House of Representatives
24 February 1932

13th Parliament · 1st Session

  1. House of Representatives
  2. 13th Parliament
  3. 1932

Mb. Speaker (Hon. G. H. Mackay) took the chair fit 3 p.m., and read prayers.

page 204

DISARMAMENT CONFERENCE

Mr LATHAM:
Minister for External Affairs · Kooyong · UAP

– by leave - I take this opportunity to make a short statement to the House regarding the forthcoming Disarmament Conference at which I shall represent the Commonwealth Government. The conference has before it tho draft convention prepared by the Preparatory Commission of the League of Nations, a copy of which I shall later lay on the table of the Library. The Commonwealth Government accepts the draft as generally satisfactory, and its delegation will endeavour to have figures inserted in the tables contained in it which will secure not only the limitation, but also the substantial reduction of armaments. The delegation will support the abolition of submarines, the prohibition of gas and chemical warfare, reduction in the permissible size of ships of war and tho calibre of naval guns, the prohibition of large land guns, and the limitation of conscription by agreement. At tho same time it will bear in mind the interests of Australia, which necessitate that its very slender defensive provisions can be limited only if other nations agree to reduction, j’

Mr SCULLIN:
Yarra

.by leave - The brief statement of the Minister for External Affairs was to the point. I associate the Labour party with the proposals to bc placed before the Disarmament Conference by the Commonwealth delegation, and I believe that all members of this Parliament, and indeed all the Australian people, will support the delegation in every effort to reduce armaments. No step towards the complete disarmament of the world can be too advanced for the Australian people. The Attorney-General will represent not the Government of the Commonwealth alone, but the Australian people; and disarmament is a subject of which he has considerable knowledge. He .has- beer associated with the League of Nations Union for many years, and has kept in close touch with its principles and spirit; he has on more than one occasion discussed its objectives in this House with great skill. The Disarmament Conference will provide the first real test of the League of Nations, and the sincere hope of all of us is that it will meet it satisfactorily. The wish of the Australian people will be that their delegate may apply, all his knowledge and ability to secure the maximum practicable reduction of armaments.

page 205

QUESTION

MILITARY TRAINING

Mr NAIRN:
PERTH, WESTERN AUSTRALIA

– An officer of the volunteer forces in Perth states, in the course of a letter to me -

In Western Australia since the inauguration of voluntary training some 500 or more men have volunteered, but only about 200 have been accepted.

I ask the Assistant Minister for Defence if it is true that for some months voluntary enlistment has been actively discouraged by the Defence Department; if so, does the present Government propose to continue that policy?

Mr FRANCIS:
Minister in charge of War Service Homes · MORETON, QUEENSLAND · UAP

– I shall institute inquiries into the statement made by the honorable member, and let him have a reply as early as possible.

page 205

QUESTION

WIRELESS BROADCASTING

PERFORMING Right Association.

Mr MAKIN:
HINDMARSH, SOUTH AUSTRALIA

– Will the AttorneyGeneral consider the advisability of introducing legislation similar to that in operation in New Zealand and Canada whereby broadcasting companies may be more adequately protected from the exorbitant demands of the Performing Right Association in respect of copyrights held by it ?

Mr LATHAM:
UAP

– This matter has engaged the attention of successive Commonwealth governments ever since the beginning of wireless broadcasting and the use of gramophone records in connexion therewith. It is at present governed by a copyright act which is based largely upon international agreements. Action by us to limit the copyright of citizens of other countries would have to be taken most discreetly, because precipitate action might imperil recognition of corresponding Australian rights in other parts of the world. At present the matter is being dealt with by agreement between the interests concerned, and the Government will use all the influence and pressure that it can legitimately exercise o secure acceptance by those interests of the principle that a reasonable payment for performing rights is proper and an unreasonable payment improper.

page 205

QUESTION

CHINA AND JAPAN

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

– Since the Minister for External Affairs replied to a question asked by me last week regarding the war clouds in the Ear East, active hostilities between China and Japan have developed, and a disastrous struggle now appears possible. Can the honorable gentleman indicate what steps are being taken by the Commonwealth Government in collaboration with the British Government to bring about a speedy restoration of peace?

Mr LATHAM:
UAP

– There is but little, if anything, that I can add to the statement which I recently made in respect of the situation at Shanghai. The Commonwealth Government is being kept fully informed of the course of events, and the’ reports in the press are in a large measure accurate. Action has been taken by the League of Nations to deal with the matter, and the Commonwealth Government will be represented by the High Commissioner at the special Assembly of the League of Nations which will be held on the 3rd March next. The policy of the Commonwealth Government is, as I have already said, to lend any aid of which it is capable in co-operation to bring about a peaceful solution of the problem that has arisen. The honorable member will doubtless recognize that it is not practicable for the Commonwealth Government to take any useful, separate action apart from the League in this matter.

page 205

QUESTION

SUPPLY OF GALVANIZED IRON

Mr GREGORY:
SWAN, WESTERN AUSTRALIA

– I have to-day received a telegram from a well-known trader in Perth to tlie effect that Lysaghts Limited has refused to supply him with galvanized iron, and he desires an adjustment of duties’ to enable importations to be made. I understand that the Minister has received a similar telegram. I should like to know whether, in view of the fact that Lysaghts Limited are refusing to supply firms outside the association, he will at once carry out the policy which he enunciated when a member of the Opposition, and remove the embargoes and duties so as to allow people to buy imported .galvanized iron at a price two and a half times less than that at which it can be purchased here?

Mr GULLETT:
Minister for Trade and Customs · HENTY, VICTORIA · UAP

– It is a fact, as the honorable member has said, that the information disclosed in the telegram received by him reached me yesterday, and I immediately communicated with Messrs. Lysaghts Limited upon the matter. The whole question is now being investigated, and I trust that the complaint will be redressed at an early date. The honorable member exaggerates when he suggests that imported ‘ galvanized iron could be sold here at about one-third of the present Australian price.

page 206

AUSTRALIAN COMMONWEALTH LINE OF STEAMERS

Mr JAMES:
HUNTER, NEW SOUTH WALES

– With the object of bringing to an end the profound and painful silence of the right honorable member for Flinders (Mr. Bruce), I wish to a3k him-

Mr SPEAKER (Hon G H Mackay:
LILLEY, QUEENSLAND

– The honorable member must ask his question without preliminary remarks.

Mr JAMES:

– In view of the determination of the Commonwealth Government to persecute the Government of New South Wales for default with respect to its interest payments, will the right honorable gentleman, when he proceeds overseas as resident Minister in London, take action against the shipping company represented by Lord Kylsant, which has defaulted in its payments with respect to the contract which was entered into between that company and the Commonwealth Government some time ago for the purchase of the Australian Commonwealth Line of Steamers?

Mr SPEAKER:

– Honorable members must frame their questions in the form required by the Standing Orders; they should seek and not give information, and no comments are permitted. I intend to insist on the observance of these rules.

Mr JAMES:

– Then I shall make no comment. Does the Government intend to take any action regarding the default in interest payments by the shipping company which purchased the Australian Commonwealth Line of Steamers?

Mr BRUCE:
FLINDERS, VICTORIA · NAT; UAP from 1931

– I make no comment upon the preliminary observations of the honorable member beyond saying that nobody is persecuting the State of New South Wales, though an attempt is being made, for the honour of Australia, to compel that State to live up to its obligations. With regard to the sale of the Australian Commonwealth Line of .Steamers to the White Star Line with which Lord Kylsant was connected, everything will be done by the Government to ensure that that company fulfils its obligations under the contract.

page 206

QUESTION

DEPORTATION OF COMMUNISTS

Mr E J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– Is it the intention of the Government to introduce at an early date necessary legislation to bring about the deportation of foreignborn communistic agitators?

Mr LATHAM:
UAP

– Section 30a. and following sections of the Crimes Act already provide for the deportation of certain foreign-born persons who engage in seditious and revolutionary activities of the character described and set forth in that act. In the past, prosecutions have been undertaken under some of its provisions.

Mr Scullin:

– Not too successfully.

Mr LATHAM:

– All of them have been successful. The Government will be glad indeed to take action in any proper case if legal evidence is presented to it upon which it can justifiably initiate proceedings.

page 206

QUESTION

INSURANCE LEGISLATION

Mr BERNARD CORSER:
WIDE BAY, QUEENSLAND

– As the State of Queensland will be seriously embarrassed financially to the extent of £700,000 if a provision is enacted in Commonwealth legislation requiring the refund of deposits by insurance companies, will the Government, in considering its insurance legislation, provide for the retention by the States of the deposits they already hold on behalf of insurance companies? Is the Government prepared’ to accept State securities in lieu, of cash deposits at present held by such States?

Mr LYONS:
Prime Minister · WILMOT, TASMANIA · UAP

– The matter is already under the consideration of the Government. Consideration is being given to the special circumstances of the individual States and their difficulties. In the case of New South Wales no deposits are held by the State on behalf of the insurance companies. The honorable member will doubtless find the proposal of the Government satisfactory to the State of Queensland.

page 207

QUESTION

SUGAR AGREEMENT

Mr HUTCHIN:
DENISON, TASMANIA

– Oan the Prime Minister inform the House when he anticipates that the Government will be able to initiate a discussion respecting the sugar agreement which is at present an anachronism?

Mr LYONS:
UAP

– I am not able to indicate when such a discussion will take place. I have nothing further to add to what I said on the subject last week.

page 207

QUESTION

TRADE WITH THE EAST

Mb. Gepp’s Report

Mr FORDE:
CAPRICORNIA, QUEENSLAND

– Has any report been received from Mr. H. W. Gepp since his return from his recent tour to the East, during which he investigated the subject of the better marketing of Australian products? If so, will the Minister make it available to honorable members?

Mr HAWKER:
Minister for Markets · WAKEFIELD, SOUTH AUSTRALIA · UAP

- Mr. Gepp has returned to Melbourne, and is getting his report into shape. The Markets- Department has not received from him a comprehensive report dealing with the whole subject, but he has conveyed information with regard to particular subjects, such as the possibility of exporting sleepers to China. When the report has been received by the Government, consideration will be given as to whether it is suitable for printing and for circulation among honorable members.

page 207

QUESTION

AMENDMENT OF DIVORCE LAWS

Dr MALONEY:
MELBOURNE, VICTORIA

– In view of the almost universal desire expressed by judges and legal men that the divorce laws shall be amended with a view to simplifying the domicile question, ‘will the AttorneyGeneral consider bringing in a simple measure making it law that any man or woman can claim domicile whereever they can claim the rights of citizenship proved by their being entitled to vote ?

Mr LATHAM:
UAP

– While I sympathize with the object of the honorable member, which is the simplification of our laws of divorce, it is necessary to point out that the laws of divorce affect the status of parents in relation to one another as husband and wife, and may also affect the status of children born after a divorce.

It is highly desirable that our divorce laws should be upon such a basis that they will be recognized in every country of the world. By being founded upon domicile, they are now upon that basis. If we redefined “ domicile “ so as to make the fact of a name being upon an electoral roll sufficient to give .jurisdiction to our courts, the result would certainly be that Australian divorces would not be recognized in many countries of the world, with disastrous results, it may be, to Australians who had been divorced and had, possibly, remarried in other countries. I do not think that the suggestion made by the honorable member would provide a useful or, indeed, a benevolent solution of the difficulty to which he has referred.

page 207

QUESTION

DUTY ON TEA

Mr STACEY:
ADELAIDE, SOUTH AUSTRALIA

– I ask the Treasurer whether the Government has considered the advisableness of reducing the duty on tea, and, if not, whether it will do so at an early date?

Mr LYONS:
UAP

– The Government has already considered all the duties of the kind referred to by the honorable member. I wish to say quite frankly that under the existing financial circumstances I can hold out no hope whatever that there will be any relief from these duties.

page 207

QUESTION

CENSUS- ELECTORAL RE-DISTRIBUTION

Mr BLAKELEY:
DARLING, NEW SOUTH WALES

– Will the Minister for Home Affairs inform me whether the Government has given any consideration to the taking of the next census, or to the bringing into force of the electoral re-distribution ?

Mr. ARCHDALE PARKHILL.Consideration is at present being given to the taking of the next census, but no attention has yet been paid to the subject of electoral re-distribution.

page 207

QUESTION

EARNINGS OF COAL-MINERS

Personal Explanation

Mr JAMES:

– I wish to make a personal explanation. Last Thursday the Attorney-General (Mr. Latham), in reply to a question 1 asked as to whether money could be set aside for the purpose of assisting those engaged in the industry of extracting oil from coal, made some remarks which were not exactly a reply to my question. He suggested that I should do my best to bring about a reduction in the price of coal, and made some reference to a statement, which appears on page 228 of the report of the royal commission on the coal industry, that certain machinemen working on the coalfields had received from £6 to £6 10s. per day.

Mr SPEAKER:

– The honorable member cannot, under the guise of a personal explanation, contradict statements made by the Attorney-General. The object of a personal explanation is to correct a misrepresentation of something that a member has himself said or done. If the honorable member has been misrepresented in any way, he may make an explanation in regard to the matter; but he cannot make statements in contradiction of statements made by other honorable members. The honorable gentleman will have an opportunity on the motion for the adjournment of the House to make his position clear in respect to the matter he wishes to discuss.

Mr JAMES:

– I wish to explain the meaning of the extract read by the Attorney-General from the report of the Coal Commission.

Mr SPEAKER:

– The honorable member cannot do that by way of personal explanation. “While such observations might be appropriate when the motion for the adjournment of the House is moved, they are not proper to a personal explanation. I hope the honorable member will not attempt to evade the ruling of the Chair.

page 208

QUESTION

BROADCASTING OF PARLIAMENTARY PROCEEDINGS

Mr THOMPSON:
NEW ENGLAND, NEW SOUTH WALES

– Is the Prime Minister aware that yesterday a new chapter was written in the wireless history of Australia when the proceedings of the Parliament of New South Wales were broadcast? According to newspaper reports, the broadcast was very popular. Will the Government consider the wisdom for arranging for the proceedings of this Parliament to be broadcast, in order that greater public interest may be taken in its business?

Mr LYONS:
UAP

– I shall give consideration to the honorable member’s suggestion. The Parliament to which he has referred may always be relied upon to provide entertainment; but I hope that we shall never provide similar entertainment in this House.

page 208

QUESTION

SALES TAX

Mr WHITE:
BALACLAVA, VICTORIA

asked the Treasurer, upon notice -

  1. What revenue has been brought in by the sales tax while the rate was, (a) 2J per cent., and (6) 6 per cent.?
  2. What was the cost of its administration and collection in both cases?
Mr LYONS:
UAP

– The answers to the honorable member’s questions are as follow : - 1. (a) Collected at the Taxation Department Offices, £3,767,824; collected at the Customs Houses, £ 300,208; total for period 1st August, 1930 to 19th February, 1932, £4,069,092. (b) Collected at the Taxation Department Offices, £3,781,580; collected at the Customs Houses, £340,300; total for period 11th July, 1931 to 19th February, 1932, £4,121,949.

  1. The exact cost cannot be ascertained, as part of the cost is incurred in the Taxation Department and part in the Customs Department. Information as to salaries of sales tax officers will be ascertained and supplied at a later date, but it will not be practicable to apportion between sales tax and other Commonwealth taxes, the salaries of administrative and senior officers who apply themselves to the administration of all Commonwealth taxes. It is not economically practicable to apportion the general working expenses of the department between the various taxes.
Mr GUY:
BASS, TASMANIA

asked the Treasurer, upon notice -

With a view to removing anomalies and injustices in the Sales Tax Act, Regulations, and Rulings, will the Government give consideration to a proposal to collect the tax by means similar to those employed in the collection of excise duties, viz., at the source of manufacture and source of importation?

Mr LYONS:

– Yes ; the matter will be considered.

page 208

QUESTION

DISARMAMENT CONFERENCE

Mr HOLMAN:
MARTIN, NEW SOUTH WALES

asked the Prime Minister, upon notice -

Whether he will afford the House an opportunity of discussing the forthcoming Disarmament Conference before the departure for Geneva of the Honorable the AttorneyGeneral ?

Mr LYONS:
UAP

– It will not be practicable to accede to the request of the honorable member, as the Honorable the Attorney-General and Minister for External Affairs is leaving Australia immediately, but it is proposed that he will make a statement on the matter this afternoon.

page 209

QUESTION

INTERSTATE COMMISSION

Mr GREGORY:

asked the Prime Minister, upon notice -

  1. Is it a fact that section 101 of the Commonwealth Constitution enacts that there shall be an interstate commission for the maintenance of the provisions of the Constitution relating to trade and commerce, and that this was a distinct condition upon which the States entered federation?
  2. Is it a fact that by the Interstate Commission Act (No. 33 of 1012), which is still in force, it is enacted, inter alia, that the interstate commission shall consist of three members, that the Governor-General shall appoint three persons to be commissioners, and on the happening of any vacancy in the office the Governor-General shall appoint a person to the vacant office?
  3. Is it a fact that since 1010 there have been no commissioners, and that the commission has ceased to exist?
  4. Is it the intention of his government to perpetuate the contravention of the existing law of the Commonwealth by not appointing commissioners, thereby giving all citizens a highly undesirable lead, and an excuse similarly to disregard all the laws of the land?
  5. Will he take immediate steps to arrange for the appointment by the Governor-General of three interstate commissioners as required by law?
  6. If not, is it his intention to remove the Interstate Commission Act from the statutebook?
Mr LYONS:
UAP

– The answers to the honorable member’s questions are as follow : - 1 and 2. Yes.

  1. The tenure of the commissioners expired on the 10th August, 1020. 4, 5, and 6. The High Court held in the State of Now South Wales ti. the Commonwealth (20 C.L.R., 54) that Part V. of the Interstate Commission Act relating to the judicial powers of the commission was ultra vires the Parliament of the Commonwealth. In view of this decision it was, apparently, the view of the Government of tlie day that no useful purpose could he served by continuing the commission in existence. The appointment of commissioners to exercise tlie remaining powers of the commission under the act could not, in view of the financial position of the Commonwealth, be justified at the present time.

page 209

QUESTION

PETROL PRICES

Mr PRICE:
BOOTHBY, SOUTH AUSTRALIA

asked tire Prime Minister, upon notice -

  1. What is the present retail price of petrol at bowsers in each of the capital cities of the Commonwealth ?
  2. Is the Government satisfied that the price which the various oil companies are extracting from the petrol-consuming public is a fair one?
Mr LYONS:
UAP

– Information regarding the retail prices of petrol in the several States is being- obtained; and a further reply will be furnished to the honorable member as soon as possible.

page 209

QUESTION

DUTY ON OREGON

Mr PRICE:

asked the Minister for Trade and Customs, upon notice -

Has the Government had time to review the duty on Oregon; if so, with what result?

