13th Parliament · 1st Session
Mr. Speaker (Hon. G. H. Mackay) took the chair at 2.30 p.m., and read prayers.
Mr.R. GEEEN.- I ask the Prime
Minister whether the Government has considered the incidence of the sales tax, and whether it proposes to repeal the act or, at least, radically amend it?
– The sales tax has been almost continuously under the notice of the Assistant Treasurer and myself, but no drastic alteration of it is intended at present.
– I ask the Assistant Treasurer whether the Government intends to consider the removal of the sales tax from explosives used in the mining industry?
– It is not customary to announce government policy in reply to questions. The matter raised by the honorable member will be considered in connexion with the budget proposals for the next financial year.
– Is the Government prepared to abolish sales tax on articles used for the destruction of pests affecting primary industries; articles such as rabbit poisons, traps, sulphur, bunticide, &c. ?
– When the Government is considering its financial proposals for the coming year that matter will be taken into consideration.
– Has the Minister for Trade and Customs considered the possibility of rationing the imports of tobacco leaf to ensure that all Australian leaf of reasonable quality shall have a local market? If so, can he make a statement to the House of the Government’s intention?
– The Government will watch closely the developments in the tobacco industry, with a view to ensuring the consumption of all leaf of sound marketable quality now being grown; it will also pay particular attention to prices. If it is deemed necessary in the interests of growers, and to promote the consumption of locally-grown leaf, and the maintenance of a reasonable price, the rationing of imports will be considered.
– Notice having been given of a motion to be submitted tomorrow relating to the tobacco duties, questions which anticipate that discussion cannot be permitted.
Payment with Commonwealth Bonds.
– Has the Prime Minister read the report of the AuditorGeneral that bonds of a face value of £8,800 were purchased fay the executor of a deceased person’s estate for £7,897, lodged in payment of estate duty, and accepted by the Treasury at their face value? Subsequently, upon the reassessment of the estate, £3,902 was repaid to the executor in cash, involving a loss to the Treasury of £400, and a corresponding gain to the estate. Having regard to the injustices and anomalies which are possible under the existing system, will the Prime Minister investigate the practice of accepting bonds at their face value, particularly bonds purchased by executors after the decease of the testator, with a view to protecting the public revenues?
– The matter will be investigated.
– Was it not stated on the prospectus issued in connexion with the last big loan conversion that bonds would be accepted for probate purposes at their facer value? If so, would not such a departure from the present practice as was suggested by the honorable member for Darling amount to repudiation ?
– I have assured the honorable member for Darling (Mr. Blakeley) that I shall look into the question that he raised ; but, no doubt, as the honorable member for Gippsland (Mr. Paterson) has suggested, it presents certain difficulties.
Farms for Unemployed
– Will the Minister for Home Affairs consider the advisability of establishing within the Federal Capital Territory small farms on which the unemployed may grow vegetables for sale within the Territory?
– The honorable member’s suggestion will receive consideration.
– I have received from Mr. M. Hodgetts, Chairman of the Local Producers Association at Callide, Queensland, the following telegram : -
The removal of flat rate duty on cotton yarn means the wiping out of one of Queensland’s most promising industries, and will cause ruination to those thousands of farmers in the industry; will therefore bring about increased widespread unemployment. We urge you reinstate the flat rate duty.
Having regard to the fact that the Tariff Board’s report, upon which the Minister for Trade and Customs based his decision to remove the flat rate duty, is nearly two years old, will he order a reconsideration of the matter, and meet the representatives of the cotton-growing industry before the tariff schedule is discussed, so that we may avoid throwing on to the labour market thousands of people now engaged in the cotton industry?
– I am not prepared to give the honorable member the undertaking for which he has asked. In my opinion, the awful things thatthe honorable member contemplates are not at all likely to happen to the cotton industry.
– In view of the possible disastrous effect of the German tariff on the Tasmanian apple industry five or six ships loaded with Australian apples are now nearing the German market - what action, if any, does the Minister intend to take to safeguard the growers and shippers of apples against what might otherwise be serious loss?
– The department is much concerned with the possible effect of the new German tariff upon Australian shippers of apples, and inquiries have already been made through the High Commissioner in London to ascertain whether action can be taken to enable shipment’s of apples from Australia to enter Germany. This is unfortunately only one of a series of retaliatory measures upon Australian industries arising out of the tariff policy of the last Government.
– Will the Government make immediate arrangements for the feeding of a number of unemployedmen at No. 4 camp at Canberra, who are at present without food?
– The honorable member raised that subject last night, and was given an answer by the Minister for Home Affairs to which I do not propose to add anything.
– In view of the vital necessity for eradicating cattle tick from Australia, will the Minister give a definite undertaking that the subsidy at present provided by the Commonwealth Government for that purpose shall be continued in accordance with the agreement between the Commonwealth Government and the Governments of New South Wales and Queensland?
– The eradication of cattle tick has for some time been receiving the earnest consideration of the Government. We have provided up to £55,000 per annum to help the Government of New South Wales to eradicate the pest, but that sum was reduced last year by £10,000. It is costing the Health Department a considerable sum of money to carry out this work. The Government has not yet decided whether the subsidy will he continued, reduced, or abolished altogether.
6WF BROADCASTING STATION.
– Is the PostmasterGeneral able to state what progress is being made with the 6WF National Broadcasting Station in Western Australia, and when is that station likely to be completed?
– The proposal is to replace the present broadcasting station 6WF with a vastly improved station, to be located on another site in Wanner ooroad. Plans for the building hare been adopted, and approval has been given for its erection to be proceeded with. Tenders for the masts have now been let. The provision of the necessary equipment for the new station is well in hand, and a number of tenders have been let.
– Was the blow which has been struck at the South Australian almond industry by. reducing the duty on kernels based on the Tariff Board’s report of September, 1930, or on a later report ?
– To the best of my knowledge the reduction of duty was based on the report to which the honorable member has referred.
– Has the Government yet decided to render assistance to National Airways Limited, which met with so much misfortune when pioneering the North-South service?
– No consideration has been given to a particular service, but certain proposals which have been placed before the Government by the representatives of the company concerned are at present under consideration.
– In view of the fact that the Prime Minister, in his reply to my question of the 26th February, indicated that of the £69,600 allocated in November, 1931, to the Commonwealth Works Department, only £48,277 has been expended in New South Wales, thus leaving an unexpended balance of £21,323, and that the allocation to the PostmasterGeneral’s Department in that State shows an unexpended balance of £2,000, will the Prime Minister expedite relief work to ensure that the unemployed get some work pending the proposed Premiers Conference? Does the Prime Minister not think that it would stimulate much more active co-operation from the States at the proposed conference if the Commonwealth Government were to display a little more activity in the expenditure of money in order to assist the States in alleviating the distress consequent upon unemployment generally in Australia?
– The honorable member seems to overlook the fact that when a statement is made as to the proportion of an allocation absorbed by a State, the balance of the money provided by the Commonwealth is probably in process of being spent. In regard tothe Post Office, the Commonwealth and the State are both committed to the full amount, and the works involved are proceeding. There can be no actual unexpended balance.
– Why not expedite the expenditure ?
– I do not know that any advantage would be gained by doing that, and throwing men out of employment earlier than would otherwise happen.
– Is the Prime Minister aware that a certain journal known as The Soviet To-day, which styles itself the official organ of the Soviet Union, is being sold throughout New South Wales, and even on therailway stations? If he is aware of that, what steps does he propose to take to suppress the circulation of this paper?
– I shall refer the matter to the Attorney-General.
Special Parliamentary Session
– Has the attention of the Prime Minister been drawn to the statement published in the Canberra Times that the Victorian Government is considering the holding of a non-party session of the Victorian Parliament to give effect to the promise of the Premier that no families would be out in the streets during the coming winter? Will the Prime Minister ask his Cabinet to consider the holding of a non-party session in Canberra to legislate for the alleviation of unemployment?
– I shall submit the request of the honorable member to Cabinet.
– I ask the Minister for Home Affairs whether it is the intention of the Government to drive from the Federal Territory unemployed men and boys, and if so, whether the Government is influenced by the state of the public finances, or by a desire to embarrass the Government of New South Wales, whose policy it is to feed the unemployed?
– Last night, on the motion for the adjournment, I explained the facts relating to the unemployed in the Federal Capital Territory. Many men settled themselves here in what were regarded as rest camps for travelling unemployed. They were not disturbed in their more or less permanent occupancy of those camps, and they received rations over and above those provided for by the regulations. It is not, however, proposed to continue supplying rations to these men while they occupy the camps to the exclusion of bona fide travelling unemployed who desire to use the buildings as a rest camp.
– Will the Minister for Home Affairs demonstrate that at least one Minister entrusted with the administration of the Northern Territory has taken his job seriously, and when he visits the Territory with a view to instituting schemes for its development, take with him an expert agriculturist or an agricultural chemist with a view to determining the immense possibilities which, as I have definitely asserted in this House on many occasions, exist there, and to open avenues for the occupation of the huge army of unemployed in Australia?
Mr. ARCHDALE PARKHILL.When this projected visit takes place, I shall be glad to give consideration to the honorable member’s request.
– I ask the Prime Minister whether it is the intention of the Government to reduce the federal land tax on rural laud? If not, is there any reason why the Taxation Department should not accept current values when making their assessments ?
– I can hold out no hope whatever that there will be any reduction of land tax or any other tax at the present time. I should be only too happy if I could see any prospect of granting relief to any class of taxpayer, but in view of the present financial circumstances’ of the Commonwealth, and of our commitments during the coming months, nothing in this direction can be done.
– Those interested in the shale oil deposits at Newnes have demonstrated that the extraction of oil from shale is an economic possibility, and petrol distilled from shale is on sale in the streets of Sydney, and in other parts of New South Wales. I ask the Minister for Industry whether the Government will give consideration to a proposal for taking over the shale oil deposits at Newnes, and working them as a national industry, with the object of making Australia independent of imported petrol and oil?
– The extraction of petrol from shale is, as the honorable member knows, a subject under close consideration by the Government, and a report on the matter is expected shortly. There is not the slightest possibility, however, that the Government will make this business a national undertaking. The experience of governments in industry has not been such as to encourage us to do so.
– In view of the conflicting reports which have appeared in the Australian newspapers regarding the situation in the Far East, will the Minister for External Affairs inform honorable members whether the Commonwealth Government is being kept in touch by the Imperial Government with what is going on ? If so, will he or the. Prime Minister make a statement to the House, explaining the situation ?
– The Commonwealth Government is being kept fully informed, and is receiving daily communications about the situation in the Far East. Events there are moving so rapidly, however, that a statement made to-day would not cover the situation that may exist to-morrow. The reports which have appeared in the press have been substantially correct. The most recent information is more hopeful; it is that the Japanese Government has agreed to a suggestion for a conference with a view to an armistice and a final settlement of the dispute. It is not right to assert that the Government is not keeping honorable members fully informed. Repeated statements have been made regarding the events as they have taken place, and the only additional statement which could be given to members would be a detailed explanation of the cause of the present trouble, its progress to date, and the prospects of its settlement. Such information, however, has been available from day to day in the press.
– Is the Minister for Health aware that the northern portion of the Northern Territory is the breeding ground for cattle tick, and that all expenditure incurred for the eradication or control of the tick will prove abortive if adequate steps are not taken for the suppression of ticks in the north? Is the Minister aware that an area of 250,000 square miles, which is now free of the tick, is threatened by it because the Federal Government will not spend a few thousand pounds on control measures? If he is aware of this, what does he propose to do about it?
– The Government is fully aware of the importance of the cattle tick problem. The eradication of this pest is naturally a matter for the consideration of the Commonwealth Government, in co-operation with the State Governments, and combined action is being taken. The occurrence of the pest in the Northern Territory has not come under my notice since I have taken over the control of the Department of Health ; but the Minister for Home Affairs (Mr. Parkhill), who administers the Northern Territory, is doubtless giving serious consideration to the eradication of cattle tick there.
– Is the Minister for Health aware that the rumour is current in northern New South Wales that cattle tick are being deliberately carried from the far northern area to the southern area of that State by persons who are interested in retaining lucrative official positions for themselves? Will the Minister have these rumours looked into by the Commonwealth Investigation Branch of the Attorney-General’s Department ?
– The rumour was brought under my notice some time ago in Sydney, but I am loth to attach importance to it. The tick problem is being investigated by a commission consisting of Commonwealth and State representatives, and I have sufficient confidence in the members of that body to believe that they would not be a party to the deliberate spread of the pest in the manner indicated.
– The Minister should ask the people concerned, and see whether the rumours are not well founded.
– If the honorable member brings particular cases under my notice, drastic action will be taken. The commission is applying its best efforts to the eradication of the pest.
– Has the Government any policy for protecting the users of petrol in Australia against the high prices charged by the American oil trusts and combines, since it is not prepared to develop the local petrol resources on national lines, in order that the people’s requirements may be met ?
– The price of petrol has been of great interest to Australians for many years, and the honorable member may, perhaps, recall that in an effort to obtain petrol at a fair price, the Bruce-Page Government, in conjunction with the Anglo-Persian Oil Company, established the Commonwealth Oil Refineries Limited, and watched petrol prices very closely. What was done in the matter during the regime of the last Government, I cannot say.
– Will the Prime Minister make a statement regarding the policy and intentions of the Government in connexion with the problem of unemployment ?
– The honorable member has already been reminded that it is not the practice of governments to make statements on matters of policy in reply to questions without notice.
– When does the Government intend to give effect to the promises made to the unemployed when endeavouring to secure their support at the last election ?
– The Government requires no advice from the honorable member as to the right time for intended action.
asked the Prime Minister, upon notice -
Has he received from the Patriotic LifeSaving Mission of Western Australia copies of the following documents: -
– The answers to the honorable member’s questions are as follow : -
Provision of Clothing and Boots
asked the Prime Minister, upon notice -
Whether, in view of the fact that large numbers of unemployed, including women and children, are in dire need of clothing for the coming winter, the Government will consider the appointment of a committee of this House to seek, and report upon, means of providing clothing and boots for destitute people?
– Whilst this matter is one primarily for the attention of the governments of the States, the Commonwealth Government has on a number of occasions made available surplus military clothing and boots for issue to destitute people. In this connexion I would refer the honorable member to a reply given by my colleague, the Assistant Minister for Defence, to a question upon notice yesterday.
asked the Acting Minister for Industry, upon notice -
Has the Government withdrawn the balance of the £100,000 which was set aside by the previous Government towards the repatriation of surplus coal-miners, and discontinued that work; if so, what does the Government intend to do with the£60,000 still loft in that fund?
– The sum of £100,000 was appropriated by Parliament for the repatriation of surplus coal-miners, and is at present being utilized for the purpose for which it was appropriated.
asked the Assistant Minister for Defence, upon notice -
– The information is being obtained, and a reply will he furnished to the honorable member as soon as possible.
asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Minis ter administering war service homes, upon notice -
Will he instruct the officers of his department not to permit the ejectment of any war service home purchaser from his home because he cannot meet his payments through unemployment?
– Ejectment actionis not taken by the War Service Homes Commission in any instance unless consideration of all the facts available justifies such a course. I am unaware of the case the honorable member has in mind, but he may be assured that every case of arrears is dealt with in a most sympathetic manner with the object of affording assistance to the applicants concerned wherever possible.
asked the Minister for Home Affairs, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the Minister for Trade and Customs, upon notice -
In view of the acute unemployment position in the Melbourne Ports district, and the anxiety in connexion with the erection of the proposed oil refinery there, will he inform the House when he will be in a position to announce the Government’s future tariff policy in regard to petrol?
– The matter is receiving consideration, but no definite statement can at present be made as to when the Government may announce its decision in the matter.
Losses in Administration.
– The honorable member for Perth (Mr. Nairn) has asked a number of questions regarding losses incurred in the administration of the Federal Capital Territory. Replies to the honorable member’s questions will be furnished as soon as possible.
asked the Prime Minister, upon notice -
With regard to the Speech at the opening of the Parliament by the GovernorGeneral, in which it was stated that it was the intention of the Government to call a conference of experts under an independent chairman to deal with the various transport services -
Is it the intention of the Government to include interstate shipping in this inquiry!
If so, in view pf the Hobart-Sydney passenger service ceasing in the near future, will the Government consider this matter of sufficient urgency to warrant calling the conference at an early date?
Failing this, will the Government, in view of the Prime Minister’s statement that there is no money for subsidizing this line, approach the State Governments of New South Wales and Tasmania with a view to subsidizing the service on a pound for pound basis?
– As a preliminary step a conference of railway commissioners of the Commonwealth and the States and representatives of the transport authorities in the various States was held in Sydney last month. This conference will be followed by further action for the examination of all aspects of the transport problem.
asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Minister for Health, upon notice -
– The answers to the honorable member’s questions are as follow : -
Assistant Director of Development
asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Minister for Home Affairs, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the AttorneyGeneral, upon notice -
– The answers to the honorable member’s questions are as follow : -
– The honorable member for Capricornia (Mr. Forde) has asked a number of questions regarding clearances from bond of tobacco leaf. The information will be obtained from all the States.
– On the 26th February, the honorable member for Melbourne (Dr. Maloney), addressed the following question to the Assistant Minister for Defence : -
During the World War Japan endeavoured to impose on Ohana 21 conditions, of which nineteen were eliminated at the Washington Conference. Are the other two points still in operation, and if so, what are .they ?
This question would more properly have been addressed to the Minister for External Affairs, and I now supply the following information : -
Of the original 21 demands fifteen were accepted by China, to which three more provisions were added by an exchange of notes. Of these eighteen provisions, six were cancelled as a result of the Washington Conference of 1921, several others are to a considerable extent a dead letter, and the remainder, relating to Manchuria, the Hanyeping iron mines, Fukien, and the non-alienation of harbours, bays and islands on the Chinese cost, may be regarded as still in force.
Bill received from the Senate, and (on motion by Mr. Bruce) read a first time.
The following papers were presented : -
Commonwealth and State Ministers - Conference held at Melbourne, JanuaryFebruary, 1932 - Record of Proceedings.
Ordered to be printed.
Science and Industry Research Act - Fifth Annual Report of the Council for Scientific and Industrial Research, for year ended 30th June, 1931.
– I move -
That the bill be now read a second time.
I do not. intend to delay the House by speaking at length on this bill. I intimated to honorable members, in discussing the Financial Agreement Enforcement Bill, that the Government would accept the suggestion of the right honorable member for Cowper (Dr. Earle Page) that that portion of the Financial Agreement Enforcement Bill which dealt with the Commonwealth Government’s acceptance of liability for the payment of interest due on behalf of the States to the bondholders should be embodied in a separate measure. That bill is now before the House, and the reason for it is simply, as has already been stated, that doubt has arisen as to the liability of the Commonwealth Government to the bondholders. In November last, Sir Edward Mitchell issued his book on the Financial Agreement, and in it he pointed out that such a doubt existed. Although some legal opinions suggest that there is no doubt, others clearly indicate that there is a doubt. In these circumstances, the Government felt that the matter should be put beyond question, because there is a moral obligation resting on the Commonwealth to accept responsibility to the .bondholders of the States. The Leader of the Opposition himself, I think, pointed out that in this bill we are aiming, so far as we can, at putting the matter on a permanent basis, and to that extent we are justified in separating this measure from the provisions of the other bill, which may not be permanent, and concerning the validity of which some doubt, which may have to be fought out in the courts, may arise. Since the principle embodied in the present bill has the support of the whole of the people of Australia, whatever their political views may be, it is almost inconceivable that a future Parliament would remove the measure from the statute-book. In submitting the bill, therefore, I feel that the whole of the Parliaments and the people of Australia are behind us.
.- I do not intend to take advantage of the fact that this is a new bill to discuss, at length, the matters with which the measure deals. I shall say only what I would probably have said on these provisions had I discussed them in committee as part of the Financial Agreement Enforcement Bill. It is necessary, however, that the position should be made clear. This bill was formerly clause 4 of the Financial Agreement Enforcement Bill. Its purpose is to add to the Commonwealth’s liability to bondholders. If it is agreed to, the Commonwealth will be directly liable to all bondholders. I am glad that the Government has introduced this provision as a separate measure, because die re is no doubt in my mind that other provisions of the. Financial Agreement Enforcement Bill will be challenged on the ground of invalidity. This bill does not create a new liability for the Commonwealth ; it merely says that in respect of an existing liability the bondholders may, in the event of default, sue the Commonwealth directly - an action which they may not have been able to take under existing legislation. If this bill is likely to do anything to improve our credit on the other side of the world we should pass it without question.
So far as I know, doubts have never been raised by any legal authority - and I have read many legal opinions on the subject - as to the liability of the Commonwealth to pay interest due by a defaulting State. The Prime Minister (Mr. Lyons) and the Assistant. Treasurer (Mr. Bruce) have repeated, on a number of occasions, the statement that according to some legal opinions there is no doubt, and, according to others, there is doubt on that point. I invite the Government to quote the legal opinions to the effect that there is any doubt as to the Commonwealth’s liability to pay the interest due by a defaulting State. There is admittedly difference of opinion between lawyers as to whether the Commonwealth is directly liable to bondholders, but there is no doubt in the mind of any legal gentleman, so far as I have been able to ascertain, that ultimately the Commonwealth is liable to pay any interest due on account of a State default.
– Could bondholders sue the Commonwealth under the existing law?
– Some legal authorities say “yes” and some say “no.” I do not intend to dogmatize on the point. But no lawyer, to my knowledge, has,. declared that we are not liable, either directly or indirectly, to meet such payments.
– I do not see how we can be directly liable unless this bill is passed.
– I am inclined to think that the right honorable gentleman is correct.
– This bill, therefore, creates a direct liability.
– It adds to the responsibility of the. Commonwealth in that it gives to the bondholders power to sue the Commonwealth, which they may not possess under existing legislation. I make no complaint about the giving of that power. It is most unfortunate that a doubt should have been thrown upon our ultimate liability to pay, if there is no real doubt on the point.
– Unless we are liable to pay, the language of the Financial Agreement on the point is meaningless.
– It is certainly no protection to the bondholders. If there is not such a liability on our part, the only thing that stands between State defaults and absolute loss by the bondholders on the other side of the world is the moral obligation on the Commonwealth to pay. It is therefore desirable that the point should be cleared up, and the legislation which clears it up should be retained on the statute-book. But something more than that is necessary if the bondholders are to be assured. There has already been one default - the first in the history of the Commonwealth. I believe that if the Commonwealth Government is to allay the fear which it has aroused - because nothing could raise more fear than an actual default - it must do more than it seeks to do by this bill. As a matter of fact, the Commonwealth declared that it was not liable to pay, but was a trustee, and would pay after collection. That statement has raised the question in the minds of bondholders: what will become of them if the Commonwealth fails to collect. I believe that the passage of this bill will do something to allay the fears which have been aroused, but the Government should go further, and endeavour to amend the Financial Agreement. If the Agreement were amended to remove any doubt which the Government thinks has arisen, the bondholders would have greater protection.
– Then the right honorable member agrees that, to some extent, the provisions of the bill are inconsistent with those of the agreement.
– This bill seeks to confer a right on the bondholders which may not have been conferred upon, thom by the agreement.
– Then the provisions of the bill may not be enforceable against the States.
– Some legal authorities have declared that the bondholders could directly enforce their claim against the Commonwealth, but others hold a different view. Both the Prime Minister and the Asssistant Treasurer have quoted certain remarks by Sir Edward Mitchell on this point. I have read that quotation and, in my opinion, Sir Edward Mitchell does not call into question the view that the Commonwealth is liable to pay. On page 31 of his book lie says -
It is clear, however, that as regards all the Statu debts taken over by the Commonwealth under clause 1 of Part III. of the First Agreement “ as between the Commonwealth and the States “ that language precludes the owners of those particular public debts, i.e., those borrowed up to 1st July, 1020, being able to enforce rights against” the Commonwealth directly under that agreement.
His view, I suggest, is that there is an indirect liability.
– We are in the position of guarantors.
– Yes, but guarantors are always liable to pay if the original debtor fails to do so. The position is that, in the event of default by a State, the Commonwealth, as the guarantor of the State, is liable to pay. I do not think that anybody, Sir Edward Mitchell included, has challenged that view. It is true that he does say that the Commonwealth is not directly liable, but he does not dispute indirect liability. I can find in Sir Edward Mitchell’s statement not only no suggestion of doubt of Commonwealth liability, but an affirmation that the Commonwealth is liable, though the liability cannot be enforced directly. In discussing several other questions, Sir Edward Mitchell, ou page 36 of his book, deals with the default by the New South Wales Government last year. He says -
I submit that when Mr. Lang - as I understand he did - publicly stated that the State of New South Wales would not pay the interest on its maturing public debts, and also did refuse to repay the Commonwealth after tha latter had, in pursuance of its obligation under the Financial Agreement, paid such interest, that a clear case would exist for a mandatory injunction against the State of New South Wales.
