House of Representatives
25 February 1932

13th Parliament · 1st Session



Mr. Speaker (Hon. G. H. Mackay) took the chair at 2.30 p.m., and read prayers.

page 270

MEMBER SWORN

Mr. NELSON, as member for the

Northern Territory, made and subscribed the oath of allegiance..

page 270

RE- ARRANGEMENT OF MINISTERIAL DUTIES

Mr LYONS:
Prime Minister and Treasurer · Wilmot · UAP

.- by leave - During the absence from Australia of the Attorney-General (Mr. Latham), the following , arrangements for the distribution ofhis duties will operate: The Assistant Treasurer (Mr. Bruce) will act as Minister for External Affairs, and will represent in this House the. AttorneyGeneral and Minister for Industry; Senator McLachlan will act as AttorneyGeneral and Minister for Industry.

page 270

QUESTION

DAY LABOUR

Mr MAKIN:
HINDMARSH, SOUTH AUSTRALIA

– I ask the Minister for Works whether the policy of constructing public works by day labour has been abandoned, and the contract system reverted to? If so, will the Minister see that ample precautions are taken in regard to both the quantity and quality of materials supplied, and the services rendered by contractors, in orderto prevent any recurrence of the scandals that occurred under the,contract system during the regime of the Bruce-Page Government?

Mr MARR:
Minister for Health · PARKES, NEW SOUTH WALES · UAP

– The policy of the Government is that public works shall be carried out by contract instead of day labour. Ample precautions will be taken to prevent any abuse of the contract system.

page 270

POSTMASTER-GENERAL’S DEPARTMENT

Preference to Unionists

Mr WHITE:
BALACLAVA, VICTORIA

– Has the Postmaster-

General deleted from contracts let by his department the provision introduced by his predecessor, requiring that preference to unionists shall be given by contracting employers ?

Mr FENTON:
Postmaster-General · MARIBYRNONG, VICTORIA · UAP

– The matter is being considered.

page 270

QUESTION

FEDERAL CAPITAL TERRITORY

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

– Will the Minister for Home Affairs say whether the report of the committee of departmental officers which was appointed by the previous Government to investigate hotels and transport in the Federal Capital Territory has been received; if so, will it be made available to all concerned?

Mr ARCHDALE PARKHILL:
Minister for Home Affairs · WARRINGAH, NEW SOUTH WALES · UAP

– The report has not come to my notice, but I shall make inquiries concerning it.

page 270

QUESTION

LITHGOW SMALL ARMS FACTORY

ManufactureofShearing Machine Parts.

Mr JOHN LAWSON:
MACQUARIE, NEW SOUTH WALES · UAP

– Representations are said to have been made to the Minister for Defence that the manufacture of combs, cutters, and other shearing machine parts at the Lithgow Small Arms Factory should be discontinued. In view of the fact that the output of this plant is of very high quality, and is being retailed at lower prices than those charged for similar imported articles, which enter Australia free . of customs duties, and having regard to the further fact that the industry has the full support of the Graziers Association of New South Wales, will the Assistant Minister for Defence assure the House that the operations at Lithgow will be continued? Will he make available to the House the names of the people who requested the Government to close down the plant?

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

– I shall bring the honorable member’s question under the notice of the Minister for Defence, and furnish a reply as early as possible.

page 270

QUESTION

NEW SOUTH WALES LEGISLATIVE COUNCIL

Appeal to Privy Council

Mr BEASLEY:
WEST SYDNEY, NEW SOUTH WALES

– Does the Prime Minister propose to make a statement to the House regarding the Government’s decision to intervene in the appeal by the Government of New South Wales to the Privy Council in connexion with the proposed abolition of the Legislative Council of that State?

Mr LYONS:
UAP

– I have no statementto make other than that the Commonwealth Government is availing itself of the opportunity to intervene in the case in the interests of the Australian people as a whole.

page 271

QUESTION

RAILWAY SLEEPERS FOR CHINA

Mr NELSON:
NORTHERN TERRITORY, NORTHERN TERRITORY

– I ask the Minister for Markets whether the Government has taken steps to request the Imperial Government to amend the Boxer Rebellion Indemnity Act in order to permit China to place orders in Australia for railway sleepers ? Under that act, a portion of the indemnity was to be utilized in the purchase of railway material from the United Kingdom. Great Britain cannot supply sleepers, and as the Chinese Government desires to place orders for them in Australia, will the Government take steps to allow this to be done?

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

– My department has been considering the possibility of having some of the Boxer indemnity applied to the purchase of Australian products. Great Britain’s share of the indemnity is divided into two parts: One half is allocated by a committeein England for the purchase of material for developmental works in China; the other half is allocated by a committee in Shanghai, the majority of the members of which are Chinese citizens. Before the purchase of a particular line of goods can be recommended by that committee, a request for them must have been received from the Chinese constructing authority. Mr. Gepp has been inquiring into this matter, and has ascertained that most of the money available up to the present has been already allocated. However, the Government is keeping in mind this possible market, in the hope that a certain proportion of future indemnity payments will be available for the purchase of Australian products.

page 271

NATIONAL BROADCASTING BILL

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

– When will the National Broadcasting Bill be introduced into this House?

Mr LYONS:
UAP

– We hope to introduce the measure within the next few days, and to dispose of it before the Easter recess.

page 271

GALVANIZED IRON

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

– Yesterday, the honorable member for Swan (Mr. Gregory) asked me whether I would investigate a complaint from a merchant in Perth that he had been refused supplies of iron by Lysaghts Limited. The Collector of Customs at Perth advises me that the minimum quantity of galvanized iron supplied by Lysaghts Limited is 2 tons, in containers. The request from this merchant was for ½ ton, and he was supplied with a price list in which the reference to the minimum quantity supplied was underlined. There seems, therefore, to be very little in the complaint of the honorable member for Swan.

page 271

QUESTION

NORTHERN TERRITORY

Tobacco Culture

Mr NELSON:

– Does the Minister for Home Affairs intend to honour the promise made by his predecessor to send a tobacco expert to the Northern Territory to give instruction to the agriculturists there ?

Mr ARCHDALE PARKHILL:
UAP

– I have no knowledge of any such promise by my predecessor, hut I will look into the matter, and give the honorable member an answer later.

page 271

QUESTION

AERIAL MEDICAL SERVICES

Mr WHITE:

– Will the Minister representing the Minister for Defence direct the attention of the Government to the need for placing on the Estimates this year a small subsidy to the aerial medical services in Queensland and the Northern Territory? This subsidy was unfortunately omitted last year.

Mr FRANCIS:
UAP

– I shall bring the honorable member’s request under the notice of the Minister for Defence, and let him know the decision as soon as possible.

page 271

QUESTION

AUDITOR-GENERAL’S FUNCTIONS

Mr MAKIN:

– Will the Prime Minister state whether it is the duty of the Commonwealth Auditor-General to make declarations on subjects of general political policy ; whether it is not his duty rather to review the public accounts and confine his observations to them? What limitation, if any, is placed upon that officer in expressing opinions on subjects which have no direct relation to the Commonwealth public accounts?

Mr LYONS:
UAP

– The Auditor-General discharges his duties in accordance with the act under which he was appointed.

Mr SPEAKER:

– It would be advisable for honorable members to read the notice-paper each day, in order to see whether the subjects about which they intend to ask questions without notice are not already set out there. Question No. 12 in the name of the honorable member for West Sydney (Mr. Beasley) is couched in similar terms to those of the question just asked.

page 272

BANKRUPTCY BILL

Mr NAIRN:
PERTH, WESTERN AUSTRALIA

– Is it intended to bring down an amending bankruptcy bill during the present session, in order to remedy some of the defects which have been discovered in the operation of the Federal Bankruptcy Act?

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

– Anomalies and defects have been disclosed in the operation of the Commonwealth bankruptcy law, and a bill is now being drafted to remedy them. It is hoped that it may be brought down at an early date.

page 272

QUESTION

TARIFF EMBARGOES

Mr FORDE:
CAPRICORNIA, QUEENSLAND

– On perusing to-day’s issue of the Commonwealth Gazette, I noticed that a proclamation has been issued by the Minister for Trade and Customs removing the tariff embargoes on a number of items, but comparing the present list with the previous one, I notice that certain embargoes have been lifted. I refer to such articles as biscuits, candles, confectionery, eggs in shell, lard, preserved meats, dried milk, peanut butter, canary seed, &c, as well as a number of products of secondary industries. Will the Minister make a brief statement as to what inquiries were made before these prohibitions were removed, and whether the primary producers who were affected by the action taken wereconsulted beforehand?

Mr GULLETT:
UAP

– I propose to make a statement on the matter in the near future.

page 272

QUESTION

SURPLUS MILITARY CLOTHING

Mr JAMES:
HUNTER, NEW SOUTH WALES

– In view of the fact that it is the declared policy of the Minister for Defence that, in the further distribution of surplus military clothing in New South Wales, the Government will allocate it to charitable institutions in the Sydney metropolitan area, thereby debarring charitable organizations in the country from securing such clothing, will the Minister consider reviewing this policy, and see that surplus stocks of this clothing are made available to the unemployed in the country districts during the coming winter?

Mr FRANCIS:
UAP

– The statements made by the honorable member are not correct, but I will have a full statement on tha matter prepared, and will submit it te the House to-morrow.

page 272

QUESTION

TELEPHONE SUBSCRIBERS

Mr DEIN:
LANG, NEW SOUTH WALES

– Will the PostmasterGeneral inform the House of the number of telephone subscribers who had their telephone services disconnected in the various States during 1931, and will he notify the House also of the number of new subscribers ‘during that period ?

Mr FENTON:
UAP

– The honorable member intimated his intention to ask this question, and while I cannot give him full particulars, I have some information which may be of interest to him and other honorable members. In June, 1930, there were 520,169 telephone subscribers in the Commonwealth, and that total fell in December last to 487,850. During the past six months 26,863 telephones were disconnected, and 16,668 new connections were made, a net decrease during that period of about 10,000. For the six months from the 30th June to the 31st December, there were 32,319 cancellations. I shall obtain the figures for the various States, and supply them to the honorable member.

page 272

QUESTION

ROYAL MILITARY COLLEGE

Cigarette Smoking

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

– Will the Assistant Minister for Defence state why regulation 58 of the Royal Military College has been amended in the direction of removing the prohibition of cigarette smoking among cadets?

Mr FRANCIS:
UAP

– I shall have a statement prepared, and supply a copy of it to the honorable member.

page 273

FINANCIAL AGREEMENT ENFORCEMENT BILL

Attitude of Tasmania.

Mr BEASLEY:

– Is the Prime Minister prepared to make a statement regarding the protest published to-day by the Tasmanian Government in respect to the bill now before the House?

Mr LYONS:
UAP

– Anything which has to be said in connexion with that measure will be said when the measure is actually under discussion.

page 273

QUESTION

WAR SERVICE HOMES

Mr THOMPSON:
NEW ENGLAND, NEW SOUTH WALES

– Will the Minister in charge of War Service Homes state whether applications are now being accepted from returned soldiers for the construction or purchase of homes? If not, is there any early prospect of the department resuming its activities?

Mr FRANCIS:
UAP

– Applications are still being received, but, as a result of the financial emergency provisions, no money is available to make advances for erecting homes. The department is still considering when its full activities may be resumed.

Mr COLLINS:
HUME, NEW SOUTH WALES

– Is any money being made available for repairs and renovations of war service homes?

Mr FRANCIS:

– Every application for this purpose is considered on its merits. Funds are limited; but if the honorable member has any particular case in mind I shall be pleased if he will supply me with particulars.

page 273

QUESTION

OVER-PRODUCTION IN INDUSTRY

Mr JENNINGS:
SOUTH SYDNEY, NEW SOUTH WALES

– I ask the Minister for Customs whether he will consider the appointment of a committee, representing both sides of the House, for the purpose of inquiring into the unemployment problem, and the effect upon it of over-production due to the increasing use of machinery in industry?

Mr GULLETT:
UAP

– I shall give consideration to the honorable member’s suggestion.

page 273

QUESTION

BROADCASTING CONTROL

Mr MAKIN:

– Will the Acting AttorneyGeneral, before the final drafting of the measure to deal with the control of broadcasting, permit the broadcasting interests to consult with him in regard to their position in relation to the Performing Right Association?

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

– That is a matter of policy rather than of drafting. If any interests desire to make further representation to the Government they will be heard, but a great many representations have already been made. I suggest, however, that those who have anything to say on the subject should address themselves to the Postmaster-General.

page 273

QUESTION

SUGAR AGREEMENT

Mr FORDE:

asked the Prime Minister, uponnotice -

  1. Whether it is a fact that in his announcement to the Loan Council in connexion with the proposed revision of the Sugar Agreement, he, as Prime Minister, said that a reduction in the price of sugar in the household would have a substantial effect in reducing the cost of living and thereby widening the fields of production in all industries?
  2. What would be the reduction in the index figure for food and rent on which arbitration courts adjust the basic wage from time to time if the retail price of sugar is reduced by id. per lb., as recommended by the Minority Sugar Inquiry Report which was signed by the consumers’ special representatives?
  3. What reduction in the basic wage would be brought about in consequence of a¼d. per lb. reduction in the price of sugar?
  4. Would such reduction in the basic wage be sufficiently great to have any effect in widening the fields of production in all industries ?
Mr LYONS:
UAP

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

  1. My statement to the Loan Council in regard to sugar was as follows: - One factor in the cost of living with which the Commonwealth as a whole and the State of Queensland, in particular, are closely concerned is sugar. Its cost to the consumer is fixed by the terms of the Sugar Agreement to which these two governments are parties and which, although not entered into by my government, is recognized by it as binding. Under this agreement, whilst practically every section of the community has had during the last two years to submit to heavy reductions in income, whether from wages or any other source, the sugar industry, having regard to the increased purchasing power of money, is maintained at much the same standard as it gained in the days of Australia’s greatest prosperity. The Commonwealth Government fuels that this is an anomaly, and it proposes to invite the parties to the agreement to review its terms so that this industry should share in the general reduction to which all other industries, and, indeed, practically every other section of the community in Australia, has had to submit. A reduction in the price of sugar in the household would have a substantial effect in reducing the cost of living, and thereby widening the fields of production in all industries. 2, 3, and 4. My statement to the Loan Council contains no reference to any specific amount by which it might be possible to reduce the price of sugar, and incidentally, the cost of living, nor does it contain any reference to a reduction in the basic wage.

page 274

QUESTION

TICK ERADICATION

Dr EARLE PAGE:
COWPER, NEW SOUTH WALES

asked the Minister for Health, upon notice -

Is the Commonwealth Government withholding from the New South Wales Government the federal subsidy towards tick eradication?

Mr MARR:
UAP

– The matter is at present under consideration.

page 274

QUESTION

CANADIAN- AUS TRALIAN TRADE

Mr PRICE:
BOOTHBY, SOUTH AUSTRALIA

asked the Minister for Trade and Customs, upon notice -

  1. What was the value of trade between (a) Australia and Canada; and (6) Canada and Australia, for the years 1928-29, 1929-30, and 1930-31?
  2. When did the Australian-Canadian Trade Agreement come into operation?
  3. Are particulars available showing trade between the two countries since the agreement came into operation, and a corresponding period prior to the agreement?
Mr GULLETT:
UAP

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

  1. There have been two trade agreements between Australia and Canada. These came into force on the 1st October, 1925, and the 3rd August, 1931, respectively.
  2. These particulars are not available.

page 274

QUESTION

GOVERNMENT SAVINGS BANK. OF NEW SOUTH WALES

Provision of Credit

Mr LYONS:
UAP

– The honorable member for Melbourne Ports (Mr. Holloway) has asked a number of questions regarding the provision of credit for re-opening the Government Savings Bank of New South Wales. Inquiries are being made in this matter with a view to securing the information desired.

page 274

QUESTION

MAITLAND COAL

By-Products

Mr LYONS:
UAP

– The honorable member, for Hunter has asked a number of questions regarding the extraction of byproducts from coal. Inquiries are being made into the points raised by the honorable member, and a reply will be furnished to him as soon as possible.

page 274

QUESTION

EXCHANGE RATE ON LONDON

Mr PRICE:

asked the Treasurer, upon notice -

  1. What is the present rate of exchange between Australia and Great Britain?
  2. What was the rate of exchange for corresponding dates for the years 1928, 1929. 1930 and 1931?
Mr LYONS:
UAP

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

  1. The present rate of exchange, Australia on London, for telegraphic transfers, is - Buying, £25 per cent, premium; selling, £25 10s. per cent, premium. These rates were operative from 3rd December, 1931.
  2. The rates of exchange, Australia on London, for telegraphic transfers, for the corresponding dates for the years 1928, 1929, 1930, and 1931, were: -

page 274

QUESTION

SALES TAX ON CANNED FRUITS

Mr HILL:
ECHUCA, VICTORIA

asked the Treasurer, upon notice -

Whether the Government will be prepared to give favorable consideration to the remission of the sales tax on canned fruits?

Mr LYONS:
UAP

– The question involves government policy. It is not the practice to state policy in reply to a question such as this.

page 275

QUESTION

BALANCE OF TRADE WITH THE UNITED STATES OF AMERICA

Mr PRICE:

asked the Minister for Trade and Customs, upon notice -

What was the balance of trade in favour of the United States of America for the years 1928-29, 1929-30 and 1930-31?

Mr GULLETT:
UAP

– The reply is as follows : -

page 275

QUESTION

WING-COMMANDER COLE

Dr MALONEY:
MELBOURNE, VICTORIA

asked the Assistant Minister for Defence, upon notice -

Was Wing-Commander Cole, of the Air Force, on holiday or leave at any time during the month of December last; if so, on what days?

Mr FRANCIS:
UAP

– Wing-Commander A. T. Cole, Commanding Officer No. 1 Aircraft Depot, Laverton, was granted recreation leave from 21st to 31st December, 1931, inclusive.

page 275

QUESTION

FEDERAL CAPITAL TERRITORY

Food Relief fob Unemployed.

Mr JAMES:

asked the Minister for Home Affairs, upon notice -

  1. What are the necessary qualifications for the unemployed to be recognized as local residents of the Federal Capital Territory for the purpose of receiving food relief?
  2. Is it a fact that the unemployed in No. 4 Camp are not only comprised of residents of New South Wales but of every State in the Commonwealth, and also of immigrants from the United Kingdom; if so, why does the Government treat their maintenance as an obligation of the New South Wales Government?
  3. Was it stated in this House by the previous Government that out of the recent unemployment relief grant every unemployed person would receive not less than a fortnight’s employment for Christmas; if so, why did some of the unemployed of Canberra only receive one week’s work?
  4. In view of the approaching winter, will the Government permit the men at present in the unemployed camp to remain on the same conditions as prevailed under the previous Government?
Mr ARCHDALE PARKHILL:
UAP

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

  1. The previous Government fixed residence in Canberra during December-January, 1929- 1930 as qualifying a person for ration relief and unemployment relief as a resident of Canberra. In some cases, in circumstances regarded as justifying the arrangement, the date was extended to as late as June. 1930. The granting of ration relief is, of course, subject to safeguards applied in respect of income standards. This arrangement is similar to that operating in New South Wales and other States. 2. (a) I have no definite information regarding the permanent place of residence of the men at the camp, but I assume that the honorable member’s statement is correct, (fi) The Government does not treat the maintenance of these men as an obligation of the New South Wales Government. The Government, however, takes the attitude that, when the men depart from Canberra, they will, in many cases, travel throughout New South Wales, and thus be a responsibility of the New South Wales Government in regard to their maintenance. By maintaining some of the men over a considerable period, the New South Wales Government was relieved of certain expenditure involved in such maintenance.
  2. On the 29th October (Hansard, p. 1363), the then Prime Minister stated that between 1.2,000 and 14,000 men would be employed by the expenditure of the grant of £250,000 for unemployment relief made by his Government. On the same date, the then Treasurer stated that the minimum period of employment would be two weeks. All of the unemployed in Australia could not, therefore,” be given employment under the grant. In respect of Canberra, where £12,000 was made available, preference was given to local residents. One week’s work for travelling unemployed was approved, however, from the general relief programme. In addition, these men received two extra rations.
  3. As already stated by me, the unemployed camp is” designed as a “ rest camp “, where the men- may remain for two weeks for recuperative purposes, and receive a “ walk-in “ ration and a “ walk-out “ ration. If the Government allowed the camp to become a permanent residence for travelling unemployed, other such men who arrived in Canberra would not be able to secure admittance to the camp.

page 275

QUESTION

AUDITOR-GENERAL’S REPORT

Pensions awd Allowances.

Mr BEASLEY:

asked the Treasurer, upon notice -

  1. Whether the advice of the Commonwealth Auditor-General, advocating the further reduction or abolition of invalid and old-age pensions, maternity allowances, of sustenance to the unemployed, and of other services, social and otherwise, to the community, is likely to be adopted by the Government?
  2. If not. and since the apparent reactionary view of the Commonwealth Auditor-General indicates, as his personal opinion, that the salvation of the present system in Australia - rests solely upon the adoption of the measure referred to in paragraph (1) of this question, what other source of action does the Government propose to take to correct the financial position of the nation?
  3. Is the Commonwealth Auditor-General acting within his statutory powers under the Audit Act in -advising in his annual report on questions that are matters of national policy and for determination by the Commonwealth Parliament?
  4. Is the Commonwealth Auditor-General acting within his power as such in “reporting in his annual report for 1930-31, to the effect that pensions to the aged and infirm provided by the .authority of the Commonwealth Parliament can be further reduced without any injustice ?
Mr LYONS:
UAP

– The answers to the honorable member’s questions are as follow : - 1 and 2. The Government has not yet had an opportunity of considering the report ot the Auditor-General. The “Government is, however, closely examining the financial position of the Commonwealth, and, in duc course, will inform Parliament of the policy it proposes to adopt. 3 and 4. The Audit Act pro,ides that the Auditor-General shall examine the Treasurer’s statement of receipts and expenditure, and shall prepare and sign a report explaining such statement in full, and showing certain information, including “ such other information as may be prescribed or as the Auditor-General thinks desirable “. The act also provides that the Auditor-General may “generally report upon all matters” relating to the public accounts, public moneys and stores “.

page 276

QUESTION

RISKS OF WAR

Mr WARD:
EAST SYDNEY, NEW SOUTH WALES

asked the Prime Minister, upon notice -

In view of the enormous misery and suffering brought amongst the Australian people by this nation’s participation as one of the victorious Allies in the Great War of 1914-18, will he give an assurance to this House and to the people of Australia that under no future circumstances will tins Government sacrifice the lives of Australian citizens in any war other than one of the invasion of Australian shores ?

Mr LYONS:
UAP

– The policy of the Government is to do everything in its power to avoid the Commonwealth becoming involved in any war. . Beyond that it is quite impracticable to lay down any set rule, as policy must have some reference to circumstances. The Government, however, deprecates at this time references to risks of war when it hopes that, in view of the provisions of the Covenant of the League, no such risk exists.

page 276

QUESTION

INSURANCE COMPANIES

Deposits with State Governments.

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

asked the Treasurer^ upon notice -

What cash or other deposits are held by the various State Governments, as securities from insurance companies carrying on business in each State?

Mr LYONS:
UAP

– The following information has been taken from the published accounts of the States : -

page 276

QUESTION

FLINDERS ISLAND

Mau. Subsidy

Mr GUY:
BASS, TASMANIA

asked the PostmasterGeneral, upon notice -

In view of the isolation of Flinders Island and the inadequacy of the mail services to the Furneaux group of islands, will the Government give consideration to a proposal to grant a mail subsidy to any airways company that may establish a service to and from Tasmania, calling at Flinders Island, en route?

Mr FENTON:
UAP

– Whilst the department is most anxious to provide the people of Flinders Island with the best possible postal service, it finds itself unable in existing circumstances to devote funds for securing more extended facilities than those at present provided. The honorable member is reminded that throughout the Commonwealth it has been necessary to curtail quite a large number of services because of the prevailing economic conditions. The department has recently concluded an arrangement to secure the utilization of all ships calling at Flinders Island, which guarantees a service not inferior to any it has previously been found possible to maintain.

page 276

FINANCIAL AGREEMENT ENFORCEMENT BILL

Second Reading

Debate resumed from the 24th February (vide page 249), on motion by Mr. Lyons -

That the bill be now read a second time.

