House of Representatives
10 March 1927

10th Parliament · 1st Session

  1. House of Representatives
  2. 10th Parliament
  3. 1927

Mr. Speaker (Hon. Sir Littleton Groom) took tho chair at 2.30 p.m., and read prayers.

page 254

QUESTION

UNREST IN CHINA

Mr MARKS:
WENTWORTH, NEW SOUTH WALES

– With a view to putting a stop, if possible, to the passing, by certain bodies, of what might be called intemperate and impertinent resolution* to the effect that Australia should not lake part in the troubles in China, and believing in the old adage, “ It is manners to wait until you are asked,” I ask the Prime Minister whether the British Government has at any time requested that Australians should take part in naval, military, or air operations in China.

Mr BRUCE:
Minister for External Affairs · FLINDERS, VICTORIA · NAT

– The Commonwealth Government has received no request from the British Government to co-operate in any way in the action which it has had to take in China for the protection of British lives and property. No such request would be sent, because it has been made perfectly clear and definite as the basis of Empire co-operation today that it is for the self-governing dominions to determine what their participation shall be in any matter of this kind.

page 255

QUESTION

LIMITATION OF NAVAL ARMAMENT

Mr CHARLTON:
HUNTER, NEW SOUTH WALES

– A cablegram appears in the press to-day to the effect that new proposals for the limitation of naval armament have been submitted by President Coolidge to Great Britain and Japan, the only two powers agreeable to conferring with the United States of America on the subject. It is suggested that a conference shall take place in Geneva to consider the matter. Has the Prime Minister received any communications concerning the new proposals, and, if so, “will he disclose them to the House ?

Mr BRUCE:
NAT

– No new proposals have been made by President Coolidge. The invitation he recently extended was that conversations should take place between the Powers that were signatories to the Washington treaty, in an endeavour to bring about a further limitation of naval armament. To that invitation Japan and the British Empire have responded ; they have said that they are prepared to take part in the proposed conversations.

page 255

QUESTION

CYCLONE IN NORTH QUEENSLAND

Interruption of Communications

Dr NOTT:
HERBERT, QUEENSLAND

-Is the PostmasterGeneral in a position to say whether the telephonic and mail communications, recently interrupted in North Queensland by a devastating cyclone, have yet been restored ?

Mr GIBSON:
Postmaster-General · CORANGAMITE, VICTORIA · CP

– The whole of the damage done by the cyclone has been almost repaired, and communications are now practically on the old basis.

page 255

QUESTION

CANBERRA

Sale of Liquor - Charges Against Employees of Federal Capital Commission

Mr COLEMAN:
REID, NEW SOUTH WALES

– Some considerable time ago the House carried a resolution to the effect that a local option poll should be taken to decide whether the ordinance prohibiting the sale of liquor in the Federal Capital Territory should be repealed. In view of the fact that the Federal Capital Commission has urged, in a report, that finality should be reached in this matter, and in view, also, of the unrest in Canberra, owing to the Government’s delay, I ask the Prime Minister whether it is his intention to introduce the legislation which I presume will be required to permit of a local option poll taking place. If so, when will that legislation be introduced? Is it possible to make a general statement as to who will be entitled to vote at the poll?

Mr BRUCE:
NAT

– I remind the honorable gentleman that the resolution to which he refers provided in effect that a local option poll should be taken at such time as this Parliament might determine after the seat of government has been transferred to Canberra. Itwill be for this Parliament, when it is sitting at the new capital, to determine the appropriate time for holding the poll, and who shall be entitled to vote at it.

Mr COLEMAN:

– I ask the Minister representing the Minister for Home and Territories if it is a fact that charges alleging graft have been made against minor officials associated with the Federal Capital Commission, and are the subject of an inquiry at the present time? If so, what is the nature of the allegations?

Mr MARR:
Honorary Minister · PARKES, NEW SOUTH WALES · NAT

– I have not heard of any such allegations. If the honorable member has any information which he desires to place before the department, I shall have inquiries made into the matter, and supply him with an answer later.

page 256

QUESTION

VISIT OF THE DUKE AND DUCHESS OF YORK

Mr STEWART:
WIMMERA, VICTORIA

– In connexion with the impending visit to Victoria of their Royal Highnesses the Duke and Duchess of York, the Prime Minister is doubtless aware that some dissatisfaction exists in country centres because of the curtailment of country tours. Would it be possible, during the Victorian tour, for the royal train, on its way to Adelaide, to be halted at intermediate stations as well as at Ballarat, and at intermediate stations between Melbourne and Canberra cither way? If definite arrangements have been made for a country tour, will the right honorable gentleman make them public at the earliest possible date, so that the country people concerned may have ample time to prepare for the royal visit?

Mr BRUCE:
NAT

– The greatest difficulty has been experienced in trying to meet the public desire that their Royal Highnesses should visit as many centres as possible, because the Government, and, I think the people of Australia feel that their Royal Highnesses should not be asked to do more than they are physically able to do without diminishing the enjoyment of their visit. The Victorian programme has been found more difficult to arrange than that for any other State, owing to the fact that at the time of the royal visit to Victoria, Melbourne will still be the seat of government of the Commonwealth. Certain suggestions have, I understand, recently been made to the State committee, which may possibly result in a variation of the programme in some respect. That is a matter for the consideration of the State committee, but there has been no announcement on the subject, and the Commonwealth committee has no information about it. With regard to the honorable gentleman’s suggestion that the royal train should be halted at intermediate stations between Melbourne and Adelaide-

Mr Stewart:

– It need be for two or three minutes only.

Mr BRUCE:

– And also between Melbourne and Canberra, the desire is to give an opportunity to as many as possible of the people along the routes traversed to see their Royal Highnesses, but what can be done is limited by the physical strain that will be imposed on them. However, consideration will be given to the honorable gentleman’s suggestion, and, as far as possible, it will be given effect.

page 256

QUESTION

CANBERRA

Priceof Lands: Recommendations of Public Works Committee: Price of Houses: Purchase of Rented Houses - Boarding Regulations

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

asked the Prime Minister, upon notice -

  1. In view of the fact that the Public Works Committee pointed out that land purchased at Canberra for £5 per acre is being allotted to public servants at as high a price as £400 per block, or £1,600 per acre, will he state why such an enormous profit is being made at the expense of public servants, and if it is proposed to make any reductions?
  2. What action has been taken in regard to each of the eleven recommendations of the above-mentioned committee regarding housing;
  3. What is the position of an officer who will be receiving an annual allowance to compensate him for the purchase of a house at Canberra at a price 20 per cent. higher than in Melbourne, according to the Public Works Committee, and is subsequently transferred to another city; would an adjustment be made in regard to the extra cost incurred by him?
  4. In the event of an officer, who is paying a rental, eventually deciding to purchase a house, will the amount paid in rent be allowed on the purchase price?
Mr BRUCE:
NAT

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

  1. Five pounds per acre does not represent the cost of the land to the Commonwealth. In addition to the cost of acquisition, much expenditure has been incurred in connexion with the subdivision of the land, the construction of roads, and the provision of services such as water supply and sewerage. In assessing land value the only reasonable basis to adopt is the market value, and this has been done in the case of blocks set aside for public servants. The lateMr. Gorman, who was one of the members of the Federal Capital Commission, was an expert in land valuation, and gave a great deal of attention to this matter. Upon his death the Commission sought further advice before finally assessing the valuations of blocks allotted to public servants. The Government does not propose to interfere with the valuations arrived at by the Commission.
  2. The action taken on the various recommendations of the Public Works Committee has been as follows: - Recommendation (a). Everything possible has been done to encourage small contractors, but the Commission advise that its experience has been that the lowest tenders have been received from larger contractors. Recommendation (b) and (k). The utmost efforts are being made by the Commissionto reduce constructional costs as low as possible. Recommendation (c) See reply to Question No. 1. Recommendation (d).The cost of fencing has been reduced. Recommendation (e). The Government is not prepared to act on this recommendation. It is considered that a 35-year purchase period is adequate. Recommendation (f). This matter is still under consideration by the Commission. Recommendation(g). This recommendation has been acted upon.Recommendation (h). The Government considers that the administrative charge of 4) per cent., adopted by the Commission is fair and reasonable. Recommendation (i). Additional provisionhas been made for houses of cheaper types to be constructed for officers in receipt of low salaries. Recommendation (j). The Government does not propose to interfere with the Commission’s policy not to permit the construction of timber cottages in brick areas.
  3. Individual officers who purchase homes in Canberra will be expected to face the results of market fluctuations, just as in any other city.
  4. This is a matter for the Federal Capital Commission, which stated some time ago that, in the case of an officer who purchased, within twelve months, a house which he had at first rented from the Commission, there would he no objection to an adjustment which would be equitable to the Commission and the officer concerned.
Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

asked the Minister representing the Minister for Home and Territories, upon notice -

Is it a fact that a person residing in the Federal Capital Territory who desires to provide accommodation for a boarder is not allowed to do so; if so, will the Government take action to cancel such a regulation?

Mr MARR:
NAT

– The answer to the honorable member’s question is: -

No regulation of the character referred to by the honorable member exists in the Federal Capital Territory.

page 257

AUSTRALIAN WAR MEMORIAL

Mr MARR:
NAT

– Yesterday the honorable member for Macquarie (Mr. Manning) referred to the Australian War Memorial to be erected at Port Said, and asked if the plans had yet been forwarded to that place. I am now able to inform the honorable member that plans for the War Memorial at Port Said were forwarded to the Official Secretary in Great Britain on 3rd April, 1924. Subsequently, however, mainly to meet the wishes of the Egyptian authorities, the original plans were slightly modified, and copies were for warded to London on 6th January, 1927, together with a request that the work should be commenced on the foundations for the memorial, for the stone work of which a contract has been let.

page 257

PAPERS

The following papers were presented : -

Navigation Service - Annual Report of the Director of Navigation for the year ended 30th September, 1926.

Ordered to be printed.

Arbitration (Public Service) Act - Determination by the Arbitrator, &c. - No. 44 of 1926- Commonwealth Public Service Artizans Association.

Census and Statistics Act - Statistics RegulationsStatutory Rules 1927, No. 1

Seat of Government Acceptance Act and Seat of Government (Administration) Act-

Ordinances of 1927 -

No. 2 - Auctioneers.

No. 3 - Provisional Government (No. 2).

page 257

STATES GRANTS BILL

Debate resumed from 9th March (vide page 254), 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” he omitted, with a view to insert in lieu thereof the following words: - “ in view of the State Governments’ heavy financial responsibilities, the bill he withdrawn.”

Mr JACKSON:
Bass

– I regret that I cannot run true to newspaper form to-day. It was stated in yesterday’s press that I was an opponent of this Bill, and I take this, the earliest opportunity in my speech, to say that that assertion is incorrect. In 1919, when I was first elected to this Parliament, I came here as a supporter of the retention of the per capita payments. I was opposed to the proposal that had just then been brought forward by the right honorable member for Balaclava (Mr. Watt) that the per capita payments should be gradually reduced to 10s. by a series of annual reductions of 2s. 6d. each. The right honorable member did not propose to substitute anything for the withdrawal of the per capita payment, and in that respect his was a very different proposal from that of the present Government. Listening last night to the speech of the right honorable member for North Sydney (Mr. Hughes), one might have imagined that he knew nothing of the scheme propounded by his Treasurer, the right honorable member for Balaclava. I think we are entitled to doubt the sincerity of his utterance. Are we to believe that his Treasurer was acting on his own initiative in putting forward such a scheme, and that he, the then leader of the Government, knew nothing of it ?

Mr Foster:

– Mr. Hughes was in England at that time for over twelve months.

Mr JACKSON:

– Does the honorable member suggest that Mr. Hughes was not kept informed of such a far-reaching proposal? I refuse to believe it. The Hughes administration is not the only Ministry that has proposed to alter the per capita payments ; but finding that the State Governments objected to a reduction of their grants with nothing to be put in their place, it quietly dropped its scheme. Since then no attempt has been made to alter the existing arrangement until the present, yet when a new Government takes over the task dropped by himself, the right honorable member for Balaclava castigates it for it refusing to adopt the spineless attitude of the Hughes Government. After hearing the speeches of the right honorable member for Balaclava and the honorable member for Batman (Mr. Brennan), whom I may regard as leaders of thought on either side of the chamber, I am quite satisfied that the moral obligation to continue the per capita payment does not come into question. It must have been a tremendous shock last night to the right honorable member for North Sydney when the AttorneyGeneral (Mr. Latham) confronted him with the words he had used at a conference of State Premiers regarding the per capita payment. He must have been smitten “ hip and thigh,” to use a delightful phrase he himself is so fond of using. The bill will have a very farreaching effect on Tasmania, particu- larly .when we compare the per capita payment in 1921 with the estimated receipts of Tasmania for the current year. In 1921, Tasmania received, as per capita payments, £272,514; whereas in 1927-28 it is anticipated that itwill receive only £267,367, a decrease of £5,147. At the same time the other States will have benefited by an increase of £1,135,000.

Mr Lazzarini:

– That is because the other States are more progressive.

Mr JACKSON:

– The other States may be more progressive, but at the expense of the smaller States. It has been said here over and over again that the larger States derive more than a fair share of the advantages given by our protective tariff. At any rate, several of the smaller States have been placed at considerable disadvantage because of it.

Mr Foster:

– They have been penalized.

Mr JACKSON:

-I thank the honorable member. “ Penalized “ is the right word to use..

Mr Fenton:

-What about the Tasmanian woollen, mills? Does not the honorable member want protection for them ?

Mr JACKSON:

– Yes. I voted for protection for the woollen industry, but that does not get over the fact that hitherto the protective tariff has not been of much benefit to Tasmania. That it may be in the future, I am very hopeful. Tasmania has a diminishing population, but it is not alone in that misfortune. The Island of Newfoundland, close to Canada, is also losing population, and is confronted with exactly the same problems as face Tasmania. The State I represent not only has less population to tax, but is unable to further decrease its expenditure. That has been clearly stated by the Labour Premier (Mr. Lyons), who in the last financial year contented himself with expending from loan funds only the very small amount of £250,000. The Prime Minister has indicated that after this bill is passed the State Premiers will be invited to confer with Federal Ministers. I expect that, as a result of that conference, Tasmania will receive treatment more in accord with its deserts than that which it receives today. I agree with the right honorable member forBalaclava (Mr. Watt) that the State Governments failed in their duty when they refused to discuss with the Federal Ministers the proposed discontinuance of the per capita payments. The honorable member for Fawkner (Mr. Maxwell) said that the Prime Minister and the Federal Treasurer should have met the representatives of the States and discussed with them the re-adjustment of financial relations. What does the honorable member do in the law courts when he is confronted with a hostile witness who refuses to talk?

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– He endeavours to have him put in gaol.

Mr JACKSON:

– The States have had more than one opportunity to discuss with Federal Ministers the proposal now before us, and, knowing that the Prime Minister and the Treasurer meant to proceed with it, their duty was to suggest some alternative. Instead of doing that, they took a haughty stand, and said that the subject was one which did not admit of a conference. Every State Premier has said that the Prime Minister adopted a standanddeliver attitude. It is obvious that the State representatives resolved to do the standing and make the Federal Government do the delivering. The opponents of this bill have expressed a tender regard for the taxpayer. I wonder whether the tender regard of honorable members opposite is for the unfortunate taxpayer or for the five Labour Treasurers who, if the bill becomes law, will be required to impose the additional taxation. I am authoritatively informed that at one conference a State Treasurer said, “It is all very well to talk about imposing additional taxation, but the Government that does that loses popularity.” But this Government may make itself ever so unpopular ! It seems to me that the desire to avoid an unpopular and, therefore, distasteful course is the real reason for most of the opposition of the States to the Commonwealth Government’s proposal.

Mr WATKINS:
NEWCASTLE, NEW SOUTH WALES · ALP; FLP from 1931

– Docs that apply to Victoria also?

Mr JACKSON:

– Honorable members opposite are, no doubt, acting in sympathy with the Leader of the Labour Op position in the Victorian Parliament, who, if his party should be successful at the election, will be faced with the same obligation to impose fresh taxation as confronts the other five Labour Premiers. The right honorable member for Balaclava admitted that the States have no moral right to a continuance of the per capita payments, and that he was not satisfied that there was no alternative to it. He proceeded to suggest that the financial re-adjustment should be a family arrangement between the Commonwealth and the States. The family atmosphere was strikingly absent from the last conference between Commonwealth and State representatives.My own view is that of the man in the street who pays the taxes. His concern is not as to how or by whom the taxes are collected, but asto how much he will be required to pay. And it is common knowledge that the average citizen who pays income taxation to both Commonwealth and States earnestly desires this Parliament to vacate that area of taxation. Much has been said regarding the greater revenue which the Commonwealth is able to derive from this tax by aggregating the incomes earned in more than one State and taxing them at higher rates. I have not been able to assess the value of that advantage, but Ibelieve that what the States will lose through not being able to aggregate incomes will be more than recouped by the saving in administrative expenses. In any case, I have a profound respect for the ingenuity of both Federal and State Treasurers in finding new sources of revenue, and I refuse to believe that the wealthy taxpayers, who, according to the right honorable member for North Sydney, will benefit under this scheme, will escape the clutches of the New South Wales Treasurer, for instance. The Government may or may not have a mandate for the proposed re-arrangement of the financial relations of the Commonwealth and the States, but every government in Australia has a definite mandate from the people to practice economy and reduce taxation. In any case, it is news to me that the right honorable member for North Sydney, andcertain honorable members opposite, feel themselves at liberty to do what they wish to do only when they have a definite mandate from the people. Some of those gentlemen have done rather amazing things in direct opposition to the definite mandate from the people. When the honorable member for Dalley was Premier of Queensland he sought from the electors a mandate for the abolition of the Legislative Council. The people declared that the second chamber should continue. But did that stay the honorable member’s hand? No!

Mr Fenton:

– He took the verdict of the people at a general election.

Mr JACKSON:

– And he obtained that verdict dishonestly. At no time while he was Premier of Queensland did his party represent the majority of the voters.

Mr Stewart:

– How did he manage to get into power?

Mr JACKSON:

– By jerrymandering the electorates.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– That statement is a reflection on the State of Queensland, and I ask that it be withdrawn.

Mr SPEAKER (Hon Sir Littleton Groom:
DARLING DOWNS, QUEENSLAND

– The honorable member to whom the remark applied is not present to take exception to it. Nevertheless, I ask the honorable member for Bass not to allege improper actions on the part of another honorable member; but to address himself to the bill.

Mr JACKSON:

– I remind the House of the significant fact that the Labour party has not been able to win one Federal electorate in Queensland, except Capricornia, since 1917. The honorable member for Batman said that the honorable member for Dalley had made two important jumps - from Brisbane to Dalley, and from Dalley to the Federal Parliament. The honorable member forgot to mention the landslide in the Herbert electorate as a result of which the honorable member for Dalley found himself back in Brisbane without an occupation. It is noteworthy, too, that when he decided to again attempt to reach the Federal Parliament, he chose another State in which to “ take off.” The Legislative Councils of the States have been held up as bogies to frighten supporters of the bill. We are told that where the lower chambers impose the taxation which the Federal Parliament has promised to remit, but that the Legislative Councils, as the strongholds of the rich, will reject such measures. I am of the opinion that reasonable restraint in finance is necessary in both Federal and State legislatures. When the members of a Legislative Council are faced with a proposal to levy additional taxation in fields evacuated by the Commonwealth, without in any way inconveniencing the State taxpayers, is it reasonable to expect that they will place their Government in a financial hole? I refuse entirely to believe that. I think that this Government is taking a certain amount of risk with regard to placing almost total reliance on Customs revenue. We have heard many honorable members comment upon the inordinate rise in the Customs revenue, but there are quite a number of reasons for that. Some honorable members say that the tariff is not high enough to protect Australian industries sufficiently. I should like to point out three or four factors in the enormous growth of the Customs revenue. One is growth of population, and another is higher values. Then there are the protection policy itself, and, perhaps to a lesser degree, the excessive borrowing overseas. Taking the first two items - the growth of population and higher values - had the present-day figures been computedon the same basis as were the 1910-11 figures, £13,000,000, we would have had to-day a Customs revenue of £24,000,000, instead of £44,000,000. On that basis, the difference between the figures for 1910-11 and 1926-27 docs not appear to be nearly so great as some of the free trade members of this House would have us to believe. We have also to take into consideration certain tariff items which have been imposed solely to meet war expenditure. I am not one of those who think that the present tariff policy is not protective. The way in which our industries are extending to-day is sufficient evidence to me that our tariff policy is highly protective. Regarding the gibes at the whips by members of the Opposition and those on this side who are opposed to the bill, let me remind them of the old adage that “ people who live in glass houses should not throw stones.” There are many in this chamber who have on their backs deep scars which the passage of time has failed to obliterate. The right honorable member for North Sydney (Mr. Hughes) must be pleased to find himself with such political bed-fellows as the honorable members for Swan (Mr. Gregory) Forrest (Mr. Prowse), and Perth (Mr. Mann). Seeing that the Western Australian members in this House are almost, if not entirely, unanimous in their attitude towards the measure, it seems to mc that they are opposing it solely because of their opposition to the Government’s tariff policy.

Mr Gregory:

– The honorable member is entirely wrong.

Mr JACKSON:

– I am glad to have that assurance; I feared it was not so. The right honorable member for North Sydney, when referring to the entertainments tax, said that the children of Australia would say, “ God bless Dr. Page.” I would remind him that the present Treasurer did not relieve the children of the amusement tax. I am astonished that the right honorable gentleman should wear such a cloak of modesty, especially in view of his amazing political career. He completely forgot that it was the last Treasurer of his own Government, the present Prime Minister, who discontinued the amusement tax, in October, 1922. That act left £1,000 a week in the pockets and purses of the children of this community. In any case, it is far better that the children should grow up with the idea that the Prime Minister, and perhaps the Treasurer as well, had acted as a sort of Father Christmas, than that they should bo imbued with bitterness against the right honorable member for North Sydney for introducing the entertainments tax in 1917.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– Surely the honorable member did not object to the entertainments tax?