I direct particular attention to the words, “ after the latter had, in pursuance of its obligations under the Financial Agreement, paid such interest “. Sir Edward Mitchell does not there raise a doubt. He says that bondholders cannot sue the Commonwealth Government directly under the Agreement, and, no doubt, he used the word “ directly “ with a full understanding of its significance. The Government which I had the honour to lead obtained a joint opinion on this matter in Sydney, and another in Melbourne, and those’ opinions are on the file of the Attorney-General’s Department. One declares that “ the Commonwealth is under a legal duty to the States, except possibly the defaulting State,” to pay the interest. Another opinion states that “ the Commonwealth is under a legal obligation to the States, parties to the agreement, to pay the interest “, and, also that “ the Commonwealth is under a legal obligation to the bondholders to pay interest on the State debts, taken over when the State defaults in payment to the Commonwealth “.
– I much prefer that opinion which, I think, is the law.
– It assuredly makes this Commonwealth liable -when a State defaults.
– But it does not give the bondholders a direct right to sue the Commonwealth Government.
– We should be careful to let the bondholder know that he is protected apart from this legislation. I do not mind giving this extra protection to the bondholders, and assuming the additional liability that will tend to restore confidence, but I deprecate the Commonwealth Government suggesting that it has no liability to the bondholders if this bill does not become law. I am aware that this legislation may be repealed by any Commonwealth Government that desires to default; that must make the position of the bondholders shaky.
– What protection has the Commonwealth Government without this bill?
– This bill does not give to the Commonwealth Government any protection that it does not already possess.
– The measure adds a liability to the Commonwealth Government.
– Undoubtedly, in that it may be sued directly, but it does not add any liability for the payment of the money, because, under the terms of the Financial Agreement, the Commonwealth Government is already legally and morally bound to pay.
– It is not bound to the overseas bondholders.
– I disagree with the honorable member. The Commonwealth Government is bound to every one of the bondholders, overseas and in Australia, in an indirect way, as a result of its Financial Agreement with the States.
– The only doubt that is raised here is as to the direct liability to the bondholders.
– With that I have no quarrel. I am trying to answer the declaration that was made by the Prime Minister (Mr. Lyons) that there is doubt as to the liability of the Commonwealth Government to pay this money. The Government raised that doubt by declaring that it was in the position of trustee, and that it would pay the money when collected from the State concerned. It is true that the Commonwealth Government afterwards departed from that attitude, and paid the amount; but as a responsible member of this Parliament, I refuse to countenance the statement that the Commonwealth has no liability to pay this money, except that imposed by. this bill.
My party is not against this proposal. As a matter of fact it merely places over-: seas bondholders in a position similar to that of persons in the Commonwealth who hold Australian stock. This Government is directly liable to holders of that consolidated stock, and it is also liable to the holders of all securities overseas that have been issued or converted since the Financial Agreement was entered into. The bill gives all bondholders the same protection, and it imposes on the Commonwealth the same liability.
– Except that overseas bondholders must first have recourse to the State concerned, although subsequently they may sue the Commonwealth Government.
– That is so.
– Does not the right honorable gentleman think that this definite action will reassure bondholders?
– I am supporting the bill in the hope that it will do so. I realize the necessity for the assurance, as their confidence has been disturbed by a doubt being raised as to the liability of the Commonwealth Government.
– Therefore, being an assurance, the bill does no harm.
– I do not think that it will do any harm. I support the measure because it is intended to right a wrong. Unfortunately there is nothing permanent about this bill. Having set our hands to it we should go the whole way, and so make assurance doubly sure. Let the Government permanently remove the existing doubt by amending the Financial Agreement. I am aware that that will need the unanimous consent of the parties thereto, but I do not anticipate any difficulty in that regard. The alteration will not impose any further obligation on the States, rather it will add to the liability of the Commonwealth, and perhaps to that extent it will relieve the States. I am not sufficiently a lawyer to argue that issue. We should assume a responsibility that is equal to that of the States with regard to State debts.
– All that we should do is to assume a liability direct to the bondholders.
– That is what the measure proposes to do, but, as I have stated, there is nothing permanent about it. It may have a good effect in removing the misgivings created in the minds of oversea bondholders by the Commonwealth’s delay in paying the interest in respect of which New South Wales defaulted a few weeks ago. This bill has no relation to the other measure providing for the enforcement of payment to the Commonwealth by a defaulting State. It is a mere declaration, and while it remains in force, will prevent a repetition of the folly of the present Government in refusing to pay interest on the due date. The bill will have a restraining effect upon future governments, because even though it may be repealed, Parliament must first be consulted. In November next the Commonwealth will require to convert £13,000,000 of maturing debt, and a further £9,000,000 in the following July, and to remove any possible doubt in the minds of those to whom we shall be appealing for conversion, this definite guarantee by the Commonwealth should be placed in the Financial Agreement. Meanwhile, I support the bill, which I hope will be carried unanimously.
– I agree with the Leader of the Opposition (Mr. Scullin) regarding the desirability of a unanimous endorsement of this bill as an indication to the investing public that, irrespective of party political differences, the whole Parliament affirms the liability of the Commonwealth under the Financial Agreement for all the debts of the States. The Prime Minister has rightly said that this measure is completely severed from the bill for the enforcement of payment to the Commonwealth by a defaulting State. It has no relation to any steps that may be taken to compel a State to honour its obligations ; it merely expresses the direct liability of the Commonwealth for the interest on Australia’s public debt. That cannot be regarded by any section in this House as a controversial proposal. We should do everything in our power to allay any doubt that has been raised, and establish beyond question the liability of the Commonwealth. Undeniably, the intention of the Financial Agreement was to consolidate and strengthen the credit of Australia generally, and the people were repeatedly told that the financial strength of the Commonwealth would buttress that of the States, so that subscribers to Australian loans could feel assured that the whole resources of the nation were backing their investment. A further consideration is that under the financial Agreement, every debt as it matures will be converted into a direct Commonwealth obligation. Future borrowing, whether the proceeds are to be used by the Commonwealth or the States, will becovered by Commonwealth securities. Moreover, by the great conversion loan last year more than half the total public debt was converted into Commonwealth securities, for which the Commonwealth is liable to the bondholder. The stage is rapidly approaching when Commonwealth bonds will cover the whole of
Australia’s public debt, and it is eminently desirable that any doubts regarding the Commonwealth’s liability in the meantime should be removed. Even if the Financial Agreement be not amended as the Leader of the Opposition has suggested, unanimous approval of this bill will give to bondholders an additional guarantee, and an assurance that every party in the Australian Parliament admits the primary liability of the Commonwealth for the payment of both Federal and State debts. That will undoubtedly strengthen Australia’s credit. The credit of the nation as a whole is much greater than that of an individual State; that was shown by the improvement in our stocks following the adoption of the Financial Agreement. Investors knew then that the credit of the States was backed by the credit of the Commonwealth. We cannot afford to leave any doubt about that during the critical years immediately ahead. The conversions to which the Leader of the Opposition has referred, will be more easily, cheaply, and satisfactorily effected if our internal and external creditis strengthened by this bill, especially if it is passed with the unanimous approval of all parties.
The Leader of the Opposition has contended that there was no doubt of the Commonwealth’s ultimate liability for the payment of the interest on State debts’; that any doubt that may have arisen in the last few weeks was created by the Government, which thereby has done incalculable harm. The right honorable gentleman will agree that if any doubt does exist, it should be removed, and I propose to show that there is a real doubt. The opinions obtained by the Commonwealth from learned counsel vary to some extent, but there is fairly general agreement that in respect of State securities issued prior to the making of the Financial Agreement, and for which State bonds were issiied, the bondholder has no direct right to sue the Commonwealth. The bondholder received from a State a security which represented a promise by the State to pay principal and interest; the adoption of the Financial Agreement did not give to him the right to sue the Commonwealth directly, notwithstanding that under that agree- ment, the Commonwealth had assumed liability in respect of those bonds. Another point generally accepted by our legal advisers is that, whilst the Commonwealth is not liable to be sued directly by the bondholder, it is liable to the States, and any State, other than the defaulter, can take steps to compel the Commonwealth to pay. Apparently, there is a clear liability on the part of the Commonwealth to pay interest in respect of which a State Government has defaulted, and a clear right in the States other than the defaulting State, but not to the bondholder, to sue the Commonwealth if it does not pay. But have the States an unqualified and absolute right to make the Commonwealth pay in any circumstances, and. regardless of whether it has received any of the moneys in respect of which default has occurred?- One interpretation of the law may be that the Commonwealth has an obligation to the States, other than the defaulter, to make good any default.
– Legal opinions on that point are unanimous.
– That has been generally assumed to be the law. But another view is possible, namely, that the other States have power to force the Commonwealth to pay to the bondholder only from moneys receivable under the Financial Agreement from the defaulting State. Doubt upon this point has arisen, and the bill aims to remove it. Clause i, sub-clause 1, provides -
The Commonwealth will pay to bondholders from time to time, interest payable on the public debts …
That statement is unqualified. In Part III., clause 2, paragraph a, of the Financial Agreement, the. same passage occurs, but it is prefaced by these words : “ Subject to this clause.” And the clause includes these words -
Among the legal gentlemen who have given their interpretation of those words, is the Attorney-General (Mr. Latham), whose eminence as a lawyer entitles his opinion to due consideration. This particular point has been taken by certain persons, including lawyers, and a real doubt, has been created hi the minds Of some investors in Australian bonds as to the liability of the Commonwealth.’ We share the view of the Leader of the Opposition (Mr. Scullin) that it is unfortunate there is doubt about the meaning of this clause; but, had there not been rumblings of doubt, this Government would have been the last to refer to the matter.
– The interpretation of the clauses of the agreement is that the Commonwealth has to pay, subject to the States paying the Commonwealth.
– That is the position. The Commonwealth’s obligation to pay is made subject to the clause which provides that the State shall pay the Commonwealth.
– Where did those rumblings start?
– Among those whose business it is to advise ^investors whether they should or should not invest in Commonwealth stock. Doubt has only to occur in the minds of those persons to create trouble for us and to undermine our credit. There is a doubt, and the bill has been introduced to resolve it. Personally, I have not the slightest uncertainty as to the intention of the original measure. It was never meant to make the liability of the Commonwealth subject to the .receipt of moneys from the States. The doubt has evidently arisen by reason of the drafting. We cannot, of course, act on what was the intention of Parliament, we must take the actual wording of the clause. It was to remove any doubt that the Commonwealth Government determined to introduce this legislation.
I do not propose to deal with the course taken by this Government on the 1st February, because that has already been the subject of much discussion. The question whether the Government was right or wrong in the action it took to bring home exactly where the default lay, does not arise under this measure at all. What we are now considering is the difficulty that this measure is designed to overcome, and whether it is desirable that we should at this stage take this action to put the position beyond any doubt, and to make clear to the investors in Australian securities the opinion of the Federal Parliament. The Government considers, and the Leader of the Opposition concurs, that this is the most desirable course. I urge upon honorable members the desirability of passing this bill unanimously, to show to those who have moneys invested in Australian stocks that they have behind those stocks the security of the Commonwealth as well as of the States. The passing of this measure will have a material effect upon Australia’s credit, and will make easier the big task which we have to face of converting a considerable portion of our long-dated securities which are shortly falling due.
.- I do not intend to labour this bill, nor to traverse the arguments which I raised during the second-reading debate on the original measure. The whole subject has been thoroughly thrashed out. We all agree on the principle of the bill, and it will be simply flogging a dead horse to continue discussing it. I congratulate the Government on separating this bill from the original measure, thus making the Commonwealth liability for State debts no longer a matter for controversy. There is no question that had the original measure not been so altered the Government would probably have been dragged into litigation under another part of the bill. The mere fact that the Government is introducing this measure shows its obvious desire to put the whole issue on the highest plane. The Government may have made a mistake in not paying the interest commitments of New South Wales on the 1st February. Had it a doubt at all it should have paid the money and afterwards brought down legislation of this sort to prevent any limelight from being thrown on the subject. The time has come to bury that mistake. We gain nothing by holding continual post mortems on the corpse. We should get back to the living problems that are associated with” the remaining portion of the original bill, which is urgent, and still has to be dealt with. I hope that this legislation, because of its national character, will be carried unanimously by all members of this House, and that when this proposed alteration has been made it will be embodied in the Financial Agreement, from which the particular words referred to by the Assistant Treasurer (Mr. Bruce) should be removed. I appeal especially to the honorable member for West Sydney (Mr. Beasley) and his followers in this chamber to support this bill, and induce the Government of New South Wales to agree to this alteration being incorporated in the Financial Agreement itself.
– At this stage of the debate, it is obvious that, the honours have gone to the Leader of the Country party (Dr. Earle Page) for finding a way out of the difficulty with which the Government was faced, but apparently was unable to overcome. It was upon the suggestion of the right honorable member for Cowper that the original measure was amended, and this bill introduced. The reason for the bill now under discussion, according to the Prime Minister, is that certain doubts have arisen regarding the obligations of the Commonwealth to make interest payments to overseas bondholders. As the members of the Government in this and another chamber have taken particular care in the draftsmanship of measures concerning which the question of pounds, shillings and pence arises, it is remarkable that they did not. know that the alleged doubt in this legislation existed previously. The Prime Minister was a member of the Scullin Government for over twelve months, and it is remarkable that he did not take steps during that time to have this matter cleared up, particularly as it is now the intention of the Leader of the Opposition to support this bill. Apparently he did not know of any doubt during that period. We have, therefore, to question politically the argument, put forward in favour of this procedure. I am not prepared to accept the explanation that has been advanced. This so-called doubt, has been brought forward merely to cover up the failure of the present Commonwealth Government to meet its obligations. I feel quite satisfied about that, because the Assistant Treasurer, when questioned just now by the Leader of the Opposition as to when the rumblings of doubt to which ho had referred had arisen, suggested that they originated with the Attorney-General (Mr. Latham). Although the legal know- ledge of that honorable gentleman may be of the highest character - I am not competent to question it - he has political feelings just as I have, In spite of his high legal training, his decision on financial questions in which the law is involved must be coloured by his political feelings. The human factor must prevail.
– That being so, it is necessary to allay the distrust which the action of the Attorney-General has created.
– This alleged distrust or doubt is not based upon fact, and in reality does not exist. It has been raised for the express purpose of covering the failure of the Government to meet its obligations, a failure which has been severely criticised, not only in Australia but also overseas. I intend not to assist the Government to cover up its mistakes, but to forcibly express to all and sundry that the motives directly behind this legislation are purely political and not in our national interests. I am not prepared to help it to overcome a difficulty which it stupidly created. I am not prepared to allow it to pass a measure, the object of which is to strengthen further its efforts to destroy the party which I represent in this House. I have listened attentively to the Assistant Treasurer, and his reference to the rights of the States. After all, it must be admitted that the position confronting this country is exceptional. We all agree that a similar position is confronting most other countries throughout the world. Despite the Financial Agreement, I argue that it is competent for a State which is confronted with exceptional circumstances to declare to what extent it can meet its commitments. It matters not to me what honorable members on the Government side may say about the need to discuss this subject irrespective of party. We have not shortlived memories. We cannot forget the recent utterances of the Prime Minister in Sydney to the effect that any and every means had to be taken to remove from New .South Wales’ the incubus of the Lang Government. Another Minister said that he would eat his hat if the Lang Government were not removed a fortnight after this Government took office. The Government supporters who now ask us to discuss this- question irrespective of party and to take the broad national view, have attempted to strike a deadly blow at the party to which I belong.
– This bill does not deal with that.
– The honorable member does not know the position as we know it. Government supporters call for cooperation to uphold our national prestige, while, at the same time, doing everything in their power to thwart those who are just as well-intentioned as themselves.
Before the sum of £900,000 for interest payments fell due recently, New South Wales asked the Loan Council for £500,000, because it was unable to find all the money necessary. It could not do so, because of the economic depression which was effecting New South Wales in common with the other States. The Loan Council resolved that it would furnish no assistance to New South Wales, although, of the £900,000 owing, £300,000 represented exchange. The Loan Council did not refuse assistance to the other States which needed help, and we know why it singled out New South Wales for such treatment. I have listened to the speeches that have been made from the Government side of the House on this bill, and it has become clear that the Loan Council and the Commonwealth Government refused to help New South Wales because they disapproved of the social services which were provided in that State. Even the right honorable member for Flinders (Mr. Bruce) suggested at the Premiers Conference that the £500,000 which New South Wales could not find might be taken from the railway and tramway employees. It is obvious, therefore, that political animosity had a great deal to do with determining the attitude of the Commonwealth Government on this matter. I am not prepared at this stage to allow the Commonwealth Government final determination in any matter regarding loans or interest payments. The Commonwealth Government has shown no disposition to move in the direction of having our overseas interest burden reduced. When an unofficial statement was published that the right honorable member for Flinders would, when he went to London as Resident Minister, take steps to have overseas interest rates reduced, he flatly denied the statement the following morning. The public policy of this
Government is, apparently, to force the people of Australia to go on carrying on the present enormous interest burden, although it has been shown that the burden is too great for them. When the Loan Council refused to provide money to meet the interest commitments of New South Wales, Mr. Lang cabled to the New South Wales Agent-General in London, requesting him to get into touch with the Bondholders Association in order to make some arrangement for deferring the payment, or for a reduction in interest rates. Immediately this was done, the Leader of the Opposition in New South Wales (Mr. Bavin) published a statement in the Sydney Sun, that even though Mr. Willis was successful in his negotiations, the arrangement could not be given effect unless the Loan Council approved. Even though the bondholders themselves were willing to meet New South Wales in this matter, Mr. Bavin would not allow the taxpayers this measure of relief without the consent of the Loan Council. Why should we not seek some relief in regard to overseas interest payments? The farming community has obtained relief to the extent of over £2,000,000 on their interest commitments which have been deferred and, in some cases, waived, so that they may have a chance to recover. Similar concessions have been granted to other sections of the community, because it is recognized that, at the present time, it is humanly impossible to meet all obligations in full. Therefore, rather than force the farmer off the land, the business man into the street, and the tenant into the slums, payments have been deferred and concessions granted in the hope that, when better times come, every one will be able to pay his just debts.
This bill proposes to remove certain doubts, but those doubts, I claim, are purely imaginary. The bill has been introduced to cover up the failure of the Government to meet its obligations when they fell due, and I will not be a party to screening the misdeeds of the Government. Bather will I do all in my power to focus public attention upon them. Even the Assistant Treasurer (Mr. Bruce) in a published statement, said that, if the Government had taken any other course in regard to the default of
New South Wales, it would look ridiculous in the eyes of the party and of press.
– -For the information of the honorable member, I may say that I never made the statement he attributes to me.
– Honorable members opposite talk glibly about taking a broad, national view of the situation, and of preserving the economic stability of the country; but on the confession of one of their leaders, they are more concerned with whether or not they will look ridiculous in the eyes of the press. They seem to be unduly sensitive to press criticism. For my part, it does not affect me, and I recall that certain members of the Labour party, who have grown old in its service, have declared that, when the press begins to eulogise a labour man, it is time for his colleagues to ask just where he stands in regard to labour principles. I am just as much concerned with the welfare of Australia as are honorable members opposite, and I will not be a party to the passing of any legislation the only purpose of which is to save the face of a Government which has committed an error of judgment.
.- When the people agreed to the amendment of the Constitution in 192S, they had no doubt that the effect of the amendment would be to make the Commonwealth responsible for the debts of the States. No one has ever raised any doubts on that point until the present time, and I do not believe that there is any real doubt in the mind of the Government even now. Members of the Government have declared publicly that the Commonwealth refused to pay the money due by New South Wales in order to emphasize the default of the State Government. That is the real reason why the money was not paid; it was not because there was any doubt regarding the liability of the Commonwealth to pay. The highest legal authorities in Australia and in Great Britain have given it as their opinion that the Commonwealth is liable, and the Government has now accepted their opinion, and has paid the money. Therefore, this measure is unnecessary. The Government is pleading for a unanimous vote on this bill. Why? So that it will be able to say “ We did default, but there was a grave doubt as to whether we were liable. Even Parliament was in doubt, and unanimously passed a bill exonerating us from blame “.
We should not be wasting the time of Parliament with legislation of this kind when important matters such as unemployment claim our attention. During the elections the Government promised to take steps to alleviate unemployment, but what has it done? How many men have been given work? How many have been given food?
– The honorable member must notcontin ue in that strain.
– What does the Government propose to do in regard to unemployment ? It has said that the matter will be considered in May. So far as I know, the longest time any one has lived without food-
– I have already asked the honorable member to confine himself to the bill. He has been sufficiently long in this Parliament to know that a bill must be discussed on its merits. I ask the honorable member to confine himself to the subject-matter of the bill.
– I bow to your ruling, Mr. Speaker; but I had thought that some latitude would have been allowed. I do not intend to vote with the Government on this bill, and thus to helpis to cover up a grave error that it has committed. Like the proverbial Irishman, of course, I am always “Agin the Government.”
– The honorable member voted with the last Government not long ago.
– The honorable member who interjects has to thank the supporters of this Government for his presence in this Parliament. Their preferences in Cook were responsible for his election, and his proper place is with them.
– Order! The honorable member for Hunter (Mr. James) must be allowed to complete his speech without further interruption.
– All I desire to say, in conclusion, is to repeat that I do not intend to vote for thebill, because the
Government seems to be merely attempting to cover up its mistake of defaulting.
– I am rather apprehensive regarding the effect of this bill. I do not approve of the suggestion of the honorable member for Hunter that we should vote against this measure because the Government has made a mistake, and because we should not help it out of its difficulty. I am not anxious to uphold the Government, except when it does something which is in the interests of the people generally. If the Government made a mistake, as I think it did, in temporarily suspending the payment of interest to overseas bondholders, that is no reason why I should not help it to restore the confidence of those people to whom we may have to go again for the purpose of raising money. The people of New South Wales and other States, unfortunately, may again have to resort to interna] and overseas borrowing, although I hope that the day will soon come when the monetary system will be so altered, on sound progressive lines, that the people of this country will be less dependent on the private banks than they are to-day. This could be achieved by our own national Government bank creating and releasing the credit necessary to meet the requirements of industry. The argument advanced by the honorable member for Hunter does not appeal to me. I understand that this measure has been brought down solely to remove any doubt that may exist in the. minds of bondholders as to the authority to which they must look in future for the payment of the interest due to them, as well as the repayment of the principal. I am still willing to support the bill if it is designed only to achieve that object. The other portion of the Financial Agreement Enforcement Bill deals with the methods of enforcement to be adopted. I am not objecting to that enforcement on constitutional and democratic lines; but I take strong exception to the methods laid down in the other measure for enforcing payment by a defaulting State. I would not vote for the present bill if I thought that under clause 5, which is the sting in the end of its tail, it would be possible to raid the revenue of a State, and do all the objectionable things to which I took exception in discussing the previous measure. We have been assured that clause 5 is intended merely to give an assurance to the bondholders that the Commonwealth Government accepts liability to them. I have a doubt on that point, and when the measure reaches the committee stage, I desire the Minister in charge of it to make a clear statement as to the extent of the powers given under this clause.
Question - That the bill be now read a second time - put. The House divided. (Mr. Speaker - Hon. G. H. Mackay.)
Majority . . . . 54
Question so resolved in the affirmative.
Bill read a second time.
Clause 1 agreed to.
Clause 2 (Commencement).
Question - That the clause be agreed to - put. The committee divided. (Chairman - Mr. Bell.)
Majority . . . . 44
Question so resolved in the affirmative.
Clause agreed to.
Clause 3 agreed to.
Clause 4 (Assumption of liability by Commonwealth to bondholders).
Mr. BEASLEY (West Sydney [4.40] . - Sub-clause 4 of this clause reads as follows : -
The Commonwealth shall be entitled to recover from a State, by suit in the High Court, any moneys (due andpayable and unpaid by the State by virtue of the Financial Agreements or this act) for which the Commonwealth has become liable by virtue of the Financial Agreements or this act, or which the Commonwealth has paid in pursuance of those agreements or this act.
