4th Parliament · 1st Session
The President took the chair at 2.30 p.m., and read prayers.
Motion (by Senator Pearce) agreed to -
That the Acting Clerk of the Senate return ro llie Department of Trade and Customs the papers, relating to the Agricultural Implement Makers’ Employes, Provision for Reimbursement of Legal Outlay, laid on the table of the Senate on the 6th October, 1909.
In Committee (Consideration resumed from12th August, vide page 1501):
Clause 4 -
The Commonwealth shall, during the period of ten years beginning on the first day of July One thousand nine hundred and ten, and thereafter until the Parliament otherwise provides, pay to each State by monthly instalments, or apply to the payment of interest on debts of the State taken over by the Commonwealth, an annual sum amounting to Twenty-five shillings per head of the number of the people of the State :
Provided that in the six months ending the thirtieth day of June One thousand nine hundred and eleven the Commonwealth may deduct from the amounts payable in pursuance of this section the amounts set out in the Schedule…..
Upon which Senator Givens had moved by way of amendment -
That the words “ during the period of,” lines 1 and 2, be left out.
– When I was last speaking to this amendment I was interrupted by the close of the sitting. I wish to show why, in my opinion, it should receive the support of honorable senators on each side. If the clause is passed as it stands, the Parliament will practically surrender its control over the financial position to the States for a number of years, and. necessarily its. right’ to deal with the Tariff in accordance with’ the needs of the Commonwealth. The consensus of opinion among the electors is practically in favour of a protective Tariff. If we are to have that, undoubtedly we cannot get anything near as much revenue as we are now getting per head of the population. If our Tariff is to be effective, then the more it is effective the more manufactories of various kinds will’ be established, and the more of the goods we require will be locally produced. But if it is a merely revenue-raising machine, the sooner we start to amend the Tariff and make it effectively protective the better. If this Bill is passed as it stands, we shall not be able to do that, because every Government will be faced with the necessity of receiving large sums from Customs and Excise, and consequently it will be forced to look at a proposed Tariff not only from its protective stand-point, but also from its revenue-raising capabilities. That is a sort of duress under which Parliament should not suffer. It should be absolutely free to do the best that is possible in any circumstances which may arise, and to carry out a national policy in its entirety. Regarding the amount of money which is to be returned to the States, I need not go over the old argument that unless we are to return money from Customs and Excise, there is no reason why we should raise it. Owing to the large responsibilities which the Commonwealth is undertaking,’ it is very doubtful whether the Customs and Excise duties will be sufficient to produce anything near the revenue ‘ which we require, and which some honorable senators seem to anticipate. They should remember that we are now proceeding, I hope, to initiate an effective system of defence, both military and naval. In Great Britain the total receipts from Customs and Excise are not sufficient to bear the expense of defence, and all the other services of government have to be provided from other sources. Yet we are supposed to initiate an effective system of defence and to have a large surplus to return to the States. If the Bill is passed as it is, and as time goes on we find that more and more money is required for defence, we shall not get the money without imposing fresh taxation. Therefore, the tendency will be that defence will be left crippled as it is now, and we shall have no effective system initiated. We should not tie Parliament up in that way. In my previous speech I estimated that the new expenditure of the Commonwealth in the next few yeaTs, owing to the new services and undertakings . which were to be initiated in the way of defence and various other directions, would ‘ amount to at least £4,200,000 per annum, and my figures have never been contradicted. If we are to base our return to the States on our present revenue, and to incur that new expenditure, it will leave us only 17s. ‘per per head to return to them. But I find that I under-estimated the probable expenditure in one line. Since then we have had new light on the matter. ‘ In sub- mitting his Defence Bill the Minister of Defence gave an estimate .of what defence on the military side is likely to cost, and I think he put it at £2,000,000 per annum.
– In what year?
– By the time that the proposed defence was in decent working order.
– In what year?
– That year, whatever it may be, will be a long time before the expiration of the agreement which is embodied in this Bill. Does the Minister want to tell me that we shall not have any efficient defence for ten years? We may not have a country then to defend unless we put our house in order. Unless our defence is efficient we are better without a sham scheme. When it is efficient it will, according to the Minister, cost £2,000,000. a year on the military side. I find that I was at least £300,000 per annum below his estimate. -
– The honorable senator would be a very unreliable Treasurer.
– I used the best information which I had, and pointed out that I desired to err on the ‘side of moder.ation. Again it is certain that I equally under-estimated the amount which will be spent on the naval side of defence. 1 was told by such an authority as Senator McColl that the amount I allowed for the development, of the Northern Territory was ridiculously small. Revising my estimate in the light of the Minister’s authoritative statement, it will be found that our new expenditure during the next few years will amount to at least £5,000,000 a year. If that is so, we shall not have more than 14s. per head to return to the States, unless we impose new taxation. If we are to do that, the Parliament will be- reduced u> the position of a. mere tax gatherer and bum-bailiff for the States. That is theposition which Ministers want to reduce it to. Their whole object -is to -raise money for the States. During thelast six years we have had a succession of good seasons, perhaps unparalleled in our history. Consequently, we have had a buoyant revenue, and we arc able at present to raise a very large revenue. But what is going to happen when bad times come,’ as they inevitably will do? Our revenue may be reduced easily by 25 per cent., and then where sim II we get 25s. per head to return to the States ?
– We are going to increase our population.
– That would not alter the position, because as the population increased, under this Bill the amount to be returned to the States would automatically increase.
– Then the Commonwealth would get more money in consequence of the increased population.
– And the more population we have the more our services will cost
– There will be a lot of drinking by-and-by.
– Is it the honorable senator’s ideal as to the future of the Commonwealth that we, like the British nation on one historic occasion, must drink ourselves out of our difficulties ? We have had cycles of good times and bad times. When a bad season arrives, what is going to happen? When our people are suffering from depression in various industries, when perhaps the productions from the primary industries are reduced by one-half owing to the devastations of drought, then the Commonwealth will have to step in to impose new taxation. The whole thing is ridiculous and will not bear examination for a moment. What is the position with regard to another aspect of the question? Having- to face an election in the near future, the Premier of New South Wales is, like the unjust steward mentioned in Holy Scripture, trying to make friends with the mammon of unrighteousness. He is bribing almost every branch of the Public Service by offering increased pay if they will only support his Government. In Queensland exactly the same thing is being done.
– There is no election coming on in that State.
– That is quite true. But the fear of the 13th April is still in the hearts of the Government. During the last seven years the Queensland Government have given, according to the Budget statement, increments to public servants totalling no less than .£330,000 a year. I am not complaining about the Treasurers giving that increase. That is their business, and it is something with which we have nothing to do. But when it comes to be our turn by-and-by to do an act of tardy justice to our public servants, to give increments proportionate to the increased cost of living, we shall be met by the Government of the day with the plea’ that they have no money for the purpose, while all the time we are ladling out money to the State Treasurers in order to give increases to their public officers. That is a totally untenable position for any Government, much less for a Labour Government, to try to put Parliament in. I ask honorable senators on this side how we are going to realize the aspirations of the Labour party if we cripple ourselves financially in the way proposed in this Bill. That is a very important consideration from our standpoint, because we have pledged ourselves that as opportunity may offer we shall increase the number of services undertaken by the Government for the benefit of the people at large. We on this side have been going around and telling the people, in accordance with our signed platform, that, we are prepared to nationalize the Sugar Monopoly, the Coal Combine, the Shipping Combine, and any other trusts which may be established. No later than last year the Fusion Government seriously considered the nationalization of one. monopoly in order to carry on efficiently the services of the Commonwealth. Honorable senators generally may not know it, but there are some honorable senators on each side who can bear out the truth of my statement. Our coastal mail contracts expired last year. The Shipping Combine was asking for an inordinate price for a renewal of the service. The then Postmaster-General, Sir John Quick, seriously contemplated purchasing vessels for the Commonwealth, and running the service unless the - combine came to a reasonable arrangement. He consulted members of Parliament of both political parties, not only in another place but in the Senate, with the result that he was assured on all hands of their support if he would provide for the building of a Government steamer in case the combine did not make decent terms.
– It was a very good tactical move, and the shipping companies soon came off their perch.
– I am not saying whether it was a tactical move or not, but the fact that action of that kind was contemplated by the Postmaster-General in the Fusion Government establishes a very good precedent for the present Government. It is quite on ‘the cards that in the future, instead of our being dependent upon any Shipping Combine for the carriage of our mails, we may take the step of establishing steamers and running them for ourselves.
That at all events is a consummation that I devoutly wish for, and hope to see realized. Suppose that we were faced with that necessity in two or three years time. What would be the position? We should be so stripped of money that we should not have a single shilling to start such a service.
– Sir John Quick’s proposal received more generous consideration than did Senator Henderson’s motion when he proposed the same thing in the Senate.
– At all events the party to which I belong believe in such a policy. But it is of no use professing to believe in a policy if we deliberately deprive ourselves of the power to carry it out.
– Is not the hon,orable senator assuming that such services would be run at a loss if the Commonwealth undertook them?
– Even if they were run at an immense profit, there must necessarily be initial expenditure in connexion with their establishment. We should probably have to borrow money for them in the first instance. The probability is that they would be worked at a loss for a year or two. Suppose that the Commonwealth wanted to nationalize the Sugar Monopoly or the Tobacco Combine. For such a purpose we should require money. Yet we are depriving ourselves of the opportunity of doing one of these things if we pass the Bill in its present form. I regard the Bill as being distinctly anti-national and antiFederal’. It is a deliberate attempt to deprive this Parliament of its constitutional power for an unreasonable period. It has been urged in defence of the measure by the Vice-President of the Executive Council - who, I regret to say, is not able to be in his place to-day - that this Bill is based on the results of the late Premiers’ Conference. I took particular note of his words at the time he used them, and if honorable senators look up Hansard, they will see that he claimed that the agreement arrived at at the “ Premiers’ Conference formed the basis of this measure. He used that argument in support of more than one of the provisions of the Bill. He used it in support of the amount that is pronosed to be returned to the States. He used it in support of the amount that the States are to contribute towards the Commonwealth deficit of the present year. The result is that we have before us a Bill, not framed by the Government, not framed at the instance of a party behind the Government in this Parliament, but framed by the Premiers’ Conference. I have yet to learn that it is in accordance with the ideals of the party to which we belong to look to the State Premiers to formulate our policy. Yet that is what the Vice-President of the Executive Council told us had been done with this Bill. I refuse absolutely to pay any attention to what the Premiers did or did not want. I refuse to recognise them as an authority as to what we should do in this connexion. I refuse to be guided by any basis laid down by them. I refuse to be guided by the requirements of the Opposition. The only financial arrangement we should make at all is one that would be in consonance with the national needs of the Commonwealth, and with the ideals and aspirations of the party to which we belong. We should legislate on the lines laid down in our programme. This Bill does not do that, and, consequently, I shall do my best to alter it.
– - I intend to support Senator Givens’ amendment.- I do not believe that the Commonwealth will be able, for a period of ten years, to pay the States a sum of 25s. per head per annum without seriously handicapping itself in the various schemes which it at present has in hand. I think that the first duty of the Commonwealth is to itself, and its own policy. It is our duty to carry out the mandate which the people of Australia have given to us. We have no mandate, whatever, with regard to any payment to the States. The proposal submitted by the Fusion Government was struck aside by a huge majority of the people of the Commonwealth. Therefore, that policy need not be considered. We have nothing whatever to do with it. We have nothing to do with the policy which was framed by the secret caucus of Premiers, and upon which, I regret to say, our own Government has founded its proposals. As I have said, we ought to be governed entirely by our own necessities. The people have given us power, after the 31st December, to deal with the Customs and Excise revenue as we please, but instead of looking after our own needs, the Government calmly propose to grant a first mortgage to the States. Whatever comes or goes, whether revenue rises or falls, come good day, come bad day, the States have to get their 25s. per head of the population during the next ten years. This imposes a most serious burden upon the people of the Commonwealth. If we are to carry out this policy we must jettison a large number of the questions which are upon our programme. In the first place, we are pledged to the reduction of the pension age in the case of women. The invalid pension is also to be proclaimed very shortly. Both of those matters will involve large additional expenditure. Then there is the pennypostage project, which the Postmaster-General, who ought to know, says will involve an additional expenditure of between £400,000 and £500,000 a year for some years. Next there is the re-organization of the Post and Telegraph Department. It is the bounden duty of every Socialist member of this Parliament to see that that Department is placed upon a sound and effective footing. If it is not, what will be the cry of our opponents ? They will say, “ Here is your socialistic Post Office! Look at it ! Look at your telegraph and telephone service ! What are they but ruins and Wrecks? Here is a mismanaged State enterprise which should be handed over to private enterprise.” If there were no other sound reason under Heaven than that, every member of this Senate should insist upon the Post and Telegraph Department being placed upon an efficient and effective footing. We are bound in the interests of the policy which we profess to support to see that the Department is rescued from the condition of wreckage in which it now stands. But if we are to pay the States 25s. per head per annum for ten years, how is that work to be done? Will the wise-acres in the Government tell us how it is to be done? Will the Treasurer speak? Will he inform the people of the Commonwealth, even if he does not inform Parliament? Will he tell the people who sent him here where this money is to come from ? I presume that the Government will try to muddle through somehow. But those are not the lines upon which a Labour Government ought to Lie conducted ; and Labour Governments will not be conducted on those lines with my consent. Then we have to provide for defence. We have to defend a continent in which there are only 4,200,000 of people. My own opinion is that no matter how we organize, no matter what fleet we have, nor what army we place in the field, if a great Power assailed us we should be beaten down before we knew where we’ were. But, in any case, the policy of Australia is to provide for its own defence as far as it possibly can. To do so will involve very large additional expenditure. Then there is the Northern Territory with the prospect of building a railway right through the heart of Australia - through country that no man knows anything at all about. There is scarcely any settlement, and a large portion of the country is nothing but drifting sand - miles and miles of drifting sand !
– Has the honorable senator been there?
– I have been as far as the railway would take me; and, in my opinion, South Australia would be very glad if she had not built it up to that point. I never before saw a railway built through such a desert. You can hardly see an animal on the whole route. There is only one train a fortnight. The loss on the line amounts to nearly £90,000 a year.
– The honorable senator will not be in order in discussing the merits of the proposed railway.
– What has all this to do with the ten-years period ?
– It has something to do with the question. I am pointing out the liabilities with which we are faced in carrying out the policy of the present Government.
– That means that the honorable senator is going to vote for the proposed railway.
– The honorable senator will find that out when the proper times comes. Then there is the Western Australian railway, another enterprise, which, if it is carried out, will mean the expenditure of a very large amount of money. There is also the building of the Capital city, and there is no honorable senator who will have the courage to stand up and say that we ought not to proceed at once with that work.
– Yes, I say that.
– We have a mandate from the people of Australia to get to the selected Seat of Government at the earliest possible moment. That will cost a very large amount of money. Light-‘ houses are required all round the coast of Australia. Then we have the transferred properties which will involve an annual interest payment of somewhere about £400.000. In addition to all that, there will be other expenditure continuously cropping up, incidental to the constitutionalpowers of the Commonwealth. Senator-
Givens has furnished an estimate of what he considers will be the added expenditure within the next few years. So far as I have been able to look into the particulars 1 agree with him. He has very fairly stated the probable increase in expenditure. If we agree upon that it is a simple sum in arithmetic to say what expenditure we shall have to face. If the States are to get 25s. per head per annum, a very considerable portion of those Commonwealth enterprises must be abandoned. I see no way of financing them. If the Government can tell me how they propose to find the money for the States, and for the enterprises to which I have referred - some of which cannot be deferred - I shall be glad to listen.
– Would not the honorable senator trust the Government to find the money?
– No, I would not trust the Government. I am not here to trust the Government. I am not here to trust any Government. I am here with a responsibility to the people who elected me - a responsibility as great as that of any member of the Government - and, as far as I am able, I shall take my full share of that responsibility.
– Where does the honorable senator think that the money for the Northern Territory would have to come From?
– Heaven knows ! That is a conundrum. Of course, the Government would have to Borrow for railway construction purposes. I would not have a single railway built out of revenue. But the interest would have to be paid out of revenue. .
– That is a mere bagatelle.
– It is not a mere bagatelle. If honorable senators care to look into the matter for themselves, they will very soon discover where the land lies.
– The Northern Territory would only involve a transfer of interest liability, and that would be a charge upon the revenues of the Commonwealth.
– Any deficit on the railway would have to be paid out of Commonwealth revenue.
– There would be no deficit, then.
– The honorable senator does not think so, I am sure. Now we will look at the revenue side of the matter. Is our revenue from Customs and Excise going to expand in the near future to such an extent as will enable us to make the payments provided for in this Bill. If honorable senators who support the Government are to meet the pledges upon which they were returned to this Parliament, Customs and Excise, instead of yielding £2 1 os. per head of the population, as ls now the case, will yield a very much larger sum.
– At the very most the yield should be only £1 10s.
– I agree with the honorable senator. If our Tariff is going to create industries instead, of being a mere revenue-collecting machine, then down ‘ to £1 10s. per head the receipts from Customs and Excise must go within the next twenty years. Every honorable senator supporting the Government is pledged against a revenue Tariff and in favour of a Protectionist Tariff.
– Are there no Free Traders in the Labour party ?
– I do not know. They are all pledged to the policy of Protection.
– The policy of new Protection.
– To new Protection and old Protection. Senator Ready need not try by means of a subterfuge to apply a salve to his conscience. We cannot have the one without the other. If you attempt to put the roof on a house without building the walls, the roof must inevitably fall. The wall of the Labour party’s fiscal policy is old Protection, the roof is new Protection, but we cannot have the one without the other.
– I thought the fiscal question was always an open question with the Labour party.
– It was prior to this Parliament, but it is not now.
– Senator St. Ledger, who is the historian of economic development in Australia, is not keeping his information up to date. I should advise him to look at the latest Labour platform, and he will find that old Protection and new Protection are now parts of the Labour party’s policy. If that policy is carried out, instead of getting a larger revenue from Customs and Excise as the years go by, we must inevitably get less, until the revenue from those sources reaches as near to the vanishing point as we can get it. I hope that the Labour party will see fit to carry out their policy of Protection, because, if they do not, they will not be carrying out the mandate of the people. There is one thing in connexion with the Tariff to which the party are bound by their original platform, and that is to cut out as many of the revenue-producing duties as they can. The policy of the party has always been direct, as opposed to indirect, taxation, and I have every confidence that it will be carried out. So that, from whatever point of view this question is regarded, we find on the one hand a continually increasing expenditure, and on the other a continually decreasing revenue from Customs and Excise. I may be told that there are other avenues of taxation. I quite agree that there are. Personally, I do not desire that we should raise a single shilling of revenue from Customs and Excise taxation except by duties on some narcotics.
– And spirits.
– Is not alcohol a narcotic if one takes enough of it? I do not wish to go into the minutiae of Tariff questions, but I must say that I am not in favour of a tax on tobacco. I cannot give my reasons now, because they would be ruled out of order. With regard to revenue other than that derived from Customs and Excise taxation, we have a proposal to levy land taxation, but there are honorable senators here who are pledged not to reduce the £5,000 exemption proposed for a period of six years.
– That is so.
– If it is not reduced, the revenue we shall get from the land tax within the next six years will be comparatively small, and it will be a continually decreasing revenue unless we increase the rate of the tax - unless, instead of beginning at id. in the £1, we begin at 2d. or 3d. in the £1, and go on.
– Would the honorable senator object to that?
– No; I should be prepared to sweep away the proposed exemption altogether if I had the power, but I am only one of a multitude.
– The honorable senator will have to wait for the new party he spoke of.
– The new party will be gradually evolved. I have not the slightest doubt that the present Labour party will consolidate into a Conservative party, and that a new party will be built up upon its ruins.
– The honorable senator is getting out early to avoid the crush.
– I may not see the day, but some honorable senators sitting here probably will see it. It will be merely a repetition of the experience of every party since representative government has been known. Some honorable senators are opposed to the reduction of the proposed exemption. Senator W. Russell, I am sure, will not agree to a reduction of the exemption below £5,000.
– No, never.
– I may tell- honorable senators that I have never yet broker* a pledge, but if the Government gave me the opportunity to-morrow I should be prepared to break a pledge not to reduce the proposed exemption under the land tax, and should consider that in doing so I had done the Commonwealth good service. I should be perfectly willing to submit my action to the people, knowing well that before my time here is up it would be amply justified by the results.
– The honorable senator had some difficulty in getting in this time, as things are.
– Senator W. Russell cannot appreciate my position. I am much more anxious about getting reform than about winning a seat even in the Senate. Although I wished to win the seat I did not sacrifice a single iota of principle in order to win it. I told the people that I did not believe in the £5,000 exemption, and I told them a great many other things which, I am sure, Senator W. Russell would not have had the courage to tell the electors, even if he believed them.
– What !
– Yet they returned me, by the skin of my teeth perhaps, but I would rather have been defeated than have abandoned any of my principles.
– The winning of seats is not the important thing.
– No; the winning of reform and the education of the public are the important things. Once we let the public know what is best in their interests, they will take good care to send us to Parliament to bring it about, but if we continually keep something up our sleeve, finesse with the public, and tell them only half of what we believe, we need not be surprised if when we suddenly spring the whole lot upon them, they turn upon us disgusted.
– Is the exemption to be fixed at £5,000 for only six years?
– So far as some honorable senators are concerned, but so far as others are concerned, it is not fixed for even as long as six years.
– Does the honorable senator consider these remarks strictly relevant ?
– I was merely answering a question put by Senator Vardon. For persons who appear to take a great interest in the Labour movement, members of the Opposition’ do not know very much about its inner workings, although they are sufficiently open to any one who desires to make himself acquainted with them.
– I am always a seeker after truth.
– Well, the honorable senator is getting it now. The question is whether, in view of the circumstances I have detailed, we are justified in promising the States a payment of 25s. per head per annum for a period of ten years. I have shown that if we carry out our own policy, whether of spending or of raising revenue, we cannot keep such a promise.
– We have been paying £2 10s. per head per annum to the States for the last ten years.
– The honorable senator forgets that we have an additional £^5, 000,000 of expenditure to meet now. He is not acquainted with the facts of Federation, or has not brought his information up to date, or he would know that the expenditure of the Commonwealth is going to be doubled. It is only a question in arithmetic, and any member of the Senate can get the information for himself. Anyhow, I have got it, and I am satisfied that I am right in my contention that the Government must either abandon a large portion of their policy, or abandon the proposed payment of 25s. per head to the States. We have a direct mandate from the people with regard to our policy, but we have no mandate with regard to the payment to the States. Our first duty is to the people who elected us. The State Parliaments have the responsibility of raising and expending their own revenue. There are ample fields of taxation, which they have never yet attempted to explore, and we should give them every opportunity to enter those fields. Our first duty is to ourselves. We must carry out our own policy, or be discredited in the eyes of the people. If we do carry out our policy, we cannot pay 25s. per head per annum to the States for ten years. Here is a difficulty. Every honorable senator supporting the Government, who votes for the ten years’ period will pledge himself so far as he is able to carry out that arrangement. Is not that the case? He has already pledged himself to his constituents to do a number of things, and in supporting this Bill he will now pledge himself to the States to do something additional. If he will go into the figures, he will find that the thing cannot be done. He will find that if 25s. per head is to be paid to the States during the ten years, a large portion of the policy to which he is pledged must be set aside. Some day, he will have to choose between the States and the Commonwealth, and when that day comes, I hope there will be no hesitation as to the side of the fence on which honorable senators will drop. My principal trouble now is that the Government are proposing that we. should lull the States into a condition of false security. Depending upon a promise to this Parliament, the State Treasurers will arrange their finances on the understanding that they will receive each year 25s. per head of their population for a. period of ten years. I say they must be disappointed, because we cannot carry out that promise. We, therefore, should not make it. It would be much better to tell the State Governments now that we are not sure of being able to make this payment for a longer period than three years. That would be giving them fair warning, and those who are forewarned are forearmed. It would give them an opportunity to recast their systems of taxation, and ‘to overhaul their expenditure. It would give them a chance to set their houses in order for the day which will inevitably come long before the ten years’ period has elapsed, when the Commonwealth must, of necessity, cease to pay the States 25s. per annum per head of their population. For these reasons, I intend to support the amendment proposed by Senator Givens. I trust that every honorable senator who thinks that our relations with the States should be conducted in an honest and a candid fashion will also vote for the amendment.
