10th Parliament · 1st Session
Mr. Speaker (Hon. Sir littleton Groom) took the chair at 11 a.m., and. read prayers.
Mr. A. GREEN presented a petition from 89 residents of the Hall’s Creek district of East Kimberley, Western Australia, praying that the aerial mail service be extended from Derby to Wyndham via Fitzroy Crossing. and Hall’s Greek.
– In regard to the statement made on Egyptian affairs by the Prime Minister yesterday, will the right honorable gentleman state whether he has seen press cables this morning to the effect that on Wednesday last the Cairo newspapers published the text of a stern note from Britain to Egypt, dealing with the proposed Egyptian legislation to limit British activities in Egypt!
Has the Commonwealth Government been advised of the contents of this note? If so, does the Prime Minister intend to make a further statement to the House?
– I have not seen the reports to which the honorable member referred, but I have received a cablegram embodying the terms of the British note, and I shall lay it on the table of the House. The honorable member is not quite accurate in saying that the note relates to the proposed limitation of British activities in Egypt; it deals with certain fundamental matters affecting British rights that must be preserved.
– I ask the Treasurer whether it is a fact that, after long sustained agitation by land-holders for a (simpler and more expeditious form of appeal against what they considered to be excessive land tax valuations, the Government, in creating the new appeal board of three, has appointed (1) as chairman, a former official of the Taxation Department, who is likely to bo unconsciously affected by his long association with public taxation-
– Order ! I ask the honorable member not to make comments when asking a question.
– The second member of the board is the chief valuer of the Land Tax department - he and the chairman are permanent appointees - and the third is a .representative of tho taxpayers, to be chosen from time to time in different States. As this savours very much of an appeal from Caesar to Caesar will the Government consider the advisability of appointing an independent chairman who will be acceptable alike to the department and the taxpayers?
– The constitution of the Land Tax Appeal Board was approved by the House during the passage of the amending legislation last year. The eli airman who has been appointed under that legislation is an independent person, who for the last five years has been acting as chairman of the Income Tax Appeal Board. No suggestion that he was partial towards the department has been made during that period, and I resent the honorable member’s aspersions on his impartiality, and his insinuation that the department desires any but an independent chairman. The other members of the board are respectively representative of the department and the taxpayers. The board is constituted exactly as this Parliament directed.
– In answering my question in connexion with the Land Tax Appeal Board, the Treasurer said that he resented aspersions being cast upon officers of the department. I wish to make it perfectly clear to you, Mr. Speaker, arid to honorable members generally, that I cast no aspersions upon public officers. I carefully framed my question to avoid casting aspersions on any one. I am aware that public officers conducting any department have an onerous and difficult task. I am also aware that a system has grown up of accepting sales as the basis of valuation -
– Order I The honorable member is only entitled to show how he has been misrepresented.
– One of the reasons prompting my question was to show that the person appointed as chairman of the Land Tax Appeal Board was not, in the view of the taxpayers, the most acceptable person to fill the position, but I had no desire to reflect on that gentleman or any other officer of the Taxation Department.
– Has the Attorney.General any statement to make regarding Mr. Justice Starke’s refusal to give legal sanction to the arrangement made by the Taxation Department with the Abrahams brothers? Will the honorable- member lay on the table the documents ‘ connected with the case?
– In- September last I offered to show to the honorable member1 the agreement between the Commissioner of Taxation and the defendants and I am ready at any time to make it and other papers connected with the case available to him or any other honorable member. I ask leave of the House to make a statement on this subject.
-. - The Taxation Department suspected that serious frauds ad been perpetrated in connexion with the evasion of income tax by the three brothers Abrahams. Inquiries which extended over a considerable period involved the department in a great deal of expense. Two of the brothers left Australia, and their whereabouts at all material times has been, and still is, unknown. Only one of the defendants has been in Australia since the frauds were discovered. A search warrant was executed on various premises, and resulted in the discovery of evidence of definite fraud. The papers that were seized were very bulky and I was advised that detailed examination of them would probably occupy at least eighteen months. A partial scrutiny of them however was sufficient to convince the department that serious frauds had been committed. We had then to decide the form of proceedings to be taken. The Income Tax Assessment Act provides for the imposition of penalties, and the commissioner has power under Section 67 to penalize dishonest taxpayers by requiring them to pay double the amount of the tax evaded in any year. Section 68 provides for proceedings in court by which treble penalties may be obtained, but only in respect of the three years immediately preceding. There is also provision in the Crimes Act by which any person may be prosecuted for conspiracy to commit an offence against the laws of the Commonwealth or to defraud the Commonwealth. Advice was taken in this matter, and after very careful consideration it appeared doubtful whether a prosecution for conspiracy would succeed. The facts were very complicated, two of the defendants were beyond our jurisdiction, their whereabouts was unknown, and if ascertained, extradition proceedings would be necessary. The essence of the crime of conspiracy is agreement to commit the offence charged. As a rule a prosecution for conspiracy is instituted only when it is possible to prove the agreement, but not to establish the actual commission of the offence. It is obvious that any joint action for a criminal purpose renders the offenders liable to prosecution for conspiracy as well as for the- substantive offence. For instance, if two men together burgle a house, they can be charged with conspiracy to commit burglary as well as with the actual burglary. Where, however, proof’ is available of the actual offence it is usual to proceed on that charge and avoid the difficulty of having to prove agreement or conspiracy. In the Abrahams case there were special . problems, because many of the acts had been done by an attorney under power, and to prove the individual participation of the defendants in them would have been difficult. Accordingly, it was considered that the wiser course would be to prosecute for the offences themselves and not for thu agreement to commit them. This view was taken particularly in view of the fact that very large sums were involved, and that pecuniary penalties are considered by the Parliament of the Commonwealth appropriate to evasions of the .taxation law as appears from a consideration of the Income Tax Assessment Act. As there would be very grave difficulties in securing a conviction for conspiracy, proceedings for fraud were instituted under Section 68 of the Income Tax Assessment Act in respect of the three years immediately preceding the offence. So far as the frauds in earlier years were concerned, the Commissioner had power to impose double taxation without recourse to the court. It was thought proper, however, to bring the defendants before the court in order that the public might learn the nature of the acts upon which the proceedings were founded. Seven persons who were- associated as dummies in the formation and management of more or less fictitious companies, or were otherwise involved, were prosecuted, and they were fined the maximum amounts allowed by the law. Proceedings for penalties were then taken against the defendants in respect of the preceding three years, and the case was heard before the High Court last week. The maximum penalty with tax that could be imposed by the court amounted to a little more than £350,000.
– Is the case still sub judice?
– - I am afraid so, and I am in a difficulty in that apparently the effect of the statement by Mr. Justice Starke is that he ‘ proposes that the case shall remain permanently sub judice. The House, however, is entitled to some statement upon the case.With more time I could go into the matter in much more detail than I am doing, but I recognize that as I am speaking only with theindulgence of honorable members I must be brief. After the proceedings had been instituted the defendants came to the Commonwealth and offered a large sum in settlement; the Commonwealth authorities did not approach the defendants or ask them for any sum in settlement. The amount offered was refused. The offer was increased, and refused again. Ultimately the defendants offered £500,000 and £10,000 for costs in settlement of their liability under the Income Tax Act. The view of the department was that the amount for which the defendants could be made liable was a sum greater than £500,000, if everything could be proved that the department, from the examination of the facts that its officers had been able to make, suspected, or believed, but there is a great difference between suspecting or even believing that a fraud has been committed, and proving it by legal evidence to the satisfaction of a court of law. The departmental view was that, if everything that the department suspected could be proved, the Commissioner could require the defendants to pay £690,000. That sum was arrived at by assuming everything against the defendants as provable in every detail. But it was unlikely that the full liability could be proved in a court of law, and the offer made of £500,000 and £10,000 for costs was therefore accepted. It would have been open to the Commissioner of Taxation to refuse that offer, and the Commonwealth could have instituted a prosecution which would have afforded the legal profession the time of its life in proceedings extending over, perhaps, three, four, or five years. It appeared to me to be not in the public interest that proceedings of this character should be undertaken when itwas possible to obtain a sum so nearly approaching what appeared to be the proper liability of the defendants.
It has been suggested that some promise was given of immunity from prosecution under the Crimes Act. Such a promise was not given, and His Honor yesterday explicitly stated that he accepted the statement that there was no promise of immunity from prosecution. An agreement was made between the Commissioner of Taxation and the defendants; but the Commissioner could not promise immunity from prosecution.
– And the agreement did not purport to do so.
– The agreement is in writing and honorable members may see it. The only subject dealt with in it is the taxation liability of the defendants under the provisions of the Income Tax Act. To give a promise of immunity would have been, I agree, entirely wrong, and I shall never give any such promise or allow any one for whose actions I am responsible to do so. The agreement was made between the Commissioner of Taxation and the defendants after the matter had been fully considered by five counsel employed on behalf of the Commonwealth - Sir Edward Mitchell, K.C., Owen Dixon, K.C., Mr. Dixon Hearder, Mr. ClaudeRobertson, and Mr. Eugene Gorman. It was also considered by the Crown Solicitor and the SolicitorGeneral. I accept full responsibility for having advised the Commissioner that he would be acting properly in accepting the offer of this sum of money. I admit that I was not uninfluenced by the fact that I see no reason why the honest taxpayers of the Commonwealth should not receive the benefit of a substantial contribution from admittedly dishonest taxpayers. I also accept the responsibility for determining that it would have been a mistake from every other point of view not to accept it. The proceedings came before the court. -Certain claims were made in relation to the last three years - 1924, 1925 and 1926 - only. Security was given for the payment of the £500,000, but it was desired by the Commonwealth to obtain the additional security of a judgment of the court, if the court thought proper to give a judgment, and it was also desired to bring the case before the public. Certain facts were alleged in statements of claim, and all of those facts were admitted by the defendants. It was, however, considered by the counsel upon whose views in this matter I have acted, that the fact that an agreement had been made concerning the payment of £500,000 should be stated to the court. Technically, that was unnecessary, because, strictly, the pleadings covered the whole matter before the court, and no evidence of the agreement was relevant to any issue, but it was desired to treat the court with the utmost frankness. Therefore an affidavit was filed setting out the fact that this agreement had been made between the Commissioner of Taxation and the defendants. His Honour accepted the position that there was no promise of immunity from prosecution, but after hearing the parties yesterday morning he made a statement to the effect that he disapproved of the agreement, and accordingly would not give judgment, although the defendants had admitted liability for some £354,000.
– How could absent defendants admit liability?
– A solicitor entered an appearance for them. The defence consisted of one paragraph to the effect - I have forgotten the precise form - that the defendants admitted all the allegations contained in the statement of claim. His Honour objected to the agreement
On the ground that the amount to be paid was excessive, and he further said that the matter should have been left entirely in the hands of the court, and that the executive authorities should not have accepted any security or taken any money in respect of the liability.
– Did not His Honour imply other grounds?
– Those are the only grounds His Honour stated.
– But were others implied?