If these provisions are agreed to, the troubles foretold by the honorable member for Melbourne Ports (Mr. Holloway) will certainly occur. The honorable members who belong to the party which 1 have the honour to lead, regard this clause as obnoxious to the principles of democracy, and the rights of the States, both financially and otherwise. It is provided in the next clause that regulations may be made “ not inconsistent “ with the provisions of this measure. 1 realize that the power to make regulations rests with the Executive Council, and, without being disrespectful in any way to those whose duty it is to give legal advice to the Government, I know very well that an Executive Council exercises this power very often to give effect to the aspirations of the political party to which the majority of its members belong. The last Government exercised the power to make regulations to give effect to certain desires which it had. I approved of those desires, and supported its action in framing the regulations which I have in mind. I therefore feel justified in saying that there is every reason to believe that this Government will cause regulations to be framed to suit the interests of the people which it represents. I shall, therefore, vote against the clause
.- The object of this clause is to give bondholders power to sue the Commonwealth in the High Court for the recovery of debts due to them in the event of a State making default in its payments. The honorable member for “West Sydney (Mr. Beasley) has referred to the power to make regulations which is given in the next clause of the bill. I remind him that regulations made pursuant to that power must he consistent with the provisions of the measure. I entirely disagree with the honorable gentleman when he suggests that the previous Government strained its power to make regulations to serve the political ends of its followers. The regulations referred to by the honorable member stood the test of examination in the High Court, and were held to be consistent with the act under which they were made. The Executive Council can only make regulations consistent with the provisions of the act under which such regulations are made. I draw the attention of the Prime Minister to the words in paragraph a of clause 5, which read “ and any other powers which in the opinion of the Governor-General are necessary”. These words are ambiguous, and should be eliminated.
– I shall ask the committee to strike them out.
Question - That clause 4 be agreed to - put. The committee divided. (Chairman - Mr. Bell.)
Majority . . . . 48
Question so resolved in the affirmative.
Clause agreed to.
Clause 5 -
The Governor-General may make regulations, not inconsistent with this act, prescribing all matters required or permitted to be prescribed, or which are necessary or convenient to be prescribed, for carrying out or giving effect to this act, and in particular -
for conferring on the Treasurer and officers of the Commonwealth, powers requiring returns and production of documents and any other powers which in the opinion of the Governor-General are necessary or desirable to be conferred for the purpose of carrying out this act ;
for imposing for the purposes of this act duties on officers and persons employed by a State; and
for prescribing penalties, not exceeding in any case one hundred pounds or imprisonment for six months, for any contravention of the regulations.
– I wish it to be clearly understood that the Government does not desire to use anything in this clause to supplement the powers that are included in the measure that will presently be under discussion again. I, therefore, move -
That all the words after the word “ documents “, paragraph a., to the end of the paragraph, be omitted.
The powers then conveyed by the paragraph will be sufficient to invest officers of the Commonwealth with authority to obtain returns and the production of documents.
– What documents?
– The registers associated with certain of our loans are in the hands of the State authorities. If the Commonwealth Government meets the liability of the State by paying its obligation, it should have the right to ascertain precise particulars of the amount involved.
– The whole of the action will be taken through the High Court.
– Exactly, and it must be consistent with the act. It would be extraordinary if honorable members sought to deny to the Commonwealth Government the right to recover an amount that it had paid on behalf of a State. My amendment should meet the. contention of the Leader of the Opposition (Mr. Scullin) that the powers at present contained in paragraph a are vague and too wide.
Amendment agreed to.
. -I move -
That paragraphb be omitted.
I contend that the Commonwealth Government has no right to impose upon a State employee duties that neither he nor the government to which he owes allegiance desires to carry out. An officer of a State Government is peculiarly bound to that Administration, and he has superannuation fund commitments and accrued benefits which should not be prejudiced by any conscientious objection that he may entertain about giving to the Commonwealth Government or its representatives information which he considers is the property only of the government to which he owes, allegiance. Para graph b seeks to introduce a conflicting authority, and, if approved, it would leave a conscientious State servant in a difficult position. I know that if I were such an officer I should regard the State Government as my employer, and implicitly obey its instructions. It would be improper if another government were granted authority to mulct, in penalties, and even commit to prison, any person who insisted upon being loyal to the administration that employed him. To put a State official in such a position would be wrong. In honorably discharging his duty to the State, he has a right to refuse to divulge to any authority information which he regards as the confidential property of his employer.
– The clause will create a conflict of authority, and place upon a State officer responsibilities which he might not regard as consistent with his duty to his employer. Such a test of his loyalty would be unjust-. I can imagine State officers questioning the authority of any other Government to undermine their discipline and allegiance to their employer, and they would be especially resentful if the State Government were opposed to the demand of the Commonwealth. Surely the Commonwealth can have its services performed by its own officers. During the deportation proceedings it did not ask the State police to violate their oath of allegiance. We have no right to give to State officers orders which may run counter to their natural desire to be loyal to the authority that employs them.
.- The clause gives to the Commonwealth power to ask State officers to produce certain papers and documents. I do not agree that this legislature has not a right to impose duties on State officers but, where possible, it should avoid doing so. There is no need for the power conferred by the clause, because the production of documents could be secured by order of the court.
– The documents, may be wanted before a case reaches the court We may want to ascertain what amounts have to be paid by the Commonwealth on behalf of a State.
– I have it in mind that an officer of the South Australian
Government was ordered by a court to produce certain documents. Acting under instructions from his Minister he refused to do so, and was sent to prison. But an order of the court for the production of documents is different from a demand by a government or its officers for the production of documents by the officers of another government.
– The Commonwealth is assuming liability to pay direct to the bondholders interest in respect of which a Statehas defaulted. Before it can pay it must know the names of the bondholders and the amount of the debt due to. them. To enable that information to be obtained this power to make regulations is necessary. The power to require the production of returns and documents relates only to this bill, which provides merely for the payment by the Commonwealth of interest due by a State. Paragraph b relating to the imposition of duties on State employees is not required, and can be eliminated, but the Commonwealth must have authority to get from State officers information relating to the obligations which the Commonwealth is assuming.
– I am entirely opposed to this clause. We should not impose upon a State officer an obligation which may involve a breach of his allegiance to the authority which employs him.
.- The clause does not introduce any new practice. For years State officers have been carrying out certain duties for the Commonwealth - for instance in the quarantine and taxation departments - and no difficulty has arisen. Such service does not involve a breach of allegiance to the employing State; the officers are loyal to both Commonwealth and State.
– A State Government may resist the Commonwealth’s demand for certain returns.
– If a State Government chooses to take an illegal course, its officers should not be expected to follow Commonwealth law overrides State law. The bill proposes merely to impose on State officers certain obligations; if this law is valid, State officers will do no wrong in obeying it.
.- Under the clause as amended the Commonwealth could still enforce its will upon State servants, and compel them to produce returns and documents.
– That being so, I am opposed to the bill.
.- The regulations must be consistent with the bill. The Commonwealth must have power to call for returns and documents, and a refusal to comply must be punishable. I would not whittle away the right of this Parliament to give effect to its legislation; it must have power to require State servants to produce documents. We have only to provide safeguards against undue interference with the employees of another government. The services referred to by the honorable member for Calare (Mr. Thorby) are not analogous to the duties to be imposed by this clause, because those services are rendered by agreement between the Commonwealth and State Governments. Paragraph b may allow of unwarrantable interference with State officers, and in that way might prove vexatious. It should be struck out.
– I am astonished that in relation to a bill of this character some members of the Commonwealth Parliament should be concerned only for the State Governments. The Commonwealth, in order to make the payments in respect of which a default has occurred, must be able to get information regarding the exact amounts payable and the persons to whom the money is to be paid. The justice of that is obvious. Moreover that information may be necessary to enable the Commonwealth to recover the amounts it has paid. Surely a State cannot expect more than a fair deal. The Commonwealth should be in a position to recover the payments it has been obliged to make because of default by a State Government. After all, the object of this provision is to obtain information; to get at the truth. For instance, we have not been able to obtain from the Premier of New South Wales information that we have sought from him. The Leader of the Opposition has said that by agreement certain duties are performed by State officers on behalf of the Commonwealth. That is so; but when we are endeavouring to recover from a State government a certain sum that we have paid on its behalf, it may refuse to allow its officers to supply information to us.
– An order could be obtained from the court.
– That might be possible, but when we are definitely accepting the liability of a State government, every facility should be given to the Commonwealth to enable it to recover payments made on behalf of that State government. I admit that the object of this clause could be achieved without the retention of paragraph b; and therefore I am prepared to accept the amendment proposed by the honorable member for West Sydney to delete it. I wish to make it perfectly clear that I am not accepting the principle that the Commonwealth should not have power to impose duties upon State officers. It will be absolutely essential to insert in the other bill a provision which will enable the Commonwealth to recover amounts paid on behalf of a State government, and, therefore, I am not prepared to make the proposed amendment in that, bill.
Amendment agreed to.
. - I move -
That paragraph c be omitted.
There appears to be no necessity for this paragraph.
– Of course there is.
– If there is a necessity for it, what is its purpose? The imposition of a penalty of £100 or imprisonment for six months is too drastic in the case of a State officer who, for conscientious and other reasons, obeys the instructions of the State Government which employs him and acts in contravention of regulations made under this legislation.
– The proposed amendment, if accepted, would destroy the bill. Regulations must have sanction and force behind them. The penalties that are provided are only maximum penalties, and without them this legislation would be useless.
Question - That the paragraph proposed to be omitted (Mr. Beasley’s amendment) stand part of the clause - put. The committee divided. (Chairman - Mr. Bell.)
Majority . ….. 45
Question so resolved in the affirmative.
Clause, as amended, agreed to.
Preamble and title agreed to.
Bill reported with amendments; report - by leave - adopted.
Message recommending appropriation reported.
In committee (Consideration of the Deputy Governor-General’s message) :
Motion (by Mr. Lyons) agreed to -
That it is expedient that an appropriation of revenue to be made for the purposes of a bill for an act to resolve doubts which have arisen as to the liability of the Commonwealth to bondholders in certain debts of the States taken over by the Commonwealth, and for other purposes.
Resolution reported, and - by leave - adopted.
Bill - by leave - read a third time.
Message reported recommending appropriation for the purposes of amendments to be moved to this bill.
In committee (Consideration of Deputy Governor-General’s message).
Motion (by Mr. Lyons) proposed -
That it is expedient that an appropriation of revenue be made for the purposes of amendments to be moved by the Prime Minister to a bill for an act to provide for the carrying out of the Financial Agreements between the Commonwealth and the States by the parties thereto, and for other purposes.
– The Prime Minister (Mr. Lyons) should inform honorable members why it is necessary to move that an appropriation of revenue be made in connexion with this bill. The committee is entitled to know what expenditure is likely to be involved. The Government was elected on a pledge to reduce expenditure, and already it is asking for authority to embark upon new expenditure. The money to be spent must come from the taxpayers, and honorable members opposite are always asking that relief be given to the taxpayers, and the alleged burdens lifted from industry. A government which is always talking of economy, and has reduced wages and living conditions, should be careful before involving the country in greater expenditure by introducing a measure of this kind.
.- We are now asked to make an appropriation to enable us to give effect to amendments which are to be proposed; but why was not the bill itself originally preceded by a message?
– One of the amendments provides for an appropriation from Consolidated Revenue for the purpose of making any payments for which the Commonwealth may become liable under this measure. For that reason the message is necessary.
– Is that in connexion with possible refunds?
Question resolved in the affirmative.
Resolution reported and - by leave - adopted.
In committee: Consideration resumed from the 2nd March (vide page 529).
Postponed clause 1 -
This act may be cited as the Financial Agreement Enforcement Act 1932.
– I move -
That the word “Agreement” be omitted with a view to insert in lieu thereof the word “ Agreements.”
This has been rendered necessary, because there is now more than one agreement in existence between the Commonwealth and the States.
– I think we would get through this bill more expeditiously if the rather numerous amendments proposed by the Government were embodied in the text of the bill, so that honorable members could see just what was before them. Many of the amendments are consequential on the rearrangement of the previous bill into two separate measures. With very little trouble the bill could be reprinted, showing the alterations in black type.
– We cannot afford the time which the alteration would involve. Honorable members will be given every opportunity to understand the amendments as they are brought forward. The amendments seem somewhat numerous, but many of them are consequential, and others have been rendered necessary because the Government has decided to give effect to suggestions offered by honorable members. Certain drafting improvements have also been made.
– The Prime Minister says that Parliament could not spare the time to have the bill repainted so as to show clearly the effect of the proposed amendments. If it is a waste of time to do what is necessary to enable honorable members to understand the proposed legislation before them, then the Government might as well save as much time as possible, and suppress all discussion, allowing the decisions of the Executive to have the effect of law. Very few honorable members will be able to follow the effect of the amendments which have been proposed. It is always difficult for new members to understand amendments, and if honorable members opposite would speak their minds, they would agree with me that it is desirable that the course suggested by the right honorable member for North Sydney (Mr. Hughes) should be followed. The last Government assisted honorable members, particularly in regard to the taxation bills, by placing before them memoranda explaining the nature of the proposal. I venture a prophesy that, before we have finished with this measure, the drafting office will have sent forward a fresh batch of amendments.
Amendment agreed to.
Clause, as amended, agreed to.
Postponed clause 2 (Parts).
Amendment (by Mr. Lyons) agreed to-
That the words “ Part II. - Acceptance by Commonwealth of liability to bondholders “ be omitted.
Clause, as amended, agreed to.
Postponed clause 3 (Definitions).
– I move -
That after the definition of “Liability”, the following definitions be inserted: - “ Loan Council “ means the Australian Loan
Council established in pursuance of the Agreement, between the Commonwealth and the States, which is contained in the schedule to the Financial Agreement Validation Act 1929; “ Person “ includes a body corporate orunincorporate and a partnership;
– Copies of the amendments proposed by the Prime Minister (Mr. Lyons) were not handed to honorable members until the conclusion of the consideration of the last measure, and I defy any member to tell, at a glance, exactly what their effect will be.
– It is necessary to insert the definition of “Loan Council”, because its full name is the Australian Loan Council.
– Obviously there is a desire on the part of the Government to rush these amendments through before honorable members have an opportunity of discovering precisely what they mean.
Amendment agreed to.
Amendment (by Mr. Lyons) agreed to-
That in the definition of “ prescribed moneys “ the words “ owing by any person to a State and becoming payable “ be omitted, with aview to insert in lieu thereof the words “ due and payable by any person to a State “.
Clause also verbally and consequentially amended, and, as amended, agreed to.
Clause 5 (Application of part to State after declaration of High Court). (3.) At any time, and from time to time, after the publication in theGazette of a copy of a certificate of the Auditor-General, the Attorney-General may apply to the High Court for a declaration that the amount set forth in the certificate or one or more of the sums comprised in that amount is or are due and payable and unpaid by the State to the Commonwealth. (4.) Any such application may be made by motion of which not less than three days’ notice shall be given to the Attorney-General of the State concerned. (5.) The application shall be heard by a Full Court consisting of not less than three Justices, and upon the hearing of the application a certificate of the Auditor-General given in pursuance of sub-section (1.) of this section shall be prima facie evidence that the amount certified to be due and payable and unpaid by the State to the Commonwealth under or by virtue of the Financial Agreements is so due and payable and unpaid and that the sums comprised in that amount are due and payable and unpaid in respect of the items set forth in the certificate.’
.- This is the principal machinery clause of the bill. I suggest that there is such a close relation between clauses 5 and 6 that some reference to clause 6, and the amendments proposed to be made to it, might be permitted in discussing the present clause. I am opposed to this clause, because it provides what I consider to be an unnecessary method of securing money from a State. I do not desire to traverse all the ground that I covered during the debate on the second reading of the bill; but under this clause an extraordinary method of recovering money due by a State is provided. Some honorable members seem to have the idea that the last Government attempted to recover the money with respect to which the New South Wales Government had made default, and it having failed, it was necessary to bring down this extraordinary legislation. That is an entirely erroneous impression.
– ls the right honorable gentleman referring to the clause as proposed to be amended?
– The amendments proposed in this clause make practically no difference to my argument, and the amendments proposed in clause 6 make no substantial difference to it; they do not remove my objections to both clauses.
– How would the right honorable member make a State Government stand up to its obligations?
– The last Government issued writs against the New South Wales Government. There was some criticism as to the delay that occurred; but there was no unnecessary delay. My Government had a new situation to grapple with. After it had gone a certain distance with its legal proceedings, the Premiers Conference was held. At that conference, seven governments, including the Government of New South Wale3, were represented. The Premier of New South Wales attended the gathering, and discussed for weeks the .plan for financial rehabilitation, in which he joined. The various governments agreed unanimously to effect economies for the purpose of balancing their budgets, and then we launched the scheme for the conversion of bonds amounting to over £500,000,000 with respect to our internal debts. 1 submit that it would have been ridiculous for the Commonwealth Government to proceed with its litigation while the Premiers Conference was in progress, or during the period when attention was being directed to the internal conversion loan. My Government merely marked time while it was conferring with the various State Governments, because we hoped that the Premier of New South Wales would give effect to the plan. It is true that Mr. Lang, who, I believe, discussed, the plan earnestly, wanted the interest rates scaled down to 3 per cent. ; but he accepted the best terms he could get. That indicated to my Government that to that extent the Lang plan had been modified, and that the Premier of New South Wales was willing to fall into line with the rest of the governments of Australia in regard to the conversion loan. Therefore, my Government did not push on with the legal proceedings against New South Wales.
Before we made the appeal in connexion with the conversion loan, the Premiers Conference appointed a special sub-committee, consisting of the Prime Minister, the Premier of New South Wales, and the Premier of South Australia, to endeavour to overcome the difficulties created by the default of New South Wales. The sub-committee met, in conjunction with the Chairman of Directors and the Governor of the Commonwealth Bank and the commissioners of the Government Savings Bank of New South Wales, because another outstanding matter was the closing of the latter bank. It was agreed to co-operate, so far as possible, in order to bring about the rehabilitation of the finances of Australia. My Government did not push on with the proceedings against New South Wales when that stage had been reached. Even in private litigation the delay often runs into months, and it is not fair criticism of the last Government to say that it allowed months to go by without taking steps to deal with the Government of New South Wales. Up to that stage, we had pressed on with our writs with as much determination as any other government could have displayed; we were determined to recover the money that was owing. I was glad to have the approval of the present Attorney-General (ifr. Latham), who admitted that every possible step was taken by my Government. In similar circumstances, I would again push on with an action in the court in the ordinary way. Do honorable members realize that in seeking to attach the revenues of the State by legislation of this kind we are doing a thing such as caused war between America and Great Britain? We have ample power at present to take all necessary action to recover. A good deal of use has been made in this debate of Sir Edward Mitchell’s valuable book What Every Australian Ought to Enow. I wish that the Government had studied the book a little more closely in certain aspects. Had it done so it would have realized that there was no need for legislation of this kind. On page 35 of the book the author refers to the proceedings taken by the Commonwealth last year to recover money from New South Wales, and says -
Assuming the action had not been settled I will point out the effective remedies which were available to enable the Commonwealth to obtain preferential payment. . . and, at the same time, if it thought fit, to obtain an effective injunction against the State of New South Wales and against its Ministers of State, to prevent any repetition of the further defaults which Mr. Lang was then publicly threatening.
I do not suggest that we should do everything that Sir Edward Mitchell advises, but I say, unhesitatingly, that it is entirely wrong for this Parliament and Government to assume in advance that any government would defy a decision of the High Court, or that any responsible Minister of a sovereign State would put himself in the position of being found guilty of contempt of court, as he would do if he proceeded along a certain line of action in defiance of a judgment of the High Court. In those circumstances I think it is wrong for us to talk at this stage about what will be the next step after judgment is obtained. But Sir Edward Mitchell makes very clear what would happen after a judgment had been obtained in the High Court. He describes the clauses in the agreement which make the State liable faithfully to perform its obligations, and adds that
After a judgment in the High Court the Commonwealth could obtain a certificate pursuant to section65 of the Federal Judiciary Acts and duly serve that certificate upon the Treasurer of New South Wales under section 66 of such act. Such Treasurer would then be under the statutory obligation, imposed by that section, to satisfy judgment out of moneys legally available.
I speak earnestly on this subject because these are the steps which my Government began’ to take last year, and which this Government started to take this year. While we have no right to assume that any government or Minister would defy the High Court, for that is to assume that the party so doing would be guilty of the greatest disobedience of the law that any person or government could be guilty of, there are many ways in which we could act in the event of such disobedience. After stating that, under section 109 of the Constitution, our law would prevail over a
State law dealing with the same subject, Sir Edward Mitchell says -
When Mr. Lang, as I understand he did, publicly stated that the State of New South Wales would not pay the interest on its maturing public debts, and also did refuse to pay the Commonwealth, after the latter, in pursuance of its obligations, under the Financial Agreement, paid such interest, then a clear case would exist for a mandatory injunction against the State of New South Wales and against the officers of such State and persons acting under the authority of such State, under section 60 of the said Judiciary Acts.I think the term “ Officers “ in such section would be held to include Ministers of State . . .
Sir Edward Mitchell then quotes a Privy Council case to support his contention, and mentions the provisions of sections of our own Constitution in which officers of the State are referred to as Ministers and Ministers as officers of the State. Proceeding, he then goes on to say that -
Section60 of the Federal Judiciary Act appears to have been carefully framed so as to ensure that an injunction against the State should be as effectively enforced as against subjects, whether corporations or individuals. It appears to recognize the difficulty of enforcing, in certain respects, an injunction fullyagainst a sovereign entity and, for that reason, gives specific power to make the injunction against the State and against all officers of the State and persons acting under the authority of the State, and then power to enforce the injunction specifically against any such officers and persons.
I can see no reason why that last specific provision should be cut down so as to relieve an officer who happened to be the Premier or Treasurer, or any other highly-placed Minister of State, from suffering the ordinaryconsequences of contempt of court, if he were guilty of wilful disobedience of the injunction . . I can hardly visualize all the members of the Ministry, especially the AttorneyGeneral, flouting a mandatory order made against each of such Ministers in the State under section 60. Nor can I see how a Premier or other Ministers of State against whom such an injunction had been made under section 60, and who wilfully did execute acts in disobedience of it, could continue to act as a responsible adviser of His Majesty’s representative in that State. Nor even if he advised such executive acts.
The Crown must obey the law, and it would be impossible for the King’s representative to retain as an adviser a Minister who counselled the doing of executive acts in disobedience of an injunction against a State and such Ministers. There may be no modern precedent, but precedent is hardly required. On principle the matter seems clear, for what would any alternative view necessarily involve? That His Majesty’s representative in a State should join or, at least acquiesce in executive acts which were in direct disobedience of a man datory order of the High Court made against such State and its Ministers of State.
That would certainly amount to a direct violation of the duty of His Majesty and his representative in every British Dominion to obey the law. Everything I have said is consistent with the Commonwealth or other party enforcing such repayment, and with the High. Court, on any such proceeding, making all reasonable allowance for Ministers bona fide attempting to carry out an injunction without dislocating government operations and providing for the same in any such order.
– The right honorable member’s time has expired, but as no other honorable member has risen he may, in accordance with the Standing Orders, take his second period of time.