Mr GULLETT:
UAP

– The tariff in its many aspects is still receiving the careful consideration of the Government’.

page 209

QUESTION

UNEMPLOYMENT RELIEF

Mr BAKER:
OXLEY, QUEENSLAND

asked the Minister for Works, upon notice -

  1. How many unemployed persons have received employment under the previous Government’s grant for relief work - (a) in the Commonwealth; and (6) in Queensland?
  2. How many more unemployed is it estimated will receive work under this grant - (a) in the Commonwealth; and (6) in Queensland?
  3. What was the amount set aside under this grant for improvements at - (a) Archerfield aerodrome; and (&) Lytton?
  4. How much of the money referred to in paragraph 3 has been spent?

  5. When is it expected that the works at Archerfield and at Lytton will be completed?

    1. Is there any intention on the part of the present Government of following the example of the previous Government, and making available further moneys for the relief of the unprecedented unemployment now existent in Australia?
Mr MARR:

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

The following information is furnished in relation to that portion of the grant made available for expenditure by the Works Department : - 1. (a) Approximately 11,000 mon; (ft) approximately 1,300 men. 2. (o) Approximately 4,000 mcn; (6) approximately 1,200 men. 3. (a) £4,500; (6) £2,334. 4. (a) £3,043; (b)£1,693.

It is anticipated that Archerfield will be completed in six weeks and Lytton in four weeks.

I am not in a position to advise whether any further moneys will be made available in the near future for the purpose referred to.

page 210

QUESTION

TELEPHONECHARGES

Mr PRICE:

asked the PostmasterGeneral, upon notice -

  1. Is it a fact ‘that the Municipal Councils ofUnley, Kensington and Norwood, situated within the Division of Boothby, have carried and forwarded resolutions asking the Government to reduce telephone charges?
  2. Has the Government had time to give serious consideration to the question of telephone charges; if so, what is the decision?
Mr FENTON:
Postmaster-General · MARIBYRNONG, VICTORIA · UAP

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

  1. Yes.
  2. The matter has received very careful consideration, but, in view of the grave state of the national finances, it would be quite impracticable to make any reduction in telephone charges at this juncture.

page 210

QUESTION

REPARATIONS CONFERENCE

Mr CASEY:
CORIO, VICTORIA

asked the Minister for External Affairs, upon notice -

Is he in a position to give the House any information regarding the proposed reparations conference?

Mr LATHAM:
UAP

– The Advisory Committee provided for in the Hague Agreements submitted its report at the end of December. Generally, it supported the view that Germany would be unable to resume reparations payments at the end of the so-called Hoover Moratorium (June next), urged the necessity for adapting reparations and war debts to meet the needs of the world economic crisis, and recommended governments to take the necessary measures without delay. It was found impossible to carry out the first proposal to hold a conference last month, and it has now been decided that a conference shall meet in June next. The object of the conference will be to agree on a lasting settlement of the questions raised inthe report of the Basle Experts, and on the measures necessary to solve the other economic and financial difficulties which are responsible for the present world crisis. This decision has been reached by the several governments in the hope that it will ease the international situation.

page 210

NECESSITOUS BONDHOLDERS

Mr LYONS:
UAP

– On the 18th February, the honorable member for Angas (Mr. Gabb) asked whether a time limit had been imposed within which applications by necessitous bondholders for the redemption of their securities should be made. I have now to say that, when issuing the original instructions in connexion with the scheme for relief of cases of hardship under the conversion scheme, it was decided that all applications should be lodged not later than the 31st March, 1932. These instructions, however, including the time limit referred to, are now under review with the object of liberalizing the whole scheme.

page 210

QUESTION

DUMPING OF WIRE AND NAILS

Mr GULLETT:
UAP

– On the 19th February, the honorable member for Balaclava (Mr. White) asked the following questions, upon notice: -

  1. Is it a fact that a New South Wales wiremaking combine, which is protected to the exclusion of imported wire, is “ dumping “ barbed wire and nails into Victoria and Tasmania at prices less than the combine charges Victorian manufacturers for their wire, because the Victorian manufacturers will not give up their New South Wales and Queensland markets ?
  2. If on investigation this is proved, will the Government consider the removal or reduction of theduty on wire, so that Victorian manufacturers of barbed wire and nails may not be coerced?

I am now able to furnish the honorable member with the following information : -

Preliminary inquiries show that very keen price competition at present exists, and the facts will bo more fully investigated.

page 210

QUESTION

GRANTS AND SUBSIDIES

Mr LYONS:
UAP

– On the 19th February, the honorable member for Dalley (Mr. Rosevear) asked the following question, upon notice: -

What amount has been paid to each of the States of the Commonwealth, respectively, in the form of special grants and subsidies by the Commonwealth for each financial year from 1914 to 1931 inclusive?

The desired information is shown in the following statement;

page 212

CONGRATULATION OF MR. SPEAKER

Mr SPEAKER:

– In acknowledging the congratulations offered to me last Wednesday on my election as Speaker of this House, I omitted to mention the name of my immediate predecessor in this office.

I thank the honorable member for Hindmarsh (Mr. Makin) for his kindly references, and assure him that my omission to do so on Wednesday last was entirely accidental.

page 212

RETURNOF WRIT

Mr SPEAKER:

– I have received from the Military Secretary to the Governor-General a copy of the original writ issued for the election of a member to serve for the electoral division of the Northern Territory, and from the certificate of endorsement upon it, notifying the telegraphed result of the election,it appears that Harold George Nelson has been elected in pursuance of the original writ.

page 212

PAPERS

The following papers were presented : -

International Labour Organization of the League of Nations - Fifteenth Conference, held at Geneva, May-June,1931 -

Reports of the Australian Delegates.

Draft Convention concerning the Hours of Work in Coal-mines. Arbitration (Public Service) Act - Determinations by the Arbitrator, &c. -

No. 31 of 1931 - Amalgamated Postal Workers Union of Australia.

No. 32 of 1931 - Common Rule re Accidents.

No. 33 of 1931 - Commonwealth Public Service Clerical Association.

No. 34 of 1931 - Commonwealth Public Service Artisans Association.

Customs Act and Commerce (Trade Descriptions) Act - Regulations amended - Statutory Rules 1932, No. 12.

Defence Act - Regulations amended - Statutory Rules 1932, Nos. 11, 15, 19.

Export Guarantee Act - Return showing assistance granted to 31st December, 1931.

Land Tax Assessment Act - Applications for relief from taxation during the year 1931.

Seat of Government Acceptance Act and Seat of Government (Administration) Act - Ordinances of 1932 -

No. 3 - City of Canberra Arms.

No. 4 - Canberra University College.

Transport Workers Act - Regulations amended - Statutory Rules 1932, Nos. 1, 2.

page 212

GOVERNMENT BUSINESS

Motion (by Mr. Lyons) agreed to -

That, unless otherwise ordered, Government business shall, on each day of sitting, have precedence of all other business, except on that Thursday on which under the provisions of Standing Order No. 241, the question is put, “ That Mr. Speaker do now leave the chair “. On such Thursday general business shall have precedence of Government business until 9 o’clock p.m.

page 212

FINANCIAL AGREEMENT ENFORCEMENT BILL

Second Reading

Debate resumed from the 19th February (vide page 155), on motion by Mr. Lyons -

That the bill be now read a second time.

Mr SCULLIN:
Yarra

.- This bill, I am sure, will evoke a considerable amount of interest in Australia. While it may have been drafted for a specific purpose, I consider that it will have more far-reaching effects than its sponsors anticipate. Broadly, the bill may be divided into two parts, the first purports to remove doubts as to the liability of the Commonwealth to meet an obligation under the Financial Agreement when a State defaults, and the second to provide drastic means to recover from a defaulting State an amount paid by the Commonwealth Government under the agreement. Dealing with the first part, I contend that there is no need for legislation to do what this measure purports to do. It is said that the object is to remove a doubt as to the liability of the Commonwealthwhen a State defaults; but any doubt that exists to-day in the minds of bondholders in any part of the world has been created by the present Government’s action in delaying to pay the interest due by New South Wales when the Government of that State made default. The Commonwealth Government, in effect, joined the Government of New South Wales in default for a period of three weeks, and paid the interest due only when public opinion became too strong for it to go any further on the lines it originally intended to follow.

Under the permanent provisions of the Financial Agreement, it is laid down that the Commonwealth will take over the public debts of the States. If the

Commonwealth Government doe3’ that, it surely accepts liability for those debts. “The agreement then contains these words -

And will in respect of the debts so taken over assume as between the Commonwealth and the States the liabilities of the States to bondholders.

If the words “ assume as between the Commonwealth and the States “ are held legally not to mean that the Commonwealth. Government is directly responsible to the bondholders, or, in other words, that the bondholders must sue the States and not the Commonwealth, that does not relieve the Commonwealth of its liability. The Commonwealth Government under the agreement must assume liability for the debts of, not only a defaulting State, but of each of the States. There was a default last March when my Government was in office, and we accepted responsibility in the matter. “We were fortified by the opinions of our own Crown Law authorities, and of outside counsel as well - of one in. Melbourne and another in Sydney. That opinion is on. the files in the Attorney-General’s Department as a guide to the present Government. Our reading of the agreement, supported by the opinion of counsel, was that the Commonwealth Government was liable for the debts of a defaulting State, and we did not hesitate to pay the interest owing by New South’ “Wales, and to pay it on the due date. As I have said, the first doubt on this question, since the Financial Agreement was made, has been raised by the present Government. “What was the first announcement of the Prime Minister with respect to the financial position of the New South “Wales Government? It was not that the Commonwealth Government could not pay the interest due. He did not assure the bondholders overseas that they would be paid, but he said that the Commonwealth Government would be trustees for the bondholders, and would take action against the State to recover the money owing, and would pay it to the bondholders as it was recovered. As day after day went by, discussion took place as to how long it would take to obtain the interest owing, and as to whether the Commonwealth Government could impound certain loan money in order to have the liability of New South “Wales discharged quickly; but all the discussion went to suggest that the Commonwealth Government was but a trustee, and that it would collect the money from the defaulting State, and pay it over to the bondholders. But public opinion, and particularly the opinion of the press that supports the present Government, was rather strong, and after an outcry, the Government decided, three weeks after the due date, and before any money had been collected from the defaulting State, to meet the interest payments due by New South “Wales. A number of excuses have been given for the delay, one being that this was done to bring it home to the people that there had been default by the Government of New South “Wales. To whom did it “bring it home?” Not to the people of New South Wales or of Australia, but to the bondholders in Great Britain.. “What care overseas investors for the internal political troubles of this country ? “What they are concerned about is that the interest on their bonds, which are guaranteed by the Commonwealth Government, is paid on the due date.

A serious 1 blow was struck at the prestige of the Commonwealth when the present Government defaulted, temporarily it is true, but still it defaulted in regard to payment which was not made on the due date. The final excuse given in this House last week for this default was that the Government had received only one day’s notice of the intention of the New South “Wales Government to default. The facts as related by the Prime Minister (Mr. Lyons) in his statement show that, on the 24th March, the Premier of New’ South “Wales (Mr. Lang) announced that, unless he received £500,000 from the Loan Council, he would be unable to pay the interest due by New South “Wales. That interest was not due until the 1st April, therefore I do not know why it is stressed, that this Government received notice only the previous evening. The notification to the present Government was received on the 2Sth January, and the due date was the 1st February, four days later. “When the default occurred last year, the Premier of New South “Wales notified my Government on the 24th March, and the interest was due on the 1st April, eight days later.

The present Government had this advantage, that my Government had had to blaze a new trail. We had no precedent to guide us ; but this Government had the benefit of our inquiries and of the opinions that we had received from counsel. We had created a precedent, and four days’ notice should have been sufficient in their case. The Commonwealth Bani Board was sitting at the time, and immediate arrangements could have been made to raise the necessary money. Even assuming that four days’ notice was not sufficient, or that eight days was insufficient, why was the payment delayed for three weeks? That question has not been answered in any of the explanations or excuses offered by the Ministry^

This bill gives no greater security to the bondholders than they have at the present time. Any doubt as to the Commonwealth’s responsibilities has been raised by the delay of the Government in paying the money with respect to which the recent default was made. This legislation reallY raises doubt as to the existence of a contract under the Financial Agreement with the bondholders; but I claim that the agreement is a contract, under which the bondholders have the backing of, not only the State to whom their money was lent, but also the Commonwealth Government, which is liable for the interest payments. If legislation is passed declaring that the Commonwealth is liable for such payments, it will be tantamount to admitting to the bondholders that no such liability exists without such legislation; that they are not protected by the Financial Agreement, and that they will be protected only by legislation of this Parliament which can be amended at any time by any government. That, instead of strengthening our credit, will weaken it. It weakens confidence in- the agreement itself, and it merely covers up a blunder which the Government made in not meeting the liability when it fell due.

Mr Beasley:

– Does it cover up that blunder ?

Mr SCULLIN:

– It is an attempt to do so. It is rather amusing to find the Government of the Commonwealth bringing down legislation the purport of which is to compel itself in future to pay promptly. What need is there for it? The last Government had no legislation. We paid promptly, and all this Go’vernment needed to do was to follow the example we set it. We paid the money when it was due, and we did not proclaim the fact from the house-top. The Financial Agreement is a contract, and a protection to the bondholders. This legislation is not a contract.

Mr Nairn:

– The Financial Agreement is not a contract between the bondholders and the Commonwealth Government.

Mr SCULLIN:

– It is a contract between the Commonwealth and the States, under which the Commonwealth assumes liability to pay the money if a State does not. It is similar to the backing of a bill by one man for another. This measure, therefore, is unnecessary, and is introduced only as an afterthought, to cover up what was a blunder on the part of the Government. The Government has rectified its blunder, and has paid the money, but I do not believe in bringing down unnecessary legislation in order to cover up an administrative mistake.

The other and more serious part of this bill requires very grave consideration, and the exercise of calm judgment, free from personalities and political prejudices. In my opinion, it is too serious a matter to be mixed up with considerations of party politics. The trouble which it is now sought to correct started in Feburary, 1930, when, at the Premiers Conference, the Premier of New South Wales announced what has become known as the Lang plan, under which it wa9 proposed to refuse to pay interest on bonds held overseas. The first New South Wales payments after that announcement fell due on the 1st April last. The Premier of New South Wales was asked by my Government whether he desired us to make arrangements with the Commonwealth Bank for advances to his Government in order that he might meet the payment which was falling due, and though it was proposed that his Government” should be treated as the other State Governments, his reply was “ No “. He said that he did not intend to pay. That, of course, was a policy of straightout repudiation. The Loan Council, there- fore, decided that it would arrange for no further loans to “New South Wales. That was a logical decision, because no one can expect to continue to receive loans after he has announced his intention of not paying interest on them. That state of default on overseas interest lasted for five months, and it applied also in respect of some local interest. Altogether the New South Wales Government defaulted in respect of £6,000,000 which the Commonwealth had to pay. The Commonwealth withheld certain sums of money due from it to the “New South Wales Government, so that the net default was £4,500,000. “Notwithstanding the relief that the Government of “New South Wales had during this period, amounting by the end of the last financial year to £4,500,000 it became evident by July that it would not be able to carry on even under those conditions. The Lang plan had failed. A number of public servants walked home one pay-day without having received their money. If that did not prove the failure of the plan, I do r/ot know what could. “Not only that, but information was given to us that storekeepers throughout “New South Wales, during the very week that we were sitting in Melbourne, were about to refuse to cash the sustenance orders issued by the New South Wales Government because they had not been paid for a considerable time. A very serious position then arose. The Premier of New South Wales came to Canberra and appealed to the Commonwealth Government for help. He withdrew entirely from the position he had taken up ; he declared that he was prepared to accept responsibility for the unpaid interest, and on those conditions he was allowed to rejoin the Loan Council. Later, he rushed through Parliament a measure designed to effect certain economies in administration. He attended a meeting of the Loan Council which reviewed the position. His Government stepped into line with other governments of Australia, so far as any one could judge, and having done so, was treated in the same way as the other governments.

There was recently a considerable amount of propaganda, particularly during the last election, bearing on this mat ter, and I think that it is appropriate that I should refer to the matter during the consideration of this bill. It is relevant to our present discussion. The people were exhorted with great effect throughout Australia, and particularly in New South Wales, to “change tlie Federal Government, and you will shift the Lang Government”. The story was that the Scullin Government was weak.

Mr Archdale Parkhill:

– Hear, hear !

Mr SCULLIN:

– Perhaps the honorable member will be sorry presently for being a little premature. It was stated that the Scullin Government was weak. It had the New South Wales Government down, and should have used the opportunity to destroy that Government. I took the attitude that the position of the Commonwealth Government in relation to State Governments was to keep out politics. It is not an act of courage to destroy or kick any one when he is down; it is an act of cowardice. At that time I was presiding over the Premiers Conference, and, as acting chairman, over the Loan Council, and I thought it my duty to ignore completely political and personal considerations. We looked beyond the author of the Lang plan, and disregarded the plan which had dishonored Australia, and disrupted my party. If we had been actuated by political and personal motives we might have been more severe, because it must be admitted that no party in politics to-day has suffered more from the Lang plan and its author than my party has done. However, we looked beyond that and considered the welfare of the people of a great State. We saw that unless we provided assistance the public servants of New South Wales would go unpaid. We saw the possibility of thousands of people who had been receiving government sustenance going in want and hunger. Therefore, when the head of the New South Wales Government intimated that he was prepared to recant, to withdraw from the position he had taken up, to accept responsibility for the debts of his Government, and to continue to do so in the future, we took the right course. We admitted him to the Loan Council, and te a share of the money advanced to the States. Though there has been some criticism of my Government in that regard, our action was endorsed by the Premiers Conference, and the Loan Council. Moreover, it was fully endorsed I am glad to say by the Attorney-General, (Mr. Latham) last Friday. I wish to put on record an extract from the AttorneyGeneral’s speech in order to show how fully he approved of what my Government did. The Attorney-General said -

I believe that the Government, in the circumstances then existing, acted in the right way. It was the proper course to issue a writ, and then seek to arrange an agreement rather than continue protracted litigation between the Commonwealth and a State on such a matter. It was right for the Commonwealth Government to act, at that time at least, upon the assumption that the agreement would be carried out by New South Wales, and I have no objections to offer to what the Commonwealth Government then did.

That is a very full acknowledgment. that the Commonwealth Government at that time did the right thing, but that statement is in marked contrast to/many of the statements made during the last election, statements which helped to put the AttorneyGeneral and his party into power.