Mr JACKSON:

– No. I have always been an advocate of that tax; but the right honorable member for North Sydney tried to ridicule the Treasurer by saying that he was responsible for something which the right honorable member himself had actually done. We were also asked by the right honorable member what we were going to say at the next election. He tried to crack the whip over some honorable members with a view to frightening them into opposition to the measure. It is a poor sort of individual who always keeps his eyes on the next election, especially when it is so far away as the next one promises to be, aud no one in this chamber is better able than the right honorable member himself to do this. I regret that the Tasmania]! grant has been embodied in the bill, but the fact remains that it is there. Under the present arrangement, that State is to be paid a special grant of £378,000 for two years. I regret that the grants to Western Australia and Tasmania are looked upon by certain honorable members as acts of charity on the part of the Commonwealth Government, because I maintain that those States are justly entitled to them. The Treasurer has stated that, under the readjustment, Tasmania will benefit to the extent of another £50,000 a year. . As a Tasmanian representative I have first to think how the proposal will affect my State, and then how it will affect the Commonwealth as a whole. I am convinced that it is in the- best interests of Tasmania. The Premier and Treasurer of Tasmania (Mr. Lyons) has issued circular after circular, endeavouring to prove that the amount that he will he able to collect when the Federal Government has evacuated the fields of taxation, as is now proposed, will not nearly approximate the amount that the Treasurer says he will receive.

Mr Fenton:

– He is quite right.

Mr JACKSON:

– I refuse to believe that the result will be as stated by the Premier of Tasmania. Even if such were the case, there is still £50,000 to be paid to Tasmania under the proposal outlined by the Treasurer. The per capita payment to Tasmania amounts to about £267,000, and Ave are to receive an equivalent sum, plus £50,000. That will place Tasmania in a good position.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– Only for one year.

Mr JACKSON:

– For two years.

Mr Maxwell:

– Who will pay the extra £50,000?

Mr JACKSON:

– The taxpayers of the Commonwealth, of course. Under the Tasmanian Grant Act, passed in 1924, Tasmania was to receive in the first year £85,000, which was to be reduced by the fifth year to £17,000. The Treasurer on that occasion said -

The Commonwealth promise was that the figure should remain at £68.0(10 for l!)26-27 nml 1927-28, Huw showing a gain of £ii 1,000 for these two years.

The bill now before the House amends the Act of 1924, and the last payment of £17,000 will disappear. I do not know what the Treasurer intends to do about that; but in view of the promise of the Prime Minister that after the two-year period he would have an investigation made into the affairs of Tasmania, I hope an intimation, will be given that financial justice will be_done to that State. The grant and the added advantage for the next two years - £50,000 each year, plus the Prime Minister’s promise - are an assurance to me that the bill will be of advantage to Tasmania, and of no disadvantage to the other States. I believe that it is the fervent wish of the general public that the Commonwealth shall cease to levy direct income taxation, and I hope that my vote will help them along that “desirable road.

Mr WATKINS:
Newcastle

.- I am contributing to this debate because certain speeches by honorable members have drawn attention to the confusion that has arisen on this question. It has been stated that the Government has a mandate to do this thing, but every honorable member knows that although the Government may have made a statement to that effect, it has no such mandate as is claimed. It stated that it was given a mandate to deport certain residents of this country. It staged the play, and to-day the wives of those residents are likely to be awarded compensation by the law courts of this country. The Government also had a mandate to revise the tariff, and to do many other things, and a promise was also given to hold a constitutional session as soon as Parliament had removed to its new home at Canberra. The constitutional session ought to be held, and if it is the intention of the Government to hold it, what folly it is at this stage to antagonize the Slates, whose assistance and co-operation wall be required before any alteration of the Constitution can be made. Notwithstanding the announcement that a constitutional session will be held, the Government a little while ago submitted ‘to the people proposals which were emphatically rejected. The people, who did not believe’ that the Government was in earnest, desire a complete revision of the Constitution. They believe that the Constitution needs altering materially, but do not approve of the pin-pricking that is now taking place. The honorable member for Bass (Mr. Jackson) has explained the effect of the bill on Tasmania. I am not aware that, when the grants were being made to Tasmania and Western Australia, any honorable member regarded them as charitable doles.

Mr Jackson:

– Does not the honorable member remember what the right honorable member for Balaclava (Mr. Watt) said about our holding out our hands for a tip?

Mr WATKINS:

– He may have said that; but he has said many foolish things. It is obvious that if the per capita payments cease, Tasmania, with only 40 per cent, of the field of direct taxation, must suffer. This Parliament will continually be required to vote grants. It is obvious that that State will not be able to collect sufficient money for developmental purposes. The hope of the States was contained in the concluding remarks of the honorable member, who disclosed the principal reason for the support accorded to the bill. It is hoped that ultimately the Commonwealth Parliament will cease to collect direct taxation, and that means that practically the only source of revenue for the Commonwealth will be the Customs and excise. It is wrong to collect revenue through the Customs. As one who believes in perfecting the industries of this country, I fear that the bill will bring about a reduction of the protective incidence of the tariff, and. that the indebtedness of this country will be met by the man with the biggest family, who is generally the poorest man. Some time ago the Treasurer handed to the State authorities the work of collecting Federal income taxation, and he said that the amalgamation of the Commonwealth and State Taxation

Departments would effect an economy. Has any economy resulted?

Dr Earle Page:

– An amount of £250,000 has been saved this year in the cost of collecting taxation.

Mr WATKINS:

– In making a statement of that kind the Treasurer omits to take into consideration many items of additional expenditure. What has happened is confusion worst confounded. While business people and others in particular States may have been relieved of taxation, those engaged in industries or commercial enterprises of an interstate nature have derived no benefit. It was stated at the time of the amalgamation that the idea was that the Commonwealth should eventually relinquish the field of income taxation. With the present bill has come another promise to that effect; but instead of being a proposal of a truly federal character, as honorable members who support the measure declare it to be, it is really anti-federal in its essence and application. The action of the Government will not stimulate the Federal spirit, but stifle it. One finds, on the Government side of the House, a situation that has never previously existed since the inception of the Commonwealth. Honorable members constituting a large section of the Government’s followers, including members of both ministerial parties, have pointed out the iniquity of the proposal. They have said that the bill should he withdrawn or postponed until a conference has been held. Never before have I seen a Government with so many opponents among its own followers as the present Government has with respect to this bill. The honorable member for Bass (Mr. Jackson) suggested that we should not talk of such a conference until the bill had been passed. But that would be a conference with a corpse!

Mr Thompson:

– How could such a conference be held?

Mr WATKINS:

– That is the Government’s proposal with regard to the claims of the States. ‘Ever since the expiration of the Braddon provision, any alteration of the financial relations, or other legislation by this Parliament affecting the States, has been preceded by a conference between Commonwealth and State Ministers. The present Government has adopted a new attitude by saying - “ We shall legislate first, and discuss the matter with the States afterwards.” I shall content myself by assuring the Government that if its proposal is persisted in it will have gone back on its mandate and on its promise to hold a constitutional session at Canberra for the purpose of dealing with necessary alterations of the Constitution regarding financial relations and other matters. By its present action, and by what it did in connexion with the last referendum, the Government has made it impossible to secure the consent of the people to the granting of increased powers to the Commonwealth.

Mr COOK:
Indi

.- I have no desire to give a silent vote on the bill, and I shall be brief in my remarks, since arguments for and against the measure have been advanced at length. The Government’s decision to grant the States £7,700,000 from July next, conditional upon an agreement being arrived at, and to withdraw £7,600,000, or thereabouts, which has been paid by way of the per capita grant, has my whole-hearted support, because it is the only way in which to prepare for a thoroughly comprehensive inquiry, such as all sections desire, to determine the basis on which surplus Commonwealth revenue should be distributed. The assertion of the State Treasurers that they would have to increase taxation considerably in the event of the withdrawal of the per capita payment is nonsensical. It has been said that, in Victoria, additional taxation to the amount of £2,144,000 would be necessary if the hill were passed. The general federal taxation returns £7,780,000, and we return to the States that amount less a bout £100,000 - the cost of collection - which, under the Government scheme, we are told, would be saved. So far as Victoria is concerned the land and income tax, the estate duties, and the entertainments tax yields £2,270,619, and we hand back to that State £2,144,796, showing a loss to Victoria of £125,853. These figures are disputed by certain State officials; hut, when the Treasurer expressed a desire that they should be investigated by a commission, the States would not face the inquiry. They have made up their minds that they Want, the per capita payment, and nothing else will satisfy them. If they have doubt about the accuracy of the figures, why do they not agree to such an inquiry? The Government has promised that, in the event of any discrepancy being discovered, it will make good any loss sustained by the States. To show the mis-statements in circulation concerning taxation I shall read a short letter that recently appeared in the Melbourne Argus over the name of a well-to-do land-owner. It reads -

Sir,

The Federal Treasurer (Dr. Pago) says that the States will receive more than they give up under the new arrangement. This may or may not be so, but has he considered the effect on individual taxpayers? Under the present Federal land tax an exemption of £5,000 of unimproved value is allowed. If the tax be transferred to the State this exemption will disappear and every primary producer, indeed every land taxpayer whose unimproved value is £5,000 or more, will be penalized. Perhaps Dr. Page will explain why they should submit to this additional burden. Farmers are already struggling under huge Customs taxation which has been greatly increased by the present Ministry. This is a matter which affects wheat-growers. To grow wheat to advantage an area of at least 1. 000 acres is desirable. Roughly, the value of such a farm in Victoria to-day is about £12 an acre. On the Wimmera, it is very much higher. A farm of 1,000 acres at £12 an acre represents £12,000 capital value. Deducting, say, £3 an acre for improvements, £3,000 leaves £0,000 unimproved value. The present exemption is £5,000, leaving a present taxable value of £4,000. When the exemption disappears this taxable value will he £9,000, making an increase in the farmer’s land tax of 125 per cent. Is this just or equitable?

Yours, &c,

W. H. White.

Echuca, 3rd March.

The fallacies contained in that letter are only equalled by those expressed by some honorable members in this chamber. There is this difference, however, that, whereas Mr. White is probably unaware of the facts, honorable members are not unacquainted with them. Should the States desire to increase their taxation, even by 125 per cent., that is a matter for them alone. If, however, they require only the amount that they now collect, why should they ask for more? I have prepared the following reply to Mr. White’s letter: -

Mr. White’s letter of the 5th March, published in the Argun, affirms that if the Commonwealth land tax is abolished, and the “ tax is transferred to the State, the present Federal exemption of £5,000 will disappear, and every primary producer, indeed every land taxpayer whose unimproved value is £5,000 or more will be penalized.” Why should it bc assumed that if the State collects the tax, instead of the Commonwealth, the amount of the present Federal exemption must disappear? The Commonwealth proposes to retire from taxation fields that, in the aggregate, yield more than the States are now receiving from the capitation payments, and it is quite open to the States to re-enact the Commonwealth legislation, or to pass legislation iri such form that at least the present incidence of taxation shall not be altered. So far as land tax is concerned, therefore, the States need only collect from that source what the Commonwealth is now receiving - no more and probably less. According to the illustration given by Mr. White the farmer who owns a farm of unimproved value of £0.000 now pays £20 4s. 5d. tax on a taxable value of £4,000, but “ when the tax is transferred to the State,’’ he will lose the benefit of the exemption of £5,000, and will pay tax on the whole amount of £9,000; which, under the present Commonwealth law. would amount to £55 10s. The removal of the exemption of £5,000, and the continuance of the present rate of Commonwealth tax, however, would mean that the State would raise from land taxation a much larger revenue than the Commonwealth now derives from that source. If this be done, it is in no wise a necessary consequence of the Commonwealth proposals, but a question of policy for which the State legislators must assume responsibility.

In the case of Victoria, a gain of £125,000 per annum would result from the adoption of the Government’s scheme. So far as I am concerned, it does not matter whether the land and income taxes which I pay are credited to the State or to the Commonwealth. I do not favour the discontinuance of the per capita payments in the expectation that I shall be exempted from taxation; but any increase that the State may put on me will not be due to the provisions of this bill.

Mr Fenton:

– What about the aggregation of incomes?

Mr COOK:

– That matter was dealt with fully last night by the AttorneyGeneral (Mr. Latham), whose opinion in the matter I am prepared to accept in preference to that of the honorable member for Maribyrnong. I have here an interesting statement showing that, for the last six years, the revenue derived from land, income, and entertainments taxes and estate duties in the several States has been remarkably consistent. It disproves statements made by State Ministers and in the press that the amounts to be derived from the fields of of the large fluctuations in years of taxation which the Commonwealth in- drought and years of plenty. The return tends to evacuate are uncertain, because is as follows: -

In the light of those figures, it cannot be truly said that reliance on these sources of revenue is likely to render the States insolvent in one year, and to give them a reasonable surplus in another year. As a matter of fact, the consistency of these returns is encouraging. An upward tendency is shown in them. During my campaign on the referendum proposals, I discussed the abolition of the per capita payments, and I found that the country people had no objection whatever to the Government’s scheme.

Mr Gregory:

– A few months ago the honorable member said the same thing in regard to the referendum proposals.

Mr COOK:

– The referendum proposals were opposed, on the one hand, by those who control 80 per cent, of the capital invested in the various States, and were intent on looking after their own interests, and, on the other hand, by. the industrial wreckers who believe in direct action. The per capita payments operate unfairly in respect of States like Western Australia. I am connected with two trading concerns which have an annual turnover of considerably over £500,000, and I know how difficult it is for small firms to set up in opposition to huge enterprises. If business men in a State like Western Australia attempted to establish industries to compete with those that are well established in a State likeVictoria, goods manufactured here could be dumped there, and all endeavours to set up local industries would be defeated. It is a foolish scheme that compels States like Western Australia and Queensland to participate in per capita payments on the same basis as States like Victoria and New South

Wales. Victoria is, probably, the wealthiest State in the Commonwealth. She certainly has the densest population. I submit that the per capita plan tends to make the wealthy States wealthier and the poorer States poorer, and, therefore, the sooner it is superseded the better for all concerned. The Commonwealth Government called a conference of State authorities last year to consider ways and means of remedying the inequity of the present arrangement, but when the State authorities came together they flatly refused to discuss the matter. In the circumstances there is nothing for the Commonwealth to do but to go ahead with its scheme, and call the States into conference afterwards.

Mr Gregory:

– The honorable member does not sign blank cheques as a rule.

Mr COOK:

-The States absolutely declined to confer with the Government on this matter.

Mr Maxwell:

– The Commonwealth Government, on its part, flatly refused to consent to the withdrawal of the proposal to abolish the per capita payments.

Mr COOK:

– It asked the States to submit alternative proposals, and they declined to do so. Honorable members have said that there was no reference to this subject in the Prime Minister’s policy speech; but, in my opinion, the following paragraph is definite on that point : -

The whole basis of these arrangements, however, was destroyed by the great war. The financing of Australia’s great effort in that struggle was undertaken by the Commonwealth, and to-day the Commonwealth is carrying an annual hurden of nearly £30,000,000 to meet the obligations incurred at that period. In addition, the Commonwealth has undertaken the obligation to provide for oldage pensions, and invalidity, as well as the maternity bonus. These obligations to-day amount to over £8,000,000. 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. The development of Australia as a nation, and the necessity of dealing with many great questions on a national basis, such as that of road transport, to which I have already referred, also’ renders necessary a re-examination of the financial relations between the Commonwealth and the States.

It passes my comprehension how, in the face of that statement, honorable members can argue that this proposal was not referred to in the policy speech. It has been stated that the Commonwealth is morally bound to continue the per capita payments, but those who argue in that way, apparently forget that there has been a war, in respect of which the Commonwealth has to meet an annual charge of £29,000,000. The interest on our war debt and the provision for sinking fund, will, as a matter of fact, continue for the next 50 years, and £8,000,000 of the expenditure will continue indefinitely. I often regret that I am not able to extract a little more from the Pensions Department to meet the urgent .needs of exsoldiers and their dependants who make appeals to me. Our expenditure on invalid and old-ago pensions amounts to £10,000,000; maternity allowance, £700,000; and defence from £5,000,000 to £5,500,000 a year. Our Customs and excise revenue last year was about £40,000,000, but, as the right honorable member for Balaclava (Mr. Watt) remarked, it may this year amount to £44,000,000.’ Out of this revenue we have, however, to meet those items of expenditure which I have just enumerated and others which amount to approximately £45,500,000 a year. The honorable member for Henty (Mr. Gullett), in speaking as a protectionist, said that indirect taxation - I presume he was referring to Customs and excise duties - must be reduced, and suggested that a. paltry duty on butter would not save the situation. I would remind the honorable member for Henty that the dairying industry is worth approximately £1,000,000 a week to the Commonwealth, and that it is as right to impose a duty on butter, in order to provide those engaged in the dairying industry with a living wage, as it is to impose Customs duties to assist the manufacturers in the cities. An effort should be made to assist that large body of workers who are struggling under sweated conditions in the dairying industry, and who are doing more than their share in contributing towards the development and progress of the Commonwealth. Honorable members should realize the value of primary production to the Commonwealth; last year it represented 96$ per cent, of our exports. Unless further consideration is given to the needs of primary producers, it will be impossible for many of them to remain on the land, with the result that still larger numbers will drift towards the already overcrowded cities. The right honorable member for Balaclava (Mr. Watt), in an eloquent speech, did not deal with the main points at issue. It is interesting to note the remarks of the right honorable gentleman when Treasurer. At a conference of Commonwealth and State Ministers in 1917, he said -

I propose to recommend that the Commonwealth Parliament shall be asked to diminish the payments progressively by 2s. fid. per head of the population in each year until the total payment to the States is 10s. per capita. That payment will continue definitely, for five years, subject to alteration at the end of that period, as Parliament determines. This means that, starting at the end of the period during which the present act guarantees the payment of 25s. per head, namely, on 1st July, 1920, we shall have 2s. fid. reductions over a corresponding number of years until the 23s. per capita payment will have been reduced in 1925-20 to 10s. per head…..

Allowing for the population progressing at the rate estimated by the Statist, in the following year, 1921-22, the loss to the States will be £1,400,840, and in 1922-23 it will be £2,170,518. In each case the loss stated is compared with the amount which the States would have received had the 2.”>s. rate been continued. In 1923-24 the loss to the States will be £2,976,062; in 1924-25, £3,827,078; and in ]92ii-2«, £4,723,632. This means, gentlemen, that the payment in 1925-26 to the States as a whole) will be £3,149,088…..

It is a subject for regret that this course is necessary, but 1 feel that it is absolutely imperative. It is better that the States should raise the money for themselves in the difficult circumstances operating than that the Commonwealth should attempt to raise it for them. Sooner or later the States may have to do without any help whatever from the Commonwealth. As against that, however, the business concerns of the States arc very valuable assets, which must prove fruitful sources of revenue. Almost certainly in the near future there will be a great increase in population, particularly if, by combined governmental activities, we reach out for it; while the large expenditure on soldier settlement must increase production and create additional revenue in various ways. The railways and other producing assets will, for instance, be benefited, and I do not anticipate that the States will be greatly embarrassed by the gradual reduction in the payments made to them. The proposal that the amount payable shall be reduced gradually is, of course, made in order that the States may have time to set their finances in order…..

Had effect been given by Parliament to those proposals the States would up to the year 1925-26 have lost approximately £4,723,632 without receiving an equivalent as is now proposed, and his scheme would have involved a further loss of, perhaps, £4,000,000. The right honorable gentleman did not refer to that aspect of the question. Honorable members are, I am sure, so satisfied with the AttorneyGeneral’s slashing indictment of the right honorable member lor North Sydney (Mr. Hughes’) inconsistency, that it is unnecessary for me to comment upon his contribution to the debate. I have always admired the wonderful work performed by the right honorable gentleman, at a time of national crisis, but in this instance he appears to be facing both ways. The right honorable member for Balaclava (Mr. Watt) also faced both ways in the speech that he made here. It has been said that the management of the affairs of the Commonwealth, during the last four years, has been characterized by financial muddle. My reply to that charge is that the war debt has been decreased by the substantial stun of £35,000,000, that £5,000,000 has been wiped off the capital value of soldier settlement lauds, and a further concession amounting to £5,000,000 made to the States in connexion with interest payments on those settlements. Although, considerable relief has been given, the Commonwealth Government will have to render further assistance to soldier settlement before long; otherwise it will be useless to expend the amount that is contemplated upon the migration scheme.. How could I, a practical farmer, advise’ a migrant to take up a block of land when returned soldiers find .it impossible to make a success of primary production ! As the finances of the Commonwealth will be fully taxed, the Government should hasten to arrive at an agreement with the States. Our commitments on account of the North-South railway, the Kyogle to South Brisbane railway, migration, and Northern Territory development, will run into millions of pounds, and that revenue will have to be raised by whoever happens to be in charge of the finances of the Commonwealth. So long as I remain a member of this House I intend to support loyally the programme that is enunciated by the Prime Minister and the Treasurer, and I believe that the majority of my constituents will support me in that attitude. It is proposed to hold’ a conference upon this matter, and I am confident that the result will prove satisfactory to all parties and be in the best interests of the people of Australia.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– I congratulate the honorable member for Indi (Mr. Cook) upon the electioneering speeh that he has made in the interests of the Country party. What is the real issue that faces honorable members? At the last election the party opposite went to the country with the cry “ We must have constitutional government.” Members of the Labour party were charged with being in league with disloyalists and communists, and the result was that the electors were stampeded into voting for the present occupants of the treasury bench. The withdrawal of the per capita payment was not made an issue at that election.