– Although I have made only brief extracts from the comments of Sir Edward Mitchell on these important points, I have quoted sufficient to show that extreme care is necessary. Sir Edward observes that he cannot contemplate an executive acting in absolute defiance and disobedience of the High Court. In these circumstances, I think that the Government would be ill-advised to adopt this procedure against a sovereign State. It should arm itself with the authority of the court, obtained by the taking of legal proceedings in the ordinary way. It is not justified in asking Parliament to take judicial action. Parliament should confine itself to legislative action, and leave judicial action to the appropriate authority. It may be said that this would involve delay, because documents and witnesses may have to be obtained from various places. My answer is that if the Government desires Parliament to act, it should make the burden of proof not less, but greater .than in the case of a High Court action, for the reason that there are not in Parliament the trained legal minds that are to be found on the High Court bench. It is not sufficient merely to call upon this Parliament to declare by resolution that the liability of the State is so much. A decision of the High Court should be obtained on the subject. When mention is made of delay, it should be remembered that we have already devoted two weeks to the discussion of this bill, and another week will certainly elapse before the measure can be finally dealt with by Parliament. Surely it would be possible for the High Court, in an important case, to move a little more rapidly than usual. The Minister representing the AttorneyGeneral in this chamber said in his speech, a day or two ago, that proceedings which involved the consideration of the constitutionality of this measure need not occupy very long; yet I have known of many long-drawn-out cases on constitutional points. But I do not confine my argument on the time aspect to the possible duration of the High Court proceedings on the constitutional aspect. When the court is called upon to deal with any action taken pursuant to this legislation, that is when an application is made for a declaration, every point will be called into question that would be involved if writs had been issued in the ordinary way. Every document necessary to prove the indebtedness of a State, and every other element in an ordinary legal action will come under consideration. I make one exception, to which I shall refer presently. In addition to that, the constitutionality of the legislation under which the action is being taken will be certainly questioned. There will thus he litigation on some points that would not have arisen if action had been taken under the existing power. I know that the Government will reply to this argument by saying that I have omitted to refer to clause 5 which purports to provide a short cut by declaring certain documents to be prima facie evidence. This bill seeks to enact that a certificate of the Auditor-General shall be prima facie evidence; but that is one of the hurdles that will have to be jumped very early in the piece. That provision is, in my opinion, unconstitutional. I do not for a moment believe that the High Court will accept as prima facie evidence a certificate of the Auditor-General. I know that provision is made in our customs, immigration and taxation legislation for certain affirmations to be received as proof of debt; but there is a vital distinction between those measures and this one. Surely it will not be argued that the constitutional power granted under section 105a is unlimited ; on the other hand, our powers in respect of immigration, taxation and customs and excise are unlimited, except that we may not, in our taxation law, discriminate between States or parts of States, or put two taxing measures in one law. Our power under section 105a is strictly limited to the carrying out of the financial agreement. There is nothing in that agreement which gives this Parliament power to declare certain documents prima facie evidence, and I do not believe that any judge of the High Court would agree that we have such power. There is, therefore, no royal road open to us. We shall ultimately have to proceed in the ordinary legal way.For all these reasons I submit that this procedure is wrong. There is no authority for the taking of such action. We shall meet the constitutional hurdle at the very inception of action under this measure. The biggest bar in the history of Australia will be briefed to test the validity of these provisions. In these circumstances, what becomes of the quick action ? It is a most dangerous thing to ask this Parliament to exercise judicial power. It will use such power if it declares how much a particular State owes to the Commonwealth.
I submit also thatwe shall be going very much further than we have a right to go in seeking to attach the revenues of the State. It would be inviting civil war to do this.
– That is under clause 6.
– But provision is also made in clause 5 to attach the revenues of the State.
– After judicial process.
– Yes; but a judicial process that will take much longer than the ordinary judicial process. It will not be the attaching of revenues or the issuing of a garnishee order after the taking of ordinary judicial action, but after the passing of a resolution by Parliament. I believe that the adoption of these extraordinary and unusual methods will arouse keen resentment. This will not be the taking of calm judicial action in the High Court, but the taking of action in an atmosphere of political suspicion. The Government should be content to take whatever steps are necessary in ordinary judicial procedure, and it should not seek to take this extraordinary action. We must read clause 5 in conjunction with clause 6. I know that the Government has indicated that it intends to submit several amendments, but these do not remove fundamental objections. Clause 5 creates the machinery, the basis of the whole thing.
– What is the connexion between clause 5 and clause 6?
– Clause 5 lays down the procedure as also, in fact, does clause 6 ; it is an alternative in case of urgency. Setting aside clause 6 for the moment, I submit that the methods that are employed in clause 5 will not effect a saving of time. Why then, shouldwe adopt that legislation, particularly as a method is already provided in ordinary judicial procedure? The Government proposes to adopt the method of making a document prima facie evidence. That will be challenged immediately on the objection that the Federal Government, as a party to the Financial Agreement, is assuming a right of enforcement,which is not granted to the other six parties to the compact. The proposal is fundamentally unsound. It is wrong for the Commonwealth Government to sign a document entering into an agreementwith the State Governments, and then to introduce legislation enabling it, in the event of a State Government defaulting, to adopt methodswhich are denied to the State Governments. If the Commonwealth defaulted, the Stateswould have to approach the High Court for a judgment, and for any other legal restraint that was necessary, and would have to prove their case. The Commonwealth Government should be compelled to take similar action. Then the people of Australiawould be satisfied that everythingwas lifted high above the taint of political interest’s and vindictiveness. Matterswould be raised to the calm, judicial atmosphere of the High Court, and the Commonwealth Parliament would be saved from the questionable procedure of enacting legislation to enforce the fulfilment of the conditions of an agreement knowing full well that the remaining parties to the compact were powerless to pass similar legislation to enforce its conditions against the Commonwealth.
Sitting suspended from 6.19 to8 p.m.
.- The Leader of the Opposition (Mr. Scullin) concerned himself unnecessarily with his own reputation when he dealt at such length with his Government’s delay in issuing a writ against the State of New South Wales. I heard very little criticism of the previous Government on that score, and probably if the right honorable gentleman had not been at such pains to excuse himself in advance, such delay as occurred would not have been mentioned. He was entitled to assume that the promises made to him by Mr. Lang would be honored, but having been grossly deceived, I am surprised that he should now believe that any measure short of compulsion would be effective in dealing with that gentleman, or any of his Ministers. The contention of the right honorable member for Yarra is that the Commonwealth should proceed by writ to obtain from the High Court a mandatory injunction, which, he said, no Minister would dare to disobey. Apparently he has a sublime confidence in the respect which New South Wales Ministers would have for orders of the court. I, on the contrary, imagine that those gentlemen would take the greatest delight in openly defying an order of the High Court, and in inviting the Commonwealth to get its money as best it could. The Leader of the Opposition said that this proposed legislation would delay the procedure by writ, and, if it should be declared invalid, considerable time would be lost. That is not correct. Action under this bill would not hold up procedure by writ. Writs have been issued already, and are proceeding in the normal way.
– That is so.
– And they will proceed irrespective of this legislation. But while the Commonwealth has recourse to process by writ, the Government believes that the legislation we are now considering will provide speedier and more effective means of compelling the Government of New .South Wales to meet its obligations. Judment on the writs may not be obtained for twelve months, during which the revenues of New South Wales would be received and spent, thus rendering any order of the High Court abortive. The virtue of this legislation is that it will enable the Commonwealth to attach the revenue of New South Wales at its source, and before it is received by the State Government. The Leader of the Opposition also questioned the power of this Parliament to legislate in this Why for the enforcement of an agreement to which the Commonwealth is a party. He declares that no Parliament has a right to do that. He seems to have overlooked section 105a of the Constitution which reads -
The Parliament may make laws for the carrying out by the parties thereto of any such agreement.
That section expressly vests in this Parliament power to legislate to ensure the performance of the financial agreements. The giving of that power was ratified by the Parliaments of the Commonwealth and the States and was approved by the people by referendum. It was also, I believe, supported by the present Leader of the Opposition (Mr. Scullin). That same statutory power answers the right honorable gentleman’s further objection that the Commonwealth Parliament, being a party to the agreement, should not exercise power to legislate for the performance of it, when similar power is not given to the States, which are the other contracting parties. .He complained of what he called the unilateral right which this legislation confers upon the Commonwealth Parliament. But power to legislate in this way was deliberately given to this Parliament by the States and the people, after full consideration. It was thoroughly understood that if laws should be necessary for the carrying out of the agreements, the National Parliament was the proper authority to make them. The right honorable gentleman’s argument invaded the realm of constitutional law. I submit with all respect that it is futile for honorable members in this chamber to debate purely constitutional issues; the only sound course is for the Government of the day to take the best legal advice obtainable and act upon it. I deprecate the statement made too often in and out of this chamber, and repeated by the Leader of the Opposition to-night, that legislation of this character may be an incitement to civil war. Such words, if they have any influence at all, are calculated to provoke resistance to the claims of the Commonwealth.
– The Lang crowd will not fight.
– I do not believe that they will. Talk of this character is similar to that of fomenters of insurrection, who issue a warning that if their demands are not conceded, they may not be able to restrain their supporters. The majority of the people of New South Wales desire that that State shall act honorably and honestly; they do not approve of their representatives flagrantly violating their pledges. If this issue has to be determined by force, I am confident that the better element in New South Wales will stand definitely for the honorable discharge of obligations deliberately undertaken.
– Would the honorable member be prepared to pay the overseas interest and allow people to starve in consequence ?
– The first essential is that people shall be honest.
– Feed them on words.
– The Government of New South Wales appears to have made up its mind to resist in every way possible the Commonwealth’s just demands, and for that reason temporising by this Parliament would be futile. The majority of the people by their votes at the recent federal election showed that they desire the Commonwealth Government to deal with this matter resolutely, and I believe that the Government having entered upon the task of compelling performance of the Financial Agreement, will not be deterred by cheap sentiment such as has been repeatedly expressed during the discussion of this bill. A fair and proper contract was made, and the breach of ii is admitted. We need not anticipate trouble by saying that the court will nor accept the Auditor-General’s certificate as prima facie evidence of the debt. Undoubtedly, the certificate will state the correct amount, and objections to prima facie evidence will be made merely for the purpose of defeating or, at any rate, delaying justice. As the objections by the Leader of the Opposition would, if accepted, defeat the purpose of this measure, the Government should not give way to them.
.- Usually, I have a profound regard for the legal knowledge of the honorable member for Perth (Mr. Nairn), but on this occasion his . argument is unsound. He said that a writ, which is a process of law, would not be effective againstthe Government of New South Wales. He ignored the fact that the Scullin Government proceeded by writ against the State of New South Wales, and eventually as the result of that action the money then owing was fixed up. If there was any doubt of the efficiency of that process, why has the present Government issued writs against the State of New South Wales?
– The Government is using a double-barrelled gun.
– What is the use of that if, as the honorable member for Perth (Mr. Nairn) has declared, one barrel is ineffective? Obviously, the Government must expect that both barrels will function. In several instances the opinions of some of the highest legal gentlemen in Australia have been obtained in regard to certain legislation, and when the law has been put into operation it has been found to be entirely ineffective. As has been stated during this debate, the opinion of one legal authority is often countered by the opinion of another legal authority. Many of the long drawn out cases in the courts are the result of this legal uncertainty. The honorable member for Perth (Mr. Nairn) querulously touched upon the fact that the Leader of the Opposition (Mr. Scullin) stated that there might be a civil war in New South Wales as a result of any action taken by the Commonwealth Government under this provision. I am sure that the Leader of’ the Opposition did not say that in any provocative way. Rather he suggested that there was a remote chance of civil war. If that should be so, it should cause this Government to halt. The Bruce-Page Government made mistakes in matters of this kind. Itwas responsible for the Transport Workers Act which has thrown the industrial life of this country into turmoil. On one occasion that Government set the law in motion to deport certain persons, but it did not succeed. This Government is continually telling us that a man who preaches class hatred and sedition is an enemy to Australia, yet it has introduced this provocative legislation in a country in which 300,000 workers are on the bread line. I warn the Government that its action is exceedingly unwise. We have been told to put aside party politics, and to take the broad view, but I ask the honorable member for Perth, the honorable member for Forrest (Mr. Prowse), and the honorable member for Swan (Mr. Gregory) to visualize what would happen if this provision were applied to Western Australia. Indeed the honorable member for Swan has already expressed a fear in that regard. If the Federal Government attempted to compel the public servants of Western Australia to carry out its behest against the interests of the Government of that State, nothing short of a revolution would take place. I cannot help thinking that this proposed action on the part of the Government is a spectacular gesture in accordance with its promises on the hustings; otherwise why should it take this circumlocutionary and provocative action ?
– It surely is not circumlocutionary.
– The right honorable gentleman will find that his alleged short-cut will prove to be the longest way round. I do not know whether the Government intends to put this measure into operation when it is passed. The right honorable member for North Sydney (Mr. Hughes), although he has occupied the seats of the mighty, has had years of experience of work among the lowly, and he seems to think that this provision is a most dangerous experiment. What will happen if a member of the Commonwealth Public Service is sent into the State tramways or railways offices of New South Wales to collect revenues? Mr. Lang is a wonderful poseur. He has a large following in New South Wales and particularly in the thickly settled centres. If this legislation is enforced, he will pose as a patriot. He will say that he is standing for the rights of that State against the depredations of the Federal Government, and unless I am mistaken in my estimation of the ordinary psychology of mankind, he will create a feeling of hostility against the Federal Government. I urge the Government not to heed the views of its supporters who represent New South Wales and a»e anxious to hit Mr. Lang. They attend their own political meetings and are urged on by the New Guard or some other similar body. They hear the opinions only of those who are of a political complexion similar to theirs. We should consider the interests of Australia as a whole, and on this occasion the interests of the States as a whole. I cannot imagine any sane government proceeding with this legislation unless it has some ulterior motive. If this Government does not follow the ordinary procedure of law it will crash as did the Bruce-Page Government on two previous occasions.
– The only “comment that I shall make on the speech of the honorable member for Kalgoorlie (Mr. A. Green) is that I do not think that he has read the bill carefully, because he devoted a good deal of his time to talking about what will happen if we place the officers of the Commonwealth Public Service into the tramway offices, or other offices of a State. The real object of this bill is to prevent anything of that kind having to be done. If the bill has any merit - which some honorable members opposite seem to have difficulty in detecting - surely it is that it offers no provocation to violence, or any of those dreadful things of which we have heard so much from the honorable member for Kalgoorlie.
I rose to deal with some of the points made by the Leader of the Opposition (Mr. Seullin). He put his case, as he always does, admirably, concisely, and logically, but he had much to say of the action that his Government took last year. He showed great sensitiveness to, and very much magnified, any criticism that has been directed at what was then done. Most of his critics have admitted that the right honorable gentleman took the right and proper course when New South Wales defaulted. The Government of which he was the head met the obligations of New South Wales, and promptly issued a writ against that State. The proceedings were withdrawn only when the Premier of New South Wales made, apparently, a complete change of front, and promised to meet the obligations that he had previously repudiated, giving an undertaking to conform to the plan that was then under discussion between the Commonwealth and the States for the balancing of budgets. The Premier of New South Wales also undertook to live within a limited deficit, as laid down by the conference, and agreed to reduce his expenditure by 20 per cent. I, therefore, dismiss that part of the speech of the Leader of the Opposition, which was entirely due to oversensitiveness, arising, I suggest, from the fact that he now realizes that he might have been a little more energetic, and might have shown some of the initiative which the present Government is showing in dealing with the situation.
The main point of the Leader of the Opposition was that, under clause 5, we were departing from the principles of having determined by the judiciary the liability of either a citizen or a government of this country. Whatever criticism could be levelled at clause 6 would be entirely wide of the mark if levelled at clause 5. What the right honorable gentleman contends is not possible under that clause. It provides that no action shall be taken against New South Wales or any other State until a declaration has been obtained from the High Court that the amount to be recovered is due and owing by the State to the Commonwealth. There i3 no flouting of the judiciary, nor could any of the things suggested by the Leader of the Opposition happen under clause 5. The Leader of the Opposition said that the Government was attempting to accelerate the proceedings before the High Court, instead of adopting procedure taken by his Government last year, which was protracted and almost interminable. As the honorable member for Perth (Mr. Nairn) has said, the Government is in this instance proposing to take proceedings, first, by proving that an amount is owing to it by the State of New South Wales. It is provided under this measure that the AuditorGeneral’s certificate is prima facie evidence of the amount owing, and the obligation is then on ‘the’ State of New South Wales to disprove it. The Leader of the Opposition has suggested that the action that we are contemplating will lead to no acceleration of proceedings, but let me say that, on the contrary, there will be a tremendous acceleration of proceedings. In High Court proceedings such as we are taking now,, and such as were taken last year, it is necessary to claim the amount that is alleged to be due, and the judgment of the court will be in respect ,of the whole amount claimed. A claim cannot be dealt with piecemeal. If, however, proceedings are instituted under the clause we are now considering, it will be possible to sue for a declaration that the whole or part of the amount claimed is due. When we have to deal with the present Premier of New South’ Wales who, apparently, is prepared to take any legal objection in his power to occasion delay, there is certainly a very good chance of shortening the hearing by proceeding in the manner we propose.
I pause here to say that it is amazing to find the responsible head of a State government taking advantage of every legal point to cause delay in determining whether his State does or does not owe money claimed hy the Commonwealth. I could understand Mr. Lang, if he were quite honest, saying, “ Yes, the Government of New South Wales owes the money, and I am prepared to allow the High Court to determine the amount owing, but I am not going to pay it, for the reasons set forth in this wonderful policy statement of mine.” That might be decent and honest, but he should not descend to such tactics as trying to delay proceedings when everybody knows that some amount, at any rate, is owing.
The Leader of the Opposition (Mr. Scullin) further suggested that the Commonwealth should institute High Court proceedings, obtain judgment, and then proceed to enforce it. It was unthinkable, he said, that we should act on the assumption that any Premier or government of a State might defy the High Court. That is a most optimistic view to take regarding a gentleman who has shown that he will stick at nothing; who has not hesitated to repudiate his obligations and forswear the undertakings given on behalf of his State. He has allowed nothing to stop him up to date, and it would be strange if he should hesitate to defy the High Court or, ia.deed, any other authority.
There was one very remarkable feature about the speech of the Leader of the Opposition this afternoon. He read copious extracts from the book written by Sir Edward Mitchell, K.C;, his purpose being to show that the collection of money due by a defaulting State should be really a simple matter. It was only necessary, according to the statement as quoted by the Leader of the Opposition, to obtain a judgment, and to do various things. When these were done, the money would flow into the coffers of the Commonwealth Government. The Leader of the Opposition read steadily, but I was following him from another copy of Sir Edward Mitchell’s work. One sentence on the page from which he was quoting, he omitted altogether, and that sentence is as follows : - lt might suit some highly placed Minister of Statu for ulterior purposes to pose as a martyr and go to jail rather than obey something the court had ordered - but which lie was politically pledged to oppose.
That omission by the Leader of the Opposition strikes me as remarkable. He read practically the whole of the page on which the sentence appears, and what he i Tad is now on record, and will be published in Hansard. The sentence he omitted shows that even Sir Edward Mitchell’s legal mind saw the possibility that there might be a State Premier who would desire to pose as a martyr, and even go to gaol in support of Ids policy. It is obvious that that is exactly what a man like Mr. Lang might choose to do. Sir Edward Mitchell has suggested various remedies to which the Leader of the Opposition attaches much importance; but there is no guarantee that those remedies will prove so effective as he thinks.. We must remember that there is a judiciary act, section 65 of which provides that no execution or attachment against properties or revenues of a State pan take place. It further provides that a certificate of the Registrar may require the Treasurer of a State to satisfy a judgment of the High Court out of moneys legally available. I remind honorable members that “moneys legally available” are those which have been appropriated by Parliament, and we have to ask ourselves how much money will be appropriated by the. Parliament of New
South .Wales, controlled as it is by a government which has already broken its obligations, if, as soon as the money has been appropriated, the Commonwealth can step in and attach it. Very little would be available from that source. Ii may be claimed that, under the recent amendment of the Constitution and the Financial Agreement, certain other obligations rest on the Treasurer of a State; but they are uncertain and difficult to define. If the Commonwealth attempted to proceed under those provisions it would merely entangle itself in interminable legal difficulties. I have great respect for Sir Edward Mitchell, but after all, many other eminent legal authorities have given opinions contrary to his.
– Such as the present Attorney-General.
– I know the esteem in which the honorable member for Darling (Mr. Blakeley) holds the AttorneyGeneral, and I share it. It would not be possible to get a better opinion than the Attorney-General’s, and the Government is fortunate in having his assistance and advice. There is a large body of legal opinion which differs from Sir Edward Mitchell’s opinion, that the Commonwealth would have no difficulty in recovering moneys due by a defaulting State. The Government has decided that it is necessary to provide more certain means of collecting moneys due. At the present ‘ moment, the committee is considering clause 5, and it cannot be claimed that this clause eliminates the judiciary, or even postpones its intervention. This clause provides that the Commonwealth must obtain a judicial decision, and having done so, may take certain steps to enforce the judgment. It is necessary to define the steps to be taken. It was never contemplated in the past that there would be a defaulting State, or that we would have to enforce remedies against a government which takes every step in its power to avoid paying. The action proposed is fair and equitable. Other clauses of the bill provide safeguards for the rights of individuals. Whatever may be said regarding clause 6, there is no justification for the assertion that clause 5 in any way flouts the judiciary. Such an argument might he applicable to clause 6, although I do not think that it is, but clause 5 is entirely distinct, and is, I contend, absolutely necessary, unless we are to get into a position in which a dishonest Premier of a State can repudiate all his obligations under the Financial Agreement. If that sort of behaviour spread to the other States it would undermine the whole financial structure that has been built up since the signing of the Financial Agreement,
– Honorable members . might reasonably have expected that, when eminent lawyers addressed themselves to this bill during the second-reading debate, they would have made its legal provisions clear, but instead of that they succeeded only in making confusion worse confounded. I understand that a law student, when seeking his degree, must write a thesis. After listening to the speeches of honorable members opposite, who are learned in the law, I am convinced that they are well-qualified to write an admirable thesis on the art of apology, if on nothing else. They sought to justify this bill, but how would they be received if they were to ask His Majesty to agree to a proposal that the judges of the courts should be both accusers and judges in one. His Majesty, [ am. sure, would turn a deaf ear to any such advice. It is no wonder that the people of this country are beginning to lose their respect for the law, when they see its chief ornaments paying such little regard to the principles of common justice. The honorable member for Martin (Mr. Holman), the honorable member for Perth ((Mr. Nairn), the honorable member for Darling Downs (Sir Littleton Groom), and the Acting Treasurer (Mr. Bruce) have all spoken in defence of this bill, a measure which, even if legally valid, is repugnant to British sentiment.
The title of this bill should be changed. It should be called “ The Record Bailiff Bill “, because it will create about 2,500,000 bailiffs in New South Wales. Every ratepayer and every taxpayer becomes a bailiff. I ask some of the legal luminaries opposite what will be the position of a taxpayer of New South Wales, whether he resides in New South Wales or not, if the Commonwealth Government succeeds in attaching the revenue received by New South Wales from taxation? It is well known that these taxes must first of all be assessed by the Taxation Department, and until then the individual taxpayer will have no idea of the amount due. If a taxpayer wishes to appeal against his assessment, he must, under the laws of the State, first lodge his tax; but under this bill he is required to pay both Federal and State taxes. What would be the position if the Commonwealth authorities attached the revenues received by the State from, say, butchers, storekeepers, wine, tobacco and motor licences? Suppose the State authorities informed the persons so licensed that unless they paid their licence-fees to the State, the licences would be withdrawn, and they would be prevented from continuing in business. Confusion would result as soon as an attempt was made to give effect to this legislation. What legal power has the Commonwealth to declare if New South Wales does not meet certain obligations, that those licences shall be issued. I say advisedly that this legislation was handed to the people of Australia as if it were a bouquet, but when the people realized its true significance, they found that it was only a posy of noxious weeds. This bill is but a smoke-screen to hide the insidious legislation that is to come in the form of tariff and other proposals. The Country party cannot escape its share of the blame for this action. Time after time it has abused the last Minister for Trade and Customs for the tariff schedules brought down by him. Let the members of the Country party now come forward and make amends for their shortcomings in this direction in the past. They have got the girl into trouble, and should stand by her. In the corner occupied by them, they have cried “ wolf “ ; but to-day the wolf is in that corner, and they now desire- the Opposition to help them to save the primary producers. This measure should have been served up with spaghetti, because it has a distinct Mussolini flavour.
– The honorable member must confine his remarks to the clause.
– I appreciate the latitude which has been granted to me ; it was about time somebody told the members of the Country party the true significance of this bill, lt is merely designed to cause a smoke-screen to enable the Government to escape from the promises made by it at the last election, and, therefore, 1 hope that the clause will be defeated.
– The committee is indebted to the real Leader of the Government for the reply which he has attempted to give to the arguments advanced from this side of the chamber. He tried to answer the criticism of the Leader of the Opposition : but having gone only one-fourth of the way in that direction, he dismissed the whole matter with a wave of the hand. If he thinks that he can justify the Government’s action so easily as that, I am sure that he is sadly mistaken. The right honorable gentleman had the hardihood to invite us to join in this debate in a spirit of sweet reasonableness, and yet, as a .member of the Government he proposes to attach the revenues of New South Wales for the purpose of meeting interest obligations to overseas bondholders. Twelve months of the worst period through which Australia has passed were spent by the right honorable gentleman on the other side of the world, so he knows very little of the circumstances that confronted this country during that time. He will not find the taxpayers of New South Wales anxious to part with their money so that it may be transmitted overseas, leaving them in a state of semi-starvation and bankruptcy. L do not suggest for a moment that civil war may result from the passage of this measure.