It has been said that all that Mr. Lang did when he rejoined the Loan Council, and acknowledged his indebtedness in respect to the money owing by his Government, was to sign an I.O.TJ. backed by the Commonwealth. That is true, but that is all that any other Australian Government has done. No other government has been able to do more. “We all signed I.O.U’s We all took put treasury-bills that were cashed by the Commonwealth Bank, and traded by it to the other banks. That was the only way in which governments were able to carry on in face of their recurring deficits. Why should that be held to the blame of the Commonwealth Government which agreed to admit the New South Wales Government to the scheme for financing State Governments. Under the Premiers plan all the Governments of Australia agreed to balance their budgets, and it is amusing to hear the supporters of Mr. Lang in this chamber condemning wholesale and retail the. Premiers plan which Mr. Lang, together with the other leaders of State Governments, accepted.

Mr Rosevear:

– Tell the whole story; he did not reduce wages.

Mr SCULLIN:

– He did reduce wages. He informed the Premiers Conference that the reductions of expenditure he had made by legislation, plus the 5 per cent, wages tax, represented a reduction of 20 per cent, in the earnings of men employed by the Crown in New South Wales. Having come into line with the other Governments, the Government of New South Wales received equality of financial treatment; advances were made to it for the payment of the public servants, the relief of the unemployed, and the conduct of the affairs of the State. There was no agreement then that any government should receive one penny more than was allotted to it under the Premiers plan. A definite scheme for the checking of the advances was adopted; because of the lag of revenue the advances must be larger in March than in June. The Premiers agreed that an officer of the Commonwealth Bank should check the advances to each State Government from month to month, and the officers of the Commonwealth Treasury, working in conjunction with State officials, were to see that each State received the amount due to it under the plan. That was the arrangement up to the time when my Government left office. Now we are informed that the Government of New South Wales will exceed by £3,000,000 the specified limit of expenditure, and because the Loan Council refused to make any further advances to him, Mr. Lang has defaulted. I have not heard the explanation for that extra £3,000,000; it may be that the checking officers had not complete information before them. But I repeat that my Government had not agreed to issue treasury-bills to any State more than the amount provided for in the Premiers plan; it was essential that all governments should share equitably in the money available.

It should not be necessary for me to emphasize that the party which I lead does not believe in repudiation ; we proved that in the most crucial test to which any government could be subjected. We stand for the fulfilment of the nation’s obligations and the enforcement of its rights. We have no sympathy with any government which deliberately dishonours its contractual obligations, and we are prepared to support the Commonwealth Government in taking proper steps to compel a State Government to observe the laws of honest dealing which every government enforces on its own citizens. The belief has been fostered that a government, by refusing to pay the moneys it owes, can give greater assistance to the needy. That is a fallacy. The greatest help that can be given at this period to those in need is the provision of work for the unemployed, and I see no way of substantially relieving unemployment without a considerable extension of credits. Credits cannot be extended if confidence is destroyed. Credit depends on the belief that the borrower will repay, and if everybody announced even before he borrowed that his deliberate policy was to default, who would lend? Destruction of credit would be followed immediately by the cessation of all activities of governments, banks and industries. In what way would that benefit the unemployed and needy? If the members of the Opposition were asked merely whether the Commonwealth Government should exercise its rights under the Financial Agreement to recover the amounts due to it by New South Wales, we should unhesitatingly answer in the affirmative. We would support any proper legal action by the Commonwealth Government. But the measure now before the House raises two issues - (1) is this legislation a valid exercise of the powers conferred on this Parliament under the Constitution as amended; and (2), if it is valid, is it a proper exercise of such powers? No doubt the validity of the bill will be tested. Section 105a of the Constitution enables this Parliament to enter into agreements with the State Parliaments, and gives to it power to legislate for the carrying out of such agreements. Upon that power to legislate this bill is based. I am not a lawyer, but my duties as a parliamentarian have required me for many years to study the drafting and operation of laws, and I can claim at least some knowledge of the spirit of the Constitution, and the Financial Agreement. Does any honorable member believe that when the State Governments and the people of Australia agreed that this Parliament should have power to legislate to carry out that agreement, they contemplated anything more than the carrying out of the agreement according to law? What is the law? The law of the Commonwealth is what this Parliament declares it to be, subject to the very important limitation that we can legislate only within our constitutional powers. The amended Constitution gives to this Parliament power to legislate to carry out the agreement, but Parliament cannot make a law giving to itself airy new right under the agreement. I am not a States-righter ; I have always contended that there should be one sovereign parliament in Australia. But there are seven sovereign parliaments, and their sovereignty must be recognized until the people will otherwise. The States and the electors, when giving this Parliament power to carry out the Financial Agreement, expected that it would be carried out according to accepted law, a principle of which is that no party shall be judge in his own cause. That applies to parliaments and governments as much as to individuals. But this measure violates that principle. Although drafted specifically to counter the default of one State, it will apply to all States. It lays down a definite procedure. The Commonwealth Auditor-General may certify that a certain sum is due by a State government to the Commonwealth Government. After that certificate has been gazetted application may be made by the Attorney-General to the High Court for a declaration that such sum is due and payable to the Commonwealth. The certificate of the Auditor-General shall be considered prima facie evidence in the court of the amount due. The declaration of the court shall have the force of a judgment, and shall become a charge upon all the revenues of the State concerned. Specified revenues will be those specified by resolution of this Parliament. The ordinary procedure for the recovery of a debt is to issue a writ for the amount due and abide by the judgment of the court. That was the course which my government adopted, and would have continued, had not Mr. Lang repented and accepted responsibility for the interest liability of his State. On that course the present Government also began. It issued a writ against the Government of New South Wales, and why it introduces this legislation in the meantime, I cannot say. There may be a motive that is not apparent on the surface. The Prime Minister and the Attorney-General have stated that the ordinary processes of law are too dilatory, and would result in protracted litigation ; and, apparently, the Government fears that before the court could give judgment on the writ, the State Government would collect and spend its revenue, and nothing would be left for the Commonwealth to collect. That is a short-sighted view. Do honorable members imagine that when, in accordance with the certificate of the Auditor-General that a certain amount is due and payable by a State, the High Court issues a declaration, which, in effect, garnishees the revenues of the State, the decision will not be challenged ? Not only will the amount due be questioned by the Government of New South Wales, but the constitutionality of this legislation will be challenged. Protracted argument on the constitutional issue is bound to ensue, and this will open up a wonderful opportunity for the legal fraternity. Will it take longer to get a judgment of the High Court on a writ for the recovery of money due and payable, than to get a declaration from the court on the constitutionality of this legislation and also a judgment on the amount claimed? I prophesy that the latter course will occupy twice as much time as ordinary procedure by writ.

I may be told that clause 6 overcomes my objection, because it proposes to cut right across the procedure provided in clause 5, and to ignore the court. Under it the Auditor-General may issue a certificate as to the amount of money due and payable by the State, whereupon both Houses of Parliament may by resolution approve of the certificate and specify the revenues of the State which are to be seized. The High Court will be passed by; a sovereign government may take action against another sovereign government without the intervention of that tribunal, which was created to interpret the constitutional relations of Australian governments. That can be done even if action is pending in dispute as to the amount due and payable. The creditor can go right ahead and take the revenues in payment of the debt which he says is due to him although the debtor may dis- pute it. That is an extraordinary proceeding for a creditor to take in order to recover from a debtor. We are told that while proceedings are taking place, application may be made to the court for a declaration. The proposal is first to seize the revenue of the State and then to apply to the court to decide whether the money is owing. The Attorney-General in explaining this clause said -

This is designed to meet cases of urgency in which Parliament is prepared to act without a declaration of the High Court having first been obtained. It is provided that a declaration may be obtained from the High Court while the procedure outlined is going on.

The application to the High Court rests with the Federal Attorney-General only. “ That a declaration may be obtained ‘: are the words contained in the bill, but there is nothing in it to say that such a declaration must be obtained. So that, apparently, action can be taken to seize the revenues of a State merely by obtaining a certificate from the Auditor-General and passing a motion in Parliament. Such action could continue without reference to the High Court to decide whether a particular amount was due and payable by the State.

Mr Gabb:

– The other party could take action.

Mr SCULLIN:

– Not under this bill; that is what I am stressing. The bill does not confer equal rights, because only the Federal Attorney-General can apply to the court for a declaration. I shall mention later the only action that the States can take. This legislation cuts right across the recognized principle of law that no man shall be judge and accuser in his own cause.

Mr White:

– We need extraordinary measures to meet extraordinary cases.

Mr SCULLIN:

– We need to take steps that will be successful and not lead to disaster. This proposal is: seize the revenues first, apply to the court later. There is nothing, however, in this hill giving the right to a State to go to the court to decide such a question. Can it be argued that the States intended to give to the Commonwealth, under section 105a of the Constitution, power to dig out one of the foundation stones upon which our system of society rests? I refer to the proposed overthrowing of that fundamental principle “ no man shall he the judge and accuser in his own cause.” Surely if the nation insists on the individual observing that principle, it should, itself, observe it. Surely a principle that is good enough for the individual should be good enough for the nation. The Financial Agreement is an agreement between parties - the seven sovereign governments - which are supposed to be on an equality. The method of applying and carrying out this agreement should be equitable. If the Commonwealth defaults to the States - and it could so default - no State may take the measures that are being adopted under this legislation to recover from the Commonwealth. This is, therefore, a one-sided arrangement. Only one party to the agreement can adopt this extraordinary legislation and give effect to it. Moreover, if the Commonwealth defaults to a State, and this legislation is passed, the Commonwealth can set itself up as the judge in its own cause, and can declare that it does not owe the money in dispute to the State. Surely that is wrong. The Commonwealth can specify the amount due to it, and take action to seize it from the revenues of a State without reference to the High Court. Therefore it is to be the judge as well as the accuser in this case, and if the Commonwealth defaulted to a State, it could be the judge and the defender in another case. That extraordinary position could arise. I object to this legislation as opposed to equity, and for other reasons that are more cogent at the present time. I object to it because any action against a sovereign government, which cannot be backed up by an absolute certainty, and about which there is the slightest suspicion as to its legality and its equity, is most dangerous, and must naturally arouse resentment. This section is not just.

Mr White:

– Default is not just.

Mr SCULLIN:

– Default is not just, and default on the part of New South Wales has aroused resentment; but two wrongs do not make a right. It is important that this country should correct a wrong, and I am warning this Parliament to do it in the right way so that there may be no kick back.

Mr White:

– What is the right way?

Mr SCULLIN:

– I indicated it in the action that the Labour Government took. The States have sovereign rights; that cannot be disputed. They have control of their own revenues. The High Court is the only authority that can interpret the Constitution. It has to determine the powers andrights of every government. If the Federal Parliament assumes rights or powers without reference to the High Court, or without taking a referendum to confer such powers, such action is provocative and dangerous, and gives warrant or excuse, at any rate, for resistance, that is wherein the danger lies. The AttorneyGeneral (Mr. Latham) when explaining the bill on Friday last - and I give him credit for having explained it clearly and lucidly, leaving no doubt as to its intention - spoke of the previous proceedings commenced by the Labour Government, by which we proposed to obtain judgment in the court for the amount due. He referred to a suggestion, not of the Government, but of some one else, that receivers should be appointed to receive the revenues of the State after judgment had been obtained against it. He said -

If a receiver were put into State offices under a judgment of the High Court, forcible resistance might lead to serious civil trouble.

As the Attorney-General had himself raised this serious question of civil trouble, let me point out that there is more danger of civil trouble under the provisions of this bill than there would be if proceedings were taken in the ordinary way. As I have emphasized, every Australian government has sovereign rights, and the power to exercise them. All Australian governments have undoubtedly the power to exercise their rights by force. We control one force, and the States control others. Therein lies the fundamental weakness of our Constitution and federal system generally; but that is by the way. If we assume, as the AttorneyGeneral does, that a State government may defy the judgment of the High Court obtained in a proper constitutional way, when the Commonwealth is backed up by the Constitution and every legal form, will not that State exercise resistance under this measure? Will it not have a greater excuse for exercising resistance against a measure that defies the very Constitution and the High Court of Australia? “We have no right to place that excuse in the hands of a State. There is more likelihood of the State gaining public support for its action, regrettable as it may be, when we ourselves step outside the legal atmosphere, and make a decision in Parliament as a result, perhaps, of a panic election. Let us lift this issue out of the atmosphere of politics into the calm and judicial atmosphere of the High Court. If we do that, we shall have warrant for our action, and public approval behind it, and resistance by force will be less likely, and le&s dangerous even if made. “When the Government vests itself with legal authority which is obtained properly only from the High Court, it divests itself of the moral power, if not the legal power, which it possesses to administer the affairs of this country. It’ may be said that we have to please certain people, but I am looking further ahead than the present moment, the next year, or the next two years, and disregarding altogether political considerations. We should take the broader and longer view. We have to cope with practical difficulties, besides the clanger that I have indicated. It is apparent that the money that will be specified is income taxation. One has only to look at the facts to ascertain that. Why this hurry to obtain a judgment so that action may be taken? What is the revenue that will be collected during the next two or three months?

Mr Fenton:

– The revenue from the State lottery may be specified.

Mr SCULLIN:

– We shall draw a blank if that is done. One of the major sources of income of a State is income taxation. All the machinery for the collection of ordinary income taxation, apart from that derived from more than one State, is controlled by the States, except in Western Australia. We have no machinery, outside of our head office, for the collection of income taxation, and it is quite possible that a State Treasurer may disband the whole staff of his taxation office, and hold up indefinitely the collection of income taxation. This would be a drastic step to take, and I think that there are people in this country sufficiently irrespon sible to take it; but we should not provide excuses for them to do it. We should have behind us the full backing of a judicial decision of the highest tribunal in the land in any action that is taken. A resolution of Parliament declaring how much is owing is not enough. Therein lies the fundamental weakness of the position which the Government has taken in this bill.

When the Income Tax Collection Bill, which was known as the Amalgamation Bill, was before this Parliament in 1923, I urged the Government of the day to reverse the scheme of it. I contended that the federal authority should be the sole collector of income tax for both the States and the Commonwealth. Honorable members can now see the wisdom of that contention. If a State authority told ite taxpayers not to pay, is there anything in this proposed legislation to compel them to pay? If there is, I cannot find it. If a State says “ Do not pay, we will not prosecute “ the taxpayers of New South Wales would enjoy a taxation holiday. I do not know what may happen, but such things as are sought to be done by means of this hill cannot be done successfully in a hurry, nor can they he done successfully without proper legal authority.

Proper legal steps can be taken to obtain any money that is owing, and it is surely desirable that they should be taken even if the money remains uncollected for a month or two. It would surely be much better to suffer a short delay than to create chaos and possibly disorder within a State. Drastic legislation of this kind will, no doubt, be met by drastic action. The bill seeks to authorize the seizing of State revenue without legal action. I can find nothing in the measure which provides machinery for the State concerned to approach the court in regard to any of the matters in dispute. The right to approach the court is given only to the Commonwealth. I am not a lawyer ; but I presume that a State could apply to the court for an injunction to restrain the Commonwealth from taking certain action. What a field for lawyers such an action would open up ! If that can be done what will happen regarding the so-called short cuts and quickness of action by avoiding the issue of writs ? An application for such an injunction would undoubtedly lead to a fierce legal battle. What would happen, in the meanwhile, to the unfortunate taxpayers of New South Wales ? To whom would they have to pay their taxes? I could not advise them on that question.

It is provided in the bill that payments to the Commonwealth will relieve the State taxpayers of their liability to the State. But surely such a provision could apply only after the Commonwealth Government had established its legal rights to the taxes! That could only be done by submitting the whole matter to the court for judgment. Until that action is taken how could this legislation relieve the taxpayers of New South Wales from their liability to pay taxes to the State Government? Until a judgment is obtained from the court that a certain amount is due and payable, the provisions of this bill must remain ineffective; otherwise the unfortunate taxpayers of New South Wales would have no protection whatever.

Mr Gabb:

– It would be legal for the Commonwealth to collect the money until the High Court decided otherwise.

Mr SCULLIN:

– Not at all. That is where I join issue with the honorable member.

Mr Gabb:

– The legislation of this Parliament overrides State legislation dealing with similar matters.

Mr SCULLIN:

– That is so; but the mere fact that this Parliament has said that a State owes the Commonwealth a certain amount of money does not mean that the State legally owes it. Such a question would have to be determined by the court. We cannot surely expect to be the judges in our own cause.

Mr Paterson:

– But suppose that a State admits a debt?

Mr SCULLIN:

– The State of New South Wales admits nothing.

Mr Lane:

– It has admitted the debt and then repudiated it.

Mr SCULLIN:

– I assure the honorable member that I am under no illusion as to the people with whom we are dealing.

Mr E J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– The right honorable gentleman is supporting their repudiation.

Mr SCULLIN:

– The honorable member for Wentworth (Mr. E. J. Harrison) has not listened to my remarks or he would not have made such an unfair observation, though I have no doubt that my criticism of this bill will be subjected to quite a lot of similarly unfair comment. I am looking at this subject in a broad way.

Mr Archdale Parkhill:

– They are very fortunate in their apologist.

Mr SCULLIN:

– Any one would be unfortunate who had to rely upon the honorable member for Warringah (Mr. Archdale Parkhill) as an apologist. Any man who can say that one word that I have used to-day is an apology for the repudiation and default of the New South Wales Government does not understand the English language. I have been emphatic again and again in resisting repudiation. We shall support this Government in every proper legal procedure it takes to make the New South Wales Government pay its debts ; but we will not support draconian legislation of this description, which is a departure from all sound principles of justice. This measure, if it became law, would provide an excuse for those who do not want to observe the decencies of civilized life, and would also be used to justify a government adopting illegal measures of resistance.

Are we to affirm the principle that the Commonwealth is to be a dictator in the interpretation of a compact or agreement which has been entered into between equals? It is proposed that first of all our own officer shall declare how much a State owes, and that then this Parliament shall judge the matter and enforce action. Who would not resent procedure of that kind? Who will say that that would be a fair conduct of action as between creditor and debtor? Our officers may be thoroughly capable, but this Parliament is not the proper body to decide these matters. Would we be willing to allow an officer of a State to say how much our indebtedness to it might be?

Mr Lane:

– We should certainly have the right to make up our own accounts.

Mr SCULLIN:

– That is quite true; but they should be laid before the proper tribunal to be proved. Does the honorable member deny that? A man may be able to make up his accounts, but if there is dispute about them, he must surely submit them to some independent tribunal.

Mr Lane:

– Honest people pay their accounts without dispute.