– His Honour said that the arrangement, as he called it, was objectionable from several points of view, but those are his only specific objections to what was done. He said that the maximum that could have been recovered was £354,000, and that it was, therefore, quite wrong for the Government to accept £500,000. Accordingly he adjourned the case sine die. That happened yesterday morning, and possibly that is all that honorable members know of the case, because that is all that appeared in the press. In the afternoon, however, counsel for the plaintiffs and counsel for the defendants went before His Honour and counsel for the plaintiffs pointed out that his statement had been made under a misaprehension of the facts. They informed him then that the proceedings before him had related only to the three years, 1924, 1925 and 1926; that in relation to these three years it was true that the amount recoverable was only £354,000, but additional evidence was given that there had been continuous frauds since 1915. It was stated to His Honour that in respect of these earlier years there was a liability for evasion of tax which the department estimated at about £140,000. Under Section 67, to which His Honour did not advert in his judgment, the Commissioner has power to charge double tax in respect of that amount. His Honour apparently had not considered the fact that Parliament has expressly conferred upon the Commissioner the power of assessing what may be properly described as penalties to the extent of double tax. If treble tax is desired, proceedings must be taken in the court, and for a period limited to three years. This fact was pointed out to His Honour in the afternoon of yesterday. Double tax on £140,000 would be £280,000, which would mean a total sum of £420,000 claimable by the department in addition to the £354,000 referred to.
– Is not the double tax a penalty in addition to the tax itself?
– Yes. That is how I arrive at the sum of £420,000, which sum under section 67, the Commissioner could impose in accordance with the explicit provisions of the law, without going to court at all. I am using only round figures. In accepting the offer of £500,000, the Commissioner was affected by the fact that by reason of the liabilities for earlier years, which he could enforce without going to any court, he had powers which enabled him to collect a sum, say £400,000 in addition to the £354,000 to which the judge referred. I have only had time to scan the. documents, without examining them as closely as I desire, but I thought that 1 ought this morning to give as much information as possible to the House. His Honour said that the further facts which had been placed before him certainly affected the amount so far as the £500,000 was concerned. I put it to honorable members that these facts did make a vital difference to the whole case. His Honour ended by saying that whatever the position as to the £500,000 the sum of £10,000 for- costs was excessive. That is how the case stands at present. In conjunction with the officers of the Taxation Department, and my own department I propose to examine more fully than I was able to do before the House met this morning the statement made by his Honor, and the position generally. I conclude by assuring honorable members that the whole position will be carefully examined and re-examined, because, while the view of the authorities is that severe penalties should be imposed for aggravated frauds of this description, there is not the slightest desire to do injustice to any defendant even though he has broken the law.
.- (By leave) - I do not propose, at this stage to say anything upon its merits about the Abrahams case, because honorable members and the public have not yet been made familiar with some very extraordinary features associated with one of the biggest taxation swindles known in Australia. Last September I asked the Attorney-General (Mr. Latham) if he would place on the table of the House the documents in connexion with the case. It is true that the honorable gentleman offered to show the documents to me in his department, but that would have been showing them to me confidentially.
– I did not intend that at all. The agreement and documents were then before the court.
– If it was not the purpose to show me the documents confidentially, I fail to see reason for any objection to laying them on the table of this House for the examination of honorable members. I ask for no privilege for myself that cannot be granted to honorable members generally. I did not pursue the matter at that stage, because I realized that court proceedings were pending. I now ask that the whole of the documents be placed on the table of the House, in order that honorable members and the public may know their contents. We wish to know the nature of the agreement and the nature of counsel’s advice upon which the Attorney-General acted. We also wish to know the reasons that caused the Attorney-General to approve that there should be no prosecution on a criminal charge. We want to know, further, why two of the defendants were allowed to leave Australia, first receiving their passports to enable them to leave, with the full knowledge of the officers of the Taxation Department, although no other person is permitted to leave Australia while owing income tax. The AttorneyGeneral has not answered the request that I made, to make available to honorable members the documents connected with one of the biggest frauds that has been discovered in connexion with our system of taxation. The documents should be placed upon the table of the House for the perusal of honorable members and for the information of the public.
– I have already stated that I would place certain documents on the table of the House.
– We want to see all of the documents connected with the case.
– Is it a fact that the wireless patents held by Amalgamated Wireless Limited, and which have a book value, according to the report of the Wireless Commission, of £93,000, were offered to a Melbourne wireless merchant for £15,000?
– I ask the honorable member to put his question on. the notice paper. I should think that he would have appreciated that it would be better to do so in the beginning, as it is obvious that I could not reply to such a. question e.r tempore.
– My informant stated that the right honorable gentleman had had the matter brought under his notice.
– I have not heard of it.
– Will the Prime Minister inform the House when the report of the royal commission appointed to inquire into the Constitution may be expected ?
– The commission is still taking evidence, and I believe is at present in Sydney. I have no knowledge as to how long it will take to complete the evidence, and subsequently to prepare its report.
– Will the Prime Minister indicate when I may expect to receive information relating to the decision of the Government on outstanding matters respecting employees of Cockatoo Island dockyard, particularly as regards furlough and compensation?
– A sub-committee of Cabinet has dealt with the matter, and it has been found necessary to examine each case individually, it being found impracticable to consider the cases in accordance with any general principle.
The following papers were pre sented : -
Postmaster-General’s Department - Seventeenth Annual Report, 1926-1927.
Ordered to be printed.
Australian Forestry School, Canberra - Work of the year 1927.
Federal Capital Commission - Report for quarter ended 31st December, 1927.
Northern Australia Act - North Australia Commission - First Annual Report for period ended 30th June, 1927.
Audit Act - Auditor-General’s Suggestions regarding Commonwealth Accounts. Consideration by the Governor-General. - Order-in-Council.
Egypt - Note delivered to the Egyptian Government on 4th March, 1928, by His Britannic Majesty’s High Commissioner (Lord Lloyd).
asked the Minister representing the Minister for Defence, upon notice -
Is he now able to state the result of the consideration promised, in answer to questions of the honorable Member for Grey on 3rd November and 15th November, 1927, concerning the establishment of an aerial mail service from Cootamundra to Canberra, with a view of linking up with the service established between Cootamundra and Adelaide, which would expedite the mail service from Western Australia and Adelaide to Canberra?
– The Minister for Defence advises that the establishment of this service is still under consideration in conjunction with the general question of the extension of aerial routes within the Commonwealth.
Existence of Foreign Ring
asked the Prime Minister, upon notice -
– The answers to the honorable member’s question are as follow : - 1 and 2. I am not in possession of any definite information on these points.
Effect of Suspension in Northern Territory.
asked the Minister for Trade and Customs, upon notice -
With specific reference to the suspension of sections 14 and 43 of the Navigation Actin so far as shipping engaged in Northern Territory waters is concerned -
What is the power upon which the Minister relies for ordering that any vessel in the Australian coastal trade shall not carry a duly certificated master?
Is the competent seaman who is . to take the place of the master to be deemed to be the master of the vessel, and, if so, is he to be paid wages in accordance with the rates ruling for masters in the Australian coastal trade?
Are the “ capable deck hands “ (referred to in a statement appearing in the press reporting the action of the Minister) which the vessel is to carry in place of qualified able seamen within the meaning of the Act to be persons with sea experience, and, if so, what experience?
Before suspending sections 14 and 43 of the Navigation Act, did the Minister refer the matter to the Marine Council, and, if not, what are his reasons for not referring - the matter to the Marine Council?
Does the Minister exempt the vessels under consideration from the obligation to pay Australian rates of pay to the seamen, or persons in lieu of seamen, forming the crews.
Are the vessels concerned to be allowed to carry passengers, . and are they to ply for hire in the ordinary way of vessels carrying on the Australian coastal trade?
– The information is being obtained.
Dr. MALONEY (through Mr.
Fenton), asked the Postmaster-General. upon notice -
Is it a fact that thirty or forty married men and returned soldiers have been dismissed from the General Post Office, Melbourne?
Is it also a fact that a considerable amount of overtime is being worked at the General Post Office, Melbourne?
If so, will the Minister take action to prevent overtime being worked, with a view to reinstating such married men and returned soldiers ?
– Inquiries are being made and the information desired will be furnished to the honorable member as soon as possible.
asked the Prime Minister, upon notice -
– This question is designed to elicit information as to Government policy, and it is not the practice to state the Government policy in answers to questions in Parliament.
asked the Minister for Trade and Customs, upon notice -
– The information will be obtained as far as possible.
asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follow : -
– On the 7th March the honorable member for Cook (Mr. C. Riley) asked me if I would make available to members the conditions of tender for the purchase of the Australian Commonwealth Shipping Line. I informed him that copies would be made available in the course of a few days. I am now in a position to inform the honorable member that copies have been placed on the table of the library.
Motion (by Mr. Paterson) agreed to -
That he have leave to bring in a Bill for an Act to amend section five of the Wine Export Bounty Act 1924-27.
Bill presented by Mr. Paterson, and read a first time.
- I move : -
That the Bill be now read a second time.
I appreciate the permission of the House to proceed with the secondreading stage of this bill. The object of the bill is to adapt the wine bounty to conditions which have arisen’ since the principal act was last amended. Honorable members will remember that when, some twelve months ago, the Minister for Trade and Customs (Mr. Pratten) introduced a measure for the amendment of the Wine Export Bounty Act, he made it very clear, that the Government reserved to itself the right, in the event of the British Government altering the terms of British preference in a manner which ‘would be more favorable to the wine industry to reconsider the whole question during the term of the bounty. I propose to show that what the Minister for Customs foresaw as a possibility has occurred, and that the terms of British preference have become so much more favorable that the existing bounty of ls. 9d. is no longer justified, and should be reduced to ls. a gallon. I should like to set out briefly the various stages through which this industry has passed during the last few years, especially in connexion with British preference, and the bounties granted here. In 1922-23 we exported from this country 649,000 gallons of wine, a very small quantity compared with what we are exporting now. In 1923 the Economic Conference took place in London, and Avas attended by the Prime Minister. Honorable members will remember that at that conference a strong case was made out by the right honorable gentleman for Empire preference being extended, not only to wine, but to other products seni to the Old Country from the Dominions. There was in existence at that time a limited preference, but it was a preference on paper only. It was not really effective, because the dividing line between, high strength and low strength wines was 30 degrees. The Prime Minister pointed out that if sweet wines were sent from
Australia to Great Britain, and a regular trade was built up, the dividing line between high and low strength wines should either be reduced from 30 degrees to 26 degrees, or increased to 35 degrees. At that time we were doing practically nothing in the exportation of sweet wines. The object of the alteration proposed by the Prime Minister was that if the lower figure was taken it would mean that both the foreign wines and our wines would be in the same category, and both would have to pay on the higher scale, although our wines would enjoy the preferential rate. In the event pf the dividing line being raised to 35 degrees, we should both come in at the lower strength rates of taxation. The chairman of the Conference pointed out that Great Britain was precluded by treaties from altering the line of demarcation between low and high strength wines. There were treaties in existence of three years duration which still had a considerable time to run, and he said that the only way to assist the Dominions would be to increase the rate of preference on Dominion wines over foreign wines without altering the line of demarcation between high and low strength wines. Shortly after that, a change of government took place in Great Britain, and a government not favorable to the extension of British preference came into power. In 1924 a crisis occurred in Australia in the doradilla grape growing industry. During the war period the production of doradilla grapes had been a highly profitable industry, and many returned soldiers were settled on blocks by the State governments, and encouraged to produce doradilla grapes. In a very short while the production of these grapes became greater than the demand, and as they are practically a distillation variety used almost wholly for the production of spirits, and not particularly suitable for the production of wine other than for spirit purposes, there was a glut of this spirit on the market, and the industry was faced with ruin. Prices came down to about £3 a ton ; a price which is generally recognized as being only about half the fair value of doradilla grapes. The Commonwealth Government, realizing that very many soldiers were interested in doradilla grape settlements, and were in great financial difficulty felt that something of a drastic nature would, have to be done. An act was passed by which was provided a bounty of 4s. a gallon on sweet wines of 34 degrees strength exported to Great Britain. The object of that measure was mainly to secure an outlet for the huge quantities of doradilla spirit for which a market could not otherwise be found. In fairness to the wine industry I wish to point out that it is really misleading to describe this bounty as being 4s. a gallon. It was actually 2s. 9d. net. It was almost elementary justice to return to the exporters any special taxation imposed on them for revenue purposes; therefore, the amount of the net bounty was 2s. 9d. a gallon, and a drawback of taxation already paid amounting to ls. 3d. a gallon. That represented the amount of taxation which is imposed on spirit contained in sweet wine.