– The right honorable gentleman will not be here when it starts.
– No; he will be at some favoured spot on the other side of the world. He has been very lucky throughout the piece. No doubt, he will leave the job behind, and get somebody else to see it through. But in all probability, the difficulty over the position of New South Wales will be overcome in a much easier way than by the precipitation of civil war.
It is suggested that the proposal in this clause is constitutional; but, after all, the people of New South Wales will have to provide the money that is demanded. It is useless to worry about the Premier of New South Wales or the members of his Government; -they are of secondary consideration, because the money required to meet the State’s obliga- tions must be collected from the taxpayers. Whatever our views may be on this matter, the money required must be put into the pockets of the people of New South Wales before it can be taken from them. My colleagues and I have discussed the situation from the point of view of the primary producers, who, as honorable members in the Country party corner know, have not the means of carrying further burdens of taxation whereby the payments due by New South Wales can be met. Other sections of the community are in a similar predicament; but I have no doubt that if certain commercial interests in New South Wales have revenues of any kind to assist the State Government in meeting its obligations overseas, that Government will provide the necessary legislative machinery whereby they can hand over their money, and then our friends opposite will he quite happy in regard to the overseas obligations of that State. Without giving any secrets away, all these possibilities are being carefully and quietly examined. The practical effect of this clause is a matter for consideration by the lay members of this committee, who have to consider whether New South Wales is in a position to make any payments of the character contemplated under this bill. I maintain that the taxpayers of that State will adopt the easy course, rather than resort to civil war, and simply refrain from paying.
I have heard a good deal, during the discussion of the Premiers plan, of the alleged necessity for honouring agreements, and so on. What was the final decision of the Premiers Conference? It was that (the States should cut down their expenditure by 22^ per cent., and each State was left to effect economies in its own way. Anybody considering this matter in an unbiased fashion would admit that the method employed in New South Wales did not meet with the wishes of the political party opposite, which favours the policy followed in the other States. The utterances made in this chamber, and the speeches delivered at banquets and in various public places by the political leaders opposite-
Mr Hutchin interjecting,
– The honorable member for Denison (Mr. Hutchin) was candid about this matter, and his speech might well be published in pamphlet form. By it he has done a great service to the Labour party of New South Wales. If the New South Wales Government had set out to destroy the social legislation that has resulted from many years of Labour organization, the Premier of New South Wales would have been regarded by honorable members opposite as a national hero. I have in my hand a copy of the journal of the Melbourne Stock Exchange, and it refers to the operations of a firm in which the right honorable member for Flinders (Mr. Bruce) is an important, figure. The report’ to which I am referring deals with the necessity for meeting obligations.
– Why not avoid personalities?
– Have no personalities been indulged in with respect to the New South Wales Premier and the members of my party? I am now questioning the tactics of those who would cast slurs upon persons who are not here to defend themselves. The authorized capital of this firm is £1,000,000.
– I rise to a point of order. I submit that the personal references which the honorable member is making are not relevant, to the clause under discussion.
– The honorable member for West Sydney (Mr. Beasley) has not so far transgressed the Standing Orders.
– The report to which I am referring makes certain statements in regard to capital, the number of shares issued, the number of shares paid up, the number of shares held in reserve, dividends, and so on.
– The honorable member is now making remarks more appropriate to a second-reading speech.
– The object of these remarks, Mr. Chairman, is to reply to the observations made by honorable members opposite that honest methods should be adopted by governments. The previous speaker had something to say, on this point, relative to the Premier of New South Wales. At the foot of the report from which I am quoting appears a reference which reads, “A.A. Dividends in arrears”. That, I take it, refers to dividends declared but not paid. Those who feel impelled to discuss motives should ask themselves, first of all, whether their own motives and conduct are honest. They should- make a check of themselves before they criticize others. How much honesty is there in a business firm which declares dividends but does not pay them?
It appears to me that the Government has introduced this bill because it feels called upon to do something spectacular. The Leader of the Opposition (Mr. Scullin) has truly stated that if the Government acts in accordance with ihe provisions of this bill it will usurp the powers of the judiciary by taking action simply on a resolution submitted to both Houses of the Parliament. We have been invited to discuss this subject apart altogether from party political considerations; but I ask whether the honorable member for Barton (Mr. Lane) and the honorable member for Parramatta (Mr. Stewart) will disregard all party- political considerations when the resolution to which I have referred is before the House. The appeal to consider this subject on a broad national basis will fall on deaf ears in their case. I suppose that in spite of everything that is being said, the Government, will proceed with this vindictive legislation. It has, no doubt, made this clause as vicious as possible. But that fact will in ‘.no way reduce our power or- prestige, as we criticize the Government ‘ here and elsewhere for this unwarranted action. I can visualize what will happen if this drastic measure becomes law, and unjust regulations are made pursuant to its provisions. The individual taxpayers of New South Wales will be the people who will suffer. This is an attempt to corner them and force them to meet commitments which they cannot afford to meet. In these circumstances, the people will take the only course open to them, and refuse to pay.
– The necessity for the introduction” of this clause is easily explained. An attempt is being made to insist that people shall honour their obligations and pay interest on the money that they have borrowed. That there is much confusion about the subject is shown by the remarks that have been made by honorable members opposite. It is also evident how dangerous is the. leadership of some of the honorable gentlemen who profess to be leaders of the people.
The honorable member for West Sydney (Mr. Beasley) has referred to a company, which he did not specifically name, but which, it is perfectly obvious, is a company with which I am personally associated. In discussing whether people should honour their debts, he quoted a note which appears at the bottom of a stock exchange list relating to “ dividends in arrears.” If the honorable member had grasped the significance of that note, he would have realized that this company has borrowed money, and that it will have to pay interest on the money so borrowed as it becomes due, even if it means the selling of every asset which it possesses. This company will be obliged to dispose of everything it has in the world, if necessary, in order to meet its obligations. The . “dividends in arrears “ to which the honorable member has referred, are due to the unfortunate shareholders who are the proprietors of this company - the people who have invested their all in the company, and have received nothing in return. The company will have to pay every shilling that it owes, even if it means the loss of every asset it has. That is the true significance of the facts referred to by the honorable member.
.- Whenever we get into difficulty there is a tendency for us to rest too much on the advice of lawyers. We frequently get too much law and too little justice: I did not think that I should live to see the time when a Commonwealth Government would -try to bring force to bear on a State Government in the way that this Government is trying to bring force to bear on the New South Wales Government. I am very sorry that such a time has arrived. But we must remember that it is the people who will have to pay. This Government may say that it is attacking the Government of New South Wales for not carrying out its obligations, but it is really attacking the people of New South Wales. The result of an attack of this kind will be serious. Even a little more taxation in any of the Australian States will mean a very much bigger insolvency list. The Government does not seem to realize that it cannot draw blood from a stone. It appears to me to be very likely that the people will refuse to pay, as the honorable member for West Sydney (Mr. Beasley) has said. It has been demonstrated time after time that people will not submit to unjust taxation. I do not know whether the Government of New South Wales has borrowed any money from the United States of America, but if it has done so, it will be required, under existing circumstances, to send £179 back to that country for every £100 that it has borrowed. We know very well that every country in the world, except the United States of America, is saying, through its leaders, that it cannot pay its war debts. Even brave old England is in this position. Would any honorable member of this chamber dare to say from a public platform in this country that there is any justice in a financial system which requires the repayment of £179 for every £100 borrowed? I have had a long political experience, and I do not believe that any honorable member would dare to justify such a thing. Shylock is a gentleman, and Ned Kelly an archangel, in comparison with those who demand such repayment. I did not meet Ned Kelly in the flesh, but I was once mistaken for one of his colleagues. The Herald newspaper, at one time, made the statement that Steve Hart, a member of the gang, had been driven into Benalla under escort; but it was not Steve Hart, it was I. This was in the happy days of long ago.
Various State governments have recognized that under existing conditions people cannot meet their commitments, and have passed moratorium legislation. We know very well what has happened in the past. A person may have desired an advance on a property valued at £3,500, and after an inspection of it by one or two agents, he may have obtained a loan of £2,000. But trouble has afterwards overtaken him so that he has bees unable to meet his payments. Is it just in such circumstances to allow the mortgagee to foreclose ? No mortgagee should be allowed to foreclose unless he is willing to pay the difference between the valuation of the property on which he advanced money, and the amount due in principal and interest. If a simple law like this were enacted we should have very little trouble about foreclosures and forced sales. I do not think that the Commonwealth Government is justified in putting the bailiff in on 2,000,000 people. To do so will result in great hardship to tens of thousands of men, women and children. We should do some good if we devoted the time that we are wasting on this measure to devising means to relieve our unemployment problem. Why should we have these troubles ? God has not forgotten Australia; He has treated us bountifully, and we are able to produce three times as much food as our population needs. Let us get down to the job, instead of frittering away the time of the National Parliament on this legal enactment which will never be operative. God forbid that there should be any revolution in Australia; hut I point out that every revolution has been built up on a foundation of want and starvation. To-day there are 400,000 human beings who need and seek work in Australia, and have to live on 5s. a week. In England an unemployed man is paid 15s., and an unemployed woman 13s. a week, and they have the advantage of being able to buy Australian meat, wheat, butter, and other commodities much more cheaply and of a better quality than our people can here. Therefore the position of the unemployed in Great Britain is better than that of the unfortunates who are suffering in Australia. I am confident that if the people of the Commonwealth had the power they would not allow the creature called Parliament to pass such a measure as this.
– I shall confine myself mostly to the statement that was made by the right honorable member for Flinders (Mr. Bruce), to the effect that this bill was introduced purely to ensure that the States should honour their obligations. The people of New South Wales are not endeavouring to avoid their commitments. The trouble is that they cannot pay. As a public man
I possess the knowledge that my constituents, who are as honest as any honorable member sitting opposite, are not in a position to pay taxes, and have been compelled to seek an extension of time from the Taxation Commissioner. That condition of affairs also applies to business firms, municipalities and shire councils. I have in mind a municipality that is represented by the Minister for Home Affairs (Mr. Parkhill), the Manly Council, which has gone farther than any honorable member on this side, and stated that it will not pay its dues. People are neither able to collect nor to pay their dues, as there are so many who are unemployed and unable to meet their commitments. To assist the community generally, the Government of New South Wales has granted such persons extensions of time. Now the Federal Government steps in and, in order to harass the Lang Government, it proposes to take direct action, put in its bailiffs, and recover the money that is owed to it by the State of New South Wales.
This matter must he regarded from the human point of view. Personally, I do not owe a penny to any man, but if the £5 or £10 that I received as a weekly wage for my labour as a working man was the only money that I possessed, and I owed that amount in taxes, it would be criminal for me to starve my children in order to pay that debt; and it. would be equally criminal for my creditor to accept payment of the amount while my children starved. That is the position in New South Wales to-day. Its Government seeks an extension of time in order that it may feed its people, recognizing that that duty must receive prior consideration’ to that of the payment of interest to overseas investors.
The framers of this bill have no human feelings for. the people of Australia. I say Australia, for, shortly, the whole of our States will be in a similar position to that of New South Wales. Mr. Lloyd George and other Imperialists have acknowledged that the game is up so far as the payment of reparations is concerned. That is not the statement of Mr. Lang, whom some consider an awful person, but whom I know to be one of the most humane individuals in Australia. Mr. Lang considers the women and children rather than the wealthy bondholders overseas, the representatives of Shylock.
The Acting Attorney-General (Mr. Bruce) is anxious to rush this legislation through, in order that he may return to London, where he has spent more time than he has spent in Australia. The honorable gentleman’s sympathies are directed overseas rather than to the country that bore, but did not rear him. I assure him that my remarks are not intended in a personal manner. The position of the company in which the honorable gentleman is interested should improve in future, as its London representative will be paid by this Government.
– That remark ought to be withdrawn.
– Honorable members indulge in a lot of mud-slinging at the Premier of New South Wales, who is not here to defend himself in person. I shall say what I think is fit and proper when comparing Mr. Lang with the individual who is trying to grind him down, and chase him out of public life by introducing a measure such as this, which may, as was stated by the Leader of the Opposition (Mr. Scullin), cause a revolution. J. am curious as to how this Government will act. If it puts its bailiffs into New South Wales, it will have to arrest every State public servant who carries out the orders of his employers. The Victoria Barracks will quickly be filled. Then, perhaps, the Commonwealth Government will ask the people of New South Wales, who run contra to its desires to lock themselves up in their own gaols and provide for themselves. Or will it place these people on Garden Island, Cockatoo Island, or even in No. 4 Camp at Canberra ? In any case the process will be an expensive one. I am entirely opposed to this clause and to the bill generally, and I shall record my vote against it.
.- During the debate on this clause, and on the bill as a whole, much talk has been indulged in about the meeting of obligations. The measure proposes that action shall be taken to seize certain revenues of the State of New South Wales. Where does the Commonwealth Government imagine that that revenue is going now?
Does it believe that Mr. Lang takes it for his own personal use? If it takes some of the revenue to meet State commitments to overseas bondholders will this Government reduce the present rate of unemployed relief, cut pensions, or reduce the basic wage? If those are the intentions of the Commonwealth Government, the Labour Government of New South Wales and the Labour movement itself will fight them to the last ditch.
The honorable member for West Sydney (Mr. Beasley) stated that each of us should indulge in a little retrospection before we talked about other people honouring their obligations. Governments have commitments to their own people as well as to overseas bondholders. To-day I asked several questions of the Prime Minister regarding the obligations that he has incurred as a result of promises that he and members of his party made prior to the 19th December last. Are those promises to be lightly waved aside, because only unfortunate Australians are concerned? This legislation has been introduced solely for the purpose of disciplining the State of New South Wales, and in an endeavour to force it to sacrifice the welfare of its own people in order to pay interest to overseas investors. When I asked the Prime Minister to indicate when the Government would announce its policy for the relief of the unemployed, he brushed my question lightly aside. But the State Government, which has been charged by ministerial members with not having met its obligations, has, following representations by honorable members on this side of the chamber, agreed to provide rations for the thirty unemployed men in No. 4 Camp, Canberra, an obligation that should have been shouldered by the Commonwealth Government. Are the representatives of New South Wales who are supporting this bill prepared to tell their electors that the interest must be paid to overseas bondholders before the unemployed are fed? Are those who talk of equality of sacrifice and the honouring of obligations prepared to tell the returned soldiers that they and their dependants should accept reductions of their pensions by as much as 80 per cent.; whilst the bondholders are to be repaid, not merely what they lent to Australia, but much more? I entered this Parliament only a few months ago, not because it offered an easy position for -me, but in the hope that I should be able to do something to assist the people who sent me here, and I shall not sit idly by whilst an anti-Labour Government in this Parliament attacks the people of New South Wales merely because a real Labour Government occupies the treasury bench in that State. I shall oppose every endeavour by the anti-Labour forces in this Parliament to compel the Government of New South Wales to lower the social conditions of the workers. As the honorable member for West Sydney said, we have no desire that civil war should occur in Australia, hut the men of New South Wales have not forgotten how to fight, and if the opponents of Labour in this Parliament are cowardly enough to” use their position to attack the unfortunate unemployed in that State, and their women and children, they will find, there, men who are prepared to fight in defence of the liberties and working conditions of the New South Wales people. I say frankly and definitely that somebody must stand up for the people of Australia and protect the conditions of the workers against the demands of overseas bondholders. We have a leader in New; South Wales who is prepared to do that, and many thousands of followers will stand solidly with him. This legislation will probably be enacted by force of numbers, but honorable members must not imagine that the Commonwealth will then need only to stop into the Treasury of New South Wales and take what it requires. If honorable members from other States attempt to ride roughshod over the people of New South Wales and break down the social and industrial conditions for which the workers fought- in years past, probably many of the marauders will not leave the State alive. I ask honorable members to examine the facts for themselves; if they do so they will find that the Government of New South Wales is not only doing more than any other government to provide food, shelter and clothing for its own unemployed, but is also giving relief to the unemployed from other States. The New
South Wales Government is not refusing to meet its obligations ; it is endeavouring to redeem every promise it made to the people who placed it in office. If honorable members opposite desire the State Government to pay the overseas interest bill, they should use their influence to induce the tory members of the Legislative Council to withdraw their opposition to the legislation by which Mr. Lang endeavoured to rectify the financial position of the State. If that legislation be enacted Mr. Lang will be prepared to balance his budget and meet the State’s overseas interest liabilities. But members supporting the Commonwealth Government want to compel the people of New South Wales to work longer hours, and suffer a reduction of the basic wage, and the loss of widows’ pensions and childhood endowment. Because the State Labour Government is not prepared to sacrifice its people the Commonwealth Government declares that Mr. Lang must be disciplined. He and his Ministers are under no delusions regarding the present social order. Despite the endeavours in all countries of the world to prop it up, it is failing rapidly. Mr. Lang, who is the most far-seeing statesman that Australia has ever produced, realizes that the existing evils can be cured only by a complete reconstruction of the social order. Of what avail are the professions by honorable members opposite of their sympathy with the unemployed, and their talk of restoring confidence? The confidence of whom? Of the unemployed in No. 4 camp, whom the Commonwealth Government has refused to feed? The confidence of the men and women in New South Wales, who are suffering because of the policy of the Federal Government? No; confidence is to be restored to men like the honorable member for Barton (Mr. Lane), who prior to entering this Parliament was a time-payment collector. After all, the people who are the real mediums of production in this country are those who count, and I say candidly that if this Parliament can do no more for the people than it has. done during the short period for which I have been a member of it, we should consider whether Parliament itself should not be closed down, and the cost of it saved. When I return to New South Wales at each weekend, I tell the electors what I am telling this committee, but other representatives of that State are not prepared to repeat in their electorates the speeches they deliver in this Parliament.
– Do not be silly.
– I exclude the honorable member; whether he speaks in this Parliament or in his electorate, nobody understands him. Many honorable members may sincerely believe in the existing social order, but I ask them not to be blind to the facts. They should consider the existing position calmly, not in the spirit of vindictiveness which prompted the introduction of this bill, and then ask themselves whether representatives of New South Wales are justified in voting for a measure which, if effect can be given to it, will not only smash the “Labour Government in that State, but also will bring ruin to every resident of it. I believe, however, that New South Wales will be powerful enough to resist the effort of the Commonwealth and the other States to enforce their will upon it. Wo, who are opposing this legislation, do not want serious trouble to develop; we ask honorable members to realize that the Commonwealth Government is attempting to justify its election promises by making a spectacular attack upon the Labour Government of New South Wales. That policy is not wise, and I ask honorable members to reject it.
.- So that readers of Hansard may understand my earlier remarks, I place on record the following letter relating to the cost of exchange : -
Canberra, 16th January, 1932.
Dr.W. Maloney, M.P., 51 3 Elizabeth-street, Melbourne.
Dear Sir, - With reference to your telephone inquiry of to-day relative to the cost of remitting money to New York, I would point out that taking the exchange rate as 3.40 dollars to the £1, it costs £143 in London to place £100 in New York.
This £143 must be remitted to London from Australia, and at a rate of approximately 25 per cent., would cost, say, £36.
It will be seen, therefore, that the cost of remitting £100 from Australia to New York is approximately £179 - £79 being in. respect of exchange.
I hope for the sake of the Australian people that the overseas mission of the Assistant-Treasurer (Mr. Bruce) will be successful, and also that the company of which he is a director will soon be able to pay dividends instead of fearing the result of selling its assets.
Mr.RIORDAN (Kennedy [9.43].- Clause 5 suggests that the Government is seeking to follow up its threat during the last election campaign that if the United Australia party were returned to power in this Parliament, the New South Wales Labour Government would be sent to the electors within a month. That prediction has not been verified. Honorable members opposite have failed to upset the verdict of the people of New South Wales given fifteen months ago, and likely to be repeated less than two years hence. Is the Commonwealth entitled to put a receiver into the Treasury of any State? Obviously, the purpose of this legislation is to enable the Commonwealth to collect, not from the State Government, but from the already harassed taxpayers. If a New South Wales taxpayer desires to appeal against his assessment, he must first lodge the amount of his tax with the commissioner. Under this legislation that will be an offence; he will be required to pay his tax to the Commonwealth Government, but to establish his right of appeal he must also pay to theState Government, and by the time the appeal has been disposed of, his money will have been spent by one of the governments. How will he fare then ? This bill applies not only to New South Wales but also to other States, and if any State cannot meet it’s interest obligations the Commonwealth Government will have power to put a receiver into the Treasury of that State. In addition, if the Commonwealth Government defaults, the States may take similar action against it, but, if such a position arose, the press of the Commonwealth would be unanimously opposed to this legislation. What is the position of many of the Australian Governments to-day? What is owed by the land-owner or the primary producer in deferred taxation as a result of his inability to pay? The amount outstanding is nearly £3,000,000. Would members of the United Australia party in this chamber be prepared to put receivers on the holdings of landowners who are unable to pay, and, if necessary, to foreclose on them? In New South Wales and Queensland, -because of the big drop ‘in the price of wool, thousands of primary producers are not in the position, to pay taxation. Only recently Ae Taxation Department put a receiver on a selection out west in an endeavour to collect the amount of tax outstanding, which was retrospective to 1919, and the assessment was made by the department in 1926, after the taxpayer had passed through five years of drought. The Prime Minister (Mr. Lyons) introduced this bill, and then ran away from it. The Attorney-General (Mr. Latham) then took charge and he ran away from it to Geneva. Before the bill is passed by this Parliament, the Assistant Treasurer (Mr. Bruce), who now has charge of it, will flee to safer quarters in London. What is the trouble in this country to-day?
– Mr. Lang.
– That is an obsession with some honorable members. Most of our trouble has been due to the cry of stinking fish on the part of the members of both Federal and State legislatures. The position of New South Wales to-day will soon be the position of the Commonwealth and. the other States. We have to meet this year an interest bill of £59,000,000. The more we throw people out of production the more revenue we lose. The year before last we expended about £8,000,000 for unemployed sustenance”. This year we have expended about £12,000,000, and next year we shall need to expend about £15,000,000. At the same time, we have to meet a big interest bill. The Commonwealth as well as the States is drifting on to the rocks. To-day it is the turn of the State of New South Wales. To-morrow it will be the turn of some other State.. This Government, instead of passing harassing legislation bristling with difficulties, would be better engaged in making provision for the employment of our people in industry. The high cost of transport is ruining the very people upon whom we rely for revenue to meet our interest payments. The attention of the previous Government was drawn to the exorbitant shipping charges on our primary products, particularly wool, and yet no action was taken to compel the shipping companies to give relief to the wool-growers. Australia has lived on the back of its sheep for many years, but cannot do so for ever. The mining industry is languishing. There is a clamour for gold, which is bringing £7 an oz. What effort’ is being made by the Government to encourage the mining industry, and to put this country on the road to progress? The Cabinet or the Loan Council meets the bankers, who stress the fact that the note issue must be curtailed, otherwise inflation will be brought about. They say, “ We must dismiss more men and take a few more shillings from the unemployed : to provide employment we must substitute a 48-hou.rs week for a 44-hours week”. The only effect of that would be to throw more people out of work. How is the money owing by a State to the Commonwealth to be collected? I remember the incident of the Warwick egg, which hatched the Federal Police Force. Is that police force capable of enforcing penalties under this legislation ? Is the police force of New South Wales likely to accept instructions from the Commonwealth? This Government says that it will put a receiver into Th: banks of New South Wales, but if I am any judge of Mr. Lang he will not put his money in the banks. He is a wise bird. We have, since the opening of this Parliament, wasted nearly a month in beating the air. The bill is not worth the paper on which it is printed, and is so much humbug and rubbish. In any case, I do not think that the High Court would give a decision in opposition to the voice of the people.
– I move -
That after the word “ that “, first occurring, sub-clause 3, the words “ the whole or part of “ be inserted.
This amendment is necessary to make it clear that under this’ clause there is power to ask for a declaration from the High Court that the whole or part of the amount in dispute is owing, and payable to the Commonwealth.
Question - That the amendmentbe agreed to - put. The committee divided. (Chairman - Mr. Bell.)
Majority . . 25
Question so resolved in the affirmative.
Amendment agreed to.
– I move -
That the word “ may “, sub-clause 4, be omitted with a view to insert in lieu thereof the word “shall”.
That is to provide that any application to the court for a declaration shall be made by motion, of which not less than three days’ notice shall be given to the Attorney-General of the State concerned.