Mr FORDE:
Capricornia

.- The Leader of the Opposition (Mr. Scullin) dealt comprehensively with this matter yesterday, and raised the level of the debate to a high plane. This is a matter on which we should not entertain bitter party animosities towards any government or individual. In its importance, it transcends party politics altogether, and I trust that honorable members will be able to consider the question free from any bitterness which they may feel towards a certain gentleman who happens at the present time to be Premier of New South Wales This legislation is going to be most unpopular in certain quarters, and very popular in others. Members of the legal fraternity are looking to it as a means of reaping a rich harvest. They, in common with other sections of the community, have suffered from the depression, because, when people have very little money, they are not prepared to quarrel and engage lawyers. Not only will this legislation be unpopular with certain honorable members in this House who take a long view of the situation, and are apprehensive that unconstitutional act’s may be committed by the Government, but it has also met with the disapproval of at least one of the State Governments, that of Tasmania. That is the State from which our own Prime Minister comes, and its Premier, in a published statement, takes strong exception to this bill. Probably when we hear from the Premiers of the other States some of them will take similar objection. In this morning’s issue of the Sydney Morning Herald it is recorded that, after a Cabinet meeting yesterday, the Premier of Tasmania, Mr. McPhee - who, by the way, is a Nationalist Premier - forwarded the following message to the Prime Minister of the Commonwealth: -

My Government views with grave concern the important and far-reaching nature of the financial and emergency measures now before the Federal Government. We feel justified in urging that the States be given a reasonable opportunity of examining these proposals, details of which have only just come to hand. I would appreciate advice whether your Government can accede to this request.

That is a reasonable request. No one knows the Prime Minister better than does Mr. McPhee, because they were colleagues in the Tasmanian Parliament. It is only reasonable to assume that the Premiers of the other States will also be most anxious to have an opportunity of examining this legislation carefully before they commit themselves regarding it. This gives point to the suggestion of the right honorable member for Cowper (Dr. Earle Page) and the Leader of the Opposition (Mr. Scullin) that the States might very well have been consulted regarding this legislation before -it was submitted to Parliament. I do not suggest that we should hand over any of our powers or authority to the States, but the Prime Minister himself has said that this measure is one which vitally affects all the States, so that he might have sought their opinion regarding it or they might have been consulted at the Premiers Conference. There appears to be no doubt that the Premier of Tasmania, at any rate, is hostile to the measure.

From my study of the bill it seems to me that it must inevitably result in protracted litigation. The Attorney-General (Mr. Latham) was the author of this measure, and chief legal adviser to the Government. He is leaving Australia, and will not be present to unravel the legal tangle which will undoubtedly come about when the bill is passed, or, at any rate, when steps are taken to enforce it. A former Nationalist Government introduced a certain piece of legislation into this Parliament, and assured honorable members that it was constitutional. It was stated that the best legal advice had been obtained, and there was no doubt as to the constitutionality of the proposed legislation. But when its validity was tested in the High Court, judgment was given against the action taken by the Government under the deportation sections. The Federal Labour party, which constitutes the official Opposition in this House, does not stand for repudiation in any form. It stands rather for the fulfilment of this nation’s obligations, and of obligations between individuals in this country. While we cannot support, the measure in its present form, we are prepared to support any legitimate step which in law may be taken to compel a State government to recognize that, just as a ci tizen who chooses to live under British rule must observe the law of the land, so must a government which accepts the responsibility of administering an Australian State observe the law of the

Commonwealth. The Government in introducing this measure has blundered. I agree that if a government is at liberty to default deliberately, then no individual should be compelled by that government to honour his obligations to the State. Deliberate default by a government does not find jobs for any one in the community. Instead of putting people into employment it undermines confidence, -withholds capital from industry, and thus adds to the number of unemployed in the community. The Federal Labour Executive and the Federal Labour Conference, the controlling bodies of the Australian Labour party of which I am a member, gave serious consideration to this question at the time the Premier of New South Wales enunciated what is known as the Lang policy, and the Federal Executive carried this resolution - “The platform and policy of the Australian Labour party does not’ declare, and never has, declared for repudiation “. This subject was of such importance to the Labour movement throughout Australia that a Federal Labour Conference was held, and it approved of this declaration -

This conference declares against the Lang pronouncement to refuse deliberately to pay interest obligations on loans raised from the general public of Australia and in England, which is contrary to the Labour policy.

That was the well-considered pronouncement’ of the Federal Labour Conference, comprising delegates drawn from every State of Australia. It shows clearly that the action taken by this party in opposing a deliberate act of repudiation is in accordance with the expressed wishes of the Federal Labour Executive and the Federal Labour Conference of the Australian Labour party. The ^ conference also stated that the act of repudiation would not restore stable economic conditions, and place men back at work, but on the contrary would aggravate the position. It added that the application of the so-called Lang policy to overseas debts would result inevitably in trade reprisals against Australia, which would bring in their train increased unemployment and financial chaos. I agree with the decision of the Federal Labour Conference. If we are to give employment to the people we must create credit. We must so ad- minister the laws of the country as to give confidence to investors to spend money in the development of industry. Deliberate repudiation tends to tie up all sources of credit, and to bring about a withdrawal or withholding of capital from industry, thus putting more people out of work and on the dole.

I have listened with interest to the speeches of many honorable members on this measure, and particularly to that of the right honorable member for Cowper (Dr. Earle Page). For seven years he was Treasurer of this country and whatever we may think of him politically, we know that he has made a close study of the financial position. He has given this measure much consideration, and everybody who listened to him must agree that, apart from his preliminary remarks indicating that he was behind the Government, and was elected on a mandate to support the Government, his speech was, in the main, against this measure. He killed it with faint praise. He pointed out all the loopholes in if. In effect, he showed that it was ill-considered legislation. Let me summarize some of his objections to it. He said, first, that we should be careful not to infringe State right’s; secondly, that we should be careful not to destroy federation, and adopt a form of unification ; thirdly, that the States should have some say in the initiation of this legislation. It is evident that’ the Premier of Tasmania at least thinks that he should have been consulted before this measure was introduced. The right honorable member for Cowper (Dr. Earle Page) said, fourthly, that we should bring about an alteration of this legislation to enable a dishonest Federal Government to be caught in its own net; and, fifthly, that the Commonwealth Government should not have powers which could not be exercised by State governments in the event of the Federal Government defaulting.

Mr Maxwell:

– Does the honorable member endorse those objections?

Mr FORDE:

– I endorse some of them. The speech of the right honorable member for Cowper shows clearly that there are a number of honorable members in this House, even on the Government side, who do not believe in this legislation.

Unfortunately, they are under the domination of the party machine. No one knows that better than the honorable member for Fawkner (Mr. Maxwell) who was expelled from the Nationalist party because he voted against the Arbi1tration Bill in this House in 1929, and the honorable member for Darling Downs (Sir Littleton Groom) who was the victim of a bitter vendetta instigated by the then Prime Minister (Mr. Bruce), because he, as Speaker, dared to stay outside the House and to adopt a neutral attitude when Mb leader considered that he should put party before the speakership and the country. I mention that because the honorable member for Fawkner laughed at the suggestion that some of the Government supporters will blindly follow the decision of Cabinet and vote for this party measure. The right honorable member for Cowper, in raising a number of objections to this legislation, did a service to this House. He said that the. bill should be divided into two parts. He pointed to the possibility of its being proved unconstitutional because it contains matters other than taxation. He said emphatically that the nonpayment of interest on its due date was a huge blunder. , His criticism against this measure was effective. I quote his remarks, because, at one time, he was a colleague of the Assistant Treasurer (Mr. Bruce) who is credited with being one of the authors of this legislation. The Assistant Treasurer contended that the Government in taking action by resolution of parliament under clause 6 would not be ousting the court. I refer the right honorable gentleman, who is now Acting Attorney-General, to the following statement made by the AttorneyGeneral (Mr. Latham) in this Parliament last Friday morning: -

An alternative procedure is set out in clause G of the bill. 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 clear from that statement that provision is being made to oust the court if thought necessary, (‘because this Parliament has power to rush in and carry certain resolutions which the Attorney-General considers will give the Government power to take revenues that otherwise would be paid to the Government of New South Wales, without first obtaining the decision of the High Court of Australia - the recognized interpreter of the Constitution. Although the Assistant Treasurer spoke plausibly and glibly about the bill, and tried to enumerate its good features, it is evident from a study of his speech and that of the Attorney-General that they, at least, have two minds on the subject. The right honorable gentleman was unconvincing when he tried to show that the High Court would not be prevented from discharging its proper functions if the provisions of clause 6 become operative; but he admitted that extraordinary power was being conferred upon the Government by those provisions, and said that a proviso could be inserted to the effect that if the powers were exercised, application must be made within a reasonable time for a judgment of the court. The criticism to which the bill has so far been subjected has, therefore, been sufficiently strong to oblige the right honorable gentleman to reconsider his position and to change his ground. Even if provision was made for an application to be submitted to the court within a reasonable time, the phrase “ reasonable time “ would need to be defined. It will be remembered that the Constitution provided that the Federal Capital should be established within a reasonable time. That “ reasonable time “ turned out to be 27 years. This shows the necessity for definiteness in our legislation.

The honorable member for Perth (Mr. Nairn) has also criticized this bill to some extent, but he did not maintain the standard of debate set by the Leader of the Opposition (Mr. Seullin). He misrepresented both the attitude and motives of this party.

Mr Makin:

– His speech was most illogical.

Mr FORDE:

– That is so. He said that when the present Leader of the Opposition was Prime Minister he took no action against the Government of New South Wales. That statement was quite inaccurate. The Leader of the Opposition outlined definitely yesterday the action taken by his Government to oblige the New South Wales Government io meet its obligations. He pointed out that the writs issued and proceedings instituted in the Hight Court were withdrawn only after the Premier of New South Wales had agreed to meet his obligations, and that the withdrawal was made with the complete endorsement of the Prime Minister (Mr. Lyons), the Attorney-General (Mr. Latham), and the present right honorable member for Flinders (Mr. Bruce).

The Assistant Treasurer was also forced to admit yesterday that a provision should be included in the bill toindemnify State taxpayers in respect of subsequent proceedings that might be taken against them if their taxes were paid to the wrong authority. The Leader of the Opposition and other speakers had drawn attention to the necessity for such a provision. It might happen that a State taxpayer, from fear of being fined or for other reasons, might pay his taxes to both the Commonwealth and State authorities. In present circumstances it is extremely difficult for primary producers in particular to find the money to meet their taxation in a normal way; and they would bo involved in very grave disabilities if they felt it necessary to pay twice in order to protect themselves. We know very well that shareholders in such a concern as the Newcastle steel works, who are resident in States other than New South Wales, might also be gravely inconvenienced if the provisions of this ill-considered bill became law. Enough has been said to show that the measure has serious defects.

Reference has been made to the attitude of the Labour party in respect of war debts, and the interest due thereon. Although this party is definitely opposed to the deliberate repudiation of this indebtedness, it believes that the time has arrived when the whole subject of international war debts should be reconsidered with a view to cancellation of the debts by agreement or, failing that, to reductions in interest payments, but any such reconsideration must be given honorably. We should not adopt a “ stand and deliver “ attitude, because those who lent us money to prosecute the war did so in good faith. I am hopeful that this subject will receive careful consideration at the Geneva Disarmament Conference, because it is one which must vitally affect the whole problem of disarmament. It cannot be denied that war debts are weighing very heavily upon practically every country in. the world to-day. I believe that some honorable amelioration of our position in this’ respect is essential before the economic depression in which we find ourselves can be lifted. If an individual incurs a debt which he subsequently finds he cannot meet, he seeks his creditor in an honorable way, if he is an honest man, and endeavours to re-arrange the conditions of repayment. That is’ the attitude which should be adopted by the nations. The Labour party stands for the reconsideration of our’ war indebtedness by honorable negotiation.

The honorable member for Swan (Mr. Gregory) revealed by interjection yesterday his fear that this bill is fraught with real danger, for he asked whether the duration of the measure could not be limited. The honorable gentleman is a State lighter, and resists every proposal which he regards as an infringement of the sovereign rights of the States. I point out to him that a limitation of the life of the bill would not get over the difficulties which he doubtless sees ahead, for once a bill of this kind has been put into operation, other governments may adopt similar measures tq suit their own purposes.

If the view of the Attorney-General is right, that there may be some resistance to a judgment of the High Court given under the provisions of clause 5 of the bill, we can take it for granted that there will certainly be resistance if the provisions of clause 6 ever become operative. This clause provides that the machinery of the bill may be put in operation after a resolution has been adopted by both Houses of the Parliament, and before the highest legal tribunal in the land has been approached. It has been pointed out already that the Commonwealth would have difficulty in collecting State taxation to serve the objects of this bill. At present the State authorities collect taxation for both Federal and State Governments, excepting in Western Australia. If the Commonwealth Governmentattempts to interfere with, say, the taxation officers of the New South Wales Government, it will find itself in a very queer position. Such, officers are dependent for their future promotion on the goodwill of the State authorities, and they will not readily disobey instructions given to them by a State Government. I have always held the view that the Commonwealth made a retrogressive step when it handed over its tax-collecting machinery to the State Governments. That action tended to strengthen the power of the States, and to reduce the power of the Commonwealth. “We can see now that the collection of State taxes for Commonwealth purposes will, in the existing circumstances, he very difficult. It is probable that passive resistance will first be offered to any attempts of the Commonwealth to collect taxation clue to the States, but it is quite likely that, later, force might be used. It would be deplorable if such a state of affairs developed in Australia.

It has been said that clause 4 of the bill is designed to remove any doubt that might exist as to the liability of the Commonwealth Government to pay interest on public debts taken over by the Commonwealth from the States. In my opinion, the clause is a sham, and has been inserted in the bill to cover up the grave blunder perpetrated by the Federal Government in allowing Australia to default on the 1st February. It might be said that there was no default, but such a statement cannot be substantiated. As the Assistant Treasurer said last night, everybody recognized that when the Commonwealth assumed responsibility for the State debts it also accepted liability to pay all interest that became due in the event of a State defaulting. The Commonwealth, as a matter of fact, became the guarantor to other States that interest and State debts would be paid. Under ex sting legislation although the bondholders abroad could not sue the Commonwealth, they could sue the States. The Commonwealth guaranteed to the other States that the interest would be paid, and I doubt the wisdom of diverting the legal fire from the States 10 the Commonwealth. The right of action which bondholders formerly had against defaulting State Governments will, under this bill, bo right of action against the Commonwealth Government. This may be regarded as a hint to

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States that do not wish to pay, that their legal liabilities may be transferred to the Commonwealth. This year Australia will have to borrow £13,000,000 in London to meet maturing loans, and during the next two years many millions more will have to be borrowed. The action of the Commonwealth Government in allowing default, to take place in respect of the interest obligations of New South Wales will make more difficult the raising of new loans. Bondholders in Great Britain do not think of Australia in terms of Federal and State Governments and Federal and State politicians; to them it is one nation. They have in good faith invested in Australian loans - those raised by New South Wales were not for war purposes, but for the building of roads, railways, bridges, land development, and irrigation schemes, which gave employment to the people of the State - and when hundreds of thousands of comparatively poor persons, who are dependent upon their interest income for their sustenance, do not receive it on the due date, they do not place the responsibility on this or that politician; they know only that Australia has defaulted. Therefore, the Commonwealth Government struck a serious blow at the credit of this country when, in order to crush Mr. Lang, it allowed default in respect of the interest due by New South Wales, and payable in the last resort by the Commonwealth. During the recent general election campaign, Nationalist candidates assured the electors that if the Commonwealth Government were changed, Mr. Lang would be put out of office within three months. The Lyons Government has been in office for two months, and Mr. Lang is still secure. The Nationalists -undoubtedly played on the sentiment of the people, particularly in those portions of New South Wales in which public feeling is hostile to the present State Government. They condemned the Scullin Government for alleged weakness because it paid the interest liability of New South Wales when that State defaulted last year. Yet, the election having been won by such propaganda, the Prime Minister admits that his predecessor acted rightly in making good the default of New South Wales, whilst the Attorney-General in his speech on Friday last emphatically approved of the action of the last Government. I remind the House of the concern expressed in many newspapers when the Commonwealth allowed Mr. Lang’s default to continuewhen it said to him, “ We shall both default together, because if the Commonwealth pays your debt you may gain something.” The Melbourne Age, in a lending article oil the 17th February, said - ‘

With any legal notion that may be pending between governments, bondholders have no call to be concerned. The liability for the payment of their interest is the Federal Government’s liability, and as long as it leaves the liability unredeemed it is advertising its lack of competence and sensitiveness to national dishonour.

Even the Assistant Treasurer said last evening, “We have always said that the Commonwealth was liable to pay interest on State debts in the event of the State Governments, defaulting.” As a matter of fact every person who ha3 an interest claim on the New South Wales treasury understood that in the last resort the Commonwealth would accept liability. The right honorable member for Cowper (Dr. Earle Page) rightly said that the Government had gravely blundered when it refused to make the payments due to the overseas bondholders. I contrast this’ action with that taken by the Scullin Government. When Mr. Lang advised the Federal Government on the 24th March last, that he did not intend to meet the interest payable to the Westminster Bank on the 1st April, the then Treasurer rightly sought legal advice regarding the responsibility of the Commonwealth, and on receipt of it cabled to the High Commissioner in London, inter alia -

Advice received shows that the Commonwealth is under legal obligation to States which ave parties to Financial Agreement to pay the interest, and also that the Commonwealth has legal right to pay. The Commonwealth accordingly will make provision to pay the interest falling due in London, which New South Wales has declined to pay.

The present Government could have followed the same course. Two wrongs do not make a right. Apparently the Prime Minister thought to bring about the downfall of Mr. Lang by refusing to pay the State’s debt, but he made a great mistake.

In hi.3 endeavour to strike a blow at the prestige of the New South Wales Premier he besmirched the credit of Australia abroad. Tho National Bank of Australasia, in its monthly summary for January last, said in reference to the default by New South Wales and the Commonwealth - it is unfortunate that the consequent delay in paying certain matured interest obligations of the State of New South Wales has had a disturbing influence on the investing market, but there is no doubt that the interest will be paid shortly.

Many newspapers pointed out the bacl effect which the Commonwealth’s default had had on the overseas money market. It caused Australian stocks to slump, and has made more difficult the conversion of loans about to fall due on the London market.

The drastic provisions of clause 6 infringe the sovereign rights of the States. The exercise of such powers was never contemplated by the framers of the Constitution, or by the representatives of the States when they signed the. Financial Agreement, or by the people of Australia when they endorsed it. It is a negation of the spirit of federation. The Federal Labour party stands for one sovereign parliament for Australia, but desires that the transfer of power from the States to the Commonwealth shall be made, not- by back-door methods, but by a referendum of the people, and with the approval of the majority of those voting in a majority of the States. No government is entitled to use its parliamentary majority to whittle away the rights of the States.”

Mr Maxwell:

– What right is being taken away? Is it the right to repudiate honorable obligations?

Mr FORDE:

– Clause 6 gives to the Attorney-General of the Commonwealth a right to move the High Court which is not given to any State Government. Both plaintiff and defendant should have right of access to the High Court. Confiscation of State revenues by a snap vote of Parliament, without recourse to a High Court decision, is an infringement of State rights. But a chance majority in this Parliament may decide upon taking drastic action against a State without allowing it to be heard before the highest tribunal in the land. Clause 6 is unfair, and would not be tolerated by members opposite if they were not bound hand and foot to the party machine. The framers of the Constitution never intended or contemplated that the federal authority should be able to seize the revenues of a State without first applying to the High Court. Such drastic action would not be permitted a private individual, and should not be permitted a government.

No doubt there will be. some who, for party political purposes, will misrepresent the attitude of the official Opposition to this measure, but my leader has clearly pointed out that the Federal Labour party stands for the fulfilment of the nation’s obligations. It has no sympathy for any party to a contract who elects to dishonour his or its obligations. If the question at issue were simply whether New South Wales should honour its obligations under the Financial Agreement, and whether the Commonwealth would be justified in exercising its legal rights to compel the State to do so, the Opposition would undoubtedly answer in the affirmative. The questions at issue, however, are not so simple, even though we approach the subject with the firmest conviction that New South Wales should discharge its obligations. If all the members of the Nationalist and Country parties were free to vote as they think on this measure, and free of political prejudices, many of them would adopt the same attitude as the right honorable member for Cowper. I would like to hear the views of the honorable member for Martin (Mr. Holman), and the right honorable member for North Sydney (Mr. Hughes). I know that consideration of their prospects for promotion to Cabinet rank will not deter them. They have expressed themselves candidly in the past, and I hope that they will give to the House the benefit of their long study of the Constitution.

The questions honorable members are called upon to decide are whether the course- which the Government is proposing in this legislation is a valid exercise of the powers conferred on this Parlia ment under the Constitution as amended; and if it is valid, whether it is a proper exercise of them. Whether it is valid or otherwise must be ascertained by the interpretation of section 105a of the Constitution, which em”powers the Commonwealth to enter into agreements with the States, and to enforce the provisions of such agreements. Protracted litigation is bound to ensue if this bill is passed. If the Government exercises the powers conferred by clause C it will, as the accuser, decide the case, by the use of its parliamentary majority, the members of which are bound, under pain of expulsion from the party, to vote according to the Cabinet’s direction. A fundamental principle of the protection of life, liberty, and property is that no mau shall be the judge in his own cause. If that principle is sound as between individuals, it is surely sound as between governments. The Financial Agreement is a partnership between the Commonwealth and the States. What if the Commonwealth deliberately defaulted? Certain powers are given hy this measure to the Commonwealth to deal with the defaulting States, but no powers are given to the States to cope with a defaulting Commonwealth.’ If it is right that the Commonwealth should be both the accuser and the judge in this matter, in accordance with the powers given under clause 6, what would be the way to decide the. question if the Commonwealth had defaulted and the States had a grievance? It may be argued that notwithstanding any action taken under paragraph a of clause 6, the jurisdiction of the High Court might be invoked. That course could be followed, but only at the instance of the Federal Attorney-General. That is an important point which has been recognized by the Assistant Treasurer. The same right is not given to the State Governments which have sovereign power and control their own revenues and staffs, including the police force, as the Commonwealth Government controls its affairs. The High Court has always been recognized as the interpreter of the Commonwealth Constitution, and that issues such as this should be decided by the Commonwealth High Court is one of the cherished principles of our judicial system. Once we depart from that principle we are stepping on uncertain ground.

I consider that the introduction of this measure in its present form was a huge blunder. This action was dictated by_ personal bitterness and party political” feeling between the Commonwealth Government and . the party in power in the State of New South Wales. The seriousness of the blunder which has been committed will be brought home to the Government in a few months, and it is only one of many mistakes, such as the removing ‘of the preference to members of the Waterside Workers’ Federation and to returned soldiers on the waterfront, which is one of the biggest blunders of this Government. It blundered also when it appointed the Assistant Treasurer to be Resident Minister in London, and one of its most grievous mistakes was its failure to meet the interest payments due on the 1st February, when it allied itself with the Lang Government in a policy of repudiation. That action will redound to the discredit of Australia and -will shake the confidence of bondholders abroad in the ability of Australia to honour its obligations. These mistakes have been made by the party that came into office by shouting that it believed in paying every penny of interest clue by the Commonwealth, whether it was State or Federal indebtedness. They secured a victory on the 19th December last by sheer misrepresentation. Because of some of the objectionable provisions in this measure it should be rejected, and I believe that that is the view of a number of honorable members who would like to express that opinion, but for party considerations are not prepared to admit it.

Mr HUTCHIN:
Denison

.- The previous speaker was good enough to suggest that all members on this side will support this measure merely because the Government has brought it down, and because they blindly follow the Government. If the accusation of blindness is levied against the young members of this ‘ House, my reply is that even they had their eyes opened before they came into this chamber. Indeed many of them would not have come here had this not been so. Of those in this House who have had their eyes opened recently, the members of the section to which the honorable member for Capricornia (Mr. Forde) belongs have had their eyes opened most widely. He mentioned that the Premier of Tasmania in a communication this morning expressed concern about this bill, and he assumed that other State Premiers will also be concerned about it. In my view everybody in this House, and throughout Australia -is concerned about it. If not, they would not he alive to the gravity of Australia’s situation. But the person in Australia who is perhaps chiefly concerned is the Premier of New South. Wales. The Commonwealth Government is not proposing to do now anything which the States under the Financial Agreement have not already authorized. Therefore, there need be no fear of interference with State rights. One must regard the bill as one of the most important measures that in the history of this Parliament have been brought down, and it must be confessed that the attendant circumstances are amongst the most pitiable. 1 agree thoroughly with the right honorable member for Cowper (Dr. Earle Page), that Australia is now at the crossroads. Either the States and the Commonwealth go forward in mutual sympathy and aid, or we follow the lines of dishonesty, and the federation is sundered. The moral issues being so great and the results that will follow from the action now proposed so serious, it is not at all a matter for wonder that everybody is very much concerned in the measure that is now being debated. I congratulate the Prime Minister on having brought forward this bill so promptly, it being the first measure to be placed before the House. The Leader of the Opposition (Mr. Scullin), in addressing himself to the bill, gave us to understand that he considered that there was some risk attached to it; that there was a powder magazine in New South Wales, and we must not put a match near it. I think one can well take the opposite view, that the patience of the people of New South Wales - except those in East Sydney perhaps - is well-nigh exhausted and they are waiting for something firm and decisive to be done. Therefore, I am sure that they applaud the action of the Go- vernment in bringing forward this bill. Personally I am not surprised that Mr. Lang has again defaulted. Neither he nor his supporters have equivocated much as to their attitude to the State’s overseas debts. Nor am I surprised that the Prime Minister has come forward in this decisive way. His whole public career has been marked by the practice of three simple, yet perhaps, difficult virtues - honesty, common sense and decision ; and this bill is typical of the man and of the Government which he leads. Nobody realizes better than the Prime Minister the gravity of the situation facing Australia to-day. Nobody more clearly visualizes that the only way out is the way of honesty, whatever sacrifice be entailed, nor is any one more sincere in his sympathy with the people who are suffering distress through the economic conditions now obtaining in Australia and throughout the world. Nobody who has followed his actions of recent years can, for a moment, deny that, and the people of Australia have recognized the fact. I am wholeheartedly with the Prime Minister. I feel for those unfortunate people upon whom misfortune has descended so severely, and I am quite prepared to follow the Prime Minister’s lead in the general line of action now proposed.