– I intend to support the amendment, because the Government are assuming in this Bill a power which we do not possess. They are trying to bind future Parliaments. There will be two Parliaments after the present one before the ten years period will have expired. We cannot pretend to bind those Parliaments. I was in favour of the embodiment of the Financial Agreement in the Constitution if that were the wish of the people. It was the wish of the people of my State, and also of the people of Tasmania, but it was not the wish ot the people generally of the Commonwealth. Future Parliaments might see reason to reduce the proposed payment from 25s. to j£i, or 15s. per head of the population of the States. I should have been prepared if the agreement had been embodied in the Constitution to leave it to the people to say whether the payment should be increased or decreased. The Government, in this measure, as Senator Stewart has said, are trying to lull the people of the States to sleep. The Treasurers, if they are wise, will take no notice of it, but if they are unwise they will carry on in the belief that for ten years they will receive from the Commonwealth 25s. per head per annum. But every one here knows that that is not a fact, and that the next Parliament may allow the States only 10s. per head, or 5s., or, perhaps, nothing. On these grounds only I intend to support the Bill. I hope, if the amendment is carried, to submit a proposal pledging the Commonwealth to return to the States, .for the life of this Parliament - that is, for a period of three1 years - the sum of 25s. per head per annum, but beyond that I do not feel inclined to go. It is of no use to pledge ourselves for a period of ten years. I intend to support the amendment.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [3.31].- Senator Sayers has, I think, placed himself in rather an inconsistent position, because in the last Parliament a majority, rightly or wrongly, favoured the placing of a provision in the Constitution for the payment of 25s. per head per annum. Had the decision of Parliament been accepted by the people at the referendum, we should have been pledged, in any circumstances, to find that amount until the people saw fit to again alter the Constitution. Senator Sayers now takes up the position that the Parliament has no power to bind the Commonwealth for ten years, but that it may bind itself for three years. He argues that a new Parliament, might be elected with entirely different views from ours. That may be so, but it should be borne in mind that the present Parliament, in its peal this very measure. The honorable senator may say that that would be an inconsistent proceeding, because, inasmuch as honorable senators had made a pledge today, they would be bound, in honour, to observe it until the expiration of the Parliament.
– I should, anyhow.
– That, I admit, is a very strong position to put. Technically, this Parliament, in another session, would have exactly the same right to abandon its decision of to-day as a subsequent Parliament would have.
– It would not be honorable.
– 1 admit that.
– -There would be no more stability in the three years than in the ten years in the Act of Parliament.
– No. A great many honorable senators have stated that they would not consider themselves individually bound by a period of ten years. But individual senators would be just as much bound by a ten-years’ period as by a three-years’ period. Honorable senators have said that if, in their opinion, the needs of the Commonwealth called for a repeal of the Act, they would be. prepared to do so at any time. If we follow out the wording of section 87 of the Constitution, it will put us in an awkward position, because it will lead the public to believe that this payment was absolutely fixed for a period, and that the Parliament did not intend to alter the provision until after the expiration of that period. We all know that, with regard to any law, one Parliament cannot bind itself or any succeeding Parliament. Senator Stewart laid great stress upon a mandate which, he said, had been given by the people to the Labour party to do many things. But I would remind him that a mandate has also been given to the Parliament by the people in regard to making this payment to the States for a period of, at least, ten years. During the progress of the elections a manifesto from the Labour party, signed by Mr. Fisher, as chairman, and Mr. Watkins, as its secretary, was placed before the people. Although honorable “senators may say that individually they are not bound by the manifesto, yet they cannot overlook the fact that it bore the signatures of two representative members of the Labour party. When the leaders of a great party, speaking on its behalf, make a certain statement to the electors, and it is returned with a majority, that statement is as much a mandate from the people as is any other matter which was included in the manifesto, and which may have been advocated.
– It will be observed, too.
– Here is a Minister who recognises that there was just as much a mandate to the Parliament to enact this payment to the States for ten years as there was to carry out important portions of the policy of the Labour party. The manifesto which appeared in the Sydney Morning Herald of the 5th March, 1910, contained this reference to a ten years’ guarantee -
We have been told that some guarantee of reasonable stability of this arrangement is due to the State. We do not deny the reasonableness of such a demand, and have always been prepared to concede it. And we are prepared to give a guarantee that, for a period of ten years, we will do nothing to disturb the proposed arrangement. At the end of that period, if the Parliament so decided, the matter may be submitted to a simple referendum of the people to determine whether the scheme should be accepted for a further period.* In this way an effective assurance of stability would be assured to the States, the financial arrangements of the Commonwealth fixed for a definite period, and the rights of the people to make what laws they please remain unimpaired.
Not only did “the manifesto distinctly set forth a period of ten years for the payment of this amount, but it went on to say that at the end of that period, if the Parliament should so decide, the people might be asked by a simple referendum to determine whether the payment should be continued for a further period. With that declaration in their possession, the people had a right to expect that the policy of the Labour party was to give stability to the arrangement for ten years, and to continue the payment until a simple referendum was taken to ascertain the will of the people. According to the language of the manifesto, the matter was not to be left to the Parliament itself to deal with, but was to be brought before the people after a certain period. In pursuance of that pledge, the Government have proposed to make the payment for a period of ten years, adopting the language of section 87 of the Constitution, “ and thereafter until the Parliament otherwise provides.” In advocating his amendment, Senator Givensstated why he favours the adoption of a fixed period. He said that the Commonwealth may be placed in such a position that it will not be able to properly finance all its great and important obligations. He also pointed out that there might be a difficulty with regard to defence, and I discovered from his arguments that, in hi& opinion, the cost of our defence should be a charge against the Customs and Exciserevenue.
– No, a charge against the Consolidated Revenue.
– .The honorable senator suggested that it was a necessity that the Commonwealth should hold the whole of the Customs and Excise revenue, in order that it might have adequate funds for its defence.
– I did not say anything of the kind.
– My view is that the cost of defence is properly a charge, not on any portion of the revenue, but on the Consolidated Revenue generally. It is a charge upon- the country, which must be met in some way or other, but it should not be met directly from one source. The argument that we should retain’ the power to take the whole of the Customs and Excise revenue does not appear to me to have a sufficient justification behind it. Senator Givens also described this 25s. per head proposal as a policy which had been formulated by the State Premiers, and he refused to be guided by their views. It certainly was agreed to by the State Premiers, but on the understanding that it should be placed in the Constitution and remain there until it was altered by a vote of the people. I have no doubt that whatever proposals ‘the Government ask the Parliament to accept, they will have in their minds a method to properly finance them. It may be that many honorable senators will not agree with that way ; but, of course, that is always open to question. I do not conceive that the Government will attempt to place any obligations upon the community unless they believe they can see their way clear to properly finance them. That question, however, does not arise at the present time. When the Government submit any proposals involving additional expenditure, it will be for the Parliament to indicate its opinion as to the wisdom of their policy. We, of course, have to recognise that no Government can do everything which they think ought to be done where the expenditure of large sums is involved. But, when the Government do submit their financial proposals, they will have to regard this 25s. per head payment as a fixed charge which the Commonwealth will have to provide. Let it all be borne in mind that this is not a Parliament which may do as it pleases with the States. Under the Constitution, the States were assured that the Commonwealth would return to them a certain proportion of the Customs and Excise revenue for a period of ten years, and until the Parliament otherwise provided. It was realized at the time that if it were a National Parliament, it would recognise that the solvency of the Commonwealth would require the States to be kept solvent.
– With one exception, have not the States equal power with us to raise money?
– Technically, the States have the power; but, practically speaking, have they? If the Commonwealth utilize the power of taxation to such an extent as to approach the maximum which can be placed on the people, then the reserve taxing power of the States will be of little value.
– They cannot get any revenue from Customs and Excise duties.
– No. It has already been said that the only power which will be left to the States, if they want to levy a land tax, will be to tax the properties which come under the Federal exemption of £5,000. Our duty lies both to the States and the Commonwealth. The Commonwealth is not a body which has no concern with the States,, nor are the States in such a position that they have no concern for the prosperity of the Commonwealth. The electoral body is the same in each case. We are clothed with certain legislative powers, the exercise of which necessarily require a large revenue. But there are large and important matters of internal development left with the States. In all probability they will never be removed wholly from the States. The States have to finance these matters. They have to open up their territories and make them suitable for the settlement of a larger population. All this work costs money. The States are doing it, not alone in their own interests, but in the interests of the Commonwealth as a whole. The larger our population, the greater will be the power of the Commonwealth as a whole, and the more able shall we be to deal with matters from a national stand-point, and to protect the country from possible invasion.
– We cannot do that without money.
– And the States cannot internally develop their territories without money. It is our duty to consider both sides of the case. We have a mandate from the people to make this arrangement with the States for at least ten years, just as certainly as the Labour party have a mandate to impose land taxation. That mandate was embodied in a manifesto issued by the Prime Minister during the last elections. One of the strongest points used in the electorates in opposition to the placing of a provision in the Constitution was the fact that the Labour party were pledged to at least a ten years’ period. I heard that stated from platforms innumerable, and I read it in newspapers from one end of New South Wales to the other. Members of the Labour party said that they were prepared to vote for a ten years’ period, though they were opposed to a constitutional provision. I was one of those who would have preferred to see the ten years’ period extended to fifteen or twenty years. I should have liked to see the matter placed in such a position that an alteration could not have been made without a referendum to the people. But, nevertheless, I regard a ten years’ period as much better than leaving the matter without any fixity. Consequently, I cannot vote for the amendment, though I realize how utterly impossible it would be to make the Bill stronger in the interests of the States. I remind the Committee that the Financial Agreement submitted at the instance of the last Government narrowly escaped being carried by the constituencies. I find that 645,514 electors voted in favour of the proposed law, whilst 670,838 opposed it, showing a majority against the proposal of only 25,324. Had it not been for the strong agitation against the Fusion policy in New South Wales and Victoria, the proposed law would have been carried in a majority of the States. In Queensland, 87,130 votes were recorded for the proposed law, whilst 72,000 were recorded against it, showing a majority of 15,000 in favour of it in that State. In Western Australia, there were 49,050 electors in favour of the proposed law, whilst those against it numbered 30,392 - a majority of nearly 19,000 in favour. Nevertheless, in Western Australia there were influential members of the Labour party who stated that they were in favour of a twenty-five years’ period. In Tasmania there were 32,167 votes recorded in favour of the proposed law, and 21,454 against it. So that there was a majority in favour of IT,000 votes in that State. In South Australia strong efforts were made in opposition. Very pronounced views were placed before the people by influential persons. But, nevertheless, we find that while 49,350 were in favour of the proposed law, there were only 51,250 against it. In other words, there was only a majority of about 2,000 against the proposed law. Compare this small majority against the Fusion policy with the very large majorities recorded in favour of it in Queensland, Tasmania, and Western Australia. The manifesto of the Labour party gave the people an assurance that the States would be placed upon a sound basis for ten years. In view of that fact, I contend that the Senate would be false to the people of the country if they were to treat this Bill as though it were an ordinary law which might be amended at any time by the decrease of the term which is specified in the measure. I admit that the allowance which the Commonwealth is making to the States is liberal in view of the greatness of its own requirements. It is absolutely necessary that we should recognise the position of the States, and that we should insure their being governed on sound lines. It is our duty not only to recognise the mandate of the people, But, apart from that consideration altogether, to see that the solvency of the States is maintained, and that they are not robbed.
– Robbed ! Who is proposing to rob them ?
– Yes, I say robbed ; because the States have a duty to perform to their people, and we must recognise the obligations and necessities which devolve upon them. They are called upon to perform important functions, and must have money to pay for them, therefore their main source or revenue before the establishment of the Commonwealth was Customs and Excise. It is only just that the States should participate in the amount of money that is raised from this source. I trust that the Committee will reject the amendment. I should like to see a longer term fixed, but recognising that it is not’ practicable to do what I desire in that respect, I shall be prepared to accept the’ term provided in the Bill if I cannot get a longer period.
– I wish to say a word or two in reply to my junior colleague from New South Wales,” Senator Gould. He has quoted a portion of the Labour manifesto, but has not quoted all that was essential to illustrate his argument. I may state at once that I am not in accord with the’ amendment, and’ intend to vote for the clause as it stands. I should, however, like to make myself clear in regard to trie matter, in justice to the mul»titude of voters who sent me here, not perhaps because of my ability, but because of my loyalty to- the party to which I belong. I regret to say that during the elections in New South Wales there was a little misunderstanding between die State members of our party and the Federal party. A breach was threatened, but happily that breach was bridged over by the manifesto issued by the Leader of the Federal Labour party. The manifesto contained a guarantee to the people of Australia that the States would receive 25s. per capita for ten years. Undoubtedly I was sent here to support that policy, and. as far as I can secure it, it is going to be carried out. I am sorry that certain honorable senators who are pledged to the Labour party’s platform are trying to do something in opposition to the policy of the Government, although I admit that they have a perfect right to do so. It is pleasant to hear any man express his convictions in a straightforward manner. We have not heard much from the . Opposition about the caucus on this occasion, but they must have been convinced that the members of our party have . a perfect right to come out into the open and say what they think. Certainly I do not blame them. Senator Gould, in quoting from the Labour manifesto, picked out a little piece. I intend to quote the whole passage relating to the matter, and also the headings : “A policy worth fighting for,” “ Labour’s manifesto to the Austraiian people,” “ Performances in the past their pledge for the future.” On that policy I fought the elections and won. I am here to carry it out -
It is not the rights of the States nor Federal-, ism which are in jeopardy on this occasion, but the right of the people to govern themselves. lt is in support of this right, fundamental and going to the very roots of democratic Government, that we oppose the Fusion policy. We take no exception to the amount to be paid to the States, nor to the method of its distribution. These, in fact, are suggestions we ourselves first made public. Our objection lies against the proposal to embody the scheme permanently in the Constitution. To. that we are opposed. Upon the principle that the people have a right to govern themselves free of all restrictions we lake our stand. Neither autocracy nor “ the rule of the dead hand “ ought to trammel the purposes of a free people when expressed through the ballot-box.
If the people choose to permit the present proposal to remain for generations unchanged, they are entitled to do it. If they desire a change, on the other hand, opportunity should be given to them to effect it. Our objection to the Ministerial proposal is that, if once placed in the Constitution, it may be kept there indefinitely by a small minority against the. wish of an overwhelming majority of the people of Australia. For this reason we ask the people to reject the proposal.
We have been told that some guarantee of reasonable stability of this arrangement is due to the States. We do not deny the reasonableness of such a demand, and have always been prepared to concede it. And we are prepared to give a guarantee that for a period of ten years we will do nothing to disturb the proposed arrangement. At the end of that period, if the Parliament so decides, the matter may be submilted to a simple referendum of the people to determine whether the scheme should be accepted for a further period. In this way an effective assurance of stability would be assured to the States, the financial arrangements of the Commonwealth fixed for a definite period, and the rights of the people to make what laws they please remain unimpaired.
If Senator Gould had read the whole of that, he would have had to put a different complexion on the policy of the Labour, party and the reasons for issuing that manifesto. I am pledged to the people of New South Wales to support the policy enunciated in that manifesto. To that pledge I intend to be loyal. I make “ no bones” about it. Some .of my colleagues say that they gave no such pledge from the public platform, and I take their word for it. Well, I did, and therefore I shall carry out my pledge. Some honorable senators have grave doubts of the Commonwealth being able to carry out their promise to pay the 25s. per head to the States for ten years. J have no doubt myself, and believe we would be able to pay a greater sum if it should be required for State services. I have no hesitation in giving my support to the clause as it stands. I believe that it will be carried.
Senator Sir JOSIAH SYMON (South Australia) [4.10]. - I was exceedingly gratified to hear the views expressed hy Senator
Gould, because, from something which I saw in the press the other day - though 1 know we cannot always rely upon the press -I was under the impression that the honorable senator was disposed to support the amendment. I felt quite certain that when he had reconsidered the position he would see that to do so would be, not only detrimental to the position of the Commonwealth, but also to the position and requests of the States. I do not quite agree with Senator McDougall in his criticism of Senator Gould’s quotation from the Labour manifesto, because I do not think there was anything in the additional portions which the honorable senator read to qualify the pledge, and I may say the very creditable and patriotic pledge, given in the passage quoted by Senator Gould. It was quoted with a view of showing thai’ the Labour party’s manifesto contained an assurance that there would be a definite period fixed for the payment of 25s. per head per annum to the States. I am glad to find that the present Government are loyally carrying out that pledge, and that Senator McDougall also is going to be loyal to it. On the other hand, it gave me great pain to listen to the severe strictures which Senator Stewart passed upon the Government. I know he is one of those who do not spare the rod lest he should spoil the child. I know the chastening capacity of the honorable senator’s tongue, and even the Ministry have not escaped it. I wish to pour a little oil on the troubled waters, and say a kindly word of this Bill, as against the vigorous denunciation of it by Senator Stewart. The basis of the honorable senator’s criticism, in the first place, was that there was no mandate for the adjustment proposed by this measure. I wish to remind the honorable senator that there is a mandate. I am not alluding to the assurance given by the Labour party, through their leaders, but to the mandate in the Constitution to make an adjustment which shall be fair and equitable to the States, and, so far as the resources of the Commonwealth will allow, definite and stable. We know that under the Constitution the States were for the first ten years of Federation to receive at least three-fourths of the Customs and Excise revenue, and this came to about £2 10s. per head of their population. At the expiration of that time the arrangement was to continue until Parliament otherwise provided.
– Did that constitute a mandate for another ten years’ period?
– It is a mandate to adjust the matter on a fair and equitable basis.
– The Constitution says nothing about another period qf ten years.
– It would be an utterly inequitable and unjust thing if we were to place an adjustment upon the statute-book in regard to a matter of such supreme importance as this is to the finances of the country, running only, so to speak, from year to year. But that is the meaning of Senator Givens’ amendment. During the first ten years of Federation, the States have received threefourths of the net’ Customs and Excise -revenue and a good deal more, and it would be entirely unjust to say that in future the payments should be made to them in a hand-to-mouth fashion and in driblets from year to year, with, a standing invitation to repeal even that arrangement upon, it might be, any ad captandum pretext that was set up. That is not the way to legislate upon this subject, and I am sure that Senator Givens, upon further consideration, must agree that it is not. Last year every one of us declared before the country, first of all, that 25s. per head was a fair, perhaps a liberal, payment, and that we ought to be liberal to the States, and, secondly, that that payment should be fixed for some definite period. We were all agreed as to that. The rock upon which we split was the proposal to. embody that in the Constitution. And why? Because some of us said, and I am glad that a majority in the country agreed, that it was humiliating for the Commonwealth Parliament, intrusted by the Constitution with the adjustment of this matter, to shirk its responsibility, admit that it was not to be trusted, and refer the matter to the people.
– The honorable senator is contending now that future Parliaments pf the Commonwealth are not to be trusted.
– I am glad that the people rose to a full appreciation of their rights and their system of self-government, and said they would hot have the agreement put into the Constitution. The country gave no mandate with respect to the amount of the payment, or with respect to the period, except in so far as the. electors approved the manifesto of the party they returned to power.
– They left the matter entirely to this Parliament.
– And so they ought. There is no part of my political career of which I am more proud than the part I took in the rejection of the proposal that the Financial Agreement should be embodied in- the Constitution. I assisted in that matter to deliver Australia and the Constitution from a grave and serious danger, and I think we ought all to be grateful to-day that the referendum was so successful. But last year, when we were discussing the matter, we were told over and over again that Mr. Deakin had said in another place that the period during which he expected the proposed arrangement to’ last was from ten to fifteen years. I said that I was willing that it should be fixed at twenty or twenty-five years if it could be shown that the longer period was more desirable in. the interests of the Commonwealth and the States. But I objected to this Parliament not being trusted. I took up the position which I take up now, that if this arrangement is embodied in an Act of this Parliament, it will remain fixed and stable unless some great national catastrophe occurs to render it necessary to alter it. The honour of Parliament will be pledged by the passing of this Bill to maintain the agreement for ten years. Senator Sayers’ argument has been effectively riddled by Senator Gould. The honorable senator said that he was willing to fix the matter for three years, but not for ten years. With great respect, I say that the honorable senator entirely misunderstands parliamentary government. An Act of this Parliament would be no more binding upon us for the three years than it would be binding upon the Commonwealth Parliament for the ten years named in the Bill. If this arrangement is carried in’ this Bill, which I hope will become an Act, it will be just as binding upon us as a Parliament as though it were embodied in the Constitution, with this difference, that we who are charged with the responsibility of dealing with the subject shoulder that responsibility, and do not, like a lot of poltroons, cast it upon the people. I regard this Bill as a necessary corollary of what was done by the people at the elections. One reason why I am prepared to agree to the proposed period of ten years is that that is the period which was fixed for the operation of the arrangement under which we have ‘been working for the last ten years.
– Originally no term was fixed.
– Let us deal with what we have before us - with what the wisdom of the Convention decided, what the Premiers’ Conference modified, and the people approved, and that is the Constitution under which we are governed. I offer that to Senator Givens as a parallel, if not a precedent, for the period proposed in this Bill.
– The States are not to get 25s. per head of their population for the first year under this Bill.
– I am not dealing with that now. What the Government do in this matter is to say to the States, “ You agreed to take 25s. per head from the 1st July of this year. We are giving you all that you agreed to take, but we have to pay you three- fourths of the net Customs and Excise revenue for the current six months of the financial year,’ and during the first six months of the next year we will repay ourselves the excess of that payment over a payment for the year of 25s. per head.” I do not care what the exact figures are; it is a very excellent arrangement. Any one would say that the proposal of the Bill as to the period is a fair parallel to the period fixed for the operation of the Brad don section. The payment now proposed is, of course, much smaller than the payment under the Braddon section, but I still think, with Senator Gould, that 25s. per head per annum is a very liberal allowance. The period proposed to be fixed is a very fair period for the new experiment, if I may call it so, because no one can say how the finances of the country will turn out in the future. The next reason why I am perfectly willing to agree to a term of ten years is that the Government, who are responsible for the finances of the country, tell us that they see their way, in the absence of any cataclysm or national catastrophe, to make the proposed payment for ten years.
– When did they tell us that?
– In introducing the Bill.We have their assurance that in the absence of some serious emergency in the affairs of the country they believe they will be able to carry out the proposed arrangement for ten years.
– They have never given us any such specific assurance.
– Does not the honorable senator think that that assurance is contained in the Bill ?
– I do not.