– The notice provided for by this clause is extremely short. Whatever the rights or wrongs of this proposal may be, it is only fair that ample time should be given to the parties concerned. No doubt the Government has the numbers to pass the bill as drafted, but, in order to place on record our protest against this attempt to proceed with undue haste, we shall divide the committee. In its indecent haste to clutch the revenues of a defaulting State, the Government would not allow the party proceeded against a reasonable time to enter an appearance.
– The suggestion of the honorable member is entirely unfounded. The clause provides that three days’ notice shall be given, but that refers to the notice to the AttorneyGeneral of a State. This action is to be preceded by a motion, and there is no necessity for extending the period of notice. Three days is sufficiently long for the Attorney-General to enter an appearance, and, if further time is necessary, the court, at its discretion, may grant an extension. The honorable member’s suggestion that this is an attempt to restrict the time allowed for the preparation of a defence is a reflection on the court, not on the Government.
Amendment agreed to.
– I move -
That all the words from and including the words, “ and upon the hearing “, to and including the words “ in the certificate “ sub-clause 5 be omitted.
The purpose of this amendment is to strike out from the clause that portion which provides that the certificate of the Auditor-General shall be prima facie evidence that the amount set forth therein is due and payable. It is proposed to insert that provision in a later clause.
– This matter involves important constitutional issues, and it might be wise to require that motions shall be heard before the Full Bench of the High Court. Why is it stipulated that only three justices need be on the Bench ?
– The clause provides that the application shall be heard by the Full Court. That is the direction which Parliament proposes to lay down, but it insists that the court shall consist of not less than three justices. The actual number of justices to sit to hear the motion will be determined by the Chief Justice. The Government attaches such importance to this matter that, in addition to providing that a Full Court of not less than three justices shall hear the application, it allows the Chief Justice to exercise his discretion as to the availability of the judges, and I should say that, in a matter of such importance, every available justice would be required by the Chief Justice to sit and hear the application.
– I assume that the Government considers the possibility of the constitutionality of the proceedings being challenged, and wishes to provide that the court shall be constituted in such a way that an application, under this clause, will have the same consideration as is given by the court to other important constitutional issues.
– I agree with the honorable member. We must be perfectly certain that, in the event of any major constitutional issues being involved, the court will be fully constituted.
– What is the meaning of the term “Full Court”?
– It embraces justices of the court, but we are providing that, when hearing applications under this clause, it shall consist of not less than three justices.
Amendment agreed to.
Clause also verbally amended.
Question - That the clause, as amended, be agreed to - put. The committee divided. (Chairman - Mr. Bell.)
Majority . ….. 24
Question so resolved in the affirmative.
Clause, as amended, agreed to.
Clause 6 - (1.) Notwithstanding the provisions of the last preceding section, if, at any time after the Auditor-General has given to the Treasurer such a certificate as is specified in sub-section (1.) of that section, each House of the Parliament resolves, upon motion” moved in each House by or on behalf of a Minister, that the certificate be approved and adopted, and that by reason of urgency it is desirable that the provisions of sections seven to thirteen (inclusive) of this Part should apply immediately in relation to the State specified in the motion (being a State to which the certificate relates) and should have effect with respect to the specified revenue of that State, the provisions of those sections shall apply and have effect accordingly to the extent of the amount set forth in the certificate, or of any smaller amount stated in the resolution. (3.) Nothing contained in or done in pursuance of this section shall prevent or affect
.- I think the most convenient procedure will he to discuss the whole clause before dealing with the important amendments that are to be proposed. As originally drafted, the bill provided that the AttorneyGeneral “may” apply to the court for a declaration. The provision was not mandatory, and even if the Attorney-General did decide to apply, there was no time limit upon his action. One amendment which I shall move later enacts that the Attorney-General “ shall “ within a period of two months, apply to the court for a declaration that the amount claimed is due and owing to the Commonwealth by the State concerned. The other important amendment provides that, at any time after the resolution has been passed by both Houses of the Parliament, the Attorney-General for the State concerned may, entirely at his own discretion, and at. any time, make application to the court for a declaration that the amount is not due and owing by the State.
– But the Government proposes to insert new sub-clauses.
– I have already dealt with proposed new sub-clauses 3 and 4. Proposed new sub-clauses 5 and 6 provide that any application under either of the last two preceding sub-clauses shall be made by motion, of which not less than three days’ notice shall be given, and that the application shall be heard by a Full Court consisting of not less than three justices. Under sub-clause 6 an application is made to the court, and it gives a declaration that a certain sum is due and owing. Under sub-clause 5 it is provided that when the court makes that declaration, resolutions may be passed by both Houses of the Parliament; but under sub-clause 6, the resolutions will have preceded the declaration of the court. Sub-clauses 7 and 8 set out that after the declaration by the court, it will not be necessary to go through the whole of the procedure outlined in sub-clause 5, that having already been done. Subclause 9 merely provides that clauses 7 to 13 of the bill shall cease to apply if the court declares that no amount is due and owing by the State.
.- Although the amendments to clause 6 constitute an attempt to meet some of the criticism offered to the bill, they do not remove the fundamental objection that may be taken tothis clause. The criticism levelled against the bill has resulted in numerous amendments being submitted, and to that extent it has not been in vain. As this clause was originally drafted, it provided simply for a certificate by the Auditor-General, resolutions by both Houses of the Parliament, and action to attach the revenues of a State. It was pointed out by a number of speakers during the second-reading debate, beginning with myself, that under the bill no approach to . the court was provided for; but now it is made mandatory that the AttorneyGeneral shall make application to the court within two months. That, however, does not meet the fundamental objection that this Parliament is being asked to take judicial action, and declare, without recourse to the court, that certain money is due and payable by a State. It is one of the greatest outrages ever attempted upon the sovereign rights of a State, under any federation, for a Government to assume the right, merely by resolution of the Parliament, to declare on the certificate of the Auditor-General that a State owes a certain amount, and then to proceed to attach its revenue.
– There are no sovereign States.
– The honorable member has said that before; but that does not give truth to the remark.
– The States have sovereign rights.
– Of course, they have, and they have certain limitations within the Constitution. I warn the committee that the Government proposes to adopt a dangerous principle. I am not pleading merely for a recognition of the rights of the States; but such rights as they have ought to be respected. I believe we should have one sovereign power: but we should bring about the necessary change by the will of the people, who accepted the Constitution, and not by a resolution of this Parliament. If we do something which is either unconstitutional or suggestive of sharp practice, it will be resented by the people. I indicated, in discussing clause 5, that alternative methods of achieving its object were available to the Government. I made certain quotations from Sir Edward Mitchell’s book, What Every Australian Ought to Know, and I told the committee frankly that I had made excerpts from his observations. I understand that the Assistant Treasurer (Mr. Bruce) endeavoured to convey the impression that I had deliberately suppressed a passage that was of some significance. I have never been guilty of knowingly suppressing any part of a quotation relevant to a matter under discussion, and I resent the right honorable gentleman’s suggestion. I read excerpts that had been typed for my convenience, and I purposely eliminated what I regarded as redundant, because my time was limited. The passage I left out is contained in the latter part of this paragraph -
I can see no reason why that last specific provision should be cut down, so as to relieve an officer who happened to be the Premier or the Treasurer, or any other highly placed Minister of State, from suffering the ordinary consequences of contempt of court, if he were guilty of wilful disobedience of the injunction. It might suit some highly-placed Minister of State for ulterior purposes to pose as a martyr and go to gaol rather than obey something the court had ordered, but which he was politically pledged to oppose.
I understand that the right honorable gentleman ceased quoting fromSir Edward Mitchell’s book at that point; but Sir Edward Mitchell went on to say -
But I can hardly visualize all the members of a Ministry, especially the Attorney-General, flouting a mandatory order made against each of such Ministers under the said section 60.
The right honorable gentleman did not read that, and I assume that the point that he was making was that Sir Edward Mitchell showed that a State Premier might go to gaol and frustrate all efforts to recover the money due. Sir Edward Mitchell goes on to say -
Nor can I see how a Premier or other Minister of a State against whom such an injunction had been made under section CO and who wilfully did executive acts in disobedience of it, could continue to act as a responsible adviser of His Majesty’s representative in that State.
I eliminated the words referred to and many others in making extracts from lengthy statements, because of the limited time at my disposal; but I strongly resent the suggestion that I did so because I was afraid to quote them. As a member of this Parliament, I shall never be guilty of quoting an authority and deliberately leaving out any part of his remarks that does not agree with my views. If that is the best case that can be put up for this class of legislation, all I can say is that the Government is hard pressed for arguments. This is the urgency clause, which it is obvious the Government proposes to use. It violates every fundamental principle of justice between equals. There is no authority in the agreement for it. Is there one honorable member who believes that if the provisions of this bill had been put in the agreement, any State would have signed the agreement?
– It is a trick.
– Not one State Government would have signed the agreement had such a provision been embodied in it. This is legislation not to enforce an agreement, but to amend the agreement. It gives to the Commonwealth powers not given to the States, which are partners to the agreement. I am not offering any defence on behalf of any particular State, nor am I attempting to justify default. There are already ample powers to deal with defaulting States. Merely because we desire to reach one State we have no right to deprive the States of their undoubted rights. Such legislation only invites resentment and resistance. Should the Government persevere with this one-sided legislation it must accept the full responsibility for the consequences.
– This clause, as proposed to be amended, is an attempt to meet the criticism which has been levelled against the Government’s proposals. In dealing with it we have to ask ourselves what power in the Constitution enables us to pass a clause of this description. The financial agreement entered into by the Commonwealth and the States resulted in section 105a (3) of the Constitution which provides -
The Parliament may make laws for the carrying out by the parties thereto of any such agreement.
The making of those laws is directed to the carrying out of the agreement by the parties to it. The clause has to be read in connexion with whatever powers and authorities are contained in the Constitution. Therefore, whatever additional authority can be given, under section 51 (xxxix), dealing with “ matters incidental to the execution of any power vested by this Constitution in the Parliament,” can be called to our aid. We have to remember that section 105a (3) must be read in conjunction with the fundamental structure of the Constitution - the distribution of powers under three headings, namely; the legislature, the judiciary and the Executive. The Commonwealth is entitled to call to its aid whatever additional powers are contained under the heading of the general executive power. It is sometimes difficult to know how far the executive power goes, or the limits of the judicial power. The position is set out in Sidgwick’s Elements of Politics in the following terms : -
It is not always easy to draw a distinction between executive and judicial power. It is sometimes difficult to decide whether a particular act is judicial or ministerial. Sometimes the executive has to perform coercive work as a preliminary to or before, or apart from the decision arrived at by the judicial power - such as service of process and execution of warrants of arrest. Sometimes the coercive work of the executive consists in carrying out the decisions of the Judiciary, such as the imprisonment or execution of an offender and the enforcement of a warrant of distress. In these instances the coercive interference of the executive, either as essential preliminaries to or consequences of judicial decisions, frequently necessitates the exercise of judicial functions and thus renders the distinction between executive and judicial duties ambiguous, since executive officers, in so acting, have to interpret the law in the first instance, and the decisions after they are given.
Clause 5 makes it clear that so far as the determination of the liability of the _ States is concerned, it is a judicial power that is exercised, the power being vested in the High Court. I mention incidentally that this clause when amended will provide, as does the preceding one, that the Full Court shall consist of at least three justices. In section 23 of the Judiciary Act it is set out that on a question affecting the constitutional powers of the Commonwealth at least three justices must concur in the decision. My view is that that section of the Judiciary Act will have to be read in conjunction with this legislation. In. constitution al matters, it will be necessary to comply with the provisions of the Judiciary Act. Wo must bear in mind the distinction between the judicial power and the executive power. Clause 6 provides for the issue of a certificate by the Auditor-General, which shall be regarded as prima facie evidence before the Court. The effect is to make that certificate equivalent to an affidavit or other prima facie evidence of a debt. Both Houses of Parliament must then by resolutions approve and adopt the certificate. The resolutions are to contain the words : “ and that by reason of urgency it is desirable that the provisions of sections 7 to 13 inclusive of this part should apply.” That is an approving power, not the exercise of a judicial power. This clause amounts practically to an invitation by the Executive to the Houses of Parliament to join in an executive act. How do sections 7 to 13 apply? A proclamation is issued under clause 7, on the issue of which a debtor to the State is immediately affected under clause 9. The Commonwealth is then in the position to sue for, and recover, any moneys owing by any person to that State, and becoming payable during the currency of any proclamation, which, if received by or on behalf of the State would have formed part of the specified revenue of that State. We thus arrive at a position in which the Commonwealth is able to sue a debtor of the State in order to recover moneys owing to the State. That liability is imposed upon the debtor without the intervention of the judiciary up to that point. The question then arises as to what power can be conferred upon the Executive to issue any executive proceedings of any kind to enforce a debt before any judicial proceedings are taken. In the old English law there is a procedure somewhat analogous to the procedure in the preceding clause. In Halsbury’s The Laws of England it is stated that -
The writ of extent is the process by which the Crown can seize the body land, goods, and debts or other choses in action of its debtor by summary process for the purpose of obtaining satisfaction of debts due to it. . . . lt is stated further that -
Extents are divided into extents in chief and extents in aid. Extents in chief are extents issued on behalf of the Crown against its debtor (extents in chief iu the first degree), or against its debtor’s debtor, and so on (extents in chief in the second, third, &c, degrees ) .
In clause 9 the Commonwealth is issuing a process against a debtor’s debtor - the taxpayer owes the State a debt, and the State owes the Commonwealth a debt. The position is similar. Extents in chief are now comparatively rare; they were formerly the Crown’s favorite method of recovering its debts. Extents in aid were practically abolished by the Extents In Aid Act of 1817. The only species which it is worth while to discuss at length at the present day is the immediate extent in chief iri the first degree. In this procedure there is the affidavit of debt and danger, &c. A judge of the King’s Bench Division, on the production of the affidavit - and, if the debt be by bond, the bond - signs his fiat, and the other steps follow. Apparently the amendment is intended to overcome the complaint that judicial procedure has been omitted. The amendment has been proposed to make it obligatory, in the enforcement of the debt, under this clause, to adopt judicial procedure. In other words, the fundamental debt, upon which the execution is being taken, is to be a matter of judicial determination. To that extent, therefore, the judiciary is being brought in.
– But it is too long afterwards.
– It must be within two months. The point is that provision is made for a judicial determination. When, an application has been made to a court, it is open for a State to raise any issue, such as that the money is not owing, that the Executive has not complied with the provisions of the act, or that the act under which action is taken is not constitutional. But all those questions are capable of speedy determination.
– But action will already have been taken.
– That is so.
– The Government has no right to override the principles of law in order that it may fake speedy action.
– But provision is being made for compliance with the constitutional requirement that judicial action shall be taken to determine the questions at issue.
It is provided under clause 5 (6) that upon the making of a declaration by the High Court that any amount is due by the State to the Commonwealth, such declaration shall be a judgment of the High Court in favour of the Commonwealth against the State, and shall be enforceable as a judgment, and shall, in addition to any other remedies for enforcing such judgment by law provided, operate as a charge upon all the revenues of a State.
– That is sub-clause 6 of clause 5, and it does not re-appear in clause 6.
– That is so. I do not know the reason for this omission in the proposed amendment. No means is being provided in this clause, apparently, to follow up the declaration of the court. The intention of the bill as amended appears to be directed towards the preservation of the distinction between the Executive and the judiciary. It is not unusual in State acts to provide executive remedies to preserve rights. Probably this is the intention of this clause.
– The honorable member’s time has expired; but’ as no other honorable member has risen he may take the second period allowed him under the Standing Orders.
– The Leader of the Opposition (Mr. Scullin) complained- that there was no justification for departing from the ordinary legal procedure in order to enforce judgment, and he referred, in this connexion, to some observations on page 37 of Sir Edward Mitchell’s book, What Every Australian Ought to Enow, in which the writer refers to the remedies provided under the Judiciary Act for the enforcement of the payment of a debt. I wish to stress the following observations, which the Leader of the Opposition read: -
The Crown must obey the law and it would be impossible for the King’s representative to retain as his adviser, a Minister who counselled the doing of executive acts in disobedience of an injunction against the State and such Minister.
I should not like to see the Commonwealth attempt to exercise its power in such a way as to place the King’s representative in the State in such a position that he might feel compelled to use his authority to attempt to force his Ministers to comply with a judgment of the court in the cases contemplated by this measure. If a responsible Minister refused to obey the judgment of the court, it might be necessary for the King’s representative to dismiss him; but it would be most unfortunate if such a state of affairs were reached in Australia. All sorts of political complications might result from a dissolution and an election.
– Suppose that the people returned the same party to power?
– I submit that nothing should be done calculated to bring about such a result as I have indicated. If there is any constitutional means of avoiding the possibility of such a situation developing, it should be taken. I should like an assurance from the Government that it is quite satisfied that the steps proposed to be taken under this clause preliminary to the application to the court are within the power of the Commonwealth. The draftsman has certainly done his best to meet the criticism offered to the measure, and to make it comply with the provisions of the Constitution.
– This clause has been substantially amended by the Government in an endeavour to meet the points that have been brought out during the discussion of the bill, to safeguard as far as possible the right of the Commonwealth to recover money due to it from the States, and also to protect tho States against unfair or unwarranted action on the part of the Commonwealth. The Leader of the Opposition (Mr. Scullin) was not in the chamber when I quoted from Sir Edward Mitchell’s book a sentence which the right honor able member had omitted to quote. The right honorable gentleman has suggested that it is quite wrong to contemplate that a State Government might not obey an order of the court, and my quotation was intended to show that even Sir Edward Mitchell had contemplated the possibility of a State Premier making a martyr of himself by standing rigidly by his principles in defiance of the, judicial authority. The suggestion that the head of a State, or a State Minister, might decline to obey the law is, therefore, not so outrageous a thing as the right honorable the Leader of the Opposition would have the committee believe it to be.
I disagree with the right honorable member that the parties to the Financial Agreement would not have signed it if they had had such provisions as these before them. I have not the slightest hesitation in saying that they would not have attached the slightest significance to them. It did not occur to any of the representatives of the governments which made the Financial Agreement that the Commonwealth or a State would do other than stand honorably by its obligations. Any suggestion to the contrary would have been scouted, and, consequently, no one at that time contemplated or foresaw the need for such provisions as these.
It has been suggested that this clause in some way flouts the judiciary, and is an assumption of judicial power. Whatever may have been said when it was optional for the Commonwealth only to go to the court, there can be no possible ground for that objection now that a State can approach the court the very day after resolutions have been passed in this Parliament. The eventual judicial determination of the issue is thus provided for.
Another objection urged strongly by some honorable members is that the Commonwealth proposes to collect a debt before the court has decided that it is owing; that there is no precedent for such a course. That is utterly ridiculous. The bill only provides for something which is taking place every day in this country. Have honorable members forgotten the power that this Parliament gives with regard to the collection of taxation? The Government makes a demand upon the citizen for the payment of income tax. If the individual declines to pay, he has recourse to the courts, but that does not prevent the Government from taking action against him to recover the money which Parliament says is owing. That is an exact analogy of what is provided for in this bill. This Parliament declares by this bill that certain money is owing to the Commonwealth. Under its provisions officers authorized by this Parliament will demand payment of that money. If the debtor declares that he does not owe die money, and appeals to the law to protect his rights, this Parliament is not debarred from authorizing its officers to take the money from him before the court has given a decision upon the issue. That is exactly what will happen under this bill. The final determination, of course, will be with the judiciary. If the court finds that no money is owing to the Commonwealth, the Commonwealth Government has immediately to refund what it has taken. The Commonwealth, however, is entitled, as it is under ordinary taxation laws, first to recover the money from the State. If, eventually, the judiciary determines the issue, and finds that the money is not owing, the Commonwealth must refund it, just as it is obliged to do in the case of the ordinary taxpayer. This principle is necessary for sound government. It is followed in the United States of America. In the American Constitution there are the same divisions as we have iii our Constitution - the Executive, the legislature and the judiciary. The position in the United States of America is stronger against anything of this character than it is here, because embodied in the Constitution of that country is a provision that no money shall be taken except in due process of law. Yet again and again the courts of that country have re-affirmed the right of the State - and by the State I mean the Government, whether of the Federation or a State - to recover taxation by distraint, or other means, before a court has given any decision, and before, it can bo said that action is being taken in due process of law. The reason is that administration becomes impossible if the recovery of moneys by a government can be delayed until there has been a judicial determination of the amount that is due and owing. It has been suggested that this clause disregards a principle. It does nothing of the sort; it merely give3 the Commonwealth power to recover, with expedition, moneys due to it. I refuse to accept the argument that was advanced by the Leader of the Opposition (Mr. Scullin) as to the character of this legislation. It is for this Parliament to determine whether it is necessary for. the Commonwealth to have the power to take definite action against any State that defaults. If that is determined by Parliament there is no flouting of the judiciary nor any disregard of any established principle.
.- In a* plausible way the right honorable the Assistant Treasurer (Mr. Bruce) airily brushed aside, and failed to face, the important issue before us. The right honorable gentleman referred to the powers possessed by the Commonwealth Government in connexion with a taxpayer who disputed his assessment. He declared that as it could compel him to pay, pending a judicial determination, ipso facto, similar action could be taken with a State. Does the right honorable gentleman propose to deal with a sovereign State as he would with a subject of the Crown ? That is the fundamental difference. I have already pointed out that there is no analogy. The Commonwealth Government possesses extraordinary powers with regard to taxation, immigration, and customs and excise, and it has to take drastic measures to make the application of those laws practical. But that is a transaction between government and subject. I submit that the Commonwealth Government does not possess power under section 501a or 51 (xxxix), or any other section of the Constitution, to carry out this enactment. Seven sovereign governments have entered into an agreement, and the Commonwealth Government contemplates proceeding against one party, at the same time taking to itself power to take similar action against any of the other six. Where in any agreement between individuals or governments can be found the right to enforce that agreement in the manner that is here proposed? The right honorable gentleman said, “ Of course the State Governments would have signed the agreement if such a provision had been incorporated in it originally, because not one of them contemplated default.” That was no answer to my question. Supposing that the Commonwealth had had the foresight to put such a provision in the agreement, does any honorable member believe that the States would have accepted a contract that gave to only one party the power to enforce this provision, denying to any State, an equal partner to the agreement, the power to pass similar legislation? Is it feasible that the States would agree to a certificate being issued by the Commonwealth Auditor-General as to the amount that was owing by a State, when similar action could not be taken by a State Auditor-General with regard to a Commonwealth obligation? Yet the right honorable gentleman has the hardihood to tell this Parliament that the States would willingly have agreed to such a proposal. The assumption is that the Federal Parliament dominates, and that the State Parliaments are the subjects of the Federal Parliament. The whole thing is too ridiculous for words. Actually we are dealing with partners to an agreement who possess equal rights with the Commonwealth. I watched the proceedings of the Premiers Conference, and I saw the difficulties encountered by the right honorable gentleman, who presided, in dealing with the States, which were exacting to the last degree. I know how jealously the States guard their rights. We have a Constitution, which we must uphold. This provision will apply to other States as well as to New South Wales. It undermines the whole federal system. We hear it said that hard cases make bad laws. Here is an example of a bad case making hard laws.
– It is not my intention to add to what the Assistant Treasurer (Mr. Bruce) has said in reply to the arguments advanced by the right honorable the Leader of the Opposition (Mr. Scullin). On a previous occasion the Assistant Treasurer made it perfectly clear-
– The Prime Minister did not hear what he said.
– I did, and I also heard the mock heroics indulged in by the right honorable the Leader of the Opposition in referring to the position of the States under the Financial Agreement. As a representative at the conference at which the Financial Agreement was drafted, I can support the declaration of the Assistant Treasurer that the States would have embodied in that agreement the principle contained in this measure, because of the protection which it affords the States. My signature is attached to that agreement. It is true that the State representatives did everything in their power to protect State interests, and to ensure that they should not be placed at a disadvantage by the withdrawal of the per capita payment. Each State representative endeavoured to obtain the best for his State. I was opposed to the abolition of the per capita payment because that system was considered of advantage to the State which I represented. As a member of the conference I say, emphatically, that all the State representatives, including Mr. Lang, would have agreed to the principles embodied in this measure being included in the agreement, principally because of the action of the Commonwealth in assuming responsibility for the States’ debts.
– Would the Prime Minister have agreed at that time to Tasmania’s rights being placed under the sole control of the Commonwealth?