– Is it a rule to give a drawback on all goods exported?
– I think it is the practice in most countries to refrain from anything in the nature of an export tax. This bounty enabled our sweet wines to compete in the British market. A further step was taken to assist the doradilla growers by making a reduction from 6s. to 5s. a gallon on the excise duty on spirit made from that grape. That was done with the object of encouraging the wine makers to use the spirit made from doradilla grapes rather than that from other grapes. It may appear to-day, in the light of our present knowledge of the wine industry, that this bounty was a particularly generous one, but it has to be remembered that at that time the small preference which existed on paper was not effective. Also, we had to remember that the British wine merchant was a somewhat conservative individual, who could only be induced to change his business practices and buy from new countries if he got some fairly substantial advantage. In- 1925, after the bounty had been passed by this House, there was another change of Government in. Britain. The Baldwin Government came into power, and shortly afterwards an additional preference of 2s. a gallon on sweet’ wines appeared in the British budget. Although that nominally gave a preference of 4s. a gallon to Aus- tralian wine, our duty being 2s. for more than 30 per cent, strength, and the foreign duty being 6s., that was also only a paper preference, because the effect of the duty was largely governed by the dividing line of 30 per cent, between the low-strength wine with low taxation, and the high-strength wine with high taxation. Because we have to send our wines from Australia through the tropics, we have to fortify them to 34 per cent, of spirit to make them carry, while our competitors are able to send their wines from Portugal, Spain and Prance by fortifying them to only 29 per cent, of spirit. The result was that the foreign wines were in the category of lower-strength wines, while ours had to pay at the rate of higher-strength wines. Therefore, the preference, which on paper appeared to be 4s. a gallon, was actually only 6d. a gallon. The foreign wines came in at a duty of 2s. 6d. up to and including 30 per cent, strength. Our wines, with 34 per cent, of spirit, paid 2s. a gallon, so that they came into direct competition with, foreign wines at 2s. 6d., the actual difference being only 6d. a gallon. Nevertheless, the fact that we had an actual preference of 6d. a gallon, and the generous wine bounty of 2s. 9d. a gallon, gave the industry an impetus, and our overseas market expanded rapidly. “When the bounty period was extended in March of last year from the 31st August, 1927, until that date in 1930, the bounty was reduced to ls. 9d. This House agreed to that, believing that the improvement which had taken place in the conditions of the industry. and the increased market which had been obtained overseas, justified the reduction. That reduction to ls. 9d. took place when the effective preference which we enjoyed in Great Britain amounted to only 6d. a gallon. The amendment was made in March last. Only one month later, in April of last year, when the British budget was brought down, a very notable change was made in the incidence of British pre7ference. The duties were raised to 2s. British, and 3s. foreign for low-strength wines, and 4s. British and 8s. foreign for high-strength wines. This left a margin on paper of 4s. between our wines and foreign wines in the high-strength class.
A great change occurred in the dividing line between high and low strength wines. Until the expiration of its treaties the Imperial Government was prevented from giving effect to the suggestions made by the Prime Minister in 1923 at the Economic Conference, but those treaties have now expired, and effect has been given to the Prime Minister’s proposals. The dividing line has now been made 25 degrees for foreign wines and 27 degrees for Empire wines. The importance of this change will at once be realized when it is pointed out that wines with which we were formerly competing were to a great extent in the 29 degrees class. Previous to. the alteration which has now been made they were dutiable only at the lower foreign rate. They managed to get in as wines under 30 degrees, but now that the strength has been reduced to 25 degrees the higher duty has to be paid on them. It was considered when the reduction to 25 degrees was made that’ it would be impracticable for shippers in even such comparatively near countries as Spain, Portugal and France to ship to. Britain sweet wines not exceeding 25 degrees, and that therefore the fixing of the strength at that figure would enable Australian shippers to obtain the full margin of preference for their product with the result that their effective preference would be the full 4s. per gallon instead of the actual 6d. per gallon which they had been receiving. Certain honorable members may ask why, if the alteration of the dividing line as between high and low strength wines has had that effect, the Government did not immediately reduce the bounty seeing that the Minister for Customs had stated last March that if the British preference were substantially increased the Government would feel at liberty to take such action. The reason that no move was made in that direction was that the Government wished to be satisfied beyond the shadow of a doubt that under the new conditions the preference would be effective. That there was justification for the adoption of this attitude can hardly be disputed, for it was freely stated at the time the alteration was made that the continental wine-makers would discover some means of getting out of the difficulty. It was actually reported that they had solved the problem by exporting certain proportions of low and high strength wines and blending them. It was stated that success was expected from a blend of three gallons of wine of a strength of 25 degrees on which a duty of 3s. a gallon would be paid, with one gallon of wine of a strength of 42 degrees on which the full foreign duty of 8s. would be paid. The result of such a combination would be that the average rate of duty per gallon on the blended “wine would be 4s. 3d., and the average strength of it 29 degrees, which is aboutthe strength of the wine with which we formerly had to compete. Moves of this de’scription had to be watched very closely. It is generally admitted to-day that small quantities of very low strength sweet wine might be successfully transhipped from countries near to Great Britain if carefully pasteurized, but that an extensive business on such lines would be extremely risky. In all the circumstances I think it may be said that the statement that the continental wine-makers have discovered a means of escaping the high rate of duty which is now imposed on their product has been greatly exaggerated. One leading Australian wine-maker who has just returned from a trip to Great Britain has stated that he investigated the position and is satisfied that so long as good quality Australian wines are made available at reasonable prices our producers need not fear any serious competition from the foreignblended wines which may be marketed in Great Britain. To some extent, therefore, that bogey has been removed. The improved position of the wine industry generally is reflected in the prevailing prices. Recent prices paid in Great Britain for Australian sweet wine range from 9s. to 9s. 6d. per gallon. If the duty of 4s. per gallon be deducted and an allowance of ls. lOd. per gallon for wood and freight be made, it will be seen that the price ranges from 3s. 2d. to 3s. 8d. per gallon f.o.b., or an average of say 3s. 4d. per gallon. That is a conservative estimate. During the currency of the bounty of 2s. 9d. per gallon, in the earlier, days in which we were building up our export trade, the f.o.b. price which the Australian wine-maker obtained for his product . was on the average ls.. lOd. per gallon, which is ls. 6d. per gallon less than the average price ruling to-day. If we take into account the first reduction of ls. in the bounty, it will be seen that the winemaker was at least 6d. per gallon better off with that than they were under the higher bounty. The expansion of our wine export trade has been remarkable. In 1922-23 we exported 649,000 gallons, while last year our exports totalled 3,014,470 gallons. What is more significant still is that during the second half of the last financial year Australia climbed into the premier position as supplier of wine to Great Britain. Certain honorable members may ask whether, in view of the alteration of the British preference, which has caused such a great improvement in the position,, the bounty could not be abolished. I do not suggest that such a question is likely to come from the honorable member for Angas (Mr. Parsons), or the honorable member for Wakefield (Mr Foster). But if such a query were directed to me, I should point out that no industry which is seeking to build up a trade connexion in a new market, which hitherto has been supplied from wholly foreign sources, can expect to- use the whole of its preference for price advantage. It must use a large part of it to undersell its competitors. It must not only obtain a solid footing on a new market, but it must to a great extent dislodge its competitors. For this reason the Government is not prepared to abolish the bounty at this stage. We have no desire to take drastic action which will dislocate the industry. We wish, if possible, to bring it. back to normal by easy stages. I think honorable members will agree that the industry has been shown every consideration so far. Another aspect of the matter which should not be lost sight of is that the Government regards the interests of the grape-growers as paramount. The first action which we took to assist the industry, namely,- the reduction in the excise duty on spirit made from doradillas, was taken primarily in the interests of the growers. So long as we continue to give some measure of assistance to this industry we shall be able to enforce the condition that growers must receive remunerative prices for their grapes. At first this condition applied only to doradillas, but last year it was made applicable to all wine grapes. The prices which will be paid for grapes this year will be announced almost immediately.
– It ia unfortunate that there has been such a serious delay iu making the announcement.
– The prices should be made known within a day or two.
– Who fixes them?
– The Minister for Trade and Customs is responsible for that. I point out to honorable members that although the bounty is payable only on sweet wine produced for export, all grape-growers have enjoyed an advantage from it, for the wine-makers have paid the fixed price for all wine grapes, regardless .of .whether they have been used for the manufacture of wine for- export or for consumption within Australia. The bounty has also had a beneficial effect upon the dried fruits industry, for large quantities of currants and lexias which could not be disposed of as such at profitable prices, have been sold to the wine-makers. Considerable quantities of our lower grade currants and lexias have also been taken to the distilleries, and so we have been able to’ send overseas better average quality currants and lexias than would otherwise have been the case. The wine industry has recently been enjoying great advantages in two ways. It has reaped substantial benefits from the provisions of the British preferential tariff since last April, and it has also been substantially assisted by this bounty. In these circumstances, the Government considers that there is no longer any justification for continuing the bounty of ls. 9d. per gallon, and a reduction to ls. per gallon is being made which will become effective to-day. The date of the expiration of the bounty is not being altered. It remains the 31st August, 1930. But I wish to make it quite clear that if at any time during the currency of the bounty, the British Government pleases to give us even more favorable conditions in relation to our competitors than those which at present exist, the Government will consider itself quite free to reconsider the whole question. I also direct the attention of those engaged on the manufacturing side of the industry to the statement of the Minister for Trade and
Customs when introducing a former, amending bill, that the Government expects them to undertake a thorough reorganization of their industry, with special regard to the export market. Very little has yet been achieved in the way of co-operation to that end. I commend the bill to the House as embodying the wellconsidered conclusions of the Government.
Debate (on motion by Mr. Soullin) adjourned.
– I move -
That the bill be now read a second time.