One listened to the speeches of the leaders of the various parties with the greatest possible interest. As a new member I express my personal appreciation of the statement of the case made by the honorable the Attorney-General (Mr. Latham). I should also like to say that I appreciate the contribution made to the debate by the Assistant Treasurer (Mr. Bruce). I was not at all surprised that both the Leader of the Opposition (Mr. Scullin) and the right honorable member for Cowper (Dr. Earle Page) expressed their agreement with the main issue now before the House, although they offered some criticism and some constructive suggestions. The issue before us is quite simple. Shall we stand up to our job or throw up our hands and cry “ Kamerad “ ? Are we going to be British and refuse to admit defeat, or are we to run away, having collared all the loot in sight? This country has been settled for little more than a century; have its people degenerated, or do we still main tain the ideals of the pioneers who crossed the ocean to come here and built up our nation, and of the Australian Imperial Force, who saved it, and displayed in the greatest crisis of our history the traditional British spirit? Are we worthy of them? Are those who have gone before us to turn in their graves, and are those who are now here to hide their faces in shame? Are we the descendants of bushrangers, or do we come from those who, to found this new country, faced all sorts of difficulties and privations, laying the foundation stones of nationhood without ever acknowledging defeat? The honorable member for West Sydney (Mr. Beasley) said that overseas interest rates must be scaled down. Events may prove him to be correct. The Assistant Treasurer (Mr. Bruce) indicated the only possible method of scaling down interest rates, and the last speaker (Mr. Forde), I think, agreed with the method he proposed, namely, discussion, negotiation, and agreement; but always after we have put our own house in order.

It is only to be expected, if emissaries from Australia go to Great Britain to talk over the subject with the British people, that the latter will look carefully at the proposals submitted to them, lt is only to be expected that, if asked to consent to the reduction of interest rates they will make comparisons between the standard of living enjoyed by British people and that of our own workers. I do not know how anybody could go to London and say, “ We want the interest rates paid by Australia to be scaled down, so that .the labourer in New South Wales may get £4 2s. 6dr per week while the labourer in England receives 40s.” It is all very well to talk of this bill as an intrusion upon the sovereign rights of States. New South Wales, no doubt, is, in law, a sovereign State; but from the common-sense point of view, a State is no longer a sovereign State when it ceases to behave as such. The plea of the spokesmen of a section of the representatives of New South Wales in this matter is inability to pay. They say -that the prime duty of the New South Wales Government is to feed the women and children of that State. The main cause of complaint by other States - and I am a representative of the smallest and most remote - is that the Financial Agreement has been broken, and that the New South Wales Premier’s treatment of the Commonwealth Government has been of a most cavalier nature. We ought to be extremely thankful for the Financial Agreement. God knows where Australia and New South Wales would be to-day without it. It is a monument of statesmanship, and its authors will always be gratefully remembered by those whom it benefits. New South Wales has not a monopoly of starving women and children; nor have the protagonists of the New South Wales Government in this chamber a monopoly of sympathy for them. But is it fair that other States, which are courageously facing the present situation, should be levied upon to support people who are suffering no greater distress, if as great, than that experienced in other States. New South Wales must come into line. The Commonwealth’s financial policy must be a common policy; that is fundamental so far as overseas financial affairs are concerned. If that condition is not fulfilled, wo cannot remain a federation, because finance is the basis of government.

New South Wales claims in one breath to be the richest State of the Commonwealth, and in the next breath says that she cannot’ pay; that she cannot feed her starving people. The two statements are inconsistent. Notwithstanding that New South Wales claims to be the richest State, and has indulged in all sorts of expenditure which more cautious or more prudent States have declined to embark upon, its Premier is the first to fly the white flag in the face of distress. It is pertinent to ask why New South Wales cannot pay. In the short space allotted to me it is impossible to go over the ground fully, but I can touch on one or two basic things to illustrate some of the more important effects of the policy which has been pursued in New South Wales. It is necessary first to refer to the system of industrial arbitration which has been built up in New South Wales. Since October last, the industrial system of New South Wales has been paralysed. The Government removed from the bench of the arbitration commission one of the judges who went to constitute that’ com- mission. Had commodity price levels been rising, one could not imagine that this length of time would have been allowed to elapse without the vacancy being filled. The constant pressure for increased wages could not have been resisted, and an appointment would have been made. But commodity prices have been falling, and one cannot escape the conviction that the Government’s failure to fill the position has been deliberate, its purpose being to prevent a review of the basic wage ruling in New South Wales. At the present time, the New South Wales Government is endeavouring to pass through Parliament” legislation amending its industrial laws. The measure is at present in its second-reading stage in the Upper House. Among the provisions of that bill is one which provides that the president of the Industrial Commission is to be re-appointed to his position for another seven years, notwithstanding that under the Judiciary Act he was due to retire this year.

The State basic wage was fixed in New South Wales in December, 1929, at £4 2s. 6d. a week. Although the cost of living has declined since then, that rate still holds in all industries which are governed by the State Industrial Commission. In real wages, all the employees affected by that provision have had a rise. As against that, operating in the same State, is the federal basic wage, which, as from the 1st February, stands at £3 9s. a week. These two sets of rules operate side by side, the result being confusion and stagnation, with attendant unemployment’. Unemployment costs money, and that is one of the principal reasons why New South Wales finances are in chaos to-day. I suggest that while the women and children who are in need in New South Wales must be fed, if possible, certain economies might well be made. The overhead expenditure of the Industrial Commission, which has not justified itself by anything it has done since October last, might be applied to relieving the distress among women and children. On that commission there are Mr. Justice Piddington, Mr. Justice Cantor, Mr. McGrath, Deputy President, and nine conciliation commissioners, each receiving £750 a year. There were formerly six industrial commissioners in New South

Wales, but although the work is less - iu fact there is no work before the commission except by consent; - their number has been increased, and it is interesting to note - since the only hope of industrial peace in the last resort is some form of arbitration at the hands of an impartial authority - just how this commission is constituted. The last three, industrial commissioners to be appointed are as follow : Mr. Burns, who was secretary to the Coal Miners Union in the southern district; Mr. Hook, who was secretary to the Moulders Union ; and Mr. Sherwin, who was secretary to the Restaurant and Hotel Employees Union. It is not in human nature that these gentlemen, with their affiliations and associations, can exercise that impartiality which their position demands.

Mr. Beasley. - What’ about the appointment of Judge Drake-Brockman ?

Mr SPEAKER:

– I am sure that the honorable member for Denison (Mr. Hutchin) does not mind the interruptions, and is quite able to hold his own against them, but I remind honorable members that it is customary to afford new members, while making their first speech, an uninterrupted hearing.

Mr HUTCHIN:

– The new bill which is before the New South Wales Parliament proposes to give these conciliation commissioners the widest powers. The definition of industrial matters is as wide as the Pacific Ocean. In addition to that, they are to have a vote, so that it is essential that they should be impartial. Now that I have disclosed the names and histories of some of these gentlemen, it is not surprising that the employing interests in New South Wales feel that this measure proposes to deliver them bound and gagged to the domination of the New South Wales Trades Hall. Why is not the money which this- cumbersome organization costs devoted to the relief of distress? The other States of the Commonwealth are entitled to ask that.

There has been for some time past a milk board in New South Wales, the president of which receives £1,250 a year. The members of the board each receive £750 a year, but recently their salaries have been increased by £500. Mr. Lang evidently intends to milk the State. Not long ago he said that no one was worth more than £500 a year in any position in these days, and he proposed to cut down the tall poppies. Very shortly one will not be able to see Mr. Lang for these poppies. An increase in salary of £500 a year to the members of this board in face of the prevailing distress is surely the height of absurdity. One is informed on authority which one usually believes, that there are reasons behind this increase which have not been disclosed.

Another appointment has recently been made which indicates that, while the desire may be strong in the breasts of certain people in New South Wales to look after humanity, their interest is centered not only in the poor. A gentleman has been appointed to a land board in Western New South Wales at a salary of £1,000. He may know all about land, but, so far as I can learn, his previous connexions have nothing whatever to do with it.

Then, in connexion with the administration of the dole, the Lang Government appointed an army of inspectors at fairly satisfactory salaries. Their duty is to keep a check on dole payments, and to prevent that dishonesty which, apparently, became a little bit too much to be borne. If the Government of New South Wales is so concerned about the starving women and children, what need is there to create this ever-growing bureaucracy at salaries which must be as a red Tag to a bull in the eyes of the unemployed. The Loan Council would have been justified at its last meeting in. tackling the New South Wales Government on that question. No other State has done anything of the kind, nor would think of doing so. In New South Wales, however, there appear to be a great many people who have to be appeased, and the Government has no hesitation in appeasing them at the expense of the rest of Australia. The Loan Council, which authorizes the raising of the money to be spent by New South Wales, has the right to inquire into these matters.

Regarding the basic wage in New South Wales, it will be informative to place on record the percentage decreases which have taken place in various parts of the Commonwealth since June, 1930. In New South Wales the State basic wage has not been decreased at all. The federal basic wage, which is paid over a fairly wide range of industry, has been reduced by 25.19 per cent. In Victoria the reduction has been 26.27 per cent. ; in Queensland, 24.25 per cent. ; in South Australia, 30.86 per cent.; in Western Australia, 26.37 per cent.; and in Tasmania, 22.83 per cent. The Governments of those States have not shouted from the housetops that they have starving women and children to support. The only State which has raised that cry is New South Wales, which has refused to adjust wages to meet present day conditions. Because of the high wages ruling in that State, competitive industry in other States has had an advantage over it. The New South Wales Government, in an endeavour to meet that position, has introduced a trade mark bill designed to frustrate freetrade between the States. In addition to the high basic wage, there is in New South Wales a system of family endowment payments. For this purpose a levy of 2 per cent, is made on all salaries and wages, including the salaries of members of executive staffs. From the fund so created 5s. a week is paid to each dependant child - after the first where the average income is less than the basic wage. Due to unemployment, and intermittency of employment, which, in turn, is due to the high rate of wages prevailing, child endowment claims are increasing by hundreds every week.

In New South Wales and in other States governments are paying sustenance or, as it is more commonly called, the dole. The dole for a single man in New South Wales is lis. 8d. a fortnight, on top of which he may earn, if he feels so disposed, 25s. a fortnight, bringing his total income to £1 16s. 8d. The dole for a married man is 18s. lOd. a fortnight. He may earn 50s. a fortnight, bringing his receipts up to £3 8s. lOd. a. fortnight. If he has a child, he may draw 29s. 4d. a fortnight, and earn another 50s. a fortnight, bringing his total receipts up to £3 19s. 4d. If he has seven children he may draw up to 55s. 4d. a fortnight. He may earn, without diminishing the amount of the dole, up to £5 12s. 6d. a fortnight, so that his total receipts will be £8 7s. lOd. a fortnight. Is it any wonder that many people in New South Wales have become so expert in doing just that amount of work which will fail to penalize them in drawing their dole payment? That is a very provocative state of affairs in the eyes of the people in other States, people who, besides being citizens of their respective States, are first of all Australians, and -as such are concerned for the welfare of the federation. They naturally resent the action of the Government of New South Wales, which has resulted in increasing the burden which they themselves must bear.

I pass on now to another matter which affects the State of New South Wales, and the other States of the Commonwealth also, namely, the coal industry. The best coal in the Commonwealth lies in New South Wales, and the best of the New South Wales coals lie in the northern district. Other States must use New South Wales coals for gas and for railway purposes, as well as for industrial purposes. The price of coal, therefore, concerns all industries throughout Australia. The Maitland coals aTe superior to most in the world; in fact, I doubt whether they have any superior. They are high in volatiles, and low in ash. Because of the quality of the coal, it was previously possible for a large export trade to exist; but that trade is now almost a thing of the past. Its loss is due, not only to the development of coalfields in other countries which are now our competitors, but also to- the fact that the price of our coal has been too high and the supply uncertain. In 1913 cargoes in bunkers from New South Wales consisted of 3,500,000 tons, whereas in 1928 the quantity had decreased to 1,400,000 tons. The coal industry of New South Wales has been a heavy charge upon the manufacturing enterprise of that State as well as of other States, and has made a serious .contribution’ to the present financial position of New South Wales. The price of coal in 1915 was Ils. a ton, and in 1929, 25s. a ton; but whereas in 1911 coal produced in that State used to be the cheapest in the world, in 1929 it was the dearest. It is only recently, lu the scramble for trade, that the price has’ fallen. Then, again, the question of wages crops up. The basic wage in New South Wales is far above that of the other States, and this applies particularly to the coal-mining industry. It is a condition which, if New South Wales is to recover its health, must be cured. In 1921, pig iron, according to the figure computed by the Statistician, stood at 2,470, and in 1929, that figure had been reduced by 50 per cent. The figure for cement had been reduced by 14 per cent., and that for general supplies on the railways of New South Wales by 40 per cent. The railways are one of the biggest items of loss in the revenues of the State, and one of the principal charges on them are the rates on coal. It is, therefore, necessary for the coal industry to come to earth, and to recognize the economic conditions of to-day, so that coal may be made available for the various purposes for which it is required at a price which will result in its economic utilization in commercial and manufacturing channels. Gas is one of the basic requirements of society, and its cost is closely bound up with the price of coal. In fact, the selling price of gas is reflected in the price of “coal to the extent of 37 per cent., and a reduction of 5s. a ton in the price of coal would show a reduction in the price of gas of 3id. per 1,000 feet. At the present moment legislation purporting to rectify the anomaly of the coal position is before the Parliament of New South Wales, but, unfortunately, it omits many of the recommendations of the recent coal commission which sat in that State. The control that was proposed to be exercised over the two sides in this industry - the employers and the employees - is now to be exercised over the employers, and the employees are to be given more or less a free hand.

No one wishes more heartily than I do that in the interests of Australia the States and the Commonwealth shall pull together in this period of adversity, and march on to greater prosperity than we have known before ; but unless we can eliminate much of the selfishness which now exists that will not be possible. It is perfectly natural that the other States should resent the action of New South Wales, and the sooner that State realizes that it is not a self-contained unit, either geographically or economically, the sooner will there be between the States and the Commonwealth that goodwill which is essential to our national solidarity and our future progress. As an illustration, let me say that New South Wales may be considered as a trustee holding valuable deposits of coal, not for its own immediate enrichment, but on behalf of the Australian people as a whole.. The proper handling of the industry would confer great advantage, not only upon the State of New South Wales, in which the deposits lie, but also upon the other States of the Commonwealth.

Mr WARD:
East Sydney

.- After listening* to the speech of the honorable member for Denison (Mr. Hutchin) there should be no doubt in the minds . of other honorable members that this legislation deliberately attacks the living conditions of the people of New South Wales. Notwithstanding what the Assistant Treasurer (Mr. Bruce) has said, we in New South Wales have no doubt that he is the directing force behind the Government’s policy. The Prime Minister (Mr. Lyons) when introducing this measure said little about it, and promised that the details would be supplied by the Attorney-General and other members of his party. The Assistant Treasurer so far forgot himself as to indicate that the Government intended to avail itself of the suggestions of honorable members. That was a clear indication to the members of this House that he was the fighting force behind the Government, and that his policy was being enunciated. The Prime Minister is only the nominal head of the Government. Although when he took office, after the appeal to the people on the 19th December, he claimed to have a united party, we know full well that the United Australia party is not united. Some honorable members who now belong to it have in the past fought the Nationalist party bitterly. They could not sit in the party room and agree wholeheartedly with the views expressed by other honorable members. Immediately the United Australia party took up the reins of government there was a scramble for the spoils of office. What does the right .honorable member for Cowper (Dr. Earle Page) think of $he action of the United Australia party, which, when it found that it was sufficiently strong, formed a ministry without accepting the support of the United Country party? The right honorable gentleman has indicated that this Government will have a short life, and I agree with him.

Mr Maxwell:

– The wish is father to the thought.

Mr WARD:

– If this Government pursues its present policy of attacking the conditions of the people of New South Wales, the end of the Government will come much sooner than the honorable member expects. The policy of this Government was rejected by the people.

Mr Lane:

– Is the honorable member referring to the East Sydney by-election ?

Mr WARD:

– Yes. That was the first occasion in the political history of this country on which the decision of the people as shown by the results of a general election was reversed before the new Parliament actually sat. On the 19th December, the Lang plan candidate had a minority of 1,100, but within seven weeks, notwithstanding the fact that the Prime Minister, the Assistant Treasurer, and other members of the United Australia party whose services were available, supported the candidate of the United Australia party, the minority of 1,100 was turned into a majority of 200. Even the Leader of the Opposition (Mr. Scullin) spoke in that electorate in opposition to the Lang plan candidate. Now that this Government has given us a taste of its policy I am prepared to contest the electorate of East Sydney with any Government, supporter. If my challenge is accepted I am convinced that I shall be returned to Parliament with a majority, not of 200, but of thousands.

Mr SPEAKER:

– I ask the honorable member to connect his remarks with the bill.

Mr WARD:

– I shall do so. In introducing this bill the Government has altered its original policy. Previously it refused to pay the interest commitments of New South Wales. It set out to teach that State a lesson, but after reading tha protests in the press of New South Wales it altered its policy, and decided to meet those commitments. This legislation is the result of a vendetta against the Government and the people of New South Wales. The Government in its haste to wreak its vengeance upon the Premier of that State, blundered, and this legislation has been introduced in an endeavour to correct that blunder. This measure is likely to pass both Houses of the Parliament, but that will not be the finish of the fight ; it will be only the commencement. I say definitely that we are not prepared to sacrifice, without a fight, anything which has been gained as the result of work and agitation on the part of the Labour party.

Mr Thompson:

– What sort of a fight?

Mr WARD:

– That rests with the Government. As the Government is prepared to treat the people of New South Wales, so will it be treated by them. If this Government is determined at all costs not to feed the unemployed, we shall fight them. One honorable member, speaking in favour of this measure, commented on the fact that the Premier of New South Wales had agreed to the Premiers plan. He did agree to it, but with the reservation that each Premier should be allowed to determine in what way the necessary adjustments should be made. He has endeavoured to carry out the agreement, but he has not been able to do so because of lack of support in the upper chamber of New South Wales. Mr. Lang contends that the workers have had their wages and conditions adjusted sufficiently, and that any further adjustment must be at the expense of those who are best able to bear the burden. If honorable members want those adjustments made, let them approach their representatives in the upper chamber of New South Wales with a view to giving such support to Mr. Lang as will enable him to adjust his finance and to balance the budget. Of what action is New South Wales guilty? No steps are being taken against other States which have not kept to their undertakings under the Premiers plan. On the other hand, the Commonwealth Government or the Loan

Council has rendered financial assistance to several States, so as to enable them to carry on. But no such assistance is being extended to New South Wales, simply because the Premier of that State chooses to feed and clothe his people. Having listened to the speeches on this measure made by honorable members opposite I am proud of the fact that I support the policy of the Premier of New South Wales. It has been demonstrated this afternoon that the people of New South Wales live under much better conditions than those of other States, and that justifies my pride in being a New South Welshman.

Mr Hill:

– The other States are paying for those better conditions.

Mr WARD:

– That is not the case. Figures compiled, not by Mr. Lang or his officers, but by the Commonwealth Statistician, show that New South Wales pays 14s. 4d. more per head of the population into the coffers of the Commonwealth than is paid back to her, and Victoriapays 10s. per head more to the Commonwealth than she receives from it. All the other States have, as a matter of fact, being living on New South Wales and Victoria since the consummation of federation. If New South Wales were to withdraw from the federation tomorrow, the other States could not maintain their activities. Western Australia has had substantial grants from the Commonwealth ; South Australia has had special grants over a great number of years; and Tasmania has also received grants, without which she would not have been able to maintain her public services. The people of New South Wales have not only provided money to enable the people of the other States to live, hut have done more for their unemployed fellow-citizens than the people of any other State.

The honorable member for Denison deplored the fact that the basic wage in New South Wales was £4 2s. 6d. per week of 44 hours. I am proud of that fact.

Mr Stewart:

– Many of the people have no work at all !

Mr WARD:

– An analysis of the figures will show that, in comparison with the Commonwealth basic wage, the people of New South Wales are in a very good position. The federal basic wage is based upon the requirements of a man, his wife, and two children, while the New South Wales basic wage is computed upon the requirements o£ a man, his wife and one child. For every additional child under fourteen years in a family, child endowment is paid in New South Wales. This makes the basic wage for the husband and wife and two children £4 7s. 6d. a week. The honorable member for Denison said that the Premier of New South Wales had acted wrongly in refusing to make an appointment to the Arbitration Bench of that State so that the basic wage could be reviewed. In my opinion his refusal to do so was one of the best things that a Labour Premier has ever done for the people. I am proud .that Mr. Lang has refused to allow any authority to slash at the basic wage in that State.

The honorable member for New England (Mr. Thompson) suggested yesterday that the proceedings of this Parliament should be broadcast. If the people of New South Wales could have listened to the speech of the honorable member for Denison this afternoon they would resolve that the Labour Government of New South Wales shall be kept in office for a very long time. The Leader of the Opposition (Mr. Scullin) said yesterday that, in the current financial year, £12,000,000 would be expended on unemployment relief ; but he did not say that £7,000,000 would be provided for this purpose by the New South Wales Government. We are proud that the New South Wales Government is caring for the unemployed of the State.

It has been said that Mr. Lang has p”* honoured his undertaking to the Premiers Conference. If honorable members who make that and similar remarks were honest, they would admit that their policy is to reduce the working people of Australia to coolie standards of living and coolie wages. The policy of the New South Wales Government is to maintain and, where possible, improve our existing standards. The Lang Government has so far effectively resisted all the efforts of anti-Labour reactionary governments to reduce the living standards in New South

Wales. The honorable member for Denison said “ Let us be British “. I claim to be as patriotic as any other honorable member of the House, but my patriotism is not the kind which is shown by flagwaving in time of war. I believe that the true Australian patriot is the person who desires to maintain a standard of living in this country which will make us proud of our citizenship. It has been said by honorable members of every party in this House that the urgent needs of the moment are the restoration of confidence, the balancing of our budgets, and the placing of our people in employment. I ask whether the enactment of this bill is likely to place one additional man in work. The honorable member for Parramatta (Mr. Stewart) knows very well that money is available in Australia for investment in any enterprise which can be proved to be profitable. But we must recognize that our troubles to-day are due not to our inability to produce, but to the inefficiency of our methods of distribution. Owing to the mechanization of industry we can produce more goods than the markets can absorb; but our governments have stupidly failed to solve the distribution problem. Instead of crying out for a lengthening of the hours of work from 44 to 48, we shall before very long be seeking a reduction of hours to as little as 30 hours per week. In this way we shall be able to provide employment for the unfortunate people who are to-day walking the streets of our cities.

Honorable members opposite have said a great deal about the necessity to restore confidence, and have expressed sympathy with the unfortunate people who are out of work ; but expressions of sympathy do not fill empty stomachs. The Government of Now South Wales has dealt with the unemployment situation in a practical way. It has endeavoured to provide food, shelter and clothing for the people. The Leader of the Opposition said yesterday that we should meet our obligations. I agree with him. But would it be suggested for one moment that the people of this country should pay back more money than they have actually borrowed? I have heard it said repeatedly in this House that Germany acted dishonestly when she inflated her currency in order to destroy her internal debt. If such a course was dishonest, is it not equally dishonest to deflate the currency so that the bondholders will receive very much more than they actually lent to our various governments? We are prepared to repay every penny that we borrowed, but not a penny more.