– I say, emphatically, that as the Commonwealth was standing behind the States in the matter of giving a guarantee to the bondholders, and obtaining better terms and improving the credit overseas, the representatives of the States, would not, as the Assistant Treasurer has stated, have objected to what the Leader of the Opposition says is an interference with the rights of the States. At that time Mr. Lang was prepared to meet all his commitments. Had it been anticipated that the Commonwealth would have to make payments on behalf of a State the States would have given the Commonwealth all the power it required, seeing that it was taking over their responsibilities in the matter of debts. Unlike the right honorable the Leader of the Opposition, I speak with experience. The arguments advanced by the Leader o£ the Opposition to the effect that in matters of this kind there is a distinction between a . State and an individual surprises me. Does he suggest that an individual should be subject to Commonwealth law, and that a State should not? Does he contend that it is within the power of the Commonwealth to collect income taxation, or any other form of revenue from an individual, and that it should not have the power to collect moneys due to the Commonwealth by a State ? If the Commonwealth has power to collect from a resident of the Commonwealth, it should also have the power to collect what is due to it hy a State. These arguments have been advanced in order to prevent the recovery of money due by a defaulting and dishonest State Government and, apparently, to make it easy for such a State Government to continue to default.
– It would appear from the arguments advanced by the Assistant Treasurer (Mr. Bruce) and the Prime Minister (Mr. Lyons) that the clause as originally drafted was defective. The Government now considers that it is necessary to obtain a judicial decision in order that the law may be effective. In the meantime it is proposed to employ the powers which the bill provides for the issue of a certificate by the Auditor-General supported by a resolution of both Houses before proceeding to confiscate the revenue of a State, regardless of the’ difficulties that may be created. It is now clear that a judicial decision is necessary in the final analysis. Notwithstanding what may he said to the contrary, I submit that no State representative would allow the Commonwealth to go to the bank with which his State did business, and confiscate the State’s funds in that institution to satisfy a debt due by it to the Commonwealth. The Prime Minister, when Premier of Tasmania, would not have supported an agreement giving the Commonwealth such extensive powers. There is a distinct difference between an individual and a State. Why should the rights of a State be protected hy its Constitution if they are similar to those of an individual? An individual’s, obligations are confined to ‘him only, but . the obligations of a
State concern the well-being of all the people resident in that State. The honorable member for Darling Downs (Sir Littleton. Groom) contends that the Crown must obey the law; but we have to consider whether the Crown is able to obey the law. That is an aspect of the matter that apparently has been overlooked during this discussion. We can pass a law, but its practical application should be considered, particularly when it involves the confiscation of .the funds of a State. When the Financial Agreement was entered into the conditions were entirely different from those which obtain to-day. An individual or a State has to decide the course intended to be adopted according to the circumstances at the time. The course adopted by the New South Wales Government, under the present circumstances, will be supported by a majority of the State electors. The easiest way in which to arouse the interest and attention of the people is to pass legislation which detrimentally affects their interests. At the moment New South Wales is in such a position that she cannot comply with a law such as this Government proposes to pass.
.- As I stated during the debate on the second reading, it was my intention to oppose this clause on principle. We have heard a good deal concerning the constitutional powers of this Parliament and the Financial Agreement entered into between the Commonwealth and the States. We have to remember that conditions have altered since that agreement was adopted. Had the States retained the per capita payment, they would have been in a better position than they are to-day, but more than one of the Premiers sold their States and accepted the Financial Agreement, because it made finance easier for the first few years. Every action that is possible within the law should be taken to make the Government of New South Wales meet its. commitments. I shall’ endorse whatever action the Government can constitutionally take to compel New South “Wales, .or any other State, to meet its liabilities. I do not know whether the Commonwealth can seize the chattels of an individual, to satisfy a debt due to it. The ‘Commissioner of Taxation must sue for a debt that is due. We are adopting by this legislation a procedure that may prove exceedingly dangerous in future. These powers to deal with a government deliberately defaulting and refusing to make any effort to meet its obligations may be used when the default is not wilful. The present circumstances in New South Wales are extreme, and I would endorse almost any action in accordance with ordinary legal procedure to force the State Government to pay its debts. But I do not approve as a general principle the setting aside of the usual processes of law and the empowering of the Commonwealth to seize the revenues of a State without prior recourse to the High Court. This bill contains an impertinent provision that if in the subsequent proceedings before the court a decision is given that the Commonwealth is not entitled to the money it has seized it shall merely hand the amount back to’ the State without compensation. Apparently, the court will not have power to award even costs against the Commonwealth. I desire to uphold State rights. I realize that in the hear future several of the States may experience difficulty in meeting their obligations. The powers which this clause purports to give to the Commonwealth are not restricted to wilful default on the part of a State. I hope that the Government will not try to force through the chamber legislation of this dangerous character. The present Prime Minister is trustworthy; but I am not prepared to give to any government power to demand of States that are in. financial difficulties, “Hand over your railways “.
– We certainly shall not ask for them.
– The State railways are a liability only because of the interest and sinking fund charges. If the Commonwealth could take over the railways of New South Wales without those charges, it would soon recover the interest which Mr. Lang has refused to pay. Time after time this Parliament has arrogantly entered fields which are closed to it by the Constitution. The Commonwealth Parliament was never intended to create an Arbitration Court to deal with almost every industry throughout Australia. The sooner we withdraw within the limits of the Constitution, the better. This bill could be used to bring about unification. Frequently, Ministers when introducing legislation, think only of how they intend to administer it. For instance, the Customs Act gives power to impose embargoes under certain conditions. Parliament when conferring that power could not define all the articles to which the embargo might be applied - including, say, indecent literature and pictures, spurious coins, and drugs - but subsequent governments took advantage of that general provision to impose prohibitions against all sorts of imports. That is an abuse which Parliament never intended.
The CHAIRMAN (Mr. Bell).Order ! I ask the honorable member to confine his remarks to the clause.
– If we give to the Commonwealth the power which this clause proposes, it may be abused as other powers have been abused in the past. The clause contains a vicious principle, and I cannot vote for it.
.- On other occasions in this chamber, and during the period that the Commonwealth Parliament sat in Melbourne, we have had exhibitions of justice from different governments, but particularly the Bruce-Page Government, and more recently the Lyons-Latham-Bruce Government, even common sense being sidetracked in order to attack this or that section of the community. When the Bruce-Page Government was not attacking a section of the working class it was attacking a primary or secondary industry. The latest tariff schedule brought down by the Minister for Trade and Customs (Mr. Gullett) affords a further illustration of this tendency. Meanwhile the present Government is carrying on a war of hate against a certain gentleman in New South Wales. Apparently it has become obsessed by the cranky and futile schemes of this man, and is quite prepared to sacrifice that or any other State in its determination to “ get “ him. It can see nothing else but him. It cannot see the federation, or the constituent parts of the federation. It cannot even see the Financial Agreement, which was solemnly entered into by seven different parties. That agreement laid down clearly and definitely the different powers that were to be invoked under it. Each of the parties to it possesses certain rights, and no one party has rights greater than those of any other party. This bill, however, not only assumes rights, but takes what it has not the right to enforce or to attempt to bring into operation.
The Prime Minister (Mr. Lyons) worked himself into a great heat in reprimanding the Leader of the Opposition (M.r. Scullin) for indulging in what he termed “ mock heroics “. I refuse to accept the declaration that he made to-night, that as the Premier of a State he would accept provisions such as those that are embodied in this bill.
– I would not hesitate for a moment to do so.
– Knowing the hon- iorable gentleman, and the methods which he adopted as Premier of Tasmania to rid that State of the problems that confronted it - and they were many - I can only conclude that he would probably be the most conservative party to such an agreement. The honorable gentleman has been caught up in a whirlpool of political rancour and hatred. He does not see even his own State. Heaven forbid that he should ever lose sight of it. It has remained for the Parliament of that State to draw his attention to its continued existence, and its ardent desire to remain a party to the Financial Agreement into ‘ which it originally entered, not to one which usurps the rights and privileges of the various parties to it. Responsible men in the Parliament of the State have made strong speeches in condemnation of clauses 5 and 6, which are now so hotly defended by the honorable gentleman. So far as I can learn, not one voice was raised in the Tasmanian Parliament in praise of the steps that are now being taken by the Commonwealth Government. This is not the first blunder’ that that Government has made, and I do not suppose that it will be the last. The Premier of Tasmania is not obsessed by the futile and foolish tactics of one party to the agreement, nor blinded into doing what may or may not have the effect of compelling the Premier of New South “Wales to recognize his responsibilities and obligations. He realizes, as do we who sit on this side of the House, that the legislation which we are now considering will have more far-reaching effects than the “ getting “ of somebody who for the time being has gone mad.
– Yet that very Premier, as a member of the Loan Council, refused to find a single shilling to help the Premier of New South Wales.
– On the motion of the Premier of Tasmania, the State from which the Prime Minister comes, but which he has forgotten very quickly since taking up his residence in Canberra, the Tasmanian Parliament to-day adopted a motion “ viewing with grave concern the far-reaching and dangerous nature of the Financial Agreement Enforcement Bill “. This gentleman is a conservative Premier; he is almost as conservative as the Prime Minister. It was agreed “ that the bill would place the State in a most lamentable position if, at any time, through causes over which the Parliament had no control, it was unable to meet it3 obligations “. I venture to assert that if the Prime Minister were to take this bill to-morrow to a meeting of the Loan Council, that body would not agree to it. I am fortified’ in that opinion by the observations that have been made by the Premiers of Western Australia, Queensland, and, last but not least, Tasmania. Thus at least three of the parties to .the agreement condemn the extraordinary methods that are being adopted by this Government to bring about an enlargement of the powers of one of the parties to it, an enlargement that was never contemplated when the agreement was consummated and never agreed to by the parties to it. I am perfectly certain that the honorable gentleman would have a majority of the Loan Council against him if he submitted the measure to them.
– It happens to be our responsibility, not that of the Loan Council.
– Heaven forbid that I should uphold State rights, that I should in any way attack the federation or federal powers, that by act or speech I should prevent the consummation of unification in Australia. In opposing this legislation, I have in view the protection, not of State rights, but of federation. The Government has but to intro- duce another bill as drastic as this and federation will indeed have been dealt a great blow by the Federal Parliament. We cannot afford to be parties to legislation of this character. The Prime Minister has made certain statements as to what he would do and would not do, but I challenge him to withdraw the bill temporarily, and to submit it to the Loan Council for its approval. As a party to the Financial Agreement, the Loan Council has that right. We are accepting the responsibility for the payment of the debt of a defaulting State, and the rest of the States have exactly the same responsibility. As parties to the agreement, they must stand side by side with the Commonwealth so long as the Commonwealth. Government proceeds along sane and safe lines. In this instance, the Commonwealth Government is adopting a high and mighty attitude. It is acting as if it were the only party to the agreement. In the circumstances,I cannot see my way clear to support the bill.
Sitting suspended from 11.43 p.m. to 12.15 a.m. (Friday).
Friday4, March 1932.
Mr.RIORDAN (Kennedy) [12.15 a.m.]. - After the passing of this bill one can visualize the Prime Minister and the Assistant Prime Minister, headed by the Assistant Minister for Defence, marching on Sydney to collect the revenue of New South Wales. The Prime Minister stated to-night that had this clause been in the Financial Agreement, when it was put before the Premiers Conference, he would have accepted it, as would the Premier of New South Wales. If I remember rightly, Mr. Lang, who represented New South Wales at that conference, opposed the formation of a loan council, and actually refused to sign the agreement. He said that he was not prepared to place the finances of New South Wales in the incompetent hands of the then Treasurer, the right honorable member for Cowper (Dr. Earle Page). At that time there was a Labour Government in power in Queensland, and had this clause been in the agreement the Premier of Queensland would not have signed it. When this clause becomes operative, the Financial Agreement will become a very one-sided instrument. When the honorable member for Darling (Mr. Blakeley) suggested that consideration of the bill be postponed for a few days so that a meeting of Premiers might be called to consider it, the Prime Minister interjected that the Government might as well refer the bill to a city council for an opinion. He added that he was accepting responsibility in the matter. I remind him that legislation of this kind is not so much his concern as that of the States.
This bill was introduced more than a week ago, and now the Government comes down with a sheaf of amendments almost as large as the bill itself. It is stated that the amendments are to be moved by the Prime Minister. Which, I ask, is the Prime Minister, the honorable member for Wilmot (Mr. Lyons), or the right honorable member for Flinders (Mr. Bruce) ? The bill should be referred to the representatives of the States for consideration before this Parliament passes it. There is likely to be a change of government in Queensland within the next few months, and who is to say that, under this measure, the same treatment will not be meted out to the new Queensland Government as is now intended for the Government of New South Wales.
– I move -
That after the word “and” (third occurring), sub-clause 1, the following words be inserted : - “ in order to protect the interests of the Commonwealth until the question of the liability of the State has been determined by the High Court pursuant to an application under this section “.
That provision is merely declaratory of the object of this clause, which is to protect the interests of the Commonwealth during the period the matter is under consideration by the court.
Amendment agreed to.
Amendment (by Mr. Bruce) agreed to-
That sub-clause 3 be omitted with a view to insert in lieu thereof the following subclauses : - “(3.) As soon as practicable after such a resolution has been passed by both Houses of the Parliament, and in any event within two months thereafter, the Attorney-General shall apply to the High Court for a declaration that the amount, stated in the resolution or any part thereof, is due and payable and unpaid by the State to the Commonwealth. (4.) At any time after such a resolution has been passed by both Houses of the Parliament, the Attorney-General of the State may apply to the High Court for a declaration that no part of the amount stated in the resolution or a smaller amount than that stated in the resolution is due and payable and unpaid by the State to the Commonwealth. (5.) Any application under either of the last two preceding sub-sections shall be made by motion, of which not less than three days’ notice shall be given to the Attorney-General of the State concerned, or to the AttorneyGeneral, as the case may be. (6.) The application shall be heard by a Full Court consisting of not less than three justices. (7.) The application in relation to a State of the provisions of sections seven to thirteen (inclusive) of this Part shall not cease or be suspended upon an application to the High Court, or during the pendency of any proceedings thereon in thesaid court. (8.) On the making of a declaration by the High Court that any amount, or part thereof, stated in the resolution is due and payable and unpaid by the State to the Commonwealth,
the declaration -
shall be a judgment of the High Court in favour of the Commonwealth against the State;
shall be enforceable as a judgment; and
shall, in addition to any other remedies for enforcing such judgment by law provided, operate as a charge upon all the revenues of the State; and
the provisions of sections seven to thirteen (inclusive) shall continue to apply in relation to that State -
notwithstanding that a reso lution of each House of the Parliament has not been passed in pursuance of sub-section 7 of the last preceding section ; and
notwithstanding that there may be pending any action, suit, proceeding or matter in which there is in issue a question as to the amount or amounts due and payable and unpaid by the State to the Commonwealth under or by virtue of the Financial Agreements. (9. ) In the event of the High Court making a declaration that no part of the amount stated in the resolution is due and payable and unpaid by the State to the Commonwealth, the provisions of sections seven to thirteen (inclusive) of this Part shall cease to apply in relation to the State”.
Question - That clause 6, as amended, be agreed to - put. The committee divided. (Chairman - Mr. Bell.)
Majority . . . . 24
Question so resolved in the affirmative.
Clause, as amended, agreed to.
Clauses 7 and 8 agreed to.
Clause 9 verbally amended, and, as amended, agreed to.
Clause 10 agreed to.
Clauses 11 (Unlawful payments not to operate as discharge of liability) and 12 (Payments in contravention of Act).
– The fact that the Opposition has not called for divisions on a number of clauses does not indicate its approval of those provisions. Clause 11 embodies some of the principles contained in preceding and subsequent clauses. We have discussed those principles at considerable length, both on the second reading of the measure and in committee, and I propose to call for divisions on clauses 11 and 12 as a protest against a number of clauses the principles of which the Opposition cannot endorse.
Question- That clauses 11 and 12 be agreed to - put. The committee divided. (Chairman - Mr. Bell.)
Majority . . . . 24
Question so resolved in the affirmative.
Clauses agreed to.
Clause 13 (Application of act to further certificates of the AuditorGeneral).
. -I move -
That, at the end of the clause, the following proviso he inserted: - “ Provided that, if at any time after any such further certificate is given, the High Court makes a further declaration in pursuance of sub-section (3.) of section six of this act, this act shall have effect as if the amount specified in the further declaration of the High Court had been set forth in the prior declaration of the Court in addition to the amount stated in that prior declaration.”.
The object of the amendment is merely to provide that any further claims may be included in one amount.
Amendment agreed to.
Clause also consequentially amended.
Question - That the clause, as amended, be agreed to - put. The committee divided. (Chairman - Mr. Bell.)
Majority . . . . 23
Question so resolved in the affirmative.
Clause, as amended, agreed to.
Clause 14 -
Without prejudice to the foregoing provisions of this act, if at any time during the currency of any proclamation relating to any State, any moneys come into the possession or control of the Commonwealth in pursuanceor by virtue of the Financial Agreements, or of any decision of the Loan Council, for and on behalf of that State, or for the purpose of payment to that State, or to which that State has any claim under those agreements, those moneys shall be charged with the due performance by that State of its obligations under those agreements, and may be applied in discharge of any liabilities of that State which have accrued under those agreements :
Provided that if the Auditor-General certifies that tho obligations of the State under those agreements have been satisfied, or, if in any action, suit or other proceedings to which the Commonwealth is a party or in which it has intervened, the High Court determines that no amount was due and payable and unpaid by the State to the Commonwealth under or in pursuance of those agreements, the moneys which have so come into the possession or control of the Commonwealth shall be dealt willi in the same manner as is specified in section eighteen of this act.
.This clause should be omitted, for many reasons. The honorable member for Martin (Mr. Holman) considered that its provisions were invalid, and the same opinion lias been expressed to me by other legal practitioners. The clause cuts right across the Loan Council procedure, and is unnecessary; in fact its inclusion in the bill would make the legislation of this Parliament look rather ridiculous. The Financial Agreement provides that the Loan Council may raise moneys and allot them among the various States. By a unanimous agreement, the moneys may be allotted as the Loan Council may determine, but in the absence of unanimity they must be ‘allotted according to a certain formula. It would be extraordinary if the Loan Council, after allotting certain moneys, issuing treasury-bills in respect thereto, and requesting the Commonwealth Bank to cash the bills, then seized the money in satisfaction of a debt incurred* through the default of a State. A much more simple procedure would be to make no allotment to the State in default. That was done by the Loan Council during the regime of my Government. I do not know whether an allotment was refused in respect of money for public works, but moneys for the purpose of meeting revenue deficits were certainly withheld from New South Wales. I submit that if moneys may be withheld after allotment there is no need to make an allotment. I cannot imagine any loan moneys being allotted to a State which has declared that it does not intend to pay its interest bill. A State which would make that declaration would more likely also refuse to repay any principal due by it.
– Such a State would take anything that it could get.
– No application was made for the allotment of loan moneys to New South Wales while that State was in default last year.
– In that event these provisions would be inoperative.
– Their inclusion in the bill might lead to an attack on the validity of the measure, and so jeopardize all its provisions.
– Unless there is unanimous agreement by the Loan Council any moneys raised are automatically allotted to the States.
– I repeat that no money was allotted to New South Wales by the Loan Council while it was in default last year.
– But the New South Wales representatives did not attend the Loan Council meetings during that period.
– That is so, but they had the right to do so at any time. I suggest that although the Loan Council must sanction the issue of Commonwealth treasury-bills, for the purpose of giving effect to its decisions, it rests finally with the Commonwealth Government whether the bills will be actually issued or not.
– Did -not the Scullin Government withhold other moneys that were due to New South Wales while the State wa3 in default?
– Yes; and that was a proper procedure. It seems to me to be ridiculous for the Loan Council to allot moneys, for the Commonwealth Treasury to issue bills, and for the Commonwealth Bank to cash the bills, only for the Commonwealth Government to seize the cash in the event of default by a State. Why go to all that trouble? I shall oppose this clause because I think it is unnecessary.
– This clause has been inserted for the purpose of imposing additional hardships on New South Wales. If the Loan Council authorized the issue of treasury-bills and the Commonwealth Treasury subsequently issued them, the part of the issue to which New South Wales was entitled would be backed by the productive capacity and other resources of the State. At the last meeting of the Loan Council, Tasmania and Western Australia insisted upon having their share, despite the fact that they have not lived up to the terms of the socalled Premiers plan by balancing their budgets. As honorable members know, those two States have been receiving subsidies because of the alleged difficulties that they have suffered under federation. All this has been to the detriment of New South Wales, and it is beyond my comprehension that some of those who represent the Mother State should approve of a law which is designed to penalize New South Wales. If the Loan Council provides certain moneys for defined public works, those moneys should be expended, so that the works may be completed and made revenue-producing. The proposal of the Commonwealth Government will throw thousands more into unemployment, and those who represent the State of New South Wales should resist it. There should be no restriction of the works programme that was approved by the last meeting of the Loan Council.
– Irrespective of the cost ‘i
– I know what is in the honorable member’s mind. He should cultivate a broader outlook. I have repeatedy stated that the major portion of our costs is due to the enormous rate of interest that is charged on borrowed money. The annual wages bill of the New South Wales railways is £9,000,000, while interest on that public utility amounts to .£7,000,000! Wages were reduced and employees were rationed, but the interest rate was left untouched. The honorable member for Macquarie (Mr. John Lawson) is the only honorable member opposite who has been frank in this matter of costs. In his maiden speech in this chamber he admitted that those engaged in industry have already made adequate sacrifices. I remind the honorable member for Denison (Mr. Hutchin) that special authorities have been set up to determine rates of wages. This Government declared that it would not interfere with that procedure. I remind honorable members opposite that the Bruce-Page Government was defeated on that issue in 1929. Honorable members who represent New South Wales have a duty to perform to that State. They must give its Government an opportunity to complete the public works that it has in hand, otherwise many more will be thrown out of employment.
– It is absolutely necessary that the Commonwealth Government should have power to deal with moneys that have been allocated to States by the Loan Council. In normal circumstances the Loan Council meets prior to the commencement of the financial year, to determine, among other things, how much money can reasonably be raised to meet the programmes submitted by the Commonwealth and the States, and a .unanimous decision is come to concerning tho allocation of the amount available. The figure for the present year was approximately £9.000,000. The money was raised by issuing treasury-bills, which were discounted by the Commonwealth Bank, and the different States received instalments of their allotted proportions. Upon the dissolution of Parliament in November last, an arrangement was made with the Commonwealth Bank to continue the payments until January, when a new government would be in power. Tho bank then agreed to finance a loan programme on the basis of that formulated for the first eight months of the year, and to find the necessary amount, some £2,100,000. That money had already been allotted to the States by a unanimous decision of the Loan Council, which could not be reversed other than by a further unanimous decision. Obviously, it was impossible to obtain the consent of New South Wales to such a reversal.
The- Leader of the Opposition asked whether it was necessary. *f or the Commonwealth Government to issue treasurybills, intimating that the Commonwealth need not borrow the money. The Financial Agreement provides that if the amount desired can be borrowed within the terms that the Loan Council lays down, the Commonwealth Government shall make reasonable efforts to raise it. There was no question of the Commonwealth being under no obligation to obtain the money. Further, New South Wales had to receive its due proportion of whatever amount was raised, in accordance with the original allocation. It is obviously a stupid position which provides that a State government that had declined to pay its interest commitments, land probably will not repay the capital, must receive its proportion of any further moneys raised. This clause gives the Commonwealth Government power to retain any such moneys that come into its possession on behalf of a defaulting State.
The right honorable gentleman also raised the point that the State of New South Wales would not claim this money. Appearances go to prove that that State would not hesitate to claim the money, for in its counter-claim to the writ that has been issued by the Commonwealth Government it makes a claim for the whole of its instalments for the balance of the year, on the ground that they are moneys that the Commonwealth is under an obligation to pay over to the State.
– Does the right honorable gentleman believe that if this legislation were passed and enforced the present Premier of New South Wales, knowing that the Commonwealth would take them, would accept liability for those treasury-bills ?
– He would try to avoid that, if possible. It is necessary to determine whether the moneys were raised on behalf of the Government of New South Wales in accordance with the determination of the Loan Council; if they were, that government is liable in respect of them.
– If the Government of New South Wales does not accept liability this provision takes nothing from it. The Commonwealth would merely be raising a loan for itself.
– There is more than that in it. It is necessary to have a provision of this sort in the bill so that the Commonwealth will not find itself in the position of having to make these payments to the Government of a State which is actually in default.
