined the proper one to pursue, that if the Government insists upon forcing the matter to a division, I shall vote without hesitation and without misgiving against it.
Debate (on motion by Mr. Jackson) adjourned.
House adjourned at 11.17 p.m.
Cite as: Australia, House of Representatives, Debates, 9 March 1927, viewed 22 October 2017, <http://historichansard.net/hofreps/1927/19270309_reps_10_115/>.