Dr Earle Page:

– The people took it for granted that the payment was to be withdrawn.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– We took it for granted that it was the settled policy of the Government to continue the practice that had been in existence since the establishment of federation. The Government has not been asked to take this action; on the contrary, it is meeting with opposition from allpolitical organizations. The platform which I have signed specifically instructs me to support the retention of the per capita payment. I understand that a promise on similar lines has been made by the National party. I am not aware of what has been done by the Country party. Had federation not been established, the States would now be receiving the whole of the Customs revenue. Federation was agreed to on the understanding that the States were to have returned to them a portion of that revenue. It has been said that the obligation of the Commonwealth in respect of invalid and oldage pensions and interest on the war debt amounts to over £29,000,000. If we were to vacate the field of direct taxation the revenue required for those purposes, as well as for the defence of Australia and the development of our territories, would have to be provided by Customs and excise duties, and it would be necessary to impose a purely revenue tariff. We should not then have an effective protection policy. A protective tariff is designed to ensure the establishment of local manufactures. When that object has been achieved to the extent that we are able to manufacture the whole of our requirements we shall not derive a great deal of revenue through the Customs. The idea of the Government is to retire from all avenues of direct taxation and depend for its revenue solely upon the Customs Department. The people will not stand for that. The real object of federation was to secure uniformity in legislation. Under the Government’s proposal, instead of having that uniformity, we shall have six collectors of land and income taxation, a state of affairs entirely contrary to the spirit of federation. The intention of the Ministry to convene a conference after the passing of the bill is analogous to a proposal for a conference between employers and employees to consider whether the employees’ wives should be allowed to do domestic work to supplement the family income and make good the losses sustained by wage reductions forced on the employees by the employers.

Dr Earle Page:

– It is not.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– The Government contemplates depriving New South Wales of between £2,600,000 and £3,000,000 of revenue each year.

Dr Earle Page:

– That is not so. We propose to take it after fifteen months, and, in the meantime, to discuss the position with the various States.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– But the conference will be convened after the per capita payments have been withdrawn. The attitude of the Ministry reminds me of a former public executioner in New South Wales, who enjoyed the reputation of being a very gentle man. It was said of him that when he was about to tie the rope round the neck of the unfortunate condemned man, he would say, “I will make it as easy as I can for you.” To do that he would give the man a long drop. This Government proposes to make the position easier for the States by immediately withdrawing the whole of the income which, under existing arrangements, they receive from Customs and excise duties. From a political point of view, this will suit the Labour party. The people of New South Wales are bearing a heavy burden of taxation at present. If the Government of that State is deprived by the Commonwealth Government of approximately £3,000,000 a year, it will be unable to continue with its public works policy. Consequently, there will be great general unemployment. The other States, no doubt, will be in the same position. Consequently, the Federal Government will have to answer to the people at the next general election. But 1 put the interests of the Commonwealth before the interests of my party, and urge the Government not to take this retrograde step. The honorable member for EdenMonaro (Mr. Perkins) said yesterday that not one prominent member of the Nationalist or Country parties of New South Wales or Queensland was opposed to the Government’s proposals. The honorable member spoke out of his turn, because an hour or two later, the right honorable W. M. Hughes, one of the most prominent Nationalist representatives from New South Wales, strongly condemned the bill. The right honorable gentleman, I remind honorable members, has had a very long experience in the public life of this country. He has been a member of the Federal Parliament since the inception of federation, is a former Prime Minister, and can be relied on always to have his finger on the pulse of the people. When I remember the record of those honorable members who are opposed to the bill, and compare it with that of the occupants of the front Government bench, I cannot help feeling impressed with the gravity of the situation. Not one member of the Ministry has had any State parliamentary experience, and, consequently, Ministers know nothing about the difficulties of the State administrations. The Prime Minister and the Treasurer both entered this Parliament as raw recruits.

Mr Brennan:

– They are a callow lot.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– All the Ministers are entirely lacking in State experience. Mr. Hughes, who spoke so strongly against the measure last evening, knows all about the instrumentalities of the States, how extensive are their activities, and how necessary it is that they shall be assured an adequate revenue to carry out their work.

Dr Earle Page:

– Is that the reason why he sought to withdraw the per capita payments in 1919-20?

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– It is not. The Labour party did not wish the principle to be embodied in the Constitution. The record of the Treasurer himself cannot be compared with that of the right honorable member for Balaclava (Mr. Watt), who also is opposed to the bill. Mr. Watt has had twenty years’ experience in the Victorian Parliament, holding office for some years as Premier and State Treasurer, and also has been Treasurer in a Commonwealth administration.

Dr Earle Page:

– Nevertheless, Mr. Watt at one time proposed the abolition of the per capita payments.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– But not in the way now contemplated. The Government proposes to cut off the payments in one operation. The honorable member for Swan (Mr. Gregory); another opponent to the bill, has to his credit seven years’ ministerial office in the Western Australian Government, and, because he knows how this measure will affect his State, he is strongly opposed to it. In the honorable member for Wakefield (Mr. Foster) we have another man who has had long experience in a State Parliament. With his ripe experience of State ministerial problems, he also is against this bill. My own respected leader, Mr. Charlton, had considerable training in the New South Wales Parliament, whilst the latest recruit to this House, Mr. Theodore, a former Premier and Treasurer of Queensland, and OUt who has attended several of the conferences with Commonwealth Ministers over this particular issue, has warned honorable members that the carrying of this measure will seriously in jure the State of Queensland. The judgment of the honorable members to whom I have referred is convincing evidence of the unwisdom of the bill. The honorable member for Eden-Monaro, as well as one or two other honorable members who contributed to the debate, unwittingly let the cat out of the bag. They told us that, as Labour Governments are in power in five of the States, it is no business of the Commonwealth to raise money for them. But we should not forget that Federal and State electors are the same people, sowe should look at this subject from an Australian stand-point. As a Labour representative, I would scorn to vote for any measure which, whilst it might advance the interests of my party, would be injurious to the people generally. The financial relations of the Commonwealth and the States should not be viewed in any narrow way. Because the Labour party is in power in five of the States, that is no reason why the Commonwealth Government should do anything to deprive them of their legitimate share of the Customs and excise revenue. The honorable member for Eden-Monaro asked why we should come to the assistance of five State Labour Governments by handing them this money. Whose money is it? It is the people’s money. The people of New South Wales, for example, contribute to the revenue from Customs and excise, and are entitled to share in it. We are told that the State Governments can impose direct taxation ; but if they do so they will derive no advantage from the taxation imposed upon their people through the Customs House. I do not desire to see the Commonwealth Government humiliated, but honorable members opposite must know that the proposal now under discussion is not popular. If the passing of this bill were not made a party question the majority of honorable members would reject it, because the proposal has never been put before the people. When it was recently proposed to put some questions to the people by way of referendum the Government must have had this proposal in mind, if, as it is claimed, it was part of the mandate given them by the people, and why then did they not submit it to the peoplewith the other questions submitted at the referendum?

Dr Earle Page:

– This proposal was then before the Parliament.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– The Government kept it up its sleeve and gave the people no chance to deal with it at the referendum. If this measure were submitted to the people it would be rejected by a majority of four to one. The Government cannot point to any State or any body of opinion demanding that it should proceed with this measure. The Treasurer believes that there should be only one collector of taxation, and claims that it would reduce the cost of government if the field of direct taxation were evacuated by the Commonwealth. He overlooks the fact that the States must provide machinery for the collection of direct taxation.

Dr Earle Page:

– There is already such machinery in most of the States.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– No doubt the Commonwealth Government would save money now spent to collect direct taxation if it evacuated that field; but the State Governments would have to increase their staffs to cope with its collection. We have listened to some lectures upon the extravagance of the State Governments. I have no wish to institute comparisons, but the expenditure of the Commonwealth Government is far greater than that of the State Governments. When the Treasurer first entered this chamber he continually denounced the right honorable member for North Sydney (Mr. Hughes) and others because of the extravagance of the then Commonwealth Government. He demanded that light should be thrown upon its expenditure. But the expenditure of the Government of which he is himself a member has far exceeded that of the Government he condemned.

Mr Foster:

– The “loot” the honorable gentleman talked about then is well covered up now !

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– There is no doubt that the light will be turned on when honorable members opposite go before the country on the next occasion. They stampeded the electors at the last Federal election, but the people are now realizing the mistake they made.

Dr Earle Page:

– They did not seem to realize it at Dalley, where the Labour majority was reduced by 2,500 votes.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– The honorable gentleman cannot derive much satisfaction from that when he remembers that the present member for Eden-Monaro polled very much less than the vote recorded for the late Sir Austin Chapman. The Government is’ determinedto pass this measure, in spite of the fact that development in the different States will be prevented if the State. Governments are to receive nothing from the Customs and excise revenue. The result will be unemployment throughout the Commonwealth. Then a reaction will set in from which, no doubt, the party on this side will benefit. I do not desire that the party on this side should benefit at the expense of the progress of the country. I had the pleasure of going from Queensland round to “Western Australia with a commission, and was very pleased to observe that there appeared to be abundant prosperity and progress in every one of the States. We are told of the great debts of the States, but if Queensland and the other States are to construct railways, and open up the country for settlement, they must borrow money for the purpose. This proposal will check railway construction and development in the different States. The Commonwealth Government can construct railways for the purpose of development only within territories under its control. There might be something in the proposal if it were provided that the money now covered by the per capita payments would be expended in the unification of our railway gauges. That would give employment to the people, and would relieve the State authorities of some of their burden. What is proposed is that the State Governments shall be deprived of over £7,000,000 derived from Customs and excise taxation, and they will then be invited to meet representatives of the Commonwealth Government at a conference, where they will be told that they will be allowed to impose direct taxation. What a very generous offer ! We know that the collection of taxation is not popular, and because there are five Labour Governments in the States, honorable members opposite propose that they should be made unpopular by compelling them to levy direct taxation. The members of the party on this side stand for the distribution amongst the States of a certain amount of the revenue derived from Customs and excise. No State should suffer as the result of any action taken by the Commonwealth. If, at the time of Federation, it had not been made clear that, under the Constitution, the State authorities would receive part of the revenue from Customs and excise, there would have been no Federation. The States then trusted the Commonwealth

Parliament, and have continued to do so for a quarter of a century. It behoves the present Government to act in good faith towards the States by withdrawing this bill, or modifying it in such a way as will promote harmony between the States and the Commonwealth.

Mr MACKAY:
Lilley

.- The merits of the Government’s proposal have been fully discussed, and its good points as well as its weaknesses brought out. After carefully following the debate, I am convinced that the per capita payments as such must either cease now, or in the very near future. During the last financial year they amounted to £7,530,615, and as the population of the different States increases, the total amount of the per capita payments must also increase. I remind honorable members that the British Government advanced £34,000,000 to the Commonwealth to assist migration. We are all agreed that Australia must have a larger population, and if the methods adopted by the British Government and the Commonwealth are successful the result should be a large increase in the population of Australia. In that event, the Commonwealth Government will he placed in the position of having to find 25s. per head for each of the new arrivals, in addition to the £7,530,615 it is compelled to hand, over to the States at the present time under the arrangement to make them per capita payments. Many members of this House believe in a protectionist policy for Australia. I have myself advocated protect tion for some industries with which I am concerned. It is the object of every good protectionist to make the tariff effective against the introduction of goods from abroad. If our tariff is to operate in this way I cannot see how any Commonwealth Government is going to raise sufficient revenue from Customs and excise to meet the demand of the States for the continuance of the per capita payment. An effective policy of protection should mean that the present large revenue from Customs and excise would cease. I am very sympathetic towards the State authorities in view of their responsibilities and the need for development in all the States. I am aware of the splendid work they have accomplished in the way of railway construction and inland settlement. But I cannot -understand what objection can be raised to the cessation of the per capita payments if the Commonwealth Government is willing to make such arrangements as will enable the State Governments to raise revenue equal in amount to the per capita payments made at the present time. It is said that the Commonwealth Government is adopting a wrong method in dealing with the question. Some honorable members have said that, before 2’assing this bill, a conference with the State authorities should be held to see whether some mutual agreement cannot be arrived at. The Commonwealth Government has met representatives of the States in conference, not once, but three times, and nothing useful has resulted. It apparently has come to the conclusion that some gentle persuasion is necesasry to convince the State Governments that it is sincere in its desire to abolish the per capita payments, believing that some more equitable method of dealing with the financial relations between the Commonwealth and the States should be arrived at.

Mr Brennan:

– But there is to be a conference.

Mr MACKAY:

– A conference is proposed after the passing of this bill. Some honorable members contend that this legislation should first be withdrawn and we should then repeat the farce of the State Premiers solemnly assembling, knowing perfectly well that no solution of the matter will satisfy them that does not provide for retention of the per capita payments. It has been suggested by the Prime Minister (Mr. Bruce) that there are quite a number of ways in which the States can be given assistance if the per capita payments are .abolished. The suggestion has been made that we should hand over to the State a considerable percentage of the direct taxation we now impose, or that we should pay money into a sinking fund to redeem the State debts, or take over a considerable portion of those debts. All these methods could be thoroughly discussed, and along those lines I think we could arrive at some solution of the difficulty. But it is an undoubted fact that the obligations of the Commonwealth have considerably increased. For instance, we have taken over practically the whole of the expenditure on immigration; and, although the matter has been subjected to a good deal of criticism, we have provided money for the construction of State roads. I am satisfied that none of the States would have spent their proportions of the money on these roads had it not been for the generous offer of the Commonwealth, and,’ in. any case, no matter where the money comes from it is pleasing to the people to know that they are being provided with better means of transport in country districts. We have also taken, up the question of national insurance, and in years to come very material assistance will be given to the people of the States in that direction. Another step involving considerable expenditure is the appointment of a Health Commission to coordinate the health activities of the States. We have also set up a council to bring about an improvement in scientific and industrial research. We have, therefore, incurred heavy financial obligations in many directions. During the course of the debate on this bill the Government has been given a considerable amount of advice, but the whole position can be summed up briefly. The Government finds that the present system of making capitation grants to the States is wrong, and very rightly it says that some action should be taken to remedy what it regards as a defect. I do not think that any member of the National party or the Country party can suggest that this Bill has come to him as a surprise. Twelve months ago its provisions were fully explained by the Treasurer (Dr. Earle Page) at a combined meeting of both parties, and it is unfortunate that a certain proportion of the almost unanimous support which was then promised to the Government has since been withdrawn. The support which was given on that occasion quite justified Ministers in telling the people throughout the States that the Government intended to proceed with its proposals in this direction, and that the States, whether they liked it or not, would be compelled to agree to some alteration. I do not blame the Treasurer or the Prime Minister for taking the stand they have taken during the last fortnight. No self-respecting Ministers could do otherwise. Certain honorable members have altered their opinions on the merits of the Government’s proposals ; but it is not a simple matter for a Government to retract publicly-made statements of policy. If, because of the opposition of a few leading members of its own party the Government were prepared to break its promises, sink its political principles, and withdraw the bill, I am sure we should all enjoy listening to the withering scorn which the honorable member for Batman (Mr. Brennan) would heap upon it. I do not think the Government would be justified in withdrawing a bill of such importance. It would be far better for Ministers to suffer defeat, knowing that they had the courage of their convictions, than to be dictated to by a few leading members of their own political party, or by the press of Australia.

Mr FOSTER:
Wakefield

– I shall be brief in ray remarks, because a good deal of the matter I have collected has already been made use of in admirable and powerful speeches which have not yet been answered by the Government, simply because the arguments advanced in them were unanswerable. I put the blame for this legislation on the Leader of the Country party (Dr. Earle Page). I am not a member of the Country party, but I have been a country member all my life. I do not care so much how things get on in the cities; for the full 35 years of my political life my influence has always been used for the benefit of the primary producers and rural districts. At the outset of my remarks, I wish to know why there is such a desperate rush to pass this legislation at a time when we have other matters of pressing importance to consider, and when it is recognized that within three or four weeks the House must adjourn for the celebrations during the visit of the Duke and Duchess of York, and the opening of our permanent home at Canberra ? We are told that the Government had a mandate for this legislation. It has been made as clear as noon-day that no such mandate has been given, and that the Dandenong speech of the Prime Minister (Mr. Bruce) contained nothing more than a simple reference to the recommendation of the Western Australian Disabilities Commission that there should be a review of the whole financial position as it affected the States and the Common wealth. The right honorable gentleman said that that suggestion “ was to be considered.”

Mr Cook:

– Hear, hear!

Mr FOSTER:

– My friend is a farmers’ man, and yet he is doing his level best to injure the farmers by supporting an outrageous proposal for which there has been no mandate. There was a mandate given by the people at the last elections, a more definite mandate than had been given at any previous election, and that was to clean up industrial troubles. If it had not been for the feeling that then existed throughout Australia, supporters of the Government would have had a pretty tough fight; but it was as easy as falling off a log for them to be elected. The people said, “ Nothing elsecounts ; clear up this industrial trouble.” Yet that important mandate was only partly observed, and financial questions of great importance have been put to one side. For the last two or three years this House has had no proper opportunity to overhaul the finances or investigate with any degree of thoroughness the public expenditure. It has not had time to do so. Whether by design or not, these important questions always have been left to the concluding weeks of Parliament, when they have been rushed through without proper consideration. Yet they are bread and butter matters, about which the people should know a great deal more than they do. The financial arrangement with the States has been in existence for 27 years, and it has not given any trouble, save to bring about periodical discussions, mostly academic, which have led to nothing. The honorable member for Bass (Mr. Jackson) was striking below the belt when he made certain charges against an old friend, in connexion with the revision of the per capita arrangement. The honorable member did not know what he was talking about. Apparently he could not distinguish between the conditions prevailing when the right honorable member for North Sydney (Mr. Hughes) was Prime Minister, and those existing to-day. Moreover, the proposals he now condemns were those of the right honorable member for Balaclava (Mr. Watt), and the then Prime Minister (Mr. Hughes) was not responsible for them, because, accompanied by

Sir Joseph Cook, he was absent in London for about fifteen months. In those days Parliament could meet and do business during the absence of the Leader of the Government.

Mr ABBOTT:
GWYDIR, NEW SOUTH WALES · CP

– ‘At that time they used to play the game.

Mr FOSTER:

– Yes. They used to play the game until we had the pact between the National party and the Country party. When the present Prime Minister (Mr. Bruce), as Treasurer, presented a budget, the simplicity of which captivated the whole community, because it could be understood so easily, the present Treasurer (Dr. Earle Page) had a good deal to say about it. I advise honorable members to read Page on Bruce, and Bruce in reply to Page. Yet to-day we find these two honorable gentlemen cheek by jowl, like two blind sisters, in agreement to dive into expenditure never dreamt of before. The extravagances which attracted the unfavorable comment of the present Treasurer were a mere flea-bite to those of to-day, the only difference being that the latter are covered up in the budgets of to-day. The opinion in the country is that the present proposals have emanated from the Treasurer, and not from the Prime Minister. .There was no mandate for this legislation at the last election. There was hardly the shadow of a mandate for it. There is to-day’ more strenouous objection from the press and the people of Australia to the Government’s proposals than I have previously known in my political experience. There must be some good reason for such unanimity. The great Liberal party in South Australia is disgusted with the precipitancy Avith which the Commonwealth Government is endeavouring to dispose of an issue affecting the welfare of the States as well as the Commonwealth.

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

– The honorable member believes in State rights?

Mr FOSTER:

– I do; but I do not believe in men advocating State rights in the country, and voting in this chamber to destroy them. Moreover, I am confident that if honorable members who support the Government were at liberty to follow their own inclinations, this measure would not be passed. Because of its attitude towards the States, this Government has been condemned more universally than any Federal Government in the history of the Commonwealth. We have been told that the representatives of the States would not meet Commonwealth Ministers in conference. That is true, but the unfortunate State Treasurers were in. desperate straits because of the financial embarrassment resulting from enormous and annually increasing liabilities, such as could not have been anticipated. When their existing troubles were added to by the Commonwealth proposal to discontinue the per capita payments, they regarded it as so unfair that they refused to discuss it. But, finding that the Commonwealth Government Avas determined to proceed with the scheme, they pleaded with the Prime Minister to meet them again. He refused to do so.

Mr Bruce:

– That “is not so. At a conference, the Government’s scheme Avas submitted and discussed. The Premiers were invited to state their views. They refused to do so. They met subsequently, and asked that the Commonwealth should reopen the whole proposal. I said, “We have already discussed the general principle, but Ave shall be delighted to discuss with you the methods by which effect is to be given to it.

Mr FOSTER:

– I am glad to have that assurance, because I have been differently informed. Nevertheless, the Prime Minister’s explanation does not alter the position very much. I am not prejudiced as to the form any financial adjustment shall take. I am one of the few Liberals in this House who believe in having one taxing authority, and in the Commonwealth withdrawing from the field of direct taxation as soon as possible. The Prime Minister and the Treasurer have declared very definitely that there is no constitutional, legal, or moral obligation on the Commonwealth to continue the per capita payments to the States. I admit that there is no constitutional or legal obligation, but there is an implied moral right in the States to share in the Customs and excise revenue. Indeed, that Avas a fundamental principle of the Constitution. I attended nearly every sitting of the Federal Convention in Adelaide, and I know that the aim waa to achieve a true federation. The opinion of the delegates was that, on account of our immense territory, the development and defence of Australia would be best assured by a federal form of government. All constitutions then existing, including those of the United States of America, Canada, Switzerland, and the various States, were examined by thu delegates, who were big men, rich in ability and wide in outlook. When they gor. down to the financial provisions their difficulties began, but, as the result of many sittings in committee, a plan was evolved for the States to participate in the Customs and excise revenues to be collected by the Federal authority. In accordance with that agreement, the States for some years received threefourths of the whole of that revenue, and had the exclusive collection of direct taxation. It was very difficult to get the people to consent to the union, which meant the surrender of some revenue to a new central parliament. The States had very slender resources; low prices ruled for all products, and every State Treasurer had to look carefully at a pound before spending it. There were few ministerial jaunts in those days; a Minister could not even go to Victoria or I New South Wales to study what was being done there, because the State finances would not bear any additional expense.- Nowadays one can rarely enter a railway carriage without being crowded out by politicians travelling in search of information. A few days ago I was speaking to Sir Josiah Symon, who was one of the legal giants of the Federal Convention, and chairman of the constitutional committee at its meeting in Adelaide. His reputation in South Australia as a constitutional lawyer is such that, if ever an amendment of the State constitution is proposed, the people in every electorate ask, “ What does Symon say?” He still follows federal politics as closely as he did when he was a cham-! pion of State rights in another place.