– Very well, I do. When a responsible Government introduces a Bill in which they agree to make a payment for ten years, I should not insult them by saying that they do not see their way to fulfil their obligations under it. As Senator Gould said very forcibly a few moments ago, the Government are responsible for the finances, and must find the money. If their existing proposals are not sufficient for the purpose - and goodness knows they may be oppressive enough - we shall have an opportunity, of dealing with them, and saying whether we approve of them or not. But the Government pledge themselves and the Commonwealth by this Bill to make the proposed payments to the States, and they are responsible for seeing that the money is forthcoming for the purpose. That ought to be, and I am sure is, enough for us. We cannot deal with this proposal as a sort of Budget of Ways and Means. We should, on these two grounds, be satisfied with the proposed period of ten years. Senator Givens proposes an arrangement which would run from year to year, and would give no stability whatever to the States. We said that it was not necessary to embody the Financial Agreement in the Constitution, since stability would be given to. the proposal if it were embodied in an Act of this Parliament, because the honour of Parliament will be pledged to it, as it is to the redemption of loans. In a Loan Act provision is made for the redemption of the loan within a certain number of years, and the public creditor must trust to the honour of Parliament. Parliament could repeal the Act in the next session, but that kind of thing is never done. Surely the honour of Parliament will be just as securely pledged to providing for this payment to the States as it would be to the public creditor by a Loan Act for redeeming the loan?
– The repayment of a loan is the repayment of money borrowed.
– This is the repayment of money taken.
– It is not.
– We took over the whole of the revenue of Customs and Excise from the States, and we agreed to give them back three-fourthsof that revenue, because it would have been unjust and unfair to ask them to finance their affairs without some portion of the revenue derived from that, source. Now we say that the necessities of the Commonwealth make it impossible for us to give them back so much, and that we will, in future, pay them a certain amount per head, and give some stability to that payment. Where is all the concern that the State Treasurers should have a fair idea of what their finances are likely to be from year to year if we do not fix some period for this payment?
– If the honorable senator were a Judge, and any man offered him such reasons for altering his judgment, he would “ shoo “ him out of Court.
– That is a very easy thing to say. I should like to sit as Judge upon my honorable friend, sometimes. I do not know what I should do with him, but I think I would treat him with more mercy than he is extending to the Government in this matter.
– More justice, too, I hope.
– It is not necessary that I should treat them well when the honorable senator does so.
– I think I should take a fair view of the Constitution and the obligations of this Parliament on one hand, and the necessity on the other of providing some sort of stability for the States. As Senator Stewart has said, this Parliament has. a perfect right to repeal this Bill after it is passed, or it may leave its repeal to the next Parliament. But even if such a thing were conceivable, surely it is better for us to be honest in our assurances to the States and give the proposed arrangement some element of stability. It is better for us to put in some period and, so to speak, to chance it, than to leave it out altogether.
– To chance it ! Is that the way to legislate?
– Certainly not ; I am trying to come down to my honorable friend’s level. There is no chancing it at all. Once the Bill is passed the payment to the States will remain unaltered for ten years, unless a great pub- l.c necessity should arise, when, of course, everything must give way to the needs of the country. The only other argument which was offered was, that there was no money with which to make this payment. I could not quite follow Senator Stewart’s speech. It was a most impassioned deliverance, full of rhetoric, and a most delightful criticism of the Ministry, but that was all. He referred to the Northern Territory. “ Why,” he said, “you have to provide £4,000,000- or ,£8,000,000 for die Northern Territory,” but he is going to stop the payment of that money. If he had said, “ On consideration, and in order to stop this abominable scheme, I am going to vote for the Northern Territory Acceptance Bill, so as to provide another way of getting rid of £8,000,000,” I could have understood him. On the question of the Western Australian railway, our sympathies are, perhaps, more nearly together. Still, all this is rather imaginary. It all comes back to this position that, if the payment is authorized, the Government will have the responsibility of finding the money. What we are pledging is not our personal honour, but the honour of Parliament. I believe that the promise of Parliament, given by this Bill, will be fulfilled until the expiration of ten years.
– It is quite refreshing to find that the policy of the Labour Government is so agreeable to members of the Opposition, whom we fought so hard lately, that the chief defenders of that policy are the acting Leader of the Opposition and Senator Symon. I would point out that with all the begging of the question which we have heard from the other side, no one has come down to bed rock and shown how the Commonwealth can finance the proposal of the Government. My figures have never been disputed.
– The honorable senator’s argument is that, unless we get complete control of the Customs and Excise revenue, we cannot finance the proposal.
– If we are not to return money to the States from Customs and Excise, there is m reason why we should return them a farthing, because every other source of taxation is wide open to them.
– Except land taxation.
– The States have exactly the same right to impose a land tax as the Commonwealth has.
– Is it quite so open?
– It is quite as widely open. There is not a single provision in the Constitution of the States, or of the Commonwealth, to prevent the former from imposing a land tax of 10s. in the £1 if they wish. Senator Gould has used the ingenious argument that the Labour party is bound by the manifesto issued by its Leader and secretary during the general election. Everything which he said would be quite true if the manifesto were covered by our platform. The constitution of the Labour party is entirely different from the constitution of any other party. Not only has the Leader no right to lay down a policy for the Labour party in Parliament, but the members of that party in Parliament have no right to lay down a policy for themselves. It is the Labour people all over Australia who do it.
– And they did that at Brisbane.
– Certainly, but nothing was said there about a ten-years’” period.
– The arrangement was to go on for all time.
– Not one word was said about it, and no platform was laid down there or anywhere else. The most which was ever done at the Conference was to make a recommendation, and there was not a single thing put in either the fighting or the general platform.
– To whom was the recommendation made ?
– To the members of the Australian Labour party in the Federal Parliament.
– And they always follow the recommendations which are made to them.
-They ought to do so.
– This Bill is not carrying out the recommendation from the Brisbane Conference. Neither the Leader nor any other officer had the right to formulate a policy for the Labour party, and a majority have no right to bind a Labour member on a particular question which is not specified in the platform.
– Does not the honorable senator think that the people of Australia would take the statement which was signed by Mr. Fisher as being the- policy of the Labour party?
– They would, if the Labour party occupied a position similar to that of the old parties, and which the country and their members had to swallow whatever their leaders said. But the people of Australia know quite well what the constitution of the Labour party is, because almost every week our platform is published in the Labour press.
– Is not the minority of the Labour party bound by the majority verdict of the caucus ?
– Only in regard to what is distinctly laid down in the Labour platform. On every other question a Labour member is as free as air. A question has arisen as to what we have a mandate from the country to do in regard to the States. There was never any party policy laid down by any manifesto except the platform of the Labour party. The honorable obligation of this Parliament to do what is right and fair to the States will remain just the same whether it is put into :i measure or not. Senator Symon was just as much opposed to putting the Financial Agreement in the Constitution as was anybody else. He rendered as good a service as any man in the Commonwealth towards preserving intact the power of this Parliament to deal with this question, but he now takes up an inconsistent attitude. He then said that we had no right to bind future Parliaments.
– No. What I said was that you had no right to shunt your responsibility, that you must make the payment by Act of Parliament, and not put a provision in the Constitution.
– What right have we to lay down a law for succeeding Parliaments ?
– It is done irc every Act.
– What right had we to do it in the Sugar Bounty Act?
– I am continually getting that Act chucked at ‘me by such an ardent, old-time Free Trader as Senator Pearce. Queensland wants nothing from this Parliament for her industries but the same fair treatment as every other industry gets. We have no right to suppose that future Parliaments will not do the fair and just thing. I believe that they will be quite as prepared to act fairly and justly as we are, and certainly they will have a far better knowledge as to what is a fair and just thing. I would remind Senator Pearce that one of the chief reasons put forward by “the State Premiers at the Melbourne Conference, and by their supporters, was that it was necessary to bind the Commonwealth to give this large return to the States, in order that the Commonwealth should never have a large sum to play with, and consequently would be unable to indulge in socialistic experiments. We now find a Labour Government conceding .that very principle to the State Premiers. Senators Gould and Symon said that we must not do anything which might render the States bankrupt. With all due respect to those honorable senators, I hold that a statement of that kind is the merest nonsense, and would not deceive an intelligent person for a moment. If they were right, one would think that the Commonwealth was something outside of the people of Australia, that it was a rich Croesus which had money to throw back to the people. ‘It is not anything of the kind. It has not a single farthing to give to any one until it is obtained from the people of the States. When Senator Symon talks about our robbing the States, I ask, “ How can you rob the States which really are the people by leaving the money in their pockets”? What he wants the Commonwealth to do is first to take the money out of the people’s pockets, and then hand it back to the State authorities.
– Why not abolish all the State Parliaments?
– Why not go in for unification straightforwardly?
– Those questions do not arise here. Apart from Customs and Excise, the States have ample power to resort to every sort of taxation if they think fit.
– Have we not?
– Our power of taxation is unlimited. All that it is necessary for either party to do is to raise sufficient money for its own requirements. In my opinion a time is soon coming when, unless we resort to new taxation in various directions, we shall not be able to raise from Customs and Excise, and land, a shilling more than we shall require. I object to this attempt to bind future Parliaments. Every one knows that this Parliament has been crippled by the operation of the Braddon section. There are various things which we could not attempt to do, and there are ‘many things which we tried to do, but could not carry out effectively merely because we had not the money. In spite of that fact we are now asked to put in a provision which would cripple us before the end of its operation a great deal more than has the Braddon section. I shall never agree to the plea put forward that this Parliament should be crippled financially in order that it shall not have any money to play with, and therefore shall never be able to indulge in socialistic experiments. I hope to see a great many of those experiments tried by this Parliament for the benefit of the people, and so far as I can I shall .retain in its hands the power to do so if it thinks fit.
– Much of the criticism which has been directed to the obligations of the Prime Minister and the Government with regard to the payment of money is outside the issue at present, because I take it that the verdict of a jury, far more important than that of party, has been pronounced. There is no disputing the fact that the Prime Minister submitted a distinct proposal in plain words to the people of this country. They were promised that if the Labour party were returned to power the States would receive 25s. per capita for ten years. I take it that the Labour party received a verdict from the people largely because that was part of their policy. Therefore, it is idle for us to dispute as to how far that pronouncement of the Labour party binds them, or how far the Prime Minister is bound by the platform of his party. The present discussion must be educative to the people, because we now learn from very prominent members of the Labour party how far even a Prime Minister can bind his supporters to a particular policy. The question is, however, whether we shall follow out the policy of paying 25s. per head to the States for ten years. I certainly consider that the States require to have safeguards and guarantees, as far as Parliament can give them, that this money, so long as the Commonwealth can afford to pay it to them, will be paid. Senator Givens has impressed upon us the opinion that it is unsound finance for the Commonwealth to be returning Customs and Excise revenuetj the States, because he says we thereby encourage the States to play fast and loose with money which they have not to raise through taxation. But my honorable friend must have forgotten the circumstances under which the Constitution was framed. The States would not have come into the Union except for the Braddon section.
– The honorable senator does not know whether they would or would not.
– What I have stated is a reasonable inference from the history of the Convention itself. Conference after Conference was held, and the representatives of the States split upon the important matter of a proper adjustment of the Customs and Excise revenue between Commonwealth and States. At one time it seemed impossible to come to any conclusion. The Convention was on the point of breaking up. Then, against the wishes of Sir Edmund Barton, who was the Leader of the Convention, Sir Edward Braddon submitted a proposal which, in its present form, we know as section 87 of the Constitution. He practically said to the Convention, “ It must be that or nothing.” Had not the Convention accepted some such proposal there might have been no Constitution at all. Sir Edmund Barton accepted it under the strongest protest, and with grave misgivings, but nevertheless he advised the Convention to agree to it, recognising that otherwise the Constitution would not be ratified. Surely the members of the Convention understood the wishes of their people and Parliaments. I would point out that section 87 offers an alternative with regard to the Customs and Excise revenue. The Commonwealth Government could not spend more than one-fourth of that revenue, and three-fourths must be returned to the States; but the Commonwealth had the alternative that if it did not spend the full one-fourth it could apply the balance in payment of interest on the debts of the States. We need not have returned one penny of Customs and Excise revenue over and above the three-fourths if the Commonwealth Parliament had chosen to determine to take over the financial obligations of the States. But I contend that until the Commonwealth Government has formulated a complete scheme for taking over the States’ debts, it is bound in honour to carry out the principle contained in section 87, and to return to the States as much as it can do consistently with making provision for Commonwealth necessities. I am not an ardent admirer of many portions of the policy of the present Government, but in this case I must assist them. At the same time, I must admit that Senator Givens and Senator Stewart have some grounds for the alarm which they have expressed. I confess myself that when I study the projects of the Government, and contemplate the enterprises which they propose to carry out - some of which indeed they are absolutely bound to undertake - I am forced to recognise that expenditure must necessarily increase. Senator Givens is quite right in asking the Government how they intend to meet their obligations.
– Here we have an alliance between Senator Givens, Senator Stewart, and Senator St. Ledger !
– Not at all, because I am going to support the Government in carrying out their distinct pledge to the people.
– Then there is a fusion of Queensland senators?
– No, we have only to interpret as best we can our duty to the States. But when I see expenditure mounting up by millions, I do not know how the Treasurer is to continue to pay back 25s. per head to the States. It is a mere sum in mental arithmetic that, with financial engagements accruing to the extent of between eight and ten million pounds, and in face of the enormous expenditure which we are now incurring, it must be difficult for the Treasurer to find the money to return this amount to the States for ten years. I fear that the exigencies of the Treasurer will in a comparatively short time compel him to come down, and ask Parliament to repeal this Bill. That leads me to say that, while Senator Symon prided himself upon the work he did in South Australia in causing the rejection of the Financial Agreement, I believe that he will come to realize that it is really to be regretted that the agreement was rejected. I venture to say also that when, in the light of subsequent events, we take the verdict of the people again, the Government will not receive even the very narrow majority which they received at the last election with respect to« their financial proposals. It is as plain as the lights in front of us, that in view of the great and growing expenditure only two courses will be open to the Government. One is that they may be forced to come Sown, and ask for the repeal of this measure on the ground that 25s. per head is more than they can afford, and the other is that they will be called upon to pile up taxation in every direction.
– The honorable senator wants the Commonwealth to pay 25s. per head for all time, and yet he says that we cannot pay it for ten years.
– I am speaking in the light of the policy of the Government. I feel confident that had the party to which I belonged been returned, we should have been able to finance the country on sounder lines. By that means, we should have been able to continue to pay 25s. per head to the States. I beg to say, in conclusion, that I shall support the Government, because what they propose is the nearest that I can get to what I require as a guarantee to the States. I regard this Bill as involving the personal and political honour of the Government, who are pledged . to pay this money to the States if they possibly can. I should like to have -it paid for a longer period than ten years ; but 1 recognise that there is no chance of securing a guarantee to that effect. I am, however, confident that in the near future, the Government will be forced, either to ask for the repeal of this Bill, or to provide for increased expenditure by an increased burden of taxation.
– I intend to oppose the amendment. I agree with Senator Givens and Senator Stewart in some of their arguments. I agree with Senator Givens, for instance, that ten years is too long a period for any financial arrangement. The finances of any Government are so liable to change in ten years, from a variety of circumstances, that any such period is too long for entering into so serious an obligation as this. I believe that ten years was too long a period for the operation of the Braddon section of the Constitution. I wish to deal briefly with the attitude of Senator Givens in regard to the Labour party’s manifesto at the last election. I may state that I and my colleagues in New South Wales, had been campaigning a considerable time before that manifesto appeared; and, while Senator McDougall has expressed himself in favour of a ten-years’ period, neither -Senator Gardiner nor I were pledged to any period. . I maintained throughout the campaign that the Commonwealth Parliament could be trusted to act fairly to the States, and that it was unwise to tie its hands even for ten years, because no one could predict what might happen in that time. It appeared to me that if we had to cope with a declining revenue from Customs and Excise, together with an increasing charge under the per capita system, it would become exceedingly difficult to carry out the obligation. But, still, I cannot get away from the fact that the party to which I belong in New South Wales gained thousands of votes - perhaps tens of thousands - from the understanding that the manifesto referred to had been drawn up with our consent, and with our indorsement. We certainly did nothing whatever to repudiate it Nor am I aware that Senator Givens, Senator Stewart, or any other honorable senator, took it uponhimself to explain to the people, that that manifesto spoke merely for those who drew it up, and did not bind the rest of the party. It is of no use for us to come here now and explain the exact details of the organization of our party. The vast majority of the people do not trouble themselves about minute details. They consider the general principles of our organization. When they see a manifesto signed by the Leader and the secretary of our party, -and thousands of them give votes to our candidates on the strength of that, it is a fair thing to recognise that if we had repudiated that document, and had not promised the States any consideration at all, the votes recorded for us might have been considerably less. At all events, we should have made clear what our position was if we did not intend to be bound by the manifesto. There is no doubt about it that thousands of votes were cast for us in the belief that we approved of the manifesto and had no objection to a term of years. It is, therefore, I hold, an obligation upon our party to do what it can to establish financial stability in regard to the States. I feel morally bound, therefore, to adhere to the proposal brought forward by the Government in the measure before us. It appears to me that what has occurred offers a most triumphant vindication of our party from the misrepresentations that were made- by newspapers and politicians that we only wished to get into office, and that if we succeeded, the States might go hang for payments from the Commonwealth Treasury. That is a proof that the Labour party are not disposed to take advantage of technicalities, but are prepared to carry out their promise to deal fairly with the States. With regard to the argument that we cannot fix a period of ten years, because we cannot bind future Parliaments, I take it that it is in the power of this Parliament to repudiate next session what it does this session ; but that is a power which is never likely to be exercised. If we carry this: proposal for a period of ten years we shall be doing what we can to keep faith with the public, and if a future Parliament repudiates the arrangement the responsibility for doing so will rest with it. I can quite understand that a great emergency arising might justify a future Parliament in repudiating this proposal. But all legislation is passed with such an understanding.
Future Parliaments will be in honour bound to carry out this arrangement for the period mentioned, if it is possible to do so. I have already said that I believe it would have been better to have proposed a payment to the States on a sliding scale, gradually reducing the amount until the financial relations of the States and the Commonwealth were entirely separated. But it is of no use for individuals to expect to be able to carry out their own particular fads. I do not think that this, or any future, Parliament will repudiate the proposal now submitted, unless it is found to be impossible to finance it, and no one will ask Parliament to do what is impossible. With regard to Senator Givens’ statement, that we shall be hampered in carrying our Socialistic reforms if we bind ourselves to this payment, let me say that the wealth of a country is not decreased by the manner in which its revenues are divided. By paying this amount to the States we may have less money available for public purposes, but the Labour party in the State Parliaments may be able to carry out what the party will be unable to give effect to in this Parliament.
– Especially with their Upper Houses.
– A vigorous administration will not hesitate to take steps to swamp such an Upper House as that which we have in New South Wales if it stands in the way. The powers of this Parliament are so great, and the field of taxation open to it so wide, that I have no doubt it will find the ways and means necessary to carry out any scheme indorsed by a majority of its members. Senator Stewart very gloomily stated the expenditure with which the Commonwealth is faced, but the amounts he mentioned were very much over stated. I am personally opposed to borrowing, but I believe that Parliament will decide to carry out many of the public services to which he referred with loan money, and we shall have to meet only the interest on the capital payments which the honorable senator referred to. Taking all things into account, I say that we are morally, if not technically, bound to this proposal, because we never repudiated the Labour manifesto.
– Ihave been amused, and somewhat enlightened, by the debate upon this clause. I hold that the Government have no mandate from the people to bring in the proposition contained in this Bill. We know what the constitutional position is - that until the end of this year the Commonwealth must return to the States threefourths of the net Customs and Excise revenue. There was a proposition by the late Government to alter that arrangement by paying to the States 25s. per capita, beginning from the 1st July of this year, such arrangement to be embodied in the Constitution. The late Government passed a Bill dealing with the matter which was remitted to a referendum of the people. What did the people do with it? They swept it aside, and yet we have honorable senators saying that this Bill is a part of the arrangement made with the people.
– This was the alternative offered by our party.
– It may have been, but the honorable senator has no ground for saying that the people accepted it.
– A majority of the people certainly did.
– The people, by their vote, simply swept away the Financial Agreement, and said that we should go back to the constitutional position.
– Hear, hear. It was an independent and separate issue.
– Exactly. No party has now the right to come here and say (hat, because the Financial Agreement was not accepted by the people, they are justified in bringing forward this proposition. As Senator Keating has said, a distinct and separate issue was submitted to the people, and they said they would have none of the Financial Agreement.
– They accepted our alternative.
– No, they threw upon this Parliament the responsibility of dealing with the matter.
– They said we were to go back to the constitutional position, and that at the end of 1910 Parliament should make such provision as it thought proper. This Bill does not do anything of that kind.
– It carries out the promise made that the States should have the payment for ten years, in lieu of the proposal made by the honorable senator’s party.
– The people had nothing to do with that promise. All they said was that they would not have the Financial Agreement put into the Constitution.
– The honorable senator contends that their vote was only a negative one?
– Yes, that is all it was. They did not, by their vote, give the Labour party any mandate whatever with regard to a ten-years’ period.
– They gave us the power.
– I do not say that the Labour party have not the power.
– And the public knew the conditions on which they gave it.
– They adopted the constitutional position that three-fourths of the Customs and Excise revenue should continue to be paid to the States until the end of 1910, and that then a new arrangement should be made, if necessary. The Government, in this Bill, say that they are going to give the States 25s. per head from the 1st July of this year. But they are bound under the Constitution to return to the States three-fourths of the net Customs and Excise revenue up to the 31st December of this year.
– We will take it out of the next half-year, and make the payment for the whole year 25s. per head.
– I say we have no right to do it. We are in honour bound not to do it. We are bound by the Constitution to give the States three-fourths of the net Customs and Excise revenue up to the end of 1910, and we may make a new arrangement after that.
– Unfortunately, this has nothing to do with the amendment before the Committee.
– I think it has. Senator Givens is proposing to do away with the ten years’ period, and that period is under the Bill to date from the 1st July. If the Government were proposing that it should date from the 1st January next there might be something in Senator de Largie’s contention. The Government propose to pay the States three-fourths of the net Customs and Excise revenue up to the 31st December, and after that to give them a balance representing 25s. per head for the whole of the financial vear, minus £450,000.
– No, they will get it all.
– I refer honorable senators to the schedule of the Bill -
– Is the honorable senator against that?
– I say the Government have no right to do it.
– Is the honorable senator against it ? He supported it in the Financial Agreement.
– We supported an agreement which we said we would stand by if it was embodied in the Constitution.
– Under it the States were to give the Commonwealth£600,000..
– If the Financial Agreement were embodied in the Constitution. I say that we are relieved of all that. We have now to make provision between the Commonwealth and the States as from the 1st January, 1911. When this matter was previously discussed, Mr. W. H. Irvine said that the proposal to put the Financial Agreement into the Constitution was like putting two people on one horse. One had to be in front, and he contended that the proposal meant putting the States in the saddle, and the Commonwealth on the crupper. Senator Symon afterwards adopted the simile. But what are we doing now ? Honorable senators in supporting this Bill are putting the States in the saddle and the Commonwealth on the crupper, and strapping them there for ten years. I know that” it is said that in this we are staking the honour of Parliament. I am aware that Mr. Fisher said that so far as he could he would endeavour to keep this arrangement for a period of ten years. When the matter was discussed last session I did not wish that any term should be fixed. I held that if the agreement were embodied in the Constitution there was power to take it out again whenever it was proved to be necessary.