Mr SCULLIN:

– Unfortunately, not all men are honest. We are trying to find a means of forcing a State to pay money which it owes, and is not willing to pay, and we should, in such a case, take every care to fortify ourselves with proper procedure. There should be nothing suspicious about our procedure. [Leave to continue given.) I thank honorable members for their consideration. I am trying to deal with this matter calmly and dispassionately, but I resent the suggestion that I am an apologist for repudiationists. I would walk out of public life rather than support repudiation by anybody or any government.

Mr Rosevear:

– The right honorable gentleman practises it.

Mr SCULLIN:

– That is not true. I shall deal, in committee, with some other aspects of this measure, and particularly with the proposals that the certificate of the Auditor-General shall be prima facie evidence that the money is due and payable and unpaid, and that the onus of proof on the subject shall rest with the State concerned. I can find nothing in the Financial Agreement to warrant such a provision. That, however, is a small thing in comparison with the other great principles with which I have dealt’.

Some of the provisions .of .the bill strike across principles of law which were in operation at the time the agreement was made, and particularly across the principle that, “he who affirms must prove “. Is a political party a proper body to determine the questions which must arise if this bill is passed ? Should not all such questions be submitted for decision to a court of law? A parliament dominated by a political party is not an appropriate body to determine such matters.

I do not find myself in any disagreement with honorable members opposite as to the desirableness of the object in view in the introduction of this bill; but I am iu serious disagreement with them as to the methods which should be adopted. Moneys which arc due should be paid ; but the methods proposed in this bill for ensuring payment are entirely wrong. Neither a political party nor a parliament is a proper authority to deal with the matters which inevitably arise when accounts between governments are not met; such subjects should be submitted to a court for determination. The framers of our Constitution laid it down that the High Court, and not any political party, should deal with such matters. The High Court, sitting in a non-political atmosphere, would deal with these problems with a judicial mind, and all the interested parties should be heard before it.

I hold the view very strongly that no action should be taken to confiscate the revenues of another government until the High Court has determined that a debt has not been satisfied. The action which, the Government is proposing to take in this case is, in my opinion, a reversal of the proper procedure. The correct procedure was taken by my Government. When default occurred on the first occasion, writs were issued, proceedings were commenced in the High Court, and further financial accommodation was refused to the defaulting Government by the banks. This meant that the New South Wales Government could not’ carry on beyond July. In that way, pressure was legitimately brought to bear upon it. It transpires that what was true of July last will be true of next July. But there would be no need for delay to occur on this occasion. Preliminary work has been done by the Attorney-General’s Department which would make possible more rapid action this year. It will be remembered that last year a conference of Premiers was summoned to consider ways and means of meeting the situation, and in those circumstances legal action could hardly be pursued against the government concerned; but this year no Premiers Conference will intervene. Steps could therefore be taken immediately to obtain a judgment of the court. If judicial action of this kind were taken, all suspicion that party politics was a factor in the case would be allayed.

A judgment of the court should, of course, be obeyed by a State. We should not assume that any government would defy the court”. If it did, its defiance would justify the taking of other steps. I suggest that every legal step should he taken to obtain payment. There should be proof of the debt, the obtaining of judgment, and the enforcement of judgment. These steps should be taken in the proper legal manner through the court and not by devious means through Parliament. The advice that I am offering to the Government on this subject will be found, before very long, to be sound. Expediency and short cuts in matters of this kind are extremely dangerous, particularly in the case of action against a sovereign government which has power to enforce its will just as this Government has. Perhaps the election propaganda indulged in by the Ministerial party demands something more spectacular than the ordinary processes of the courts. This measure is spectacular enough for anybody, but it is also charged with elements of disaster. The Prime Minister said “We must be resolute”. I have no objection to his being resolute, but I suggest that this bill savours more of recklessness than of courage. Recklessness is not courage, nor is caution cowardice, and when drastic action is to be taken against a State, there should be no doubt as to its legality, before the action is taken. Action should even then be taken through the court, and not behind the back door of the court. There should be no suspicion of political influence or differential treatment as between the States. Any legislation intended to carry out the agreement should accord equal rights to all the parties to it. In my opinion, this bill does not conform with those principles. The Opposition cannot agree to the method by which the Government seeks legislative sanction to employ its power against New South Wales; but it will support sound and legitimate action taken in the way that I have indicated, through judicial channels, to carry out the financial agreement entered into between the Commonwealth and the State Governments.

Mr.NAIRN (Perth) [4.37].- The speech of the Leader of the Opposition amounts, in reality, to a plea to do nothing. He was not able to suggest to the House any effective way of dealing with the Government of New South Wales and its default. When that Government first defaulted, I raised objection to any payments being made by the rest of Australia on behalf of New South Wales. I am of the opinion that if the Prime Minister of the day had adopted a stiffer attitude to the Premier of New South Wales, and had refused to meet any of the payments with respect to which default had been made, we should have had a much less difficult situation than that which now confronts us. It seems to me that the only way of dealing with an outlaw, such as Mr. Lang undoubtedly is, is to starve him out, and there is no reason to be careful with regard to the means employed, provided they are effective. The means adopted by the late Government consisted in issuing a writ against the New South Wales Government. The Government dallied on for some months, but it did not go so far as to issue a statement of its claim. In fact, the writ was utterly ineffective, and the Government achieved nothing in the direction of compelling the Government of New South Wales to stand up to its obligations. One of the complaints of the Leader of the Opposition (Mr. Scullin) to-day, is against the proposal to attach the revenues of New South Wales, and he draws pictures of distress which might very well have come from Mr. Lang. I point out, however, that if a writ were issued and a judgment were obtained against New South Wales it could be enforced only by attaching the revenues of that State.

Mr Scullin:

– Why do you doubt a judgment being obtained?

Mr NAIRN:

– I have no doubt that some day a judgment would be obtained, but I have also some knowledge of the law’s delays, and I am aware of the experience of the late Prime Minister in regard to his own writ. His progress was slower than that of the pilgrim. I have no confidence in the processes of the courts as a means of dealing with the Premier of New South Wales.

Mr Beasley:

– Has the honorable member no confidence in the courts?

Mr NAIRN:

– I do not say that, but I realize the extreme difficulty of enforcing any judgment when it is obtained. This difficulty was well pointed out by the

Leader of the Opposition. It is useless to condemn Mr. Lang, and yet take no effective steps to make him pay. If we do nothing, as suggestedby the Leader of the Opposition-

Mr Scullin:

– Why does not the honorable member be fair? I said that I would take action through the proper judicial channels.

Mr NAIRN:

– How long that would take I do not know ; but, in the meantime, the rest of Australia would be paying the debts of New South Wales. It would be the duty of any Government to do the best it could to enforce the honouring of the obligations of New South Wales.

I am not here to predict whether this measure will be successful or otherwise; but it affords some prospect of success, while the policy of the Leader of the Opposition furnishes none. Therefore, I intend to support the general policy of the bill. One feature, however, calls for some consideration. I refer to the proposal that the Commonwealth should voluntarily take over the debts of the States.

Mr James:

Mr. James interjecting,

Mr SPEAKER (Hon G H Mackay:

– The honorable member for Perth (Mr. Nairn) is entitled to make his speech in his own way. Those honorable members who disagree with his views will, in their turn, have every opportunity of expressing their opinions. I warn members that these frequent interruptions will not be tolerated.

Mr NAIRN:

– Under the Financial Agreement the Commonwealth is not liable to bondholders outside Australia who lent their money prior to that agreement. In the framing of the agreement, the Commonwealth was careful to limit its contract as between the Commonwealth and the States, and the overseas bondholders being no party to the contract between the Commonwealth and the States, are not able to enforce that contract. A further precautionary measure taken by the Commonwealth is the provision that the undertaking to be responsible for the debts of the States is subject to the performance by the States of the parts of the agreement which they have consented to observe. Therefore, the Commonwealth cannot, in any case, be liable for the debts of New South

Wales, unless and until that State performs its part of the agreement. At the present time, the Commonwealth, undoubtedly, has no responsibility to the bondholders overseas who lent their money to the States prior to the financial agreement. The amount lent by those bondholders is about £159,000,000, and it is proposed that the Commonwealth should voluntarily accept the liability to those bondholders. This is set out in specific terms in clause 4, which provides that the Commonwealth will pay them both the interest and the principal when due, and that they may bring a suit against the Commonwealth in the High Court for the payment of the interest, and the principal when due. The seriousness of that position may well be realized in November next, when, if this bill is passed, the Commonwealth will be under a direct obligation to bondholders overseas to pay £13,000,000 due by the State of New South Wales. At the present time, I do not know whether the Government has in view the means of providing that money; but it seems to me that extreme difficulty may be experienced in raising the amount, at any rate, at a reasonable interest rate. To-day, Commonwealth 5 per cents. can bo bought on the London market at £80. I cannot imagine persons overseas lending at 5 per cent., or less, when they can get a bigger rate of interest from the same debtors simply by purchasing existing bonds in the open market. On the present quotations the Commonwealth would have to pay, as an equivalent, over 6 per cent. in. order to convert the overseas loans. I hope that nobody, without the express authority of this Parliament, will make further borrowings for any purpose at increased interest rates.

The object of the Commonwealth voluntarily undertaking responsibility for State debts, amounting, in all, to nearly £400,000,000, and particularly for the £159,000,000 borrowed by the defaulting State of New South Wales, has not, so far as I have heard, been explained to this House. I take it that the Assistant Treasurer is going to London with the object of making arrangements with regard to this indebtedness, and I believe that he is the most competent man in Australia to assist in putting this country on an improved financial basis, and, particularly in obtaining a reduction of the amount of interest which we owe abroad. It is desirable that the representative of this country should go properly accredited, but it is possible, if we undertake this responsibility, that we may be paying too high a price for the credentials our representative will carry. In the first place, there may be great difficulty in his meeting our overseas creditors in order to make - a deal with them to obtain a reduction of interest rates.

Mr Beasley:

– But he has denied that he has any intention of doing that.

Mr NAIRN:

– I am not informed as to just what his policy is, but I believe that the people of Australia are looking forward to obtaining some reduction in the amount of interest which is payable overseas.

Mr Beasley:

– They are not merely looking for it; they are demanding it.

Mr NAIRN:

– “ Demand “ is hardly the word which a debtor ought to use. An honest debtor does not use the word “ demand,” because that implies that he has a right to a reduction of interest rates. It would be better if we can carry the business through honestly, and on the same grounds upon which we obtained a reduction of interest on our internal debts, namely, that the country cannot pay the full amount of interest. I believe that Australia will not be able to pay the full amount of interest due to its overseas bondholders. I have observed that all the other debtor countries of the world are asking for, and most of them have obtained, substantial remissions in respect of their indebtedness. Even Great Britain has had to obtain a moratorium. For these reasons Australia is entitled to raise the question of obtaining some reduction also. I hope that that will be one of the main objects of the Acting Treasurer (Mr. Bruce) when he is abroad. His task will be rendered difficult, however, if we pledge the Commonwealth to pay nearly £400,000,000 representing the external public indebtedness of Australia, and particularly if the Commonwealth pledges itself in regard to that portion of the debt owing by New South Wales. When one goes bargaining it is always a good thing to have something left to bargain with. At the pre sent time, if the Acting Treasurer were to go to London, he, would be representing a Commonwealth which had no legal responsibility for the debts of the States, but after this bill- is passed the Commonwealth will be at the mercy of the creditors abroad. There is no need to put Australia into that position. In the present circumstances the overseas bondholders must realize that they have very little to look for in regard to that portion of the Australian debt owed by New South Wales. I am not referring now to the £80,000,000 which we owe to the British Government. I have no doubt that we shall get a fair deal in respect to that. The majority of our debts, however, are owing to private persons and corporations. Indeed, the great bulk of our debts are due to trustees. I am referring now, of course, to pre-agreement debts. The various States of the Commonwealth used purposely to go on the market at intervals of a few months in order to get as much as possible of the trust moneys which were constantly becoming available for investment. Trustees are in an exceptional position. A trustee has a duty to the persons for whom he holds funds, and he is not in a position to give away anything even if he so desires. Many trustees hold money for infants, and nobody, not even a court, is authorized to give away anything to the detriment of an infant. In Australia, when we reduced the interest rate on our internal indebtedness, we protected trustees by means of statutes passed by the various State Parliaments’ against any legal consequences of their action in agreeing to accept a reduction of interest. No such legislation, however, exists abroad, and as I see the position, trustees as a class will be unable to accept any reduction of interest. If this responsibility is accepted in the form proposed by the bill, trustees holding Australian Government bonds will demand, not only the interest, but also the principal. It will be their duty to do so. If they do not they will be liable under the law for a breach of duty. This means that the Commonwealth Government is liable to be sued in its own courts for payment of the sum of £13,000,000 which is shortly falling due. _ Should that position arise, Mr. Lang will be in a position in which he will be able to sneer at the discomfiture of the Commonwealth Government.

I cannot see any occasion for accepting this responsibility. It is a great error to undertake liabilities which at present do not lie on the Commonwealth. If we wish to be generous to the bondholders abroad, we can be generous at any time. We can adopt the policy which the Prime Minister has formulated, and pay as long as we can, but if the Commonwealth enters into an obligation with the bondholders abroad, which it may not be able to fulfil when the time comes, it will commit a grave error of judgment.

Moreover, if the Commonwealth accepts this responsibility, the new arrangement will probably work out in this way: New South Wales contains about two-fifths of the population of Australia. If that State does not pay its debts, or its proportion of the Commonwealth’s liabilities as a whole, the people representing the remaining three-fifths of the population will have to meet the whole of the debt, including that owing by New South Wales. It has been predicted that the Government of New South Wales will be defeated at the next opportunity. That may happen, but there is no guarantee that it will take place. I have no great admiration for the public opinion of Sydney.

Mr Beasley:

– The New South Wales Government will not be defeated at the next election.

Mr NAIRN:

– The honorable member and his friends represent a very large element of public opinion in New South Wales - the criminal public opinion of Sydney.

Mr Beasley:

– I take strong exception to that remark, Mr. Speaker. The honorable member stated that the people I represent in this Parliament are criminals. I ask that he make an unqualified withdrawal of that statement.

The ACTING SPEAKER (Mr. Bell). - I did not understand the honorable member to say that the honorable member for West Sydney or his friends were criminals. I understood that he was referring to a political .party in New South Wales.

Mr NAIRN:

– I withdraw the expression “ criminal “. What I meant was that there is in New South Wales, and particularly in Sydney, a very large body of public opinion which takes delight in repudiating its debts. I see that body of opinion expressed in this House by the honorable member for West Sydney (Mr. Beasley). “Criminal” is perhaps a hard word, but these people are certainly defaulters. They pride themselves on their dishonesty. The Government of New South Wales, which holds these opinions, will, in the normal course of events, be in power for another eighteen months, and there is no saying that, at the next elections, they may not be putback into power. If that occurs, the people of Australia outside New South Wales will be left to carry the whole of the burden of Commonwealth liability.

This acceptance by the Commonwealth of increased responsibility goes right outside the terms of the Financial Agreement. It is, as a matter of fact, entirely inconsistent with the agreement, which provides that the Commonwealth shall pay the interest due to bondholders on condition that the States responsible first find the money owing. The Financial Agreement provides that the Commonwealth shall arrange for the conversion of debts, subject to the States carrying out their part of the agreement. It is entirely beyond the terms of the Financial Agreement for the Commonwealth to accept responsibility for nearly £400,000,000 of Australian debt, in regard to which, at the present time, it has no responsibility at all. Though I may be accused of being a State-righter in this respect, it appears to me that the inequality of the arrangement arises from the fact that the liability is being thrown upon the people of Australia outside New South Wales. As regards the general policy of the bill, I commend the Government for its determination to take some action, at any rate, to compel the State of New South Wales to stand up to its obligations.

Dr EARLE PAGE:
Cowper

.- I desire to say at the outset that I stand absolutely behind the principles of this measure. This bill, as I understand it, has been framed for the purpose of stating unequivocally that the policy of Australia is to honour its obligations, whether those obligations were incurred directly by the Commonwealth as guarantor for any of the States, or by the States as debtors. In my opinion, it declares that honesty is the policy of Australia. To have that declared in a special measure surely should not have been necessary. It should have been as a matter of course in this great Commonwealth of ours. Unfortunately, however, this policy does require stating. Every one must deplore that fact, but every one must recognize that the need has arisen.

Although I stand behind the principles of the bill, I believe that those principles are so important, so vital, and so farreaching, that they should not be all included in one measure. The bill should be divided into two parts, and I propose to offer some constructive suggestions in this regard which, I trust, the Government will be able to accept. If accepted they will have the effect, I believe, of enabling the measure to withstand the legal attacks certain to be made upon it, and also may succeed in earning for it the goodwill of the people of the various States. The bill should be in two parts, the first dealing with the Commonwealth liability under the Financial Agreement in respect to the interest owing on State debts; and the second dealing with the laws which are necessary under the terms of the constitutional amendment passed in 1928, to make New South Wales meet its obligations in full. The amendment of the Constitution upon which this legislation is based was carried in New South Wales by a majority of three and a half to one ; therefore the attitude of the people in that State with regard to the principle of this measure is not in doubt.

The bill is in two portions. The first, portion proposes -to establish beyond dispute the ultimate liability of the Commonwealth for the interest, and, even the principal, of State debt3; the second portion is to provide machinery which will enable the Commonwealth to enforce the carrying out of an agreement made with a State by that State. These two matters are entirely distinct. The former affects vitally Australia’s reputation and credit overseas. As the AttorneyGeneral (Mr. Latham) stated, there is no doubt about the Commonwealth liability for the Australian debts of

State governments; the only liability that was in dispute was that relating to State bonds issued overseas. To remove that uncertainty, the first portion included in part II. of the bill is essential to maintain our credit abroad. The second portion, included in parts III., IV. and V. of the bill, however, relates to a matter of purely domestic concern - the financial relations between the Governments of the Commonwealth and the States. If the two matters are separated, and a bill is introduced to establish definitely that the credit of the Commonwealth is behind the debts of the States, regardless of any defective wording of the Financial Agreement, it will have the support of every party. If possible, it should be agreed to unanimously. The best course, if it were practicable, would be a unanimous assent to that principle by the parties to the Financial Agreement, which would have the same effect as a constitutional amendment. If such a declaration of . agreement between all the parties to the Financial Agreement be not possible immediately, we should seek it in the near future. I believe that if the controversial clauses of the bill now before the House were removed, we could immediately get unanimous acceptance of the principle of the ultimate liability of the Commonwealth for all State debt3 in this Parliament. That would assure the outside world that whatever government might be in power in this Parliament that liability would not be disputed. The responsibility of the Commonwealth to the bondholders overseas was never doubted by investors until the Commonwealth Government failed to pay the interest due by the State of New South Wales a few weeks ago. In future, that liability is not likely to be questioned by the investors or be the subject of litigation. But the measures to be taken to enforce Commonwealth rights against a State government will undoubtedly be the subject of legal dispute. Already almost every leading barrister in Sydney is preparing to participate in the constitutional argument to which this bill will give rise. Litigation over a measure affecting the credit of Australia overseas should be avoided. The point may be taken, and possibly upheld by the High Court, that a Commonwealth measure deflecting the revenue of a State into Federal coffers, especially if it taxes individuals,’ is a taxing measure, and by section 55 of the Constitution, such a measure is invalid if it deals with more than one specific matter. That possibility is an additional reason why the two parts of the bill should be separated. Undoubtedly the Commonwealth was thought to be ultimately liable for all the debts of the States. According to the AttorneyGeneral, the actual meaning of the Financial Agreement is that the Commonwealth is responsible for all State debts other than certain overseas obligations, and even these were generally understood to be included in the guarantee by the Commonwealth. That is proved by the comments published in the financial newspapers of London and New York when the Financial Agreement Bill was passed in 1929, and by the published statements of the leaders of the Government at that time. Having regard to the fact that these overseas debts will, upon maturity, be converted into Commonwealth bonds in accordance with the debt conversion legislation, Ave should take the earliest possible opportunity to place the ultimate Commonwealth liability beyond dispute. If that be done, particularly by the unanimous vote of this Parliament, the task of the Assistant Treasurer (Mr. Bruce) in London, in seeking the consolidation of our overseas debt and the diminution of the overseas interest burden, will be made easier.