I When he heard of what this Government, is proposing with regard to the per capita payments, he said, “ You ure going mud. It is incomprehensible that a Nationalist Government should want to commit political suicide by seeking to destroy the States.” When Sir Josiah was a member of another place, he said many times, “ God forbid that the great corner-stone of federation - the constitutional provision which ensures the safety and solvency of the States - should ever be jeopardized or injured.” He expresses the same sentiment to-day. The right honorable member for Balaclava (Mr. Watt), when Treasurer in 1919, proposed to tamper with the per capita payments. At that time the then Prime Minister (Mr. Hughes) and his lieutenant (Sir Joseph Cook) were in England. The Australian people were staggering under financial burdens which appalled even the stoutest hearts, and the Mother Country, in glorious self-sacrifice, although bearing the financial burdens of her allies as well as her own, handsomely offered to relieve Australia by advancing the money for the feeding and maintenance of our soldiers abroad. Up to that time the strain had been almost unbearable, but with good seasons and good prices for wheat and wool we soon were able to breathe more freely. It was because this Government did not know which way to turn for money that the then Acting Prime Minister and Treasurer (Mr. Watt) put his proposal before the States. The Liberal party refused to accept it, and so it was dropped. To-day the honorable member for Bass (Mr. Jackson) made a speech that had no semblance to his former speeches in which he cried about the needs of Tasmania and the way in which that State was being ruined by federation. The framers of the Federal Constitution worked day and night at the convention to provide for the safety of the State’s, and particularly of the smaller States. At that convention were men of wide experience from Tasmania, and they hung grimly together with Sir Edward Braddon as their leader. The convention, from the beginning, realized that Tasmania required nursing. For that reason a portion of the Commonwealth’s Customs revenue was set aside for the States, and particularly for Tasmania. The Constitution also provided for additional assistance to necessitous States. Such assistance has been given, and it will continue to be given. I am surprised that a representative of Tasmania in this House should support the withdrawal of the per capita payment to that State, especially in view of its parlous financial position. The State of Western Australia has a great future, and is, therefore, entitled .40 special consideration. For some time’ that State collected its own tariff revenue, and it has also had considerable assistance from the Commonwealth. We are putting money into a good bank, because Western Australia is bound to be a great country. It has reached a stage of rapid development, to which most States are contributing in manhood, in money, and in other ways. Are we justified in so precipitately cutting off from the States a wise provision that has been justified a thousand times over during our 27 years of federation? All the States say “ No.” With them it is a question, not of politics, but of financial life or death. The great banking interests, the financial experts, and the great commercial leaders of Australia are practically all united in their opposition to this measure. Sir Henry Braddon, the president of the Australian Chamber of Commerce, and one of the Prime Minister’s ablest financial advisers, recently passed through Adelaide. The Chamber of Commerce there asked for his advice on this subject. He replied that he had been swimming in figures for weeks, and had come to the conclusion that the Australian States could not long survive the withdrawal of the per’ capita payments. The Government’s proposal, if given effect, must bring about a calamity; but I am not taking a gloomy view, because I am certain that it will never operate. Although the measure may pass this House by a small majority, there is still the Senate to be consulted. No government, especially this composite ministry, could survive the storm of protest that must arise if this proposal is forced on the country. A number of people say flippantly that the people outside are taking little notice of the Government’s proposals. In my opinion, they think a lot more about what is done in this Parliament than those inside it and about the cities. Our best citizens are in the outback country. On Sundays, in places where no church is in the vicinity, these men read Hansard. They know what is being done in this chamber. The per capita provision was made for them. There is a

Country party in this chamber, and I have been told that the Treasurer has ten- twelfths of them in his pocket. What sort of a party can it be? This measure affects the producers more than any other section of the community. Under existing conditions the passage of the measure by a majority of four or five votes would be almost equivalent to defeat. I shall stand by the per capita principle and by the States. People say that this is the day of young men, and so it is. They have glorious opportunities, but how many of them are cutting out a track to enable them to shoulder the responsibilities that were undertaken by the men of the past? The great majority of our young men are absorbed in pleasure, and in anything except real downright work and a conscientious endeavour to shoulder their country’s obligations. A contemptible and paltry reference that we very often hear to-day is that State righters are little Australians. Unless we give the States fair play we shall never have a happy Commonwealth. Only prosperous States, big or little, will make a prosperous Commonwealth. This Government and its followers are putting a dagger into the heart of this rock-of-ages principle that was designed to ensure the safety of the States. A certain person at the Federal Convention caused a lot of trouble. He was a “ Yes-no “ delegate ; although his counsels prevailed at the finish. He and many others at the Convention wanted to make the States safe for all time. Now this Government proposes to nullify their work by withdrawing the. per capita payments. Are we not dangerously near, the track of unification, leading to financial strangulation and the desertion of the people on the land, undoubtedly the best citizens of Australia? We are deserting them. I know that an adjustment which may be as good for the States as the per capita payment maybe made; but will it be made? The Government is now suggesting generous treatment of the States if they will reason with the Commonwealth, will consent to put their arms round each others necks, and agree. It is contemptible to thrust a dagger into a man, and then say, “ We will confer with you.” ‘ It is not Liberalism ; it is not even honest. There is an implied obligation in the Constitution. Whatever adjustment we make now should endure, and would endure if we treated the States decently. The moral obligation may some day be essential for adjustments on the side of the Commonwealth, as it is essential to-day for adjustments on the side of the States. The amendment of the Constitution cannot imperil the nation in time of war, for the Government, if necessary, can again have recourse to emergency legislation. In war time that would be the proper thing to do. The Treasurer is a confessed’ unificationist; he has distributed pamphlets on the subject, and has advocated unification on many platforms. When the Federal Constitution was drafted every statesman in England said that it was the finest instrument of government that had ever been given to a free and enlightened people. When five of the framers of it took it to England to have it passed through the British Parliament, all the newspapers in the world eulogised thom and those associated with them in its production. It is now proposed that it should he amended.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– By inexperienced nien.

Mr FOSTER:

– .No ! God forbid! Many amendments are needed in the Constitution, but they cannot be made, because the people - and I do not blame thom - will not trust this Parliament. Does it ever occur to those who worry themselves about amendments of the Constitution that this Parliament has many powers that it has never exercised? It is a scandal that this Parliament has never dealt with the marriage laws. The highest principles of humanity demanded consideration of that subject long ago. For how many years did the provision relating to the insolvency laws lie hidden in the Constitution before we attempted to legislate under it? Members of the commercial community in <ivery State were humbugged and suffered enormous losses, but it was very late in the day when this Parliament set itself to pass an act which is not in working order even now. The Treasurer would accomplish more than he is doing if he gave his attention to such commonsense matters. If all honorable members wore free to vote faithfully for the people on this big constitutional question, there could be but one result.

Mr Makin:

– Are not honorable members on the Government side free men?

Mr FOSTER:

– That is for them to demonstrate. I know that the interests and safety of this country are in danger, and therefore I shall do everything that is humanly possible to prevent this bill from being passed. Something has been said about a mandate; but the Government has other mandates that it has not executed. Those who say that no great moral principle- is implied in the Constitution in regard to per capita payments are dangerous men to this Commonwealth. There has been some talk about a constitutional session. The holding of such a session would do no harm, and may brighten up the minds of some people and educate them on the foundational principles underlying the safety of this country. That form of education is badly needed. But if the question is put to the people, I am willing to give odds of ten to one that they will not approve of the change. Switzerland is one of the most democratic countries in the world; hut in the matter of changing her constitution is one of the most conservative. Proposed amendments of the constitution of that country are submitted to the people year after year, and arc turned down for eight or nine years, until the people, wearying of well-doing, allow them to pass. It is much the same in Australia. Again and again attempts have been made, with no result, to obtain the people’s endorsement of proposals to alter the Constitution. To the representatives in this chamber of country constituencies I say, with all the earnestness at my command, “If you forsake the farmer now, God help you, for you will meet the fate you deserve.” The Prime Minister has admitted, and the right honorable member for Balaclava (Mr. Watt) has stated, that the principal advantages of the Customs tariff are obtained by two big cities. Who, on the other side, balances the ledger? It is balanced by the small States and the primary producer, who is the base of all our prosperity. How did we get through the war? We did it on the back of the Australian merino.

During the war, the primary producer had a good time, but prices are now receding. Wool is still saleable at a satisfactory price, and is the best line of produce that we have; but the price of wheat is near the bare cost of production.

Mr Stewart:

– It is below that.

Mr FOSTER:

– It is, unless the crop is a large one. The burden placed upon the wealthy farmer has to be carried by the small, struggling farmer. The big man, by employing the latest implements, can reduce the cost of production and show a satisfactory result, but the little man, who cannot afford the same facilities, is having a bad time.

Mr Gregory:

– And will have a worse one.

Mr FOSTER:

– Probably he will. If Parliament passes this bill, the people will wipe the Government out of existence. And so they should. Australia is a high tariff country, and, as a rule, this House and the producers’ representatives in it have been most generous to the secondary industries. The manufacture of agricultural machinery in Australia has been of great benefit to this country. The employees in that industry do not “ go slow.” They receive big wages, and Australia can afford to pay big wages to those who earn them, but, when a couple of men put together a few sheets of iron, I object to the Minister for Trade and Customs declaring that another great industry has been established in this country. And up goes the tariff! Up-to-date machinery and the best brain-power available are required to produce efficiency in manufacture. It would he wrong, however, to place the States on an unfair competitive basis. The Government, by this measure, is deserting the men it ought to assist, and they, with others, will rise in a mighty army and tell the public that in some of the big manufacturing establishments high wages are being paid to men where there is not efficiency. During the last two election campaigns, my keynote was industrial efficiency, and I spoke for almost an hour on the industrial system in vogue in Canada and the United States of America. The Treasurer, who recently visited these countries, must be aware of the local conditions. The honorable gentleman has been travelling about Australia in an aeroplane; but, if he would come down to earth, and deal with bread and butter affairs, it would be advantageous to the people. What authority has the Government for opposing the States’ demand for a share of the Customs revenue? I know something of the diificulties associated with. State administration, and I agree with the right honorable member for Balaclava (Mr. Watt) that the State financial responsibilities have increased enormously of late years. The population in the various metropolitan areas has grown to. such a remarkable extent in the last twelve or fifteen years that, despite the tremendous capacity of the water supply systems, they are not nearly big enough to cope with the increasing demands. All the other State services enumerated by the right honorable member for Balaclava (Mr. Watt) involve staggering burdens, severely taxing all resources.

Mr Coleman:

– What does the honorable member think of the proposal for taking over’ the State debts ?

Mr FOSTER:

– I am greatly enamoured of the suggestion of Mr. Warren Kerr, and I should agree to anything in the form of a quid pro quo, so long as the Government retracted the wicked statement that the States have no moral claim to a continuance of the per capita payment. We know that States that have not been extravagant are in a serious financial position. I have faith in the common sense of the people, and even in the wisdom of this Parliament. If the bill should be agreed to. in this House, by a majority of four or five, the position of the Government would be almost as humiliating as if the measure were defeated. Fortunately for the country, it must run the gauntlet of the other branch of the legislature, whereI wish it good luck.

Mr BELL:
Darwin

.- When the House dealt with the Estimates last session I clearly defined my attitude towards this measure, and I do not propose to repeat what I said on that occasion. Since then theright honorable the Prime Minister has made a statement to the House, in which he has to some extent suggested that objections that I and others raised previously may be met, since the Government is willing to confer with the States as to what action shall be taken af ter the passage of the bill. He has stated definitely that the Government will be more than fair - that it will even be generous - -to the States; but it appears to me that, if the Prime Minister wants harmony - and no doubt he does - between the States and the Commonwealth, he has not given exactly the gesture likely to promote it by declaring that first of all the per capita payment must cease. His statement that it is impracticable to discuss further with the States the question of the withdrawal of the grant is unfortunate. If he insists on the bill becoming law before the holding of a conference, I am afraid that there is not much hope of further discussion in any -atmosphere such as is required to produce and preserve harmony. I shall briefly deal with some of the arguments advanced by the Prime Minister and put forward during the debate. The Prime Minister said that there were several ways in which the Commonwealth could meet the States, and he hoped that adjustments would be made which would be satisfactory to them. One of the suggestions, of course, was that the Commonwealth might take over the State debts, or, rather, provide a sinking fund for their liquidation. The right honorable gentleman seemed to suggest that the Commonwealth would consider such a course of action, and I think that he expected to be understood to mean that that would be done if it were the unanimous wish of the States. He and the Treasurer have always contended that it is necessary to separate State and Federal finances. If the Commonwealth is to take over State debts, or provide a. sinking fund for their liquidation, State and Commonwealth finances, it seems to me, will become more involved than they now are. Personally, I cannot see much difference between paying Customs revenue to the States - it has been called surplus revenue - on the per capita basis, and paying a similar amount of money into a fund for the purpose of liquidating the debts of the States.

Dr Earle Page:

– The latter arrangement would simplify the borrowing system.

Mr BELL:

– I understood that that was one of the things which the Government was willing to do in order to reconcile the States to the withdrawal of the per capita payment. I am merely referring to what the Prime Minister said in the House. It would be hardly possible for the Commonwealth to provide a sinking fund for that purpose, and at the same time quit the field of direct taxation as has been proposed. There is very little difference between continuing the per capita payment and liquidating the State debts by means of a sinking fund. If we are to separate Federal and State finances, which is the chief argument in favour of the bill, I am afraid that we shall have to retrace our steps a long way. I do not think that the separation of those finances will ever be possible of accomplishment. The Commonwealth is committed to great road schemes, and in that and other respects it is collecting revenue which is being expended by the States. The argument has been advanced by the Treasurer and the Prime Minister that the distribution of. the Customs revenue on the per capita basis would not be in the interests of the smaller States. I am not sure that it is so, although I admit that there is room for a difference of opinion. There is, in fact, a great diversity of opinion regarding this question, not only among honorable members in this chamber, but also among members of the general public. The honorable member for Bass . (Mr. Jackson) and I represent Tasmanian constituencies. Each, no doubt, believes that in relation to this measure he is acting in the best interests of the general public ; yet our views are entirely different. A great deal has been said regarding the constitutional aspect of this question. I have been unable to find in the Constitution any reference to per capita payments, although the adjustment of State and Federal finances was one of the great problems which confronted those who drafted it. That difficulty has been present in every federation. In my opinion, the framers of the Constitution intended that after a period of ten years had elapsed the continuance or otherwise of the system whereby the Commonwealth would return to the States a proportion of the revenue derived from Customs and excise would be a matter for Parliament to decide. Personally, I have no doubt that Parliament has the power to withdraw the per capita payments. I differ, however, from the Government as to the advisability of withdrawing them now. In view of the unanimous opposition of the various State Governments to the abolition of the present system, it is not right to abolish it. When the per capita basis of payments to the States was decided upon in 1909, it was not regarded as ideal ; it was the one to which the least opposition was offered at the time. Prior to the Great War the Federal Government had imposed very little direct taxation; but the heavy war hurden made such taxation necessary. If the per capita payments had ceased then that action would at least have been logical ; but, unfortunately, expediency, not logic, is frequently the motive guiding political action. The Prime Minister argued that it was wrong that those States which had become wealthy by reason of our fiscal policy, should, because that policy had also increased their population, receive increased payments by means of the per capita grant. We must not lose sight of the fact that those States whose wealth and population have increased, have a greater taxable asset than have the smaller aud the undeveloped States. If the Commonwealth vacate the field of direct taxation, the position of the more populous States would be better than that of the States whose population is small. The rate of increase in the wealth of the States has exceeded that of their increase in population.

Mr Gardner:

– Their responsibilities have increased with the growth of their population.

Mr BELL:

– I question that. The greater responsibility rests upon the undeveloped States. To many people it seeing absurd that revenue collected by the Commonwealth by means of direct taxation should be returned to the States as surplus Customs revenue. Instead of abolishing the present system, we should enlarge it. The system of paying to the States, on the basis of population, a proportion of the revenue collected either from Customs, or direct taxation, or both, tends to adjust inequalities between the States. The framers of the Constitution appear to have based their financial proposals on the assumption that all the States would become richer or poorer, according to whether their population increased or decreased. The several States are so different in respect of their area, climate, and resources, that it is obvious that they cannot all have the same power to contribute towards the expenses of a central Parliament. The revenue necessary for the needs of the Commonwealth is contributed by the States; yet the Commonwealth has become a dictator, with power to direct the finances of the States. To take over the debts of the States would be a great step towards unification. If that were done, the States could no longer be permitted to borrow indiscriminately.

Dr Earle Page:

– Even without the Commonwealth taking over their debts, the States should not be allowed to borrow indiscriminately. We are doing our best to prevent it.

Mr BELL:

– And rightly so. In practice the system by which revenue is collected by the Commonwealth by means of direct taxation, and returned to the States on the per capita basis, effects many adjustments. One State may be affected by a drought, and thus be less able to contribute towards the expenses of government than another State which, being free from such a visitation^ has benefited from that drought and become possessed of greater wealth. Having a greater taxable asset, that State contributes a greater sum to the Commonwealth than its drought-stricken neighbour; hut, as the grants from the Commonwealth to the States are made on the per capita basis, and not on the basis of the contributions by the States to the Common wealth, the present system, as a means of effecting adjustments between the Commonwealth and the States, is better than that proposed by the Commonwealth. In the interests of the smaller States, the present system should be continued. The contributions by the States towards the expenses of the Commonwealth should be based on their power to fulfil their obligations. The best financial brains of the country have endeavoured to find a correct basis for the adjustment of Commonwealth and State finances, but, so far, without success. It is, therefore, not likely that honorable members in this chamber will be more successful. In view of the opposition of the States to its proposals, the Government should no longer persist in them. The federation can be successful only so long as there is harmony between its constituent parts. The Government’s proposal to abolish the per capita payments will do more to disrupt the federation than anything that has been attempted since its inauguration. Notwithstanding its power to do so, the Commonwealth is not justified in asserting that power in the face of the opposition of the people. Whether the principle underlying the Government’s proposals be good or bad, the Government has no right to fly in the face of the people. In pressing this question, the Government is making a great mistake. I regret that it did not heed the advice of some of its supporters when this measure was first proposed. To-day, among many erstwhile Government supporters, there is opposition to the bill. Had they made their attitude clear at an earlier stage, 1 feel confident that the Government would not have proceeded with the measure. When the Estimates were under discussion last year, I availed myself of the first opportunity, as a member of this House, to protest against any withdrawal of the per capita payments. My views have not changed since then. I shall, therefore, be consistent and vote against the bill.

Mr STEWART:
Wimmera

.- I have followed the debate on this bill very closely, and have listened with considerable interest to the views expressed by honorable members. Generally, the debate has reached a high standard, although, at times, the party note, which seems to be inseparable from discussions in this chamber, has been too much in evidence. Nevertheless, the debate has been one of the most stirring that we have had in this chamber for some time.

Mr Fenton:

– And one in which the people are vitally interested.

Mr STEWART:

– That is so. One or two honorable members have asserted that the general public knows very little about this subject. The honorable member for Brisbane (Mr. D. Cameron) remarked that he had only the other day met an eminent legal gentleman in Melbourne who asked him the meaning of the ver capita proposal. I could take the honor able member into outback areas of my constituency and introduce him to some of my constituents who could not only quickly explain the matter to him, but who would express strong views on the manner in which tho Government is forcing a decision on it. During my speech in the budget debate last year I observed that there was doubt as to the wisdom of this proposal, and that, in view of the promise of the Prime Minister that a constitutional session would be held within a few months for the purpose of revising the Constitution, I thought it would be wise to postpone further consideration of it until then.

I have listened with an open mind to the debate on the merits of the Government’s scheme, but I can see no . reason for changing my view. In fact, I am more than ever convinced that it would be wise to postpone the matter. I listened intently to the speech that the Prime Minister delivered a few days ago, very little of which is remembered by honorable members, for the reason that very little of it was worth remembering. The attitude of the right honorable gentleman suggested to me, though I may be mistaken in this, that he was not as comfortable as he generally is when he is speaking in the House. His heart was not in his job. I listened also to the excellent speech of the honorable member for Dalley (Mr. Theodore), and to the illuminating remarks that the honorable member for Wakefield (Mr. Foster) . made this afternoon. Whatever we may think of that honorable gentleman’s view on this or any other subject we know that he is never guilty of insincerity. I feel bound to observe that throughout the debate, right down to the quiet but well-reasoned speech that the honorable member for Darwin (Mr. Bell) has just delivered, it has been plainly evident that if a vote of honorable members could be taken upon the merits of this bill it would be defeated by an overwhelming majority.

Mr Fenton:

– Why should a bill like this be treated on party lines?

Mr STEWART:

– It should not be so treated, but, unfortunately, it has been made a party question.

Mr Fenton:

– Not by honorable members on this side of the chamber.

Mr STEWART:

– The Government have deliberately made it aparty measure, and when the vote is taken we shall, on that account, see at least half a dozen members on this side of the chamber voting against their convictions.

Mr Mann:

– And they resent having to do so.

Mr STEWART:

– Two main considerations face honorable members in dealing with this matter. The first has relation to the wisdom or otherwise of the principle of per capita payments. The other is whether even allowing that it is desirable and necessary to make an alteration in this basic financial relationship it is wise, in the face of almost united opposition by the press, the State Parliaments, and the people generally, for the Government to force a decision on the matter as it seems determined to do. Even assuming that the Government had proved, up to the hilt, that these proposals were eminently just, fair, and reasonable - and that has certainly not been proved - I consider that it would not be justified in adopting this attitude. The Attorney-General (Mr. Latham) endeavoured in his speech last night to destroy the effect of the speech delivered by the right honorable member for North Sydney (Mr. Hughes), who preceded him; but he lamentably failed to do so.