The Arbitration Public Service Act provides for the appointment of an arbitrator for the purpose of determining the salaries, wages and conditions of employment of those engaged in the public service. Section 6 requires that the appointment shall be for a term of seven years, and that any appointee may be eligible for reappointment. The term of office of the present arbitrator, Mr. Atlee Hunt, expired on the 29th February last, and it is the desire of the Government to re-appoint him for a further term. He is now 63 years of age. The Government does not think it proper to re-appoint him for a further term of seven years, as required by the existing act, because that would retain him in office five years beyond the normal compulsory retiring age for the public service. Yet, if he were to retire immediately, he would suffer a serious loss of superannuation benefits. The purpose of this bill, therefore, is to amend the act by providing that the term of office of any future appointee who is more than 58 years of age at the time of his appointment shall expire on his 65th birthday. That will bring this appointment into line with other legislation affecting the Commonwealth public service, and will enable Mr. Hunt to be reappointed for a further two years. That is the only purpose of the measure, and it is desirable that it should have a speedy passage.
.- Honorable members will agree that the bill embodies a desirable amendment. If it be not made a great injustice will be done to the present Public Service Arbitrator, inasmuch as he will not enjoy the superannuation benefits upon his retirement to which he would be entitled if he remained’ in office until the compulsory retiring age. Under the existing law any re-appointment would necessarily be for a period of seven years, and it is only just that the act should be amended, so that Mr. Atlee Hunt may retain office until he reaches 65 years of age. In thu circumstances I offer no objection to the measure.
Motion (by Mr. Foster) negatived -
That the debate be now adjourned.
Question resolved in the affirmative.
Bill read a second time and passed through its remaining stages without amendment or debate.
Debate resumed from 7th March, 1928, (vide page 3650) on motion by Mr. Bruce -
That the bill be now read a second time, upon which Mr. Charlton had moved by way of amendment -
That all the words after the word “That” be omitted with a view to insert in lieu thereof the following words: - “the bill, involving as it does an alteration of the Constitution, be postponed until Parliament has had an opportunity to discuss a comprehensive scheme of constitutional reform, including the evidence taken before the. royal commission now sitting and its proposals when made.
.- I support the amendment moved by the Leader of the Opposition. The Constitution Commission was appointed by this Government for a definite .purpose. It consists of experts who, at considerable expense to the people, are taking evidence from competent witnesses throughout Australia. Either the evidence and the report of the commission will be of assistance to this Parliament in dealing with the amendment of the Constitution, or the commission should not have been appointed, and its work involves a deliberate waste of public money. If this bill is deferred. pending the receipt of the commission’s report, time will be afforded for further consideration of the issues involved. I believe that a great wrong is being done to some of the States by the financial agreement. When the people agreed to federate, they believed that the States would retain for all time 75 per cent., or some other large proportion, of the customs and excise revenue. They were assured that the solvency and prosperity of the States would be guaranteed. Upon that point I quote the opinion expressed in 1910 by the present Speaker, Sir Littleton Groom -
It is well understood and appreciated by persons of all shades of political opinion that from the very structure of the Constitution, from the very nature of the powers committed to us, and of necessity the States should participate to a large extent in the revenues raised from this source, customs and excise.
That is a definite and deliberate statement. As I propose to deal, particularly with the effect which this agreement will have upon the State of South Australia, I quote now the opinion of Sir Frederick Holder at the second Federal Convention held in Sydney in 1897 : -
A federation in which the federal authority is not interested in the solvency and prosperity of the State is such a thing as we ought not to consider for a moment. In fact, our first duty to-day is, and I think I can go further and say that the first duty of the Federal Parliament of the future will be to conserve the interests of the States. . . . The success of federation itself must depend on the success of every State in it, and, therefore, in arguing for the strength and financial stability of the States, I am arguing not for that which is parochial, but for that which is essential to the success and strength of the Commonwealth itself. . . . I do not know a Treasurer, or a budding Treasurer, who would he willing to go back to his colony and advocate any system of federation which did not provide for the return of practically the whole of the sum now collected from customs and excise to the States from the Federal authority.
In that speech Sir Frederick Holder definitely gave the pledge that the sovereignty of the States would be preserved. This present agreement, as set forth in the legislation before us, if ratified, must have a detrimental effect on South Australia. Sir John Cockburn, at- the third section of the Federal Convention held in Melbourne in 1898, said -
It would certainly sap the independence of the State to place the Federal Parliament as a sort of Lord Bountiful over the States, to whom ad misericordiam appeals could be made. The whole proposal (that the Federal Parliament might render financial aid to any State in such manner as it thought fit) is foreign to the spirit of the Constitution…..
The thing will not bear a moment’s consideration.
Various other speakers at that convention spoke in similar terms. I have no wish to be parochial in my view, but I contend that the alterations that have been made from time to time respecting the payments to the States have had a very adverse effect on South Australia, and any honorable member representing that State in this Parliament would be only doing his duty if he pointed out the true position to the House and the community generally. It is true, as stated by one gentleman whose remarks I have quoted, that the success, of the Commonwealth depends upon the success of any one State. This bill should be postponed until such time as the report of the Royal Commission on the Constitution is before this Parliament, because it is quite likely that it will recommend an alternative scheme which would be infinitely more satisfactory to all concerned than the proposal now under consideration. From 1-901, when federation took place, to 1910, the States received 75 per cent of the customs and excise revenue. In 1901-02 South Australia received £332.239 from the Commonwealth, and in 1909-10, £803,057. For the first ten years South Australia received S0.44 of the customs revenue collected in that State. That percentage, I might explain, included a proportion of surplus revenue. After that period the per capita payments were instituted, and last year South Australia received 16.96 per cent, of the revenue collected from customs and excise. If the spirit of federation had been carried out as was first intended, that State would have received last year an additional sum of £9,000,000. The agreement now before the House makes no provision for any payments to the States after 58 years, when it is calculated that the debts will be extinguished; but the Commonwealth will make sinking fund contributions to the States in respect of loans raised subsequent to June, 1927. The net revenue of the Commonwealthfrom customs and excise for the year 1899-1900 was £6,892,077; last year it increased to £43,532,478. We should give the bill our earnest consideration before
Ave attempt to pass it. The States still have to carry on their various utilities and functions. The agreement neither takes away nor gives power to the Commonwealth ; but the States must levy additional taxation to meet their obligations. Speaking in this House on the Sth March, 1927, the right honorable member for Balaclava (Mr. Watt) dealt with this subject exhaustively. He said -
I ask honorable members to note that with few exceptions the enterprises over which the States preside are suckers and not feeders of the public treasury. I shall take the opportunity of recapitulating anew some of the businesses to which the States are inevitably and progressively committed by the constitution, under which they and we live. Every year they are obviously becoming less political and more dominant as economic forces in the community. They are responsible for practically the whole of the internal transportation of this country, the most empty continent in the world. They operate 25,000 miles of railway. The capital debt of that enterprise is £300,000,000, and the revenue is £50,000,000. When I say railways, I include tramways, which are either operated by departments of the State, or by subordinate or subsidiary bodies. The States operate a great system of savings banks, excluding the Commonwealth Savings Bank, which is the responsibility of this Parliament. The deposits in those State institutions amount to £188,000,000, and they are guaranteed by the State Governments under acts of Parliament. In addition to that guarantee, which stands as a great and possibly menacing obligation’ upon these heavily-laden governments, they are responsible for activities of great social services to this country, such as the housing of the people under the Credit Foncier finance system, which has been availed of by the working and small shop-keeping classes in a way that perhaps few of us have any knowledge of. Then they care for the education of the youth of this country. That looks a simple job, but in the State schools of Australia, apart from tlie universities, they, house and teach 900,000 children every day, employ- 29,000 teachers, and expend on schools, universities, and research -work associated with education, £10,000,000 a year, for which they get no financial return. They control local government, and there are in Australia 1,075 local governing bodies, whose revenues amount to over £20,000,000, and whose loan liability is £35,000,000.
The functions of the States must still be carried on, yet they are not to receive the payments that have previously been made to them by the Commonwealth. This agreement aims a staggering blow at some of the States. At the recent Premiers’ Conference, Mr. Lang stated: -
I shall deal rather with what they would eventually mean to the taxpayers of New South
Wales. Before a period of twenty years that State would have to increase taxation to the extent of £1,000,000 a year.
If that position applies to New South Wales, which has developed most of its country and has many secondary industries, how much more would it apply to States that have plenty of room for development and few secondary industries ? If the agreement is ratified it must impose hardships upon South Australia. I also contend that grave injustices have been done to the States under the Surplus Revenue Act, which provides that all surplus revenues at the end of the financial year must be returned to the States. The Treasury accounts disclose huge Commonwealth surpluses in recent years, but no portion of them has been paid to the States. In 1915-16 the Commonwealth surplus was £3,000,000 ; in 1917-18, £1,848,393; in 1919-20, £2,201,749; in 1920-21, £893,521; in 1922-23, £1,020,150; in 1923-24, £2,578,338; and in 1924-25, £518,876. The Commonwealth has evaded the provisions of the Surplus Revenue Act by paying those moneys into a trust fund, although they rightly belong to the States. Under the new agreement, the Commonwealth will still have the right to pay surplus moneys into a trust fund. It has been stated in this House that surplus revenues have not been distributed to the States because the Commonwealth is responsible for the payment of old-age and invalid pensions. It has also been contended that the substitution of the per capita payments for the original agreement was necessary because of the old-age and invalid pension payments. That argument cannot be applied both ways. I believe that the States are entitled to all the surplus revenues that have been paid into a trust fund by the Commonwealth.
Sitting suspended from 12.J/5 to 2.15 p.m.
– When we adjourned for luncheon I wa3 endeavouring to explain to the House the disadvantages under which South Australia has laboured, caused by the various financial readjustments that have been made by the Federal Parliament. I wish to place on record the amount of customs and excise revenue which has been collected , in South Australia since federation. For the period 1901-2 to J.910-11 the amount was £7,643,071. For the same period £6,147,911 was repaid to South Australia, a little more than 75 per cent. In the year 1910, after the per capita system had been instituted, the Commonwealth collected from South Australia the sum of £1,087,713 in customs and excise revenue, of which amount it repaid approximately 50 per cent. Although the customs and excise revenue had continually increased, the amount repaid to South Australia diminished. For the years 1910-11 to 1926-27 customs and excise revenue amounting to £33,797,164 was collected in South Australia, of which amount £5,925,327 was repaid - approximately 25 per cent. The amount repaid for that period was £15,422,486 less than it would have been under the 7 5 per cent, basis, proving that the per capita system was distinctly disadvantageous to South Australia. Again, prior to 1910, the Commonwealth did not collect direct taxation. Since 1910 it has inaugurated a system of direct taxation and has collected from South Australia, through that medium, £15,426,054. Those figures indicate that, in the aggregate, the Commonwealth Government has collected from South Australia over £30,000,000. One is not amazed, therefore, at the present deplorable financial position of South Australia. The Prime Minister stated that the bill now before the House is one to- approve an agreement entered into, subject to Parliamentary approval. It must be remembered that, it is also subject to the approval of the people, and, I am confident that, unless it is materially altered, the people of South Australia will not agree to it. The Prime Minister also said -
The agreement provides for a permanent and final settlement of the financial relations of the Commonwealth and States, a matter which has occupied the attention of every Government since federation.