In regard to the disciplinary provisions of the bill, I support the Government on principle. Australia is a federation, and when this Parliament makes laws in pursuance of its constitutional powers, and particularly in pursuance of extended powers accepted within recent years by substantial majorities of the electors in each State, every real patriot should support a government that sets out to ensure that the federal law shall run throughout Australia. I again remind the House that the New South “Wales electors, by a majority of three and a half to one, endorsed the constitutional amendment relating to the Financial Agreement. It is the duty of all of us to support a federal law which will remove from the national credit and honour the stain put upon them by the action of the New South Wales Government. But although the majority of honorable members will agree with the principle involved in these provisions, the methods proposed to be employed by the Government for the enforcement of the rights of the Commonwealth are likely to be the subject of protracted and bitter struggle. With the result of this fight will be bound up the whole future of the Australian federation. I, and the members of my party, are prepared to fight to the finish to uphold the federal principle. It is now ingrained in the public and social life of our country, and its continuance is essential for the advancement of Australia, and will materially promote our progress and prosperity. But unless we are prepared to fight to the last ditch, employing every means at our disposal, the federation may be destroyed. I hope, therefore, that the Government will recognize the need for stripping this legislation of all extraneous verbiage, irrelevant principles, and methods that will not make a general appeal, so that the vital issue may be’ put fairly and squarely before the people. Nothing must be allowed to interfere with the clear presentation of this issue as a fight,- not between the Commonwealth and individual taxpayers, as may be unscrupulously suggested, but between honesty and dishonesty on the part of government’s. The principle at stake is not the putting of food into the mouths of starving people instead of paying our just clues to our creditors, although in my opinion honest dealings by governments with their creditors will speed up the development of Austrafia, create more employment, and provide more food for the needy. In every newspaper throughout the Commonwealth, propaganda should be conducted to inculcate that fact into the minds of the people. This continent, with an area of 3,000,000 square miles is inhabited by only 6,500,000 people, and how can we develop it without the assistance of capital from abroad?

Dr Maloney:

– We have borrowed too much already.

Dr EARLE PAGE:

– I hope that when we again seek capital from abroad it will be borrowed, not solely for public works, but principally for the development of private enterprise. We shall, however, get no accommodation from the overseas lender unless all the governments of Australia maintain the highest standards of honour and integrity. We shall not get private enterprise or anybody else to bring money into this country unless we maintain these standards. The machinery of the bill should be kept as bare as possible. “No superfluous words should be inserted in it. Lawyers know probably better than any one else how legal fights hinge upon superfluous words, the use of which has, in some instances, invalidated the whole of an act. We should keep out of the bill any suggestion of the infliction of injustice or hardship upon individual taxpayers, and make sure that there is no possibility of its provisions being misconstrued, because, in vulgar parlance, this is going to be a skin game. That is quite evident from what took place yesterday in the “New South Wales Parliament. We must frame this legislation in such a way as to prevent any distortion of its meaning. We must also avoid any’ suggestion of infringing State rights. One of the chief virtues of the Financial Agreement was that it sought to perpetuate federation in Australia. It was an arrangement which secured to the various States for 58 years a certain and definite portion of increasing federal, revenues. It consolidated the position of the States which had not the opportunities of larger States to obtain public moneys. Its object was to assist and maintain the federal principle, and we should ensure that, under this legislation, nothing is done which may ultimately force unification. We must also be careful not to include in the bill any provisions which may tend to invalidate it. We need to succeed both in our legal and political fight, and if we lose a legal battle on this issue we shall find that those who are opposed to this bill will hail that event as a victory. That undoubtedly would be a bad thing for us from a political point of view, and, ultimately, from the point of view of the whole of the people. We shall have great difficulty in getting the taxpayers interested in this particular fight, because, whether the Commonwealth or “New South Wales wins, there will be no immediate reduction of taxation. The ordinary taxpayer is not very keen on a fight to decide whether the Federal Government or the State Government is to collect his taxation.

Mr Blakeley:

– The taxpayer may have to pay taxation to the two Governments.

Dr EARLE PAGE:

– We must provide against that. This fight should be between governments, and not directed or misdirected into one between governments and individuals. In framing this legislation we must endeavour to protect the rights of the States, and I should like to incorporate in it some provision which would ensure to the States some say in its actual operation. For instance, before the Commonwealth Government takes action under this legislation, it should be supported by a majority decision of the Loan Council. That would bring the States into the matter, and place the issue on a proper basis. It would prevent any attempt to make the fight appear as one between, say, the right honorable member for Flinders (Mr. Bruce) and the rest of Australia. Such a thing would be harmful to the future of Australia, although it might have some temporary political advantage. We must confine this fight to one between the honest Governments of Australia, whether Federal or State, and any dishonest government. The bill should contain also a provision setting out the action to be taken against any dishonest Federal Government. Ultimately all securities of the various States will become Commonwealth securities, and in that event any interest moneys paid by the States to the Commonwealth may be put to an improper use. There should, therefore, be placed in this bill some provision to secure the States against the action of a dishonest Federal Government, and, if that is done, the public will understand the real issue. It cannot be distorted into a fight between the Commonwealth and the States, but will be seen for what it is, a fight between honest and dishonest governments. When discussing this bill we must decide whether it will do the work for which it is destined without inflicting injustice upon individuals or even States. We must make certain that this legislation contains no provision which would make it dangerous in the hands of wreckers. We have to make it an instrument as fool-proof as possible. A dangerous government might think twice before introducing dangerous legislation, but it would not hesitate to use for its own purposes legislation already in existence. We must also ask ourselves whether this bill properly protects State rights. When we examine its procedure we find that although there is in it a provision which enables -the Commonwealth to attach all the revenues of the various States should they default up to the point of meeting the defaulting State’s liabilities, yet from ‘ the speech of the Attorney-General (Mr. Latham) it is quite obvious that that is not the Government’s intention. The Attorney-General said, and the Leader of the Opposition (Mr. Scullin) quoted his exact words, that any action on the part of the Commonwealth to attach the revenues of a State by putting in a receiver might easily lead to civil conflict. Therefore, another method has been adopted which seems to attach the amount due by the individual taxpayer by making certain that he pays it, not to the State, but to the Federal Government. That method presents great practical difficulties. For instance, if the State taxation officers refuse to collect taxation, we shall have to create new taxation machinery. The State may cancel its legislation levying income taxation, or suspend its collection, and make it impossible for the intention of this Parliament to be carried out. I suggest that instead of worrying about this civil conflict, which, if it must ultimately arise will arise just as quickly from attacking the individual and the Government, we should take the bold course and attach the revenues of a State Government at the central point of payment. This will save any irritation directly to individual taxpayers, and will not put subordinate officials in an invidious or difficult position. Provision is made in the bill to enable us to do that in regard to moneys held by banks on behalf of a State. The revenue that, in my opinion, we should specifically attach - and this should appeal to the people of Australia as a just attachment - is that derived from railways. Railway revenue is essential revenue derived from the operation of assets for which State debts have been incurred. In the early days of federation Sir George Turner, in submitting his proposals for the consolidation and taking over of State debts by the Commonwealth, always accompanied them with a proposal for the handing over to the Commonwealth of State railway revenues up to the point necessary to reimburse interest. He obviously, was not so trustful of the other States as we have been in respect of our financial agreements. Railway receipts are definite receipts from a large public undertaking and are paid into various banking institutions.

Mr Lane:

– If railway receipts are to be handed over to the Commonwealth, the States may stop the operation of the railways.

Dr EARLE PAGE:

– No, because the railway services are being paid for, not merely from railway receipts, but from taxation levied by the various States.

Mr SPEAKER (Hon Or H Mackay:
LILLEY, QUEENSLAND

– I understand that it is the desire of honorable members to suspend the sitting for the dinner adjournment a little earlier than usual. Therefore, with the concurrence of the House, I shall vacate the chair now, and resume it at 8 p.m. Sitting suspended from 5.S0 to S p.m.

Dr EARLE PAGE:

– In my opinion it would be wiser for us to attach certain specific revenues of a State than to draw individual taxpayers into the dispute. The Attorney-General suggested in his speech that the attachment of certain general revenues and the appointment of a receiver would be more likely to bring about forcible resistance than the method of dealing with individual taxpayers in the way proposed in the bill. I do not think so. The irritation and confusion of individual taxpayers is more likely to lead to personal resentment. In another part of his speech the honorable gentleman suggests that the mere passage of this legislation would be sufficient to intimidate the New South Wales Government, and to prevent it from carrying out its present intentions. I disagree entirely with that view. In my opinion, the fight between the two governments will be a fight to the finish. I do not think it will conclude actually until New South Wales in its present form disappears as aunit of the federation, and in its place there appear a number of smaller federal units consisting of portions of the State, like the Riverina and New England, the people of which are intent upon paying their just dues.

I shall deal in committee with several points of procedure. It appears to me that no discrimination has been made in the penalties applicable to taxpayers who through ignorance or mistake pay their taxes to the State authority instead of to the federal authority when that is made imperative. There should be discriminatory treatment. Those who deliberately defy the federal law should be penalized, while those who disobey the law through ignorance or mistake should be treated with consideration. I raised this point when the Prime Minister was making his secondreading speech on the bill, and he replied that ignorance of the law did not excuse disobedience of it. To-day, however, taxpayers are surrounded with so many taxation difficulties and confusion that we owe it to them not to add unnecessarily to their burden in that respect. The load of taxes on the individual taxpayers or the difficulties and responsibilities on subordinate officials should not be made more onerous than it need be. It would be better to make this a straightout fight between governments, if there must be a fight.

I am sure that the lay members of the House would like to hear an explanation from honorable members of the legal profession of the effect of certain provisions in this bill upon sections 65 and 66 of the Judiciary Act. These sections read as follow: -

  1. No execution or attachment, or process in the nature thereof, shall be issued against the property or revenues of the Commonwealth or a State in any such suit; but when any judgment is given against the Commonwealth or a State, the Registrar shall give to the party in whose favour the judgment is given a certificate in the form of the schedule to this act, or to a like effect.
  2. On receipt of the certificate of a judgment against the Commonwealth or a State, the Treasurer of the Commonwealth or of the State as the case may be shall satisfy the judgment out of moneys legally available.

I take it that section 66 means that in order to satisfy the claims of a government, moneys must be made available by a proper appropriation, and section 65 indicates that all that a government can secure from the High Court is a certificate for payment of the amount without distraint. Will the passage of this bill practically repeal the sections of the Judiciary Act which I have mentioned in regard to moneys due and payable between governments?

Mr Holman:

– Those sections are expanded, at any rate.

Dp. EARLE PAGE. - It would be helpful to the lay members of the House if the position were made clear by honorable members who are associated with the legal profession. We ought not to have any greater conflicts in our laws than are unavoidable.

Another matter with which I am concerned relates to the attaching of bank balances in accordance with the provisions of clause 15 of the bill. Any one who has had experience knows that a considerable portion of the government balances held by banks consist of trust funds or special accounts such as contractors’ deposits, which actually belong to private individuals. Some provision should be inserted in the bill to safeguard balances of that kind. The owners of such moneys have not injured the Commonwealth, and they should not be held liable for defaults by a State. While I am willing to agree to the attachment of revenue proper, I desire to protect the interests of individuals. If it cannot be shown clearly that the interests of these persons are already protected, I hope that the Government will cause an amendment to be drafted which will meet the circumstances I have outlined.

Mr Paterson:

– Would not such moneys be covered by the term “funds prescribed “ ?

Dr EARLE PAGE:

– I do not know. I should like the position clarified in that respect.

Provision should also be made in the bill to safeguard the position of the States. As I observed earlier in my speech, the Financial Agreement was designed substantially to perpetuate the federation and not to force the adoption of unification. Clauses 5 and 6 of the bill provide that the machinery of the measure shall operate upon the passing of resolutions through both Houses of the Parliament, and I suggest that any such action should be preceded by a recommendation from the Loan Council, which consists of representatives of the Commonwealth and all the States. If it were necessary to obtain a majority vote of the council in order to initiate proceedings, we should feel that all the States had some power and some say in the whole proceedings. Something more should be done to permit the States, through the Loan Council, to force a dishonest federal government to do its duty in respect of the payment of interest. Now that the whole of the State bonds will automatically become federal bonds, some provision should be made to ensure that the Commonwealth Government does not default. If that should happen our credit would depreciate and our ability to raise money would be impaired, or the whole procedure for borrowing might be completely altered, and the position of the State finances correspondingly damaged. If my proposal in this respect were adopted, it would go far to assuage the fears of the States that the machinery of the bill might be used unfairly against them. We know that this machinery is being provided for a special purpose, but it is possible that it moy be used at some distant date by some other government for the purpose of destroying the financial integrity of the States. I have no proposals to make as to the manner in which my suggestions could be incorporated in the bill, but I am sure that it is well within the capacity of the parliamentary draftsmen to meet the circumstances that I have outlined.

Mr GREGORY:

– Why not limit the life of the bill?

Dr EARLE PAGE:

– That would have some effect; but we should go further, and formulate some provisions for incorporation in the bill to ensure its equitable operation and to provide efficient and satisfactory safeguards.

In my opinion the fight that has been entered upon by the Commonwealth Government in the interests of honest, as against dishonest, government will be protracted. It will not be quickly ended either in the law courts or elsewhere.

I believe that it will continue until the next great step in our constitutional reform is taken, the step which was outlined many years ago by B. R. Wise and Sir Henry Parkes. That step involves an extension of real local governing powers by the subdivision of the bigger States, and especially the subdivision of New South Wales. At present the position of the Commonwealth is much more seriously menaced if a big State like New South Wales defaults, than if a small. State like Tasmania defaulted. The total debt of Tasmania is only between £20,000,000- and £30,000,000. The interest on that sum is not large when compared with the £13,000,000 or £14,000,000 which has to be provided annually for interest in connexion with the indebtedness of New South Wales; If New South Wales were subdivided into three or four areas the total amount of interest payable by any one part would not relatively be very great, and the Commonwealth, in the case of any default, would be able to meet the situation. The problem is very difficult with a State which contains two-fifths of our population and two-fifths of our resources, aud is responsible for a very large proportion of our debt.

I am quite satisfied that the only real cure for our present ills is the subdivision of the big States. If that policy were adopted, the Loan Council would be so composed that solid support would be assured for a sound policy of finance, because such a number of large rural areas which are essentially stable and honest, would be represented. Until the large States are subdivided in this way, there will always be a certain instability about the procedure of the Loan Council ; but when the council consists of representatives of a large number of units, Australia will be in a much better position in the eyes of the world, and we shall he assured of stable national political equilibrium and sound policies from an investor’s point of view.

Australia is at the parting of the ways. Mr. Lang’s policy of default and repudiation is a retrograde one ; it means the repudiation of all contracts. What he acclaims as the new revolution can only throw us back to barbarism. Such a policy may tickle the ears of the multitude for a short period; hut the destruction of the sanctity of contracts would undoubtedly be a retrograde step, and would ultimately result in the destruction of civilization as we know it. The policy of the Commonwealth Government, which is to honour contracts, is an honest one, and I feel sure that, although Australia is now in difficulties, if all the people put their backs to the wall, this country will emerge from its present trials as it has overcome similar troubles in the past. By carrying out the joint policy on which the United Australia party and the United Country party were elected to this House the cost of living, of government and of production can be reduced, progress and prosperity can be restored, and employment can be increased. Only by stimulating employment can we escape from our present difficulties. Default can be of no real assistance to us. We must show that we have the will to work out our salvation and the whole of the weight of the nation must be put into the effort, if this great country is to fulfil its destiny.

Mr BEASLEY:
West Sydney

– When the Prime Minister (Mr. Lyons) brought in this bill, he said that he regretted the circumstances which necessitated its introduction. Just what he meant by that statement each honorable member must decide for himself. The honorable gentleman may have had in mind the particular circumstances of New South Wales, or he may have been thinking of the conditions obtaining in Australia generally, and throughout the world. If he was speaking of the latter, I agree with him, but if he had particularly in mind the circumstances of New South Wales, I totally disagree with him. If the Government had come down with certain measures having for their object the relief of unemployment, which is the subject to which our attention should mainly be directed at the present time, it might have been commended. AH who have spoken agree that when the unemployment problem is solved, the rest of the difficulties of Australia will soon disappear. But the policy of the Government is not to submit measures designed to relieve unemployment, nor has it proposed anything’ to relieve the taxpayers of Australia of the awful burdens now imposed upon them. During the recent election campaign the opponents of Labour said a great deal about the necessity for reducing the burden of taxation, and since this Parliament met, numerous questions have been asked, particularly by members opposite, suggesting the desirability of reducing the sales tax, the tax on tea, and other such taxes, and in each case the answer given has been that, owing to the present financial position, no hope of relief in that direction can be held out. Members of the Government did not make statements of that kind prior to the election. Being unable to meet these demands it must now be obvious to the Government that the difficulty facing Australia and all other countries is that the monetary system has definitely failed to meet the requirements of the time.