– It was not so easy as to put it in.
– We have heard that argument over and over again. It surprises me intensely that it should be used by the Labour party. They profess that they are always willing to trust the people, but they say that if the agreement were put into the Constitution they could not trust the people to take it out. That is a distinct reflection upon the people of the small States. It accuses them of a want of patriotism. It means that if they were shown that it was necessary to revise the terms of the agreement they would say that as it stood in the Constitution it secured to them a payment of 25s. per head, and they would not give it up.I do not believe for a moment that the people of the smaller States would have said anything of the sort. I believe they would have been quite ready to consent to an alteration if the interests of the Commonwealth demanded it. I do not say that they will not demand it. I 3o not think we can look ahead for ten years.
– What right have we to do so?
– Why are honorable senators opposite doing it?
– A little time ago the honorable senator was looking ahead for all time.
– That is the silly statement we have heard from Senator Pearce and others all through.
– The honorable senator knew it was intended to be for all time, and that is why he was so anxious to have the Financial Agreement embodied in the Constitution.
– It was to continue so long as the people desired, and no longer.
– Pawning the honour of the Federal Parliament.
– And now we are said to be pledging the honour of the Parliament; but if circumstances require it, there will be a proposition in four years or six years’ time to repeal this measure, notwithstanding the fact that the honour of Parliament is being pledged in this way. 1 contend that the position I have always taken up, that no time should be fixed, is the soundest. I feel somewhat inclined to support the amendment.
– I should not be in the least surprised, as the honorable senator seems to be hopelessly befogged.
– I am sure that the honorable senator’s speeches since his elevation to the Treasury bench must have enlightened every member of the Senate. If honorable senators go wrong now, they must do so wilfully, since Senator Findley has shown them the right way.
– I hope that, when I do speak, I shall make myself understood, which is more than the honorable senator has done.
– I have admired the eloquent silence of the honorable senator since his elevation to the Treasury bench.I -have listened to Senator Stewart, and if I thought it would bring about such a revolutionary state of affairs as he seems anxious to see, I might vote for the amendment; but I intend to give the Government a chance.
– “ Yes-No- Yes.”
– I am going to see whether they will stick to their Bill, after all.
– The honorable senator should get down off the rail.
– We have seen some other people doing this kind of thing. I heard the honorable senator say the other day, in reply to a question put to him in connexion with this matter, that his answer was “ No-.Yes-Yes.” Seeing that we could not get the Financial Agreement embodied in the Constitution, I do not think I should be justified in refusing to accept a proposal to make this payment to the States for a period of ten years.
Question - That the words proposed to. be left out be left out (Senator Givens’ amendment) - put. The Committee divided.
Majority … … 21
Question so resolved in the negative.
Senator Givens to test the feeling of the Committee on the question of fixing no period.I propose now to move the omission of the word “ ten,” with a view to insert in lieu thereof the word “ fifteen.”
GOULD.- Oh that question I desire to say a few words. In the first place, sir, I draw your attention to the language of section 53 of the Constitution. Mine is not a proposal either to impose taxation or to appropriate revenue or money for the ordinary annual services of the Government. I think that those two points can be fairly conceded.
The Senate may not amend any proposed law so as to increase any proposed charge or burden on the people.
I suggest, sir, that you should defer giving a ruling until the first portion of my proposal has been dealt with.
That the word “ten,” line 2, be left out. My object is to afford to the Committee an opportunity to express its opinion as to the period which has been inserted in the clause.
I admit at once that if this amendment is carried it is not my intention to propose a shorter period than fifteen years. In the manifesto issued by its Leader during the general election, it was stated that the Labour party were prepared to submit a Bill fixing the period of payment at ten years, and, therefore, its members may not be prepared to vote for the omission of ‘ ten ‘ ‘ with a view to insert a longer or shorter term. I can understand the reason why they object to make any change. If my present proposal is carried I intend to submit, in the form of an amendment or a request, a proposal for a period of fifteen years. VVe have had a long discussion as to whether no period should be fixed ; but by the recent division the Committee have shown that they are in favour of some period being adopted. I desire to follow out the suggestion which was offered when this question was being considered in the late Parliament. It will be remembered that a proposal was made by one honorable senator to fix the period at twenty-five years, and by another to fix it at fifteen years. Either twenty-five years or fifteen years - whichever had been accepted - would have been the period which the people would have been asked to place in the Constitution. If it was legitimate a few months ago toprovide for a longer period than ten years, it is equally legitimate to-day to do so. I submit that while the Government are in honour bound to recognise the period of ten years, they will not be departing from any principle if on reconsideration they see fit to adopt a period of fifteen years. It was stated in portions of the Commonwealth that members were in favour of inserting a longer period, so that people in the various States might clearly understand that it was not intended to make the revenue of the States dependent from year to year onthe bounty of this Parliament. On the contrary, it was intended to let them clearly see that there would be a lengthy period during which the States would receive 25s. per head per annum. I shall not weary honorable senators with a reiteration of the views whichI expressed on a previous occasion.
– I wish to acknowledge that Senator Gould submitted his amendment as briefly as he possibly could, and to appeal to honorable senators not to go over the ground which was traversed on the previous amendment. The Treasury officials are naturally very anxious to see this Bill passed, . because, as honorable senators can well imagine, it will revolutionize the whole system of bookkeeping. They are now waiting to bring their books in order, and the Prime Minister asked me to appeal to the Senate to put the Bill through as early as possible, so as to get it assented to and brought into operation. With regard .to the amendment, I have only to say that after due consideration the Government adopted the period of ten years. It will be noticed that under this clause the payment is to be made to the States for a period of ten years, “ and thereafter until the Parliament otherwise provides.” Just as people recognised that this Parliament could be trusted to deal with the allocation of the Customs and Excise revenue at the end of ten years, so they can trust the Parliament of ten years hence to do justice to the States for another term. It is only now asked to do justice to the States and honour the obligation placed upon the Commonwealth by the Braddon section. Without further debate 1 ask honorable senators to reject the amendment and agree to the clause.
Question - That the word proposed to be left out be left out (Senator Gould’s amendment) - put. The Committee divided.
Majority … 1 1
Question so resolved in the negative.
5-55]- - 1 move -
That the word “July,” line 2, be left out, with a view to insert in lieu thereof the word “ January.”
If this amendment is agreed to, a subsequent amendment will be requisite, with the object of making the clause provide that the. Commonwealth shall carry out the new arrangement for ten years, dating from 1st January, 191 1. While I am quite satisfied with the amount of 25s. per capita, I. am strongly opposed to any endeavour to take away from the States, by a side wind, that to which they are clearly entitled. We have no power to alter the constitutional provision which insures to the States threefourths of the Customs and Excise revenue of the Commonwealth until the end of 1910. But the Government propose to go behind that provision. During the present six months, the States are entitled to receive from the Commonwealth revenue at the rate of about 19s. per capita. Under the new agreement, they should receive, for the first six months of next year, 12s. 6d. per capita. But it is now proposed that they shall receive only 25s. per capita for the two periods of six months. Consequently, the States will suffer a loss of revenue to the extent of 6s. 6d. per capita.
– The States will get the full amount that is due to them this half-year. The reduction will be made in the following year.
.- Yes; but’ I contend that we have no right to deduct from the amount to be paid to the States next year any sum on account of payments legally due to them during the current half-year. The Constitution clearly provides that until the 31st December this year a fixed minimum of Customs and Excise revenue should be paid to the States. They ought to receive that amount without any diminution. If we adopt the proposal of the Government, we shall not be treating the States on fair and equitable lines, but shall be doing, indirectly, and by a side wind, what we have no legal right to do directly. I feel satisfied that if it had been explained to the people that the Government intended to say to the States, “ We shall pay you what is due to you up to 31st December, because we cannot help ourselves, but after that we shall deduct from you what we really do not want to pay in the current halfyear,” the people would have expressed their disapproval strongly. What would be said of any man who acted in ordinary civil life as the Government now propose to act towards the States? I can imagine the comments that would be made in a Court of law if one person said, in regard to his dealings with another. “ I admit that I was bound to pay you a certain sum under an arrangement entered into, but I intend to try to get that money back again by means of a new arrangement.” Why should we not in public matters obey the same rules of honour as apply in the concerns of private life ? Why should we resort to trickery in our dealings ? If I enter into an agreement to pay a man a certain sum of money on a particular day, I have no right to devise a means whereby I can get behind that agreement, and pay him less than is due to him. If I were under an obligation to pay £100 in a particular year, would it be honest on my part to pay £50 for one-half of the year, and then, by means of trickery, to take back £25 of that in the next half? If we are going to legislate in this way, we shall be open to the implication that we are legislating by means of trickery, and not on straightforward lines. If this kind of thing would not be honorable between man and man, how can it be honorable between Commonwealth and States ? I have my own strong opinion as to whether this is a fair, just, and honorable thing to do. Of course, I recognise that Parliament has power to do what is proposed if it likes. But Parliament has power to do many great wrongs if it likes. It is left to the honour and good sense of Parliament not to do a wrong by any act of legislation. lt is a captious argument to urge that in this Bill the Government are carrying out the agreement entered into with the Premiers of the States when it does not give effect to the whole of its terms. If the people decided upon anything at the late Federal election it was upon maintaining the Constitution in its present form, and leaving Parliament to deal with this matter after the ten years’ period fixed by the Braddon section. The people believed that Parliament would deal with the matter then fairly and equitably. This proposal does not treat the States fairly. It is an attempt to circumvent the Constitution.
– There seems to be an irresistible attraction for the legal mind in the difference between tweedledum and tweedledee. I can, therefore, quite understand that Senator Gould attaches considerable importance to the amendment he has moved. Every one must recognise that the Government are embodying in this Bill, so far as they can, the terms of the agreement which the Premiers, claiming to represent the States, were prepared to enter into with the late Government. It is true that they wished to have the agreement embodied in the Constitution, but we told the electors that we would not consent to that. We are embodying it in an Act of Parliament giving the electors the opportunity,’ should necessity arise, to say whether it shall continue in operation or not. That is why I say there is but the difference between tweedledum and tweedledee between the proposal in this Bill, that the payment should start from the 1st July, and the proposal that it should start from the 1st January. The object of making the agreement start from the 1st July is to recognise in this Bill that part of the Financial Agreement which enables us to recoup the sum of £450,000 representing the deficit on last year’s transactions of the Commonwealth.
– Does the honorable senator not think that it is inconsistent with the Constitution, in terms, to make the payment start from the 1st July?
– The honorable senator should know that I have sufficient discretion not to venture an opinion in reply to such a question. If I had sat at the honorable senator’s feet earlier in life I might have been competent to do so. But I am prepared to say that we have had expressions of opinion from legal members of this Parliament which show that they are by no means unanimous as to whether this proposal is in accordance with the terms of the Constitution or not. The fact that the Attorney-General of the late Government has said that he believes it is in accordance with the Constitution shows that we have some good grounds for adopting this course. We are only acting in accordance with what Senator Gould and his friends so warmly advocated.
– And we are keeping faith with what we said when before the electors. This Bill carries out the pledges we made, and that it is indorsed bv the electors is shown by the fact that, whilst its provisions have been before the public for some weeks, no protest has been made against them. _ Honorable senators opposite talk as if the public were ready to rise in arms against this proposal, but they are aware that not a single body in the Commonwealth has protested against it. They know very well that this is what they expected us to do, and they are not in the least surprised that we have done it. I trust that honorable senators will not waste time on the amendment, and that the Committee will reject it.
– I have been surprised to hear Senator Pearce arguing as he has done. If he were on this side and we on the other side made a similar proposal, he would very clearly see the great difference between it and the Financial Agreement. I had the honour .to be a member of the Federal Convention, and when the first Commonwealth Constitution Bill was submitted to a referendum of the people of Australia it contained a provision that three-fourths of the net revenue from Customs and Excise should be paid to the States for all time, or until the Constitution was altered in that regard. That Bill was not accepted by the electors, and subsequently there was a Conference of Premiers, at which it was proposed that the Braddon section should operate for only ten years.
– The honorable senator should not forget that New South Wales was the principal State objecting to the perpetual provision.
– I admit that. I am only reciting the facts. After the Premiers’ Conference to which I allude the second Commonwealth Constitution Bill was referred to the people, and it contained a provision applying the Braddon section for a period of ten years. That period will not expire until the 31st December next. No alteration in the payment to the States should, therefore,’ take place until the ist January next year, and for the first half of the next calendar year the States should receive a payment of 12s. 6d. per head.
– The honorable senator is forgetting the terms of the Fusion agreement.
– No; the Financial Agreement was to be embodied in the Constitution, and the States undertook to contribute ^600,000 towards making good the expected deficiency arising from the Commonwealth undertaking the payment of oldage pensions.
– The honorable senator claims all the agreement or none?
– Exactly. To be thoroughly honest the Government should introduce a Bill giving the States 12s. 6d. per head for the half-year ending 30th June next, and three-fourths of the net Customs and Excise revenue up to the 31st December of this year, as provided in the Constitution. They have no right to alter the Constitution.
– We are not altering it.
- Senator Pearce knows very well that the Government propose to subtract from the sum represented by the payment of 25s. per head for the whole of the current financial year the amount represented by three-fourths of the Customs and Excise revenue up to the 31st December next. Senator Gould has said what in ordinary business would be the name for that, but I do not care to mention it here.
– After all, the difference will only be the difference between ^450,000 and ^600,000.
– The payment of ^600,000 by the States was to be proportionately conditional, and at the time it was anticipated that the Commonwealth deficit would amount to 200,000. I feel it to be my duty to support Senator Gould in this matter. We should lay down the principle that Parliament should, at least, be as honorable as the most honorable private citizen in all its transactions.
– I think it is proper on this occasion to point out that the Government are going behind their pledges to the electors. In the Constitution it is provided that threefourths of the net revenue from Customs and Excise, and any surplus revenue of the Commonwealth, should be paid over to the States up to the 31st December, 191 o. The whole question at issue at the last Federal elections was as to what was to be done after that date. I remind honorable senators opposite that the Labour Conference which sat in Brisbane, in the effort to determine the amount which ought to be returned to the States, included the year 191 o with other years as one in which to test the average revenue from Customs and Excise. The Minister of Defence will not deny that.
– But that was not a legislative body.
– It was not, but it was a representative gathering of the Labour party. Quoting from the West
Australian of 21st February, I find that Senator Pearce is reported to have said -
The Labour party is pledged to the Brisbane Conference.
– Very well; then I direct the honorable senator’s attention to the fact that the Brisbane Conference recommended the year 1910 as a year in which to test the average Customs and Excise revenue, in order to determine the amount to be returned to the States. Does the Minister say that that is now ‘being carried out?
– Will the honorable senator give some proof that the Brisbane Conference took any particular year or the year he has mentioned?
– I have not with me the pamphlet in which the proceedings of the Brisbane Conference are published, but I could produce it in a few moments. I referred to it only a moment ago, and the resolutions agreed to by the Conference refer to the year 1910 as one of the years to test the revenue from Customs and Excise.
– Only as’ a basis of calculation.
– My point is that it was assumed by the Brisbane Conference that the year 19 10 was one throughout which three-fourths of the net revenue from Customs and Excise will be returned to the States.
– We are going to_ return it to them.
– I think not. Senator Pearce is responsible for a view of this matter taken by the people of Western Australia.
– Unfortunately, they did not take my view of it.
– They approved of what the honorable senator recommended, plus a little more. The people of Australia were under the impression that, having rejected the proposal to embody the Financial Agreement in the Constitution, the States would be entitled for the full ten years’ period, under the Braddon section, to three-fourths of the Customs and Excise revenue, and that after that time they would get” 25s. per capita.
/// Committee (Consideration resumed from nth August, vide page 1419) :
Clause 2 (Interpretation).
Senator WALKER (New South Wales) f 7.45]. - I hope that this clause will meet with the approval of the Committee. In a former session, Senator Givens pointed out that there were so-called banking companies which had a very small capital, and which in some cases might almost be called bogus. I saw a good deal of force in his remarks, arid, as honorable senators will notice, have altered the interpretation of “ Joint Stock Banking Company “ and “Company.”
Clause agreed to.
.- I propose to move the insertion of another definition clause. One of the chief things dealt with in the Bill is the question of net profits, and if it is to have any useful effect it will be necessary to define that term. I am surprised that Senator Walker, in response to previous criticism, has not included a definition. I ask him if he cannot give us a definition of what he means by the term, because it is a matter which involves very great issues.
.- - I propose to again quote the definition of “ net profits,” which is contained in Lindley on Partnership, at page 37 -
Profits (or nep profits) are the excess of returns over advances; the excess of what is obtained over the cost of obtaining it. Losses, on the other hand, are the excess of advances over returns; the excess of the cost of obtaining over what is obtained. Profits and net profits are for all legal purposes synonymous expressions; but the returns themselves are often sailed gross profits; hence it becomes necessary lo call profits net profits in order to avoid confusion. In the present treatise, however, the word profits will be used in the sense of net profits; and the expression gross profits will l>e avoided us much as possible. [ think that I can give a banker’s definition of the term. It means the net profits made by a bank from its current business after paying all expenses incurred, providing for bad and doubtful debts, and allowing for accrued interest on fixed deposits up to that date. It means the moneys made during a half-year in excess of the cost of obtaining the profits, and also in many cases after the revaluation of the assets. Bankers, as a rule, bring forward a balance from the previous half-year, and generally leave a portion of the profits undistributed until the following half-year. As a matter of fact, the net profits very often enable a bank to build up a local reserve fund, so that, as a rule, strong banks do not declare each half-year the total profits earned. They are always strengthening their position, not only for the benefit of the shareholders, but also for the benefit of their creditors and depositors.
.- There is a very grave defect in the definition offered by Senator Walker. I am not questioning or denying that that is the legal definition. One of my principal objections to the Bill has been that that definition would allow a banking company to use up its assets in creating a reserve fund for its own protection.Lindley bears out that view in its entirety, because “ profits “ or “ net profits “ mean what is obtained after due provision has been made for the cost of obtaining it. If a bank converts its assets or estates, that is profit, according to the legal definition. If the Bill were to become law in its present form, then undoubtedly any banking company could provide against any risk or loss on its part at the expense of its customers and depositors by merely converting its assets. I think that a more rigid definition of net profits is required, and therefore I move -
That the following new clause be inserted : - “ 2A. ‘ Net profits ‘ means the profit made after full and due provision for current expenditure has been made and does not include the proceeds from the realization of assets or the conversion of reserves or any portion of reserves.”
If Senator Walker desires to pass the Bill in such a form that the public cannot incur any risks, he ought to accept this definition.
Proposed new clause agreed to.
Clause 3 -
From and after the passing of this Act it shall be lawful for any Joint Stock Banking Company to form a reserve fund for the purpose of protecting its shareholders against their liabilities in respect of the uncalled capital (if any) and the reserve liabilities (if any) on the shares field by them in such company and to pay and to carry to the credit of such reserve fund such sums out of the net profits of the Banking Company made after the passing of this Act in any half-year and such premiums from the sale after the passing of this Act of new shares and proceeds of sale of shares forfeited after the passing of this Act and such sums (if any) representing the recovery after the passing of this Act of debts previously written off as bad from time to time (as shall be determined by the company in general meeting). No transfer shall be made to the said reserve fund from any other reserve fund, nor shall any reserve fund formed for the purpose of providing for occasional losses be used for any other purpose.
– The whole gravamen of the Bill is contained in this clause, as I have pointed out on two previous occasions. For the benefit of those who were not here then, I wish to point out the gravity of what Senator Walker asks us to do. According to its preamble, this is a Bill for the protection of no one but the shareholders in banks. What the Parliament ought to be concerned about is the welfare of the whole people. Banking is such a ticklish and delicate subject that any Parliament should be exceedingly chary about interfering with the settled banking laws, and certainly it should not interfere, except in a comprehensive way, after careful consideration by the responsible authorities. What is the position at present, and why does Senator Walker wish us to pass this Bill ? There are certain banks carrying on business, not under the Companies Acts in force in the various States, but either under charters from the British Government, or under special Acts settling the terms on which they are allowed to operate. These banks are comparatively few, and are, I believe, the boldest and about the strongest. Senator Walker desires us to devise a means for the protection of their shareholders.
– And, incidentally, the creditors also.
– That is not stated in the Bill.
– In subsequent clauses, as the honorable senator will see as we go on.
– The honorable senator told us very candidly that the object of this Bill is to protect the shareholders of banks. What is the nature of their request? They are asking us to vary the contract under which they carry on business. We are the custodians of the interests of the depositors, of those who have current accounts, and, in fact, of everybody who does business with the banks, and whose welfare is dependent upon their solvency. Before we vary the contracts, we ought to ask ourselves why certain conditions were imposed upon the banks. The shares of these companies are already fully paid up, and there is a reserve liability equal to the amount of the shares which cannot be called up. Why did such a conservative body as the House of Commons insist upon certain provisions being made in a Banking Act? And why were similar provisions put in special Acts of Settlement? It was to compel the directors and the shareholders, of a bank to so manage its business that it would always remain solvent ; otherwise they would be punished. Why should we allow that safeguard to disappear? It is all very well for Senator Walker to say, “ Let us build up a sufficient reserve so that if the bank goes insolvent the shareholders will have the money to fall back upon, instead of having a liability which may be worth nothing.” With regard to his citation of the case of his father, I would point out that a shareholder is not an honest man if he says to the public, “lam responsible for this £20 share,” but denies them the knowledge that he has not a farthing to meet the ^20 liability on it. It is not common honesty to deceive the public in that way, because the presumption is that when a man undertakes a responsibility he has the stuff behind him to meet it. Apart from that altogether, if it is desirable to build up a reserve, then it should be built up, not to protect the shareholders, but to protect the public. If it is desirable to build up such a reserve, there is nothing to prevent the Parliament from legislating in that direction in order to protect the public, and, at the same time, to leave the liability on the shareholders or directors, because any bank which is’ properly conducted, and does not go in for wild-cat speculation, or making advances on inflated values, cannot possibly fail. If the directors of a bank managed its affairs in that way, ,hen, undoubtedly, its shareholders should meet the liability for which they ‘ have made themselves responsible. The banks are quite content to carry on business according to the terms of their charters or Acts of Settlement, otherwise they would not have started. They should advance .some very good reason why we should vary their contracts. But the only reason which Senator Walker has given is that some shareholders would be subjected to enormous hardship in the event of a crisis.
– And many persons would not be able to meet their liability.
– Perhaps so; but they are carrying on business under false pretences unless they are able to meet their liability.
– In the interests of the public, they should be provided for.
– The honorable senator does not say a word about the interests of the public. But in the preamble to his Bill, he states fearlessly that its express object is to protect the shareholders. If the business of a bank is properly conducted, that liability will never be called up. The banks have had a very good time, and made enormous profits out of the public. But the public interests, are to “ hang” while the interests of shareholders are to be protected. With regard to the question of net profits, the definition which was inserted in the Bill just now was drafted rather hurriedly. If it proceeds to a further stage, I shall expect Senator Walker to allow a recommittal so that we can, if necessary, put the provision in proper legal form.
– Hear, hear.
– I have looked up the legal authorities, and know that the whole of the assets of a company, if realized upon, would be called net profits. Take the case of the Broken Hill Mining Company.
– Mining companies are different from banks. When you take an ounce of gold out of a mine, the company is poorer than it was before to the extent of an ounce.