Mr Watt:

– Lamentably and inevitably.

Mr STEWART:

– No doubt the AttorneyGeneralwas. set a most difficult task. But whatever little influence he may have had, was at once destroyed by the effective speech that the honorable member for Fawkner (Mr. Maxwell) delivered. As a rule, I enjoy listening to the Attorney-General, for he never abuses anybody.

Mr Watt:

– He contents himself with misrepresenting them.

Ma-. STEWART.- Unfortunately the honorable gentleman is severely handicapped by his inability to divest himself of his legal habits. His address last evening was quite characteristic of him. When I speak in debates in this House, I provide myself with a few notes, and with their help express my views as well as I am able; but the Attorney-General rarely fails to arm himself with huge legal volumes, and seems always to have at his fingertips some judicial decision or other - it may be one that was delivered in the time of Queen Anne, or it may be one delivered from our High Court bench the day before yesterday - with which to rebut the arguments of his opponents. With legal books to the right of him, legal books to the left of him, and the Australian Constitution in front of him, the honorable gentleman proceeds to battle. In one sentence he directs a heavy blow at one section or another of the Constitution. He immediately follows that up with a decision by one or more learned judges, and so bewilders the issue for the layman ; after which he delivers what is intended to be a blow on the solar plexus, with a reference to a legal decision given in the middle of last century, and the whole assault is complete. The honorable gentleman evidently recognized last evening that he had a most difficult duty to perform, and he proceeded with great care and deliberation to set up an Aunt Sally, and then to knock it down. He occupied about ten minutes of his speech in arguing that Parliament had power to pass this bill, and it may be said that he proved that part of his case up to the hilt. But, unfortunately, for him, not one speaker in this debate has argued to the contrary. The honorable gentleman expended his time and energy in proving the obvious. Doubtless he was making the best of a bad situation. Nobody questions the power of the Commonwealth Parliament to pass this measure; but I would say, in the oft-quoted words of Shakespeare -

Oh, it is excellent

To have a giant’s strength; but it is tyrannous

To use it like a giant.

Even if the Government could prove that it was desirable and necessary to pass this bill, it would be unwise, in the circumstances, for us to do so. But the Government has proved nothing of the sort. It has made assertions, but has not supported them in any way. We have been told that the existing system is wrong - that it is a pernicious principle for one Government to collect money, and for another Government to spend it. Let us consider what has been termed a “ pernicious principle.” If my memory serves me aright, the right honorable the

Prime Minister admitted that this principle is laid down in the Constitution. If he did not make that admission I do so now. In this measure the so-called pernicious principle is also being adopted, as provision is made for the payment of grants to Tasmania and Western Australia. The Commonwealth is to collect hundreds of thousands of pounds from the taxpayers and hand it over to Western Australia and Tasmania. As the honorable member for Bass (Mr. Jackson) said, those States are entitled to some consideration; but the money is to be paid over without any conditions being laid down as to how it shall be spent. The right honorable member for Balaclava (Mr. Watt) instanced the case of money paid to the States under the Federal Aid Roads Act, and whilst I do not desire to unnecessarily repeat points already made by other honorable members, I think it should be emphasized that that point has never been effectively answered by the Government. Under the Federal Aid Roads Act, the Government, in collaboration with the States, lay down certain conditions concerning how the money advanced under that act is to be spent. The Prime Minister said that the money was spent under a mutual arrangement with the States. Can any one say that an agreement made in the circumstances, so fresh in the minds of honorable members, is a mutual one? The Victorian Parliament unanimously passed a resolution in opposition to this so-called mutual arrangement. Honorable members will recall that South Australia had been collecting a petrol tax of 3d. per gallon when the Commonwealth Government said in effect, “ You cannot do that; Ave intend to tax petrol.” The South Australian Government continued to collect the tax, and the Commonwealth Government took the matter to the High Court and won the case.

Mr Foster:

– I believe that the Victorian Government was joined with the South Australian Government in that action.

Mr STEWART:

– I believe it was. The Commonwealth Government is now collecting a tax of 2d. a gallon on petrol, and handing it back to the States.

Mr Hughes:

– In the case of New South Wales it has not been handed back.

Mr STEWART:

– I shall deal with the position in New South Wales later. The case of South Australia is probably more glaring than that of New South Wales, as the Commonwealth Government is collecting a petrol tax formerly collectedby the State, and handing the money back to the State to be spent on roads.

Mr Makin:

– With certain conditions.

Mr STEWART:

– Yes. That is an instance of what the Commonwealth Government terms a “ mutual arrangement “ with South Australia. In the case of New South Wales, mentioned by the right honorable member for North Sydney (Mr. Hughes), such an arrangement has not yet been entered into. The Commonwealth Government is collecting a petrol tax which New South Wales consumers have to pay, but the Government of New South Wales is in the unenviable position of having the money thus extorted from its taxpayers now lying idle. The New South Wales Government may, in response to public opinion in that State, and perhaps financial necessity, be compelled to enter into a distasteful agreement with the Commonwealth Government. That is what the Prime Minister, in endeavouring to explain an inconsistency, terms a mutual arrangement.

Sitting suspended from 6.29 to8 p.m.

Mr STEWART:

– When the House adjourned I was dealing with the statement that has been repeatedly made by the Government as a justification for the introduction of this measure, that the per capita payments embody a pernicious principle. I endeavoured to show that the Government were guilty of having adopted that principle in connexion with their Federal aid roads scheme. I shall dismiss the matter by saying that, even if the principle be a pernicious one, it has endured for many years.

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

– That does not cure it.

Mr STEWART:

– No ; but the obligation devolves upon the Government to show in what way it is pernicious.

Mr Hughes:

– It has existed for 27 years.

Dr Earle Page:

– No, for sixteen years.

Mr STEWART:

– Whether it is 27 or 16 years matters not. The point is that this Government made the discovery that escaped the attention of every previous government - that a pernicious principle underlies this payment. When the Treasurer (Dr. Earle Page) embarks upon the formidable task of replying to the facts that have been established during the course of the debate, I ask that he produce evidence of the manner in which it has proved to be pernicious, and to mention what States have been debauched by the receipt of these sums. It has also been stated repeatedly that the States have no constitutional, legal, or moral right to this payment. If that be so, one is bound to ask upon what basis the payment has been made and continued? If no constitutional, legal, or moral right exists, why has it been considered necessary to introduce this measure? Accepting the contention of the Government, the payment has been made unconstitutionally, illegally and immorally during the last six years, at least.

Honorable members have listened to interesting speeches by the right honorable member for North Sydney (Mr. Hughes) and the right honorable member for Balaclava (Mr. Watt). Both of those right honorable gentlemen have a loner record in the public life of this country, and grappled with these problems before either the Treasurer or the Prime Minister passed the portals of this chamber.

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

– They did not grapple with this problem - they shirked it.

Mr STEWART:

– In a desperate endeavour to show some justification for their own inconsistency, the Government have descended to the levelling of that charge at others. They say that the right honorable member for North Sydney and the right honorable member for Balaclava have been inconsistent in that, having suggested an alteration in the system., they now oppose that which is proposed. Their action does not prove anything of the kind. We are not solely cerned with the merits or the demerits of the per capita payments. Had the Government met the Premiers of the States in conference, and made with them an arrangement for the substitution of some other system, I should offer no objection to the alteration. My chief objection to this proposal is that the per capita payments are to be discontinued despite the united opposition of every State in the Commonwealth, and, against the wish - ifthe party whips were taken off - of a majority of honorable members of this House. If the Government hold the belief that they are not acting contrary to the wishes of the people, let them test the matter by submitting it to a referendum. But no appeal is to be made to the people, because the answer would be disastrous to the Government. The Prime Minister deplored the feeling of hostility that has been growing up between the States and the Commonwealth. I know of no honorable gentleman who has occupied the position of Prime Minister in this country who, either wittingly or unwittingly, has done more than the right honorable gentleman to engender that hostility. I have before me one of the weekly statements that are issued by the Federal Country party, and are circulated extensively in my electorate. It reads - .

The Bruce-Page Government is the first Government to recognize this position. . . . The vital principle on which it stands is that the present system is unjust and unfair. It has asked the States to meet it inconference to discuss alternate proposals, but the States have vigorously refused to attend any such conference, and have, consequently, left the Commonwealth Government in the position that the only proposal it can bring forward is one which requires nothing other than Commonwealth legislation to carry it into effect. . . The main opposition to the present proposal is that the conference should be held first and the bill for the abolition of the per capita payments carried afterwards. The answer to this is that the one point upon which the Bruce-Page Government is satisfied is that the present system is wrong. That system, in any case, must cease. The only point, therefore, to consider is, what is to be substituted for it?

I ask honorable members to note particularly the phraseology in the latter portion. Apparently, the view of the Government is that the present system must cease, whether it be right or wrong.

Mr Watt:

– Is that the gospel according to Fullarton?

Mr STEWART:

– It is an intolerable gospel, whatever it is based upon. The statement puts forward the claim that the Government have a mandate to alter the existing arrangements. That is one of the salient points in this debate, and I shall, therefore, deal with it. The policy speech delivered by the Prime Minister at Dandenong has been quoted by several honorable members, the latest version having been given by the AttorneyGeneral (Mr. Latham). In that speech the right honorable gentleman undoubtedly suggested that it was the opinion of the Government that an alteration should be made in the financial relations of the Commonwealth and the States; but he did not give the slightest indication of the determination of the Government to abolish the per capita payments either with or without the consent of the States. The right honorable member for North Sydney was correct when he said that this matter was overshadowed at the elections by another and a greater issue. Throughout the country emphasis was laid upon the one issue of constitutional government versus mob rule. Compared with that great issue, everything else was but leather and prunella.

The claim of the Government that they received a mandate to deal with this matter raises an important question. If a government deliberately concentrates on one issue, and keeps others in the background, what is the extent of the mandate that it receives? The right honorable member for North Sydney asked whether any honorable member had, during the election campaign, been questioned regarding the per capita payment. Not a question on that matter was put to me. I submit that if the Government have been given any mandate it is that they should not alter the existing financial relations between the Commonwealth and the States. The honorable member for Fawkner (Mr. Maxwell), who is a prominent member of the National party, last evening quoted the following plank from the platform of that party: -

The maintenance of the 25s. per head payments to the States until such time as a satisfactory alteration is agreed upon.

The honorable member for Fawkner (Mr. Maxwell) says that he considers himself bound by that plank. All I can say is that if he is bound by it, so also are the honorable member for Corio (Mr. Lister), the honorable member for Ben- digo (Mr. Hurry), the honorable member for Kooyong (Mr. Latham), and the right honorable the Prime Minister himself.

Can one party in the Commonwealth sphere to-day say that it has a definite mandate to do what this Government is proposing to do? If so, let them produce the evidence. It is true that there was reference in the policy speech to the desirability of an alteration of the financial relations between the Commonwealth and the States; but that, I submit, is a different proposition entirely from that contained in the bill now before the House. It has also been stated that the measure is urgent. Up to the present, sound reasons for its urgency have not bean given. What has happened during the last two or three years to make it necessary for the Government to hold up public business in this way in order to rush the measure through ?

Mr West:

– There are five State Labour Governments in power !

Mr.STEWART. - We have been told that the States will gain by the adoption of the proposal. If they do, then the Commonwealth will lose to the extent that the States may gain. Butthere is a marked difference of opinion onthis aspect of the proposal, for, whilst it is stated that the Commonwealth will give up a considerable portion of its revenue, the States, for their part, state that they also will lose. On this point, the Premier of Victoria (Mr. Allan), in his policy speech, delivered at Kyabram on the 7th inst., said -

If the Commonwealth Government proceeds with itsproposal to abolish the per capita payments, the finances of the State will be ‘in a chaotic condition. This year the capitation payments to Victoria are estimated at £2,144,000. There would be great difficulty in making up this amount in direct taxation. It would involve a complete reorganization of the field of taxation of the State.

The Treasurer of Victoria (Sir Alexander Peacock), who, by the way, wasa member of the Federal Convention, and should be well versed in the history of the per capita payments, said -

It is impossible for Victoria to incorporate in its taxation system, the direct taxation which the Federal Government proposes to relinquish, and it will 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 is to cut down services now considered essential.

Despite the Commonwealth Treasurer’s emphaticdeclaration that the States will be better off under this proposal, we are justified in assuming that State ministers are the best judges of what is best for their needs.

It has not been sufficiently stressed in the debate, up to the present, that all the State Governments are vitally interested in the Commonwealth tariff policy, which imposes extremely heavy burdens on the people. The Commonwealth Government, rightly or wrongly, wisely or unwisely, pursues a policy of high protection, which vitally affects the finances of the States. Undoubtedly, high protection adds to the cost of State services, and makes it increasingly difficult for State Governments to finance their public works schemes, and pay the salaries of their public servants. In short, whilst high protection depletes State revenues, it fills to overflowing the coffers of the Commonwealth Treasury.

Mr Thompson:

– The Labour party declares that it will end all that when it gets into power.

Mr STEWART:

– It is difficult to see in what way the Labour party could out-Herod the political Herods in the Ministerial corner. One reason why the primary producers are so much opposed to the high-tariff policy of this Government is that, whilst its effect is to increase the cost of primary production, it does not adequately protect Australian industries.

Mr PRATTEN:
MARTIN, NEW SOUTH WALES · NAT

– ‘The honorable member for Wakefield did not take that view.

Mr STEWART:

– I do not know what the honorable member for Wakefield said. I am stating my own view, and I care not whether it squares with the views of the honorable member for Wakefield or not. The fact that huge sums of money are being received through the Customs shows conclusively that the tariff policy of the Government is not effectively protecting Australian industries. If it were, the Customs receipts would not be at their present high level. In the circumstances, it is pertinent to ask what is the motive underlying the tariff. Has it been framed for the pro duction of revenue, or for the building up of Australian industries? Up to the present we have not been sufficiently informed on this point.

The Treasurer won his way to place and power in the Commonwealth sphere by his advocacy of a policy of moderate protection ; but, unfortunately, since his accession to office there has been no modification of the Government tariff policy. On the contrary, we have had increase after increase in Customs duties. At one time he chided his present chief, and informed him quite bluntly that he should go into sackcloth and ashes because the Customs and excise revenue, at that time, had reached the huge total of between £22,000,000 and £23,000,000. To-day the revenue from the same sources amounts to between £42,000,000 and £43,000,000. and yet the Treasurer smiles as if all is well with the country.

Mr Thompson:

– The present revenue is being received on a much higher tariff.

Mr STEWART:

– The whole trend of the Government’s tariff policy, I repeat, is to increase the cost of State services, whilst at the same time it is filling the Commonwealth treasury to overflowing. Nearly every State Government to-day is faced with a deficit. Last year Victoria endeavoured to square the ledger. In view of the Treasurer’s declaration that the State Governments can automatically occupy the fields of taxation vacated by the Commonwealth, it is interestingto remember that when the Victorian Government endeavoured to square the ledger by increased taxation, the proposal was rejected by the Legislative Council. Honorable gentlemen who are supporting this bill apparently overlook the fact that it is easy enough for one government to relinquish taxation, but that it is extremely difficult for six governments to reimpose it, particularly in the circumstances in which the present State Governments find themselves. I have no doubt that the statement made by the honorable member for Henty (Mr. Gullett), and repeated by other honorable members during the debate, that the State Governments will not be able to aggregate income taxation is absolutely correct.

Mr Fenton:

– They will not be able to aggregate land taxation either.

Mr STEWART:

– Up to the. present it has not been made clear whether the States will be able to aggregate other forms of taxation. I hope that the Treasurer will inform us on this phase of the problem when he replies to the debate.

Dr Earle Page:

– Will the honorable member give us the reasons for his changed attitude on this issue since 1923?

Mr STEWART:

– I have not changed my opinion in the meantime.

Dr Earle Page:

– The honorable member supported the proposal then.

Mr STEWART:

– I supported it in the same manner that the right honorable member for Balaclava (Mr. Watt) did. In other words, I supported a proposal to submit the scheme to the States; but I was never in favour of ramming it down the throats of the State Governments. When the proposition was put to the States and they rejected it, the Government withdrew it.

Mr Thompson:

– It was a back-down. Shirkers !

Mr STEWART:

– I challenge the Government to put this issue to the people. That is my answer to the charge that honorable members who are not now supporting the proposal are shirkers.

Mr Thompson:

– They put it to the people fifteen months ago.

Mr STEWART:

– I remind the honorable member that the Government appealed to the people again last August. Unfortunately the merits or demerits of the per capita payments are not being considered dispassionately in this debate.

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

– The States are endeavouring to coerce the Commonwealth.

Mr STEWART:

– On the contrary, I think that the Commonwealth Government is attempting to coerce the States and the people of Australia.

Not one honorable member has contended that the existing financial relations between the Commonwealth and the States are ideal, and should be adhered to for all time. If the Government can put forward a better arrangement than that at present in force, I am quite prepared to support it, if it meets also with the approval of the State authorities.

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

– Is the honorable gentleman a Federal or a State member?

Mr STEWART:

– Possibly one of the reasons why I am so well able to understand the point of view of State Governments in this matter is that I had some experience as a member of a State Parliament, and then realized how closely the carrying out of its legitimate functions brought the State authority into touch with the people, and especially with the man on the land. Water supply, irrigation, and railway construction touch very closely the lives of the people of the different States. Can the Government guarantee that the readjustment of financial relations it proposes can he carried out smoothly, and that the burden it imposes to-day upon the people can be imposed automatically to the same extent on the same people by the Stale authorities? It can give no such guarantee. A limitation of the powers of the States is proposed, and as Sir Alexander Peacock indicated in his statement on the subject, the effect of the Government proposal will be that the burden of taxation will be removed from the shoulders of some of the richer people, who are better able to bear it, and will be placed upon the shoulders of those who are not able to bear it.

Mr Coleman:

– Railway freights will go up.

Mr STEWART:

– That is a case in point. An interjection by the honorable member for New England reminds me of a point I had nearly forgotten to mention. I can well recall the fact that, when I was a member of the Country party, when it was a Country party, one of its principal planks was the establishment of new States.

Mr Thompson:

– And it still is one of its principal planks.

Mr STEWART:

– In those days, in the inner councils of the Country party, when we were confronted with the problems of State debts, decentralization, the financial relations between the Commonwealth and the States, and problems extending from the Empire to the wheat pool, there was one unfailing remedy suggested for every evil. It was something like some one’s pink pills. New States would cure every evil ! W e hear nothing about new States now. I am cast upon the waters, and have once more to seek a remedy for economic ills, but the new State policy has been consigned to the limbo of the past. It has now but one advocate in this chamber, and that is the honorable member who was good enough to remind me of this point. I believe that the honorable member for New England is still sincere in his new State views, and still hopes that something will come of the policy.

Mr Hughes:

– Like a hen on a china egg-

Mr STEWART:

– The honorable member for New England has been good enough to ask me, in the cross examination I am undergoing from his corner, if I did not assist him to have the new States question listed for consideration at the proposed constitutional session. I did, and for the strongest of reasons, and the honorable member has again reminded me of something which, but for his interruption, I might have forgotten. The fact that a constitutional session of this Parliament has been promised is one of the strongest reasons why this bill, instead of being bludgeoned through, should be referred for consideration to that constitutional session.

I protest with all the emphasis at my command against the action of the Government in attempting to force this measure through the House. It has declared that it is urgent, but has given no evidence of its urgency. It has declared that the per capita system is pernicious, hut has been unable to refer to any pernicious effects arising from it. The bill is being persisted with, in spite of the fact that the State governments and the people are against it. I go so far as to say that, if the measure were left to the unfettered vote of members of this House, it would be found that the majority of them are against it. It is possible that in another place the vote on this issue may be against that recorded here. I point out that members of another place arc going to be put to a crucial test on this very important issue. I hope that they will show just whether they _ are prepared to carry out the functions for which that chamber was established.

Mr SPEAKER:

– Order ! I ask the honorable member not to continue in that strain.

Mr STEWART:

– I should like to say a word or two concerning the action of honorable members on this side who have taken a stand against this measure. There are members of the Nationalist party who have refused to view this proposal through party glasses. They are prepared by their voices and by their votes to defeat this proposal, and that is something which, in my opinion, redounds very much to their credit. It will be a bad day for this country when, in the settlement of issues which mean so much to the people, and so little to party, members will be found ready to carry out the desires of a political party against what they honestly believe to be the wishes of the people of Australia.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

.- The first ground upon which I offer my opposition to the proposal contained in the measure before the House is that it is a distinct violation of a principle definitely set out in the articles of faith of the Nationalist party. The rule broken by this measure has been quoted before, but I shall quote it again to give it a little more emphasis. This is the article of faith of the organization responsible for the return of the Nationalist members of the present Government to which I refer -

The maintenance of the per capita payment of 25s. to the States until such time as a satisfactory - alternative is agreed to.

The Government cannot plead ignorance of that article, because’ they have appointed a representative to the organization for the purpose of keeping it in touch with the political side. A representative of this chamber is also a member of the executive of the organization, and was appointed for a definite purpose, and at the invitation of the organization, as a kind of liaison officer between the organization and the government in power. The Government was returned upon that definite article of faith which I have quoted, and this bill is a distinct violation of it. Every honorable member must be aware that it is. The man who will not stand by that article of faith has no right to profess to be a Nationalist. My second objection to the bill is that the Government has sought no mandate to depart from that article of faith, nor should it, because the Prime Minister himself, in unambiguous terms, set out a policy which was perfectly in line with that of the Nationalist organization. .

Mr J FRANCIS:
MORETON, QUEENSLAND · NAT; UAP from 1931; LP from 1944

– There is no such plank as that in the platform of the National party in Queensland.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– If the honorable member’s leader is a member of the organization subscribing to that article of faith, he is himself bound by it. It is a remarkable coincidence that Mr. Lawson, the leader of the Nationalist Federation in this State, and a former Premier of the State, is to-night, in another part of this city, pleading for the maintenance of the per capita payments. There is a definite conflict between the two leaders, one the official head of the political organization, and the other the official head of the present Government.