– As a representative of New South Wales I do not desire to give a silent vote on this clause. Such a provision is absolutely necessary. If when the Financial Agreement was drafted the possibility of a State refusing to pay its interest liability had been considered, a safeguard of this kind would have been inserted in the agreement itself. There should be some provision in the Agreement, or in the legislation relating to it, to give the Commonwealth power to retain moneys raised by it for a State which has defaulted. Clause 3, paragraph h of the Agreement, reads -
If the Loan Council decides that the total amount of the Loan programme for the year cannot be borrowed, at reasonable rates and conditions, it shall decide the amount to be borrowed for the year, and may by unanimous decision allocate such amount between the Commonwealth and the States.
Honorable members will note that the allocation must be by unanimous decision. A recalcitrant State, such as New South Wales is at the present time, could prevent a unanimous decision, whereupon paragraph i would operate -
If the members of the Loan Council fail to arrive at a unanimous decision under the last preceding sub-clause, allocating the amount to be borrowed for any year, the amount to be borrowed for that year shall be allocated as follows : -
The Commonwealth shall, if it so desires, be entitled to have one fifth or any less proportion of such amount allocated to the Commonwealth : and
Each State shall be entitled to have allocated to it a sum (being a portion of the balance of such amount) bearing to the balance of such amount the same proportion which the net loan expenditure of that State in the preceding five years bears to the net loan expenditure of all the States during the same period.
Under that provision New South Wales would be entitled automatically to a certain proportion of the money available. Obviously, but for the Financial Agreement, a dishonest State which would not pay interest would be unable to borrow from outside sources. In those circumstances, it is outrageous that money raised by the Commonwealth because of its reputation for good faith and integrity should be automatically handed over to a defaulting State. Although I am a representative of New South Wales, I have no hesitation in supporting the clause.
– The North Shore bridge is approaching completion. If the New South Wales Government asked the Loan Council to raise further money to enable the structure to be completed and become revenue producing, would the right hon- orable member advocate that the Commonwealth should intercept that money?
– Specific works are not mentioned when moneys are allocated to a State. It is the responsibility of a State Government to conduct its affairs in such a way as not to impair its ability to borrow for the completion of works which have been commenced. If New South Wales, because of its default, cannot borrow, it cannot justly complain that the scandalous Commonwealth is throwing men out of work on the North Shore bridge. The State has by its own act robbed those men of their employment.
– I move-
That the words “ any moneys come into the possession or control of the Commonwealth in pursuance or by virtue of the Financial Agreements, or of any decision of the Loan Council, for and on behalf of that State, or for the purpose of payment to that State, or to which that State has any claim under those agreements,” be omitted with a view to inserting in lieu thereof the following words: - “the Commonwealth has, whether in pursuance or by virtue of the Financial Agreements, or of any decision of the Loan Council, or otherwise, possession or control of any moneys - (a.) for and on behalf of that State;
for the purpose of payment to that State; or
to which that State has any claim whether under those Agreements or otherwise,”.
The object of the amendment is to provide that not only loan moneys raised under the Financial Agreement, but any other moneys belonging to a defaulting State Government that come into the possession of the Commonwealth, may be impounded by it and applied to the payment of the State’s liabilities.
– Some days ago I referred to the Commonwealth subsidy to the State Governments for preventing the spread of the tick pest. This is a matter of vital concern to everybody, because if the cattle herds are destroyed by this pest the meat and milk supplies of every city in Australia will be jeopardized. If the Commonwealth Government recognizes its responsibility to protect the credit of the whole of the Australian people against default by one State, I hope that it will appreciate also its obligation to ensure that the tick pest shall not spread throughout Australia.
– The right honorable member is looking after the Cowper electorate.
– I am looking after the interests of all Australia, The tick pest has reached northern New South Wales, and preventive measures are of the greatest importance to the south coast, from which Sydney receives the bulk of its milk supply. If the tick reaches the south coast there will be no milk for the starving children for whom members of the New South Wales Labour party profess so much sympathy. When rinderpest entered Western Australia the Commonwealth Government went generously to the assistance of the State government. It has a similar responsibility in regard to the tick menace.
– I ask the Prime Minister also to take particular care to exclude from the operation of this clause any works of particular concern to members of the Country party. For instance irrigation works may be in progress, the holding up of which, through lack of loan moneys, may interfere with land settlement and prevent the supply of vegetables and other products to the starving women and children in the cities. Throughout the consideration of this measure the members of the Country party have shown a merely sectional interest; they have adopted a hypocritical attitude, but when other members express concern regarding the effect of this legislation upon the electorates we are refused any consideration by that party.
– Is not the right honorable member for Cowper contending that rather than risk the health of the people we should approve of a temporary default?
– Perhaps I have misunderstood the right honorable member. As a medical man he must know the effects of withholding the necessaries of life from the people; yet regardless of the consequences to the health of the community, he is prepared to send overseas money that is required to buy food, clothing and shelter for the people. His attitude varies on different causes, according to the interest at stake. I ask the Prime Minister to exercise the greatest care and discretion in the administration of this measure, so that the right honorable member for Cowper may obtain his pound of flesh. The needs of other sections may be disregarded, but at all costs let us protect the interest of country members.
.As we proceed from clause to clause of this drastic bill the fact becomes increasingly evident that the Government is determined to get its pound of flesh from the State of New South Wales, regardless of the suffering entailed. Not only are the revenues of the State to be confiscated, but loan moneys on their way to the State are to be arrested by the Commonwealth, and national works that are in progress will have to be discontinued. The right honorable member for Cowper spoke in defence of country interests. I do not represent only miners; there are approximately 25,000 rural electors in my constituency. Portions of the electorate have no proper water supply, and have to rely on tanks, which breed mosquitoes and disease. Extensions of the water mains have been promised, but if the Commonwealth withholds loan money from the States, such works cannot be proceeded with. The people in many country towns in my electorate and elsewhere are suffering in health through the inadequate water supplies, and if the Government operates this legislation it will prove that its members are stark, staring mad, in their vindictive political prejudice against the Lang Government.
– The support that the honorable member for West Sydney (Mr. Beasley) has given to the proposition of the right honorable member for Cowper (Dr. Earle Page) would make it easy for the Government to accede to it, but I am afraid that we can make no definite distinction between the various amounts. The bill itself provides that they may be applied for the meeting of State obligations.
– Does the Prime Minister suggest that under this clause impounded moneys of a State may be used for any other purpose than to meet the default of that State?
– That is the impression which the Prime Minister has given.
– There is nothing in the bill compelling us to deal with any particular amount. The responsibility is upon that State Government for getting into a position which entails all these difficulties. A defaulting State Government must take the responsibility for the consequences of its action. The Commonwealth will not accept that responsibility. I can give no assurance that any particular sum will be segregated, although it would be within the power of the Commonwealth to do that if it so desired.
Question - That the amendment (Mr. Lyons) be agreed to - put. The committee divided. (Chairman - Mr. Bell.)
Majority . . . . 28
Question so resolved in the affirmative.
Amendment agreed to.
Question - That the clause, as amended, be agreed to - put. The committee divided. (Chairman - Mr. Bell.) .
Majority . ….. 23
Question so resolved in the affirmative.
Clause, as amended, agreed to.
Clause 15 - (1.) At any time during the currency of any proclamation, the Treasurer may serve, or cause to be served, upon the chief executive officer of any corporation carrying on the business of banking, or of any branch of any such corporation, a notice in writing requiring that officer - .
Provided that in the event of proof to the satisfaction of the High Court being given that no amount of money was due and payable and unpaid by the State to the Commonwealth under or by virtue of the Financial Agreements, or proving the amount of money (being an amount less than the amount or amounts set forth in a certificate or certificates given by the Auditor-General in pursuance of section four or sections five and thirteen of this act) which was in fact due and payable and unpaid by the State to the Commonwealth under the Financial Agreements, the moneys received by the Commonwealth in pursuance of this section shall be dealt with in the manner prescribed by section eighteen of this act. (5.) Any chief executive officer who. refuses or fails to comply with the requirements of any notice served upon him in pursuance of this section, or who renders a return which is false in any particular, or who otherwise contravenes, or is concerned in any contravention of, this section shall be guilty of an offence. (6.) In this section, the expression “chief executive officer “ includes any person for the time being acting as, for, or on behalf of, the chief executive officer of the corporation or branch.
– I move -
That after the word “ officer “, first occurring, sub-clause 1, the words “in Australia” be inserted.
It may happen that the chief executive officer is outside Australia, and, therefore,. this amendment provides that the officer shall he the chief executive officer in Australia.
– I protest against this proposal to confiscate State Government funds which may he in any of the private hanks. Evidently the Government will stop at nothing in its determination to go on paying the present exorbitant rates of interest to overseas bondholders. If this clause is passed, the money belonging to ordinary citizens will not be safe. Even the savings of the people in the Commonwealth Bank are threatened. The members of the Government are behaving like burglars and embezzlers. They will be robbing’ the poor boxes next.
– The honorable member has reflected upon members of the Government, and such reflections are out of order.
– It is not my intention to transgress the rules. If the Government is - prepared to take this action, it is evident that it will stop at nothing in its determination to seize ite revenue of New South Wales.
.- I protest against this clause, which provides that at. any time during the currency of any proclamation the Treasurer may serve upon the chief executive officer of any corporation carrying on the business of banking, a notice requiring him to render forthwith to the Treasurer a return of the amount of the balance standing to the credit of the State to which the proclamation relates. That is grossly unfair, and will be deeply resented by the people of New South Wales. I am certain that the citizens of Australia would never have accepted the financial agreement if they had thought that the Commonwealth Government was to have power to do what is proposed in this clause. I remind the honorable member for Denison (Mr. Hutchin), who has been interjecting freely, that his own State may shortly be in the same position as New South Wales. . The Premier of Tasmania, when asking for £80,000 recently, said that, in carrying OUt the Premiers plan, his Government had taken £300,000 out of circulation, and if they took another £1, financial collapse would follow. As a matter of fact, Tasmania is proportionately further behind in its payments than New South Wales. The Premier of Western Australia stated recently that it was all very well to say that they could do this or do that, but, - in the final analysis, who was going to pay their interest bill and feed their unemployed? Of course, honorable members opposite are not concerned with that. To them the feeding of the unemployed means nothing. There is not the slightest doubt that before very long some of the other States will be unable to meet their commitments. In Queensland, under the Moore Government, wages .have been reduced, and the standard of living brought down to the coolie level, but the unemployment problem has not been solved. Before long the bailiffs will be in every State in the Commonwealth. To whom is the Treasurer going to give the job of collecting the revenue of defaulting States? Perhaps he proposes to give jobs to members of the New Guard, under the direction of “ Little Eric”. The Government is rushing blindly into this matter, actuated by political prejudice against Mr. Lang. During the election campaign, honorable members opposite declared that Mr. Lang was an incubus which must be removed. Some even went so far as to take vows that they would eat their hats or their boots if they did not shift Mr. Lang; but he is still there. He is too astute for all of them. He will be there when the whips are cracking, and he has behind him the solid support of the people of New South Wales.
.Honorable members opposite are treating this matter lightly, but they will realize before they are through with this legislation that it is serious. When this bill is passed it will be possible for the Commonwealth Government, merely by resolution of Parliament, and without a judgment of the High Court, to call upon the head officials of a bank to hand over the banking account of a State. What will be the position of a government operating on that account in order to carry on essential social services? The funds of a State Government may be seized and transferred to the Commonwealth without any proof being estab- listed that the money is owing. It is an outrageous proposal. The bank may refuse to hand over its client’s money without an order of the court. On the other hand, it may accept the view that this legislation is valid, and, under section 109 of the Constitution, overrides State law. It may, therefore, hand over the funds of a State Government, and thus cause great inconvenience and loss to that Government, and suffering to the citizens of the State concerned. Moreover, as was pointed out by the honorable member for Oxley (Mr. Baker) if this legislation is proved to be invalid, it ceases to be an act, and, in the eyes of the law, never was an act. Therefore, there will never have been any authority for the bank to hand over the funds of the State, and the State Government may sue, not only for the recovery of the money, but for damages as well. Honorable members on the other side who are such champions of the banks might pause and consider where the Government is heading.
Amendment agreed to.
Amendment (by Mr. Lyons) agreed to -
That the words “ or of any branch of any such corporation “, sub-clause 1, be omitted.
– I move -
That sub-clause 2 be omitted.
The substance of sub-clause 2 is sufficiently covered by paragraph b of subclause 1. The bank is required to pay the money to the Treasury, and clause 20 makes it an offence to contravene, or refuse, or fail, to comply with any provision of the act, or any requirement or direction made or given in pursuance of the act.
– I move -
That the following sub-clause be inserted: - “ (5a.) Notwithstanding the foregoing pro visions of this section, if the Treasurer is satisfied -
that any moneys paid to him or to an authorized person in pursuance of this’ section include moneys deposited by any person as security for the supply of goods, the per - formance of services or the carrying out of any work; and
that the conditions on which the moneys were deposited have been fulfilled, the Treasurer may refund those moneys, and any refund so made shall, as between the person making the deposit and the State, be deemed to have been made by the State.”.
By this amendment the criticism raised by the right honorable member for Cowper (Dr. Earle Page) is met, because deposits made by contractors and others are safeguarded. The Commonwealth Treasury is required to refund moneys which would have been refunded by the State.
– Why should such discrimination be made? The Government claims that everything possible should be done to enable overseas commitments to be met. I object to the discrimination which this amendment involves.
.- It would be inconsistent on the part of those honorable members who oppose the bill generally to object to this amendment. Action by the Government to place any person beyond the scope of the measure should meet with the approval of opponents of the bill. I support this amendment. It would be unwise to depart from sound principles merely on the ground of prejudice.
– As the right honorable member for Yarra (Mr. Scullin) has pointed out, the honorable member for West Sydney (Mr. Beasley) should agree to this amendment, because it will enable sums deposited with the Treasurer by individuals to be refunded under certain condition’s.
Amendment agreed to.
Clause also consequentially amended.
Question - That clause 15, as amended, be agreed to - put. The committee divided. (Chairman-Mr. Bell.)
Majority .. . . 23
Question so resolved in the affirmative.
Clause, as amended, agreed to.
Clauses 16 and 17 agreed to.
Notwithstanding the preceding provisions of this act, if, in the final judgment of the High Court in any proceedings to which the Commonwealth is a party, or in which it has been granted leave to intervene, the question of the amount due and payable and unpaid by a State to the Commonwealth under or in pursuance of the Financial Agreements is in issue, and it is declared that no amount was so due and payable and unpaid by the State to the Commonwealth at the date of the certificate of the Auditor-General, or that a, smaller amount than the amount set forth in that certificate was then due and payable and unpaid, the moneys received by the Commonwealth, in respect of that State, under or by virtue of this act, shall be paid by the Common wealth to the State, subject to all such allowances as, in the opinion of the High Court, may be just in respect of -
– Why is it necessary to make so many amendments that are of a purely drafting character? It seems to me that the responsible officers should have been able to avoid many of the verbal amendments that have been found necessary.
– The vast majority of the drafting amendments have been rendered necessary by the fact that certain substantial alterations have been made in the bill. The numerous consequential amendments are in no way due to mistakes on the part of the draftsmen.
– I move -
That the words “ at the date of the certificate of the Auditor-General “ be omitted.
If those words are left in the clause, any declaration of the High Court will apply only to the amount of the claim mentioned in the certificate given by the Auditor-General, and that would exclude any amount which was subsequently the subject of a claim.
Amendment agreed to.
– I move -
That after the word “ State “, fourth occurring, the following words be inserted: - “Or to the persons front whom such moneys were received, as may be directed by the court, to the intent that a State shall not, in respect of any money received by the Commonwealth, recover an amount both from the Commonwealth and from the person who paid the money to the Commonwealth under the provisions contained in this act. (2.) Any payment by the Common wealth under this section shall be “.
The object of the amendment is to provide that if the High Court declares that an amount claimed is not owing by a State, the Commonwealth shall repay any amount which it has collected from an individual taxpayer pursuant to the provisions of this bill if the taxpayer has paid both the State and the Commonwealth the particular amount; The new provision will remove any possibility of unfairness or hardship to individual taxpayers in the event of the High Court declaring in favour of a State in respect of any payment made to the Commonwealth.
Amendment agreed to.
Clause also verbally amended, and, as amended, agreed to.
Clause 19 agreed to.
Clause 20 (Prosecution of offences).
– I move -
That the following sub-clause be added: - (4.) An offence against section ten of this act shall not be prosecuted summarily without the written consent of the Treasurer.
The purpose of this amendment is to ensure that no prosecution shall be launched against a taxpayer until the Commonwealth Treasurer has looked into the facts of the case, and satisfied himself that an offence has been wilful. It may happen that a taxpayer has paid his tax to the State instead of to the Commonwealth in ignorance of the fact that the Commonwealth has launched proceedings against the State. It is not intended that prosecutions shall be ordered in cases of genuine and honest mistake.
.I ask the right honorable gentleman whether the word “ summarily “ could not be omitted? Heavy penalties are provided in the case of offences proved on indictment. It may happen that if the word “ summarily “ is retained prosecutions may be initiated on indictment even though the taxpayer concerned has acted in ignorance of the law.
– The intention of the amendment is to ensure that no unfair proceedings shall be taken against a taxpayer. I ask that further consideration of the clause be postponed. If from a drafting point of view there is no objection to the omission of the word “ summarily “ I shall agree to its omission.
Clause 21 (Regulations).
– This clause is similar to the regulation clause to which we objected in the preceding bill. As a matter of fact, it goes further than the clause in the other bill, because it involves, not only Ministers of the Crown, but also “ officers and persons employed by the State.” If the Governor-General is permitted to make regulations involving the welfare of State officers who owe allegiance to the State Government, a grave position may arise. I ask the committee to vote against the clause, because I do not think it is fair to give such extensive powers to the Executive.
Question - That the clause be agreed to - put. The committee divided. (Chairman - Mr. Bell.)
Majority . . . . 23
Question so resolved in the affirmative.
Clause agreed to.
.- I move -
That the following new clause be inserted: - “1 a. This act shall continue in operation for a period of two years, and no longer.”
Honorable members will recollect that the Prime Minister indicated that the Government is anxious to receive any representations that the States may desire to put forward with regard to this measure. The whole subject will be considered at the nest meeting of the Loan Council and, to put it beyond doubt that the measure will later be reconsidered by that council, the reasonable time limit of two years is provided.
This new clause clearly indicates that the Government is aware that it is not proceeding along proper lines. I am not certain that the wording “ shall continue in operation for a period of two years “ is wise. Does that mean that the measure shall not be reviewed before the expiration of two years?
– I do not object to the operation of the measure being limited to two years, but I point out that it is strange that, despite the assurance of the Assistant Treasurer (Mr. Bruce), that the legislation would remain in existence for all time, the Government now stipulates this definite time limit. Still, it is. better to have that limit than to have the measure to continue for ever.
– It is obvious, even in the last stages of the debate, that this measure is specifically designed to operate against the present Government of New South Wales. The contention of the Minister in charge of the bill that the provision is intended only to enable the matter to be reconsidered by the Premiers at the Loan Council is not borne out by fact. If that were the purpose, why should the bill continue for two years? I assure the Minister in charge of the bill that in spite of him this measure is the greatest advertisement that my party can have politically, and that it will help us considerably more than he imagines in the struggle that lies before us.
Proposed new clause agreed to.
– I move -
That the following new clauses be inserted: - “ 20a. In any proceedings whatsoever, a certificate of the Auditor-General, given in pursuance of sub-section (1.) of section five of this act, shall be prima facie evidence that the amount certified to be due and payable and unpaid by a State to the Commonwealth under or by virtue of the Financial Agreements is so due and payable and unpaid, and that the sums comprised in that amount are due and payable and unpaid in respect of the items set forth in the certificate.” “ 20b. The mere production of the Gazette containing what purports to be a copy of a certificate given by the Auditor-General in pursuance of this act shall in all courts be evidence that a certificate in the terms appearing in the Gazette was given by the AuditorGeneral in pursuance of this act.”
.Proposed new clause 20a is evolved from the old clause 5, which it is proposed to re-insert: That is an extraordinary procedure.
– Why has that course been followed?
– So that this provision will apply to other sections of the bill. Proposed new clause 20b is also a remarkable one. I intend to vote against both.
Question - That the proposed new clauses be agreed to - put. The committee divided. (Chairman - Mr. Bell.)
Majority . . . . 23
Question so resolved in the affirmative.
Proposed new clauses agreed to.
Morion (by Mr. Bruce) agreed to -
That the following new clause bo inserted: - 20c. The Consolidated Revenue fund is to the necessaryextent hereby appropriated for the purpose of any payment for which the Commonwealthis liable under or in pursuance of this act.
Postponed clause 20, upon which Mr.
Bruce had moved by way of amendment -
That the following sub-clause beadded: -
– The honorable member for Oxley (Mr. Baker) objected to the inclusion of the word “summarily.” Prosecution on indictment would proceed only after full consideration by the Solicitor-General and the Attorney-General; therefore the permission of the Treasurer was thought unnecessary. However, there is no objection to the suggested amendment, and I, therefore, ask leave to amend my amendment by omitting the word “ summarily “.
.Being entirely opposed to this bill, I am naturally against a clause which prescribes penalties for breaches of its provisions. If the Government considers that a summary prosecution, involving a fine not exceeding £100 or imprisonment for a term not exceeding six months, or both, is so serious that it should not be undertaken without the consent of the Treasurer, surely a prosecution upon indictment, involving a fine not exceeding £500 or imprisonment for a term not exceeding two ‘ years, or both, should not proceed without permission. That is why I asked that the qualification “summarily” should be omitted from the proposed subclause 4.
– This proposed new clause is unusual in that it empowers the Treasurer to decide whether an offence shall be prosecuted. As the Assistant Treasurer (Mr. Bruce) has clearly shown that this legislation is introduced from political motives, it is possible that his decisions regarding prosecutions will be influenced by similar considerations.
A prominent person recognizing his obligation to the State might pay his taxation to the State Treasury instead of to the Commonwealth, whereupon the Commonwealth Treasurer, viewing the matter only from one angle, would instruct that he be prosecuted. If a person be guilty of an offence let him be prose- . cuted without the intervention of the Treasurer, who may be influenced by political bias. The proposed new subclause creates an undesirable precedent, and I shall vote against it.
Amendment - by leave - amended to read -
That the following sub-clause be added: - “(4.) An offence against section ten of this act shall not be prosecuted without the written consent of the Treasurer.”.
Amendment agreed to.
Clause, as amended, agreed to.
Preamble verbally amended, and, as amended, agreed to.
Title agreed to.
Bill reported with amendments ; report - by leave - adopted.
Motion (by Mr. Lyons) - by leave - put -
That the bill be now read a third time.
The House divided. (Mr. Speaker - Hon. G. H. Mackay.)
Majority . . . . 23
Question so resolved in the affirmative.
Bill read a third time.
– I move -
That the House at its rising adjourn until 2.30 p.m. this day.
I wish to intimate to honorable members that the Government intends to take the Insurance Bill from the Senate, and that the second-reading speech will be made by the Minister-in-Charge at 2.30 p.m. There will be no other business,
– Does the Government propose to deal with the report of the Tariff Board on the tobacco industry?
– That report will be placed in the hands of honorable members and the discussion on it will take place on Tuesday next. On Wednesday we shall resume the discussion on the Insurance Bill.
Mr.Riordan. - The Minister for Trade and Customs (Mr. Gullett) said that the discussion on the Tobacco Report would take place to-day.
– That was intended; but the report of the Tariff Board was not ready to be placed in the hands of honorable members. We considered that it would suit their convenience better to peruse the report, and to discuss it on Tuesday next.
Question resolved in the affirmative.
Report of the Tariff Board on the Tobacco Industry.
Motion (by Mr. Lyons) proposed -
That the House do now adjourn.
– On Thursday evening last, the Minister for Trade and Customs (Mr. Gullett) said that honorable members would be given an opportunity to-day to deal with the report of the Tariff Board on the tobacco industry. I understand that there is in Canberra a deputation from the tobacco-growers, and I have no doubt that it will suit their convenience to wait upon the Minister before the discussion on the report takes place in this House.
Question resolved in the affirmative.
House adjourned at 3.6 a.m. (Friday).
Cite as: Australia, House of Representatives, Debates, 3 March 1932, viewed 22 October 2017, <http://historichansard.net/hofreps/1932/19320303_reps_13_133/>.