– Still, that is net profit.
– That is a very loose definition.
– It is the legal definition; I am not responsible for it. The legal definition of “net profit” is the whole amount realized, less the cost of realizing it, in any year. My income this year is the total amount of income that I receive, less the cost of obtaining it.
– The honorable senator has got into the Bill the definition of net profits that he thought desirable.
– I am not quarrelling with that part of the measure. This clause will have to be redrafted in view of my definition of net profits ; because the clause says, amongst other things, that banking companies shall be entitled to carry to the credit of their reserve funds - such sums out of the net ‘profits of the banking company made after the passing of this Act in any half-year, and such premiums from the sale after the passing of this Act of new shares and proceeds of sale of shares forfeited after the passing of this Act, and such sums (if any) representing the recovery after the passing of this Act of debts previously written off as bad from time to lime (as shall be determined by the company in general meeting).
What does that mean? Suppose that a bank has written off a debt as bad, and that afterwards the amount of the debt is paid into the bank. The very fact that it was paid in would show that it was a realizable asset of the bank. Does not Senator Walker think, at any rate, that the portion of the clause which I have quoted should be left out? It distinctly provides for the conversion of the assets of a banking company, in order to build up a reserve fund for the benefit of the shareholders.
– If a debt is written off as bad, but is afterwards recovered, the amount realized passes to profit.
– Does Senator Givens mean to say that when a debt is written off as bad, but is realized years afterwards, the bank is not at liberty to consider the amount as profit ?
– It is an asset of the bank, and, as such, is part of the security of the customers of the bank. It does not matter whether the debt has been written off as bad or not. A person cannot deprive himself of property in that way. There are many people who would be glad to get rid of a property which embarrassed them if they could.
– Has the honorable senator ever known a case like this, which occurred in Melbourne ? Mr. Westgarth, in the fifties, went insolvent. The amount of his debt was written off as bad. He afterwards acquired a large fortune, and, as an honest man, he paid his old creditors every penny, with 5 per cent, interest. Was not that a legitimate recovery? The money recovered could not be called an asset of the bank. It was profit.
– It was the realization of an old asset.
– Which had been written off as a bad debt.
– That does not deprive a bank of an asset which is part of the security of the customers of the bank.
– It is no asset at all. There is no security for it.
– This provision would open the way for using the property of a bank for the express purpose of protecting the shareholders, whilst leaving the public interest entirely unprotected.
– Even a bad debt is more or less of an asset.
– Of course, if a debt is written off, it does not deprive the bank of a chance of realizing upon it; and the fact that debts which have been written off as bad are sometimes realized afterwards shows that they are assets. This clause, as well as the preamble of the Bill, shows what Senator Walker’s object really is. He wishes to allow bank shareholders to free themselves of a wise penal provision for the protection o’f bank customers. But Parliament should insist on the banks making provision for the protection of the public.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [8.15].- Senator Givens has dealt with a question which was raised on the second reading of the Bill. I should like the honorable senator not to quarrel with the title, but to deal with the measure itself, and to consider what is really- proposed. I understand the honorable senator’s contention to be this - that we have not simply to have regard to the interests of the shareholders, but that primarily we should consider the interests of the creditors of tlie banks. This Bill provides - not by any hanky-panky process - that shareholders may be relieved of the liability which they incur when they purchase shares having a reserved liability, but that to obtain this relief they shall contribute to a special fund, out of the profits of the bank, the amount of* money to which they would be liable in the event of the institution, through any misfortune, going into liquidation. The shares of a bank are paid up to a fixed sum. In the majority of cases in Australia there is an equivalent amount for which the shareholders are responsible in the event of the bankruptcy or liquidation of the bank. If a man holds 100 shares in a bank paid up to ,£1,000, and upon which there is a reserve liability of ^1,000, he will be bound, under this Bill, to make up that ^1,000 if he wishes to avoid his liability in the event of the insolvency of the institution.
– Does the honorable senator think. that if this Bill were passed to-morrow the shares of the banks would be more attractive to the public than they are to-day?
– I do not say that; but I want honorable senators to realize what the real object of the Bill is. If a shareholder has a liability of ^1,000, instead of holding that liability over his head, the Bill gives power to the bank to say, “We will pay to you a smaller dividend by i or 2 per cent., and will put that amount on one side in order to meet the liability on your shares if it should ever become necessary to call up the reserve liability,” so that, in the event of the bank becoming insolvent, the money so set aside .would be in the hands of the trustees for the benefit of the creditors.
– If the honorable senator reads clause 7, he will be disillusioned.
– I know perfectly well what the Bill is intended to achieve. Let us suppose that a bank has been having good years, and been paying maximum dividends. The shareholders may be perfectly willing to have a portion of those dividends set aside in a special fund to cover their liability. Why should not that be done?
– Suppose a bank set aside a certain sum- in an ordinary reserve fund ; would not that tend to save the bank from going into liquidation? Prevention is better than cure.
– The banks already make provision for a reserve fund. A wellconducted bank strengthens its position by building up certain internal reserves, which enable it to meet any unforeseen difficulty. It is now desired to enable such a bank to set aside a portion of its profits to cover the liability of shareholders. The reserve thus created would be invested in a class of securities that are as good as can be obtained, namely, Government stock.
– What is wanted is to build up a shareholders’ insurance fond.
– It would also be a creditors’ insurance fund. What is done with the money which a bank puts into its reserves? It is not put into a vault. It is used in the business of the bank. It forms an amount, of money that the bank has available for the purpose of paying its way, and earning dividends for its shareholders. If a bank has a capital of 000,000 sterling, and a reserve fund of ^1,000,000 sterling, it pays dividends on ^1,000,000, and has ^2,000,000 with which to conduct its business. The stronger the reserve is the easier it is for the bank to pay large dividends. But Senator Walker argues that a bank, having accumulated these funds, instead of devoting the whole of its profit to paying dividends, should be at liberty to apply a percentage to another reserve fund, which would not be dealt with by the bank direc tors in the course of the business of the institution, but would be put on one side and form a security which “would be available if ever a time came when the bank had a difficulty in meeting its obligations to its creditors.
– The accrued interest on the reserve would be added to the reserve fund, I presume?
– Yes. However good and strong a bank may be to-day, it is a trading concern, and is continually incurring fresh liabilities. lt must look forward to the future, and the prospect of paying up its liabilities. When a man entering upon a business goes to his banker for an advance, the banker takes into consideration his character for honesty, his reputation as a careful trader, and the nature of his business. He then considers the security offered for the advance. But when every care is taken it is possible that serious mistakes may be made. The man’s reputation may not prove to be what it was thought to be. There may be a sudden fall in the value of such securities as he offered for the advance made to him, and in certain cases, bad trading on the part of other companies may bring about a run upon the bank, which may thus be unable to meet the emergency, and compelled to close its doors. Would it not be better in all the circumstances that a bank should, during its prosperous days, be authorized to set aside a portion of its profits so that money may be at hand, when the day of trouble conies, to meet the whole of the reserve liability of the shareholders. Such a course must be of advantage, not only to the shareholders, but in a marked degree to the creditors of the bank. There may be a large or a small number of shareholders in a bank, and they may include financially weak as well as financially strong men. Senator Walker’s proposal is, as far as possible, by building up a fund to meet the reserve liability of the shareholders, to make every shareholder a strong man financially, from the stand-point of the creditors of the bank.
– In all the past centuries of banking in other countries, has such a provision been made?
– I am not aware that any such provision has ever previously been made in connexion with banking- companies.
– There are banks that have no reserve liability at all.
– Would the honorable senator say why the original provision with regard to reserve liabilities was introduced ?
– In order to strengthen the position of the banks in the interests of their creditors. Senator Walker desires to still further strengthen their position by providing for a fund in the hands of trustees to meet the reserve liabilities of shareholders. I am not aware that any such provision has ever been made before, but there are banking companies that have no reserve liability. The full amount of the shares having been paid up.
– Does the honorable senator say that there are banking companies, the whole of whose liabilities are paid up?
– I understand that there is not a sixpence of liability upon the £1 shares of the Australian Bank of Commerce.
– How did they get their shares? The honorable senator will not answer that.
– I am not going into that. It is a matter I do not wish to discuss. I take another bank, the Commercial Banking Company of Sydney. The nominal value of each share is £25, but under the Articles of Association only £12 10s. per share is paid up. The balance is left to be paid, if necessary, to defray losses of the bank.
– What are the shares worth?
– Thirty pounds.
– That bank pays a’ dividend of 10 per cent, but on the ^12 10s. paid-up capital on each share, so that if an honorable senator bought shares of that bank at £30 he would get in dividends only about 4 per cent, on his money.
– The Commercial Bank of Australia has no reserve liability.
– That is another instance that I was not aware of. The capital of a bank might be represented by ^1,000,000 paid UP> .£1, 000,000 reserve fund, and ^1,000,000 reserve liability, and Senator Walker proposes that there may be set aside from the profits of the bank certain sums to create a fund to meet that reserve liability of the shareholders. He is really proposing a means by which the shareholders may pay up their reserve liability in advance.
I am explaining how the Bill will operate, and I think I have some knowledge of these matters. Clause 3 provides that -
From and after the passing of this Act it shall be lawful for any Joint Stock Banking Company to form a reserve fund for the purpose of protecting its shareholders against their liabilities in respect of the uncalled capital (if any) and the reserve liabilities (if any) on the shares held by them in such company and to pay and to carry to the credit of such reserve fund such sums out of the net profits of the Banking Company made after the passing of this Act in any half-year.
This means that out of the net profits made by a bank during the current halfyear the proposed fund may be built up, and the net profits are the profits on the business, after making provision for all doubtful or bad debts, adding to the reserve, and such inner reserve funds as the banking company may see fit to have. It is clear, therefore, that the fund would be built up from moneys which would otherwise go into the pockets of the shareholders by way of dividends. The clause continues - and such premiums from the sale after the passing of this Act of new shares -
A bank very often increases its capital by issuing a large number of new shares. ft may call upon people to pay a premium upon these shares. If the £20 shares of the bank are worth £25, a premium of ^5 on new shares issued may be asked for, and this clause would make it lawful for the directors of the bank to place premiums paid in that way upon shares to the credit of the proposed reserve fund. It would not enable the bank to alter the face value of the shares, and in the case I have quoted of shares worth £20, the ^20 for each share would be available for trading purposes, and dividends would be paid on the £20 as they were earned. The next provision of the clause reads - and proceeds of sale of shares forfeited after the passing of this Act -
Very often bank shares are payable in instalments. A bank may have power when a man fails to pay up his instalments to forfeit his shares and retain the instalments which he has already paid on them. The share having been forfeited would be as if it had no existence, and the clause would permit instalments paid to be placed to the credit of the reserve liability fund. I admit that if the directors saw fit they might refund instalments paid in this way or put them to the credit of an ordinary reserve, but it is proposed in. the Bill that they may be put to the credit of the reserve liability fund. I do not suppose that this is regarded as a very important provision, and Senator Walker will probably have no objection to an alteration in this respect if the provision is strongly objected to.
– Nobody disputes any of these points.
– 1 certainly thought that Senator Givens disputed some of them, and the Minister will admit that Senator Givens challenges the wisdom of the next provision of the clause, which reads - and such sums (if any) representing the recovery after the passing of this Act of debts previously written off as bad from time to time (as shall be determined by the company in general meeting)
– That is a realization of assets.
– The honorable senator challenges that provision. A debt becomes due to a bank, and circumstances arise which render it so doubtful whether it can be recovered that it is written off. The directors of the bank say that they do not feel justified in including the amount as a debt due to the bank. It is charged to the reserve built up to meet bad and doubtful debts, so that, although it is a bad debt, it is paid out of the profits made from the business of the bank, and is then as if it had never existed, or as if it had been paid by the debtor. It is not charged against the general reserve fund of the bank, but against a special fund provided for meeting bad and doubtful debts. Senator Walker proposes that these sums should be allowed to go to the special reserve liability fund. This fund will not alone protect the shareholders, but will give an assurance to the creditors of the bank that money has been provided to meet the reserve liability of the shareholders. I cannot understand why there should be so much objection to a provision of this character. I have been at considerable pains in going over these matters of detail about which there seemed to me to be some doubt, and to point out as clearly as possible what is the object of the Bill. If I have not made myself clear as to the meaning of these provisions, I shall be only too happy to afford any further explanation in my power in order that honorable senators may get a complete grip of the Bill. I do not say that all banks will take advantage of this measure.
– If it is desirable that they should, they ought to be compelled to take advantage of it.
– The opportunity will be afforded them to take advantage of it if the Bill is passed, and it would surely be better to build up such a reserve fund than to have to reconstruct under such conditions that there would be no fund to meet the reserve liability of the shareholders.
– Have the banks asked for this ?
– I do not know, but I do know that Senator Walker told me that one of the most eminent banking men in New South Wales, who is dead long since, thought that some such provision would be a measure of strength to the shareholders of a bank, and particularly to the creditors, because they would know exactly the amount of money upon which they could rely to meet the reserve liability on the shares in the event of the liquidation of the bank.
– I have no wish to “ stone- wall “ this Bill, as some of its friends seem inclined to do, by arguing points on which there is no difference of opinion. It -is not a question of how the proposed fund is to be built up. The vital objection to the Bill is that it proposes to relieve the shareholders of a bank of the liability placed upon them for the deliberate purpose of protecting the depositors in the bank. Why is it that banks deal with their shares in a way different from other companies ? Why is it that they undertake this reserve liability? Do honorable senators think that it is for the benefit of the shareholders? Of course, it is not. It is done because in a banking business there is risked not merely the capital of the shareholders, which may be only a flea-bite, but millions of pounds belonging to people who have no voice at all iri the policy of the bank. If I invest my capital in any other kind of company I have a voice in directing the policy of the company, which affects my own capital as well as the capital of my fellow shareholders. But if I become a shareholder in a bank it is not only my own capital that may be affected by the policy which I permit the directors of the bank to follow, but the millions placed in the bankhy the depositors to be used, and from the use of which I and my fellow shareholders make our profits. The idea of a reserve liability is, that when the shareholder knows that the result of a foolish or unwise policy on his part or on the part of the directors may oblige him to pay up his liability, he will take a very much greater interest in the business of the bank, and will satisfy himself that it is carried on on much more conservative and safe lines than he would if he knew that if the bank went “ bung “ to-morrow all his liability could be met out of some reserve fund built up from the profits of the business.
– All his capital in the bank would be swept away.
– I quite recognise that, but he would know that every pound’s worth of property he possessed in other forms would be liable to cover the reserve liability on his shares. I say that if we relieve the shareholder of a bank from that reserve liability we shall remove one of the strongest safeguards we could have in the interests of the shareholder and in the interests of depositors of millions sterling placed in the banks and used by them in their business transactions. Senator Gould remarked that bankers, however wise they may be, sometimes make mistakes. They certainly do. When one recalls the debacle to which he referred, and which sometimes follows as the result of such mistakes, the question naturally suggests itself - In which circle are the effects of such a disaster spread most widely? Are they spread among a small ring of shareholders, who, in the main, are wealthy men, or are they the vast circle of depositors, who have placed their savings in the banks. Is it not the latter who lose their all as the result ot the adoption of an unwise policy in which they had no voice? The object of Ibis provision is to establish a reserve fund, largely to relieve a bank’s shareholders from that liability. That is an unwise step to take in their interest, because, whilst it may make things easy and safe for them if there should be a disaster, at the same time it will lead them not to take that vigilant interest in the affairs of the bank which they would do with that liability hanging over their heads. And much more is it an unwise thing to do in the interests of the large circle of depositors who, last year, had over ^100,000,000 lodged in the banks. They have absolutely no voice in the management, and the only guarantee which they now have is the knowledge that a liability is hanging over the heads of the shareholders. This measure emanates from the large shareholders in banks, who, being wealthy men, can afford to dispense for the present with pro.fits, so long as they are able to get a reserve fund built up, when they can live in sweet security, knowing that if the worst should happen they would only lose their capital, and would have no liability to meet.
– Does the law put all bank shareholders in this reserve liability?
– No; but I was under a different impression until to-day. Take the bank which Senator Gould described as one of the strongest in New South Wales. Every share is paid up to /I12 10s., but it carries a liability of that amount. The existence of that liability is a constant incentive to every shareholder, and a greater incentive if he is a large shareholder, to keep a close watch upon the actions of the directors, and to see that their policy is a safe one. I have no doubt that the character which the bank in New South Wales enjoys is due to the fact that, the existence of a big liability has induced the shareholders to choose wise directors, and to see that they do a safe business. I appeal to the Committee to reject the clause. I am paired with my colleague, Senator McGregor, who supports the Bill. In my opinion, it would be unwise to allow the Bill to pass, because it would introduce a dangerous innovation into the banking system of Australia.
.- I think it would be well to make it quite clear that the Committee has no objection fir se to the building up of a reserve fund for the protection of the customers of, and the depositors in, banks. Times out of number we have been told that this Bill is brought in, not as much for the protection of such persons as for the protection of bank shareholders. But that is not shown in its provisions. Both in the preamble and in this clause it is stated that the express purpose of the Bill is the protection of shareholders. Senator Pearce has put the case forcibly and clearly. There is no doubt that it would be unwise to remove the penal provision which compels careful and far-seeing management of banks, so that “ ducks “ and “ drakes “-may not be played with the funds, or the interests of shareholders and depositors, with comparatively little consequence to the culprits. As Senator
Pearce very forcibly pointed out, shareholders and directors are not dealing merely with their own capital ; if they were it would 3>e largely a matter for themselves. They are dealing with millions sterling belonging to the public, with vast interests in which every person is concerned. If disaster overtakes a bank, who will suffer most - the comparatively few rich shareholders or the wide circle of the public, who are too poor to be almost able to live in ordinary circumstances, and who, in a time of disaster, would be reduced to the most abject misery and poverty, because of the neglect of directors and shareholders to safeguard the interests of the banks? In Australia we have had one or two banking disasters, and the consequences have been exceedingly serious. Therefore, we should proceed very warily. In order to show that the opponents of the Bill are not opposed to the building up of a reserve fund, I intend to take a test vote. I move -
That the words “ for the purpose of protecting its shareholders against their liabilities in respect of the uncalled capital (if any) and the reserve liabilities (if any) on the shares held by them in such company and to pay “ be left out, with a view to insert in lieu thereof the words, “ equivalent to the uncalled capital (if any) and the reserve liabilities (if any) of the share capital of such company for the purpose of protecting the interests of the depositors and customers of the company.”
With this Committee, the interests of the general public should come first, and the interests of wealthy shareholders in banks should come a long way afterwards.
– Senator Gould referred to Mr. Thomas Buckland, who had been President of the Bank of New South Wales for many years. He occupied that position at the time of the crisis in 1893. I saw that many of the banks were going to have great difficulty in getting in their reserve liability. The bank to which I had the honour to belong, of course, pulled through all right, hut the fact was that the general depositors of the banks were placed at a perplexing disadvantage through the shareholders being afraid of the liability and forcing their shares on the market. The shares fell in value, the depositors got frightened, and the panic was accentuated. Although it is true that this Bill is brought in for the [benefit of shareholders, still it is indirectly, -indeed, I might almost say directly, for the benefit of the great body of depositors that such a debacle as occurred in 1893 should not again happen. I can cite a case which shows the desirableness of making a provision of this kind. During 1893, a certain man, whose name is stated, was so afraid of the reserve liability on his shares that he transferred his property to his sister, went through the Insolvency Court, proceeded to England, and, after a time, got the property transferred to himself again, and died last year or this year, worth £12, 500. Fortunately, the official trustee, on seeing the intimation of his death, got the insolvency annulled, and seventeen years afterwards got in .£9,000. Honorable senators will now realize that in all banks and companies there are persons with good, bad, and indifferent character. If they had had to wait until the liability was called up, probably that money would have been lost. We are really carrying out the intention of the deeds of settlement by providing a fund to meet the liability. So far, therefore, from departing from’ the object of those deeds of settlement, we are forestalling it. We are carrying out the object in a much better way than would be done by calling upon the shareholders to pay for calls at a time of crisis.
– Is the honorable senator going to accept m> amendment ?
– I am not quite clear that I will. I am half inclined to do so, but I should like my honorable friend to read the clause in conjunction with it. I consider that a reserve fund is as much for the benefit of a bank’s creditors as it is for the benefit of its shareholders. The former could not get more than the reserve liability that is there.
– But the honorable senator said that the reserve liability might not be there.
– Probably, if they had to wait until the reserve liability fell due, a very large portion would never be found. But it will be available if a reserve fund is built up under the provisions of this Bill, otherwise you will never get 20s. in the £1 from all the shareholders of an institution. Senator Pearce spoke about the banks being largely composed of wealthy persons, but I can inform him that a fourth of the shareholders of the largest bank in Australia are widows and orphans. It is for their interests, as well as for that of others, that we should have a provision made against a bad time.
– Some of the wealthiest persons * in America are widows and orphans.
– :Perhaps so. I believe, if ever an honest Bill in the interests of the whole community was before the Senate, it is now. The Bulletin writes as follows about it -
Senator Walker has in hand a very commendable Bill, the object of which is to provide that any bank may accumulate a special reserve for the purpose of paying the shareholders’ calls for them in time of stress. The money is not to be taken from any existing reserve, and it is not to be mixed up in the business of the bank. It is to be invested in Government securities only, and is to be held by an elective board of trustees (not more than five or less than three), of whom only one may be a director of the bank. The fund, once started, is to accumulate at compound interest until it not only equals, but exceeds by 10 per cent., the total amount for which shareholders are liable. The proposal would make the banks’ customers feel safer, for uncalled capital is often a hard thing to collect when it is most wanted ; and it would reduce the tendency to nightmare on the part of shareholders.
The Brisbane Courier, of the 16th instant, contains this reference -
Senator Walker has introduced in the Senate a Bill which was read a first time on July 6. The proposals made have the virtue of novelty and at the back of them is the grace of plain common-sense. Mainly the Bill is to authorize any joint stock banking company formed or incorporated in any State to form reserve funds to protect the shareholders against their liability in respect of the uncalled capital or reserve liabilities on their shares, and to provide for the creation of corporate bodies in which such reserve funds may be vested. The proposals must not be taken as in any sense referring to the ordinary reserves or contingency accounts of the banks; which are funds provided for meeting unexpected developments in connexion with the ordinary banking business. The idea may be the better explained by taking the case say of a Queensland bank with shares of £$ each, upon which say £3 per share has been paid, leaving a liability of £2 in respect to each share. In the event of a financial collapse the shareholders might be suddenly called upon to pay the £2 uncalled capital, and that might involve many persons in ruin. A special reserve fund earmarked as Senator Walker proposes it shall be and built up to £2 per share would practically relieve the shareholder of the immediate result of his liability ; but it would do more : it would be a surety to the bank concerned that the money called for would be available. That is a very important feature in the measure. It protects not only the individual shareholder who might be ruined by a sudden pressure at a critical time, but also the shareholders who would be able to pay but whose individual payments would not give the relief that would be afforded by a complete response to the call. And there is the matter of the reserve liabilities as well as the liabilities in respect of the ordinary uncalled capital. A reserve liability may be also explained. A bank the shares of which are say £25 each are fully paid up, and for ordinary banking purposes no further call can be made; but there may be a reserve liability of say £40 per share which may be called upon in the event of a financial collapse, and when the bank has closed its doors or gone into liquidation. Under such a reserve a bank has available the whole of its trading capital and an insurance fund as well, which is largely in the public interest. In the case of these banks the proposed creation of the special reserve funds would be to cover the amount of the reserve liability. The aim of Senator Walker seems to be a simple one : to give even greater stability to the banking institutions by the establishment of what is practically an insurance fund. The machinery clauses of the Bill are equally simple, and there is much in the general idea which will commend it to those who look to absolute safety in trading.