My main reason for opposing this measure at this juncture is that it does not give a square deal to the States. As has been well enunciated during the course of this debate it is a fundamental principle of government in Australia that unless the Commonwealth and the States co-operate in rendering services to the people there can be no true national development. I remind a government that seeks to disorganize the finances of the States that it is dependent on the goodwill, co-operation, and machinery of the States for carrying out four of the star items in its programme. These are : - An immigration policy estimated to cost £34,000,000; a main-roads scheme, for which £20,000,000 is to be provided; a housing scheme, which will cost £20,000,000; and a scheme for the distribution of wire netting at a cost of £3,000,000. Altogether these and other items involve an expenditure of £92,000,000. It is a policy of financial munificence, yet we are told by the honorable member for Barton (Mr. Ley) that the Commonwealth has no money - that it has nothing it can divide with the States.

Mr Ley:

– I did not say that.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I am sorry if I have misrepresented the honorable member; but the burden of his speech was that the Commonwealth had no money to divide with the States.

Mr Ley:

– I said that there was no excess of Customs and excise revenue for division with the States.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– No one knows better than the honorable member, who is a legal man, that seventeen years ago the basis of payment to the States was altered, and that to-day the money is paid out of Consolidated Revenue, and not out. of Customs and excise revenue. Section 87 of the Constitution is a dead letter. There is no surplus revenue. There was a time when the surplus revenue of the Commonwealth was honorably and faithfully paid to the States in fulfilment of the bargain between them and the Commonwealth.

Mr Watt:

– It was paid until the act introduced by Sir William Lyne was passed.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Our AuditorGeneral has drawn very marked attention to the fact that in the year ending 30th June, 1925, there was in the Commonwealth Treasury an appropriated but unexpended balance of over £6,000,000 tucked away in trust funds, and that in the following year it was increased by another £200,000. Yet the honorable member for Barton tries to make us believe that the Commonwealth is impoverished. As a matter of fact, it has a buoyant revenue quite beyond the imagination of the framers of the Constitution. We have to-day a Customs revenue of about £42,000,000. It is really a reflex of the extravagance and bad administration of the Commonwealth. We have what ought to be a real protective policy, but that policy is steadily undermined when we have the States and Commonwealth going abroad to borrow money. The latest fetish is to borrow money in America, which means that we merely establish a credit in America with which to buy American goods as against Australian or British goods. There is no other way in which we can get the money from America. It is, I repeat, an unsound policy, which is undermining the whole economic fabric of the nation.

Mr Theodore:

– That does not follow naturally. It may simply mean the transfer of dollars to London.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– It is clear !that when we borrow in America we are not bringing specie to Australia, and it is not sound finance to borrow in America for the purpose of settling trade balances between America and England.

Mr Theodore:

– It depends upon whether we can make a profit by doing so.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– We are not likely to do so.

Mr Theodore:

– It has been done.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– If we borrow in America we buy America’s goods.

Mr Watt:

– What the honorable member suggests is that foreign borrowing means heavier importations.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– There are only three courses open to us if we borrow abroad. We must bring out the equivalent of the money in goods, settle balances in England, or bring specie to Australia - which we are not likely to do. It is a positively unsound policy which places Australia’s revenue on a fictitious basis, because what we levy at the Customs House is practically a subtraction from the amount we borrow. To that extent, therefore, we do not get the full effect of the borrowed money. When we make a levy on the goods we buy with borrowed money, it is simply a case of setting aside portion of the borrowed money, putting it in the national pocket, and calling it revenue - an unsound policy from every economic aspect. A young country seeking development has a right to borrow when money is cheap and when long terms can be obtained; but recently Australia has obtained loans abroad to such an extent that I am afraid it has deprived itself of one of the opportunities that borrowing abroad offers. The power to raise such loans, apart from national development, should be one of those national reserves on which a nation may rely in time of stress to avoid unemployment, or to tide it over a difficult crisis. Its credit should be kept as a national reserve for such occasions, but if Australia continues at its present rate of borrowing it will exhaust its credit. Supplies will be cut off by our creditors overseas. However, I do not desire to press the matter further than to Bay that it is not right at this late day to claim that we are relying solely upon our Customs revenue for the payment of the per capita grant. It has been the definitely settled policy of the Commonwealth for 27 years to assist the States in carrying out their functions.

The responsibility for disturbing that arrangement rests upon the present Government. I do not say that the time has not arrived for a reconsideration of the arrangement, but it is quite unBritish to call people into a conference about a matter when they are gagged before they come there. For the Commonwealth to predetermine all the vital matters upon which it would confer with the States, and practically deprive them of their financial independence before discussing their position with them, so undermining their position as to cause them to come to a conference as mendicants or suppliants, is certainly not the way in which the financial relationship between the Commonwealth and the States should be readjusted.

I am sorry that it falls to the Nationalist party to have on its head the odium of being associated with this proposal. Organizations and thinkers outside this chamber are all anxious to give the States a fair and square deal, because they recognize that the States are our co-partners in rendering services to- the people of Australia. It has been said before, but I. want to repeat it, that the States render more direct services to the people than does the Commonwealth. The fields in which they do so have already been mentioned by the right honorable member for Balaclava (Mr. Watt), but they will stand repeating. Health, housing, land settlement, transport, water supply, charities, the care of the sick, hospitals, and education are all matters, controlled by the States, that enter into the daily life of the citizen. Reduced assistance to the States means impoverished services from the States. We know that the Commonwealth is calling the States into co-operation to render more services to the people, which will increase the cost of State administration. Although the provision of money for the construction of roads is very important, the subsequent maintenance of those roads is a permanent cost that will fall on the States. It will be hard for them to find the necessary money. Then there is the question of the relationship of bodies subsidiary to the States. The maintenance of roads is undertaken by the States through local governing bodies. The service thus rendered is given gratuitously by a very fine body of men in the various country districts of Australia whose own contributions to the cost of the maintenance of roads are subsidized by the States. If the latter are compelled to withdraw those subsidies, the work of these local bodies must become less valuable. I can clearly understand the feeling of the States in this matter. The fa.t that there has been at one, two, or even three conferences a failure to arrive at an agreement as to what is a fair contribution by the Commonwealth should not be taken as meaning that failure will follow further attempts. There are changes of government. New Ministers have different viewpoints. I still think that, in the light of the valuable discussion we have had in this Chamber on this bill, the States and the Commonwealth will find a more reasonable basis of negotiation. Even now I urge the Government to call off this proposal. Ministers will be charged with bad faith by the States if they persist in arbitarily taking away the basis of negotiation before entering upon a conference. The Commonwealth is entering upon a new era. This Parliament is going to the new capital, but as the result of this bill - one of its final acts in this State after 26 years of federation, will leave behind it a very regrettable odium. In any case, it is the wrong time to take such a drastic step as this. The Commonwealth is financially affluent, hut nearly all the States have deficits. Some of them are obliged to have the per capita payment supplemented by a special grant to enable them to cope with what they call their State disabilities. We have ample evidence that the revenues of the States will not go round. The cost of management of all State departments has incre.r d. Yet this is the time selected by the Commonwealth to withdraw the king pin of the States’ finances. The per capita payment is the one item in their revenue upon which they know they can rely as an ever-increasing item. Around it are built others that go to make up the Consolidated Revenue of each State. Its withdrawal will leave the States in a position of insecurity. After all they have as much right to their share of the revenue as we have, if we are to ask them to carry on the services which they now render to the people of Australia. The Customs revenue is the easy money of the nation. Direct taxation is unpopular. It is impossible for Government activities in these days - railways and such like - to show a surplus. Nearly all the Australian railways show deficits.

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

– Does the honorable member suggest that the Commonwealth should make up the deficits on State railways ?

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I am merely indicating that the State railways are showing deficits. They have been showing them for the last 26 years, and the honorable member will not contend that the per capita payments during those .years have been paid to the States to enable them to make up for the losses on their railways. The per capita payments have been made to the States to enable them to carry out their functions. Prior to Federation they carried out all these functions including the administration of the Customs Department. The taxation at the Customs House went into their revenue. The States created the Commonwealth.

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

– The people created the Commonwealth.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– The people of the States created it. Had the States been opposed to federation there would have been no union. Certain enumerated powers were transferred to the Commonwealth; the residue, comprising the greater and more difficult responsibilities, remained with the States. The Commonwealth has been entrusted with the easy work of the nation, and the average taxpayer feels that in his everyday affairs he receives from the States a more direct and adequate return for the taxation he pays. The Commonwealth deals with foreign affairs, which do not directly affect industry, and with defence, which does not give positive and tangible results to the individual citizen. The same remark applies to most of the other federal functions. But nearly every one of the State activities is essential to the daily well-being of the taxpayers and the conduct of industry, and it would be false economy, and bad policy to weaken the essential and over-endow the unessential.

The time is ripe for a full reconsideration of the financial relations of the Com monwealth and the States. About £11,000,000 is owed by the Commonwealth to the States in respect of transferred properties. In order to help the Commonwealth in the early years of federation the States transferred to the federal authority properties to the value of £11,000,000. That is one illustration of the generous spirit of cooperation that prevailed in those days, and until that spirit is revived the people will suffer.

Mr West:

– The Commonwealth pays interest in respect of the transferred properties.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Yes, at the rate of 3£ per cent., while the States are paying as much as 6 per cent, for their accommodation. There are other items that might very well be adjusted in a general scheme of financial revision. This measure is ill-advised, and the procedure adopted by the Government is wrong. The proposal is opposed to the wishes of the people. There is no demand for it, and nearly all the organized bodies of the nation regard it as an unwise step to tate at the present time. However, all that can be done by those of us who are opposed to the bill is to take our stand upon the declared principles of our party, and I warn the Government that victory gained under such conditions as these may prove a pyrrhic victory, ultimately doing more damage than good to the Ministerial party. I think the Treasurer is over keen on this proposal, and is persisting with it against the better judgment of the nation. The right honorable member for North Sydney (Mr. Hughes) was right in saying that the fight will not end with the discontinuance of the per capita payments. The Government may gain a victory in the first action, but the campaign will continue, and eventually the nation will either restore to the States the per capita payments or make other reimbursements sufficient to enable them to carry on their functions.

Mr ABBOTT:
GWYDIR, NEW SOUTH WALES · CP

.- This debate has now lasted for two weeks, and applying the remark of an old Scottish laird, after the signing of the covenant which marked the termination of the border wars between England and Scotland, I hope that “ this is the end of an auld sang.” One thing impressed upon my mind by the debate is the disadvan tage suffered by some honorable members by reason of having served in State legislatures before entering this Parliament, because two or three of them have had the misfortune to hear the State Hansards, which have been disinterred from the dusty vaults, quoted in evidence against them. I am impressed also by the extraordinary nature of the opposition to this Bill. As a rule, one finds that Government supporters vote for the Government, and the Opposition members against the Government, and a clear line of demarcation between the parties is assured. Honorable members opposite have played their traditional role, but, as a novice in politics, I have been astounded to see some honorable members on this side accepting the assistance of members of the Opposition to score points against a Government measure. I have noticed Opposition members bringing to honorable members on this side marked copies of Hansard, and other documents, as ammunition to be used against the Government, and, in the lobbies, where one always sees interesting things, are to be found so-called Government supporters whispering and colloguing in corners with members of the Opposition. What is one to infer from such unorthodox alliances ? I am learning that there are more ways of defeating a Government than by the votes of the direct Opposition.

Mr Watt:

– Otherwise Governments would never fall.

Mr ABBOTT:
GWYDIR, NEW SOUTH WALES · CP

– I thank the right honorable member for having drawn upon his 25 years’ experience of politics to remind me that Governments often fall through the formation of “ caves “ within their own parties.

A detailed analysis of the opposition to this bill gives a most interesting result. Generally, we do not know until heads have been counted how a division will result, but the Herald of this evening has been good enough to publish an anticipation of the division list in respect of the second reading of this bill. Thus we are enabled to know the result even before the bells have rung. We find on that list that all of the eight ministerialists from Queensland, sixteen of the seventeen ministerialists from New South Wales, and seven of the eleven ministerialists from Victoria will support the Government. The newspapers of Melbourne have published some remarkable leading articles during the last few days, and I was almost terrified by one which referred to “ The Land Slide of Government Supporters.” Accepting the evening newspaper’s forecast as approximately accurate, the fact emerges that of the 52 honorable members returned at the last general election to support the Government, only eleven will vote against this bill. As a very humble and inexperienced member of this Parliament

Mr Watt:

– Not too humble.

Mr ABBOTT:
GWYDIR, NEW SOUTH WALES · CP

– If I had the wonderful personality and intellectual power which the right honorable member so clearly possesses, I would hope to be half as humble as he appears to be.

Mr Watt:

– That sounds like humility, I admit.

Mr ABBOTT:
GWYDIR, NEW SOUTH WALES · CP

– I pay that sincere tribute to the right honorable member. With all due humility, I repeat, I wonder whether all the brains amongst Government supporters are monopolized by the eleven honorable members who will vote against this bill. Amongst all the others who constitute what are apparently regarded as the rag-tag and bob-tail of the party, is there no capacity for clear and independent thought? Is it fair to assume that eleven members possess all the intelligence ?

Mr Brennan:

– It looks suspiciously like it.

Mr ABBOTT:
GWYDIR, NEW SOUTH WALES · CP

– I am also amazed to learn that one honorable member, who might vote against the Government on this issue, has been urgently summoned to Melbourne. I am sure that that action is not prompted by the hope that anything he may say will influence other honorable members. The honorable member for Henty (Mr. Gullett) had much to say about the cracking of the party whip. He and I met years ago in circumstances very different from those which attend our association in this chamber, and I ask him whether anything he learned of me in those days justifies him in regarding me as one who is likely to be intimidated by the cracking of the party whip.

Mr Gullett:

– I would certainly not, suggest that.

Mr ABBOTT:
GWYDIR, NEW SOUTH WALES · CP

-Does the honorable member known anything of other honorable members on this side that warrants him in aspersing them as he has done ? I resent very much his assertion, which has inspired an evening newspaper to write an article on the cracking of the. party whip. The honorable member for Henty has given to that journal a means with which to scourge and belittle this Parliament in the eyes of the people. In so doing he was disloyal to the House of which he is a member. Every honorable member is entitled to make up his mind and vote as his judgment dictates. Those who choose to vote against this bill are acting within their rights, but they are not justified in belittling other honorable members who are so weak, or so astute, or so loyal, as to vote with the Government.

The honorable member for Dalley (Mr. Theodore) spoke of the Government bludgeoning this measure through Parliament. I recollect having heard the honorable member speak at Goondiwindi during the last general election campaign, and 1 was very impressed by his speech. His political experience his debating powers, and logical reasoning make him a valuable acquisition to this House. But when he condemns bludgeoning he is like Satan reproving sin, because the records of the Queensland Parliament during recent years reveal a good deal of bludgeoning, of which the honorable member is not entirely guiltless.

Mr Theodore:

– That would not excuse bludgeoning in this Parliament.

Mr ABBOTT:
GWYDIR, NEW SOUTH WALES · CP

– I propose to snow that the Government has not resorted to bludgeoning. Being new to Parliament, I have always been curious to see in operation that weapon called the “ gag “ or the guillotine, which Governments are accused of using so ruthlessly. I have been a member of this Parliament for a year, during which there has been much talk, but never once has the gag been applied.

Mr Fenton:

– Bide a wee.

Mr ABBOTT:
GWYDIR, NEW SOUTH WALES · CP

– It will be quite a new experience for members of this Parliament. Having a little pardonable curiosity to see the “gag” applied, when in Sydney a little while ago, I went to the

State House, over which Mr. Lang presides, and I saw the “ gag “ applied sixteen times in one hour. The honorable member for Dalley spoke of a mandate. There are 52 Government supporters in this House - or there were - and surely that is a mandate as against the majority with which the honorable member for Dalley, when Premier of Queensland, and Mr. Lang, the Premier of New South Wales, carried on.

The principle of the per capita payment has always been a vexed question. First of all the Braddon section of the Constitution operated until 1910, and from then onwards the principle of the per capita payment was a subject of controversy. Both the right honorable member for Balaclava (Mr. Watt), and the right honorable member for North Sydney (Mr. Hughes), as Treasurer and Prime Minister respectively of this country, have opposed the per capita payments, yet, on this occasion, they have spoken bitterly against the Government’s proposal.

Mr Foster:

– The honorable member for North Sydney has never opposed the per capita principle.

Mr ABBOTT:
GWYDIR, NEW SOUTH WALES · CP

– I invite the honorable member to read extracts from a speech of the late Prime Minister at a Premier’s Conference held some time ago, as quoted by the Attorney-General (Mr. Latham) last night. I wish now to deal with the proposal that the right honorable member for Balaclava put forward when Acting Prime Minister. Let me give one illustration in the homely language to which 1 am accustomed. A man has a property, which is managed by trustees, and the annual revenue from it is £1,000. The trustees - I am speaking now of the present Government - say to that man, “ Why should we manage this property for you ? We consider that you should manage it yourself and collect the income of £1,000.” That is, in a nutshell, what the Government proposes to do. What the right honorable member for Balaclava proposed to do was this: He said, “ You go back to your property, and year by year we will take a paddock from you, until we resume the whole of the property, leaving you nothing at all.” As an owner of land, I prefer the proposal that the Government has put to the States to that of the right honorable member for Balaclava.

Again we find that at the Premiers’ Conference in 1923, a proposal, little different from the present one, was nearly accepted. The honorable member for Dalley, as Premier of’ Queensland, was certainly inclined to accept it. The honorable member for Herbert (Dr. Nott) has already quoted extracts from the speech of the honorable member for Dalley on that occasion. It is interesting to compare the attitude of the daily press at that time with the attitude of the Melbourne evening newspaper to-day. The Minister for Markets and Migration (Mr. Paterson) last night quoted certain paragraphs from that newspaper, and showed clearly that there was little consistency in its views. In this way, newspapers undoubtedly do a great deal of harm. . At the last Premiers’ Conference I sat in this chamber and listened to the discussion. As the right honorable member for Balaclava has said, the State Premiers acted like sulky children and would do nothing at all except lay claim to the per capita payments as their moral right. 1 think that it is apparent to all that the States have neither a moral, constitutional, nor legal right to the per capita payments. As the question has already been discussed in conference, what is the use .of holding another conference at which the same position would arise? There is not the slightest benefit to be derived from such a conference. By passing the measure we shall form a basis for negotiation. That may be said to be unfair, but I can only quote what many honorable members said during the last Federal election - “ Trust the Prime Minister.” That cry was used by every supporter of the Government at that time. Has the Prime Minister so changed that this trust should be withdrawn from him? His recent work abroad should have intensified the trust that we repose in him and in his Government.

This proposal means nothing to the taxpayer. The change-over will not make the slightest difference to him. That must be apparent to most honorable members. The honorable member for Henty (Mr. Gullett) spoke of the land tax. I have always found that the man who claims an expert knowledge of land taxation is the man who does not own an acre. As an owner of land, I contend that a land tax is better imposed by the States than by the Commonwealth, because there are different conditions and circumstances in every State. Honorable members talk of the indignation of the States and their opposition to the proposal. We have been told that a great revulsion of feeling against the Commonwealth Government caused the defeat of the last referendum. Speaking for New South Wales, I say with pride that that State carried the referendum. If some honorable members had put as much vim into the referendum campaign as they display in opposing this measure, the result of the referendum might easily have been different. During that campaign I spoke at several meetings in my electorate, and referred to the withdrawal of the per capita payments. I found no opposition whatever to the proposal. I think that that was the experience of most of the representatives of New South Wales in this chamber who spoke on the subject at that time.

Mr Thompson:

– The man in the street is not interested in the subject.

Mr ABBOTT:
GWYDIR, NEW SOUTH WALES · CP

– That is so. He has not studied it- at all. Apart from the opposition of the State Parliaments and the indignation which seems rampant in the city of Melbourne, there is little objection te the Government’s proposal.

I support the Government, because I have the utmost faith in it. The development of thi3 country lies in the hands of the Commonwealth Government. The State Governments have, to a great extent, ceased developing their own areas. They appear to he concentrating more on enlarging the capital cities, utilizing loan moneys for this purpose. State Parliaments are largely political wrangling institutions, devoted to the preparation of expensive baits for the electors. The States are, to a great extent, to blame for their parlous financial position. During the last two or three years they have indulged in an orgy of extra- vagance, with no thought for the future of the unfortunate taxpayers. An act which was recently passed by the New South Wales Government will cause much sorrow and tribulation to the man on the land. For that reason everything should be done to curb the power of that Government, and to place its finances on a proper footing. The right honorable member for Balaclava (Mr. Watt) and other honorable members, have referred to the chaos that will result to the States if the- per capita payments are withdrawn from them. I would point out that the Government’s proposal only means that the States will raise their own revenue, and will cease to obtain remittances from the Commonwealth. The per capita payment to New South Wales is approximately £3,000,000, and the yearly Consolidated Revenue of New South Wales is £39,000,000. What difference can £3,000,000 make to the finances of th t State, when it has the same field to raise the money in as the Commonwealth now raises it in for the State? Yet honorable members say that chaos will be created by this change. Chaos has been created there long ago, and this change will not add to it. The dreadful scares created by the right honorable member for Balaclava (Mr. Watt) and the right honorable member for North Sydney (Mr. Hughes) would be much better if used in broadcasting bedtime stories for little children, instead of for the purpose of frightening grown-up men in this House. I support this measure to the fullest possible extent, and I deplore the attacks that have been made on the Government bv its supporters. Having listened to this debate for some time, and having heard nothing but a farrago of abuse of the Government by its erstwhile supporters, I went to the newspaper room to seek a little solace and turned up the speeches made by some honorable members before the last general election. They were very different -from the speeches heard in this debate. Then it was “ Trust the Prime Minister,” “ Bruce won’t let you down,” and “ Stick to this Government, which has stuck to you.” I deplore solemnly, and with the utmost sorrow, that the attack on this Government, which has emanated from the personal ambition of certain honorable members, should receive the encouragement it has received.