The right honorable gentleman said that the arrangement had been arrived at by a cordial agreement. It is not a cordial agreement. It is the habit of the Commonwealth first to present a pistol at the head of the State with which it is negotiating, and then to explain its arrangement. . This agreement was arrived at under duress and, so far as South Australia is concerned, it is due to a misunderstanding. At a conference of Com monwealth and State Ministers, Mr. Butler, the Premier of South Australia, said -
I listened with great interest to the Prime Minister’s explanation of his Government’s proposals, and I was struck with the soundness of his arguments. I am in entire agreement with the principle he enunciated, hut in matters of detail his proposal requires amendment.
Since then honorable members in the Federal Parliament representing South Australian constituencies have received the report of the commission that was appointed to inquire into the financial effect of federation on South Australia, in addition to numerous letters from their constituents and one from Mr. Butler. A rortion of Mr. Butler’s letter reads - . . . The report clearly states the case for South’ Australia, and summarizes the position by estimating that South Australia is entitled to a grant of £750,000 per annum from the Commonwealth to compensate it for such disabilities. It is unnecessary for me to point out the importance of this matter to South Australia as a whole, and I invite your cooperation in giving the greatest publicity to South Australia’s claim on all possible occasions.
The two statements by Mr. Butler are inconsistent, and we must remember that his letter was written after mature consideration.When he made his- first statement Mr. Butler was fresh from the elections, new to ministerial office, and without the expert advice which was at his disposal when he wrote his letter.
– But Mr. Butler signed the agreement after he had received the expert advice.
– That makes it all the worse for him. He has asked us to intervene, and has claimed that South Australia is entitled to a grant of £750,000 per annum.Western Australia is to receive a grant of £450,000, and Tasmania a grant of £200,000 under the new arrangement. I am confident that the Premiers of those States would not have accepted the agreement otherwise. The Premier of South Australia was silent at a time when his voice could most effectively have been raised to protect the interests of his State.While the position of South Australia is bad to-day, it must inevitably become worse if the proposed agreement is carried out.
– The allowances to Western Australia and Tasmania are quite independent of this agreement.
– They are based on the per capita system which previously applied. As the population of South Australia increases, its finances must become worse, and at the end of 58 years, with no payments coming in from the Commonwealth, the position of the State will be disastrous. South Australia relies to a great extent upon agricultural and pastoral pursuits for its development. Other States enjoy the advantages associated with the establishment of secondary industries, but South Australia has no coal resources, .lacks rivers, and .many other essentials to secondary industries. The people of that State realize the position. Already they have had to bear additional taxation, second only to that of Queensland, but under the proposed scheme they will have to bear still heavier taxation burdens. The Hill Government of South Australia appointed the commission to inquire into the financial effect of federation on that State, and the following are the concluding remarks df the report of that commission : -
By reason of the special payments by the Commonwealth, the States of Western Australia and Tasmania have ‘ gained at least a temporary relief from the disadvantages to which they have been subjected. South Australia has no coal resources, she will be unable to take the same advantage of the cheap developmental loans as will “Western Australia, the settlement of returned soldiers was a particularly unprofitable business for her, her taxation per head has for many years been higher than in Western Australia, and will now be very much higher, while her railway freights and fares are also very much greater. There can be little doubt, therefore, that the condition of South Australia is worse than that of Western Australia, and probably not much better than that of Tasmania. Western Australia receives a grant of about 10s. per head, while the royal commission recommended that she should receive about 24s. per head. Tasmania receives a grant of about £1 10s. per head. On a conservative estimate, therefore, South Australia should receive a special grant of at least 25s. per head, or about £750,000 per annum.
A consideration of the taxation per head in the different States will lead to a similar conclusion. The taxation per head in South Australia in 1S127-28, will probably be about 25s. greater than in any other State, with the possible exception of Queensland (but see paragraph 11), and a special grant of 25s. per head would, therefore, only reduce the taxation per head in South Australia to an amount about equivalent to the highest figure for any other State. This constitutes a good confirmation of the above claim.
Unless this claim is granted the industries and people of South Australia will be forced to labour under an intolerable burden of taxation, which must become a serious impediment to the progress of the State. It should be the duty of the Federal Parliament to see that the burden of taxation is equitably distributed amongst the citizens of the Commonwealth.
I place those statements on record, because I want to impress on the members of this House that the same evidence that has been submitted to this commission has been submitted to the Constitutional Commission. Yet we are dealing to-day with this bill before the report of the Constitutional Commission has been considered by Parliament. The men who are on this commission are endeavouring to do their best for South Australia. They have arrived at the definite decision that South Australia is suffering a disability of £750,000 a year. In these circumstances I support the resolution moved by the Leader of the Opposition (Mr. Charlton), who desires to defer consideration of this bill until the report of the commission is before Parliament. I trust that satisfactory means will be found of remedying the position as it obtains in South Australia.
.- I agree to a very great extent with the honorable member- for Grey, regarding the disabilities from which South Australia is suffering. I referred to them during the censure debate, and pointed out such disabilities as the excessive price of coal. There is no doubt that South Australia, Tasmania, and “Western Australia are suffering as a result of federation. May I draw attention to the strange attitude adopted by Ministers and honorable members in regard to what, in my opinion, is a most important debate. On Wednesday night the honorable member for Perth (Mr. Mann) brought forward some astounding figures, showing the ultimate effect of the financial agreement on the States, and it is surprising that no Minister since then has seen fit to rise and give some information to the House concerning this matter. In fact, during the whole of Wednesday and throughout part of to-day only one Minister was left in charge of the House, and not more than fifteen or seventeen members displayed any interest whatever in the debate. I look upon this question as one of the biggest that could arise ; our future depends so much, upon it. Some honorable members have been treated with contempt by the Government time after time, when big issues ‘ are under discussion, and Ministers are rarely in their places to answer criticism. The amendment moved by the Leader of the Opposition appears to me to be a good one. I, myself, had drafted a similar amendment, and I am sorry that I did not give notice of it. A commission has been appointed to inquire into and report upon proposed alterations to the Constitution of Australia. That commission is engaged in taking evidence at the present time. Time after time the Treasurer himself has stated that finance is government, and surely one of the most important phases of the commission’s inquiry will be that dealing with the financial relations between the Commonwealth and the States. What position will this House find itself in if, after having passed this legislation, the Constitutional Commission should bring in a report to the effect that the proposals embodied in the measure are unfair to the States. Will this Parliament, in such circumstances, take any notice of the report? The Government has appointed the commission, consisting presumably of responsible men, qualified to weigh evidence, and to bring in a fair report, and we should await their findings. The Prime Minister, in his second-reading speech, said that the negotiations between the Commonwealth and the States had been carried on in a friendly spirit. It was recognized, he said, that the financial security and independence of the States should be secured. I maintain that the negotiations have not been conducted in a friendly spirit. We know the proposalsthat were made to the conference of State Premiers; we know how those proposals were rejected by them, and that they were subsequently brought before this chamber. Was there anything friendly about those proposals which destroyed the financial arrangement which had been in force for over sixteen years. The statement has been repeated from time to time in regard to what is known as the “.Braddon blot,” that when the Constitution was framed it was provided that, for a period of ten years Only, threefourths of the customs revenue should be returned to the States. That statement is entirely untrue. When the Constitution was framed, it was provided that for all time, or until such time as the people themselves altered the Constitution, threefourths of the customs revenue should be returned to the States. It was only after. wards, when the statutory majority was not obtained in New South Wales, and a further conference of Premiers was held, that it was decided that for a period of ten years three-quarters of the revenue should be returned. The right honorable’ gentleman spoke about the financial security and independence of the States. Has this Government, and preceding governments, displayed any anxiety that the States should retain the independence which they should enjoy under the Constitution? So far as the Treasurer himself is concerned, it is well-known that he has been a believer in unification. I have here an extract from his own pamphlet, in which he says -
We have seven parliaments in the Commonwealth, one Federal body and six State bodies, and these latter, for the most part, with all their pomp and paraphernalia, simply waste time in corners of their respective States. They may be considered to do their best, so far as in them lies; but they are handicapped politically and geographically, and are unable to carry on the work of the States. Owing to the centralizing of affairs in out of the way corners of the States, public money is always expended in that, corner where the seat of government is constituted. Politicians are not always to blame for this. Owing to the vicious system of government they are often necessarily ignorant, frequently misinformed, and always unconsciously biased.
The Treasurer says that, politically and geographically, the State parliaments are handicapped ; but if we . take away from the States their power to legislate in domestic matters, we shall find that the National Parliament will be much less capable of carrying out such work than are the States at the present time. If the National Parliament takes over the work of the State governments, we are likely to have bureaucratic control of the affairs of the people to a much greater extent than if the State parliaments managed their own affairs. Proceeding, the Treasurer demands in his pamphlet -
Give the Commonwealth complete control of immigration, federalize the Crown lands, subdivide the States into provinces whose outlines are determined solely by the lines of community of interests, big enough to attack national schemes in a large way, but small enough for every legislator to be thoroughly conversant with . every portion of the area, and land settlement and proper development will naturally follow.
The Treasurer demanded that the railways and Crown lands of the States should be handed over to the Commonwealth Government. Yet he repudiates the charge that he is a unificationist. I wish honorable members to realize what our. position in Western Australia would be if that were done. In that State new areas .are constantly being opened up, and migration is being encouraged for the purpose of building up industry and production. Surely the State governments and State politicians realize better what can be done for the development of their States than could legislators in a national parliament. Only recently the Main Roads Bill was before this House. There has been much talk of economy, yet this measure has been submitted providing for the expenditure of £35,000,000 in the next ten years. When the Hughes Administration first gave assistance to the States for the building of roads, I believe every person in Australia approved of its action. It granted £500,000 to the States on a £1 for £1 basis; but the whole direction and control of the roads scheme was left entirely in the hands of the States. To-day we find a big road programme going on, under which the States are compelled to borrow money and rush the work ahead in order to obtain the benefits of the federal grant. The result- is that there is frequently a loss of anything from 25 per cent, to 40 per cent, on the expenditure incurred. Furthermore; I contend that the provision of housing for the people is not the concern of the Federal Parliament. In every State there was already in existence legislation dealing with matters of that kind. Why could we not mind our own business, and allow the States to mind theirs ? The Arbitration Act is a further example of the same thing. There is an amendment to that act before the House now, and it permits a provision t0 remain in the act giving the Arbitration Court judges power to fix all conditions relating to the railway workers of Australia. The Prime Minister said that the financial measure was brought down for fear of what might happen in the future, fear of what some other government might do. His intention, apparently, was to lead the public to believe that if Labour got into power it would bring down legislation for the purpose of abolishing per capita payments. I have had an opportunity of seeing the Labour platform. It states that until the Constitution is amended, the per capita payments should be continued without diminution. What party, without the approval of the people, or without even consulting them, would have been likely to take this action? There, in cold print, is the platform of the Labour party. They say that they pledge themselves to keep up the per capita payments until such time as the people alter the Constitution. I know that their platform is in favour of unification. I do not mind the man who stands out openly and says that he is in favour of unification. I admire a person who stands up for his convictions, and who advocates the principle of unification if he believes in it.
– But the effect of this measure will be just the contrary of unification.