I propose now to read the case of the man who I said tried to evade his liability -
In Sheffield County Court yesterday a revelation was made concerning a Sheffield man, Charles Clayton, .who accumulated a fortune in Australia, became a bankrupt in 1901, and contrived to conceal his money from the Bankruptcy Court. He died in Australia in 1907, leaving
The Official Receiver now applied to have the unconditional order of discharge, which was granted to the bankrupt in 1902, revoked, and the judge granted the request.
The evidence showed that Clayton went to Australia in 1S52, did well at the gold fields, and speculated with his savings in bank shares. When the financial crash came in Australia in 1893 ne> t0 avoid payment of the calls from the banks, made all his money over to a female relative. He then came to England and received remittances from her, amounting tt> ^’5,000, which he invested in various names in this country.
After passing through bankruptcy with ,£9,000 liabilities to the banks and “ assets nil,” he gathered together his secret investments, went back to Australia, and died, as already stated, worth £12,500
The banks will now recover the whole of the £9,000 due to them from Clayton’s estate.
There is a practical instance showing the advantage of having the money in hand. Surely that remarkable case corroborates what I have said. I have several letters bearing upon this subject. One is from a leading merchant in Sydney, Mr. P. T. Taylor, of the firm of P. T. Taylor Limited, who says -
My feeling is th:it the proposal is a veryexcellent one. and I am sure would tend to give better security alike to customers and shareholders of the banks, as such a fund once substantially established is a much better protection to banks’ customers than the reserve liability of shareholders, who at a time of crisis would probably be unable to meet their calls.
I have also received a letter from the general manager of the Bank of New South Wales, who expresses his approval of the scheme. Another letter is from an ex-president of the Chamber of Commerce, Mr. G. S. Littlejohn, who says -
Speaking in general upon this matter, I think thu this Bill, if passed into an Act, will establish a much greater degree of confidence on the part of investors generally in public companies, though profits will be reduced until the reserve is established. Had such provisions been in force at the time of the failure of several banks in 1893 the shareholders of several of the banks, such as the Australian Joint Stock Company, would have been saved much hardship, and the re- establishment of the bank upon a satisfactory footing would, doubtless, have been accomplished much more speedily.
– To what extent would the reserve liability of the Australian Joint Stock Bank, if met by a reserve fund such as that proposed, have benefited the creditors ?
– If that bank had had such a reserve as I propose, it would have been able to pay an extra £1,000,000 to its creditors.
– To cover how much debt?
– At all events, the creditors would have had £1,000,000 more than they received. I have also a letter from the general manager of the Western Australian Bank, who writes -
I am in receipt of your letter of the 20th ulto., enclosing a typewritten copy of the Commonwealth Banking Companies Liability Bill 1910, a printed copy of which you had already forwarded to me, for which I thank you.
I thank you for the interest you have taken in this Bill, which it appears to me opens a door for banks, to which institutions I note you limit it, to provide against a rainy day so far as the shareholders are concerned.
– Hear, hear; it is the shareholders all the time !
– Surely the honorable senator does not want the shareholders to be in a weaker position?
– I want them to have their business managed properly.
– They do manage properly by providing for a rainy day.
– In providing for themselves, shareholders do not provide for their creditors and depositors.
– But surely the stronger the debtor is the better for the creditor. This gentleman continues -
I can see no further necessary alterations, and I trust it will be carried in its entirety. I also received a copy of the Daily Telegrafh, with your reply to the criticism.
If honorable senators would like me to do so, I will read my reply to criticisms pub lished in the Sydney Daily Telegrafh. Mr. Nash, the financial editor of that journal, who is a well-known authority on financial matters, called upon me in reference to the Bill.
– Will the honorable senator also read Mr. Nash’s criticism, because he is a man of standing?
– Yes, I will do so. Mr. Nash wrote -
Senator Walker’s “Commonwealth Banking Companies Reserve Liabilities Bill “ is brought forward with a very laudable object, though why he has now confined its proposed operations to banks we do not know. The object is to permit banks to accumulate special reserve funds to cover their liability upon uncalled capital, and when established, it is proposed to place such funds under the control of trustees, who may invest the funds only in Government stocks, and these funds will be beyond the control of the company, and interest thereon will accumulate until the funds reach 10 per cent, more than the aggregate uncalled capital and reserve liability. The difficulty about the proposition is in the working details’. At present the reserve funds accumulated out of profits are used in the business, and tend to its expansion. But these reserves would be wholly separate, and would tend to restrict the ordinary reserves. Take a case in point. If, say, the Bank of New South Wales raised such a fund, as the present capital is ^3,000,000, with ^3,000,000 reserve liability, it would have to accumulate ^3,300,000 outside its business, which might tend to restrict its banking operations. Then, too’, if in course of years the fund had been accumulate’d, and £1,000,000 new shares were issued, would the new shares participate in the accumulations? If not, there would be two, or more, classes of shares, some with no liability, and others with it. Otherwise, a shareholder who was covered .by the reserve might upon a new issue find his liability revived. Then the accumulation of reserves to the extent of no per cent, would be a very long process, and it is difficult to get companies and shareholders to look forward for 30 years, or so. Why should not shareholders accumulate such funds on their own account? But then, every investment by a private person is part of his reserves. The bill provides for the removal of trustees, but not for the liquidation of the trust, even if it were desired.
After publishing that article, Mr. Nash called upon me, and told me that if I would write a letter to the Daily Telegraph, it would be published. The following is the letter which I wrote : -
Sir, - The reference to this bill in your journal on 22nd inst. is my warrant for these explanatory remarks.
My experience of the great difficulty in piloting a private member’s bill through the Senate is my principal, although not my only, reason for simplifying the measure. If this bill should become law, anc! its underlying principle meet with approval, other bills, affecting other classes of companies, may be expected to follow.
As regards banking companies, not a few of the alterations have been suggested by the debates on the previous measure, which was defeated in Committee. Some of the changes may be briefly summarised thus : -
A bank must have a paid-up capital of at least £100,000.
Existing reserve funds must not be used in the building up of the new special reserve fund, which is to be in the hands of trustees, of whom not more than one shall be a director of the bank.
The liability of shareholders for notes in circulation is not limited.
The trustees of the fund are appointed bygeneral meetings of shareholders, and not bv the board.
The bill is confined to banks having only one class of shareholders.
Needless to say, the bill is merely permissive, and, doubtless, will be availed of by banks who recognise its advantages both to their shareholders and their depositors. It is true it will probably, in some cases, entail a certain present self-denial on shareholders for the sake of a future very substantial relief and freedom from loss should, unfortunately, financial crises ever arise. Bankers who went through the banking crisis of 1893 acquired a painful, but very valuable, experience, which, I submit, points to the wisdom of, in time, making ample provision for the proverbial “ rainy day.” It may here be mentioned that, in 1893, the late Mr. Thomas Buckland, at that time the able and respected president of the Bank of New South Wales, gave his cordial approval to the principle of this bill, but he thought it well action should be postponed until more prosperous times arrived ; surely, therefore, the present time is not inopportune.
You seem to think the establishment of the proposed reserve fund for each bank might tend to restrict banking operations. I combat that view by saying, were the funds not established, the profits so represented would, in all probability, have been distributed as dividends to shareholders. You also suppose that, when the reserve fund equalled the reserved liability on shares (plus 10 per cent, to allow for possible depreciation or fluctuation in value of investments) were a bank to issue new shares that would mean two or more classes of shares. Not necessarily. We shall suppose a bank has £500,000 paid-up capital, pays regularly a dividend of 10 per cent, per annum, and that the proposed reserve fund under this bill amounts to the reserved liability on the shares, say, £500,000. Under such circumstances it is not unreasonable to suppose £20 shares paid-up to £10 would be quoted rather above than below £20. A new issue representing£25,000 is issued firstly to existing shareholders in the proportion of one new share for each four old shares held - price £20-the premium of £10 to go to the special reserve fund. These, judging by similar transactions, would be readily taken up, and the suggested difficulty would be obviated. But, supposing the new shares were issued at a premium of only £5 a share, the position would be as follows : -
£562,500 would not represent £10 for each share paid up to £10, but it would represent £9 for each share paid up to £10. Under such circumstances there is scarcely room for doubt the new shares would be gladly accepted by existing shareholders, the extra amount to be accumulated by accruing interest, on the reserve fund alone, at 3½per cent., making up the required £62,500 in about 3¼ years. I take it for granted that a bank, before increasing its capital as ‘suggested, is satisfied it sees its way, with the additional capital put into the business, to keep up the same rate of dividend on its larger capital as it did before.
One point more. You say the bill does not provide for the liquidation of the trust, even if it were desired. The reserve fund is intended to last as long as the bank exists, and rightly so. But if the bank is wound up, voluntarily or otherwise, and all its liabilities liquidated without trenching on the special reserve fund, of course the shareholders would get back from the trustees the equivalent of their capital on realization of investments held by the trustees of the reserve fund.
Trusting you will now see your way to give the bill your valuable approval. - I am, Sir, yours faithfully,
I have no more to say on the subject at this stage.
.- I think that it will simplify procedure if we take a direct vote on clause 3 as it stands, to test the feeling of the Committee. In order that that may be done without any complication, Iask leave to. withdraw my amendment.
Amendment, by leave, withdrawn.
– I have carefully read this clause, which proposes to make it lawful for banks to establish special reserve funds. The clause is not imperative. What I wanted to ascertain was whether the provision would make things better or worse for the depositors and customers of banks as well as for shareholders. As far as I can see, it makes the position of the customers neither better nor worse; because I imagine that if a bank starts to build up a reserve fund for the purpose indicated, and, if before that fund reaches 1 10 per cent, any trouble arises to the bank, the shareholders will still be liable for the full amount to make up any loss that may accrue. What possible harm can be done by allowing a bank to build up. a reserve of this character? Personally, I cannot see the least objection, either from the shareholders’ point of view, or from the point of view of persons doing business with banks. My fear is that very few banks will take advantage of the measure. Experience teaches me that shareholders, rather than lay aside money in the manner proposed, will generally prefer to have it distributed in dividends. In nearly all cases, there is a reserve liability ‘ on bank shares equal to the amount of paid up capital represented by the shares. That is to say, if shares are paid up to £10, there is a reserve liability of £10 per share upon them. If the shareholders of a bank think it wise to insure against trouble in the manner proposed, is there anything wrong in allowing them to do so? Would it do any damage, either to the business of a bank or to its depositors? I do not think that it would. I take it that shareholders who avail themselves of this measure will say to themselves, “ Let us insure against risk.” Suppose that a business man under a Workmen’s Compensation Act is liable in case of accidents occurring to any of his employes. Suppose that he chooses to build up within his own business a reserve fund to provide against accident. Surely there isno objection to that.
– The employer in that case is not managing the employes’ money, so that there is no analogy. The honorable senator is merely begging the question.
– We are dealing with the liability of shareholders ; and if they choose to build up an insurance fund, surely that is very much better for them and for the public than that they should take all the profits earned, and pay them away in dividends. In the latter event, if a day of trouble arises, many of the shareholders may be unable to meet their liabilities.
– Depositors might choose a bank which has that safeguard in preference to one without it.
– That is quite likely. I have no wish to labour the matter, but I fail to see why we should refuse any bank permission to build up a reserve fund of this kind if the shareholders think it well to do so.
Question - That clause 3 stand part of theBill - put. The Committee divided.
Majority … … 3
Question so resolved in the affirmative.
Clause agreed to.
The Acting Clerk laid on the table the following paper : -
Return to an Order of the Senate of 14th July,1910-
Molasses produced in, and imported into, the Commonwealth.
In Committee (Consideration resumed from this day.vide page 2044):
Clause 4 -
The Commonwealth shall, during the period of ten years beginning on the first day of July One thousand nine hundred and ten, and thereafter until the Parliament otherwise provides, pay to each State by monthly instalments, or apply to the payment of interest on debts of the State taken over by the Commonwealth, an annual sum amounting to Twenty-five shillings per head of the number of the people of the State……
Upon which Senator Lt. -Colonel Sir Albert Gould had moved -
That the word “ July,” line 2, be left out, with a view to insert in lieu thereof the word “ January.”
. -When progress was reported on this Bill earlier in the day, I was saying that the Brisbane Labour Conference in their resolutions included the year 1910 as one of a number which were to be taken to test the average annual income from Customs and Excise. Senator de Largie doubted the statement, but a reference to the published report of the proceedings of the Conference will show that that year is mentioned in the resolutions which were brought up at the report stage.
– Giving that in, what has it to do with the matter?
– It is evidence of the fact that the Conference believed at the time that during the whole of the year 1910, three-fourths of the Customs and Excise revenue would be returned to the States, and that any new arrangement that was made would begin to operate after the close of that year.
– So it will.
– Setting the whole of the proceedings of the Brisbane Labour Conference on one side, I take the manifesto of the Prime Minister, and from that it will be seen that he referred to a ten years’ period, during which he undertook to pay the States 25s. per head of their ‘population. There were two tenyear periods before the minds of the electors during the Federal elections. One was that covered by the Braddon section, and the other was the period during which Mr. Fisher promised that the States would receive 25s. per head. It must have been in Mr. Fisher’s mind at the time, as it was in the mind of every elector, that the arrangement provided for in the Constitution would continue to the close of the first period, and that the second ten-year period would not begin until after the close of 1 9 10. When we refer to the difference between the terms of the Financial Agreement which was rejected by the electors and the present proposal, we are met with the statement that the Government are now making a proposal which we supported in the Financial Agreement. That has been so often exploded that I need not refer to it again. It must be evident to the mind of even the most obstinate supporter of the Government at this stage that, inasmuch as it was an essential condition of the Financial Agreement “that it should be embodied in the Constitution, no analogy can be suggested between that agreement and the proposal now made. I am reminded by the contention of honorable senators opposite of a Sunday school anecdote. We are told that the bishop asked one of the candidates for confirmation to give a definition of a lie, and the candidate said, “ A He is an abomination to the Lord and a present refuge in our difficulties.”
– His Scripture was a little shaky.
– It was a bit mixed, as is the Government’s finance in connexion with this measure. The attempt to suggest an analogy between the Financial, Agreement and this proposal shows the. desperate position in which the Government find themselves. During 1910, because the Constitution compels it, the Government must return to the States three-fourths of the Customs and Excise revenue. They cannot escape that. The Bill carries it out, and, so far, I am inclined to think that it is well within the Constitution. But this clause provides for something more. It provides that during the last six months of the current financial year the Government may pay such a sum to the States as will, with what was paid during the previous six months under the terms of the Braddon section, amount to an aggregate payment of 25s. per head over the whole of the year. I throw out this challenge to the other side : I ask the Minister or Defence, or any other honorable senator opposite, to produce a single scrap of evidence to show that the Prime Minister in his manifesto, or any member ‘of the party when before the electors, told them that they would do what the Government are proposing to do under this clause. Did the Prime Minister say to the electors, “I am bound under the Constitution to pay the States three-fourths of the Customs and Excise revenue up to the 31st December, 1910, but you will please remember that during the next six months of the financial year I shall take out of the proposed payment of 25s. per capita the excess of that amount represented by the payment of three-fourths of the Customs and Excise revenue during the first half of the year “ ? I venture to say that no honorable senator opposite will take up my challenge.
– The Fusion crowd introduced the idea.
– I have answered that by saying that the attempt to suggest an analogy between this proposal and the Financial Agreement is only a refuge of the desperate. If honorable senators opposite can give me some proof that they told the electors that they proposed to deal with this matter in the way provided for in this clause, I shall be prepared to withdraw my opposition. Senator Walker correctly described this clause as a subterfuge. The Minister of Defence has said that this was an important portion of the financial programme of the Government, and that not a single protest has been urged against it by any State authorities or any other body. He therefore assumes that it is acceptable to the States. The answer is that the State Parliaments know, as every citizen knows, that protest at this stage is useless. The only effect of persisting with a protest is to leave one’s self liable to the charge of obstructing the business of Parliament and the will of the Government, with a decided majority of the people behind it. We are in this position, that no amount of argument or criticism - no amount of challenge as to a single scrap of proof that Mr. Fisher intended this thing- will elicit a reply. I think that the absence of any knowledge on the part of the people that the Government intended to take this step is, in itself, the strongest proof that not only is he, by pressure of necessity, violating the spirit of his own manifesto to the people on dais particular point, but so is the whole party. They cannot justify their position. They are heartily ashamed of this juggling with the finances ; they can scarcely defend themselves, and they refuse to excuse themselves.
Question - That the word “ July” proposed to be left out be left out (Senator
Gould’s amendment) - put. The Committee divided.
Majority … … 10
Question so resolved in the negative.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [9.53]– So far as this clause is concerned, the Committee has affirmed that the per capita payment of 25s. per head per annum shall be made for ten years beginning from the ist July, 1910. It contains another provision which we might debate at considerable length, and which has been debated to some extent on various amendments. But before dealing with sub-clause 2, I would again draw the attention of honorable senators to the proviso to sub-clause 1 -
Provided that in the six months ending the 30th day of June One thousand nine hundred and eleven the Commonwealth may deduct from the amount payable in pursuance of this section the amount set out in the schedule.
I understand that the deduction of the ^450,000 referred to is really to meet the deficit which has been brought about in consequence of the Commonwealth having taken over the responsibility for the payment of old-age pensions, and, to a certain extent, is in accordance with the understanding which had been arrived at between the State Premiers and the Commonwealth authorities. In the circumstances, I am prepared to accept the position with regard to the payment of the ^450,000. But I want honorable senators to bear in mind that that sum is in addition to the difference between the per capita payment of 12s. 6d. per head and the States’ three- fourths share of the Customs and Excise revenue, and will be a further reduction on the amount which the States will have to receive. Under this provision the States will be entitled to receive, during the first six months of next year, not 12s. 6d. per head, but about 6s. 3d. Then that amount is to be further reduced by 2s. or 3s. in respect to the ^450,000. It is open to honorable senators to consider whether it is fair that subclause 2 should also come into operation in addition to the deduction of ^450,000. In speaking to this subject this afternoon. Senator Walker seemed to be under the impression that the sum would represent the sole deduction which would be made from the per capita payment of 12s. 6d., but he should hear in mind that this is in addition to a deduction of about 6s. 3d., or one-half of the amount which otherwise the States would be entitled to. Sub-clause 2 clearly goes back upon section 87 of the Constitution. It provides very clearly that if the amount during the six months ending the 31st December, 1910, should exceed the per capita payment of 12s. 6d., the excess is to be deducted from the per capita payment of j 2s. 6d. which the States are to receive in the future. It appears to me to be treating die States very unfairly. I do not intend to debate the question at greater length, because a good deal of discussionhas already taken place. But I wish to again protest against what I think is a most unfair and unjust way of treating the States, and to reiterate my belief that it was never made known to the people of the States that any such deduction would be made. They were led to believe that the 25s. per head per annum would be paid to them for ten years as from the ist January, 1911, instead of which they are to receive less than they are entitled to under the Constitution, and then only to re- ceive their per capita allowance for a period of nine and a half years. In fact, it appears almost worse than that, because of the way in which this Bill is getting behind section 87 of the Constitution.
Clause agreed to.
Clause 5 -
The Commonwealth shall, during the period of ten years beginning on the first day of July One thousand nine hundred and ten, pay to the State of Western Australia, by monthly instalments, an annual sum which in the first year shall be Two hundred and fifty thousand pounds and in each subsequent year shall be progressively diminished by the sum of Ten thousand pounds.
One-half of the amount of the payments so made shall be debited to all the States (including the State of Western Australia) in proportion to the number of their people, and any sum so debited to a State may be deducted by the Commonwealth from any amount payable to the State in pursuance of this Act.
– I move -
That after the word “ ten,” line 3, the following words be inserted: - “and thereafter until the Parliament otherwise provides.”
I am submitting this amendment in order to satisfy the minds of honorable senators who may have a doubt as to whether or not the special subvention to Western Australia will continue after ten years. Under this clause, that State will be receiving ten years hence a special payment of £150,000. We all recognise that that is necessary.
– At this hour, I am not going to state the reasons why it is necessary. The honorable senator knows quite well why it should be given. I understand that there is a doubt in the minds of some honorable senators that, at the expiration of ten years, it will suddenly cease.
– So it ought to do.
– I do not think -so.
– Suppose that the Commonwealth should not be able to pay the 25s. per head, would the honorable senator still want the £250,000?
– I am not going to be led into any by-ways. I am submitting the amendment in order to insure that this special payment shall continue for twenty-five years. If, at the end of ten years, the State is receiving a special sum -of £150,000, and the conditions which necessitated the making of that special payment should still obtain, then I want the special payment to continue so that at the end of twenty-five years the sum of £250,000 will have been exhausted.
– The honorable senator will have to alter the whole clause, because it provides for the liquidation of the whole sum in ten years.
– No. In the clause, there is an implied contract that Western Australia shall receive this special subvention so long as the special conditions exist.
– The honorable senator will remember that, at the end of his second-reading speech, I interjected that this amount is diminishable annually, not by a twenty-fifth, but by a tenth.
– I contend that as it is diminishable annually by a tenth, ten years hence Western Australia will be receiving £150,000. I do not think there is any intention on the part of Parliament to suddenly cut off -the special allowance. I submit that it would be very wise to make this amendment.
– Would the honorable senator be agreeable, so as not to cut it off suddenly, to make it £25,000 a year ?
– If the honorable senator does not feel inclined to trust the Federal Parliament, I do. For the reasons which I have given, I submit my amendment.
– -The Government will accept this amendment. I do not think that my honorable friend Senator Needham, in moving it, has shown what its effect will be. All that the amendment will do will be to bring the two provisions of the Bill in regard to time on to the same footing. The whole agreement will then operate for ten years, and “ thereafter until Parliament otherwise provides.” lt will he seen that clause 4, which provides for the payment of 25s. per capita to the States, is also to operate for ten years, and “ thereafter until Parliament otherwise provides.” The reason for the latter provision is that the period might terminate when Parliament was not sitting. Parliament might not have made any other provision, and the States might be for some months without any payment unless there . were a provision of the kind. The same consideration applies regarding the payment to Western Australia. Senator Needham’ s amendment continues the operation of the Bill until Parliament has had an opportunity of dealing afresh with the question.
– The clause, if amended as proposed, will give a subsidy to Western Australia for ten years instead of twenty-five, and thereafter until Parliament otherwise provides.
– It does not run out in ten years, but diminishes at a given rate ; but the amendment says that at the end of ten years the special payment will continue decreasing at the rate of£10,000 a year until Parliament otherwise provides. If Parliament does not otherwise provide, the special payment will run out in twenty-five years.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [10.9].- I am rather astonished that such an amendment, should have been submitted by a private senator and immediately accepted by the Government. I should like to know why the Government did not submit the amendment themselves and take the responsibility for it.
– What difference does it make ?