Mr Maxwell:

– What about imputing motives now?

Mr ABBOTT:
GWYDIR, NEW SOUTH WALES · CP

– As for the honorable member for Fawkner (Mr. Maxwell), I admire him, and exempt him from these statements ; but there are other honorable members who have done nothing but backbite and try to destroy the Government’s credit. If this Government is going down, I shall go down with it; if the Prime Minister is defeated, I shall be defeated with him, and shall follow him wherever he goes, because in him and his Administration we have the best Government that this Commonwealth can hope to have.

Mr BAYLEY:
Oxley

.- This is an occasion when a man should speak of the faith that is in him, and that I intend to do. I support the bill wholeheartedly. My reason for doing so is that when one views the financial arrangement that has existed since the inception of federation with, it is true, one change, one realizes that it has broken down. The States find it impossible to finance themselves, and are at their wits’ end to carry on from one year to another. Surely, therefore, this is the time when a new arrangement should be entered into. The Government has been accused of acting hastily, of trying to bludgeon the States into the acceptance of its proposals; but any one who is conversant with the political affairs of this country for the last four or five years, knows that that is a misstatement. It has been pointed out that in 1922 the Prime Minister, when speaking in Brisbane. said that the per capita payments must continue until there had been a fundamental change in the government of this country. I admit that no great fundamental change in the government of this country has taken place, but financial and economic conditions have changed owing to the introduction of the 44-hour week. That has made the machinery of the State Governments almost unworkable. The honorable member for Dalley (Mr. Theodore), when the industrial branch of the movement to which he belongs brought this subject ut> for discussion at a Labour conference, opposed the proposal as only he could. On that occasion he was supported by his colleague, the present Premier of Queensland, and his opposition, in fact, almost lost him the leadership of the party.

Mr Theodore:

– The honorable member has misunderstood the situation. I did not oppose the proposal for the 44- hour week, but supported it at the convention.

Mr BAYLEY:

– The impression that I gained from reading what may be called the official organ of the Queensland Labour party, the Brisbane Daily Standard, was to the effect that the honorable member, who was then the Premier of Queensland, opposed the introduction of the 44-hour week, and pointed out that it would be impossible for him, as the head of the Government, to carry on if it were introduced.

Mr Theodore:

– The honorable member is wrong. I explained to the unions the reason why we did not proceed with the reform in 1923, but at the convention that year I supported it, and it was carried unanimously.

Mr BAYLEY:

– Perhaps I am doing the honorable member an injustice, but I think I am correct in saying that he at first opposed the proposal to the utmost, and that it was only when he found the numbers were against him that he agreed to it. At any rate, the introduction of the 44-hour week has added to the burdens of the governments of this country, which now find themselves in a very serious position. The Commonwealth Government asked the State Governments to meet them at a round-table conference to discuss the question, and every opportunity was given to them to put forward a scheme that would be acceptable to both parties. Unfortunately, it was found impossible to come to an agreement, and a deadlock ensued. The Federal Government either had to allow things to remain as they were, or endeavour to force the States to accept a change that would be to their advantage. The bill will put. an end to the per capita payments and the States will then have an opportunity of meeting the Federal Government in conference. When that conference is held, the honorable member for Dalley knows that the State of Queensland and every other State will receive a fair deal from this Government. It has been said by some honorable members that the attitude of the Government to the States has been intolerable, and has been characterized by a lack of courtesy. No statement could be farther from the truth. As a matter of fact, no other Government in the Federal sphere has done as much for the States. It has come to the assistance of the States to the tune of £5,000,000, which it has written off the land settlement scheme for soldiers. It has told the States that it will pay half the initial charges of the immigration scheme, by which Australia will obtain £34,000,000 from Great Britain. In many other ways, also, the Government has shown a bona fide desire to assist the States.

In common with the honorable member for Gwydir (Mr. Abbott), I regret deeply the statements made by some honorable members. The honorable member for Gwydir mentioned especially the honorable member for Henty (Mr. Gullett). It is true that the honorable member for Henty fired the first shot, but other honorable members who have opposed the bill have expressed agreement with him. The honorable member for Wimmera (Mr. Stewart) in his concluding remarks, said he felt positive that if honorable members were free to give an unfettered vote, the bill would not pass; and the honorable member for Fawkner (Mr. Maxwell), the right honorable member for North Sydney (Mr. Hughes), and the honorable member for Wakefield (Mr. Foster), repeated that opinion. Those honorable members know full well that there is not a scintilla of truth in the suggestion. The honorable member for Fawkner need only cast his mind back to an occasion during the regime of a previous Government. The phrase “ reasonable justice “ was used in a bill. On the ground that justice cannot be qualified, the honorable member for Fawkner moved in committee the omission of the word “ reasonable.” The right honorable member for North Sydney, who was then Prime Minister, called out the army, had the Riot Act read, brought out the firing party, and lined up the six or seven men who dared to support the amendment for the omission of that word. And yet yesterday we heard the right honorable member speak of the party whips being cracked. Honorable members do not need to be told that there is no such thing as a party whip on this side of the House. Never was there such liberty of action as we on this side now enjoy. The members who have made those insinuations know that they are untrue; but the people outside believe them when they see them printed in the newspapers. When a man of the reputation of the honorable member for Henty, and of the .other honorable members I have mentioned, make such statements, the public believes that there must be some truth in them. The right honorable member for North Sydney said that politics make us acquainted with strange bed-fellows. He was referring to the fact that the right honorable the Prime Minister and the- Treasurer, who were at one time members of different parties, are now working together in harmony. But what about the bed-fellows of the right honorable member for North Sydney? On his left sits the right honorable member for Balaclava (Mr. Watt), and on his right the honorable member for Wimmera; and those honorable members who are conversant with the inner history of this House during the last eight or nine years know what that means. Itmeans that the right honorable member for North Sydney would make friends with the ex-Kaiser, whom he formerly threatened to hang, if by so doing he could bring about the political undoing of the Prime Minister. The Prime Minister has been guilty of one sin, and one only, in his eyes - he has been a success in the office that was not of his own seeking, but was thrust upon him.

Mr Gullett:

– I rise to a point of order. The honorable member for Oxley has said that for political gain the right honorable member for North Sydney would associate in a friendly way with the ex-Kaiser. That is a very offensive statement to make about one who served his country so well in the war.

Mr SPEAKER (Hon Sir littleton Groom:

– I understand that the honorable member was expressing the feeling of hostility that, he says, exists on the part of one honorable member towards the Prime Minister, and illustrated his remarks in a certain way. If that illustration is regarded as offensive, the honorable member I am sure will withdraw it.

Mr BAYLEY:

– Certainly, I withdraw it. Any honorable member is entitled to express his opinion, and it is open to him to vote against any bill that the Government may introduce.

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– I suggest that if the remark of the honorable member was offensive to another honorable member he should be prepared to withdraw it.

Mr SPEAKER (Hon Sir Littleton Groom:

– The honorable member has withdrawn the expression. Imputations bordering on the offensive have been made on both sides of the House.

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– Had 1 heard the honorable member withdraw the expression I should not have risen in my place.

Mr SPEAKER:

– I think that honorable members are becoming rather sensitive when the boomerang comes back on them. I urge them to ignore the personal element. The measure before the House is important enough to be discussed on its merits.

Mr BAYLEY:

– I was pointing out that an honorable member is entitled to express his own opinion, and would be within his rights in voting against any measure that the Government might introduce. Yet I think he would be going slightly beyond the code usually accepted by gentlemen if he not only opposed the bill, but also abused members of his own party who supported it. I suggest that it would have been better if those honorable members who are opposed to the measure - and no doubt they consider that they have good grounds for doing so - had confined their remarks, as did the honorable member for Wannon (Mr. Rodgers), to a criticism of the bill, rather than endeavour to bring about the downfall of the party to whichthey owe allegiance. It has been stated that the people are opposed to the withdrawal of the per capita payment. The honorable member for Gwydir (Mr. Abbott), in reply, declared that the people of New South Wales were behind the Government in its proposal. A few weeks ago I attended a public meeting in Brisbane which was addressed by the honorable the Treasurer. At that time feeling ran fairly high concerning the Government’s proposal. The press and certain members of the Brisbane Chamber of Commerce had done their utmost to create a hostile attitude towards it. The meeting was attended by at least 1,000 persons, and the Treasurer explained in detail the action that the Government intended to take. No dissentient voice was raised at that gathering. I am confident that the people of Australia have sufficient faith in the Prime Minister and those of us who are associated with him to trust us in this matter.

Mr Charlton:

– According to the press, the Nationalist executive in Sydney is against the Government and its supporters.

Mr BAYLEY:

– I cannot speak for New South Wales; but the Nationalists in the Queensland Parliament are supporting us. We owe allegiance to the same people as do the members of the State Parliaments, who naturally oppose the measure on the ground that the per capita payment has been easy money. I feel sure, however, that when the matter is fully understood we shall receive the credit which is our due.

Mr DUNCAN-HUGHES:
Boothby

– I shall not detain the House long - certainly not as long as other honorable members who have addressed it - but so many have expressed themselves on the bill that I feel it would be undesirable for me to refrain from stating my attitude, particularly since I do not wish it to be understood that the honorable member for Wakefield (Mr. Foster) represented either my personal views or those of the whole of the Nationalists from South Australia. I approach the matter as a federalist, not as a unificationist; as one who believes in working with the States,’ and not against them ; and equally, if I may say so, as one who was elected as a representative, and not as a delegate, to this Parliament. I consider that I am entitled to express my own views, and come to my own decision on the facts as they appear to me, looking at them in the broadest way. I am not inclined to be diverted from my decision by the views of State members, State ministers, or State-prejudiced newspapers. In spite of much agitation, I have not been asked by people in my own district, by deputation or otherwise, not to exercise my own judgment in the matter. I do not imagine that my constituents would think any the worse of me if I decided on my own course of action, even if they had expressed views which differed from my own. On the merits of the bill I shall be almost as brief as I have been on the personal aspect of the matter. Again let me emphasize that I speak as a federalist, who wishes to do justice to the States. The first point that stands out prominently in my mind is that the States rest their claim to the per capita payment on a moral right. To any lawyer that means an admission on their part that they have no legal right to the continuation of the payment, and goodness knows what a moral claim is. If we are to begin to conduct the affairs of the nation on moral claims, we had better jettison all our laws and inaugurate a new method of government. For years the States have avoided any settlement of this matter, although they have discussed it frequently. I am not speaking with any heat. It is natural and right that they should seek to protect State interests. If we were members of State houses it would be our duty to see that the States’ rights or claims were safeguarded in every way. Personally, I do not cavil at such an attitude; but I point out that for years the States have avoided coming to a settlement. It will be found that whenever they have discussed the matter in conference with Prime Ministers, there has been at least one State that, at the last moment, has failed to come into line, and the whole of the negotiations have broken down. The subject has been postponed for future consideration, and the per capita payment has continued. That was inevitable. Further, the present State Premiers - I think I may say without undue prejudice in the matter - arc, with one exception, not of the same political party as the Prime Minister and his colleagues, and, in spite of the fact that the proposal Avas clearly placed before them, they have made no attempt to suggest an alternative method. I consider that they have made a very grave mistake. Even assuming that the. suggested arrangement was not a good one, they might at least have put forward some alternative scheme which could have beer considered, particularly since they had no legal standing. By refusing to consider it, however, they put their States in a false position.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Surely, that remark, coming from a lawyer, is putting the States in a false position? They have had a legal right to the payment of 25s. per head of the population for the last sixteen years.

Mr DUNCAN-HUGHES:

– Legally, the States have no standing in regard to the per capita payment. It could be terminated any moment, without any alternative payment, or compensation whatever. In spite of that, the State Premiers practically said, in conference, “We admit that we have no legal right to the payment; but we say that we have a moral right. Therefore, Ave refuse to discuss the question ; it must rest on our moral right.” Any lawyer realizes that that was an exceedingly weak position for the States to assume; it amounted really to bluff. The Premiers rendered a very grave disservice to the people they represented. They had an opportunity a year ago to put forward their suggestions in conference, and, perhaps, to obtain better terms than they Were offered in the first instance; but they did not take advantage of it. Further, the Premiers refused to accept the proposal that the Prime Min ister made about three weeks ago, that a special commission should be appointed to inquire into the figures and report if any of the States would be at a disadvantage under the measure. That seemed to me most reasonable and fair; though it did not mean the re-opening of the whole question. Members of Parliament - at least I speak for myself - had come to a decision before that time. I certainly had, but the Prime Minister told the State Premiers, “ We are not prepared to open the main question; but as a proof of our good faith, Ave are prepared to go into the question of the amounts that the various States would receive under this scheme, to see if there is any truth in the claim that they would be worse off in the future than they have been in the past.” The State Premiers again refused that offer, and, in doing so, I think they did a further disservice to the people.

It will be admitted that for a long time the States have urged two things rather strongly. The first is that there should be a remission by the Federal Parliament of some direct taxation. Under the present proposal it is intended that that shall be done. In the second place it has been repeatedly emphasized that the taxing authority should tax for itself and not for another authority. It is intended under the bill that that principle also shall be applied. Apart from the arguments that I have already advanced, I cannot vote for an amendment that has been moved by a party which is admittedly unificationist in its objective. I have always understood that the Labour party stands for unification. Am I right in assuming that the honorable member for Hunter (Mr. Charlton) and the honorable member for Dalley (Mr. Theodore), are unificationists?

Mr Charlton:

– The honorable member is quite wrong in his assumption.

Mr Theodore:

– He is.

Mr DUNCAN-HUGHES:

– This debate has at least elicited that information. Had the honorable member for Yarra (Mr. Scullin) been present, I should have directed the same question to him.

Mr SPEAKER:

– The honorable member must not direct questions to other honorable members.

Mr Fenton:

– If the honorable member will study the Labour party’s platform, he will see where honorable members on this side stand in the matter.

Mr DUNCAN-HUGHES:
BOOTHBY, SOUTH AUSTRALIA · LP; NAT from 1925

– HUGHES.- I am gratified at the admission of leading honorable members on the other side that they are not in favour of unification. Believing that they were, I regarded their change of attitude towards this matter as being somewhat humorous; but now I realize its seriousness.

A further reason why I intend to support the Government’s proposal is that I am prepared to trust the Prime Minister to act fairly towards the States. I remember that when, in 1923, we had before us a bill for the extension of the railway south from Emungalan to Daly Waters the then honorable member for Angas (Mr. Gabb) moved an amendment which was based on the unwillingness of Labour members to trust the Prime Minister to carry out what South Australian members regarded as the more important part of the contract with that State, namely, the commencing of the work from the south end. Honorable members on this side of the chamber, believing that in good time the Prime Minister would honour the contract which had been entered into, voted for the bill, which provided that the continuation of the work should commence at the northern end. That the work of extending the railway from Oodnadatta to Alice Springs has al ready commenced is evidence of the Prime Minister’s bona fides. As in this matter also I believe that the Prime Minister and his Ministry are prepared to act fairly towards the States, I shall support the Government. In any case, I decided last year that in supporting the Government’s proposal I should not be violating any principle; and seeing that no change which has since been made in the detail of procedure has caused me to think otherwise, I shall vote for the bill.

Mr MARKS:
Wentworth

.- It was not my intention to address the House in relation to this measure, but circumstances have arisen which make it incumbent on me to do so. As I approached the chamber just now, I heard some one exclaim, “ Here comes one of the small guns.” That is true. How could I, after only eight years in this House, attempt to equal the great display of eloquence that we have had in this chamber within the last few days? I have not the eloquence of the right honorable member for North Sydney (Mr. Hughes), the right honorable member for Balaclava (Mr. Watt), or the honorable member for Henty (Mr. Gullett) whose speeches stand out among those which I have heard in this chamber during the last eight years. In saying that, I have no desire to be sarcastic. The speech of the honorable member for Barton (Mr. Ley) was also of a very high order. During the debate on this measure we have heard many arguments, both for and against the Government’s proposal. I shall not traverse those arguments; I desire rather to say something which has not been said before during this debate.

When I returned from the war in 1919, being still fond of the sea, I decided to join the good ship Commonwealth, then commanded by William Morris Hughes. After about twelve months’ service I was promoted to boastwain. For that recognition of my services I am intensely grateful. For a time everything went well; the ship earned good freights, and made excellent voyages. One day a member of the crew - a man named Page - accidentally dropped a hammer on the head of the skipper. That caused considerable trouble. In the engine-room also we had trouble with a man named Greene, who fell out with Page. Things grew so bad that we had to return to port to get a new crew. When the new crew was signed on, the vessel was placed in charge of one, Bruce, and Page was promoted to be second in command. It is interesting to note what occurred after that. Let me apply the analogy to the bill now before us. Whence comes the opposition to it? I can understand honorable members on the other side opposing the measure because, as members of the Opposition, they are playing the old game of opposing Government measures. But I cannot understand the action of members on this side of the chamber who, at a time when their duty demands that they should stand by their skipper, desert the ship. Let us see who are the deserters. Two of them - the right honorable member for North Sydney and the right honorable member for Balaclava - in times past have had serious quarrels; but now we find them with their arms around each other’s necks in a fond embrace. Honorable members no doubt remember that the right honorable member for Balaclava was, on one occasion, sent on an important financial mission to the Old Country.

Mr Fenton:

– I rise to a point of order. Is the honorable member in order in referring to personal matters, and in washing the dirty linen of the Government party?

Mr DEPUTY SPEAKER (Mr Bayley:
OXLEY, QUEENSLAND

– I am waiting for the honorable member for Wentworth to connect his remarks with the bill.

Mr MARKS:

– The ruling of the Chair being against my continuing in the strain in which I started, I shall not attempt to do so further. Before I finish, I hope to spike the guns of some of the deserters. The right honorable member for Balaclava, speaking as a great financier, criticized the Government. Let us for a moment review the past. What success did the right honorable gentleman achieve in connexion with the financial mission entrusted to him by the Commonwealth Government of which he was a member. Then take the case of the right honorable member for NorthSyd- ney with all his brilliancy and his great career. Unhappily for him, and for the country, he has not on one occasion since he was deposed from the captaincy of the good ship Commonwealth made one speech in this House in favour of the Nationalist party, the supporters of which in North Sydney returned him.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Oh, yes, he has! He both spoke in favour of and voted for the Crimes Bill, and he has done the same on other occasions.

Mr MARKS:

– It I am wrong to the extent of one occasion, I apologize; but time after time the right honorable member has criticized the present Government from the floor of this House. Although honorable members of the Nationalist party are perfectly free to vote as they please on all matters that are submitted to them, it is quite apparent that the Government cannot proceed satisfactorily if they fail to support their own Ministry.

Mr Gregory:

– They are perfectly willing to stand to the platform upon which they were elected.

Mr MARKS:

– If, on every occasion when an important measure of this character is submitted to Parliament, honorable members who are supposed to support the Government go over to the Opposition and play their game, how is government to be carried on ? There must come an end to that kind of thing.

Mr Maxwell:

– We are not playing the Opposition game. We are opposing a bill that we do not believe in.

Mr McGrath:

– What ahappy family you are over there !

Mr MARKS:

– We are not a happy family, and cannot be as long as honorable members on this side of the chamber are willing to play the game of the Opposition. That cannot go on. When I saw the crowds in the galleries of this chamber yesterday afternoon and evening I wondered what they must be thinking of us, and I came to the conclusion that they must be thinking what I have very often thought; and that is, how difficult is party government as carried on throughout the British Empire, and how necessary it is that we should find some better means of government. Until we do, however, we are forced to carry on as we are. The

Bruce-Page Government has a larger majority than any Commonwealth administration that has preceded it; but how can it carry on if it has only nominal supporters behind it? I am not appealing to the honorable members to whom I have referred to alter their votes.

Mr Gullett:

– The honorable member will obtain another under-secretaryship as the result of this speech..

Mr MARKS:

– I am a much happier man in my position to-night than the honorable member forHenty (Mr. Gullett) is in his, because although I do not for a moment agree with the whole of the Treasurer’s proposals in relation to theper capita payments, I at least am supporting the Government that I was elected to support, and which, since 1919, I have been elected by the electors of Wentworth to support. All honorable members on this side of the chamber were elected to support the Bruce-Page Government.

Mr Maxwell:

– I was not.

Mr MARKS:

– The honorable member for Fawkner (Mr. Maxwell) was elected because the Nationalist organization stood behind him, and it is his duty, in turn, to stand behind the Government.

Mr Maxwell:

– I undertook to support only such measures as commended themselves to my judgment.

Mr MARKS:

– The honorable member and others are not supporting the Government they were returned to support. That kind of thing cannot go on. .

Mr Brennan:

– Keep the ring clear !

Mr DEPUTY SPEAKER:

– Order !

Mr Fenton:

– Unfurl the sail !

Mr DEPUTY SPEAKER:

– The honorable member for Maribyrnong (Mr. Fenton) is out of order. I suggest that the honorable member for Wentworth (Mr. Marks), having made these few introductory remarks, should now confine his attention to the bill.

Mr MARKS:

– I am happy to follow your advice, sir, for I have said sufficient on that point.