It must be admitted that the taxation policy which the Government intends to pursue in this measure will increase rather than relieve the difficulties of New South Wales. History has shown that even in very ancient times there were strikes and opposition against taxation, and in many instances those strikes were successful. If the Government takes action on the lines laid down under the present bill, and it is thought in certain quarters in New South Wale3 that the people of this country can carry the burden thus imposed, the Government of New South Wales will make provision to enable the taxpayers of that State to meet the exactions imposed on them. If the commercial interests of New South Wales believe that the country can carry the interest burden now being imposed on it, steps will be taken by the Premier of New South Wales to enable them to meet the position, and I have no doubt that he will be as good as his word.

It is necessary to look at the present economic position in the light of the conditions, not only in Australia, but in all other countries. It cannot be denied that, no matter in what direction we turn, a deplorable state, of affairs is to be noted. In the United States of America there are 8,000,000 persons unemployed; similar conditions are to be found in Great Britain, Germany, Italy, Prance, and other countries throughout the world. From the discussion in this chamber one might imagine that nothing of importance was occurring beyond the confines of this building, and that all this Parliament need be concerned about is the framing of certain legislation to extract from the public something which it does not possess. Yet every honorable member realizes that the circumstances of the people are deplorable, and that this problem has to be faced, and this bill considered, in the light of the conditions obtaining in the constituencies.

I believe that our present difficulties originated soon after the outbreak of the war in 1914. Had that war not intervened, the present monetary system, no doubt would, in the ordinary course of events, have eventually reached its present tottering condition ; but the war accentuated its weaknesses. That war cost this country, in round figures, over £744,000,000, and the burden of taxation imposed on our people to meet the interest on that huge sum is more than this country can bear. I believe that no honorable member will contend that under the present circumstances Australia can discharge that indebtedness, and, therefore, it would be hypocritical to suggest that this country can pay off that debt. In order to meet the interest payments, apart altogether from the principal, money has to be obtained either by direct or indirect taxation. Those honorable members who claim to represent the primary producing interests should remember that the position is such that this section of the community is unable to carry even the burdens already imposed on them, and they did not refuse to accept assistance in New South Wales in regard to those burdens. The moratorium laws of that State were helpful in giving the primary producers relief from some of their burdens. Just as that principle has been applied to the individual, so it should he applied to the State. When times were normal, and governments enjoyed surpluses, the workers received no more than the basic wage. Tribunals were set up for the purpose of determining what was a fair standard of living, but the workers were not able to accumulate sufficient wealth to tide them over periods of stress such as that now being experienced. When, however, government deficits occur, instead of surpluses, the proposals of our opponents are that the workers should make the sacrifice. The first thought seems to run in the direction of cutting wages, lowering the working conditions, or lengthening the hours of employment, although in times of plenty the workers were confined to the standards provided by the courts. Now the decisions of the courts are thrown aside, as they were under the Premiers plan, because wages have been reduced in an arbitrary fashion by this and other Parliaments.

I have heard much said in this House about the honouring of solemn obligations. As a matter of fact, the Prime Minister has used that expression no less than half a dozen times. He spoke of the solemn obligations of governments ; but I take the view that governments have obligations in more than one direction. It may be that they have responsibilities in regard to public debts, but they also have even greater obligations in regard to the welfare of the people as a whole. In the struggle among the various nations for the purpose of tiding, over the present world crisis, governments must consider the best interests of the people within their own borders, and all means that can be devised to meet the exceptional circumstances are being em-, ployed. I have listened to the discussion in this House on the matter of governmental obligations, but I have heard no member speak of the obligations of the Government to the people of this country. The whole thought of honorable members opposite seems to have been directed only to the subject of gold. They have shown single-track minds: they would make the masses responsible for debts which the members of my party contend are unjust. As I proceed I shall show that, when the debts were first contracted, the rates of interest on government bonds were from 3 per cent, to 4 per cent., while they are now from 5£ te 6 per cent. The bonds are not now in the hands of the original investors, but have passed into the possession of banking interests, trusts, and combines, who manipulate the money markets in all parts of the world. Perhaps when the bonds were originally taken up they were purchased by persons who had made savings, but the conditions in Great Britain in the last few years have shown that those who had estates of that character have been forced to get rid of them at any price offering. In the flotation of companies the same course has been followed; the large financial interests have taken measures to squeeze out the small investors, and thus provide the means of reaping the whole of .the profits themselves.

Mr HUTCHIN:
DENISON, TASMANIA · UAP

– Rubbish !

Mr SPEAKER:

– That expression is unparliamentary, and the honorable member must withdraw it.

Mr HUTCHIN:
DENISON, TASMANIA · UAP

– I withdraw it.

Mr BEASLEY:

– There are solemn obligations in more directions than one, and those of governments to the people are particularly solemn. We may centre our thoughts along one,line, as has been done in this Parliament, but if the people who are responsible for the existence of parliaments reach the stage at which they can no longer maintain themselves and their dependants, they will have no scruples in regard the course they should take to rid themselves of governments and any other obstacles that stand in the way of their getting the necessaries of life. Therefore our chief consideration during this crisis must be to meet our obligations to the people in regard to food, clothing and shelter. * There are other obligations as well. During the early part of the war many gentlemen in this country took the stump advocating that Australia should send troops abroad, and even conscript them for that purpose. They, on behalf of the people of Australia, entered into a very solemn obligation to the men who went away. They told the soldiers that Australia was to be made a land fit for heroes to live in; that if the war were fought to a successful conclusion their future would be provided for if they returned, and if they did not, their widows or dependants would be liberally maintained by the State. It was promised that in paying the pensions to widows, dependants, or returned soldiers suffering from disabilities, the Government would hot take into consideration any other income which those persons might be earning. But what is the position to-day? All income received by pensioners is taken into consideration in assessing the pension paid, and if their earnings exceed £78 a year, their pensions are cut.

Mr Lane:

– The honorable member would have starved them also.

Mr BEASLEY:

– The business which the honorable member followed prior to coming to this House resulted in starving many householders. He rapped on the back doors of many houses, and followed practices in his line of business which, to say the least of it, were not respectable. There can be no doubt that the obligations entered into in regard to the soldiers have been repudiated. This bill has a bearing upon external debts of all kinds, and it is, therefore, relevant for me to point out that between 1915 and 1931, Australia has paid £219,800,000 in interest on her war debts. Last year the Commonwealth paid interest amounting to 16s. 7d. a head of population on debts raised for public works, but the interest payment on war debts amounted to no lees than £2 6s. 4d. a head. In other words, interest payments on money raised for developmental and constructive purposes amounted to only 16s. 7d. a head while that paid on the war debt, incurred for purposes of destruction and the taking of human life, was £2 6s. 4d. a head. Last year our war debts amounted to £277,780,226, on which we are paying an average rate of interest of £5 8s. 5d. It is no wonder that there is a general clamour for a reduction of interest rates. Recently a statement was published to the effect that steps would be taken by the Acting Treasurer (Mr. Bruce) when he went to London to have the interest on our overseas indebtedness reduced, but Mr. Bruce hurriedly had that rumour denied through the press. I can justly claim, I think, that every section of the community in Australia is to-day demanding that overseas interest rates shall be reduced to a level which this country can bear. There is nothing unusual iri such a demand. In practically all debtor countries to-day steps are being taken to reduce the burden of their debts. I could even quote from the Sydney Sun of the 22nd August of last year an editorial opinion actually advocating the repudiation of war debts altogether. It was pointed out in this article that it was humanly impossible for this and other countries to continue paying interest. Mr. Lloyd George, upon his return from a health trip to Colombo, stated that there was no hope of economic recovery for the world so long as war debts and reparation obligations remained as they were, and that the sooner the nations arrived at a decision to cancel such debts and obligations the better it would be for the world. Despite such assertions by leading authorities in other parts of the world, we have not, up to the present, had any one occupying a public position in this country to advocate similar action in regard to our own debts. As a matter of fact, the Premier of New South Wales (Mr. Lang) did not go so far as some of these overseas authorities propose. He stated that, in his opinion, the same concessions should be granted to Australia in regard to the debt which she owed in Britain as the United States of America had conceded to Great Britain. There is a large and influential body of opinion in many countries which demands that not only war debts, but reparations as well, should be entirely cancelled. Yet, many of us in this country go on pretending that we can meet our obligations in full. We know in our hearts that we cannot do so, but we adopt the hypocritical attitude that we can, and those who stand up and state the position fairly are howled down by the enemy press and by political opponents.

It may be interesting to state how some of our overseas indebtedness was incurred. In regard to our war and repatriation, expenses, we raised £101,000,000 overseas, £273,000,000 in Australia, and spent from revenue £370,000,000. .The spending of this £370,000,000 from revenue seriously affected the finances of Australia; yet it was the spending of this money on providing employment, and in settling returned soldiers on farms and in homes, which has induced them to accept the present position up to now. The whole of the money spent for these purposes may well be classed as war expenditure. Some honorable members are not prepared to accept that view of the situation, but I do not propose to debate the matter further, because time will prove that I am right. Including the expenditure which I have mentioned, our total war expenditure now stands at £744,000,000. It is obvious that something will have to be done, and those who are prepared to take the side of justice and common sense cannot but aline themselves with New South Wales in the fight she is putting up to-day.

It is now fourteen years since the war concluded, and besides having to pay interest on the debts for which the war was responsible, we have a further heavy impost to meet in the form of exchange. Last year exchange payments cost us £1,140,000. This exchange rate is something which the stock exchange gamblers are able to manipulate to their own advantage, and by this means they are imposing upon the people an annual extra burden of over £1,000,000. On the sum of £900,000 due for interest in connexion with the New South Wales debt the exchange amounts to practically £300,000, which is really £300,000 for nothing. The right honorable member for Cowper (Dr. Earle Page) spoke about a fight in which the Commonwealth was engaged. I can assure him and other honorable members that it will undoubtedly be a fight. The definite determination has been arrived at by those who stand for the people to do whatever is necessary to defend the people from those who would oppress them. Honorable members opposite may laugh, but when the struggle takes place the laugh will be on the other side of their faces. They did not laugh when the results of the East Sydney byelection were made known, and it was seen that the electors there had reversed the previous decision, the candidate of our party receiving over 19,000 votes. I am certain that when the struggle really takes place the electors will line up behind those who advocate the only just and sensible way of dealing with our indebtedness, and in saying that I am not forgetting the electors of the waterside electorate represented by the Minister for Home Affairs (Mr. Parkhill), who, I notice, is sneering at my remarks.

There has been a great deal of talk about repudiation, but we have heard too little of that great act of dishonorable repudiation committed by several of the banks in 1893, when they repudiated their obligations to their depositors. Yet those same institutions are now regarded as “ Simon Pures and no one is permitted to doubt their honesty and integrity. That great leader, Charles Hardy, of the Riverina, was one of the first to take advantage of the Lang scheme when he repudiated his personal obligations, and went through the Bankruptcy Court, his creditors receiving only 6s. 8d. in the £1. The honorable member for Martin (Mr. Holman) the other day gave evidence in the Bankruptcy Court in the case of Mr. Hugh Mcintosh. Apparently no stigma of repudiation attaches to men who fail to meet their obligations, and seek the shelter of the Bankruptcy Court, but no one must dare to suggest that a government should attempt to seek relief from its obligations. The great Charles Hardy, the Cromwell of the Riverina, scooted up and down the country talking about what he would do if the people trusted him with power; how he would see that governments met their just liabilities. His supporters in the House speak in the same strain. Let them examine their own circumstances, and acknowledge their own sins, instead of throwing stones at their neighbours. If we made inquiry into the history of many of those who support the party opposite, we should probably find that most of them had “ double-crossed “ their clients, which is more than can be said of those who stand with me in this fight, and have been charged with dishonesty.

We believe that’ governments have their main obligation to those who need sustenance, and to those out of work, which is greater than any obligation to their creditors whose debts have not been arrived at on a just basis. They have an obligation to the sick and infirm, and a duty to provide the social services necessary for the well-being of the men, women and children under their charge. We say that it is humanly impossible for New South Wales to meet its debts overseas at the present time. We say that time must be given to that State to recover from the economic depression, and the representatives of other States who have raised objections had better look to the affairs of their own States. I hope that we shall all live to see the time, not many months hence, when the governments of most of the other States will be in the same position in regard to their external debts as New South Wales is in to-day. The honorable member for Perth (Mr. Nairn) spoke of the position of Western Australia. That State has done very well at the hands of the taxpayers of New South Wales. The smaller States have for years been receiving subsidies from the Commonwealth, the greater part of the money coming from New South Wales, and those States should be the last to sneer at what is happening in New South Wales today. They have lived on the backs of the New South Wales taxpayers for years. They have clamoured about their disabilities, and have cried to royal commissions and to the Public Accounts Committee about what federation has done for them. As a matter of fact a statement issued by the Commonwealth Treasury showed that New South Wales has paid into federal funds 14s. 4d. more than it has received ; the balance has been paid to States whose representatives sneer at New South Wales. The honorable member for Perth spoke of starving Mr. Lang into submission, but if honorable members representing New South Wales electorates are bent on destroying New South Wales and its people, I am satisfied as to what the verdict will be when the electors are given an opportunity to decide whether they shall continue to represent them in this Parliament. The people of Western Australia are continually complaining about federation and clamouring for secession, and when I visited Tasmania only a few weeks ago I found in Hobart also a strong feeling in favour of that State’s withdrawal from the Commonwealth.

Mr PROWSE:
FORREST, WESTERN AUSTRALIA

– Hear, hear!

Mr BEASLEY:

– If that is the honorable member’s attitude, how can he reconcile it with the strongly federal speech delivered by his leader this afternoon? Those States which are now clamouring for secession may have the support of some of the larger States, which will not tolerate imposition such as this bill proposes. I doubt, however, if it will be found to be constitutional.

Mr Thompson:

– New South Wales is right against the honorable member, and he knows it.

Mr BEASLEY:

– The attitude of the honorable member and his colleagues is amusing. They propose to reduce governmental expenditure by creating new States and establishing more governments in New South Wales. By what marvellous process an increase of parliaments and governments is to reduce expenditure I do not understand. However, the prospect of such a subdivision is so remote as not to be worthy of consideration.

A very interesting situation is revealed in connexion with this bill. Although it was introduced by the Prime Minister (Mr. Lyons), it is fairly generally known that the author of it is the right honorable member for Flinders (Mr. Bruce), who, by the way, holds only a minor position in the Cabinet. During the general election campaign the Prime Minister stated that he had a wonderful policy to overcome the present financial crisis, but it is a remarkable fact that he could not disclose it or discuss the Financial Agreement until the right honorable member for Flinders returned from overseas. It is obvious that the Leader of the Government had to await consultation with a gentleman whom he fought almost viciously at the general election in 1929. Indeed, his entry into this House was due to his strong condemnation of the policy of waste and extravagance pursued by the right honorable member for Flinders (Mr. Bruce) and the right honorable member for Cowper (Dr. Earle Page) for seven years. Yet two years later, when confronted with financial problems of paramount importance and urgency, he had to remain silent until the return to Australia of the gentleman whose administration he had previously denounced.

I now propose to refer to the proposals submitted to the Premiers Conference by the Premier of New South Wales in February of last year. While in Hobart I asked a representative of one of the morning newspapers if he was ever called upon to write of Mr. Lang’s proposals. He replied, “ Yes, I frequently do “. I then asked him if he had ever heard them explained, and he replied “I know nothing about them “. His ignorance is very like that of some honorable members in this House who are continually sneer ing at the Premier of New South Wales. Mr. Lang’s proposals to the conference contained three points ; first, he demanded that the rate of interest on internal loans should be reduced to 3 per cent. ; secondly, that the rate of interest on the external debt be reduced to the rate granted .to Great Britain in the arrangement for the funding of its debt to the United States of America ; and, thirdly, the abandonment of the gold standard. Although those proposals were condemned in unmeasured terms, two of them have since been adopted either entirely or in part. The gold standard has been suspended. The rate of interest on the external debt has not been reduced to the extent that he proposed ; neverthless his critics have been forced by circumstances to do that which previously they had denounced as repudiation. In fact, the present Prime Minister left the Labour caucus room on one occasion because of a proposal to extend for twelve months at the existing rate of interest the currency of the £2S,000,000 loan which was maturing in December, 1930. He said that such an extension would be repudiation, but we have lived to see legislation enacted to extend the period of the whole of the internal debt for a minimum of seven years and a maximum of 30 years. Is that repudiation ? We hear much talk of honorable dealings in politics, but was it not dishonorable for the Prime Minister and others to urge people to invest in a conversion loan carrying interest at the rate of about 6 per cent., to invite the workers to set aside a portion of their savings in order to come to the help of the Treasury, and twelve months later to cause the Commonwealth to repudiate its obligations to those who responded to that appeal?

The Leader of the Opposition stated that the Premier of New South Wales had accepted the Premiers plan. If that is so, what was the reason for the hostility to Mr. Lang at the conference in Melbourne a few weeks ago? If Mr. Lang had adopted the Premiers plan, if he had done the job which he was asked to do - reduced the basic wage, lengthened the hours of labour and curtailed social services - he would still have been in favour with the other members of the conference. The other States adopted that policy, and

Tasmania and “Western Australia, despite the fact that their budgetary position was most unsatisfactory, were able to get accommodation from the Loan Council, which was refused to the Government of “New South Wales. If, as the Leader of the Opposition, has said, Mr. Lang had accepted the Premiers plan, what is the explanation of this hold-up? The facts prove that the Premiers plan was not accepted by Mr. Lang in the sense of “ cutting the tripe out of every one,” in the words of the right honorable member for Flinders (Mr. Bruce).

Mr BRUCE:
FLINDERS, VICTORIA · NAT; UAP from 1931

– Perhaps the honorable member will allow me to say that I never used such an expression, and never would.

Mr BEASLEY:

– I place the right honorable gentleman’s denial in the same category as the statement he made in 1922, when as Treasurer in the Hughes Government he stated at Castlemaine that be would follow his leader - “Where he goes, I go ; if he goes out, I go out.” The meaning for those words was that if the right honorable member for North Sydney (Mr. Hughes) was removed from the treasury bench his colleague, the right honorable member for Flinders, would accompany him. Two months later the right honorable member for North Sydney was turned out of office, and the right honorable member for Flinders took his job. Since that time the statements of the present Assistant Treasurer have cut no ice with the people.

Mr Stewart:

– Speak for yourself.

Mr BEASLEY:

– The honorable member had better confine himself to bush fires. Though honorable members on the Ministerial side may laugh and jeer, the facts must be faced. Their circumstances are different from those who are suffering distress in this crisis, and who find it no laughing matter.