-It makes a great deal of difference. In this case the Government apparently were not prepared to submit the amendment, but when one of their supporters submits the amendment for which he takes the primary responsibility the Government accept it and take only a limited responsibility. In a matter in which the finances are concerned to the extent of tens of thousands of pounds, it is the usual course for the Government to take action and not to allow a private member of Parliament to take the question up and goad them into accepting an amendment. I do not say that Ministers have been goaded in this case. I do not believe that there has been any necessity to use a goad. Perhaps I am doing them an injustice. Possibly this will be another example of one House of the Legislature, at the instigation of a Minister, doing one thing, and the other House, also at the instigation of a Minister, doing quite another. How long are we to see a State like Western Australia dependent upon the bounty of the Commonwealth for the maintenance of its own Government ? We know perfectly well that Western Australia is producing a large Customs and Excise revenue per capita, owing to the character of its population. Therefore, we are told we must give a special concession. In order to induce Western Australia to come into the
Federation in the first instance, the other States consented to give important concession by way of gratuity or as a bribe to Western Australia.
– Is the honorable senator in order in using the word “ bribe “ concerning a State?
– What else would the honorable senator call it ?
– I ask that the word shall be withdrawn.
– Call it a charitable dole.
– I ask you, Mr. Chairman, to insist that the honorable senator shall withdraw the word “bribe.” He has not done so yet.
- Senator Gould has withdrawn the word “bribe” and substituted the term “charitable dole.”
– I rise to order. I wish to have your opinion, sir, as to whether the amendment is in order, inasmuch as the effect of it is to impose an additional burden upon the people? Must we not proceed by way of request ?
– I have been asked whether Senator Needham’s proposition ought to have been submitted in the form ot a request. I am of opinion that it is out of order as an amendment.
– I feel inclined to dispute your ruling, sir.
– What does it matter whether we proceed by way of request or amendment?
– My amendment being out of order, I now move -
That the House of Representatives be requested to amend the clause by inserting after the word “ ten,” line 3, the words “ and thereafter until Parliament otherwise provides.”
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [10.15].- The honorable senator has perhaps acted rightly in submitting his proposition as a request.
– We ought not to proceed by way of request unless we are forced to do so.
– I should have been better satisfied if an amendment had been moved. If it was afterwards shown that that was not the proper course, the matter could have been put straight, but I take exception to the Senate whittling down its powers any more than it needs.
– Does the honorable senator dispute my ruling ?
.- No, I do not.
– Then the honorable senator is not in order in referring to it.
– In fact, 1 think that we should present a humble request to the other House to make a present to the people of Western Australia, in order to enable them to meet their obligations.
– Did not New South Wales insist on a special concession in the matter of the Federal Capital before she would enter the Federation?
– What about the railway for Western Australia?
– The transcontinental railway is not provided for in the Constitution, though the Western Australian senators have repeatedly argued that the construction of it was a condition of the Union.
– That has nothing to do with this question. Western Australia is in the Federation, and we are simply asked to do her common justice.
– ALBERT GOULD. - How are we doing it? Under section 95 of the Constitution, special provision was made for Western Australia with regard to Customs and Excise duties.
– What was that special provision? That she should have power for a certain period to work a special Tariff.
– But no other State was permitted to have a Tariff of its own. The people of the other States had to come under the Commonwealth Tariff, but special terms had to be offered to Western Australia. Now we are asked to grant further special terms.
– Would New South Wales have joined the Federation unless the Federal Capital had been promised to her?
– Probably not.
– Then the honorable senator gives his whole case away.
– In section 95 of the Constitution there was a distinct departure from the general principle laid down when Federation was determined upon, namely, that Customs and Excise should pass into the hands of the Commonwealth, and that three-fourths of the proceeds should be distributed amongst the States in proportion to population.
– More than that was done for Western Australia. She was given the right to impose Inter-State duties.
.- Yes; she had this right, although one of the very objects of Federation was to break down Inter-State barriers. Not content with that, this poor, struggling State of Western Australia now comes along, as though she had had no increase of population, no wealth, no expansion of industry, and asks for special financial consideration from the Commonwealth. She is to be made still more the favoured State of the whole Union. By this Bill we are asked for her benefit to take £2,050,000 out of the pockets of the other States. Even Tasmania, the smallest and poorest State in the Commonwealth, has to put her hand in her pocket and make her little contribution towards the £2,050,000 for Western Australia. Is that fair? Is it just? The Minister of Defence, a Western Australian senator, not content with asking for £2,050,000 out of the pockets of the Commonwealth, now wants a special concession of £3,250,000.
– How does the honorable senator make that out?
– By the simple arithmetical process of taking the amount of money that* would be paid to Western Australia during the twenty-five years under the honorable senator’s proposal. I want the country to realize that we are called upon to pay to keep Western Australia within the Commonwealth.
– No, to keep her solvent.
– She will remain within the Commonwealth, anyhow.
– I do not think that it is necessary to pay this sum to keep Western Australia solvent. ‘
– She has immense resources of her own, and ought to be in a position to pay her own way just as well as any other State.
– She is in a position to pay her own way, but she does not want to pay the way of other States as well.
– I recognise that every State has a right to make the best provision it can for its own financing ; but I again remind the Senate that Western Australia had to be induced to come into the Federation. She was not the only State that, gave up something. New South Wales gave lip a great deal. It was generally admitted that Federation would never [have been accomplished unless New South Wales came in. I do not suppose that Queensland would have joined if New South Wales had remained out. The great fear when the first Commonwealth Bill was under consideration was that New South Wales, and Queensland would form themselves into a Federation of their own.
– And be able to defy the world.
– The time has gone by for a great State like Western Australia to ask for a concession without giving a reason for it, except that it would be inconvenient to suddenly lose the special treatment which she has- enjoyed since Federation. It has been suggested that the allowance might be reduced annually by ^25,000 instead of ,£10,000. Had that proposition been made, it would have evoked less protest than that under discussion.
– Tasmania will be the next State to ask for a concession.
– Tasmania is in a different position. Her revenue has been so much diminished by Federation that she could with better grace ask for a concession. She would have to make out a case, but could not ask for so enormous a sum as is to be paid to Western Australia, which has no case. Can it be argued that that State has been living beyond its means, and must have a special annual payment beginning at £”250,000 from the Commonwealth to keep it solvent? The position is much as if a wealthy man were to demand that a struggling neighbour should give him something to assist him in developing his immense estates. Western Australia has boundless prospects, and great mineral, pastoral, and agricultural wealth.
– Settlers are pouring into the country.
– A few months ago the party opposite was offering £[3,500,000. to Western Australia as a special payment.
.- 1: had nothing to do with that. There is no surer way of pauperizing persons than to give them help now and again. Such treatment saps their independence, and weakens their moral fibre. Are we to do that with Western Australia?
– The honorable senator’s arguments could be applied to defeat the proposal to return 25s. per capita to the States.
– If the honorable senator thinks that the States should not receive 25s. per capita from the Commonwealth, and presses his view on the Government, Ministers may withdraw that proposition. Surely Western Australia’ will not require help for the next ten years.
– Western Australia is a very young State.
– Western Australia has slept for a long time, but has awakened to find herself a giantess; but although she has shaken off her shackles, she asks the other States for a dole.
– She cannot afford to be robbed by them.
– How is she robbed by them? All the States are to be treated alike. It is true that one of them contributes ,£3 per head of population to the revenue, and another only ,£2, but the State which makes the largest contribution is not to get special treatment. I am glad that New South Wales has shown her readiness to throw in her lot with the other States. That State, like Tasmania and the others, will obtain from the Commonwealth 25s. per capita of population. If the proposed land tax is carried, New South Wales will contribute to the Federal revenue much more than Western Australia, but, under Federation, the Commonwealth expenditure there will not be greater per capita than in the other States. The Commonwealth Government will spend its money for the benefit of Australia as a whole, and all the States will contribute towards the cost of any work wherever it may be located.
– Did not the last Government which the honorable senator supported propose to give a concession to Western Australia ?
– I have never admitted that Western Australia should receive a special concession. Under the Government’s proposal she will obtain a special grant of nearly £3,000,000, but she has no need to come cap in hand to the Commonwealth.
– She is not doing so.
– Has the honorable senator never supported a Government which has done a more grievous thing?
– I supported a Government, but I did not care to speak on the subject while I occupied a certain position - because I thought it best not to speak, and simply vote for what I deemed to be best in the interest of the Commonwealth.
– Then it was right then?
– Whether it was then right or wrong is beside the question. I have a right to protest against what I regard as the unfair treatment of the whole of the States for the benefit of one State. I have said that I would be prepared to support a special concession to Tasmania, seeing that her position is altogether different from that of Western. Australia. I desire to see Western Australia progress, but it is too tad for so wealthy a State to come cap in hand for a special concession.
– I rise to a point of order. Surely the honorable senator is guilty of tedious repetition in saying ad nauseam that Western Australia is coming to the Common wealth Parliament cap in hand ?
– I have concluded my remarks, and I can only say that I am sorry to have touched the honorable member so severely as to render it necessary for him to make a protest.
– I am inclined to think that the term accepted by the Government, like the term proposed by the Government, is too long. I know that that is open to the reply that under the Financial Agreement proposed by the previous Government a similar concession was to be given to Western Australia, but in that case the advantage was to be gained within the Constitution. The Commonwealth Year-Book shows that the contributions from Western Australia are steadily falling. In 1904-5, the contribution of Western Australia, per head of the population, was £5 18s. 2d. ; in 1905-6, it was £5 is. ; in 1906-7, it was £4 12s. nd.j in 1907-8, it was £4 17s. 2d.; and in 1908-9, £4 7s. 4d. The average contribution for the whole of the Commonwealth is £3 7s. 2d. During the five years, the contribution from Western Australia has fallen by £1 10s. iod., and, assuming that during the next five years it falls at a similar rate, it will then amount to £2 10s. 6d. only. Notwithstanding that there is every indication of a similar fall in the next five years, thus bringing the figure below the average for the Commonwealth, Western Australia is still importunate for a special concession at or about the same rate that was granted in the beginning, probably to induce her to enter the Commonwealth. While the average contribution over the “whole of the Commonwealth has been steadily increasing, that of Western Australia, as I say, has been steadily decreasing, almost at the same ratio. The general -per capita averages during the five years are as follow : - In 1904-5, the average was £2 17s. 7d. ; in 1905-6, it was £2 18s. 8d. ; in 1906-7, it was £2 3s. 4d. ; in 1907-8, it was £3 us. 7d. ; and in 1908-9, it was £3 9s. 2d. It is quite apparent that both the Financial Agreement of the late Government and the proposal of the present Government are too generous to Western Australia ; and how the representatives of that State can, under the circumstances, persist in their demand, and why Parliament should agree to it, has not been satisfactorily explained. Tasmania’s financial position is somewhat critical in relation to the Commonwealth ; and if Western Australia insists on her financial “pound of flesh,” wc shall be deprived of any possible opportunity to even consider a concession to Tasmania. It is about time that Western Australia ceased to be the importunate beggar - the financial Cinderella - of the Commonwealth.
– I do not quite understand the position. For instance, what will the payment be in the eleventh year?
– Perhaps the honorable senator will permit me to explain the amendment. The clause provides for a payment to Western Australia in the first year of the ten years’ period, of £250,000. This payment is to be diminished by £10,000 in each of the following years. Clause 4 provides for a payment of 25s. per head to the States for ten years, “ and thereafter until Parliament otherwise provides.” Senator Needham proposes that the House of Representatives should be requested to insert the same words in this clause dealing with the special payment to Western Australia, so that the payment shall continue for ten years, “ and thereafter until Parliament otherwise provides.” The reason for this is that it is possible that Parliament might not be sitting at the close of the ten-years’ period, and the payment might cease for a few months, although Parliament might desire to continue it.
– After the figures which we have heard quoted by Senator St. Ledger, showing the per capita contribution to the revenue from Customs and Excise by the State of Western Australia, I should like to know what reason the Government can offer for this proposed special payment, lt is proposed by the Bill that it should continue for ten years, and now Senator Needham suggests that it should continue after that time until Parliament has otherwise provided.
– Parliament may do as we are doing in this Bill, and make provision to deal with the matter before the expiration of the ten-years’ period. We are making provision for an alteration in the payment to the States before the expiration of the Braddon section.
– That is so; but, in my opinion, the Government are proposing to deal with the matter in an unfair way, and are really circumventing the Constitution. If, at the close of the ten-years’ period, there were six months for which Parliament had not provided, would this special payment run on under the amendment suggested?
– So that, although
Western Australia’s per capita contribution to the Customs and Excise revenue might at that time be below that of the other States, she would desire to grasp money to which she was not entitled? Other States have suffered under the Federation as well as Western Australia; but they are not coming down to Parliament cap in hand for a special subsidy. I saw in the press to-day that the Western Australian Government intend to go in for a vigorous policy of immigration, and that over 2,000 immigrants are expected to arrive in the State shortly. The Commonwealth will have to pay Western Australia 25s. per head for those immigrants next year. We have evidence, from official figures, that Western
Australia’s per capita contribution to the Customs and Excise revenue is decreasing, and, in the circumstances, I should like to know how the Government justify a proposal to take from the other States money which they should have, and make a present of it to Western Australia? I cannot support the amendment.
– I wish to say, in reply to Senator Gould, that Western Australia is not seeking a charitable dole, but a measure of common justice. When honorable senators tell us that Western Australia is bending the knee, and is coming cap in hand to the Commonwealth, I reply that she is simply asking for common justice, and my amendment is intended only to secure it for her.
Question - That the House of Representatives be requested to amend the clause by inserting after the word “ ten,” line 3, the words “ and thereafter until Parliament otherwise provides ‘ ‘ - put. The Committee divided.
Majority … … 5
Question so resolved in the affirmative.
Request agreed to.
Clause agreed to with a request.
– I move -
That the following new clause be inserted : - “ 5A. - (1) The Commonwealth shall, during the period of ten years beginning on the first day of July, One thousand nine hundred and ten, pay to the State of Tasmania, by monthly instalments, an annual sum which in the first year shall be Seventy-five thousand pounds, and in each subsequent year shall be progressively diminished by the sum of Three thousand pounds.
The payments so made shall be debited to all the States (including the State of Tasmania) in proportion to the number of their people, and any sum so debited to a State may be deducted by the Commonwealth from any amount payable to the State in pursuance of this Act.”
Those who occupied seats in the Senate during the last Parliament will remember that I submitted a similar motion in connexion with a proposition to refer to the people of the Commonwealth a Bill relating to the distribution of the surplus revenue. That measure - the Constitution Alteration (Finance) Bill - provided for an alteration of the financial relations between the Commonwealth and the States consequent upon the anticipated exclusion from the Constitution of what is known as the Braddon section. At that time some honorable senators readily supported the proposal I put forward. It was realized that the condition of Tasmania was distinct from that of the mainland States.
– What did the honor- able senator’s colleagues from Tasmania at that time think of the proposal?
– They differed from my honorable friend, and voted in absolute hostility to him.
– There has been an indication that Tasmania repudiated their decision.
– Those representatives of Tasmania who voted against my proposal, and who subsequently presented themselves for re-election, were not returned. That may be a very substantial indication of what the people of Tasmania thought of the proposal, but I wish to be as brief as possible, because of the lateness of the hour, and, consistent with my duty, to study the convenience of honorable senators generally. Western Australia, under the Constitution, has received special consideration. As to the grounds for that special consideration I am not going to speak. It is sufficient to say that for the first five years after the imposition of a uniform Tariff as between the Commonwealth and the outside world, Western Australia was privileged to impose upon goods from the other States its own Inter-State Tariff, diminishable on a sliding scale during that period. I am not going to enter into a consideration of the grounds or motives underlying the extension of that privilege to Western Australia, but I believe, generally speaking, that they may be taken to have been more or less geographical. Tasmania is the one State of the Commonwealth which, geographically, is separated from the others. She is insulated. Small in area and population-
SenatorRae. - But rich in resources.
– Rich in natural resources - developed proportionately to a slightly greater extent than are those of the Mother State, whichmy honorable friend so well represents - but to a large extent depending for her immediate supplies upon the mainland markets,what is her position ? Before we entered Federation Tasmania, like the other States, had the right to impose Customs duties on all goods coming within her borders. I do not wish to weary the Committee, but I shall quote a few figures to illustrate the position of Tasmania before and since Federation. In 1900 - just prior to the consummation of Federation, the total Consolidated Revenue of Tasmania just exceeded , £1,000,000. That, perhaps, seems a small amount tq some honorable senators, but for the first time in the history of Tasmania the total revenue of Tasmania then exceeded £1,000,000. For the year ended 30th June, 1901, her total revenue from Customs and Excise was £475,000. It will be remembered that the first Federal Tariff did not come into operation until October, 1 901, so that those figures were not affected by the abolition of the Inter-State duties.
– They relate to the last year of her own Tariff.
– Yes. For 1901- 2 the revenue derived from Customs and Excise by Tasmania was £373,000 ; in 1902-3, £360,000; 1903-4, £342,000; 1904-5, £330,000;1905-6, £326,000; and . 1906-7, £343,000.
– It began to rise again?
– Yes. From all these figures I have omitted the odd hundreds, but they do not affect the argument that I am putting before the Committee. For 1907-8, when it was anticipated that the new Tariff would increase the degree of Protection, Tasmania’s Customs and Excise revenue ran up to £409,000. In 1908-9 it dropped again to £374,000, and in 1909-10 it was £391,000.
– Was not the reduction a good thing for Tasmania, because it left the money in the pockets of the people?
– It did not, because the people of Tasmania were sending the money over to Victoria, New South’ Wales, and Queensland, and paying it into the pockets of the people there. Tasmania “ played the game “ Federally, and, instead of depending upon imports from other countries to raise revenue, was loyal to Australian productions.
– Will the honorable senator quote the figures for the year before the one he first quoted, because I think that year was loaded up in anticipation of the introduction of the first Federal Tariff?
– I have not the figures for that year. They were not so large, but very little short of the next. I assure the honorable senator that the first year I quoted was not loaded up in the way he suggests. The Tasmanian year, so far as the collection of revenue was concerned, was taken until a few years ago as ending on 31st December, and not on 30th June. The Customs Department went over to the Commonwealth on ist January, 11901, and everybody realized after that that there would be a uniform Tariff, with Inter-State Free Trade, so I do not think that that year was very much affected by heavy clearances in anticipation of the Tariff. I must admit that, to a large extent, much of the depletion of Tasmania’s Customs and Excise revenue is due to the establishment of Inter-State Free Trade.
– Did not Tasmania have her due share of the benefits of InterState Free Trade?
– The honorable senator will be able to show me afterwards what benefits she did receive. He. supported me very strongly on this matter some time ago, and I am rather surprised at his sudden change of front.
– But Tasmania’s revenue is gradually climbing up again.
– It has been gradually climbing down. The figures for Victoria for the same period, again omitting the odd hundreds, are as follow : - 1 900-1, £2,570,000; 1901-2, ,£2,376,000; 1902-3, £2,499,000; 1903-4, .£2,443,000 ; 1904-5, £”2,488,000; 1905-6, £2, 537,000 ; 1906-7. £”2,719,000; 1907-8, £[3,212, 000; 1908-9, £2,861,000 - there was the like drop that year as in Tasmania - and 1909-10, £[3,048,000.
– We regard the fact that the Tariff did increase the revenue as one of the curses of Victoria.
– I shall show the honorable senator that it is a triple curse, so far as Tasmania is concerned. My argument is that, if Victoria, with its scientific system of Protection in force before the establishment of the Commonwealth, found her revenue increase after the imposition of a uniform Tariff and the throwing down of the Inter- State barriers, it shows that her trade is progressing. To quote from a memorandum which I have already submitted to the Government, the figures show a steady continuous decline in revenue from Customs and Excise in Tasmania, the decline from 1900-1 to 1901-2 amounting to over £[100,000, or nearly 25 per cent, of the revenue of the first-named year. So far as Victoria is concerned, the drop in her revenue owing to the abolition of InterState duties amounted to 8 per cent., as against 25 per cent, on the part of Tasmania. Take, now, the case of New South Wales Her revenue from Customs and Excise in 1 900-1 was, in round figures, £[1,958,000; in 1901-2, £[2,812,000; in 1902-3, £[3,473,°°o; in 1903-4, £[3,229,000; in 1904-5, £[3,033,000; in
IQ°5-6> £[3>233>00°; in i9o6-7> ;£3>573,°°°; in i9°7-8, £[4,514,000; i? 1908-9, £[4,263,000; while in 1909-10 it was estimated at £[4,180,000, but actually amounted to £[4,449,000. So that at present she is practically receiving in excess two and a half millions from Customs and Excise, notwithstanding her gallant protestations day after day in. die glorious cause of Free Trade. Up tothe end of June, 1901, her Customs and: Excise revenue was £[1,958,000, whilst last year she received £[4,495,000. The revenue of New South Wales and of Victoria goes up, while that of Tasmania goes downIs it reasonable to expect for a moment that the latter result is due to any want of sagacity or experience or ability, to any want of industry or application on thepart of Tasmania’s people? No. Thereal reason for this position is that so many of our people buy individually, and not asfrom trader to trader, from New South Wales, Victoria, and other mainland States.
– I suppose they think that they get better value for their money, otherwise they would not do so.
– It is not a question of getting better value for their money. The point is that we do not get a record of the importations. If goods are directly imported into Victoria or New South Wales, sold there, and taken to Tasmania, what record is there of them? There may be £5 duty paid on one article, £[3 paid onanother, 50s. paid on another, or 15s. onanother. Individually the amounts seem small, but they aggregate a considerablesum by the end of the year. We lose therevenue which was paid on those goods in the importing States. In another place a Select Committee has been appointed to investigate what may have been the losses to Tasmania in the past, but the inquiry will only refer to the period during which the bookkeeping system has been in operation. Tasmania has suffered very severe Treasury losses through the absence, I cannot say of a proper inspection of all goods going into the State, because in order to get effectively at the dutiable goods it would be necessary to inconvenience every individual going there, and to adopt a most harassing system of espionage and examination of baggage or luggage. In this Bill we are laying down for ten years what are to be the future relations between the Commonwealth and the States with regard to the allocation of Customs and Excise revenue.
– In the future Tasmania will get exactly the same as any other State, so what has she to complain of in regard to the future ?
– Tasmania’s trade has been dislocated by the establishment of the Commonwealth.
– You want to get a bonus to put it right again.
– No. We entered into the Federation with the idea of being loyal, true, and honorable to all the principles which underlay the Constitution, and Tasmania more than any other State in the Union has, I venture to say, been loyal to those principles. No State more than Tasmania has spent its money in the purchase of those commodities which her sister States can produce. Western Australia got its advantage under the Constitution for the simple reason that it was alleged, and properly alleged I .believe, that the preponderance of male population was so great at the time that the consumption of the highest dutiable articles, such as narcotics and stimulants, was out of all proportion to that in the other States. Tasmania is at this time in, an analogous position. Geographically she is so situated that: to a large extent she must draw on the mainland markets. Her residents receive many of their articles in a completed form, either as actually imported or as made up of imported parts on which duty had been paid in other States.
– The honorable senator is. only putting one side of the case. Look at the tremendous market which Federation has made for Tasmania^ apples, potatoes, timber, and other things.
– And hops, beer, jam, and canned fruits.
– Has Senator Rae a friend in New South Wales or Senator Givens a friend in Queensland who has received from Tasmania apples or jams which came to Tasmania from another country ? . I am not talking about the natural produce of the country, but of things which have been imported into Victoria and New South Wales and made up there, or directly sent away to Tasmania. All the States are free to exchange their natural pro- . ducts with each other.
– Has not Inter-State Free Trade been of great advantage to Tasmania ?