– That is the opinion of the right honorable gentleman, but I do not believe it.
– As the honorable member states that it is his opinion, it must be right!
– I have had more experience of political life in Australia than has the right honorable gentleman, and I know what the effect of such legislation will be. I do not know whether the Attorney-General was in the chamber when the honorable member for Perth (Mr. Mann) quoted certain figures to indicate the effect that this financial readjustment will have upon the States.
– I heard the honorable member quote some strange figures that would not convince anybody; they were ridiculous.
– The figures of the honorable member for Perth were not nearly so ridiculous as those which the Government advanced two years ago in support of its proposal that it - should withdraw from certain fields of taxation, in consideration of the States agreeing to certain other financial arrangements.
The figures of the honorable member for Perth were taken from Mr. Wickens’ statistical returns. What justification is there for this re-arrangement? Was there any demand for it at the last election? Apart from certain remarks made by the Attorney-General, and one small paragraph in the policy speech of the Prime Minister, that there should be. a conference with the States to deal with financial matters, there was not a suggestion that any re-adjustment of this nature was being contemplated. The speech which the Governor-General delivered at the opening of Parliament subsequent to the election contained only a bare reference to the need of a conference. The next that we heard of it was the declaration of the Government that the per capita payments must cease and that some other method must be found of adjusting Commonwealth and State finances. The per capita arrangement has proved satisfactory since 1910; and it should not have been altered except by the direct authority of the people. The financial position of the Commonwealth certainly did not justify the making of any change. The only reason that the Government has given to justify its action is that unless it alters the existing arrangement, some other Government might do it and the States fare worse; but Labour is pledged not to do so. To show that the financial position of the Commonwealth Government did not warrant the making of any alteration, I propose to quote certain figures. The Commonwealth revenue in 1923 was £64,700,000 ; in 1924 it had increased to £66,000,000, and in subsequent years it increased as follows:- 1925, £68,800,000; 1926, £72,200,000; and 1927, £78,100,000. The expenditure in 1922 amounted to £57,860,000. It had increased by 1927 to £78,168,000. The total amount received in taxation in 1922 was £49,678,000 and in 1927, £59,000,000, an increase of roughly £9,400,000 in the five-year period. No special expenditure has been incurred to justify this alteration. In delivering his budget speech in 1922 the present Prime Minister, who was then the Treasurer, said -
The estimated position at the end of the present year is that a surplus of £6.902,981 will be shown. A fundamental principle of national finance is that the State shall only take out and keep out of the hands of the taxpayer the amount necessary for the meeting of the current disbursements of stable government.
Has that been done during the past few years ? It has not. The right honorable gentleman proceeded to say -
The retaining of a large unemployed surplus is unjustifiable, and must tend to economic waste. The Government is, therefore, faced with the problem that it is not justified in retaining the surplus estimated to be in hand at the end of the current financial year, and must recommend to the committee what it conceives to be the best method of dealing with the accumulated funds in hand. Two alternatives have to be considered. They” are, either to employ the amount for the cancellation of debt, or for the purpose of reducing taxation.
I call particular attention to his succeeding remarks. They were as fol.lows : -
To employ it for the purpose of reducing the national debt would not, I believe, be employing it to the greatest advantage. Provision is being made for the redemption of the national debt on a definite basis, and very little additional benefit would be gained by the employment of the accumulated surplus for this purpose.
In the light of that statement are we to understand that the fact that the present Treasurer has applied . £4,000,000 to the reduction of the national debt, is a justification for an alteration of the existing financial relations of the Commonwealth and States? I think not. What, then, can be the reason for it? The present Treasurer has said that the existing system is unjust and improper. He has also stated on various occasions that one authority should not raise money which another spends, yet the Government proposes to tax the people of the Commonwealth to the extent of £20,000,000 this year for road purposes, and to hand the money over to the States.
– A large expenditure is also proposed in respect of housing.
– That is so. Therefore we have to look still further for any justification of this proposal. The following is another extract from the 1922 budget speech: -
Wo are a young country with illimitable natural resources but no great accumulated wealth. A burden which could lightly be borne by an old country with its great capital resources is one which might strangle the future development of a young nation.
It appears to me that the policy which the Government is pursuing will result in the financial strangling of the States. I propose to show presently from certain extracts which I shall make from a speech by the President of the United States of America, Mr. Coolidge, that when the welfare of the States is injured that of the Commonwealth is injured also. The last extract which I shall make from the budget speech from which I have already quoted is as follows : -
The Government, therefore, proposes to employ. £3,200,000 of the accumulated surplus in the reduction of taxation and in encouragement of manufactures. The Government feels justified in recommending the use of that sum in the manner suggested without any fear that, in order to make the revenue and expenditure for the year 1923-24 balance, it will be necessary to re-impose taxation.
After making that observation the honorable gentleman went on to indicate that by admitting wire netting, fencing wire, and traction engines duty free, and galvanized iron at a very low rate, and by paying certain bounties and reducing taxation in certain directions the estimated . surplus would be reduced to £3,200,000. The present Treasurer in commenting upon the budget speech of that year made the following remarks: -
If the Commonwealth were deliberately endeavouring to strangle the States and bring about unification, they could not go on better lines than those they are pursuing at the present time. If it is the desire of the Government to dry up all the resources of the States in the way of available taxation, it seems to me it should not be done sideways, but on a boldly avowed policy.
He also said -
The Treasurer does not come forward with a boldly avowed policy but by destroying the financial fabric of the States he works his ends.
The Treasurer, instead of trying to stem the stream of extravagance, has been content to go with it. I own to being very disappointed that he has not been able to bring to light some proper plan of economical administration throughout the service, that the expenditure of the Government during last year was £1,000,000 more than was voted by Parliament, that throughout the whole service there is the same old war-time scale of expenditure, that there is no cessation of new appointments, and that the Commonwealth has not even begun to follow the example set by Canada, New Zealand, and Great Britain, of trying to get back at the earliest possible moment to something like pre-war conditions.
– In those days we used to cheer such remarks; but to-day some of the honorable members who joined in the cheers are supporting an opposite policy.
– The honorable member for Cowper also stated on that occasion that he had hoped that “ the Rakes Progress of successive governments ; the continual budgeting for deficits, living beyond our means and the old war-time scale of lavish expenditure “ would be brought to an end.
– How much of the money that is being raised is to be paid to the States?
– The honorable member may give those figures if be pleases. He should know perfectly well that an increase in population always means an increase in customs revenue whether, the tariff is for protective or revenue producing purposes: But our customs tariff has increased out of all proportion to our population. The average revenue from customs for the three years ending 1918-19- was . about £16,000,000; but the revenue last year was about £44,000,000. My object is to show that there has been a huge increase in the revenues of the Commonwealth, that Governments have been extravagant, and that there is no justification for this bill on the ground that the Commonwealth cannot afford to continue the per .capita payments to the States. The Prime Minister has said that, having made ample provision for a sinking fund to redeem .the war debt, it would be unjust to tax the people further, and relieve posterity of its fair share of that liability. The Treasurer boasts that he has been able to pay large sums off the war debt. “Would it not have been better to follow the precepts of the Prime Minister in 1922, to make no attack upon the finances of the States, but to allow the per capita payments to continue until, following a general election at which the whole matter had been fully debated, the people decided that there should be a change.
– The Leader of the Opposition said that the States had won the second trick, and were getting more out of the Commonwealth under this agreement than they received before.
– Does the Treasurer say that?
– Every scheme brought forward by the Government has treated the States more generously than they were treated under the per capita system. Every such scheme has meant an increasing embarrassment of Commonwealth finances.
– When the Treasurer brought forward his first scheme he promised that the Commonwealth would retire from the field of land taxation, but of what value was that promise in view of the statement of the honorable member for Yarra (Mr. Scullin) that when the Labour party return to power in -this Parliament the land tax will be reimposed? Any agreement of that kind could not bind any future Parliament. This scheme is an improvement on the preceding one, but only because of the fight that was put up in this chamber. Honorable members began to realize that if the first scheme were put into operation chey would have a bad time when they went before their constituents. There is not the slightest doubt that this matter was discussed at party meetings, and pressure brought to bear on the Government. The Prime Ministers asked honorable members to trust him, and the honorable member for Bass (Mr. Jackson) frankly stated that he was trusting the Prime Minister. I told my constituents, that while I had the highest regard for the Prime Minister I would not give a blank cheque to him or anybody else when the future of my State was at stake. No honorable member was justified in doing so. These new proposals are undoubtedly more acceptable than the earlier ones, and had they been brought forward in the first place they would have been more favorably received than they are to-day.
– They were accepted by the States immediately.
– What else could the representatives of the States do? By an act of this Parliament the per capita payments had been withdrawn. The Government substituted these proposals which, as the honorable member for Perth pointed out, will be more advantageous to the States for the next five or seven- years, after which the present Premiers will probably be out of office. They had to accept what the Commonwealth offered, because of the pressure that was put upon them; but what will be the attitude of State parliamentarians at the next Federal elections ? The figures given by the honorable member for Perth on Wednesday night were startling. According to a return prepared by Mr. Wickens, assuming a uniform increase of population, and without taking into account the sinking fund contributions, the loss to Western Australia during the 58 years’ currency of the agreement will be £73,000,000.
– But surely the sinking fund contributions should be taken into account.
– Yes, but they would be very small in comparison with the total of £73,000,000. That figure is based on a uniform increase of population, but I hope that the rate of increase in Western Australia will be considerably accelerated. Wonderful developments have taken place owing to the improved value of our south-west lands through the introduction of subterranean clover. Land that was previously regarded as worthless and capable of carrying not more than one sheep to 100 acres, will now carry from one to three sheep to the acre. On sandy land with a clay sub-soil, and enjoying heavy rainfall, the value of subterranean clover has been marvellous. An enormous new area of wheat country also has been opened up, and the State Government expects to have nearly 2,000 new blocks of land available for settlement in the near future. Mr. Wickens has said that this agreement will cost the States £383,000,000 in the 58 . years, not allowing for sinking fund contributions. I pointed out recently that the railways of Australia, notwithstanding that their charges have increased 60 per cent., have shown a loss of £24,500,000 since 1914. The taxation of the States in 1914 was £1 8s. 4d. per head, and in 1926 £4 12s., or an increase of £3 3s 8d. Federal and State taxation combined is now £14 5s. per head, as compared with £4 16s. 7d. in 1914. The average rate of interest paid on State loans in 1915 was £3 13s.11d., and in 1926 it had risen to £4 17s. 10d., an increase of £1 3s.11d. per cent. Inevitably the difficulties of administration in the States will be greatly increased, especially after the first five years operation of this agreement.
I was one of those in Western Australia who strongly supported the Federation. I believe in a union which gives to the Commonwealth Parliament complete control over matters- of national concern, but the States should remain paramount in domestic affairs. The more closely government can be brought to the people the cleaner and better it- will be. That is. particularly true of Western Australia and Queensland because of their enormous areas. Western Australia has only five members in this House, and we can only rarely return to our State to get into touch with the people, much less travel amongst them and learn their requirements. Could I protect and legislate for the interests of my huge constituency if domestic polities throughout the Commonwealth were controlled from Canberra? It would be impossible. Whilst I am a Federalist at heart, I believe that so long as the Commonwealth Parliament attends to matters of national importance, matters of purely domestic concern will best be left entirely to the State legislatures.