I well remember the speeches made in this House regarding the Premiers plan. It was to relieve unemployment; the then Federal Treasurer (Mr. Theodore) declared that it would provide work for hundreds of thousands of men and would usher in a new era of prosperity. It has been in operation for twelve months, and conditions are worse now than they were before, particularly in those States whose governments are supposed to have adhered religiously to the financial proposals. The Government of Queeusland, for instance, is supposed to have implemented the plan in all its details. The people of that State pronounced their verdict on the plan at the recent general election, but there was no hue and cry then for tlie resignation of the Moore Government, for the Governor to demand the resignation of the Ministry, or for a petition to the King to dissolve Parliament. Yet at the last meeting of the Loan Council the right honorable member for Flinders, who was in charge of the proceedings, said to the Queensland Treasurer (Mr. Barnes) “ Your State seems to be in the most hopeless condition of all. Whatever are you going to do about it?” To which Mr. Barnes replied, “I don’t know, sir.” If we examine the position of the Commonwealth Government we are bound to ask ourselves where it would be but for the Hoover moratorium, which postponed an interest payment of £4,000,000. I suppose the non-payment of that amount is regarded as honorable, because the Government of the United States of America said, “ We know that you cannot pay ; therefore, we are prepared to postpone payment - and will not regard you as having defaulted.” The position of the British Government is somewhat similar. Under the arrangement for the payment of its war debt, it was required to remit to the United States this year £32,000,000; the adverse exchange would have increased that amount to £46,000,000. The moratorium relieved the British Government of that obligation temporarily. I do not criticize the attitude of Great Britain, but I am sorry that although the money was not paid to the United States of America it has not been available for the relief of the needy throughout the United Kingdom. Nothing has been said about Great Britain not being able to meet its interest commitments. Between 1918 and 1923 Great Britain was unable to meet its interest obligations, but in 1923, as the result of the efforts of a deputation which visited the United States of America, a funding arrangement was entered into, and the whole matter was cleaned up. Any one who dared to attack Great Britain for having repudiated her interest payments to the United States of America would of course be accused of being extraordinarily disloyal, yet that actually took place, and there was no public outcry against it.

I come now to the position in Australia. I have referred to the fact that accommodation has already been given to Western Australia and Tasmania. We learn from the report of a recent meeting of the Loan Council that the right honorable member for Flinders (Mr. Bruce) told the Premier of Western Australia that he would be given half the money asked for provided that he cut down his expenditure by an equal amount. [Leave to continue given.]

Mr Archdale Parkhill:

– The honorable member has not yet discussed the bill.

Mr SPEAKER:

– It is the duty of the Chair to decide whether an honorable member i3 discussing the bill before the House.

Mr BEASLEY:

– The Premier of Western Australia replied, “It is very well to say that we must do this and that, but who in the final run is to pay our interest bill and feed our unemployed? I shall have to consider the matter “. That reply showed clearly that within a few months the State of Western Australia would be faced with the problem that is confronting New South Wales, and most of the other States to-day. The Premier of Western Australia was informed that he could take the offer or leave it. The Premier of Tasmania asked for the small sum of £80,000, and he also was told that he could obtain half of that amount provided that he cut his expenditure accordingly. He pointed out that under the Premiers plan he had taken £350,000 out of circulation, and that if he took out another £1 a financial collapse would follow. We have also been informed that the position of Queensland is worse than that of any other State. If this bill is passed, and an opportunity presents itself to this Government to apply its provisions to a State in a similar position to that of New South Wales, it will be interesting to ascertain whether they will be applied to that State with the same rigour that it is proposed to apply them to New, South Wales. The Government of New South Wales has already declared where it stands on this issue. It is prepared to fight the Com monwealth Government to the bitter end in defence of its rights, and I shall assist that State with all the means at my disposal. The Premier of New South Wales has said -

We in New South Wales will take any step and every step to defeat it whatever the consequences may be. Mr. Bruce has shown by his projected legislation that law and the Constitution have no meaning for him. Let him remember this: That whatever steps he may take, the people of New South Wales can meet him whether his action is within the law or beyond it.

It is clear that the Government of New South Wales is determined to take any step and every step to preserve the wage conditions of its people, the family endowment for the children, the pension for the widow, and the compensation for the sick and injured. Honorable members behind the Government may sneeringly refer to the social services in that -State. Not only the right honorable member for Flinders, but also the Leader of the Opposition in New South Wales, has already declared that these services are luxuries, and should be considerably curtailed. But I am satisfied that there are sufficient numbers in the State of New South Wales to stand with us in the defence of these social services, which have been built up for many years by work and agitation on behalf of the industrial and political Labour movement of Australia. The final decision of the Premier of New South Wales has been declared. He is prepared to fight on whatever battle ground the right honorable member for Flinders chooses. This legislation is likely to be passed because the Government has the numbers behind it; but its application is quite another question. I am not prepared to give any legal interpretation as to its provisions because that is beyond my province; but as the Leader of the Opposition has said, the interpretation of this legislation will provide a feast for many members of the legal fraternity. The people are the determining factor, and they have to decide whether they will accept this proposed intrusion upon their rights. We are prepared to meet any honorable member who supports this measure in any part of New South Wales, and to put our case against his for the consideration of the people. We have already had one opportunity of doing that. We may have an earlier opportunity than Government supporters expect to discuss this issue on the platform. I am perfectly satisfied that in spite of the numbers being against us in this House, and whatever the constitutional aspect of this legislation may be, the sovereign rights of New South Wales will be maintained by the people of that State. I am prepared to defend the interests of the people against this measure of persecution, which is aimed at destroying the very social structure upon which the Labour movement has been established.

Mr BRUCE:
Assistant Treasurer · FLINDERS, VICTORIA · NAT; UAP from 1931

– This measure is of the greatest importance, because it gives effect to principles for which the people of Australia have declared. But before dealing with it I shall say a word or two in reply to the honorable member for West Sydney (Mr. Beasley), who is, I understand, a great supporter of Mr. Lang. He subscribes to what is known as the Lang plan, and is prepared to preach to the people of Australia that that plan shows the path to salvation. I suggest that if the people of this country are to be saved by the operation of that plan, we might have been told with a little more logic and less appeal to passion and prejudice, exactly what it means. The times are far too serious for us to appeal to passion; the means of existence of the people and everything that concerns them are at stake. We should, therefore, give them the facts, so that they may come to a proper determination of -the questions on which they have to pass judgment. The fair issue to be put to the people of New South Wales is whether they are desirous of repudiating the obligations that they have solemnly entered into; whether they wish it to be said to those who in all good faith trusted them, “ We do not propose to honour our obligations to you “ ; whether they are prepared to allow their State to appear as a defaulter in the eyes of the world, in order that they may enjoy conditions denied to their fellow citizens in other States because of the serious crisis through which this country is passing. I suggest that if we put the issue clearly, the people of New”* South Wales will indignantly repudiate the action of Mr.

Lang and the excuses with which he and his supporters defend it. To show the falsity of the Premier of New South Wales and his supporters, let me draw attention to what they have said of myself. Why does Mr. Lang say that I am the Leader of this Government when actually I am only an Assistant Minister? Why does he quote at great length statements which he alleges were made by me at the meeting of the Loan Council in Melbourne? Many of the statements that have been attributed to me by Mr. Lang and his supporters are false, and those that are not false are generally misrepresentations of what I said. But whatever I said at the meeting of the Loan Council was also said by the Prime Minister (Mr. Lyons) with equal, if not stronger, force. Yet we never hear from Mr. Lang of the statements of the Prime Minister at that meeting.

Mr Ward:

– The Prime Minister said what the right honorable member told him to say.

Mr BRUCE:
FLINDERS, VICTORIA · NAT; UAP from 1931

– The position is too serious for suggestions of that character. The honorable member was not present at the meeting of the Loan Council, and is repeating only what he was told happened there. Why is it that we have heard from Mr. Lang nothing of the statements of the Prime Minister at that meeting? Why is it that the press which is supporting Mr. Lang has gone to the length of producing new, wonderful, and amazing allegations regarding the sinister and over-powering influence that I am supposed to exercise upon the Government? The answer is patent. The Prime Minister (Mr. Lyons) at the last election led his side to a victory unparalleled in Australia. He came into office with a greater measure of the trust and confidence of the people than was possessed by any previous Prime Minister. Mr. Lang and his friends know, therefore, that it is useless to say that Mr. Lyons is conspiring against the people, or is scheming in the interests of the capitalists. They know that that would not be believed, and that it is not safe to attack him. Therefore they have resorted to this propaganda against mc. I am not complaining of being attacked in this way. Mr. Lang and his supporters can say what they like without causing me any particular concern. They are trying to get the public to believe that I, a perfectly innocent individual, am one of the world’s strong men, with the most abominable and vicious tendencies. They attack me in this way knowing that the people would refuse to believe any of their statements if made about -the Prime Minister. Of course, what they say is nonsense, and I do not propose to waste time in speaking of it further. The people will very soon awake to the absurdity of the whole thing.

I shall quote only one remark which the honorable member for “West Sydney (Mr. Beasley) attributed to me. He said that on some unspecified occasion, I said that I would “ cut the tripe out of the workers “.

Mr Beasley:

– I said “ out of everything “.

Mr BRUCE:
FLINDERS, VICTORIA · NAT; UAP from 1931

– Splendid ! Apparently I did not limit myself in any way! Friends and foes were to be treated alike! Now, I express myself in certain ways at certain times, but I ask any honorable member of the House who knows me, or any person outside of the House who knows me, whether I would be likely ever to use such an expression, as “cut the tripe out of everything”. If the honorable member cannot do better than that, he should remain silent.

I come now to the merits of the case put forward in behalf of Mr. Lang. It is said that Mr. Lang will not pay the avaricious and rapacious bondholders, but will retain such money as he has to provide sustenance for the people, and to ensure that the fullest benefits shall be given to the workers. A tremendous appeal is also made in behalf of the widows and orphans, and those who are otherwise stricken. The suggestion is put forward that the only alternative to depriving these people of things which we all desire them to have is to refuse to pay rapacious bondholders.

The facts are that the particular bondholders who have been selected for the repudiatory activities of Mr. Lang are those of Great Britain and New York. I know something about the British bondholders. Because of the good name, honour, and integrity of previous governments of New South “Wales, the securities of that State are trustee securities in

Great Britain. The overwhelming majority of Australian stock in Great Britain is held by small bondholders in small amounts, mostly in trust funds, because they are trust securities. These trust funds are held for the very class of people in whose behalf Mr. Lang’s appeal is said to be made - the widows, the orphans, and the helpless. It will be seen therefore that there is no merit whatever in this claim.

Another ground on which it is sought to justify the Lang policy is that the State money which ordinarily goes in the payment of interest is being paid in respect of war debts - a hideous and an abominable indebtedness which should never have been incurred. The answer to that claim of Mr. Lang is that New South Wales does not owe a single farthing in respect of war debts, the Commonwealth alone being liable for all the war debts of Australia. New South Wales borrowed the money in respect of which this interest is due for the purpose of building the great assets which have made that State what it is to-day. The money has been spent on the State roads, railways, harbour, and Other utilities which have contributed to its past prosperity. It is the. payments due in respect of the loans so used that are being repudiated.

Time will not permit me to deal at length with many things that the honorable member for West Sydney has said, but I must observe that either his protestations are not genuine or, if they are genuine, it is amazing that genuine protestations should be founded upon dishonest arguments, or argument’s which the people using them should have enough intelligence to know are dishonest.

Let me refer briefly to Mr. Lang’s position at the recent Loan Council meeting. It has been suggested that a vendetta is being relentlessly pursued against Mr. Lang, and that when he came to plead for a little help, because of the inexorable circumstances of his case, his plea was harshly rejected. It has also been suggested that Mr. Lang did his best to meet his obligations like an honest man, and that he has been refused further assistance because of vindictiveness on the part of the Commonwealth Government. The facts are very different. Mr. Lang defaulted in his payments last year, and remained in default for many months. Eventually he was so hard pressed that he attended a meeting of the Loan Council, and gave his solemn undertaking that from that time onward he would meet all his obligations for interest, and assume liability for the interest which had been paid on his behalf by the Commonwealth. He also undertook to conform to the conditions of the Premiers plan. Upon the giving of these solemn undertakings further financial assistance was granted to New South Wales. The extent of this assistance has run into millions of pounds - it has been far greater than the £500,000 for which he asked at the time. No one has been harsh with Mr. Lang. His manner of coming to the council now, after six months have elapsed, rather suggests to one’s mind that he has worked everything for his own ends. The first default of Mr. Lang amounted to £6,000,000 altogether. Of that amount £1,500,000 represented moneys due to the State by the Commonwealth which were used to meet the debts which he had repudiated. But he has had for the benefit of his Government - not for the benefit of the people of his State, for he is disgracing iris State every day - further assistance to the amount of £4,500,000. Now he comes along without any apparent contrition, and without any sort of defence, and says that he must have further assistance if he is to honour his obligations. I point out that no one forced the Premiers plan upon Mr. Lang. He voluntarily agreed to it - whether honestly or dishonestly I do not know. But having agreed to it, he came to the Loan Council in January and said that he was £3,000,000 further behind, and that he wanted £3,000,000 in addition to the £500,000 that was then required for overseas interest. In the face of his own figures, prepared by his own officials at the time the undertaking was given to the Premiers Conference, he now tells us that he is down £3,000,000. It is in such circumstances that it has been suggested that Mr. Lang has not had fair treatment, that he has been hounded down, and that every man’s hand is against him. If that is the position, all I can say is that Mr. Lang has done extraordinarily well.

Of the treasury-bills issued in Australia on the 31st January, 1932, amounting to £40,820,000, Mr. Lang has had £18,320,000, or nearly half, the Commonwealth had £8,500,000, and the other States £14,000,000. On the strength of the promises he made to the Loan Council, which he has since broken, Mr. Lang has received £S,566,000 in treasury-bills since the 1st July last. The other States and the Commonwealth have received only £11,634,000. Our short-term indebtedness in London amounts to £37,825,000, of which Mr. Lang has had £12,969,533. There has been no vendetta against this gentleman. The fact that he has evolved this system of determined repudiation of his debts and of refusal to honour his obligations, has made it essential that every possible step shall be taken against him. Mr. Lang, personally, counts for nothing at all; but the principles for which he is standing must be resisted, for they are dishonouring the whole national life of Australia.

The burden of interest of debtor countries is one of the great problems which the world is being called upon to face today. Unless we face it and solve it, no one can predict what will happen. Australia, as a debtor country, is vitally interested in the solution of the problem, particularly because the present ruling world prices of commodities are making the position of primary producing debtor countries almost intolerable. The problem will not be solved by one nation refusing to honour its obligations and meet its debts. The world’s troubles cannot be solved in that way. I believe that Australia desires to meet the situation in an honorable way by discussion, consultation, and agreement.

The honorable member for West Sydney (Mr. Beasley) was quite wrong when he said that Australia had accepted Mr. Lang’s plan for overcoming our interest burden. We have carried out in Australia recently a great conversion loan which speaks volumes for the patriotism of our people. The huge amount of £540,000,000 was converted by the voluntary action of our people at a substantially lower rate of interest than had previously prevailed. In these circumstances, it ill behoves any Australian to decry one of the greatest patriotic efforts of national self-sacrifice which the world has even seen.

While 1 apologize to honorable members for having occupied, so much time in dealing with Mr. Lang’s position, I remind them that that subject is linked with the subject-matter of the bill, for Mr. Lang’s actions have forced the Government to bring dorm the measure. Before proceeding to discuss briefly the provisions of the bill, I shall refer to several matters mentioned in the speeches delivered to-day. It has been complained that the Government did not pay the interest due by New South’ Wales on the very day it became due, and that, therefore, default occurred. I do not wish to argue at any length with the Leader of the Opposition (Mr. Scullin) about the period of time in which his Government and this Government met the circumstances which they had to face; but I suggest to him that the statement about four days which he made was not quite fair to this Government. We knew only on the Thursday at 6 p.m. that Mr. Lang intended to default, and the interest was due in London the very next day. In those circumstances, it was not possible for the warrants to be issued and the payment to be made on the due date. I remind the right honorable member that the payments made by his Government in behalf of New South Wales were not actually made on the due date, although the warrants were issued in London on that date. It is not possible for the banks to place the money in the hands of their clients on the very day that the warrants are issued. That, however, is a relatively small matter. When a man who, six months before, has undertaken to meet his obligations, gives no indication whatever until the night before certain payments are due that he does not intend to meet them, he creates an extremely difficult situation.

But even if it had been possible to pay the £500,000 in London the very next day, there still remained other factors to be considered. We have to remember that concurrently with asking for £500,000 to meet his interest payment, Mr. Lang informed the Loan Council that he would want an extra £3,000,000 to cover his deficit for the current year. In these circumstances, it was inevitable that if the Commonwealth Government had paid the £500,000 at once, the problem of finding money to meet other interest payments during the remainder of the year would recur on every day when payment became due. It was also necessary to consider what steps could be taken to recoup the Commonwealth for money so expended. It was quite obvious that the action taken by the previous Government of issuing writs and proceeding through the High Court would involve long delay, and afford little prospect of success within a reasonable time. The Leader of the Opposition brushed this aspect of the subject aside without much consideration. He also dealt very lightly with the point that there was a doubt as to the liability of the Commonwealth direct to the bondholders. The right honorable gentleman said that no man could have any real doubt about that.

Mr Scullin:

– I did not say there was doubt about the direct liability. I said that we were liable to the States under the Financial Agreement to meet any default by a State. I did not use the term “ direct “.

Mr BRUCE:
FLINDERS, VICTORIA · NAT; UAP from 1931

– If the right honorable gentleman says that we owe it to the States to meet these payments, I entirely agree with him. There is no doubt whatever that the good name of the Commonwealth was at stake. Whatever may have been the exact legal position, there is no doubt that the Commonwealth had led every One to believe that it was liable to meet these payments. We had to make certain what the position was, and place it beyond all possibility of doubt. This doubt was not first raised, as suggested by the Leader of the Opposition (Mr. Scullin), when the Government introduced this bill ; it arose when Sir Edward Mitchell published his book on the financial agreement entitled What Every Australian Ought to Know, in which he said -

It is clear, however, that as regards all the State debts taken over by the Commonwealth under clause 1 of Part III. of the first agreement “as between the Commonwealth and the States,” that language precludes the owners of those particular public debts, i.e., those borrowed up to 1st July, 1929, being able to enforce rights against the Commonwealth directly under that agreement. Their direct remedies remained against the States to whom they respectively originally lent.

The Commonwealth Government was not under direct obligation to pay the bondholders. I merely wish to make it. clear that there is another factor to be considered. On the occasion of the first default by New South Wales, the money was immediately paid, and everybody forgot the incident. The Government believed that in the interests of Australian credit it was better that the whole position should be made clear, and that was the reason for the action it took. The Commonwealth Government has now paid the money owing, but I do not think anybody has doubts as to who was the defaulter on this occasion, or how serious is the position when a State makes default.