There are people who say that what Mr Lang wants to do is right, but that he wants to do it in the wrong way. It has been said that the Lang plan has failed. As a matter of fact it has only been partially tried. Where it has been tried it has succeeded. Mr. Lang said long ago that we should reduce the interest payable on our internal loans. At that time it was said that that would be impossible; but it has since been done. The Lang plan is being tried to-day even in antiLabour strongholds, and by municipal authorities, which are not Labour in sentiment. The Manly Council, in the division of Warringah, has stated definitely that it does not intend to pay any more interest to the Commonwealth Bank until the bank is prepared to come to terms with it. The Lang plan has not failed. It is gaining in popularity every day. Let us have three months of the regime of this Government, and we shall find that the people will, at the first opportunity, place on the Commonwealth treasury bench, and on the treasury benches of the State Parliament, men who will give effect to this despised plan. The people of Ne*w South Wales are not taking a parochial view of the problems which face the nation, but are acting in the best interests of all the citizens of Australia. The number of supporters of the Lang plan in every State of the Comomnwealth is growing rapidly, because the people are coming to realize that Mr. Lang has proved himself to be the most far-seeing statesman that this country has ever produced. In February, 1931, it was said that the Lang plan to reduce interest on our internal debt was impracticable and preposterous; but that part of the policy has since been put into effect. Every country in the world is to-day seeking some means of dealing with international debts. That also is part of the Lang plan. This Government is now adopting a part of the Lang plan, for it is sending a representative overseas to endeavour to obtain a reduction in oversea interest payments. When Mr. Lang first suggested that this should be done it was said that his proposal was impracticable. When the Loan Council refused to assist Mr. Lang to meet his commitments he took it upon himself to open up negotiations with the overseas bondholders - something that the National Government should have done in the interests of the people of Australia, but neglected to do. Now that Mr. Lang has done it, we are told that he has done wrong. Mr. Bavin, the Leader of the Opposition in the New South Wales Parliament, said recently that -

Apparently Mr. Lang has interpreted the decision of the Commonwealth Government that he must make his own Loan Council arrangements as an authority to deal directly with the bondholders and make special arrangements with them. I do not understand anything that lias been done by the Commonwealth Government to amount to an authority to the State Government to act outside the terms of the Loan Council agreement. Hence it is clearly impossible that the New South Wales Government should be relieved of its obligation by any arrangement between the Bondholders Association and the State Government.

The plain fact is that everything that Mr. Lang tries to do is condemned. Unless he is prepared to obey the dictates of the Commonwealth Government, the banking institutions, and the financiers of this country, he is wrong. If Mr. Lang on returning to Sydney from the recent Premiers Conference had said, “ I have agreed to discontinue the payment of child endowment; to reduce the basic wage in New South Wales to £3 3s. a week, which is the rate in South Australia; to increase working hours to 48 a week; to repeal our Workmen’s Compensation Act, and to reduce widows pensions “ the press of Australia, and particularly the Melbourne press, would have applauded him, and would have discovered previously unseen virtues in him. But Mr. Lang was not prepared to break faith with the people who* have lifted him to the position which he now occupies. He would not repudiate his obligations to the unemployed and needy people of New South Wales, and so he and his Government are being condemned more bitterly than ever.

Every effort is being made to force the Lang Government to the country. I assert that after three months of administration of the affairs of this country by this Government we shall welcome an election in New South Wales; and we shall then have no doubt whatever about the decision of the people.

Very few honorable members of this chamber realize exactly what Mr. Lang has done” for the people, of Australia. Economies have tbeen effected in that State, but not the economies demanded by the Premiers Conference. Widows’ pensions have not been reduced there, although the Commonwealth Government has made heavy reductions in all the pensions which it pays. Some honorable members talk glibly, about the necessity for a restoration of confidence. Whose confidence do they wish to restore? At the general election on the 19th December, the anti-Labour parties were returned with a substantial majority. No doubt the people accepted the policy enunciated by the Prime Minister, and believed his promises, but having ‘gulled the electors, the honorable gentleman announced his real policy in the course of an address to the Millions Club in Sydney. To him I am indebted for my presence in .the House to-day, because my most valuable asset during the East Sydney by-election was the honorable gentleman’s declaration and the support of it by his hearers. I have said that the people of New South Wales are prepared to pay every penny piece that they owe. But what action has been taken by the Commonwealth Government to prevent the robbery of the people by the banks through the manipulation of the exchange rate? The extra burden of exchange is crippling Australian governments, and preventing them from balancing their budgets. .But the present Commonwealth Government is dominated by outside financial and banking interests, and is prepared, obediently, to give effect to their policy. If honorable members opposite desire to do something tangible to assist the Australian people, they should not allow secret meetings- of private financial and banking institutions to declare that an Australian pound shall be of less value than an English pound. The sooner the Government takes steps to prevent that injustice, the sooner will Australia enter upon that era of prosperity of which ministerial candidates talked so glibly during the election campaign. The opponents of Labour declared on the hustings that if they were successful confidence would be restored, but the honorable member for West Sydney (Mr. Beasley) pointed out last night, that £5,000,000 worth of treasury-bills which matured on the 1st December were renewed at a higher rate of interest than had ever been paid before for a similar security. That was an indication that the investors have no confidence in the present Government, which after all, is a collection of misfits and rejects.

Mr SPEAKER:

– The honorable member is not entitled to refer to Ministers as rejects. I ask him to withdraw that remark.

Mr WARD:

– I withdraw it. Do honorable members supporting the Government believe that confidence was instilled into the minds of Australian workers when their wages were arbitrarily reduced by 10 per cent., or into the minds of the invalid, old-age, and war pensioners, when their pensions were slashed to a mere pittance? In New South Wales associations of pensioners have been formed, whose numbers are growing stronger daily. They have no confidence in the present Commonwealth Government, because since its advent to the treasury bench, it has repudiated every promise made to the electors by Ministers and supporters. I warn the unfortunate pensioners that they cannot hope for a restoration of their pensions if the present Commonwealth Government remains in office. If they are to recover the payments of which they should never have been, deprived, they must await the advent of a real Labour government to this Parliament.

Mr Maxwell:

– What does the honorable member mean by a real Labour government?

Mr WARD:

– -The enlightenment of the honorable member on that subject would occupy more time than is allowed to me under the Standing Orders. Whilst I can explain these matters to honorable members opposite, I cannot supply them with the brains to understand.

Mr Lane:

– That is an intelligent remark.

Mr WARD:

– I do not treat this measure with levity as do.es the honorable member for Barton, who prior to entering this Parliament earned his livelihood by chasing people to ensure that they did not repudiate their liability for goods bought on time payment.

Mr Lane:

– That remark shows what a dirty mongrel the honorable member is.

Mr Nairn:

– The honorable member for East Sydney prior to coming into this Parliament was on the dole.

Mr SPEAKER:

– I ask the honorable member for East Sydney (Mr. Ward) t« refrain from personalities, and to connect his remarks with the bill.

Mr WARD:

– I am only protecting myself against reflections passed upon me by honorable members opposite, one of whom referred to the fact that I was receiving the dole.

Mr SPEAKER:

-If the honorable member object’s to that statement I shall ask that it be withdrawn.

Mr WARD:

– No; I am not ashamed of the fact that I was in the ranks of the unemployed. Better men than the honorable member for Perth are receiving the dole in New South Wales.

Mr Nairn:

– If the honorable member avoids personalities others will avoid them.

Mr WARD:

– I endeavour to do that on all occasions, but there are in this House men whose antagonism to the Premier of New South Wales is so bitter that they cannot control their feelings. They cannot be allowed to say untruths of the representatives of the New South Wales Government in this Parliament. Probably members from other States do not appreciate the position in that State.

I warn the honorable member for Parramatta (Mr. Stewart) and the honorable member for Barton (Mr. Lane) that not even the forces of the New Guard will be sufficient to protect them if the people of “New South Wales awaken to what is happening in this Parliament. This bill provides that specified revenues of the State Government may be seized to meet it’s interest obligations; the Commonwealth Government may even seize the State Government’s balances in private banks. Do honorable members imagine that if action of this sort is taken, it will stop there? The people of New South Wales, particularly those who have deposits in private banks, should take warning that, if necessary, the Commonwealth Government will seize the savings of the’ people in order to pay interest to the overseas Shylocks. The savings of the people are endangered, not by a Labour Government, but by an anti-Labour Government in this Parliament. The Commonwealth Government is adopting the wrong methods to deal with the situation in Australia. Mr. Lang is not responsible for all the industrial and financial ills of our people; on the contrary, he and his Government may take credit for the fact that’ the Australian people have not been crushed to that level to which honorable members opposite would like to reduce them. People in all other countries have realized that the present social order is doomed; no amount of propping will save it. We may as well realize that, too. No doubt honorable members opposite sincerely believe in the present order of society, which permits one section to live in idleness and luxury while denying a decent livelihood to the great masses of the people. Those who are fortunate enough to live in idleness and luxury are content, but no system can continue which permit’s thousands of people to want in the midst of plenty. People are hungry, not because of shortage of foodstuffs; the farmers are producing more than Gan be consumed, and factories are closing their doors because they cannot sell the goods which they produce. The purchasing power of the people is being destroyed through un employment. The whole social structure must be altered so that we shall have production for use instead of for profit. The sooner honorable members realize that that is the only alternative to social chaos in this and other countries, the better it will be for the people, not only of New South Wales, but of Australia generally. The right honorable member for Cowper (Dr. Earle Page) spoke of a desire in New South Wales for the separation of certain provinces from that State. There is a growing feeling that New South Wales has been carrying the other States of the Commonwealth, and has lost by federating. The people are beginning to believe that it would be in. their best interests if the State were to withdraw from the Commonwealth.

Honorable Members. - Hear, hear !

Mr WARD:

– I am gaining u fair amount of support from members of the Country party, and I believe that if the. Standing Orders permitted me to continue, I should eventually convince, at least, the intelligent members of the House. As the honorable member for Perth (Mr. Nairn) interjected, I was for a time receiving the dole. I am not ashamed of that, because many good men are still receiving it, and I would prefer to go back to it rather than remain silent in this Parliament while the people who sent me here are being sacrificed in the interest of international boodlers. If the honorable member for Barton, who has only a three-year tenure of his seat, is desirous of ending his political career earlier, I invite him to contest East Sydney with me after the policy of the present Commonwealth Government has been in operation for three months. I extend the same challenge to the honorable member for Parramatta.

Mr SPEAKER:

– I ask the honorable member not to continue in a personal strain.

Mr WARD:

– I conclude by thanking honorable members for their attentive and patient hearing. I have no doubt’ that if this bill goes to a division many New South Wales members, even of the Country party and the United Australia party, will be conveniently ill or absent, with various excuses. Those who have the courage of their convictions will remain in the House and vote in the interests of the people of New South Wales, for this measure is not directed merely against a Labour Government; it is a deliberate attack by an anti-Labour Government upon the people of a State.

Mr PATERSON:
Gippsland

.- I understand that the Government desires, at this stage, temporarily, to adjourn the debate. Therefore, I ask leave to continue my remarks later.

Mr Beasley:

– I think that the House should have been informed why this debate is to he suddenly interrupted, and what business the Government proposes to take next.

Leave granted ; debate adjourned.

page 296

TARIFF PROPOSALS

Customs, Special, Primage and Excise Duties

In Committee of Ways and Means:

Mr GULLETT:
Minister for Trade and Customs · Henty · UAP

.- I move-

  1. That the Schedule to the Customs Tariff 1921-1930 be amended as hereunder set out, and that on and after the twenty-sixth day of February, One thousand nine hundred and thirty-two, at nine o’clock in the forenoon, reckoned according to standard time in the Territory for the Seat of Government, Duties of Customs be collected in pursuance of the Customs Tariff 1921-1930 as so amended. ,
That, excepting by mutual agreement or until after six months' notice has been given to the Government of the Dominion of New Zealand, nothing in this Resolution shall affect any goods the produce or manufacture of the Dominion of New Zealand entering the Commonwealth of Australia from the Dominion of New Zealand. By omitting the whole of Prefatory Note (2) and inserting in its stead the following Prefatory Note : - " (2) " Proof " or " Proof Spirit " means spirit and gazetted substitutes therefor of a strength equal or equivalent to that of pure ethyl alcohol compounded with distilled water so that the resultant mixture at a temperature of 60 degrees Fahrenheit has a specific gravity of 0.91976 as compared with that of distilled water at the same temperature." By omitting the whole of Prefatory Note (7) and inserting in its stead the following Prefatory Note : - " (7) Unless the Tariff otherwise provides or the Minister otherwise directs, any goods composed of two or more materials shall be deemed for the purpose of classification to be composed wholly of the material of chief value in the goods, provided that when the respective materials are of equal value the goods shall be deemed for the aforesaid purpose to be composed wholly of the material that would make the goods liable to the higher or highest rate of duty." By adding a new Prefatory Note (11) as follows : - "(11) Whenever goods are composed of two or more separate articles, even though such articles are specifically mentioned in the Tariff, the Minister may classify the goods under such item or items as he directs." ifr. *Gullett.* {:#subdebate-37-2} #### Mr. Gullet* **Mr. Gullett.** ifr. *Gullett.* {:#subdebate-37-3} #### Ifr. Gullett {: type="1" start="2"} 0. That, in addition to the Duties of Customs collected in accordance with the Schedule to the Customs Tariff 1921-1930, as proposed to be amended by Tariff Proposals, there be imposed, on and after the twenty-sixth day of February, One thousand nine hundred and thirty-two, at nine o'clock in the forenoon, reckoned according to standard time in the Territory for the Seat of Government, a special duty of Customs at the rate of fifty per centum of the amount of duty calculated in accordance with the duties imposed by the Customs Tariff 1921-1930 as proposed to be amended by tho Tariff Proposals on such of the goods included in the items specified in the first column of the Schedule hereto as are specified in the second column of that Schedule which were exported from the country of export after the third day of April, One thousand nine hundred and thirty, and which are entered for home consumption on and after the said twenty-sixth day of February, One thousand nine hundred and thirty-two ; That in this Resolution " Tariff Proposals " shall mean the Tariff Proposals introduced into the House of Representatives on the Twenty-fifth day of February, One thousand nine hundred and thirty-two, and shall include any amendment of those proposals ; and *That,* excepting by mutual agreement or until after six months' notice has been given to the Government of the Dominion of New Zealand, nothing in this resolution shall affect any goods the produce or manufacture of the Dominion of New Zealand entering the Commonwealth of Australia from the Dominion of New Zealand. {: type="1" start="3"} 0. That in addition to the dutiescollected in accordance with - {: type="a" start="a"} 0. the Schedule to the Customs Tariff 1921-1930 as proposed to be amended by Tariff Proposals ; and 1. the resolution introduced into the House of Representatives on the twenty-fifth day of February, One thousand nine hundred and thirty-two, imposing special duties of Customs or with that Resolution as subsequently amended ; there be imposed on and after the twenty-sixth day of February, One thousand nine hundred and thirty-two at nine o'clock in the forenoon reckoned according to standard time in the Territory for the Seat of Government, ad valorem duties of Customs (in this Resolution referred to as primage duty) at the rates hereunder set out on the undermentioned goods which are entered for home consumption on and after the said twenty-sixth day of February, One thousand nine hundred and thirty-two, except such goods as are hereunder specified as being exempt from primage duty - 1. Goods exempt from primage duty - {: type="a" start="a"} 0. goods covered by Items 334 (g) (2), 338 (c), 368, 370, 371, 372, 373, 394 (a), 400, 401, 409, 410 (c), 417 (b), 423, 424 (e) and 427 (a) of the Customs Tariff 1921-1930 as proposed to be amended by Tariff Proposals ; 1. agricultural and horticultural seeds not covered by any item in the Customs Tariff 1921-1930 as proposed to be amended by Tariff Proposals ; bibles, or any portion of a bible ; bullion and specie ; bags sacks packs and bales for bran, chaff, potatoes, onions, ore, coal, corn, flour, sugar and wool ; calico and hessian for use in the manufacture of bags of a size capable of holding at least forty-five pounds of flour ; fauna for Zoological Gardens at Sydney, Melbourne, Brisbane, Adelaide, Perth, and Hobart ; manures and fertilizers ; materials for use in the manufacture of agricultural horticultural and viticultural spraying preparations ; materials for use in the manufacture of cornsacks floursacks and other sacks ; outside packages and outer coverings, including the sole containing package, containing solely goods exempt from primage duty ; radium ; rock phosphate ; stud stock, viz. : - draught horses, cattle, sheep, and pigs ; sulphur; and vessels exceeding 1,000 tons gross register ; {: type="a" start="c"} 0. any other goods which are from time to time exempted from primage duty by Proclamation made by the Governor-General with the advice of the Federal Executive Council and published in the *Gazette.* {: type="1" start="2"} 0. Goods subject to primage duty at the rate of four per centum ad valorem - goods covered by Items 174, 219 (c), 404 and 415a of the Customs Tariff 1921-1930 as proposed to be amended by Tariff Proposals ; calcium cyanide ; cream separators ; fibres for use in the manufacture of binder twine ; fuel oil and coal consumed in Australian waters ; goods, other than those exempted from primage duty, for public hospitals ; newsprinting paper ; outside packages and outer coverings, including the sole containing package, containing any goods subject to primage duty at the rate of four percentum ad valorem but containing no goods subject to primage duty at the rate of ten per centum ad valorem ; potassium cyanide ; power kerosene ; rock salt ; sheep shearing machines ; soda ash, caustic potash and caustic soda, for fellmongering purposes ; sodium cyanide ; and stud stock, viz. : - horses other than draught horses ; 1. any other goods which are from time to time, by Proclamation mode by the GovernorGeneral with the advice of the Federal Executive Council and published in the *Gazette,* added to the list of goods upon which primage duty at the rate of four per centum is imposed. {: type="1" start="3"} 0. Goods subject to primage duty at the rate of ten per centum ad valorem - 2. All goods whatsoever, which are not, in pursuance of the foregoing provisions of this Resolution - 3. exempt from primage duty ; or {: type="i" start="ii"} 0. subject to primage duty at the rate of four per centum, ad valorem. That where by this Resolution any goods are exempt from primage, duty or are subject to primage duty at the rate of four per centum ad valorem, on the condition that those goods will be used for a purpose -specified in relation thereto in the Resolution, the Comptroller-General of Customs may require security that those goods will be used for the purpose so specified. That in this Resolution " Tariff Proposals " means the Tariff Proposals introduced into the House of Representatives on the twenty-fifth day of February, One thousand nine hundred and thirty-two, and includes any amendment of such proposals and any Tariff Proposal introduced into the House of Representatives subsequent to that date. {: type="1" start="4"} 0. That the Schedule to the Excise Tariff 1921-1928 be amended as hereunder set out, and that on and after tho Twenty-sixth day of February, One thousand nine hundred and thirty-two, at nine o'clock in the forenoon, reckoned according to standard time in the Territory for the Seat of Government, Duties of Excise be collected in pursuance of the Excise Tariff 1921-1928 as so amended. {: #subdebate-37-3-s0 .speaker-KFS} ##### Mr GULLETT:
UAP -- I shall he pleased to consider that suggestion before the committee is asked to deal with the schedule. This is not the time to speak in detail of the tariff and other changes now submitted to the committee. Briefly, the proposed alterations are: - Customs duties, 11 increases and 69 reductions; excise duties, 2 increases and 4 reductions; special duties, 19 items repealed out of a total of 74 items ; prohibitions, 43 items repealed out of a total of 78; primage duty, a few lines have been added to the exemptions.Full particulars of the alterations are shown in printed statements which have been circulated among honorable members. To-day, I intend only to touch upon a few of the most important items, but, before I do that, perhaps I may be allowed to set out again the tariff policy of the Government, for it is in close accordance with that policy that the changes are being proposed. The Government stands, first, for an adequate measure of protection for the maintenance or establishment of industries for which Australia offers reasonable economic opportunity. We look with disfavour upon duties of a prohibitive nature, as we believe they are calculated to create local monopoly and to provoke retaliation from foreign countries which are valuable customers for our primary products. In amending or extending the tariff, particular concern will be paid to the cost of production in primary industry. Drastic changes to the existing schedules will not be made upon ministerial initiative. The Government will work through investigation by the Tariff Board, and in broad principle will follow the recommendations of the board. It is scarcely necessary to say that the Go- vernment will co-operate in every way open to it to promote preferential trade within the Empire. This policy is so clear that it calls for no elaboration. I would, however, emphasize the Government's belief in the supreme importance of this Parliament taking every action within its power to bring about a reduction in the cost of living burden, and the cost of production burden, of those engaged in primary industries. If the depression has served one useful purpose, it is that it has convinced every thinking Australian, in every walk of life, that the first condition to our national prosperity, and our capacity to employ our people, is the building up and preservation of the largest and most profitable export trade that is attainable. The value of our exports is the sure index to our capacity to employ, and to the income and spending power of every section of the community. That statement may not be applicable to all countries, but it is certainly true of Australia. If the wool clip, the wheat harvest, and the dairy output are heavy, if costs are right, and if the profit to the producers of these great primary lines is satisfactory, then every other industrial activity and every commercial and financial activity rejoice in the sure reflection of the rural prosperity. Prosper the farmer and the pastoralist, and we prosper every factory, every warehouse, every business, and, in short, every sort of employment. During the depression, rural production has happily been abnormally heavy; but prices have been lower, perhaps, than at any other time in our brief history. It is true that the nation as a whole has profited by primary production during the past two or three years of low values. Had it not been for the grand industry of the men on the land during this crisis, nothing could have saved us as a nation from a total financial collapse. If this sustained rural production, in the face of adversity, has saved the nation, it has been unprofitable to the great majority of our men and women on the land. There is no promise of a substantial early recovery in- world values of basic commodities, and there is a limit to the capacity and disposition of wheat" and wool growers to produce without profit, or at an actual loss. If prices are not substan tially to improve, there is only one way in which rural and general disaster can be warded off. Cost of production must be brought down. It is not within tho power of this Parliament to raise values ; but it is within our power to reduce costs, and in our tariff deliberations and action, that should be our constant aim. It is definitely the aim of the Government. At this moment in Australia the man on the land, who is engaged in the export trade - and upon whose prosperity the prosperity of all Australians depend - buys all the necessaries of life and production in what is one of the dearest, if not actually the dearest, market in the world, and sells his products in the cheapest markets of the world. Practically all that 'he buys is the product of the highestpriced labour in the world; all that he sells in the open market overseas is sold in competition with the cheapest labour in the world. While, during the depression, the prices for wool and wheat have slumped almost to vanishing point, the prices of manufactured commodities have remained more or less stationary. Surely our endeavour in all economic legislation, and especially in tariff-making, must be to bridge the wide difference between the price levels of the various commodities the farmer is obliged to buy, and the produce he has to sell. ITo miracle in rural production costs will be brought about by the tariff changes now submitted to the committee. I suggest, however, that these changes are a move in the right direction. In the great basic iron and steel industry, important reductions in raw materials and in some finished products, have actually been brought about by the Government. Generally speaking, however, all that we have been able to do in the six weeks during which we have been in office is to propose changes which, although not insignificant in themselves, are in the main little more than a disclosure of the trend of the policy we intend to follow. The basis of each of these changes is a recent Tariff Board report. There is only one notable exception to this, and that is in the case of the duties on iron and steel. Briefly, the procedure f followed in making these amendments has been this : We had the Soullin Government's amending schedule which, owing to the defeat of that Government, had not passed through both Houses of the Parliament. That schedule was validated in the closing hours of the last Parliament until Monday next, the 29 th February. With many items of that schedule we are in disagreement, both because of the manner in which amendments were made, and because of their prohibitive and monopoly-making character. The late Government, after arbitrarily and heavily increasing many of the old duties in the 1921-28 schedule, referred a great many of the amended items for inquiry to the Tariff Board. In order to aid our deliberations we have turned to the reports which have reached the Customs Department as the result of those inquiries. In no case, however, have we acted upon a report of date earlier than December, 1929. Particular care has been taken, even in considering reports dated December, 1929, and onwards, not to propose amendments based upon reports dealing with industries in which economic changes, due to the depression, threw doubt upon the value of the board's recommendations. We have been cautious throughout to avoid serious disruptive changes, and have taken all possible care not to endanger employment. The committee will bear in mind that my references to primary industries were confined to those great industries which play so important a part in our export trade. The Government is as definitely opposed to excessive duties for primary industries as it is to excessive duties for manufacturing industries. I wish to make this clear, because some of the proposals I am now submitting make important amendments to tariff items which provide duty for certain primary industries catering only for the Australian market. There have been interesting developments in connexion with the iron and steel industry. The committee will observe that the Government' proposes to return to the 1921-28 tariff rates on pig iron, ingots, blooms, slabs, billets, puddled bars and loops, merchant bar, rods, including wire rods, wire in coils, angles, tees, scrap iron and steel and structural steel. Here we had no recent' Tariff Board report to guide us, but honorable members will be pleased to learn that the reductions have been made after consultation with the two great iron and steel producing firms, Broken Hill Proprietary Company Limited and Australian Iron and Steel Limited, and with their complete concurrence. This, I think, breaks hew ground in the way of tariff-making in Australia. Moreover, as has been publicly announced, these two companies, together with Messrs. Lysaght Brothers and Company Limited, Lysaghts (Newcastle) Limited, and Rylands Brothers (Australia) Limited, have also agreed, in response to a friendly suggestion from the Government, to make reductions in their selling prices. The reductions range from £1 a ton on pig iron, bars, ingots, structural steel and fencing wire, to £2 a ton upon wire netting and galvanized iron, and will represent a saving to the community in general, and to the primary producer in particular, of £160,000 per annum, based on the considerably reduced output for last year. As everybody knows, these companies have been suffering the full effects of the depression, and are enjoying anything but full prosperity at the present time. They have made the reductions, however, in a spirit of helpfulness to the Government in its endeavour to bring down industrial costs generally within the Commonwealth, and I take this opportunity, on behalf of the Government, of thanking them for their public-spirited action. Some of the companies were actually carrying on at a loss when prices were reduced. One company has not paid, a dividend for two years. As the companies have done this unprecedented thing, the committee ought, I think, to show some little generosity of disposition towards them. Honorable members will, at least, agree in this: The companies have set an admirable example to the great manufacturers of this country, an example which, I trust, will be generally followed. I express the hope that the advantage which is being given by reduced prices at the source in the iron and steel industry will be passed on by way of reductions in the selling price right through the engineering trade. Already, we see the effect of the reductions in connexion with fencing wire which has been reduced by £1 a ton, and wire netting which has been reduced by £2 a ton. If industrial conditions in New South Wales, where these industries are located, were comparable with those in industrial Victoria, if labour and other costs were as low, these reductions would have been larger, and the workers of New South Wales and of Australia generally would be better off. {: .speaker-JOM} ##### Mr Beasley: -- Does the Minister believe in low wages? {: .speaker-KFS} ##### Mr GULLETT: -- I do not, but no one can say that wages areon a low level in Victoria, and unemployment in that State is substantially less than in New South Wales. It is well known that the manufacturers of Victoria are in a fair way to capture a great deal of the New South Wales trade. Now I come to the controversial question of galvanized iron. {: .speaker-K0A} ##### Mr Gabb: -- Why not stick to the board's report? {: .speaker-KFS} ##### Mr GULLETT: -- If the honorable member will possess himself in patience for a moment, I shall explain why the Government has not, at this stage, thought fit to adopt the Tariff Board's report. Some honorable members may be disappointed that the resolution" does not cover a reduction in the duty upon galvanized iron. This duty now stands at £5 10s. a ton, British, and £7 10s. a ton, foreign. It will be recalled that the Tariff Board, in a recent report, recommended that the duty be reduced by 20s., and that it should not apply if the firm of Lysaght, which is the sole manufacturer, increased its gross selling price above £25 a ton. Naturally, I gave particular attention to this recommendation. I found, however, that the factors upon which the Tariff Board based its fin dings had changed to such an extent during the past twelve months that I did not feel on safe ground in adopting the report. Briefly, I feared that the adoption of the report might lead to heavy imports, with considerable unemployment, not only at Lysaght's where at present some 600 or 700 men are engaged, but also at the Broken Hill Proprietary's works which supplies the raw iron, and employs a greater number of men in the manufacture of thebar iron for Lysaght's than Lysaght's do in the manufacture of the galvanized iron. Indirectly, employment inthe coal-mining industry would also be adversely affected by the importation of galvanized iron. I therefore endeavoured to bring about a reduction in the firm's selling price of galvanized iron, with a view to allowing the present duties to stand Until the matter could be again referred to the Tariff Board upon the new facts. Lysaght Limited reduced the gross Selling' price of galvanized iron from £28 10s. a ton, at which it stood when the Tariff Board submitted its report, to £27 10s. a ton upon the first of this month. As a result of our further negotiations, I am now able to announce that the price will be reduced by another £1 a ton as from Tuesday next, the 1st March. This brings the gross selling price to £26 10s. a ton, and I am hopeful that further negotiations which are proceeding for a voluntary reduction in the Australian price of spelter, will lead to' a further reduction of about 10s. a ton of galvanized iron which would give us a gross selling price of £26. It may be added that Lysaght Limited have placed returns before the department showing that the selling price which will operate after the 1st March will not return any profit or margin for depreciation. The company has offered the fullest accountancy investigation into its affairs. Further, reference was made in the debates last year - I made it strongly myself - to the £500,000 of paid-up capital which appeared in the share statement of the company. That sum is not included in this calculation. I therefore ask the committee to accept this position until the matter has been dealt with by the Tariff Board. {: .speaker-C7E} ##### Dr Earle Page: -- How long will that be? {: .speaker-KFS} ##### Mr GULLETT: -- As soon as the inquiry can be brought about. The board's recommendation, which I was reluctant to pass by, was based upon an anticipated annual output at the Newcastle works of 60,000 tons per annum. The output for last year was approximately 33,000 tons, and the present rate of output is slightly in advance of that figure. The English price, which was the competitive price upon which the Tariff Board based its measure of protection, has fallen by £2 a ton during the past twelve months. Still another factor throwing doubt upon the present value of the board's report was that the Australian price of spelter had increased since the board held its inquiry, owing to exchange, by £3 8s. 6d. a ton, which added 10s. 4d. to the cost of each ton of Australian-made galvanized iron. Under all the circumstances, I venture to think that the compromise is one which should commend itself to the committee. I come now to the proposed duty reductions affecting primary products. The most important of these relates to tobacco leaf. It will be remembered that the late Government increased the import duty by successive amounts, from the rate of 2s. Sd. to 5s. 2d. per lb. With the excise at 2s. 4d., that represents a total impost of 7s. 6d. The imported leaf pay3 both duty and excise, so that the import duty represents the measure of protection enjoyed by the locally-grown leaf. {: .speaker-KVU} ##### Mr Thompson: -- That is not correct. {: .speaker-KFS} ##### Mr GULLETT: -- The last Government increased the protection from 2s. 8d. to 5s. 2d. per lb. At that stage the matter was referred by the then Minister for Trade and Customs to the Tariff Board, which seemed to indicate that he desired an impartial review of the position. It was quite a voluntary reference, like all the references of the late Government to the Tariff Board. {: .speaker-F4U} ##### Mr Forde: -- It was impossible to refer all proposals to the Tariff Board before taking action. {: .speaker-KFS} ##### Mr GULLETT: -- The honorable member signed this reference to the Tariff Board, which seemed to indicate that the Government wished to have an. impartial review of the whole situation. {: .speaker-F4U} ##### Mr Forde: -- The Minister knows that we were not bound to accept the report of the Tariff Board. {: .speaker-KFS} ##### Mr GULLETT: -- The honorable member must not blame my initiative for these changes. He must blame his own initiative in making this reference to the board. {: .speaker-F4Q} ##### Mr Scullin: -- That is ridiculous. {: .speaker-F4U} ##### Mr Forde: -- Surely the Minister is prepared to take responsibility for . the action he is now taking. {: .speaker-KFS} ##### Mr GULLETT: -- I do, but it is based on the reference that the honorable member gave to the Tariff Board. The present proposal is to reduce the import duty to 3s. on leaf used in the manufacture of tobacco, and increase the excise on Australian manufactured, tobacco to 4s. 6d. j {: .speaker-F4U} ##### Mr Forde: -- It is a scandalous imposition on the tobacco-growers of Australia. {: .speaker-KFS} ##### Mr GULLETT: -- The committee will, at an early date, have plenty of opportunity to debate this subject. This proposed change will not disturb the total impost of 7s. 6d. per lb. for revenue and protective purposes. {: .speaker-KMZ} ##### Mr Martens: -- It will kill the Australian industry. {: .speaker-KFS} ##### Mr GULLETT: -- It will do nothing of the kind. The Government will not allow that. This proposal will not disturb the total impost of 7s. 6d. per lb., but will have the effect of reducing the margin of protection to the Australian tobacco-grower from 5s. 2d. to 3s. per lb. The average f.o.b. value of imported leaf last year was ls. per lb., whilst to-day good quality Virginian leaf is being quoted in America at approximately 7d. per lb., so that it can scarcely be said that the industry is not even now heavily protected. This change has been recommended by the Tariff Board, and I believe it is in the best interests of the growers themselves. Tobacco-growing has made remarkable development during the past two seasons, and there has also been a gratifying improvement in the quality of the leaf grown. In the past the indifferent quality of the bulk of the locally.produced leaf was the main reason for the lack of expansion in the industry. The success in the future depends absolutely upon a constant further improvement in the average quality of the product. With a protection of 5s. 2d. per lb., the inevitable disposition of the growers would have been to rush in great additional areas of tobacco with relatively little attention to quality. The protection of 3s. will, it is believed, prove highly profitable to those who are proceeding along careful expert lines. In the opinion of the tobacco manufacturers it will prove amply sufficient to ensure the consumption of the big crop of 6,000,000 lbs. now maturing, and will encourage a steady increase in the local production. {: .speaker-KVU} ##### Mr Thompson: -- That is absolute nonsense. {: .speaker-KFS} ##### Mr GULLETT: -- Although, the honorable gentleman belongs to a party which is always crying out against high duties, he now urges the retention of a duty which affords protection of between 600 and 800 per cent. He cannot have it both ways. {: .speaker-KVU} ##### Mr Thompson: -- The Prime Minister has broken his election promise. {: .speaker-KFS} ##### Mr GULLETT: -- Another factor which has greatly influenced the Government is the revenue position. With the import duty at 5s. 2d. and the local excise of 2s. 4d., which were the rates in the the last year's schedule, the Commonwealth would have been faced with a loss of approximately £1,000,000 sterling in revenue from this source in the coming financial year. This could not possibly have been allowed with our finances as they are. I ask the Leader of the Opposition **(Mr. Scullin),** who was recently on the treasury bench, whether he could have faced such a loss with any equanimity? This revision of duties is being made in accordance with a report of the Tariff Board which is one of the most complete of its kind that I have handled, and could not be lightly turned aside. {: .speaker-F4U} ##### Mr Forde: -- The revenue position could have been met in some other way. {: .speaker-KFS} ##### Mr GULLETT: -- I shall move at an early date for the printing and distribution, not only of this report, but of others which have a bearing upon the subjects with which I am dealing. The Tariff Board has also recommended changes in the import duty on tobacco for the manufacture of cigarettes which, in effect, would have reduced the total impost by 2s. 2d. per lb. The revenue result, if this recommendation were adopted by the Government, would result in the sacrifice of something like £400,000 which is at present being collected. The Government could not see its way clear to accept this recommendation; the present rates of duty on this class of tobacco are, therefore, being retained. I wish to make it clear, however, that we do not regard these rates as a final adjustment of the customs and excise duties on tobacco. The whole position will be kept closely under review, and if there appears to bo any danger of Australian leaf of reasonably good quality not find- ' ing a market, consideration will be given to the practicability of rationing imports. The Government is very deeply con,cerned about the welfare of the Australian tobacco industry, and will take every step that is necessary, not only to maintain the industry upon its present basis, but to ensure its steady expansion. Attention has also been given to the cotton industry. The cotton yarn duties are being amended to conform with the recommendation of the Tariff Board. The rates under the previous schedule were 6d. per lb. and 35 per cent. British preferential, and 6d. per lb. and 55 per cent. general. Under the new schedule the fixed rate of 6d. per lb. is deleted, but tho ad valorem rates of 35 per cent British preferential, and 55 per cent, general are retained. I remind honorable members that in addition to . these duties substantial bounties are being paid on seed cotton and cotton yarn. The ad valorem equivalent of the total assistance given by the previous Government by way of bounty, including bounty on seed cotton and duty, amounted to 174.7 per cent, on 16 count combed cotton yarns and 189.2 per cent, on 16 count carded cotton yarns. The cotton yarns being manufactured in Australia are mainly of the carded type.- I do not say that the cotton spinners are taking full advantage of the present position, but it is not right that such an exorbitant measure of protection should be afforded an industry manufacturing a basic raw material such as cotton yarn.,. Cotton clothing of various kinds could, under a reckless protective system, have a heavier bearing upon the cost of living, and in consequence upon wages and the cost of production, than any other single commodity. If we continued to develop the yarn industry under an ad valorem assistance of 189 per cent, it' would mean that the clothing industries using cotton yarn as a raw material would require protective duties ranging from 200 per cent, upwards. It would be quite impossible to encourage the expansion of either .cotton-growing or cottton-spinning under conditions so oppressive to the general community. When the Government assumed office there were in force 78 prohibitions against, particular imports, and 74 50 per cent. surcharge items. . It has been emphasized again and again by the previous Government that these prohibitions and surcharges were imposed as a financial emergency measure with a view to the adjustment of the balance of trade. Many honorable members, including myself, who are now on this side of the House, supported the policy of the Scullin Government in this respect, although we vainly endeavoured to persuade the Minister for Trade and Customs of the day to place a time limit upon the restrictions. All the prohibitions and surcharges have been closely considered by the Government, and it has been decided, as honorable members may have seen from to-day's *Commonwealth Gazette* to remove the prohibitions against 43 kinds of imported goods. The list of goods now prohibited is as follows : - {:#subdebate-37-4} #### Glucose {:#subdebate-37-5} #### Cheese {:#subdebate-37-6} #### Lemons {:#subdebate-37-7} #### Oranges Dried Fruits excepting dates and figs. Fruits preserved in liquid. Vegetables, salted or preserved in liquid or partly preserved or pulped. {:#subdebate-37-8} #### Cornflour {:#subdebate-37-9} #### Jams and Jellies {:#subdebate-37-10} #### Jelly Crystals and Powders Coco-nut, prepared. {:#subdebate-37-11} #### Pickles, Sauces and Chutney {:#subdebate-37-12} #### Starch {:#subdebate-37-13} #### Custard Powders Furs and other skins partly or wholly made into apparel or other articles. Blankets (excepting Printers' Blankets) and Blanketing. Rugs except floor rugs. {:#subdebate-37-14} #### Curtains and Textile Blinds Wireless Receiving Sets partly or wholly assembled. {:#subdebate-37-15} #### Wireless Headphones Batteries and Accumulators, but not including Dry Batteries or Dry Cells. {:#subdebate-37-16} #### Bolts, Nuts,. Rivets, Engineers' Set Screws {:#subdebate-37-17} #### Rail Dogs and Spikes Wire and other Nails. Plated Ware other than Spoons, Forks and Cutlery. Aluminium Wave other than Spoons and Forks. {:#subdebate-37-18} #### Tiles Sanitary and Lavatory Articles of earthenware and glazed or enamelled fireclay. {:#subdebate-37-19} #### Vinegar and Acetic Acid Cast-iron Pipes and Cast-iron Fittings for pipes. Shafting (other than Flexible). {:#subdebate-37-20} #### Iron and Steel Beams, Channels,Girders, Joists, Columns, Trough and Bridge Iron and Steel Wines, including un fermented grape wine. {:#subdebate-37-21} #### Vermouth Matches and Vestas including book matches. {:#subdebate-37-22} #### Locomotives The motion relating to special duties which I have just moved will have the effect of reducing the number of surcharged items and sub-items from 74 to 55. In coming to its decision, the Government has been careful to consider the effects of these steps upon the balance of trade. Perhaps the most remarkable feature of the operation of these restrictions has been the relatively small part they have played in bringing about a reduction of imports. The average reduction over the imports covered by the restrictions in the year following their imposition was 73 per cent. Within the same year, the fall in imports over the unrestricted field was upwards of 50 per cent. In comparing these results, it must be remembered that the restrictions covered many classes of luxury goods in which there would, in any case, have been a relatively heavier fall in local demand. Itis doubtful if, at the present time, the restrictions are playing any material part in the trade position. On the other hand', all honorable members will agree, I amsure, that such prohibitions and surcharges are most undesirable from a tariff point of view unless they serve a vitally important purpose. The many protests which I lave received from manufacturers against their removal indicate the rapidity with which their presence can lead to the development of undesirable vested manufacturing interests. The Leader of the Opposition **(Mr. Scullin),** when Prime Minister, emphasized that these restrictions were not to be considered as part of the Government's protective policy. He assured the House that they would be discontinued immediately the financial emergency conditions justified the taking of that step. In exempting particular classes of goods from prohibition and surcharge, special regard has been paid to the probable effects on the trade balance, and nothing has been donewhich is in any way likely to menace the present satisfactory position. The normal rate of duty on such goods will, of course, be continued. The Government has gone so far, in a few cases, to give consideration to the effect which removal of the goods from pro- hibition or surcharge might possibly hare upon local employment. It will be noticed that the prohibitions remaining in force are limited to a period of one year. There will, however, be power to remove the prohibition on the balance of the goods at any time before the expiration of the year. The Government's intention with regard to the surcharges is that they shall not continue to operate for a longer period than twelve months. If the position should at any time before the expiration of that period warrant the lifting of the surcharges, action will be taken accordingly. No restriction will be continued for a moment longer than it *is* absolutely necessary. When the policy of imposing prohibitions and surcharges was being debated by -the members of the last Parliament, a strong desire was expressed in both Houses of the Legislature for an amendment of the Customs Act to make it obligatory for the Government to submit all prohibitions to Parliament for consideration and endorsement within a period of six months after they had been proclaimed. The Government is favorable to such a proposal, and hopes at an early date to introduce an amendment of the Customs Act containing this provision. {: #subdebate-37-22-s0 .speaker-KFS} ##### Mr GULLETT:
UAP -- I hope the honorable member for Swan **(Mr. Gregory)** will not become aggressive immediately. I give honorable members an assurance that an opportunity will be afforded them at an early date to debate these proposals. Progress reported. *Sitting suspended from 5.52 to 8 p.m.* {: .page-start } page 363 {:#debate-38} ### FINANCIAL AGREEMENT ENFORCEMENT BILL. {:#subdebate-38-0} #### Second Reading Debate resumed from page 296. {: #subdebate-38-0-s0 .speaker-KXT} ##### Mr PATERSON:
Gippsland .- This bil] is very necessary, and I congratulate the Government upon its prompt introduction. It breaks absolutely new ground ; in fact, it may be said that quite 21 acres of virgin soil are tilled for the first time in its 21 clauses. As to what the harvest will be one can only speculate, but I hope that the Go vernment's expectations will be realized. If any of our new colleagues in this House - and I see about me many new, handsome, and intelligent faces - having studied closely the provisions of this bill, the first to be introduced in this new Parliament, assume that it is an f.a.q. sample, of the legislation they will be called upon to assist in enacting from time to time, they may well be excused if they come to the conclusion that this is indeed a super Parliament. I intend to support the bill. It is drastic medicine for a political outlaw, who will not make an honest attempt to meet his obligations or even to honour promises made to the Loan Council and the Premiers Conference. If there were no such menace as the present Premier of New South Wales, one could not imagine the Commonwealth Parliament using the wide constitutional powers granted to it by the referendum of 192S to introduce a bill of so sweeping a character. But this menace exists; **Mr. J.** T. Lang is no myth, and he becomes more and more reckless as time goes on. We cannot allow the whole Commonwealth and the States other than New South Wales to be engulfed in the financial quagmire into which **Mr. Lang** has led his own State. For that reason this legislation is necessary. The preamble refers to the desirability of resolving " doubts " which have arisen regarding the direct liability of the Commonwealth to bondholders. The AttorneyGeneral **(Mr. Latham),** in a characteristically analytical, speech on Friday last divided the bondholders into four groups - holders of Commonwealth overseas bonds, Commonwealth internal bonds, State overseas bonds and State internal bonds, respectively - and declared that the Commonwealth's direct responsibility for the payment of interest to the bondholders covered only three of those four classes. The whole of the Commonwealth bonds, he said, whether internal or external, were undoubtedly the responsibility of the Commonwealth, as were also the internal State bonds, because they had been included in the debt conversion scheme, but the Commonwealth had no direct legal responsibility for the payment of interest to the holders of State external bonds. I have little doubt that the AttorneyGeneral gave to the House the correct legal interpretation of the Financial Agreement between the Commonwealth and the States, and has rightly stated the legal responsibility of the Commonwealth to overseas bondholders. But with due respect to him as an eminent lawyer, I cannot help regretting that he has torn to pieces the very general and wholesome belief held in Australia and overseas that the existing agreement already made the Commonwealth responsible for all State debts - past, present and future. The Assistant Treasurer **(Mr. Bruce),** in a masterly speech in explanation of the Financial Agreement Bill in 1927, said - >Apart from the greater stability which this agreement will guarantee to the States in their future financial arrangements, one of the chief features of the measure will, it is confidently anticipated, be reflected in the enhancement of Australia's credit in the money markets of the world. With the Commonwealth assuming responsibility for both the past and the future debts of the States, and with adequate sinking funds provided for the extinction of those debts, the investor abroad will be much more ready to purchase our securities than if he were offered securities issued in the name of an individual State only, without the tremendous resources of the Commonwealth being guaranteed for their repayment, which will be the case under the new arrangement. It is safe to say that the Financial Agreement is generally interpreted to mean that the Commonwealth had accepted the responsibility which clause 4' of the bill now imposes upon it. So certain was I an that point that on many occasions I have on public platforms, even as recently as the last, federal election campaign, referred to the Financial Agreement as an instrument which saved Australia from the disgrace of default on the part of New South Wales to the bondholders in Great Britain. I have always been of opinion that as soon as the agreement became effective the Commonwealth became responsible for overseas interest payments, and would in turn collect from any defaulting State. I pointed out that the difference with New South Wales was purely domestic,' and did not enter into our relations with the lenders in the United Kingdom. Holding those views, I was naturally amazed and dismayed to find that the Commonwealth Government proposed to permit New South Wales to default even for two or three weeks. I am glad that the Assistant Treasurer is going to London. There is a great work to be done by him there, particularly in connexion with the large loans which must be converted within the next twelve months, and I hope that the recent lapse on the part of the Commonwealth Government will not add to his difficulties. Even if the words " subject to this part " in the agreement provide a means for the Commonwealth to escape its responsibility, it would have been wiser not to have exposed it. Our credit would have been advantaged if the implied obligation had been left unchallenged and doubts had not been put into the minds of the lenders regarding the protection conferred upon them by the agreement. The Attorney-General stated on Friday last that the previous default on the part of the Government of New South Wales left no great impression on the public mind, because the Commonwealth promptly paid the outstanding interest, and that the action taken by the Commonwealth in connexion with the last default served to emphasize its significance. That is true, but it must be admitted that the significance of the default has been emphasized more overseas than in Australia by the delay on the part of the Commonwealth. So long as the general impression remained that the bondholders were protected by the Commonwealth under an agreement which could be altered only by the unanimous consent of seven governments, that assumed protection must have been regarded as a stronger bulwark against default than could possibly be conferred by a provision such as clause 4, which may be altered by any subsequent Parliament. In any case, although this Commonwealth obligation, which we are told has n© legal foundation, was merely implied, it would, with the lapse of time, have gradually settled upon a legal basis, because as the State debts matured they would have been converted into a Commonwealth legal liability. It is a great pity that the- general impression previously held has been disturbed. We should not have allowed the strictly legal position to obscure the . greater issue of Australia's credit. The money in respect of which New South Wales defaulted should have been paid promptly by the Commonwealth, such action being followed by the legislation now under consideration. But a mistake having been made, the wisest steps are being taken to avoid a repetition of it. Under clause 4 the Commonwealth asserts and accepts unconditional responsibility for the payment of interest overseas in respect of both Commonwealth and State debts ; the qualifying words in the Financial Agreement, "subject to this part," are omitted. I suggest that the Government should consider the desirability ofinviting the State Premiers, at the first opportunity, to agree to these words being struck out of the agreement itself. If that be done; the guarantee to the bondholder will be, not merely from this Parliament, but will be backed by the seven Governments of Australia. The bill has two purposes - first, acceptance by the Commonwealth of a responsibility which many of us thought had already been shouldered by us in the terms of the agreement; and, secondly, it provides means to compel a recalcitrant State to carry out the terms of that agreement. There is a great deal to be said for the proposal made yesterday by the Leader of the Country party **(Dr. Earle Page)** that this bill should be divided by separating the part in which the Commonwealth accepts responsibility for all interest from that part which contains the disciplinary machinery. Enough has been said already to show that the Government could expect a more general approval of clause 4 if it were in a separate bill than is possible while it is associated with provisions which will be strongly opposed by members of the Opposition. The steps proposed to' be taken under the new power given to the Commonwealth at the referendum in 1928 are far reaching. The amending words inserted on that occasion, which are the basis of this legislation, were - >The Parliament may make laws for the carrying out by the parties thereto of any such agreement. The Leader of the Opposition **(Mr. Scullin)** stated yesterday that when those words were submitted to the people by referendum, and with their consent embodied in the Constitution, there was no intention to make such drastic use of them as is now proposed. On the other hand, nobody anticipated such actions as those of which the present Premier of New South Wales has been guilty. In any case the Leader of the Opposition has had sufficient parliamentary experience to realize that what this Parliament intends by its legislation does not matter very much. What really matters is the interpretation placed upon the language of our statutes by the High Court. For this reason we should not hesitate to use all the powers we possess to deal with a defaulting government, such as that which is now in office in New South Wales. Bold action is necessary in the interests, not only of the Commonwealth, but also of every State in the federation. It is easy to imagine that legislation of this kind, in which the Commonwealth, playing the role of a school master, is authorized to discipline an unruly pupil, may be distasteful to the States as a whole, because, although it is to be used, at the present time at all events, against the " bad boy " of the federation, it is, of course, capable of being put into operation against any State which, in the future, may default in its interest payments. On the other hand, however distasteful and unpleasant to State Governments may be the assumption by the Commonwealth of such wide powers, the States must realize that unless the central Government is vested with complete authority to deal with a financial profligate like **Mr. Lang,** he may eventually encompass the ruin, not only of his own State, but of the Commonwealth and the other States as well. Since there must be a senior partner in the firm of Australia, naturally the Commonwealth has to assume that position. I wish to emphasize a point which, in my judgment, has not been stressed sufficiently in the course of this debate, namely, the fact that the Commonwealth Government, in introducing this legislation, as a preliminary to constitutional proceedings against a defaulting State which is not pulling its weight in the team, is acting on behalf of the Commonwealth and the other States. {: .speaker-KNP} ##### Mr Maxwell: -- After all, the Commonwealth is the States. {: .speaker-KXT} ##### Mr PATERSON: -- Exactly. In operating the proposed new law, the ordinary procedure will begin with obtaining a certificate from the Commonwealth Auditor-General. Then will follow a declaration by the High Court, resolutions by both Houses of Parliament, and, finally, there will be the issue of a proclamation. These steps having been taken, it is proposed to divert the stream of State- revenue from State coffers and, indeed, from individual taxpayers, to the Commonwealth Treasury. After a date, to be fixed by proclamation, the individual taxpayer - in this case we must assume him to be a citizen of New South Wales, who owes income or land tax to his State - will be required to send his cheque to the Commonwealth authorities. The State public servant will be required to apply this legislation, possibly in defiance of the Government of which he is an employee. The banks will be required to hand over to the Commonwealth any State moneys which they may hold, in satisfaction of the State's liability to the Commonwealth, and payments normally made by the Commonwealth to the States may be withheld. While each and all of these methods of obtaining satisfaction from a defaulting State may be necessary, I am concerned about the unenviable position in which the individual taxpayer will find himself. He will require to be well informed as to what is expected of him. It is not wide of the truth to say that many members of this Parliament are not so well informed as they might be concerning the doings in other Parliaments. It is certain that the average citizen does not know what is happening in this Legislature. {: .speaker-KJQ} ##### Mr James: -- For one half of the time we do not know what is going on here ourselves. {: .speaker-KXT} ##### Mr PATERSON: -- The honorable member must speak for himself. The taxpayer who, under this law, will be required to send his cheque to the Commonwealth authority instead of to the State to whom he owes the money must, in the first place, be fully informed about this legislation. I do not know what the Government proposes to do in this connexion. Advertisements published in the daily press would, I believe, be quite useless. Even notices posted at all post offices throughout the Commonwealth would be insufficient. It will be necessary, I believe, to send to each payer of income or land tax, or whatever form of tax may come within the scope of this bill, a letter and, in the case of those taxpayers living in remote districts who would not receive the letter in time, a telegram informing them of the position. This should not cost the Commonwealth anything except the paper upon which the letter or telegram is printed, because the post office is *aa* Commonwealth service, and as the department, during this, period of depression, is not so fully occupied as in normal times, it should not be necessary to employ additional staff to handle the extra work. We have to remember that the average taxpayer knows little of law, and perhaps is quite ignorant of those provisions of the Commonwealth Constitution which ensure the supremacy of a Commonwealth law over a State law. This being so, one can easily imagine the harassing dilemma of the respectable, law-abiding New South Wales taxpayer, upon being told by the Commonwealth to disregard any instructions issued by his State Government, and that, if he pays taxation to his State, not only will he get no credit for the payment, but will also be guilty of an offence against a Commonwealth law; that, in effect, Codlin is his friend, not Short. At the same time the poor man may be threatened by the servants of the New-South Wales Premier, acting in defiance of this legislation, and may be told that if his tax is not paid to the State authorities by a certain date, 10 per cent, will be added to the charge Possibly a not inconsiderable number of citizens of New South Wales will welcome this opportunity to pay their State taxation levies to the Commonwealth, rather than to the State Government, and I imagine that in their perplexity, as to which authority may .be adjudged the right one to collect the taxation, many will solve the problem by not paying either authority. {: .speaker-F4Q} ##### Mr Scullin: -- That would be the most popular method. {: .speaker-KXT} ##### Mr PATERSON: -- No doubt it would. As this legislation is the outcome of a quarrel between the Commonwealth and the five States on the one hand, and the Government of New South Wales on the other, individual taxpayers should be protected. It would be better if this dispute could be settled without bringing individual taxpayers into the firing line at all. I, therefore, would ask the Government if it is not possible to impound sufficient railway or other State revenues, after they have been paid into the banks, without individual taxpayer being required to depart from the ordinary procedure when paying State taxation charges. Perhaps the Prime Minister, in his reply, will be able to give some information on this point. I do not say that the procedure outlined in the bill can be dispensed with, but I should like to be satisfied that this interference with individual taxpayers will only take place if it is impossible, by other means, to obtain sufficient revenue to meet the obligations of a defaulting State. The suggestion has been made by the right honorable the Leader of the Country party **(Dr. Earle Page)** that the States should have some means of securing justice or redress from a defaulting Commonwealth Government. The honorable gentleman raised a very unpleasant possibility. It is almost unthinkable that the Commonwealth should ever be in the position of a defaulter, but such extraordinary things have been, done in recent years that we are forced to acknowledge that almost anything could happen. Subsection 3 of section 105a to which I referred earlier, provides that Parliament may make laws for the carrying out, by the par ties thereto, of the agreement. The Commonwealth, being one of the parties to the agreement, this Parliament is clothed with sufficient authority to insert in this, bill the necessary provisions to enable the States to secure' redress from the Commonwealth by a more direct method than by the issue of a writ against a possible defaulting Commonwealth Government in the future. If that could be done, it would remove any feeling of onesidedness in this legislation. {: .speaker-F4Q} ##### Mr Scullin: -- A defaulting Commonwealth Government could repeal such legislation. {: .speaker-KXT} ##### Mr PATERSON: -It could do that, it is true, but such a provision would be an obstacle, or one more hurdle to negotiate. I also think that the bill would be improved, from the viewpoint of the States, if they had an opportunity through the Loan Council to express their concurrence with any proposed action by the Commonwealth, as suggested by the Leader of the Country party. I am glad that the Assistant Treasurer **(Mr. Bruce)** has indicated that the Government would give full consideration to the right honorable gentleman's suggestion. The Loan Council, as honorable members know, comprises the Federal and State Treasurers, as well as their principal officers. Therefore, if the Loan Council expressed its concurrence with any proposed action by the Commonwealth against a defaulting . State, it would really be giving to each of the States, through their representatives on the Loan Council, some voice in the matter. One other subject to which I desire briefly to refer, was mentioned by the honorable member for West Sydney **(Mr. Beasley)** the leader- {: .speaker-K9A} ##### Mr Gander: -- Of the Labour party. {: #subdebate-38-0-s1 .speaker-KXT} ##### Mr PATERSON:
GIPPSLAND, VICTORIA · CP from 1922; ST CP from 1937; LCP from 1940 -- No ; the leader of the Lang party. That honorable gentleman to-day spoke of the heavy burden of exchange. Without quoting his exact words, I feel sure that I shall be able correctly to interpret what was in his mind. He said that a tremendous burden had been imposed upon the Commonwealth by the present adverse exchange rate; that, in effect, the Commonwealth was obliged to pay to Great Britain and the United States of America an enormous sum over and above the actual amount of interest due on overseas loans. Let me tell the honorable gentleman that it doesnot take one more bale of wool, one more bag of wheat, one more box ofbutter, or one more carcass of lamb to meet our interest indebtedness overseas, no matter what the exchange rate may be. Our exports go to the Mother Country and we get credit for them in London in English money, which is applied by the Commonwealth to the payment of Australia's interest bill in London or New York. Any premium which the Commonwealth Government has to pay, because of the adverse exchange rate; goes not to Great Britain, or the United States of America, but to the producers of our exported surplus products. It is a premium paid to our primary producers. It does not add one penny to our payments to Great Britain, the United States of America, or any other country to which we owe money. It does, however, cost the Government something. The exchange premium goes into the pockets of those people who, at least, provide the Government with the means to meet its interest bill overseas. I would add that a sudden drop or break in the exchange would be calamitous for Australia, and if it occurred I do not know whether we should be able to carry on; because the exchange rate to-day means something like 8d. per bushel on wheat, about 24d. per lb. on the average price of wool, and about 2½d. to 3d. per lb. on butter. It means the difference between a price which enables the producer to continue his operations at a time of depressed world markets and a price under which he would be unable to carry on at all. I support the bill without reservation; but I hope the Government will give every consideration to the various constructive suggestions that have been made in regard to it. {: #subdebate-38-0-s2 .speaker-KFK} ##### Sir LITTLETON GROOM:
Darling Downs -- This bill contemplates two objects. The first of these is the acceptance by the Commonwealth of statutory liability for the payment to bondholders of interest and principal with respect to certain debts incurred by States prior to a certain date and taken over by the Commonwealth from the States. I do not propose to go into that matter beyond saying that the Government is perfectly justified in enacting such a measure, and that anything it can do to strengthen the confidence of investors in Australia within its legitimate powers should be undertaken. I agree with the Leader of the Country party **(Dr. Earle Page)** that it would have been better if that portion of the bill had been separated from the rest. Should this legislation be questioned on the ground of illegality, there would be no need for argument before the High Court as to the severability of the clause. There are, as I have said, two distinct objects, and perhaps the intention of the Government would be- better served by two separate pieces of legislation, but as indicated by the Assistant Minister **(Mr. Bruce),** the division can, if desired, be accomplished before this measure leaves the House. The second object of the bill is more pressing than the first, from the Australian point of view, so far as our internal affairs are concerned. It involves the enforcement of Commonwealth agreements, and raises the whole issue as to the value of agreements between States and States, and between the Commonwealth and States, and the obligatory nature of such agreements. The particular agreements in question have been binding under the authority of the Constitution as amended; they are made binding upon the Commonwealth and the States by virtue of the Constitution, and as such they become practically part of the law of the Commonwealth. When the colonies federated they were individual entities, possessing autonomous powers. Prior to federation the colonies treated one another practically as foreign countries. Under the federal scheme there was created a higher entity in the Commonwealth of Australia; but the States still retain certain sovereign powers, and their autonomy. They still retain the power of entering into agreements between themselves and the Commonwealth. A question is raised by the circumstances of the particular case under consideration as to the binding nature of such contracts and agreements, and as to the right of -an individual State to refuse to perform .the obligations undertaken under such agreements. Quite apart from the constitutional authority which made this particular legislation binding, the States still have power to enter into contracts between themselves. The States as States are bound by rules of honour and moral conduct, just as private individuals are. The whole trend of modern international law is the acceptance by States of higher standards of conduct in this regard than those observed previously. What is the meaning of the League of Nations ? Take the preamble introducing the covenant itself, and mark the standard set there between the nations of the world as regards their relations with one another, the code of honour they should observe, the rules of law, the conduct of governments, and the principles .of justice that should be maintained. The preamble to the covenant recites certain methods of attaining the objects of the League; the prescription of open, just and honorable relations between nations; the firm establishment of the understandings of international law as to the actual rule of conduct among governments by the maintenance of justice, and by the scrupulous respect of all treaty obligations in the dealings of organized peoples with one another. The trend throughout the whole world is for nations to observe a higher standard of moral conduct and honour in their international relations. Should the States with their powers of autonomy, accept a lower standard than is set by the British Empire, by all the dominions and by all other countries of the world, in regard to the binding nature of international agreements and matters of honour in their relations with one another? That is the issue which has been raised.' Apart from statutory obligations, is any nation justified in departing from the high code of honour which is now observed by nations? Then we have the legal obligations of one nation to another. The growing tendency in discussions on international law is to refer the question of the establishment of international courts in order to determine the obligations of nations to one another and rules are being suggested for tribunals to follow to secure the observance of treaties and agreements, and the performance of contracts. More and more, nations are entering into contracts with one another, and in view of the troublous times overseas, which Ave have felt by reason of our difficulties in the markets of the world, it appears that, more and more, international agreements will have to be made. That being so, it does not behove us in Australia to recognize anything which would show, on the part of any State or corporate body organized in the Commonwealth, a tendency to disregard obligations of honour and contracts, which, after all, amount to obligations of law. Under our Constitution, however, the position is definite. When the Commonwealth Avas established, a special tribunal was created in the High Court for the purpose of ensuring that the obligations undertaken both by the Commonwealth and the States would be observed. It was contemplated that judgments might be entered against the Commonwealth or the States, and that the necessity might arise to enforce those obligations. Under the Judiciary Act, provision Avas definitely made for this by sections 65 and 66. Section 65 states - >No execution or attachment, or process in the nature thereof, shall he issued against the property or revenues of the Commonwealth or a State. No power of execution against the property of the Commonwealth or a State is given, but the following provision is made by section 66: - >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. It is apparent what the feeling was of the parliament of the day when those sections were agreed to in 1903. It was believed that in this British community of ours, when the people of the States agreed to unite in one indissoluble Commonwealth there would be such a binding sense of honour between them that if a tribunal constituted for the purpose of settling disputes between the Commonwealth and the States gave a decision 'and made a judgment that a certain sum of money was due, a State, a party to the action would so loyally comply with it that, if money owing Avas not immediately available, the Government of the State would go to its parliament at once, and ask that it should be made available to satisfy the honour of the State, so that it would not be branded as defaulter. That Avas one of the high ideals entertained at the outset of federation. It was believed when the Commonwealth Avas established on British lines that the high sense of honour that has characterized every self-governing community in the British Empire would be preserved in Australia. Therefore, it Avas not necessary even to contemplate that a State would be a wilful defaulter, and no provision was made for seizing the property or revenues of a State, or for taking any action of a forcible character. The executives of the States, like the Executive of the Commonwealth, are bound to observe and enforce the law, and it was never conceived that His Majesty's advisors in any State would be prepared to take any executive action, or advise such action as would mean default in the observance of the laws of the States or of the Commonwealth. I am pleading that New South "Wales should observe that standard of honour. . Had it done so, of course, this bill would not have been necessary. I am not going to deal with the facts of the case; these have been fully stated. We can assume that New South Wales has made default, and that the default was wilful. {: .speaker-KX7} ##### Mr Ward: -- That would be a wrong assumption. {: .speaker-KFK} ##### Sir LITTLETON GROOM: -- We can assume it for the purpose of this legislation. I respect the honorable member's view, for I am sure he has critically examined the position, and arrived at what he considers an accurate judgment; but we have the assurance of the Government, and of the late Prime Minister **(Mr. Scullin),** that there was a default on the part of New South Wales. The late Prime Minister has referred to the previous default, and the present Prime Minister has spoken of the recent one. We have now reached a state of affairs in Australia when we have a government that refuses to fulfil its obligations. What is the duty of the Commonwealth Government under those conditions? The Executive has its duties to perform under the Constitution. Under section 61, the executive power of the Commonwealth is vested in the Queen, and is exercised by the Governor-General as the Queen's representative. This duty extends to the execution and maintenance of the Constitution and the execution of the laws of the Commonwealth. That is the obligation cast on the Government. The Government has informed the House that, in consequence of the action of the defaulting State, it is necessary to introduce legislation to enable it to satisfy the debts due to it. It is, therefore necessary to support the Executive in that action. In examining this measure we have, however, to determine whether it is in accordance with the Australian Constitution. Our Constitution is a statute. In Great Britain, the functions of the Parliament, the Execu tive, and the judiciary are regarded as independent. They are not as set out in a written constitution ; but there is that tripartite division of power. In the interests of the liberty of the subject the division of power is absolutely essential, and is always observed. When the United States of America framed its constitution, it desired to adopt the best features of the British Constitution, and it made this threefold division, which we have also in our Constitution. . Legislative power is vested by our Constitution in the Parliament, judicial power in the judiciary, and administrative power in the Executive of the land. We must, therefore, examine this measure to see whether it is in harmony with our system of government, and does not transgress the fundamental provisions of the Constitution. That is why the right honorable the Leader of the Opposition **(Mr. Scullin)** is justified in wishing to be satisfied regarding the constitutionality of the action which the Government is taking. The Leader of the Country party **(Dr. Earle Page)** is also anxious to ascertain if the Government is satisfied with respect to the validity of what Parliament is asked to do in this matter. The responsibility of advising the Executive in matters of this kind rests upon the Crown Law officers. They have had ample time to study the measure in all its complexities, whereas it has been brought before honorable members at comparatively short notice, who can merely raise points concerning which they have doubts, in an endeavour to be satisfied before the bill is finally disposed of. The Attorney-General **(Mr. Latham)** gave a lucid explanation of the principles of the bill, and one would gather from his remarks that we can expect during the progress of the debate to be informed regarding the constitutional basis of the bill. That information, I presume, will be made available to honorable members before the debate terminates. We have to determine whether the measure does transgress particular features of our system of government. The legislative power need not be dealt withat this juncture. But there is the question of the judiciary and the power of the Executive. The bill is a peculiar blending of executive .and judicial authority. The Judiciary Act itself is complete, and provides for the determination of disputes, the power to give judgment, and the means of enforcing judgments. We have to consider this bill as it affects the administration of justice. It is not a political measure, and we have to bear in mind, as the honorable member for Gippsland **(Mr. Paterson)** said, that it is not one which is intended to apply to any particular State. If it were a piece of legislation directed towards one State only, objections might have been raised. But it is evidently intended to be a measure providing for the administration of justice in the Commonwealth. In these ' circumstances, we have to consider it quite apart from any political question or party issues of any kind. A perusal of the bill will show that it is - except the first portion, which I shall not discuss - really a measure to provide for carrying out a financial agreement entered into between the Commonwealth and the States. Its short title is significant. By clause 1 it is entitled, " The Financial Agreements Enforcement Act of 1932", which indicates that the intention of the Government is to bring the judicial and executive powers of the Commonwealth into operation for the purpose of compelling the observance of a contract. There is difficulty, apparently, in enforcing a judgment given in the High Court against a State if money is not available to meet it. There is clearly, a legal obligation cast upon a State to pay any moneys due under a judgment of the court, and the question to be considered is whether some other method can be devised in addition to what is prescribed by the Judiciary Act to ensure that the debt due by the State shall be paid. The bill consists of a combination of the powers of the Executive and of the Judiciary. It would appear from a study of clause 5 and the following clauses that the Government seems to have been scrupulous to preserve to the judiciary the judicial power. The procedure is entirely unique. I have not been able to find anything of a similar nature in authorized text books which can be regarded as a precedent for the action which the Government is taking; but if a proposed law is wise, we should support it. We have to examine the provisions of the bill and determine whether the action of the Government- is legal and also just. {: .speaker-KNP} ##### Mr Maxwell: -- It deals with a situation that is unique. {: .speaker-KFK} ##### Sir LITTLETON GROOM: -- That is so. If we study the bill we find that clause 5 provides that the AuditorGeneral shall, as soon as possible after the close of the financial year, or whenever required by the Treasurer so to do, issue a certificate in writing, signed by him, certifying the amount due and payable and unpaid by any State. That is the first executive act. That is only an officer certifying that a sum of money is due. {: .speaker-JPV} ##### Mr Blakeley: -- That is fairly loose. {: .speaker-KFK} ##### Sir LITTLETON GROOM: -- The certificate signed and issued by the Auditor-General is to be regarded a6 *prima facie* evidence of the fact that an amount is due, payable and unpaid. No particular time is mentioned for the issue of such certificates, except that it would appear that the Treasurer may call upon the Auditor-General to issue such certificates forthwith. The fact that a certificate has been received must be published in the *Gazette.