Finance was the biggest obstacle to be surmounted before a federal scheme could be evolved. The States were asked to surrender their main source of revenue, which was the customs and excise taxation, .and at each convention the chief question asked by their representatives was “ If we surrender the customs revenue, how shall we be able to finance our States? We have borrowed large sums of money for the building of railways, roads, harbours, schools, and other requirements of our people. How can we pay the interest on them and supply other needs, unless certain revenues are assured to us to replace what we are asked to surrender?” The original proposal as finally approved by the convention was that for all time three-fourths of the customs and excise revenue of the Commonwealth should be returned to the States. But as in New South Wales the referendum failed to obtain the statutory majority, at a subsequent meeting of Premiers that requirement was limited to ten years, and thereafter until Parliament should otherwise provide. The argument employed was that . the Federal Parliament could be trusted; that members elected by the States would protect the interests of their constituencies. At that time there was no realization of the extent to which the party system would develop in this Parliament. The delegates to the convention never anticipated such a farce as this big financial problem being debated on Wednesday night in . the presence of only a few members, and arousing such little interest among those whose duty it should be to preserve the States. The honorable member for Wakefield (Mr. Foster) and others of us have had long experience of parliamentary life. Unlike the AttorneyGeneral, who recently drifted into this Parliament, and who previously knew little, and probably cared less, of State politics, I know the difficulties of the people in the back country and of governments in States whose revenues are small. Is there any country in the world that can boast of a greater effort to educate its people than that of Australia? The States annually provide for education £9,500,000. The Commonwealth pays out a large sum for old-age and invalid pensions, but the States provide £5,200,000 for charities and medical services, police, £3,000,000; justice, £1,200,000; and interest, £28,000,000. The total of these items amount to £47,000,000, which sum has to be provided by the States in order to carry out these functions. The railways are State institutions, and I hope that the recommendation of the Treasurer will never be given effect, and that the railways will always be administered by the States to assist in their own development. Harbour improvements have still to be effected, and huge sums have been spent for this purpose in Australia. The same applies to the provision of roads. I want all these utilities to be controlled by the States. I ask any one whether certain functions, such as the education of our children, policing, charity, railways, harbours, roads, &c, can best be administered from Canberra or from the capital cities of the States? If so, then why destroy their finances? Then we’ come to 1909, when a Liberal government was in power. There are those who are afraid of Labour administrations because of their policies, yet, as I pointed out at the beginning of my remarks, the Labour party has clearly indicated to the people of Australia that it would, take no action in this direction without the consent of the people being first obtained, not by an ordinary election, but -by a referendum asking for an alteration of the Constitution. When Mr. Deakin introduced legislation in 1909 he provided that from and after the 1st day- of July, 1910, the Commonwealth should pay to each State a monthly instalment, or apply to the payment of interest on debts of the States taken over by the Commonwealth, an annual sum amounting to 25s. per head of the number of people in the States. There has been in this House much misrepresentation in regard to what the Constitution meant, or what the original Commonwealth Parliament meant, so far as the States were concerned, and I wish to place in Hansard some of the references made in past debates. Sir John Forrest said -
It was thoroughly understood, when federation was established, that the States were permanently to have a share in the customs and excise revenue. Those who framed the Constitution had for their object the improvement of the financial position of the States, and had not the slightest desire or intention to impoverish them. . . . The convention fixed the return to the States at three-quarters of the net customs and excise revenue, and fixed it permanently, subject, of course, to the Constitution.
That is what I have contended all along, and that statement is entirely different from that given last year to. the press by the Treasurer. Sir John Forrest continued -
Are we to act so as to recognize the honorable understanding then arrived at, or are we to take our stand solely on the legal, bond?
The Prime Minister (Mr. Bruce) has stated that there is no moral obligation. I say, undoubtedly, that there is a moral right. Every word that I am quoting shows that if there is no legal right - and I do not admit that - most undoubtedly there is a moral right. Mr. Kingston said -
I think wo are indebted to Sir Edward Braddon for having successfully carried a provision of this sort.
Sir Frederick Holder said
If the- Federal Treasurer has not the statutory obligation upon him to make a certain return to the States, he may not make it. He may establish large defence organizations, or spend it in other ways, and then it will.be said, “Where will the States be?” As the States are surrendering ?6,000,000 of revenue, it is not “an unreasonable request to have some assurance as to what the return shall be.
The States was given that assurance by that section of the Constitution known as the “ Braddon blot.” Sir William Lyne said -
I have on every occasion advocated that there should be some definite return to the States provided for. I hailed with great pleasure Sir Edward Braddon’s amendment when he brought it in. It is simple and effective and will coincide entirely with what I have advocated upon this question.
Sir Edmund Barton said
A charter of liberty is enshrined in this Constitution, which is also a charter of peace, order and good government for the whole of the peoples whom it will embrace and unite.
I think that those few quotations will rid honorable members of any misunderstanding as to what was the intention of the framers of the Constitution in connexion with the revenues of the States. South Australia to-day is in a pitiable condition. The committee which instigated the financial effect of federation upon that State, reported -
As a result of federation the people and the industries of South Australia have laboured for many years under a burden of taxation materially heavier than that imposed in other States, and the burden is now being greatly increased. Unless steps are taken to remedy this condition, the contrast between the prosperity in the manufacturing States in the east and the stagnation in the primary producing States in the west - a contrast which will become increasingly apparent - must inevitably, result in the creation of a spirit of resentment which may even endanger the federation. South Australia cannot continue satisfied with a union which must steadily impoverish her people.
A similar condition exists in Western Australia and that State is suffering enormous disabilities arising out of the economic policy of this Parliament. The condition in South Australia is intensified a thousandfold in Western Australia. The report’ continues -
While the people of South Australia have been subjected to these disadvantages for many years, they were prepared to endure them so long as they did not become serious impediments to the progress of the State. During, and since the war, however, the finances of the State have been steadily becoming more difficult. This has been partly due to abnormal increases in the cost of Government and other expenses incurred as the result of the war, ‘ partly to the invasion of fields of taxation by the Commonwealth previously reserved to the State, partly to the failure of the Commonwealth to pay to the State revenues which the State might reasonably have expected to receive, and partly to the increasing penalties inflicted upon the State in order that the general policy of the Commonwealth might he pressed forward.
Tasmania has made its difficulties apparent, and has received grants from the Commonwealth: I do not care what moneys are paid by the Commonwealth ; they cannot retrieve the unfortunate position of some of the States due entirely to the transgression of every economic law. Many honorable members have pointed out on different occasions, that Western Australia and South Australia are receiving charity from the Commonwealth Government. Let me point out that in five years the bounties paid to New South Wales, which State has profited more than any other State by federation, amounted to £1,293,193. This return is signed by the present Minister for Trade and Customs (Mr. Pratten), and it shows the bounties paid to different States. Victoria is shown as receiving only £203,000, but in a previous return it is shown that enormous sums were granted to Victoria in connexion with the export of canned and dried fruits, amounting to something like £900,000. Western Australia is shown as receiving £32,516 - I believe as bounty on meat. New South Wales benefited in a period of five years and five months to the ‘ extent of £1,293,193. Huge bounties to States were also given which are not disclosed in the usual way by the’ budget, so that it is difficult to determine what has actually been granted and I am opposed to this policy of spoils and bribes. I am in this Parliament primarily to try to build up the national interests of Australia. Secondly, I am here to assist in the development nf my own State, while, thirdly, I have to give my adherence to my party so long as I am satisfied with the policy of that party. That policy has considerably strained any allegiance that may be expected from me or any other honorable member on this side of the chamber, not only by this legislation, but by other legislation which I believe to be inimical to Australia. The Commonwealth Government, when advocating legislation, should consider its applicability to Australia as a whole. Many will not approve of the policy that I pursue, but honorable members generally will surely give me credit for being earnest and desirous of doing what I consider to be best in the interests of my country. Anything tending towards unification is destructive the best interests of Australia, and I believe that unification would be particularly injurious to my own State of Western Australia. I shall read a portion of a speech by President Coolidge in reply to requests made to him to use his influence to have a referendum taken for the purpose of granting greater powers to the national parliament, so taking away from those of the States. The President of the United States of America went to Williamsburg, Virginia, where he made a plea for the power of State governments and the limitation of Federal activity to its proper sphere. The most salient part of his speech was -
No method of procedure has even been devised by which liberty could be divorced from self-government. No plan of centralization has ever been adopted which did not result in bureaucracy, tyranny, inflexibility, reaction, and decline. Of all forms of government those administered by bureaus are about the least satisfactory to’ an enlightened and progressive people. Being irresponsible they become autocratic, and being autocratic they resist all development. Unless bureaucracy is constantly resisted it breaks down representative government and overwhelms democracy. It is the one element in our institutions that sets up the pretence of having authority over everybody and being responsible to nobody.
While we ought to glory in the Union, and remember that it is the source from which the States derive their chief title to fame, we must also recognize that the national administration is not and cannot.be adjusted to the needs of local government. It is too far away to be informed of local needs, too inaccessible to be responsive to local conditions. The States should not be induced by coercion or by favour to surrender the management of their own affairs. The Federal Government ought to resist the tendency to be loaded up with duties which the States should perform. It does not follow that because something ought to be done the national government ought to do it.
I commend those words to the members of this Parliament and to the people of Australia in the endeavour to make them realize that in the control of national matters this Federal Parliament should be supreme, but that domestic matters should be left to the administration of the States. Every one must endorse what President Coolidge has said with regard to the evils of bureaucracy. We made a grave mistake in handing practically unlimited powers to the Department of Trade and Customs. Honorable members do npt realize the enormous powers which have been given to that department. I can assure them that those powers are becoming so noticeable as to be dangerous, and they promise to become more noticeable in the future than- they now are. It was my intention to move an amendment similar to that which has been moved by the Leader of the Opposition (Mr. Charlton), and I propose to support his amendment. I shall put my principles before party, and I fully realize the significance of the attitude that I shall adopt. No doubt in many quarters where I desire approval I shall meet with disapproval because of my action. Since this legislation was introduced, having knowledge of the Treasurer’s utterances in favour of unification, I have had the impression that its purpose was to destroy the financial fabric of the States. I agree, to a certain extent, with the proposals for a sinking fund and loan councils, and would support them, as I believe that the people of Australia have gone mad so far as borrowing is concerned. We are putting a burden on posterity of which we should be ashamed.’ I deeply regret that so little interest has been taken in this debate. One would imagine that the whole matter was settled . because the State Premiers, finding themselves in a financial quandary, were compelled to accept the conditions offered by the Commonwealth. I believe that when the people of Australia realize the facts there will be a strong agitation throughout Australia for the alteration of the Constitution, and a demand that the revenues of the States be protected. It >vill be particularly so when the people realize their local needs - new railways, harbours, marketing, and other facilities. There will then be a revulsion of feeling, and the people will demand that the arrangement made when federation was instituted shall be adhered to. I wish to emphasize the point again that as Ave increase our population so we increase the revenue from customs duties to the advantage of the Commonwealth. We have brought farmers and group settlers to Western Australia in large numbers. Of group settlers we have brought 10,000 families, of which there is. not one that will be able to pay any income tax or pro vide any revenue for the State for years to come. We have to build homes for them on their land, and provide hospitals, schools, and other facilities for them. The States must do all that, and find the money for it. In the meantime every article that these people require - wire for fencing, the tools they use, and, to some extent, the food they eat - ia being taxed through the customs, and the Com.monwealth is deriving the benefit. The Government should, therefore, recognize the right of the States to share in the customs revenue, and if this Parliament will not admit that right, I believe the next parliament will. The Government should beware how they tamper with the Constitution for there is a grave danger that a demand for excessive federal powers may lead to disaster and separation of some of the States.