Australian stocks to the value of millions of pounds have changed hands in the absolute belief that the Commonwealth credit was behind the indebtedness, and that the Commonwealth Government was responsible for the payment of the interest, and that matter is to be placed beyond all doubt. That will have a good effect upon Australian credit. Doubt on the subject would undermine our credit, and it is necessary that our credit should be built up as rapidly as possible, having regard to the maturing obligations that we have to meet abroad. A great deal is to be said for the suggestion of the right honorable member for Cowper (Dr. Earle Page). I imagine that the House generally agrees that it is of paramount importance that we should make it perfectly clear, in the interests of Australian credit, what our obligation is. While I give the right honorable member no undertaking as to what the Government will do in the matter, serious consideration will be given to the suggestion to separate this particular portion of the bill, and we will endeavour to obtain the unanimous support of all sections of the Parliament for it, with the object of giving to all who are interested in Australia, and are likely to seek a field for investment here, a maximum of confidence in this country, and in that way to improve our credit and the basis upon which we can raise money.

Mr James:

– What about feeding some of the hungry people ?

Mr BRUCE:
FLINDERS, VICTORIA · NAT; UAP from 1931

– There is no more certain way of feeding the hungry than by giving an opportunity to those who are out of work to find employment, and no better means of bringing happy conditions back into the lives of the people than by restoring confidence in Australia, and showing investors that this is a country to which they can safely lend their money, thereby assisting in the development of new enterprises, and opening up fresh avenues of employment.

I agree with the Leader of the Opposition that there are two aspects of this matter to consider - the establishment of the responsibility of the Commonwealth, and the legal question how is the Commonwealth to compel a defaulting State to make payments due by it. I now propose to refer to the aspect which specially concerns the people of Australia, and I agree with the Leader of the Opposition that this matter too deeply affects the national life to warrant the intrusion of party politics. We must try to realize what the Financial Agreement really involves, and what the issue is that now faces this country. The position is serious, in that already a case of default in meeting oversea interest obligations has occurred in Australia. When the Leader of the Opposition was Prime Minister, he had to provide against repudiation by a State. He was entitled, I think, to believe in the good faith of the Premier of New South Wales, when the latter gave a solemn undertaking to honour his obligations; but subsequent events must have shaken everybody’s faith in promises given by the present Premier of New South Wales.

The Financial Agreement is now a fundamental thing in the lives of the people of this country. It affects the whole of the national debt, running into over £1,000,000,000. It casts an obligation on the Commonwealth to meet that share of the debt which it has undertaken to discharge on behalf of the States, as well as its own debt, and casts on every State the obligation to meet its share of the indebtedness. We all believed, I think, that Governments could be relied upon to stand to their honorable undertakings, and although we are now disillusioned, I hope that the default by New South Wales will be an isolated case. Provision has been made to enable action to be taken, and the Government is taking the necessary steps under this measure to enforce observance of the Financial Agreement.

The bill is not a vindictive measure, and every party in the House should cooperate to devise a serviceable instrument, at the same time protecting and safeguarding all the rights of the States which are members of the federation. The Government is prepared to consider suggestions, and it desires the co-operation of honorable members, because this bill should be an instrument to ensure that obligations will be met, while at the same time there should be safeguards making tyranny impossible under it.

The Leader of the Opposition says that he is quite prepared to support the Government in any proper steps it may take to make New South “Wales pay, and is in favour of proper judicial measures to that end. I welcome that statement, and I hope that the right honorable gentleman will see his way to support this bill. He has, I think, taken a somewhat exaggerated view of what it would do. I shall therefore deal with some of his criticisms upon it. He asked why this measure had been introduced when we might have proceeded by action in the High Court. My answer is that the last Government endeavoured to proceed by High Court action; but probably no one knows better than the Leader of the Opposition that the progress made during a period of nearly five months was rather discouraging, and the hope of a speedy determination by that means is remote. An ordinary action in the High Court involves tremendous delay in the obtaining of the decision; but a judgment in the matter is essential, and it is necessary to get rapid action. The Government has started an action in the High Court, and it can proceed with it concurrently with the legislation now before the House, but experience has shown High Court action to be a very slow process. The next point taken by the Leader of the Opposition was that in any case the delay would be as great under the method the Government now proposes to adopt as in a High Court action, but I think that that is not so. The Auditor-General’s certificate is to be regarded in a High Court action as prima facie evidence of the amount owing by a defaulting State. That would relieve the Commonwealth Government of the necessity to prove the exact sum owing by a

State. The last action showed that the establishment of such a figure is an almost impossible task, and involves most serious delay. Making the AuditorGeneral’s certificate prima facie evidence would eliminate a great part of the procedure that would otherwise be necessary.

Mr Scullin:

– Is there authority under the “Financial Agreement to do that?

Mr BRUCE:
FLINDERS, VICTORIA · NAT; UAP from 1931

– There is authority under this bill. The right honorable member’s next objection is that the constitutional validity of the proposed action can be challenged, and that that would mean tremendous delay. I contend that it would not result in any considerable delay. A State can challenge the Commonwealth’s action, and the Commonwealth will put no obstacle in its way. Is it not a little startling to find the Premier of a State, not only repudiating his indebtedness, but also placing every difficulty in the way of proving that a certain sum is owing by his State, and even sending telegrams to this effect - “ Yes, I will give you information, but you must not use it in evidence against me in any proceedings.” I do not think that the enormity of the offence of such conduct has been realized. I assure anybody who supports the opinions of this gentleman that, if it is desired to challenge the constitutionality of the measure, the Commonwealth will not put any obstacles in the way. In fact, we shall do everything in our power to facilitate the matter, and to have a decision reached. Therefore, little delay should be occasioned by efforts to determine the constitutional position.

The next point made by the Leader of the Opposition (Mr. Scullin) was that the Commonwealth is proposing to constitute itself both judge and accuser. I do not know exactly what he meant by that, but I presume his idea was that the Commonwealth is constituting itself accuser by saying to the defaulting State that it owes the money; and then it constitutes itself judge by declaring, as a matter of fact, that the money is owing. That, however, is not the position at all.

Mr Scullin:

– Is that not the position under clause 6?

Mr BRUCE:
FLINDERS, VICTORIA · NAT; UAP from 1931

– No. It is not true that we are usurping the functions of the High Court. “We are not constituting ourselves judge and accuser, because we have laid it down that it is first necessary to obtain a certificate from the AuditorGeneral that the money is owing. It is not true to say that the High Court is being ousted. After we get the certificate of the Auditor-General, we proceed under clause 5 to obtain a judgment of the court. Therefore we are not usurping the official function. The final say rests with the judiciary, which must declare whether or not the money is owing. The Leader of the Opposition will probably point out that that may .be so under those sections of the bill up to clause 6, but that under clause 6 power is taken to proceed with the collection of the revenue of a defaulting State without waiting to obtain a declaration from the High Court. In reply to that I point out that the High Court can still be brought in in regard to the constitutionality of the law, the amount owing by the State, or on the motion of any taxpayer if he is prosecuted for failing to pay his taxes. In any case, the Government has no objection to an amendment being inserted in the clause that a declaration of the court must be sought within a reasonable period. That would remove any doubt which may exist in regard to the position.

The whole justification of this bill is that it is required to deal with extraordinary and abnormal circumstances. These circumstances have to do with governments. Let us consider the position of the Commonwealth Government. After all, this is the supreme law-making authority in the Commonwealth. I agree that we cannot determine in this Parliament matters which should be determined by the judiciary, but we can legislate in every direction inside the powers conveyed under the Constitution. I agree that this is a novel, and, if you like, an extreme form of legislation, but the times demanded it, and circumstances have warranted it. There has to be some remedy. I remind the Leader of the Opposition that the Auditor-General comes into this matter. He is an independent official appointed by Parliament. After a certificate has been obtained from the Auditor-General, it becomes necessary to have a resolution passed by both Houses of the Parliament endorsing the certificate, and in order to protect the judicial side of the matter in so far as is necessary, it is required under clause 5 that a declaration of the court that the amount is due and payable shall be obtained. The constitutionality of the law may be challenged at any time, and this affords protection to the taxpayer.

The Leader of the Opposition asked why the Government did not establish its debt, presumably by High Court procedure, obtain a judgment of the court for the money, and then allow the court to enforce the judgment. An examination, of the position shows that if a Premier of a State is defiant, it would be almost impossible for the court to enforce the judgment. I do not wish to pre-judge what may happen, but we have to look at the matter as reasonable men. We have heard the burning declaration of a gentleman who speaks for a particular group in New South Wales as to how they will resist. Does any one think that they will stand quietly by, after having declared that not one penny shall go to the bondholders that is needed by the widows and orphans, and see that money attached by the Commonwealth? They would fight to the last ditch, and there would be no means of enforcing the judgment of the court. [Leave to continue given.~ Therefore, the Commonwealth having, after tremendous delay, obtained judgment, it would be faced with the problem of enforcing it. I say without any hesitation that, when that point was reached, the Commonwealth would “have to do practically what is sought to be done by this bill. Some such means would have to be adopted in the face of the attitude of defiance which has been taken up by the representatives of New South Wales, who have broken their promises and repudiated their obligations. Force is out of the question in the case of the Commonwealth and a great State like New South Wales. The only point upon which there has been any difference of opinion between the Leader of the Opposition and the Government is whether or not it is proposed in this bill to supersede the judiciary. I have pointed out that it is not proposed to do this. Therefore, there should really be no difference between us at all, but the Leader of the Opposition has exaggerated the position as he has seen it in reading the bill.

I come now to the method by which the judgment of the court may be enforced. I assume that the declaration of the court has been made, and everything pertaining to the judiciary is in order. “We know, I think, that any attempt to put in a receiver would be resisted. The Government has been faced with the problem of dealing with a situation of this kind without provoking civil violence, to which the Leader of the Opposition referred this afternoon. To put in a receiver to take the money, or to resort to any physical means of seizing the revenue of the State, would be a very difficult procedure, and probably would eventually lead to violence. Therefore, it is proposed that this Parliament shall declare by resolution that certain revenues ordinarily payable to the State shall be payable by the taxpayer to the Commonwealth. That is, the Commonwealth shall intercept the revenue before it get’s into the hands of the State. It has been suggested that we should do nothing in the way of attacking the unfortunate taxpayers of New South Wales in respect of the crimes or sins of the Government of that State. I endorse that view. We must see to it that we do nothing of the kind. I believe, however, that there is no danger of any injury being done to the New South Wales taxpayers. It has been said that, as this measure is certain to be challenged, nobody in New South Wales will pay any taxes at all. I am not sure that that will be the position. It may be that an amendment is necessary in this bill to indemnify taxpayers against loss should the Commonwealth fail in its proceedings to recover the money from a defaulting State. It may be necessary for the Commonwealth to undertake to repay to the taxpayers the money which it has collected from them should the proceedings under this measure be declared unconstitutional. However, I believe that there are a great many patriotic taxpayers in New South Wales who have sufficient regard for the honour and good name of the State to come forward and pay their taxes voluntarily, nor would they, I believe, suffer any injustice.

The Government regards this as a national bill. We should all consult together in order to safeguard the interests and rights of everybody, but, at the same time, make the measure effective to ensure that, in the future, every one will have to stand up to his obligations. It was suggested by the Leader of the Country party that the Commonwealth might obtain the money owing by a defaulting State by attachment of the railway revenue. I can see considerable difficulty in the way of such procedure, because the railway revenue is collected all over the State. After all, the railways provide service for the money paid when it is paid, and I am not sure that it would be a good thing to attach the railway revenues as suggested. However, I do not brush the suggestion aside, nor say that it is beyond consideration. That issue, however, does not really arise under this bill. It would become relevant in considering the motion brought down under this provision to determine what revenue was to be attached. If it were decided that railway revenue should be seized, it should be remembered that ultimately all revenue is paid into a bank in the State, and there are powers under this measure to attach any moneys coming into the hands of any bank on behalf of a State. Consideration of that matter may be deferred for the present. The Government has examined every possible method of collecting moneys due to the Commonwealth, with the minimum of dislocation and inconvenience to the unfortunate people of the State concerned; the last thing we desire is to punish citizens of the State for the crimes and misdemeanours of the individual who is Premier of the State for the time being.

The Leader of the Country party suggested that provision should be made in the bill that a preliminary to any proceeding against a State should be the assent of a majority of the Loan Council Again, I am not prepared to state the attitude of the Government, beyond promising that it will consider such a proposal if it is suitably worded. The Government cannot entertain any amendment that would transfer from this Parliament to the Loan Council the right to determine whether action should be taken against a defaulting State. But it will be prepared to consider whether the Commonwealth’s right to recover from any

State would be prejudiced by providing that this method would be operative if, after consultation with the Loan Council, the majority of the States expressed agreement. The proposal is difficult of determination, but I have indicated my view of it.

Mr Beasley:

– Of course the right honorable gentleman is not Prime Minister.

Mr BRUCE:
FLINDERS, VICTORIA · NAT; UAP from 1931

– I have been trying to make that clear. The honorable member seems to have suffered some delusion on the subject, but I hope that this final evidence will convince him of his error. The proposal I have mentioned might well be regarded as safeguarding the States against any unwarranted and unbalanced action by a Commonwealth Government, and as such it is well worthy of consideration.

The suggestion has been made that a similar safeguard is required against the possibility of a thoroughly dishonest and disreputable Commonwealth Government choosing not to honour its obligations. The obligation of the Commonwealth is to receive moneys from the States and apply them to meeting the services of State debts. A government claiming to be actuated by high and humanitarian motives might go to the extreme of receiving moneys from another government and not applying them to the use for which they were intended. If I could see any safeguard against such a possibility, I would be prepared to adopt it, because action which once appeared inconceivable has been proved by the event not to be so. Mr. Lang applied for per capita payments amounting to £243,000 on the day before they were due to him. The Financial Agreement provides that such money shall be applied By a State Government to the payment of the interest on State debts. Because of the relations existing between the Commonwealth and State Treasuries, the £243,000 was paid to Mr. Lang a day in advance. He has kept that money. When the head of a government can be guilty of such dishonesty, we would be wise to insert in the bill any safeguard that can be suggested. But so far the Government has not been able to evolve a provision which would be a protection against the deliberate stealing of money paid to a government for a particular purpose and not utilized for that purpose.

The object of this bill is to ensure that in future the solemn obligations of governments shall be observed, or, in default, a ready and certain method will be available by which the defaulter may be compelled to live upto his undertakings. It seeks to provide that in no circumstances will there be any taint of dishonesty and repudiation in connexion with the public obligations of Australia. I hope that the House will regard the bill as a non-party measure, designed not merely for a passing emergency, but for all time. We have to face the necessity of having machinery to ensure that the Financial Agreement shall continue, backed by sanctions that will guarantee the meeting of all obligations. The Government invites the co-operation of all sections of the House in an endeavour to do justice to all, by protecting the rights of the Commonwealth, the States and individual citizens, alike.

Debate (on motion by Mr. Forde) adjourned.

page 249

ADJOURNMENT

Coal-mining Industry.

Motion (by Mr. Lyons) proposed -

That the House do now adjourn.

Mr JAMES:
Hunter

.- The Attorney-General quoted on Friday a statement in the report of the Coal Commission, that machine men in the coalmining industry were earning from £6 to £6 10s. per day. Not understanding the conditions of coal-mining, the honorable gentleman did not recognize that the witness who gave such evidence, stated that a machine operating in a mine for the whole period would earn from £6 to £6 10s. a day. We know, however, that it is impossible for a machine to operate for the full period, because the operators occupy half an hour in walking to and from the working place in the mine, and considerable time is occupied in flitting the machine from board to board. Moreover, the machine must be operated by two men; therefore, the wage of £6 and upwards was for two men. Inquiries which I made at the week-end showed that the evidence quoted by the commission was given by Mr. Evans, manager of the Abermain No. 2 colliery. Furthermore, the £2 6s. per day mentioned as having been earned by machine men was earned by them in an occupation which had the tendency to affect their health. Out of fourteen machine men in that mine, nine have been totally and permanently incapacitated by miners phthisis, and they will draw compensation for the rest of their lives. It would have been much fairer if the Attorney-Genoral had quoted from page 228 of the report of the Royal Commission showing the average earnings of miners working in the Greta, Newcastle, Southern, and Western Districts. I shall not weary honorable members by quoting those figures, but I refer them to a table on page 215 which shows the number of adult employees other than salaried staff employed in the coal-mines of New South Wales in the year ended the 30th June, 1928, and the amounts earned for the year. It gives the total pay including overtime and workers’ compensation, but excludes the amount paid by miners for explosives, which averages5s. a day for each man. It covers miners, machine men and brushers. I emphasize machine men because they have been credited with having earned £2 6s. a day. The number of these particular workers earning under £221, less than the basic wage, was 1,098 and the number earning from £221 to £259 was 1,121. There were only 158 men employed in the coal-mines of New South Wales in 1928 who earned £520 a year and over. The total number of men engaged in coal-mining earning under £221 a year was 3,631. Since the wage figures were quoted before the cool commission the wages of the, machine men andall others engaged in the industry, have been reduced by 12½ per cent. I feel that the position has been somewhat misrepresented by the AttorneyGeneral, not intentionally I have no doubt, but because of his want of understanding of the ramifications of the coal-mining industry and of how the men work, particularly in regard to splitting up their money. When a machine is credited with having earned so much it is natural, I suppose, for any one who does not understand the position, to conclude that only one man has been operating it. So far as the tonnage rate is concerned, in the mine in which I worked before there was a reduction of 12½ per cent. it was only 2s. 511-16d. per ton. If the miners had worked the coal for nothing the reduction in the selling price would not have been affected by more than 2s. 511-16d. per ton. Such a reduction would have made no material difference. At any rate it would not have brought about the prosperity which the Attorney-General (Mr. Latham) said was likely to follow a reduction in production costs. Prior to accepting a reduction of 124 per cent., the miners were told, not only by the Attorney-General, but also by the right honorable member for Flinders (Mr. Bruce) when he was Prime Minister, that it would mean more money in their envelopes. After being starved into submission the miners accepted that reduction, but we find that in New South Wales approximately 10,000 of them were not re-engaged in the industry. I trust that this explanation has removed the wrong impression conveyed to the House by the words of the Attorney-General.

Question resolved in the affirmative.

House adjourned at 10.17 p.m.

Cite as: Australia, House of Representatives, Debates, 24 February 1932, viewed 22 October 2017, <http://historichansard.net/hofreps/1932/19320224_reps_13_133/>.

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