One might well ask, as many honorable members have already done, why the Government introduced this proposal. In my opinion, it is for the same reason that has caused several of the banks of Australia to amalgamate. In the last few weeks we have read of instance after instance of big banking institutions coming together and consolidating their forces. The managers of these banks can see financial trouble ahead, and they are consolidating their resources in order to prevent a bank smash such as Australia experienced years ago. I believe that the Prime Minister and the Treasurer can see international trouble ahead, and they have introduced this proposal so that Commonwealth and State finances may be put on a better footing than at present. They believe that, in the event of trouble occurring, it is highly desirable that we should have a clear deck. These remarks may sound strange to honorable members who heard me make a certain speech in this House some years ago - a speech for which I was ridiculed everywhere. I suppose it was rather dangerous for a politician to tread on that ground; he took the risk of being considered balmy. I have not altered my views at all ; but I wish to say that from information I have received from foreign sources - and I have many friends on the other side of the world - there is a probability of international trouble arising, not only out of the Chinese situation, but otherwise. The bank managers of Australia appear to have had information similar to that which I have received. We shall need to tread very carefully in Australia for the next two or three years. I have had the honour to support this Government consistently throughout my membership of this Parliament. I have always voted for it, although I have not always seen eye to eye with it. Honorable members who are supposed to be behind the Government, but who vote against this measure, may consider that they are plucky; but I am firmly of the opinion that Commonwealth and State financial relationships should be put on a proper basis at once. Every one realizes that anything may come out of the Chinese situation. In all the circumstances, I am certain that the Government is doing the right thing in pressing forward with this proposal. I do not regard this scheme in the same light that some other honorable members appear to regard it. I do not think it is in the nature of a bludgeon with which to belabour the States, nor of a pistol which is being held at their heads. The way is left open for negotiation. A conference will be held after the bill passes - for it will pass - and no one can say what solution of the existing difficulties may be reached when the matter is thoroughly discussed. I feel certain that positive good to the States will issue from this legislation. I would appeal to the States to come together and, with the Commonwealth, seek a way out of the present impasse. In these circumstances I regret that the parties supporting the Government are not united. I believe every honorable member is ready to admit that the Prime Minister is a sincere, trustworthy, and honest man; and the same may be said of the Treasurer. There is nothing of a personal nature in the action of the Prime Minister (Mr. Bruce) and the Treasurer (Dr. Earle Page). They are working for the sake of the country which has given them birth, of which they are proud, and on whose behalf they went overseas to participate in the Great War. We should give them credit for what they are doing, and try to help them to achieve what they desire in order to ensure the financial stability of this great country which we are all endeavouring to serve to the best of our ability. If I have said anything which the honorable member for Henty (Mr. Gullett), or other honorable’ members, regard as offensive, I apologize; but I still think that members of this great Nationalist party should not desert the Government which they were returned to support on this or any other occasion.

Mr GARDNER:
Robertson

.- I should not have contributed to the debate at this late hour had it not been for the fact that something in the nature of a challenge has been thrown out by honorable members opposite, who have said that certain members sitting behind the Government are going to record a silent vote. It has even been suggested that the party whip has been cracked and that some honorable members are not prepared to give utterance to their views on this question. We have also been subjected to a tirade of abuse from the press, but I can afford to snap my fingers at the Melbourne press, because, in this democracy, I owe allegiance only to the people who sent me here. The whole situation would be humorous if it were not at the same time more or less tragic because of the endeavour in sections of the press to humiliate the Government, and, in doing so, to attack one who, in the opinion of a majority of the electors in my constituency, has since he accepted office, proved himself to be the most courteous and disinterested Prime Minister Australia has ever had.

There has been no attempt to coerce me into voting for this bill. I have not been approached by members of the Government, or by the party whip, but have been free to form my own judgment. A good deal has been said concerning a plank of the platform of the Nationalist party, but I must confess ignorance on that point, because I was not aware that the question under discussion was covered by any plank of the platform to which I had subscribed. I am more concerned with the point at issue. It is easy to speak glibly of what appears on the party’s platform, the compilation of which has exercised the attention of some of our greatest men. The whole circumstances in which it was drawn up have to be reviewed. I have not signed any platform, and I am responsible only to the electors for the stand I am taking on this occasion. The gestures of the Government on financial measures have been clearly defined, and have been in the interests of taxpayers of this country, who, whether they be Federal or State, are the same people. The Government dispensed with a good deal of duplication and unnecessary work, annoyance, and expense when provision was made for taxpayers to submit only one taxation return. The Government has, on several occasions, been responsible for an appreciable reduction in direct taxation ; but in adjusting the financial arrangements between the Commonwealth aud the States involving the abolition of the per capita payment, it has a very difficult problem to solve. The right honorable member for North Sydney (Mr. Hughes), who possesses an astute brain, when Prime Minister, admitted, as shown by the AttorneyGeneral last night, that the per capita payments must eventually be discontinued, but instead of suggesting an alternative he allowed the matter to rest where it was. The subject was also tackled unsuccessfully by the right honorable member for Balaclava (Mr. Watt), when he was Treasurer.

One of the principal charges levelled against the Government is that it has adopted a stand and deliver attitude and proposes to deal with the patients after the operation has been performed. Numerous conferences have been held between Commonwealth and State ministers and ample opportunities have been provided for the whole matter to be discussed ; but the State representatives have absolutely refused to consider the Government’s scheme. The only alternative is for the Government to act, and the responsibility now rests upon this Parliament. Is it not ridiculous to suppose that there should be other than a diversity of opinion amongst the members of our party outside, and that the man in the street should be allowed to settle the question ? We are sent to this Parliament to perform certain duties, and in this instance we have power, under the Constitution, to do what is proposed. The honorable member for Brisbane (Mr. D. Cameron) aptly remarked that the proper time to have determined this vexed question was during the war period when the whole of our indirect taxation, particularly that received in the form of Customs and excise duties, was being absorbed, but as action was not then taken we have now to face the issue. In this instance the Government is showing its strength in proceeding with its proposals.

I agree with the honorable member for Gwydir (Mr. Abbott), who said that when a Government is compelled, in consilience of opposition, to withdraw or vitally amend any of its financial proposals, it is tantamount to a vote of censure, find those honorable members on this side of the House who vote against the Government on this bill, which is a financial measure, will be recording what is tantamount to a vote of censure. When the per capita payment was substituted for the constitutional provision for the return of three-fourths of the Customs and excise revenue, the revenue of the States was reduced by approximately £3,000,000 a year. For that they did not receive any compensa- ti on. It has been demonstrated to my satisfaction that when provision is made for our war liabilities, including interest on war loans, repatriation and other services of a federal character, there is, as the honorable member for Barton (Mr. Ley) aptly remarked, really nothing left out of Customs and excise revenue to hand to the States. I listened with rapt attention to the oratorical utterances of the right honorable member for Balaclava (Mr. Watt) who really supported mv attitude in this instance. He said that a statute could be repealed at any time. It is common knowledge that legislation of any importance that has been passed by a _ majority of honorable members of this House is very rarely repealed. The Land Tax Act, for which a Labour Government was responsible, has been criticized severely, but no attempt has been made to repeal it. So long as the Government adhere to the programme upon which they have embarked, and give effect to that which is contemplated, there is not likely to be any surplus revenue. I. for one. should never vote for the repeal of the Federal Aid Roads Act. The child endowment scheme is a matter of Federal rather than of State concern, and will involve a considerable expenditure.

I listened with interest to what the honorable member for Henty (Mr. Gullett) said regarding the incidence of taxation. It has been argued that the Commonwealth Government ought not to vacate the field of direct taxation, because those who can best afford to bear the burden of the war, should be compelled to make provision for that expenditure by way of direct taxation. I remind honorable members that a considerable portion of the direct taxation that is levied is passed on by those who are called upon to pay the amounts assessed. Every business makes provision in its profit and loss account for the probable taxation that will have to be met, and the prices of commodities that are manufactured or raised are correspondingly fixed. A great deal of the land tax, which was passed ostensibly for the purpose of bursting up big estates, is paid by the owners of city properties and by them passed on. A large proportion of the indirect taxation is levied on luxuries and is contributed by well-to-do people. It is not correct to assume that because the Government intend to pass the bill before holding a conference with the States they will not deal reasonably with the States. Previous conferences having proved abortive, the Government had to deal with the matter along the lines proposed. In private or business life an existing contract is first disposed of before a new one is entered into. Although the per capita payments will automatically cease in June, 1927, provision has been made for the payment to the States for one year of an amount equal to that which they at present receive. Now that there is a possibility of an arrangement being come to with the States, that provision might be extended, if necessary, to embrace a longer period. I am not concerned with the views that are held upon this matter by the Melbourne press; my only concern is the effect which the proposal will have upon the people of Australia.

Dr EARLE PAGE:
Treasurer · Cowper · CP

– Whatever political opinions may be held by honorable members, and whatever attitude they may adopt towards the bill, I think it will be admitted that it has furnished an opportunity for a very interesting debate.

Apart altogether from its actual scope it has proved of extraordinary value, in that it has induced honorable members to acquaint themselves with the basis upon which the financial provisions of the Constitution were built up. It has led them to peruse the convention debates to ascertain what was in the minds of the founders of the Commonwealth, and, in addition, the reports of proceedings at the different Premiers’ conferences which, since the establishment of federation, have endeavoured to determine what financial arrangements would be acceptable to the States and the Commonwealth. Those who have taken the trouble to do so must have noticed that the guiding principle in the Government’s policy is a fundamental fact of the Constitution; that is, that the Commonwealth, which is a federation of all the States, cannot afford to allow any one State to be permanently financially embarrassed. Although interesting, the debate has been considerably wide of the issue that is before the House. We have had discussions regarding methods of taxation, and its incidence when levied by State and

Federal authorities. Plausible excuses have been made by ex-ministers of the Crown, State and Federal, to account for their attitude to-day being different from what it was when they held office. Several honorable members have endeavoured to justify their opposition to the bill by giving differing versions of the policy of the Government which was enunciated at the recent election, and the mandate which the Government received. It has been suggested that the figures on which the various proposals of the Commonwealth have been based are not accurate. This Government has always been prepared to submit its figures to ‘ the examination of the officers of the States. In the agreement which was arrived at in 1923, for instance, we said, “ We will wait until we get the actual figures. We are prepared to place the States in a better position, to the extent of £100,000, than those figures disclose.” In the recent discussions we urged that the various taxation and treasury officials of the States and the Commonwealth should investigate these matters, and, subsequently, we offered the States a royal commission upon which they would have representation, to ascertain whether our figures were accurate, and by the result of which we agreed to be bound. The Commonwealth has always been prepared to submit, in substitution for the * per capita* payments, proposals which would be more generous to the States than the present arrangement is. But that is not the issue now before the House. The real issue was put by the Prime Minister (Mr. Bruce) when he intervened in the debate, through the courtesy of the honorable member for Yarra (Mr. Scullin). The right honorable gentleman detailed the various amendments which the Government desire to have inserted in the bill, and gave the reasons for those amendments. In the first place, the passing of the bill will be an expression of opinion by this House that the present system of uniform per capita payments to the States is unfair and unsound. It also will impose a definite time .limit upon the operation of the present system, because in its amended form the proposal for the cessation of the per capita payments will come into operation m fifteen months’ time; in other words, it gives notice of the termination of the present system. This is in accordance with tile provisions of the Surplus lievenue Act, which affirms that the payments shall continue for a period of ten years and thereafter until the Parliament otherwise determines. Consequently, all this talk about killing the patient first and examining him afterwards goes by the board, because, as a matter of fact, the course which the Government is taking, is always followed in any ordinary business undertaking. The Government is giving notice of the termination of the present arrangement, and invites the representatives of the States to meet Commonwealth Ministers in conference, before the expiration of the time limit fixed, with a view to arriving at a satisfactory substitute for the present per capita payments. The resolutions of such a conference must be brought before this House for ratification before they can become operative.

Mr Maxwell:

– Will one question to be dealt with by that conference be whether the per capita payments are to continue “at the end of that period ?

Dr EARLE PAGE:

– I shall deal with that point presently. The entire field will be open for discussion. The conference will be asked to agree as to the best method of establishing the financial relationship of the Commonwealth and the States on a permanent and enduring basis. The issue now befor Parliament is not whether the Commonwealth shall evacuate certain fields of taxation in substitution for the per capita payments to the States. If we had gone on with the bill in the form in which it was presented last June, and if no amendments had been indicated, there might have been some reason for the lurid and woeful pictures painted by honorable members as to the effect of the measure on the various States, but I remind them that if the bill as proposed to be amended is agreed to, the resolutions of the projected conference will come before Parliament at a later date, when they will have another opportunity to draw similar or perhaps worse pictures, of what will happen. The amendments proposed to be inserted in the bill, provide in effect first of all that the present per capita payments shall cease on the 30th

June, 1928; but the Commonwealth Government will go to the conference proposed to be held in the meantime with an absolutely open mind, fully prepared to discuss any suggested solution that may be deemed to be fair and satisfactory to the people of Australia. The result of that discussion, and the resolutions of the conference must, as I have stated, be brought before this House before the scheme can be put into operation.

Mr Theodore:

– Will the per capita payments be dealt with at that conference?

Dr EARLE PAGE:

– After discussion of these proposals, Parliament may decide in a year’s time to reverse the decision that may be arrived at to-night that the per capita payments are unsound and unfair. The tendency during the debate has been to concentrate on only one solution of the problem dealt with in the bill, to the exclusion of all other proposals, although, as a matter of fact, the whole field covered by the financial relations between the Commonwealth and the States is open to discussion. Much of the opposition to the bill has been based on the assumption that in it the Government seeks a readjustment by which the States will be obliged to impose the taxation which is to be discontinued by the Commonwealth. The Prime Minister tried to correct that impression, and to give a definite lead to honorable members. In his speech he indicated the various possibilities which presented themselves to his mind as he spoke. He spoke first of the evacuation of fields of taxation by the Commonwealth, and suggested that that might well be the subject of inquiry. Another proposal suggested for inquiry was whether the Commonwealth should take over the whole or part of the States debts, or provide sinking funds. There was also the question of modified payments, which might be made on some other basis than that of a uniform per capita payment such as has been adopted in other federations. Finally, at such a conference, the States would have an opportunity to offer entirely new suggestions. If the representatives of the Commonwealth and the States approached the several subjects for discussion with an open mind, it might be possible to evolve some new plan which would prove better even than any which has been suggested hitherto. So far as this House is concerned, however, a discussion of these matters is not proper at this stage. The time for discussion is when the conference is being held. The reason why it is absolutely essential that the measure should be carried is revealed by an examination of the history of negotiations with the States. Much of the debate has had relation to what has been described as the Braddon blot. That section provided for the payment to the States of three-fourths of the Customs revenue for a period of ten years. During the last five or six years of that period, numerous conferences were held between Commonwealth and State ministers to determine a satisfactory basis for the future, but on each occasion new proposals were made by the representatives of the States. The Commonwealth, in 1904 and 1905, brought down certain proposals, and in 1909, less than a year before the expiration of ‘the ten year period, two attempts were made to arrive at an agreement. In March, Mr. Andrew Fisher, who was then Prime Minister, went to a conference of the State Premiers at their invitation, and, in view of previous experiences of such gatherings, he intimated that he had not come with any new scheme because so many of the amendments proposed by the Commonwealth had been turned down. All he wished to say was that the time limit fixed for the operation of the Braddon section would expire in the following year, and that it was essential that a satisfactory basis of agreement should be arrived at before the termination of the period named. The States then submitted a proposition which was not acceptable to the Commonwealth. In August of that year, and within ten months of the date of the expiration of the operation of the Braddon section, the State Premiers and Commonwealth Ministers were able, for the first time in ten years, to arrive at a solution mutually satisfactory to the Commonwealth and the States. If, in 1910, the Surplus Revenue Act had been carried in such a form as to make it operative only for a period of ten years, after which, as in the case of an ordinary contract, its provisions would cease to have effect, the right honorable member for Balaclava would have been able to strike a satisfactory agreement with the State Governments in. 1918- 19. But, because the duration of the per capita payments was left undetermined, the State authorities felt that it was better that they should be continued than that a scheme should be adopted whose results in the future might be unknown. They, therefore, refused to come to any agreement. We say that the history of these conferences between the Commonwealth and State authorities indicates that there is not the slightest chance of a satisfactory issue from another conference, unless a definite termination is first put to the existing arrangement, and the Government proposes that it should terminate fifteen months hence. In the meantime, the whole field of inquiry is open to discover the best solution of the financial difficulty.

Mr Watt:

– If the Government has the numbers, why does the honorable gentleman get excited about this?

Dr EARLE PAGE:

– I am not excited, but I wish to put on record for the information of the people of Australia a definite statement which will indicate the reasons actuating the present Government. Those reasons are, in my opinion, irrefutable; they have not been met by any arguments that have been advanced during this debate. When Mr. Fisher met the State authorities in conference, he said that the only thing he did which he felt might be wrong was to give rather too long a period for the operation of the provisions of the Surplus Revenue Act. For the last eight years there have been continuous attempts to try to bring about a satisfactory conference to deal with this matter. In 1919 the right honorable member for Balaclava met the Premiers as Acting Prime Minister. In 1920 they were met by the right honorable member for North Sydney, who put forward various proposals that were very keenly debated. In 1923 the present Government came into the field and recognized the necessity for the establishment of some sort of security and some definiteness concerning the whole field of taxation. To secure the financial independence of the States certain proposals were brought forward and transmitted to the State Premiers. They sent back a counter proposal to the effect that they were prepared to give up the per capita payments if the whole field of income taxation were, vacated by the Commonwealth. The Commonwealth Government said, “Let us discuss the matter,” and the spirit of conciliation which marked the negotiations by the Commonwealth is evidenced by the fact that at that conference a compromise scheme was proposed half-way between the demand of the State authorities that the Commonwealth should evacuate the whole field of income taxation and the proposal of the Commonwealth Government, while ceasing to make the per capita payments, to continue to a certain extent in the income tax field of taxation. That compromise scheme was accepted by the representatives of five of the six States, and subsequently a resolution, which was adopted unanimously by the representatives of all the States, was carried expressing appreciation of the attitude of the Prime Minister. In 1926 the Commonwealth Government put before the State Premiers the very scheme of which they had previously expressed their appreciation, and to which the representatives of five of the six States were prepared to agree. That scheme was again submitted to them in a more liberal form, because the scheme proposed in 1923 dealt with the payment of interest on transferred properties. The scheme of 1926 made no reference to the transferred properties, but only to fields of taxation. “When the scheme of 1926 was put before the State Premiers they refused to discuss it at all, saying that they had a moral right to the per capita payments.

Mr Watt:

– In that, they were quite wrong, of course.

Dr EARLE PAGE:

– The Commonwealth Government put before the conference figures which it was prepared to submit to the scrutiny of State officers. Its only object was to secure such a transfer of the fields of taxation as would enable the State taxpayers as such to be £100,000 per annum better off in each State than they are at the present time. That is to say, the State Governments would be able to recoup themselves for the loss of the per capita payments and to levy taxation which would give each of them £100,000 per annum more than they then received through the per capita payments. I mention these facts to indicate the difficulty of securing unanimity, and that agreement between the Commonwealth and State authorities, of which so much has been said during this debate. All previous attempts to deal with the financial relations between the Commonwealth and the States have involved loss of revenue to the States. When federation was consummated, the State authorities were mulct to the extent of one-fourth of their Customs and excise revenues. In 1910, when the uniform per capita payment system was brought into existence, the States lost a further £3,000,000. When the right honorable member for Balaclava brought down his proposal, in the next six years it would have resulted in a loss to the States of £4,000,000 or more. When the present Government brought down its proposals, its definite intention was to secure that under them the States would be better off, because it regarded the problems to be solved by the State Governments as very difficult indeed. Honorable members will see, therefore, that there is no truth in the stories which have been told suggesting that it is the object of the Commonwealth Government to try to starve the States into submission or to enslave them. I wish to make two newspaper quotations which were published in 1923. One is from the Sydney Morning Herald. It said at that, time - .

The effect of such alterations is that the Commonwealth Treasurer desires to make the States supreme in the matter of finance, and not the Commonwealth.

Honorable members may remember that at the same time the Melbourne Herald dealt with the proposal in an article headed, “Mr. Bruce Surrenders to the States,” in which it was contended that to give away the fields of taxation as proposed would render the Commonwealth Government impotent.

Mr Watt:

– The honorable gentleman does not seriously quote the Melbourne Herald ?

Dr EARLE PAGE:

– I have quoted the Sydney Morning Herald in answer to those who endeavour to create the impression that the Commonwealth Government is proposing to do something to destroy the independence of the States. During the committee stage of the bill I shall deal with the question raised by the honorable member for Wimmera (Mr. Stewart), and give the reasons why the uniform per capita basis of payment has been found to be unfair and unsound, and cannot be considered at all by the Government as a satisfactory basis for the future. In passing, 1 should like to point out that, although Sir George Turner tried repeatedly to secure the inclusion in the Constitution of a section making it obligatory on the Commonwealth to pay any surplus revenue to the States on aper capita basis, all such attempts were defeated. They failed because it was believed that the inclusion of such a section would be most dangerous, since, owing to the differentstages of development of the different States,such a system would be inequitable in its incidence. The present Commonwealth Government’s proposals has from the beginning been generous to the States. They have been designed all the time to secure, as far as possible, in a Commonwealth in which there is a constant dovetailing of State and Commonwealth finances, the financial independence of the States. The question now before the House is, first of all, whether honorable members believe the uniform per capita system is unsound, and, secondly, whether the Commonwealth Government is approaching the settlement of the subject in the right way. It proposes that a termination shall be put to the present system by this Parliament, and that a conference shall be held in the meantime at which every other possible solution of the problem may be considered, in the hope thata mutual agreement may be arrived at which will be beneficial to the Commonwealth and State authorities, and also to the people of Australia.

Question - That the words proposed to be omitted stand part of the question (Mr. Charlton’s amendment) - put. The House divided.

Maiority . . 6

AYES: 0

NOES: 0

AYES

NOES

Question so resolved in the affirmative.

Amendment negatived.

Question - That the bill be now read a second time - put. The House divided.

AYES: 0

NOES: 0

Majority . . 6

AYES

NOES

Question so resolved in the affirmative.

Bill read a second time, and committed pro forma.

Message from the Governor-General recommending appropriation reported.

House adjourned at 11.19 p.m.

Cite as: Australia, House of Representatives, Debates, 10 March 1927, viewed 22 October 2017, <http://historichansard.net/hofreps/1927/19270310_reps_10_115/>.

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