– I wish to refer to some quotations made by the honorable member for Bass (Mr. Jackson) from utterances made some years ago by Mr. Andrew Fisher in the 1908 Parliament. Some members on this side of the House disputed the quotation when it Avas made, and afterwards, to emphasize his own argument, he produced a volume of Hansard and quoted from it. He left the impression on members of the House that he quoted from a speech in which Mr. Andrew Fisher said that he was prepared to grant £5,000,000 to the States for all “time. Since then I have read that very same speech. I am not here to defend Mr. Fisher, who is not likely to figure again in our Australian politics; but I wish to say to the honorable member for Bass that it would be a fair thing when quoting from a speech to read the speech right through. I am prepared to admit that Mr. Fisher Avas in the habit of being very emphatic in saying “ Yes “ or “ No,” in reply to an interjection, and that had the effect very often of putting him in what might temporarily be a false position. On this occasion Mr. Fisher was addressing the House in relation to taking over the State debts. It Avas on the financial bill on which the. Fusion Government finally fell in 1908.
Here is what he said. It is recorded in Hansard on the 12th October, 1908, page 4367-
In another part of my speech it was clearly set out that, in the opinion of the Government of which I was the head, the Commonwealth should guarantee to the States ?5,000,000 per annum for all time, to be distributed per capita: whilst if there were a surplus in the Commonwealth revenue, that also should be distributed per capita. If the honorable member for North Sydney had done me the honour to read my speech, he would have seen that the ?5,000,000 to be guaranteed meant also that the Commonwealth was to take over the debts of the States.
It was a sum of money which he was prepared to set aside for the States in consideration of the taking over of State debts. Further on in the same speech, in answer to an interjection by Mr. Henry Willis, he said -
That is another matter. I am speaking now on the question of policy. I have expressed the view, founded on that expressed by all the experts who have been consulted, that the credit of the Commonwealth will be better than the credit of the best of the States. Let us assume that to be so. We take over ?150,000,000 or ?160,000,000 of State debts, as .equivalent to the 25s. per head that the Government propose to pay the States, or the ?5,000,000 per annum which the Government of which I had the honour to be the head were prepared to set aside as a permanent guarantee to the States. I would take over the whole responsibility of that ?160,000,000 for this reason.
He was setting out that he was prepared to make a grant of ?5,000,000 a year in consideration of his taking over the State debts to the extent of ?150,000,000 or ?160,000,000. He would use the money for the purpose of paying interest on the debt, so that the Commonwealth would have full charge of redeeming the debts as they fell due. He said in another place, in reply to this interjection by Mr. Deakin, the Premier -
Mr. Deakin. Yes ; but in the meantime you have to And the interest out of your own Commonwealth revenue.
Mr. FISHER. Surely I made myself clear. If we guarantee a minimum of ?5,000,000 per annum to the States, as the Government of which I had the honour to be head were prepared to do, that sum will pay the interest for all time upon an equivalent amount of the public debt.
If the honorable member for Bass had read the speech right through he would have seen that, instead of Mr. Fisher being prepared to grant ?5,000,000 a year to the States without any consideration for their indebtedness or their financial position, he was prepared to do so only in consideration of taking over the debts owed by the States. The honorable member for Bass should recognize that he was doing Mr. Fisher an injustice. It is possible to convey an entirely wrong impression by divorcing a quotation from its’, context. I do not accuse the honorable member for Bass of doing anything very gross; but he should remember that he can do a man a serious injustice by speaking a half truth. I ask leave to continue my remarks on a subsequent occasion.
Leave granted; debate adjourned.
Bill returned from the Senate without amendment.
Motion (by Mr. Bruce) agreed to -
That the House at its rising adjourn until Wednesday next at 3 p.m.
Note to Egyptian Government - Case of ex-Stoker Jensen - Administration of the Kimberley District.
.- I move-
That the House do now adjourn.
This morning I promised the Leader of the Opposition (Mr.. Charlton) that I would lay upon the table of the House a copy of the Note delivered to the Egyptian Government on the 4th March by the British High Commissioner, Lord Lloyd. I now do so.
– I wish to bring under the notice of the Minister representing the Minister for Defence in this chamber a matter of grave urgency. It concerns ex-Stoker H. M. Jensen, who joined the Australian navy in 1919, and has been attached to H.M.A.S. Melbourne and Torrens. At the time he enlisted in the service Mr. Jensen was a fine specimen of manhood-
He weighed more than 13 st., and enjoyed good health in every way. I regret to say that his weight has been steadily declining for some time, and is now only a little over 10 st. Mr. Jensen is a sufferer from tuberculosis, and until quite recently was an inmate of the Bedford Park Sanatorium in South Australia. The first trace of his trouble was noticed at Westernport in 1924, when he lost his voice for a week. In November, 1925, he developed a’ cough, and consulted Dr. Dunstone of Port Adelaide, who prescribed a cough mixture for him. In March, 1926, he again reported to Dr. Dunstone, and was treated for one week for influenza and for three weeks for pleurisy. He had only returned to his ship a fortnight when sputum tests were made, which proved positive. On the 1st May, 1926, at the request of the Port Adelaide Board of Health he was sent home from his ship, and later he had to enter Bedford Park Sanatorium. While he was there his time with the navy expired. Up to that stage he had been receiving treatment and had also been paid his wages ; but upon the expiration of his time for actual service with the Navy he was notified that his pay would be discontinued, and that no pension or compensation would be payable to him. All that he received for the remainder of the time that he was in the sanatorium was medical treatment. His position to-day is serious, and I submit that he should have some relief granted to him. He made application to the department for consideration, but the reply he received was unfavorable. Subsequently the medical officer in charge of Bedford Park Sanatorium intimated to him that if he desired he could be discharged as invalided. Mr. Jensen consulted me as to what he should do. I inquired of Mr. Macandie, of the Navy Department the meaning of the phrase “Discharged invalided.” He replied that it would not entitle Mr. Jensen to any pension or compensation. I thereupon advised Mr. Jensen, who had been asked by the medical officer at the sanatorium to sign a paper of discharge, not to leave the institution except at the direction of the department. He therefore remained there until quite recently, when he was discharged in consequence of an order from the department. I have now received a letter from him dated 1st
March, to the following effect : -
I thought you would like to know that the doctor at Bedford Park Sanatorium has received notice from the Defence Department to discharge me from there if he thought fit. The doctor discharged me this morning, and I reported to. the Naval Office. They took my address and told me that they would send for me when I was wanted.
An explanation is given by Jensen as to how the disease, in his opinion, was contracted. He was required to trim the coal from the upper to the lower bunkers/ When that work had been done the only way to go through to the fires was to negotiate the manholes, and come up on to the deck. Passing into the cool atmosphere after working in a state of perspiration, he contracted’ a chill that brought on the dreaded complaint. He had not previously suffered from the disease, and no member of his family had shown symptoms of it; in fact, his father and brothers are men of splendid physique and undoubted good health. It is surely reasonable to assume that he contracted the malady in the service of the Australian Navy. I understand this aspect- is not questioned by the Department. According to a statement by the Navy Department, it has no power to pay him any form of pension, or even to provide adequately for his future treatment to give him a chance of regaining his health. In the next bed to him was a man from the mercantile marine, who suffered from tuberculosis, and was in receipt of a pension under the Seamen’s Compensation Act. I hope that something will be done to assist this unfortunate sufferer. If no legislative provision has been made for such cases, I trust that the Government will at least grant him a compassionate allowance so that he may be relieved of anxiety for the future.
– I have received a telegram from the secretary of the Wyndham Road Board, asking that the Commonwealth- Government should take over the administration of the Kimberley district of Western Australia. The communication reads -
I have been asked to convey to you resolution of a well-attended meeting held in
Wyndham yesterday, as follows: - This meeting ofresidents of East Kimberley respectfully asks the Federal and State Governments to give early andserious consideration to the handing over of the north of Western Australia to a new State. This meeting recognizes that the State Government, notwithstanding its good wishes, is unable to find the money that is required to develop the north. The north is going from bad to worse. It is considered that the State Government should take prompt steps to arrive at an agreement with the Federal Government, and suggests that any agreement arrived at should include provision for the maintenance of a White Australia. The carrying on of the Wyndham meat works by the new State on similar lines to those now obtaining for a period of at least ten years, and an effectual guarantee of the sole employment of Western Australian workers. It is felt that this is due to the Western Australian workerB in view of their good services in the past, and the excellent work performed at the wharf in handling general cargo and the products of the meat works. This has given Wyndham asplendid name with ship-owners. , 1 have often expressed the opinion that the Federal Government should assist Western Australia in the development of the northern portion of that State; but personally I am strongly against any proposal to place that country completely under the control of the Commonwealth, in the way that the Northern- Territory comes under its jurisdiction. I believe that with the help of a number of the good officers in the Commonwealth service, who might be asked to report on the potentialities of the northern part of Western Australia, a method could be devised by which the Commonwealth, with the finances at its disposal, could greatly assist in developing that area.
– I shall bring to the notice of the Minister for Defence the case that the honorable member for Hindmarsh (Mr. Makin) has mentioned.
The telegram read by the honorable member for Kalgoorlie (Mr. A. Green) opens up a subject of major policy in connexion with the development of Australia. This Government intimated to the Government of Western Australia that the Commonwealth would be prepared to take over and become responsible for that part of the State lying north of the 26th parallel of latitude; but the offer was not accepted. Subsequently, after a conversation between the Premier of Western Australia (Mr. Collier) and myself, my Government intimated that it would be prepared to modify its proposal by offering to take over, on behalf of the Commonwealth, that part of the State lying north of the 20th . parallel. We have not yet learned whether the State is prepared to agree to that proposal. We have pointed out that this territory adjoins the Northern Territory, which is under Federal control. Our suggestion for the transfer of the administration and control of the north-western part of Western Australia to the Commonwealth has regard to the present sparse population of that area, with the eventual objective, should the population increase sufficiently that it may become a newstate. At the present time, however, there are so few people there that it would be impossible to entertain the idea of making that territory a new state. I assure the honorable member that the matter is one in which the Commonwealth Government has a great and sincere interest, and it hopes that as the result of the present negotiations some, arrangement will be arrived at that will cause greater development in the Kimberley district and the north-west of “Western Australia than there has been hitherto.
Question resolved in the affirmative.
House adjourned at 4.4 p.m.
Cite as: Australia, House of Representatives, Debates, 9 March 1928, viewed 22 October 2017, <http://historichansard.net/hofreps/1928/19280309_reps_10_118/>.