* The Attorney-General has then the right to apply to the High Court for a declaration that the amount set forth in such certificate is the amount due and payable by a State to the Commonwealth. We now pass from the administrative to the judicial authority. Application having been made to the High Court, the matter is not limited in any way. The declaration by the court is a judgment of the High Court. The Commonwealth is given the right, on the mere fact on a debt being due, to initiate litigation. {: .speaker-F4Q} ##### Mr Scullin: -- Or on an alleged debt. {: .speaker-KFK} ##### Sir LITTLETON GROOM: -- Yes; on the certificate of the Auditor-General. The issue of a certificate by the AuditorGeneral is a considerable safeguard, as we can safely trust the Auditor-General of the Commonwealth or a State AuditorGeneral to carry out his responsible duties in the manner expected of officers of their high status and character. But the whole procedure proposed is entirely different from that taken in the courts in the ordinary way. There is no issue of a summons, and no entry of appearance. No preliminary steps are taken. There is no preliminary procedure prescribed as is usual in connexion with ordinary actions before the court. Any such application may be made after three days' notice has been given. It is hard to conceive such short notice being given. It is unreasonable to think that an application would be made to the High Court, and only three days' notice being given to the AttorneyGeneral of Queensland or of "Western Australia. Such a proceeding would be futile. But until a notice of trial has been served, there is to be no official notification to a State of the Government's intention to take any action whatsoever. If it is intended to take action in this direction, surely some preliminary notification could be given to a State, to enable it to collect necessary evidence, and to meet the application made to the court. We know that no court would proceed to hear an application of this kind unless the parties had had ample time to study the issue, and to prepare information on whatever points might arise. There is, of course, the usual power in the bill to make regulations, and these points may be covered in that way. But we may assume that, on such applications every possible question affecting a State's liability, legal or constitutional, may be raised. If the question of the constitutionality of the act is raised, presumably it can be heard, and a judgment given. Looking at the matter from that viewpoint, it appears that the duties of the judiciary are fairly and clearly set out. I notice that when judgment is given, it is provided that it shall operate as a charge upon the revenues of a State. The effect of the charge does not seem to be further mentioned in the bill. It is on the issue of the proclamation under clause 7 that specified revenues of a State become payable to the Treasurer of the Commonwealth. That involves a definite action of the executive, and before a declaration of the High Court can be enforced under the bill a resolution has to be submitted to Parliament. If after reviewing the situation Parliament is satisfied, and both Houses pass the resolutions, clauses 7 to 13 inclusive become operative. We have heard of the precautionary steps taken. The Executive does not enforce the law, but has to submit resolutions to the House. I do not propose to quibble over that, because I believe that when taking so grave a step it is wise that the legislature should be associated with the Executive in what is being done. This applies particularly to the Senate, which is supposed to be the guardian of the rights of the States in a peculiar way. Whether the Senate has really carried out the original intention of the Constitution is another matter. Before action is taken, a resolution has to be passed by this House and by the Senate, which represents the States as such. Once the resolution is passed the rest of the machinery comes into operation. That machinery can be made to operate on the revenues of the State, on moneys due by taxpayers to the State, or on moneys in a bank to the credit of the State. The definition of a State is very wide in. the bill, and is couched in these words - " The State " includes any public authority, incorporated or unincorporated, constituted under the laws of a State, which has power to levy rates, taxes or charges, or collect revenue, for a public purpose, and is declared by the Governor-General by Proclamation to be a public authority for the purposes of this act, but docs not include a municipal council, shire council, or local governing authorities. There is nothing in the bill which limits in any way the revenues and moneys which can be seized by the Commonwealth. In a book recently published by **Sir Fischer** Williams on *Current International Law and the League of Nations,* he discusses the question of State bankruptcy and the enforcement of State debts. He says, at page 32 - >A court that had to formulate the principles of decision in the matter of enforcing State debts might perhaps direct its attention to some such considerations as the following: - > >First: The debtor State must continue its activities. The enforcement of payments which cannot be made without destroying the existence of the proper discharge of the duties of the State to its nationals is always immoral and usually impossible. > >Third: The main element in estimating the financial capacity of a State is the taxable wealth of its citizens, rather than tlie material assets of which as between" itself and its citizens the State may happen to be the owner. Let us assume that this hill is passed, and comes into force. The responsibility is ' first thrown on the Executive, which has to invite Parliament to pass the necessary resolutions. I do not think that Parliament would consent to exercise these powers if it thought that their exercise would be really detrimental to the welfare of a State or lead to any serious injury. This measure is a strong and powerful instrument, and we should remember that if we have the strength of a giant, we should be as merciful as an angel. Suppose the power is to be exercised in respect of New South Wales. It is necessary to consider the capacity of that State to pay. We have to ask ourselves whether New South Wales, by reason of its material wealth, its assets and resources, is in a better or worse position than the other States of the Commonwealth. We should remember that it is the oldest State of tho union, and one of the largest States as well. We have just heard the admission of some of her representatives in this House that she has been able to carry a heavy burden on behalf of the other States. Any State which has sufficient wealth must be expected to meet its obligations. In the case of a State that possesses this wealth no injustice would bc done if the power proposed to be taken under this bill were exercised. It is not fair or right that the most powerful State of the union should allow the other States to make untold sacrifices in order to meet its statutory obligations. So it would appear- that tho procedure under clause 6 and the relevant clauses complies with the Constitution. The Leader of the Country Party **(Dr. Earle Page)** suggested that the trouble might be overcome by the creation of new States. I do not think that the creation of new States would help materially. It is looking somewhat into the future. Moreover, when a new State is formed it should be large enough to carry tho obligations which modern life requires of a State. When once we make a permanent division it should be made on the basis that it is in the best interests of all the people in the area divided. It is not practicable or just to form a State merely because a majority of its inhabitants hold some political tenet. .Such political beliefs come and go. It has happened in the past in one part of Australia, that there was a very strong agitation for separation while certain poh.tical views obtained, but later, the whole thing was, dropped. I ask the Government to proceed very carefully in regard to clause 6 of the bill conferring power to act in urgent circumstances. If we examine this clause and those connected with it, it will be found, to state it briefly, that it provides that if the Auditor-General has certified a sum to be due and payable and unpaid by a State to the Commonwealth, and a motion has been passed by both Houses, as prescribed, approving and adopting the certificate and affirming the desirability of applying sections 7 to 13, and in relation to specified revenue, those sections shall apply. Then, under section 9, the Commonwealth may be empowered to sue and recover moneys owing by any person to that State, and payable during the currency of the proclamation, which, if recovered by the State, would have formed part of the specified revenue of that State. This liability of the individual is imposed without any judgment of the judiciary of the Commonwealth on the matter of the debt duo by the State to the Commonwealth. I should like to be informed of any affirmative power in the Constitution -to justify legislation of that character. Without calling in the judiciary, a liability attaches to certain individuals to pay over certain sums of money. It is true that under the Constitution we have power to pass laws to carry on the administration. According to section 51 of the Constitution, the Commonwealth Parliament has power to legislate in regard to matters incidental to the execution of any power vested in the Government of the Commonwealth. Parliament can make laws to carry on its administration, but can a law of this kind come under that power ? Nor can the collection of money under this legislation be regarded as taxation, as has been suggested. It is not a general taxation act. It cannot be called taxation without discrimination. I cannot believe for one moment that the Government rests its power on that plea. {: .speaker-F4Q} ##### Mr Scullin: -- Does the honorable member think that the Government might be regarding this as a form of taxation? {: .speaker-KFK} ##### Sir LITTLETON GROOM: -- As I said before, I should like to be informed where, in the Constitution, there is an affirmative section conferring such power on the Commonwealth. {: .speaker-F4Q} ##### Mr Scullin: -- Does the honorable member regard a resolution as a piece of legislation ? {: .speaker-KFK} ##### Sir LITTLETON GROOM: -- A resolution of both Houses of Parliament, or of either House, is not a law, nor is it meant to be one. {: .speaker-KNP} ##### Mr Maxwell: -- The resolution does not create a liability; the liability exists already. {: .speaker-KFK} ##### Sir LITTLETON GROOM: -- I do not know, at present, of any affirmative power in the Constitution which enables this Parliament to create such a liability. However, the Assistant Minister **(Mr. Bruce)** intimated that clause 6 might be reconsidered, and placed upon a more satisfactory basis. {: .speaker-KVU} ##### Mr Thompson: -- Is the honorable member in favour of the bill? {: .speaker-KFK} ##### Sir LITTLETON GROOM: -- I am in favour of it, but I wish to see the bill passed in such a way as will enable it to effectuate its object, to secure the observance of their obligations by all the States. I want to feel that we have, in this legislation, an instrument that will achieve it3 object justly and fairly. I shall vote for the second reading of the bill, and I believe that it can be made a useful measure in order to secure the honorable observance of obligations between the Commonwealth and the States. {: #subdebate-38-0-s3 .speaker-KJQ} ##### Mr JAMES:
Hunter .- There will be no need to ask me, when I am nearing the end of my speech, whether or not I am in favour of the bill as was asked of the honorable member who has just resumed his seat. I say at -the outset that I am absolutely opposed to it, because I regard it as one of the most pernicious measures ever introduced in any legislature in Australia. The Government is endeavouring to seize power which it does not constitutionally possess, and I am convinced that after a long drawn-out legal battle the High Court will uphold the point of view I have expressed. Among the supporters of the Government are many who, on other occasions, have been loud in their advocacy of State rights, but they are strangely silent now. The honorable member for Martin **(Mr. Holman)** has frequently championed the rights of the States, but though I have waited patiently to hear something from him, I have waited in vain. He is credited with possessing much knowledge of these matters, and I hope that he may be induced to give honorable members the benefit of that knowledge. This bill is the effort of a bandit. As with individuals, so it is with States. The individual who goes to the wall seeks the protection of the Bankruptcy Court. The person to whom money is owed does not issue some edict of his own demanding payment from the individual who owes it, nor does he seize the debtor's goods; he has recourse to the courts. When the farmers of New South Wales were short, approximately 3,000,000, in their payments to the Consolidated Revenue of the State, they were not thrown neck and crop off their land ; the bailiff was not put in. They were allowed to wipe off their liabilities by a a system of deferred payments under the Moratorium Act. Yet some of them - many of the Hardy type - are prepared to take those concessions with one hand and stab their benefactors through the press or ballot-box with the other. According to the right honorable member for Flinders **(Mr. Bruce),** this step has been taken without prejudice; it is not done in any spirit of vindictiveness or for party political purposes; the bill is designed solely to enforce payment owing to the Commonwealth Government. But it is quite obvious to the people of Australia that it is aimed solely at the Lang Government of New South Wales. On the contrary, we find, that when speaking at the Millions Club, a week before the last meeting of the Loan Council, the Leader of the Government, or rather its nominal leader, referring to **Mr. Lang,** said, "We must remove this incubus from office." He went on to say how unfair it was that in New South Wales a basic wage of £4 2s. 6d. should be paid for a 44-hour week, and child endowment should be paid, things which he said were throttling and shackling industry, whilst in South Australia the wage of £3 3s. was paid for' a 48-hour week. These shackles must he removed. This bill certainly does display vindictiveness or party spirit. Did not the honorable member for Parkes **(Mr. Marr),** the present Minister for Health, say during the elections that if the Lang Government was not removed within fourteen days after the return of the Lyons Government he would eat his hat? It is about time the honorable member set about eating his hat, and perhaps his trousers also, because the Lang Government is still in power and is likely to be for many a day. The right honorable member for Flinders asserts that he is not the Leader of the Government, but when the right honorable member for Cowper **(Dr. Earle Page)** raised a contentious question and suggested that the bill should be taken in two sections, one making the Commonwealth responsible for overseas debt and the other dealing with the internal situation, particularly in regard to New South Wales, he was not answered by the Prime Minister **(Mr. Lyons)** who introduced the bill, and would naturally be expected to answer any contentious question, but by the right honorable member for Flinders, who says he is not the Leader of the Government. Does any right thinking man think that the people of New South Wales would allow the Commonwealth to put bailiffs into the New South Wales railway offices or taxation departments? Would not such a step on the part of the Commonwealth Government have rather a tendency to cause a revolution? Is the Commonwealth Government desirous of bringing about the disintegration of the Commonwealth? If so, it is going the right way about it. I contend that it is not in accord with the provisions of the Financial Agreement to attach money belonging to any State in any bank. No one can foresee what the effect of this bill will be, except that it will certainly cause a considerable amount of discontent among those to whom I have referred in my opening remarks, and who, before many days are over, will make their voices heard, if not in this chamber, at any rate in the State of New South Wales. In 1928, when the people were asked to amend the Constitution and accept the Financial Agreement, they never expected such legislation as this; or that State revenues were likely to be seized, otherwise they would never have consented to the agreement. Now we find that a State is to be debarred, not only from borrowing, but also from deriving any benefit from any revenue it may raise. The Loan Council says that the overseas usurers must be paid and that the unemployed of Australia can go hungry. {: .speaker-KNP} ##### Mr Maxwell: -- How would the honorable member suggest that the Financial Agreement be enforced? {: .speaker-KJQ} ##### Mr JAMES: -- The Commonwealth should do what the States have been obliged to do to the farmers, give an extension of credit, have a moratorium such as Australia will have to seek whether we like it or not. Let me review the position in New South Wales. The bill has been brought down solely to compel the State to reduce the standard of living. The honorable member for Denison **(Mr. Hutchin)** was outspoken. He made himself quite clear on the point. Not only did he say that he believed in a reduction of the basic wage; he also inferred that the dole paid to the unemployed in New South Wales is excessive, and should be reduced. The honorable member, who is a new member, has possibly put a mill-stone round his neck, because his utterance will be clipped from *Hansard,* and used to his detriment at the next election. The other jokers here are more cunning. {: #subdebate-38-0-s4 .speaker-KIT} ##### Mr SPEAKER (Hon G H Mackay:
LILLEY, QUEENSLAND -- Order! The honorable member must not refer to other honorable members as " jokers ". {: .speaker-KJQ} ##### Mr JAMES: -- **Mr. Lang** has been asked' to conform to the Premiers plan. It is said that he has not done so; he has not been given credit for the 5 per cent, unemployment tax on wages, as a contribution towards the aims of' the plan. His opponents say that the 5 per cent, should also come from the public servants in addition to the 22-J per cent, reduction provided for in the plan. **Mr. Lang** refuses to do this. He also refuses to reduce child endowment payments, or widows' pensions. Because of his refusal he is held up to ridicule, just as he was held up as a bandit when he first suggested a reduction of interest rates. We find now that, like the Scullin Government which fell into line with **Mr. Lang's** policy in that respect, the whole world to-day is falling into line with the policy of a reduction of interest and debts. **Mr. Lang** is to be complimented on his attempt to negotiate with the overseas bondholders. His opponents, with **Mr. Bavin** as their spokesman in New South Wales, say that nothing will absolve the Lang Government except a definite resolution of the Loan Council. That is to say, if he were successful in his negotiations with the overseas bondholders and secured a reduction of interest rates, it would be illegal, nothing would absolve him except a definite resolution of the Loan Council. Every one knows that the Council would not pass such a resolution; that it would rather pass a resolution to hang him. The Premier of New South Wales is an Australian, with the outlook of an Australian. His outlook is not an overseas one. He has spent all his time in Australia, and he is standing to-day to his country, fighting for her distressed people. Many people have asked why Australia is left to bear the great burden of debt, amounting to £744,000,000, caused by the assistance this country rendered to Britain during the war. Some one should take steps to see that Australia is fairly treated. **Mr. Lang** is trying to do so. Why cannot this country get the fair deal that Great Britain has meted out to Italy andFrance, whose debts were reduced by approximately 60 per cent., and which America has meted out to England by reducing the rate of interest on war indebtedness? The Australian debt has not been reduced. During the. war the supreme sacrifice was paid by 60,000 Australians, and 72,000 returned to their country maimed or permanently invalided as the result of the war. Why cannot we obtain similar concessions from Great Britain? The Premier of New South Wales is asking for such concessions, and he is perfectly justified in taking that attitude. Many people in Australia to-day are contending that most of our debts have been incurred owing to the fact that we have taken part in wars in the making of which we have had no' voice, and, as a result, we have been left staggering under this heavy burden. We have also had to carry a portion of the surplus population of Great Britain. Many British migrants are crippled exsoldiers who, owing to the fact that the war pension from the Imperial Government has been discontinued, are to-day receiving an invalid pension from the Government of this country.That is a crushing burden upon Australia. Let me quote statements of individuals other than **Mr. Lang,** who demand the cancellation of war debts altogether. The following statement, which appeared in the Hobart *Mercury,* was made by **Sir Ernest** Benn when speaking at the Individualist luncheon : - {: .page-start } page 376 {:#debate-39} ### A STRONGER VIEW "The Game is Up." *noMore Payments.* {:#subdebate-39-0} #### London, January 13 The great political ramp is over. At last the game is up. We know that not another cent. of reparations or inter-governmental debts will ever be paid. They are as extinct as the dodo. The only work remaining for the experts of the Reparation Conference, which will dawdle on for some years, is to save the faces of those stupid statesmen who for so long have kept the game going. The following cablegram, setting out the opinion of **Mr. Lloyd** George, was published in the Hobart *Mercury : -* {: .page-start } page 376 {:#debate-40} ### TO ENSURE PROSPERITY {:#subdebate-40-0} #### Mr. Lloyd George's Opinion {:#subdebate-40-1} #### Cancel All War Debts {:#subdebate-40-2} #### London, January 7 **Mr. Lloyd** George, who returned yesterday from a health trip to Ceylon, was interviewed at Launceston to-day. "The only way to ensure prosperity," he said, " is by the cancellation of all war debts and reparations, but the present year will not see the end of the trouble." The following paragraph also appeared in the Hobart *Mercury: -* {: .page-start } page 376 {:#debate-41} ### WAR DEBTS {:#subdebate-41-0} #### An Outspoken Banker {:#subdebate-41-1} #### Something to Remember {:#subdebate-41-2} #### London, January 9 The Hon. Alexander Shaw (deputychairman of the P. and O. Steam Navigation Company) presided to-day at a luncheon given aboard the company's newly-completed liner *Strathaird.* He said - " It is no exaggeration to say that the economic and social structure of Europe is daily moving nearer to the precipice. Europe is in the position where willingness to pay, however admirable, is no longer relevant. The blunt truth is that if things go on as they are going the choice will be simply between repudiation of war debts and chaos." It was not **Mr. Lang** who said this. These are the remarks of men who are great patriots, great imperialists. They are not subject to any criticism, are not called dishonest; they are men of high principles. {: #subdebate-41-2-s0 .speaker-KJQ} ##### Mr JAMES: -- I wish to expose the attitude which has been taken up by some persons who profess to be Christians. {: .speaker-KHO} ##### Mr Holman: -- How many war debts has **Mr. Lang** to meet? {: .speaker-JOM} ##### Mr Beasley: -- He has to meet a lot of debts that were incurred by the honorable member's administration. {: .speaker-KJQ} ##### Mr JAMES: -- Let me say that **Mr. Lang** is following more closely along the lines of Christianity than are many of those who profess to be Christians, and are to-day condemning him because he stands for feeding the people. Like the lowly Nazarene, **Mr. Lang** is putting humanity before money. Jesus of Nazareth asked nearly 2,000 years ago, "What man is there of you, whom, if his son ask for bread, will he give him a stone " ? Have we not in this House that type of man. The selfish, unsympathetic and callous type? Of course we have, and that has been amply demonstrated by the honorable member for Denison **(Mr. Hutchin).** He has shown that *lie is prepared to offer a stone to the unemployed who are asking for bread. Many of that type of individual are among the ranks of the United Australia Party. They say " Let us pay overseas usurers by taking the last shilling from the mothers who are in receipt of child endowment and from the victims of industry who are receiving compensation." They say " Squeeze them, grind them and wring from them all that we can by the pressure of economic necessity." These are the men who deserve and will receive Divine and human condemnation. I consider that the Prime Minister **(Mr. Lyons)** is but the lackey of the right honorable member for Flinders **(Mr.** Bruce). {: #subdebate-41-2-s1 .speaker-KIT} ##### Mr SPEAKER (Hon H G Mackay:
LILLEY, QUEENSLAND -- The honorable member knows perfectly well that he is distinctly out of order in making such a remark, and I ask him to withdraw it. {: .speaker-KJQ} ##### Mr JAMES: -- I withdraw it. The right honorable member for Flinders is determined to withhold moneys due to the State of New South Wales, solely because the Premier of that State practises the philosophy of the Divine Christ, which is to feed the people who are hungry. **Mr. Lang** preferred to feed the people in preference to paying interest to wealthy money lenders. Are not these money lenders the usurers of old, whom Christ condemned and whipped from the Temple? Because of the humanitarian action of the Premier of New South Wales blasphemy and irreligious hatred are directed at him by this Government. Not God, but Mammon is worshipped by the supporters of the Government. Their cathedral is the headquarters of the United Australia party, and they kneel at the shrine of the profiteers and exploiters who direct the policy of this Government. The day of reckoning is fast approaching. The Premier of New South Wales in effect denies that wealth, power and pomp, are the real objectives of life; he proclaims with Christ that the sons and daughters of God should be treated as befits their glorious origin and their magnificent destiny. Because of his attitude he has to face all the terrors and horrors that the controllers of the most monstrous and evil system ever instituted by a government can heap upon him. I ask the honorable member for Angas and the honorable member for Fawkner **(Mr. Maxwell),** to both of whom I give credit for endeavouring to follow the teachings of Christ, what would happen if the lowly Nazarene walked into this House and was made conversant with the fact that at the Premiers Conference, or at the meeting of the Loan Council, the Assistant Treasurer had demanded that we should pay the usurers at the expense of the widows and orphans; that those who are hungry, instead of receiving bread, should be told to take up their belts another two holes? That is in effect the statement of the Assistant Treasurer and others. Christ said, "Feed my lambs " and " Feed my sheep ". Would the supporters of the Government crucify Christ as the Jews did? Jesus said, "Suffer the little children to come unto me and forbid them not". What would He say if He were told that children were being semi-starved in order to pay the wealthy bondholders? {: .speaker-K0A} ##### Mr Gabb: -- Christ also said, " Man shall not live by bread alone ". {: .speaker-KJQ} ##### Mr JAMES: -- Jesus also preached the Sermon on the Mount which is the foundation of Christianity. These are the beautiful words that Christ taught - >Blessed be ye poor for yours is the Kingdom of God. > >Blessed are ye that hunger now: for ye shall bc filled. What would Christ say to-day to those who, under the guise of honouring our contracts, of meeting our obligations to usurers overseas, penalize their fellowcountrymen, many of whom are now suffering the pangs of hunger? Have we no obligations to our own people? Christ said - >But woe unto you that are rich for ye have received your consolation. > >Woe unto you that are full for ye shall hunger. Woe unto you that laugh now for ye shall mourn and weep. > >Woe unto you when all men shall speak well of you, for so did their fathers to the false prophets. This bill should receive short shrift from every person who is actuated by the spirit of humanity. On the one hand we have people in destitution who go hungry about our cities, shrinking from the sight of those they know, humiliated with the knowledge that they possess only just sufficient clothing to cover their nakedness. On the other hand, we have a class plentifully endowed with worldly goods, who have never known hunger. This Government proposes to take from the hungry and give to the rich. These words in the scriptures have always puzzled me : " He that hath, to him shall be given : and he that hath not from him shall be taken away even that which he hath." They represent the inhuman, unchristian policy of this Government. I appeal to honorable members to reconsider any premature decision that they may have formed upon this measure, to realize what it means to the people of Australia - that it may even cause bloodshed; and that it can bring about only more poverty and distress in this splendid Commonwealth, where there is and should be full and plenty for all. {: #subdebate-41-2-s2 .speaker-KV7} ##### Mr STEWART:
Parramatta -- The innate modesty which so strongly characterizes honorable members on the Government side of the chamber would have restrained me from speaking at this early stage of my political career, were it not that the measure that we are considering so seriously and immediately affects the material welfare and the reputation of the State that I represent. Furthermore, the ground has been so well traversed by previous speakers that there is little for me to add. I shall certainly not follow the lead that has been given by so many honorable members by going beyond the relevant issues in order to provide what, in my unsophistication during the last few days, I have learned is intended for consumption by constituents, and really makes no valuable contribution to the national account. New South Wales members owe it to their constituents and to the other States to declare where they stand in this matter. Undoubtedly, it is our duty to dissociate ourselves from the actions of the New South Wales Premier and his Government in connexion with measures that have led to the introduction of this bill. I sincerely regret that my first public utterance in this chamber should be connected with an issue that brings a great measure of shame to the State of New South Wales, the temporary leaders of which have grossly misinterpreted the real feelings of the people. It is because this measure * is calculated to remove some of the causes of that shame that I definitely indicate my readiness to support it. I believe that, with possibly a few notable exceptions, all honorable members who represent New South Wales constituencies will give their ready support to this bill. What is infinitely more important, I believe that the great majority of the people of that State will gladly acclaim the opportunity that this measure gives them for dissociating themselves from the political chicanery of their Premier. The Mother State does not want less favoured States to bear its burden as well as their own, nor does itwant its Premier to achieve that end by trickery and subterfuge, and a breach of all the canons of honest dealing. Last evening the honorable member for West Sydney **(Mr. Beasley)** suggested that possibly the people of New South Wales would have the opportunity to express themselves on this issue earlier than might be expected. I trust that this pro- phecy- or was it a promise - will be fulfilled. There was never a time in our history when the people of New South Wales so ardently desired the application of that Labour plank, to the disregard of which the honorable member for Melbourne **(Dr. Maloney)** so eloquently and trenchantly addressed himself in this chamber last week; I refer to the initiative, referendum and recall. Even the honorable member for East Sydney **(Mr. Ward)** had a complaint to make this afternoon against this measure which, he said, was designed to force **Mr. Lang** to go to the people. Surely my ears deceive me when the demagogue of demagogues can find cause for cavil at a measure which proposes to. give to the people the right to express themselves! The honorable member also said that he hoped that those who represented New South Wales in this Parliament would not slink out of the chamber when the vote was taken on this measure; that they would have the courage of their convictions, remain in the House, and vote in the interests of New South Wales. He is not going to be disappointed. We shall remain in the chamber, and vote in the true interests of that State. I am pleased that the bill contemplates removing all doubt regarding the ultimate responsibility of the Commonwealth in respect to the public debts of the State. Whatever might be the legal position - and we know that there are distinct and varying schools of legal thought on the subject - there can be no doubt regarding the universal acceptance of the Commonwealth's responsibility. I therefore welcome what seems to be a simple and speedy determination of that doubt. Any continued hesitancy on this matter can entail only irreparable injury to Australian credit. In view of the lateness of the hour, I shall deliberately refrain from recapitulating the arguments that have already been advanced, and will confine myself to several observations of a general character, still, I hope, keeping my remarks relevant to the subject.- The honorable member for West Sydney **(Mr. Beasley)** and other speakers from that section of the House occupied a great deal of their allotted time in dilating upon the incidence of "war debts. Surely they must be aware that as this measure is restricted entirely to loans incurred by the States, not one penny of which was dissipated in war expenditure, their references in that regard are entirely irrelevant. Most of this money has been sunk in costly socialistic enterprises, freakish industrial experiments, and public works designed to consolidate party interests in doubtful constituencies. Not one political party is free from blame in that regard. The funded debt of New South Wales to-day approaches £300,000,000. Since federation, £215,000,000 has been added to the public debt of that State, which has been living beyond its income to the tune pf £7,000,000 a year. After such an orgy of expenditure, is it any wonder that we find ourselves in trouble? The major portion of that expenditure has not benefited the country; £145,000 was invested in State trawlers and fish shops, and wasted. Those trawlers have since been used by private enterprise, and, until very recently, were working at a profit. The State bakeries - not the Shadier still-born atrocity, but the earlier institution - accounted for a considerable wastage of public money, while £77,000 was sunk in State timber yards, £42,000 in State saw-mills, and £190,000 on the construction of the Homebush saleyards, which have not yet sheltered a hoof. Then there are the State coal-mines - but these are comparatively small factors, and merely go to indicate that State enterprises are doomed to failure. And what of the greatest tiger of them all, our State railway system? I remind honorable members that practically half of the funded debt of New South Wales, no less a sum than £137,000,000, has been spent in providing railway systems, many of which could not, by any stretch of the imagination, be justified. I shall give a few illustrations. The most recently built railway extension in New South Wales connects Ballina with Booyong, and was completed in August of last year. It added £418,000 to the public debt of New South Wales, and costs that State £480 a week in interest and other charges. From that huge capital investment, the weekly return is £24! In view of the suggestion of the right honorable member for Cowper **(Dr. Earle Page)** that we might attach the railway revenues of the State of New South Wales - which procedure somebody suggested would involve placing a receiver in all of the railway stations of that State - we might well place the burden of collecting and counting that money on the right honorable gentleman. It would not interfere with his political or professional duties. Another railway extension is that from Ungarie to Naradhan, which was completed in 1929, at a cost of £254,000. Only one train a week is running over that line, which costs £400 a week to maintain. Again, there is the line from Gilmore to Batlow, which cost £279,000, involving the State in a weekly expenditure of £400, and which returns £35 a week! Some of us are occupied with pretty sick businesses at the present time, but only State enterprises could be carried on under such conditions. That is where the money has gone; not in war expenditure. For the delectation of our country representatives, let me hasten to say that we have examples just as horrible in our metropolitan areas, not excluding the North Shore bridge. Perhaps it is poetic discrimination on the-part of the Transport Board of New South Wales that it should decide to terminate some of those non-paying lines by beginning with two within the bounds of the Parramatta electorate. In view of the facts that I have quoted, I am pleased that this Government has convened a conference to investigate the whole of our State railway activities, for herein lies the fester of Australian finance, which will not be cured by stopping an orchardist from sending a few loads of melons by road to market. It will be cured only by the courageous removal of our railways from the blight of political control. For too long they have been the plaything of political adventurers, and as I have already said, all parties have been equally guilty in thi3 regard. I remind honorable members that this bill does not contemplate heartless foreclosure on worthy but unfortunate indigent States. I suggest that there is sufficient Australian sentiment to cause our people gladly to disregard State bar- **Mr. Stewart.** riers should any one member of the Commonwealth family find itself, as a result of reasons beyond its control, in need of assistance. The present default of the Premier of New South Wales is not in this category; it is a defiant and truculent repudiation, not only in respect of absentee bondholders, but of the other States of the Commonwealth. A great deal has been said by honorable members opposite concerning the effect of this bill on the unemployed. I do not question the solicitude of those honorable gentlemen for the distressed people in our community; but surely I am justified in suggesting that the public and private records of honorable members on this side of the chamber indicate that they are just as much, concerned about this aspect of their public responsibility as is the honorable member for West Sydney **(Mr. Beasley),** for instance, who made particular reference to the aged and infirm. Who was it that first expressed in terms of cash the concern of the community for the aged people of New South Wales? It was **Sir William** Lyne, who was not a Lang planner. Who was it that first made this social service Universal throughout the Commonwealth, and included invalids among those entitled to the pension? It was the Hon. Alfred Deakin, who was not a repudiationist in any sense of the word. I remind honorable members that each progressive increase in the weekly pension from 10s. to 20s., except one, was granted by an anti-Labour administration; and the one exception was granted by the Government led by the right honorable member for North Sydney **(Mr. Hughes),** who does not now owe allegiance to the Labour party. The political interests which made this provision for the old-age and invalid pensioners of Australia can learn nothing in this regard from the Premier of New South Wales, who can find plenty of time to meet tin hare interests, but cannot find time to meet the representatives of the unemployed. I refer honorable members to the columns of to-day's issue of the *Sydney Morning Herald* for further information on this point. This Premier cannot find time, either, to meet the representatives of the friendly societies whose aged and infirm members have been robbed by him of the subventions given to them by previous administrations. This legislation will help, and not injure, the hungry poor. It will hasten the time when they will be fed, not by a sustenance docket, but by a real pay docket - a time for which many thousands of distressed people in New South Wales are devoutly praying. For this reason, though also for many others, I strongly support this measure, and in doing so I know that I have the whole-hearted approval of my constituents. {: #subdebate-41-2-s3 .speaker-KWC} ##### Mr THORBY:
Calare .- This very important bill has been introduced, as the Leader of tlie Government has pointed out, for the purpose of enabling the provisions of the Financial Agreement, entered into by the representatives of the Commonwealth and the States, to be enforced against *one* of the contracting parties. That agreement has been ratified by all the Governments of Australia, as well as by the people. As the representative of a New South Wales constituency, I regret that it has become necessary for the Commonwealth Government to bring down such a bill in order to force the New South Wales Government to recognize and meet its obligations under the agreement. I say very definitely that the default of New South Wales is not due to the inability of the State to meet its liability. It has been deliberately designed and boasted of by the State Premier, **Mr. Lang.** On more than one occasion this gentleman has said, while he has occupied the high and responsible position of Premier, that he is determined to smash the Loan Council. He has already defied the council, and has said that he would have nothing whatever to do with it, and he has shown that his remarks were no idle boast. He is still endeavouring to defy the council, to smash the agreement, and to repudiate the obligations of . New South Wales under it. I realize that not many members of this House know **Mr. Lang** as well as I do. If they did, they would recognize that I am not exaggerating when I say that he is the most unworthy, ruthless, relentless and unscrupulous political outlaw in the Commonwealth to-day. I use those words meaningly, and in spite of interjections which are being made by honorable members sitting on my right. I am quite able to reply to their interjections personally or otherwise; but I trust that the proceedings of this House will not descend to that level. {: .speaker-KX7} ##### Mr Ward: -- They did when the honorable member was iri the State Parliament. {: .speaker-KWC} ##### Mr THORBY: -- I am proud of my record as a member of the New South Wales legislature ; but that is surely more than the Premier of New South Wales can say. The first question I ask myself in regard to this bill is, "Is there any justification for the Commonwealth Government introducing a measure of this type which admittedly is very drastic, and which may have far-reaching effects in the very near future?" I reply deliberately that there is every justification for the Government taking the most drastic action in its power in order to force the New South Wales Government to honour the Financial Agreement. If time permitted, I could show that the present Premier of New South Wales has deliberately planned, not only during his present term of office, but also when he was previously in charge of the affairs of New South Wales, to defeat the provisions of the Financial Agreement. An analysis of the financial position of New South Wales shows clearly that the policy of the present State Government is one of undue generosity, but not of justice. This bill is, in effect, nothing more than an endeavour to force the New South Wales Government to be just before it is generous. I make that remark in reply to the observations of the honorable member for Hunter **(Mr. James)** a few minutes ago. The New South Wales Government is now endeavouring to hide itself behind helpless women and children. It has been guilty of bringing the people down to their present desperate position. The volume of unemployment is greater in New South Wales to-day than in any other State in the Commonwealth. In spite of all the protestations of the honorable members who support the Lang plan in this chamber, I declare, without hesitation, that the people of that State are suffering greater hardships than the people of any other State. This position has been brought about because the New South Wales Government has introduced legislation which it was quite impossible effectively to administer. I have heard the policy of repudiation, which has been advocated in this chamber to-night, enunciated from many public platforms, and I consider that it is high time that the Government took steps to enforce the New South Wales Government to carry out the agreement which was entered into in an honorable way. {: .speaker-KX7} ##### Mr Ward: -- It was not entered into in an honorable way. {: .speaker-KWC} ##### Mr THORBY: -- That is not true. {: .speaker-KX7} ##### Mr Ward: -- It was entered into dishonorably. {: .speaker-KWC} ##### Mr THORBY: -- If the Premier of New South Wales knew that the agreement was dishonorably made, he should have refused to accept it. {: .speaker-KX7} ##### Mr Ward: -- He accepted it with qualifications. {: .speaker-KWC} ##### Mr THORBY: -- I am not concerned about any qualifications that he may have made, forT know the gentleman too well. I know how he has attempted to evade responsibility within the State. This gentleman condemned the previous State Government for having imposed a tax of 3d. in the £1 on incomes in order to provide money for the relief of unemployment. I remember how that Government was censured from one end to the other of New South Wales, and the promise that was definitely made by the present Premier of the State that this tax would be removed. Yet within a few days of assuming office this gentleman went back on that pledge to the people, and increased the tax by 400 per cent. {: .speaker-KJQ} ##### Mr James: -- That was done in order ro discharge an obligation which it was found that a tax of 3d. in the fi was not sufficient to meet. {: .speaker-KWC} ##### Mr THORBY: -- It was imposed at the dictation of certain unions. {: #subdebate-41-2-s4 .speaker-KIT} ##### Mr SPEAKER (Hon G H Mackay: -- Order! The honorable member for Hunter **(Mr. James),** and the honorable member for East Sydney **(Mr. Ward)** have delivered speeches on this measure, and have expressed emphatically their opinions concerning it. I ask them to show the respect that is due to a new member. The honorable member for Calare **(Mr. Thorby)** is as much entitled as they are to express his views, and in doing so will be afforded the protection of the Chair. {: .speaker-KWC} ##### Mr THORBY: -- The first obligation imposed upon any individual when he borrows money, whether he acts on his own behalf or on behalf of a government, is to see that that money is expended in such a way that it will at least return sufficient to enable the interest upon it to be paid, and provision made for a sinking fund that will ultimately discharge the debt. The honorable member for Parramatta **(Mr. Stewart)** stated the position aptly when he said that a tremendous amount had been borrowed by New South Wales and expended on works that could not be classed as reproductive, and could not return sufficient to meet interest and sinking fund payments. The present Government of that State cannot evade its responsibility in regard to that expenditure, because it has incurred a large proportion of the liability. During the last seven or eight years New South Wales has been committed to an extremely heavy expenditure on works for which there was no justification. It is, the interest upon that expenditure which the Government of New South Wales now says it cannot pay, and the Commonwealth Government has had to pay in order to uphold the honour of Australia. The Leader of the Country party **(Dr. Earle Page)** suggested that perhaps the attachment of the revenue of the Railway Department might provide a solution of the existing difficulty. Let us consider the figures in relation to that department. Approximately £141,000,000 of loan money has been expended upon railway works of one class or another in New South Wales. That huge organization earned during the year ended the 30th June. 1931, fl5,490,000. Unfortunately, the practice has been followed of making provision for everything except interest, the balance between earnings and expenditure being used to defray partially the interest bill on the money expended. Last year the working expenses of the New South Wales railways amounted to £12,372,000. Thus they absorbed the greater portion of the earnings, about £3,000,000 being left to meet the interest commitment of £7,500,000. The Premier of the State, without justification in a time like the present, has granted all sorts of concessions, which have had the effect of loading the railway commissioners with uncalled for and unnecessary expense. The employees of the department enjoy conditions that are not granted by any other railway department in the Commonwealth, such as higher rates of pay, a shorter working week, and payment based on a week of 48 hours, although only 44 hours are worked. He has not asked these men to realize that they are in an artificial position, and are living in a fool's paradise. This is one of the principal State undertakings which has brought about the financial difficulties in which the New South Wales Government finds itself today; but similar conditions exist in every other department of that State. The Government has committed the State to a huge expenditure without having made adequate provision to meet it. It has loaded industry with unnecessary costs and charges, which have directly been the means of closing down factories, driving capital out of the State, and bringing the people to a state of privation and poverty. Yet the Leader of that Government and his disciples in this House go so far as to use the unfortunate unemployed and their wives and children as a sort of smoke screen, just as the semi-savages of China did when they had not sufficient courage to face the position with which they were confronted. Nobody has greater sympathy than I have for these unfortunate women and children. {: .speaker-KX7} ##### Mr Ward: -- That will not fill their stomachs. {: .speaker-KWC} ##### Mr THORBY: -- I admit that sympathy will not feed them, nor enable them to escape from their difficulties; but neither will the artificial legislation that has been passed by the State, nor the repudiation which is being practised by its Government. Confidence will be re-established only when the Government is brought to its senses and, if necessary, forced to meet its obligations. The point needs stressing that it has been definitely and directly instrumental in closing down industries, by making it unprofitable for employers to engage labour, and that it has swelled the ranks of the unemployed, until to-day their number is greater and their hardships more severe than in any other State of the Commonwealth. Yet those who advocate the Lang plan tell us that these people are in receipt of the dole, child endowment, and widows' pensions. The truth of the matter is that they have been deprived of the opportunity of earning an honest living at from £5 to £10 a week, and in exchange have been given a miserable dole. These gentlemen would have us believe that they are giving something for nothing; whereas they have brought the people to a state of poverty, and forced them to seek charity from the State. .That is what we have to keep in mind in considering a measure of this description, which is designed to compel not only the Government of New South Wales, but also every government in Australia, to realize that it has an obligation to fulfil when it borrows money, that obligation being to see that the money is not expended on works such as the Sydney Harbour Bridge. The Government of the day said that the bridge would cost £5,000,000; yet, according to the report of the AuditorGeneral, over £8,000,000 had been expended upon it by the 30th June, 1931, and I prophesy that the amount will be increased to £10,000,000 before the structure is completed. A further £10,000,000 to £12,000,000 was invested in the underground railway, and £14,000,000 on the railway electrification scheme, making a total of between £30,000,000 and £40,000,000 of loan money disbursed within seven miles of the centre of the capital city of the State. Not one penny of that expenditure is reproductive at the present time, and in consequence the people of the State are subject to increased taxation. I mention the taxation because I desire to suggest to the Assistant Treasurer that an important principle might be applied in the future - if it cannot be embodied in the bill - when application is made to the Loan Council for the allocation of funds to State governments. Suppose that the money required is to be expended on a public work, such as the North Shore bridge- {: .speaker-KHO} ##### Mr Holman: -- 'Why not use for illustration the Dorrigo railway? {: .speaker-KWC} ##### Mr THORBY: -- I prefer to use my own illustrations, and not have them chosen for me by an ex-Premier of New South Wales. Upon the North Shore bridge £10,000,000 of loan money is. being expended under an act which provides that all municipalities and shires within a certain radius shall impose a special rate of½d. in the £1 on the unimproved capital value of their land. That rate has produced to date approximately £1,250,000, which hasbeen collected for the specific purpose of helping to pay the interest on the money borrowed for the construction of the bridge. But it is being used by the Government for other purposes. I have details of at least a dozen similar instances. Loan money has been advanced to settlers who are required to pay interest on it at the rate of 6 per cent. per annum. Again, loan money has been used for the construction of main roads, and motor-car owners in the State benefited are required to contribute directly towards the interest and sinking fund charges by way of motor registration fees. Is it not feasible to earmark such contributions for meeting the interest on the loans? I suggest that a provision, so eminently reasonable, should be enforced by the Loan Council in connexion with future advances' to governments in this direction. The New South Wales Government is collecting moneys from every possible source, paying them into Consolidated Revenue, and applying them to purposes for which they were never intended. For instance under the Flour Acquisition Act a large sum of money was collected for the. specific purpose of granting relief to the wheat-growers. But according to the report of the AuditorGeneral not one penny had been advanced to them up to the 30th June, 1931. {: .speaker-KX7} ##### Mr Ward: -- Tell the House about the black list and the refusal of the millers to supply flour to bakers? {: .speaker-KWC} ##### Mr THORBY: -- I will tell the House something about the coal industry. The Railway Department, which made a loss of nearly £4,500,000 last year, had to apply to the Government for £250,000 to compensate it for losses incurred in the haulage of coal and coke at less than coat. A State instrumentality is being used to grant assistance to the coal industry by charging extremely low rates, although the miners were not prepared to meet their obligations and suffer reductions which they knew were absolutely necessary to enable their industry to continue. I could give many instances of how, through lax administration, loan money has been expended without adequate provision being made for the payment of interest and sinking fund. If this bill does no more than compel governments in future to make adequate provision for such charges in connexion with loan expenditure, it will justify itself. {: .speaker-F4Q} ##### Mr Scullin: -- But it does not do that. {: .speaker-KWC} ##### Mr THORBY: -- It will make governments realize that if they default they will be compelled to meet their obligations, and knowledge that such compulsion is possible, will make them more careful in the expenditure of loan moneys. The use for other purposes of money collected for the specific payment of interest charges approximates very closely to misappropriation of public funds. The honorable member for Hunter **(Mr. James)** referred to the New South Wales moratorium. That measure does not apply to payments due to the Crown ; State revenues are still collectible in the same way as if the act had never been passed. {: .speaker-L08} ##### Mr Rosevear: -- Does the honorable member contend that no benefit has been conferred by that Moratorium Act? {: .speaker-KWC} ##### Mr THORBY: -- The Moratorium Act applies to private transactions; this bill does not. The New South Wales Government has not suffered any embarrassment from the Moratorium Act, because payments due to the Crown are excluded from it. The Moratorium Act has no bearing on this particular case. If the Government of New South Wales persists in ignoring its obligations to the Loan Council, and refuses to introduce the necessary economies, the other States should not be penalized. {: .speaker-KX7} ##### Mr Ward: -- What economies does the honorable membersuggest should be made? {: .speaker-KWC} ##### Mr THORBY: -- I could instance a number of economies which, if made, would effect a saving of millions of pounds in governmental expenditure. Since the State Railway Department is losing £4?500j000 per annum, there is no justification for the payment of £28,000 a year in connexion with the railway and tramway men's institute, or £1,100 a year to provide hilliard tables for the use of railway employees in the city areas. The State Government re-imburses the Railway Department to the extent of £800,000 a year to provide interest on what are known as non-paying lines. The honorable member for Parramatta **(Mr. Stewart)** should be fair, and give credit to the department for carrying on these developmental services. The Government has recognized that it would be unreasonable to ask the Railway Department to construct such lines and operate them at a loss, because they are necessary for the proper development of the State as a whole. I am convinced that many country railway services, which at present are showing a loss on working, are a national asset. {: .speaker-KV7} ##### Mr Stewart: -- The Ballina-Booyong line, for example? {: .speaker-KWC} ##### Mr THORBY: -- That proposal was a mistake. Those responsible for its construction were not concerned so much with the development of the country as with the effect which it would have upon the revenues of coastal shipping companies. But, at the moment, we are more concerned with the attitude of the Government of New South Wales to its financial obligations, and its refusal to curtail its expenditure sufficiently early to enable it to meet commitments as they fell due. It is of no use for the Government of that State to approach the Commonwealth Government at this late hour and plead that, because of financial stringency, it is unable to meet its interest payments. It should have realized its position twelve months ago, and taken the stops necessary to carry out an agreement entered into with the Commonwealth and the other States. The honorable member for East Sydney **(Mr. Ward)** made some references to economies carried out by the Government of which I was a member. If the present Government had continued with the policy laid down by its predecessor, New South Wales to-day would be in a better position financially than any other State. {: .speaker-KX7} ##### Mr Ward: -- And the people would be in a worse position. {: .speaker-KWC} ##### Mr THORBY: -- Not at all. New South Wales is in its present difficulty because all State undertakings are heavily loaded with unnecessary costs, and revenues received by the Government, instead of being applied to the redemption of loan proposals, are being paid into the Consolidated Revenue. The default of the Premier of New South Wales has been deliberate. He has openly boasted, time after time, that he is out to destroy the Loan Council, and by repudiating his obligations he has endeavoured to disgrace the whole Commonwealth in the eyes of the world. Debate (on motion by **Mr. Holman)** adjourned. {: .page-start } page 385 {:#debate-42} ### ADJOURNMENT Pensions Administration - **Mr.** *E.* Riley ex-M.P. Motion (by **Mr. Lyons)** proposed - >That the House do now adjourn. {: #debate-42-s0 .speaker-KX7} ##### Mr WARD:
East Sydney .- In the course of the debate to-day upon the Financial Agreements Enforcement Bill, wo heard a good deal about the repudiation of obligations by the Premier of New- South Wales, and about the attitude of this Government towards such matters. When the financial emergency legislation was before this House last year, we were given to understand that the- necessary economies to be enforced included a percentage reduction of invalid, old-age and war- pensions. Those reductions were made. Now it appears that war pensions are to be reviewed, with the possibility of further reductions being made. I have received a communication from the Deputy Commissioner of the Repatriation Department, Sydney, in reply to certain representations which I had made concerning the treatment meted out to a war pensioner, directing my attention to regulation 2c, which reads as follows:- >Any pension payable to a dependant (notbeing tlie wife, widow, or child of a member of the Forces, or the widowed mother of a deceased unmarried member of the Forces where she became a widow either prior to or within three years after the death of the member) shall be subject to review, and if the dependant is deemed *by* the Commission not to be without adequate means of support, the Commission may reduce or cancel the pension according to the circumstances of the case. The Deputy Commissioner added that a parent is not deemed to be without adequate means of support when his or her income from all sources amounts to £3 per fortnight. If the Government believes that £3 per fortnight is adequate for the support of a parent of a deceased soldier, we may assume that it believes that the basic wage should be in the vicinity of 30s. per week. This is an appropriate time to discuss this important principle, because another war is now being waged in the East, and Australia may be called upon to play her part. I hope, however, that the people of this country will not allow themselves to become so involved. One unfortunate mother, **Mrs. Mary** O'Neill, 27 Little Riley-street, Surry Hills, who listened to the appeals made by recruiting sergeants in the early days of the Great War, lost two sons. For a period of three years she was in receipt of a pension of 7s. 6d. a week. Upon review, her pension was increased to 40s. per fortnight. Under the financial emergency legislation passed last year, her "payments were reduced by 9s. per fortnight, and upon further review more recently, were cut down from 31s. to 25s. per fortnight. The department says that this unfortunate woman, who is 74 years of age, has adequate means of support, because she receives the old-age pension. As I have said, two of her sons served in the late war and paid the supreme sacrifice, and another son has been out of work for four years. This Government declares that £3 per fortnight is an adequate income for her. I urge the Minister to look carefully into this matter in a manner becoming to a national government, and to see whether the obligation of the nation to the parents of the men who went overseas has 'been discharged in this case. I could quote similar cases in which pensions have been reduced from 31s. to 25s. per fortnight. I have been dealing for some months with the case of a returned soldier, Alfred George Bott, of 65 Surrey-street, Darlinghurst. When he returned from the war, lie was granted a pension because he had contracted rheumatism, and the department admitted that the complaint was due to his war service. The department has since reviewed his case, and it declares that he is not now suffering from rheumatism. It has, therefore, taken the pension away from him; but he has been an inmate of three public hospitals, and has been under the care of many specialists, who have treated him for the complaint of chronic rheumatism. On reexamination of the case, the doctors have decided that he is not suffering from rheumatism, but from nerves. Now even the department is prepared to admit that the complaint is rheumatism; but, after the lapse of so many years, it says that the malady is not due to war service. If any honorable members doubt my statements concerning this case, I should like them to visit this man in Sydney, and see for themselves the condition into which he has fallen as the result of serving his country in its hour of need. I would urge them to interview the mothers of deceased soldiers, and ask them whether they believe that the last war was in the interests of those Australians who made the actual sacrifice. I hope the Minister will give his personal attention to the matters that I have brought under his notice, and that honorable members who have similar cases in hand will support me. {: #debate-42-s1 .speaker-L08} ##### Mr ROSEVEAR:
Dalley .- I desire to bring under the notice of the Minister the hardship suffered by an oldage pensioner. I do not know whether the case referred to in the communication that I have received from the department is covered directly by the act, or whether it is affected by the regulations under the act, nor can I say which particular government is responsible for the regulations of which I shall complain. When the old-age pensioner whose case I am presenting was in better circumstances, he bought a block of land from a land investment company. He, subsequently, became unemployed, and was eventually entitled to the pension; but before he claimed it, he transferred the property, which was only partly paid for, to a friend. He realized that he was unable to keep up the payments due, and he was under an obligation to his friend, who had rendered him many good services in the past. He undertook to give his friend the property, in recognition of past services, and the friend was to pay off the balance owing on the land. The department holds that the land is still the property of the pensioner. The communication received from the department contains these words - "I have to advise that transfers of property without adequate consideration cannot be recognized by the department". I went into this matter with the Deputy Commissioner of Pensions, and discussed the peculiar feature of the regulations. If this man had forfeited his land, being unable to keep up the payments, and the property had reverted to the land sharks, be could still have claimed the full old-age pension; but because he transferred it to a friend for the reason that I have stated, he is still regarded as the owner of the property. The departmental reply goes on to say - " It is regretted, therefore, that the value of **Mr. Knopp's** equity in the land in question at the time of its transfer must be maintained against him;" I do not think that that is the intention of the act, and I hope that the matter will receive consideration by the Government. The person to whom the land has been transferred is a most reputable citizen; he is analderman and a Justice of the Peace. He has signed a statutory declaration, which shows that the transaction was perfectly fair and above board. If the regulations have been properly interpreted, the Government, I think, should take a more charitable view of such cases, and should not allow the regulations to operate against a claimant for the oldage pension, as in this instance. {: #debate-42-s2 .speaker-KK7} ##### Mr JENNINGS:
South Sydney -- I desire to take the unusual course of paying a tribute to my predecessor in the South Sydney seat, my old friend, **Mr. Edward** Riley. He is wellknown to many honorable members, and as I have lived in the electorate for some 30 years, I have had many opportunities of observing his activities. Although he was politically opposed to me, I am expressing, I think, the opinion of the great majority of the electors of South Sydney when I say that he retains their esteem. Question resolved in the affirmative. House adjourned at 10.60 p.m.

Cite as: Australia, House of Representatives, Debates, 25 February 1932, viewed 22 October 2017, <http://historichansard.net/hofreps/1932/19320225_reps_13_133/>.