– Exactly ; but the point is that imported dress materials, silks, and ladies’ hats, which run up in cost to something like twenty guineas, are bought by Tasmanian people, whilst Victoria ana New South Wales have had the benefit of, perhaps, £7 or £8 in duty upon even one of them.
– Do the Tasmanian ladies wear such hats as that? If so, they cannot be too badly off.
– The standard of living in Tasmania is just as high as it is in any other State. But, nevertheless, by a singular anomaly our Customs returns are not equal to those of the other States. Why ? Because the goods which we consume in Tasmania pay duty in Victoria and New South Wales. Apart from the . leakage which still continues, we have, as pointed out elsewhere, ten years of the past to make provision for. I remind honorable senators that this is the first time that the Federal Parliament is using its power to provide for the allocation of the Customs and Excise revenue between the States. The duty thrust upon us is therefore highly important. No previous -Parliament has had the opportunity or responsibility of discharging this duty. We have already made provision for the special conditions of Western Australia. I am asking for nothing on behalf of Tasmania that cannot be claimed fairly and honestly. I am not asking for a charitable dole. I simply point out that the special geographical conditions of Tasmania and her proximity to the mainland, with its large markets, have the effect of inducing Tasmanian people to buy goods in Sydney and Melbourne which have pa:c; duty in mainland States. May I further remind the Committee that during the past seven or eight years the operation of the factors to which I am calling attention had the effect of closing up several establishments in Tasmania, and has induced the transfer of industrially invested capital from that- State to mainland States ?
– Bicycle and motor parts, for instance, are imported through Victoria.
– Quite so, and I could mention half-a-dozen other industries that are similarly affected. Meanwhile, the “direct taxation of the Tasmanian people has been increased, roughly speaking, from 13s. to something like 30s. per head during the last ten years. The fewer people we have, and the fewer industries, the greater the burden upon those of us who remain in Tasmania. I feel perfectly convinced that if honorable senators will look into the figures they will recognise that Tasmania has a genuine claim on the Commonwealth. I am not wedded to the exact terms of my amendment, but I have submitted it in the hope that I shall receive the support of the majority of honorable senators.
– Does the honorable senator think that the factors which he has pointed out are likely to be temporary or permanent; and such as are due to the proximity of Tasmania to the mainland ?
– The proximity, at any rate, must be permanent.
– I think that trade in Tasmania wiM tend to go from centres in that State to mainland centres. The Customs and Excise revenue of New South Wales, for the year ended 30th June, 1901, was ,£1,958,000. That revenue had risen to £[4,495,000 at the end of last year. In Tasmania, however, the revenue has declined from first to last from £[475,000 to £391,000. It has been down as low as £[326,000. I submit that these figures are really due to the fact that Melbourne und Sydney have become largely the distributing centres to the other States.
– Then Melbourne and Sydney, and not the other States, ought to pay what the honorable senator claims is due to Tasmania.
– The other States have a claim, too.
– The figures do not show that Queensland has lost in the same way as Tasmania, whose Customs and Excise revenue in some of the years since
Federation has been nearly £[200,000 less than it was before she joined the Union. The State has suffered because of her loyalty to Federal principles and to Protection. Senator Ready, who knows a good deal about the commerce of the State, and all other representatives of our State, will bear me out in the statement that she has traded very freely with the mainland, and her own manufacturers have had to take second or third place. We prefer Australian manufactured goods to imported goods. Personally, I have always done so, and always will do so, but we should get recognition of the fact that often imported goods on which duty has been levied have been consumed in Tasmania without the State being credited with the duty.
– Why did the honorable senator not mention Queensland in his memorandum?
– It was written at the request of the then Treasurer, the honorable member for Hume, Sir William Lyne, who asked me for data to fortify him for an interview with Mr. Wade, the Premier of New South Wales. At that time negotiations were taking place with Mr. Wade and the late Sir Thomas Bent. The memorandum is more or less unofficial. Had I been asked for a general statement, I should have referred to other States besides New South Wales and Victoria. In view of the fact that special provision has been made for Western Australia, and that we ask for an initial payment of only £[75,000, ‘I hope that the Committee will see that justice is done to us.
– Do not let there be two mendicants.
– Tasmania is not a mendicant, but she expects to receive her due share of the revenue derived by taxing goods which she consumes.
– In another place a Select Committee has been appointed to ascertain what revenue, if any, Tasmania has lost under Federation.
– The Committee will inquire only in regard to past losses.
– What has happened in the past will be a guide for future action. If the statements which havebeen made are justified, it will be for the Government to consider whether special1 provision shall be made for Tasmania. I am sure that the honorable senator will not expect Ministers to commit themselves until the Committee’s evidence and report is available. If, then, the action taken does not satisfy him, he will be able to move accordingly. Under present circumstances the Government cannot accept the amendment, and he will be well-advised if he withdraws it.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [11.44].- Senator Keating has made out a strong case for Tasmania, whereas we were asked to vote a concession for Western Australia without reasons being offered for such a course. I have thought for a long time past that Tasmania’s position entitles her to consideration, though the honorable senator asks for too much. It must be recognised t that the State has gained many advantages from Federation, but, on the other hand, her revenue is small, and no doubt her people often patronize shops on the mainland, and import goods, the duty on which is credited to some other State. But all that was done away with under the Commonwealth ; and in view of her small revenue, Tasmania is entitled to some consideration. The proposal of Senator Keating would require £615,000 in all, and that is a very large sum to ask Parliament to grant in the way suggested. With the assistance of Senator Walker, I have made one or two other calculations, and I find that a grant of ,£50,000, diminishing at the rate of £5,000 a year, would require £275,000; £40,000, diminishing at the rate of £4,000 a year, would require £224,000; and £30,000, diminishing at the rate of £3,000 per annum, would require £166,000.. I think that £50,000, diminishing at the rate of £5,000 a year, would be a fair compromise. Provision lias been made to pay Western Australia £2,050,000 during the next ten years, and if that allowance were continued tor twentyfive years, it would involve a sum of £3,250,000. Tasmania has, according to the latest statistics available, a population of 186.000,. as against Western Australia’s 273.000, and on this basis Tasmania is certainly entitled proportionately to a greater sum than £50,000, diminishing by £5,000 a year. However, Tasmania has not the same claim in consequence of the -large revenue she has contributed previously : and, no doubt, the Government of that State recognise the fact, and, therefore, the grant I have indicated would, I think, be fair and just. 1 should “be glad if the Minister can see his way to accept the proposal of Senator
Keating in some modified form, if he thinks the amount to be too large. If this question is to go to a division, a very convenient way of ascertaining the feeling of the Committee would be first to decide whether or not Tasmania should receive any consideration, and to that end the principle could be affirmed on the first part of the clause, and then the question of amount settled. Personally, I should be glad to see the amount given as a recognition of the disadvantages Tasmania has suffered in consequence of the abolition of the InterState duties, and of the benefits which the other States have received from trade with Tasmania under Commonwealth conditions. It has been objected that the matter is now under consideration by the Government, but Tasmania is in the unfortunate position that, if the matter is left over until the conclusion of the inquiry now proceeding, the State will have to wait for special legislation, instead of having the matter dealt with in the Bill now before us. If we put an amendment in the Bill, an opportunity will be given to the Government, through the Customs officials, to ascertain the probable loss that Tasmania has sustained. If the other Chamber, when the Bill goes there, considers that there is not sufficient information on which to give proper consideration to the matter, it will still be open for consideration at a later date. In the first instance, however, some figures should be placed on record in the Bill.
– Where was all this sympathy previously ?
– I had no opportunity to express my sympathy, owing to the position I occupied.
– The honorable senator had his vote.
– The question was never submitted to a vote. My sympathy has been with Tasmania for years past, and had I had the opportunity I should have voted in the direction I suggest. Indeed, I did move in the matter four or five years ago, but honorable senators representing Tasmania were not then prepared to take up the question.
.- I regret very much that it is necessary to dehate this very important question at so late an hour of the night. I should much have preferred if it had been possible to discuss, it in the daytime, when there might be a full attendance of honorable senators to hear the arguments in favour of a special grant for the island State of Tasmania. We in Tasmania claim to be Nationalists, and the history of Federation proves that we are ardent Federalists. We have manifested generally a good Federal spirit. I need hardly remind honorable senators, for instance, that Tasmania raised no objection to the sugar bounty.
– Her representatives did.
– Perhaps so ; but I do not think there was very much objection to the granting of the bounty in the Senate. The Commonwealth has paid in the form of the sugar bounty, which has gone almost entirely to New South Wales and Queensland, a sum of £[1,845,000, and Tasmania’s contribution to the amount is £[71,000. It will not be denied that , we have shown a Federal spirit in that matter. Then there is the great national project of the acquisition by the Commonwealth of the Northern Territory, and I may say, as one representative of Tasmania, that I shall approach the consideration of that question from a national, and not from a provincial, stand-point. Although it will involve the Commonwealth in an expenditure of £[10,000,000, Tasmania’s representatives will be found ready to give it reasonable support. Then I might remind our Western Australian friends that Tasmanians have never adopted an anti-Federal attitude towards the proposal to grant that State special consideration. The vote which I gave only this evening is a proof that in dealing with such questions Tasmanians are Australians first. The proposed transcontinental railway from Port Augusta to Kalgoorlie will involve an expenditure of nearly £[4,000,000, and Tasmania’s share of that expense will amount to £[160,000.
– Surely the honorable senator does not refer to the expenditure on such a work as special assistance to Western Australia?
– No; I agree that it is a great national work, and should be regarded in this Parliament from a national stand-point. Tasmania is prepared, to regard all these projects from a national stand-point. I agree that the special consideration provided for Western Australia in this Bill is no more than that State is fairly entitled to, but I claim to be able to say the same for the proposal now made on behalf of Tasmania. I wish honorable senators to understand that we are pleading, not for mercy, but for justice. I should be very sorry that any member of the Committee should be under the impression that we are asking for something as a favour. We claim that we are asking for something to which we are fairly entitled. Senator Keating, in dealing with the matter, gave the Committee figures as to the revenue of Tasmania since Federation. We received, prior to Federation, an average annual revenue from Customs arid Excise of £[475,000. During 1908-g, we received from the Commonwealth only £[245,000 from that source. Our revenue losses have been between £[100,000 and £[150,000 per annum as a result of Federation. We have found it necessary to increase our direct taxation from 12s. lod. to 32s. 6d. per head. Tasmania has the heaviest direct taxation of any State in the Commonwealth. We have been obliged to increase our land, income, and other direct taxation.
– Tasmania has the highest income tax in the Commonwealth.
– She has, and it is also one of the most unfair taxes levied in the Commonwealth. Our land taxation isvery much higher than the land taxation of any other State in Australia. Prior to Federation, Tasmania’s revenue represented £[6 2s. 2d. per head of her population. In the first year of Federation it fell to- £[4 13s. per head, and it is now only ;£5 os. 7d. per head.
Sitting suspended from 12 midnight to- 12.4.5 a.m. Friday.
– When we adjourned’ for supper, I was dealing with the direct taxation paid by the people of Tasmania, and I wish to compare it with that paid by the people of the other States in orderto give honorable senators some idea of the unfortunate position that we occupy as a State. According to the last issue of the Year-Book, the direct taxation of the other States is as follows : - New South Wales, 6.55 per cent. ; “Victoria, 13 per cent.; Queensland, 11.22 per cent.;. Western Australia, 12.54 per cent. ; and” Tasmania, 26.84 per cent. During thisyear the direct taxation in force in Tasmania has been increased by a 25 per cent, surtax on income, land, and ability taxesamounting to 5s. 6d. If Tasmania is to remain solvent, she must adopt the policy of paying for the construction of roads and’ bridges out of revenue. That would represent a payment of 14s. 9d. per capita..
She must also refrain from continuing to use the revenue derived from the sale of Crown lands in defraying current expenditure - a practice which Knibbs most emphatically condemns. The revenue so derived in Tasmania at present amounts to 6s. 5d. per capita per annum, so that if we had honest finance there at the present time, we should be paying by way of direct taxation £2 13s. 8d. per capita. That is the heaviest burden of direct taxation that any State is carrying. The fact that, at the last general election, the people of Tasmania indorsed by a large majority the Financial Agreement, whilst at the same time they returned six out of eight Labour candidates who stumped the country in opposition to that agreement, shows that the people, recognising that they were labouring under a heavy burden of direct taxation, were prepared to vote for the Financial Agreement, in order to make sure that Tasmania would receive from the Commonwealth 25s. per capita per annum. The incident is an index to public feeling in the island State at that time. I come now to what, in my opinion, is the crux of the whole question, and that is the Inter-State trade between Tasmania and the rest of the Commonwealth. Obviously if any State consumed only Australian products, it would have no Customs . revenue; but whilst Tasmania’ has not been doing that, she has been consuming more Commonwealth products per head of the population than has any other State. Whilst the other States on an average have increased their purchases of Australianmade goods since Federation by 40 per cent. - from £27,424,000 to £38,444,000 - Tasmania on the other hand has increased her purchases from the mainland from £1,069,000 to £2,534,000 or an increase of 139 per cent. It is true that the other States have been consuming Tasmania’s hops and jams, as well as certain other products, but their consumption of Tasmanian goods has been as nothing compared with Tasmania’s consumption of goods purchased from the mainland. Prior to Federation our trade with the mainland was increasing at the rate of 13 per cent, per annum, and since Federation it has dropped to 6 per cent. As a matter of fact, our manufacturers have been unable to compete with those of the other States. Tasmania has only increased her oversea purchases by £287,000. I claim to be able to speak from experience in this connexion, for I have been engaged in business in Tasmania for the last fifteen years.
As a State we have to depend almost entirely on the other parts of the Union for many manufactures that we used to produce for ourselves. For instance, with’ the advent of Federation, Victorian boot manufacturers sent travellers to Tasmania who swamped our markets with Australianmade boots, with the result that the local manufacturers found it impossible to compete with them, and there was a decrease in their numbers as well as in the volume of their business. We have an army of commercial travellers from New South Wales and Victoria travelling all over our State, and all freights on goods purchased from Victorian warehousemen are paid to Tasmania. Further, if a business man wishes to come to Melbourne to make purchases of materials here, the warehousemen of this city, and I speak from experience, will pay his return boat fare.
– It is only the Tasmanians who know that.
– That is why I mention it.
– It must be a wellfavoured State if its business people can get free travelling.
– It is quite a common thing for Melbourne softgoods warehousemen to pay return fares to Tasmanian business men who wish to come over here to make purchases from them, and they also pay freights on all goods sent over to Tasmania.
– They quote not f.o.b., but c.i.f.
– That is so. Perhaps honorable senators are not aware that many Victorian manufactures are sold in Tasmania for far less than the price at which they are sold here. Just as the Americans have export prices very much below their home prices, so the Victorians sell’ goods in Tasmania at rates below those prevailing here.
– That has also been done in Western Australia and Queensland.
– And more particularly in Tasmania. For instance, the Victorian millers last year found that they had a considerable surplus of flour, and they sold thousands of tons of it in Tasmania below cost price. Letters from some of the Tasmanian millers appeared in the Age at the time, objecting to Victoria dumping her products into the Tasmanian markets and swamping them. The Tasmanian trade has been rushed by the manufacturers of the other States.;
They have made a specialty of catering for Tasmania, and as a man in business I can assure honorable senators that there are far more Victorian than Tasmanian travellers going round our State canvassing for business. The other States have glutted our markets and we cannot compete with them, because they have better organized factories and a much larger output, and a larger output means lower prices. The consequence is that our production has decreased.
– A number of Victorian manufacturers established factories in Tasmania because wages were cheaper mert:.
– I think that was true only in a few isolated cases. The number of employes in Tasmanian factories in 1901 was 7,466, and in 1908, 8,727. The employes in factories in Australia for the same years numbered respectively 204,317 and 257j526- Thus Tasmania only increased her hands by 16.89 per cent., whereas for the rest of the Commonwealth the increase was 26.42 per cent. We have been simply crushed out of existence owing to the natural advantages possessed by Victoria and New South Wales manufacturers. Senator Keating has not touched on the question of Customs leakage in Tasmania. We claim that the special position of our State and the ruination of our trade through the competition of the other States gives us a claim without leakage, but we have undoubtedly suffered great loss through the bookkeeping system. The claim is hard to substantiate in definite figures, because people who do not provide transfer certificates are not anxious to proclaim the fact. One commercial traveller, who is a personal friend of mine, told me that he brought over £[2.000 worth of jewellery from Sydney in his sample tins, without any InterState certificate. The loss of revenue to Tasmania on that one lot of jewellery alone was about £500. When I asked him why he did not get an Inter-State certificate in order that Tasmania might receive what was due to her, he said he wanted to catch his boat and could not be bothered about it. Dozens of smaller cases have come under my notice where Inter-State certificates have not been furnished.
– They have to be filled in bv the passengers on the boats travelling between all the States.
– I am dealing particularly with the wholesale trade, of which we do such a big percentage with the other States. Out of ,£296,000 credited to Tas mania on account of Customs duty in 1908-9 no less than £[139,000, or nearly half, was credited upon goods originally imported into other States and ‘subsequently transferred to Tasmania. In view of the large quantity of goods transferred there is a great opening for leakage, and the leakage undoubtedly occurs. I am glad to know that a special Committee appointed by another place is investigating the question. 1 am aware that Senator Keating, in moving the amendment, is actuated not so much by considerations of Customs leakage as by the peculiar position that we occupy with regard to our trade with the other States. The honorable senator has moved for the payment of £[75,000 for the first year, diminishing by £[3,000 annually, and amounting in ten years to £[615,000. A return asked for by Senator O’Keefe shows what Tasmania has received under the bookkeeping sections, and what she would have received had the revenue been distributed in the past on the truly Federal per capita basis, as follows : -
– The difference would have been contributed by the taxpayers of the other States.
– It is admitted that the per capita system is the true Federal way of dealing with the matter, and it has now been adopted. Tasmania, according to those figures, has lost £[663,841 by the bookkeeping system, and Senator Keating is asking for only £[615,000.
– Tasmania never contributed it.
– No, because we have been good Federalists, dealing with the rest of the Commonwealth instead of importing goods from outside. I have presented the case of Tasmania as briefly aspossible, and I hope that it will receive from honorable senators the consideration, which it deserves. Through the representatives of the State not taking a proper interest in this matter, but puttingparty before its needs, the proposal of Senator Keating is somewhat belated. But.
I am glad to see that those who voted against its claim on a previous occasion now admit their mistake. Quite recently exSenator Dobson, in Hobart, moved the following motion -
That in the opinion of this meeting it is desirable to hold a public meeting in the Town Hall, Hobart, on Monday, August 4, in order to allow the citizens to express their views upon the proposals now before the Federal Parliament for the grant of financial aid from the Commonwealth Treasury to the State of Tasmania, and further to encourage our Federal Parliamentary representatives in the making of a strong endeavour to obtain just consideration for our State, and that a requisition be prepared for presentation to His Worship the Mayor accordingly.
It must be gratifying to Senator Keating to find that the representatives of Tasmania who, at the will of their party, voted against his. previous proposal have had to back down so publicly. I hope that on this occasion honorable senators generally will consider the proposal on its merits, and recognise that the little State is entitled^ to receive help from the Commonwealth.
– At this early-hour I do not propose to try the patience of honorable senators by going into the question at any length. But 1 think that they will concede my right to make a few remarks. Undoubtedly this is a question of great importance to Tasmania. I do not propose to traverse the ground which was traversed by Senators Keating and Ready. On the second reading of the Bill, I adduced a number of facts and figures which support the contention of the former that Tasmania is entitled to receive special consideration. The figures which he quoted this evening disclose a marked decrease in the revenue of Tasmania from Customs and Excise under the Commonwealth. The difference in the revenue has ranged from £450,000 down to a little over £200,000. In one year the State received a little more than one-half of the revenue which the two or three years prior to Federation averaged. That phase of the question was put by Senator Keating very well. Senator Ready put another phase when he dealt with the question of leakage. It has been admitted in another place that the decrease in our Customs revenue has been due to the fact that Tasmania is practically a trading suburb of Victoria and New South Wales. If there is one State in the Union which has no chance of keeping pace with the others in regard to population, it is Tasmania. Take Queensland, with its magnificent stretches of land which are yet unoccupied, and which, by means of its fairly liberal laws, it is going to bring into occupation by offering great facilities to persons to go there. Or take that magnificent stretch of country on the western side of the continent, which I had the honour to visit for only a few days, but which made a lasting impression on my mind, I realized that, by reason of its natural resources and policy, its population must in the very near future increase very largely. New South Wales also must have a large increase in population. In Queensland, Western Australia, and New South Wales, population will increase more rapidly than in Tasmania. Why? Because of their natural resources and geographical position.
– Tasmania is one ot the richest States in the Union.
– The honorable senator knows nothing about Tasmania. 1 am a native of the State, which I know from one end to the other. Tn comparison with the other States it has fewer natural resources. The map suspended in this chamber represents the continent, leaving out one State because it is small. Tasmania has to suffer because of its size. Senator Findley does not know that nearly one-half of the State is bare, inaccessible, mountainous country, which is good for neither man nor beast, but which, in the future, may disclose some mineral resources. Very much .’f the mountainous region on the western side of the island is absolutely unfitted for men to work in during the winter months. I have been snowed up there in the middle of December. At Mount Tindal I have seen, in midsummer, a foot of snow on the ground. I mention that incident in order to bring home to honorable senators the fact that some portions of the State are absolutely unfitted for men to work in even if in course of time mineral resources should be’ discovered. The bare fact remains - and it is incontrovertible - that a large proportion of the little State is absolutely unfit for the occupation of man.
– Does the honorable senator recollect that, according to Mr. Foster Fraser, Tasmania has under cultivation an area ten times larger than she actually possesses?
– When Mr. Foster Fraser, and itinerant journalists like him, make statements of that kind, they only show that they are not competent to write on the subject. The fact is that we. have’ not those great natural resources of which we hear so much, because the area is not there to give- them to us, and one half of the area that we have is useless. I hear a whispered interjection about water-power. But the water-power which wc have is not going to be of much value to Tasmania, because we cannot become a great manufacturing State. There is only one branch of manufacture in which we can hope to compete on equal terms with other States, and that is the making of woollens. _ The time, may come when Tasmania will supply the largest portion of the woollens consumed by Australia, but that will not be yet. As to other manufactures, we have not the requisite market at our door, because of our geographical position. This Bill provides for the payment to the States for ten years of 25s. per capita. 1 am absolutely in sympathy with that proposal by the adoption of which we shall realize at last a true financial Federation. But it follows that the State which increases its population in the greatest ratio will benefit most from this system of distributing the revenue, and Tasmania cannot expect to increase her population in the same ratio as the other States.
– Then she will not have to incur the same expenditure.
– But the expenditure of the other States will not keep pace with the increase of revenue due to increased population. I do not object to the special grant to Western Australia. That may not have been a concession, but a matter of justice. But if there is one State in the Union, the population of which is undoubtedly going to increase rapidly, it is Western Australia. Queensland, New South Wales, and South Australia may also expect to increase in numbers very largely. Naturally, they will derive an increased amount of revenue consequent upon their increase of population.
– Will they not require the extra revenue?
– But will not the State whose population does not increase want it still more? On that, as well as other grounds that have been clearly put, 1 maintain that we are entitled to have our claim sustained. Honorable senators should recollect that we who come from Tasmania are prepared to consider the great national questions that will come before this Parliament on national grounds. In the same way, we ask the representatives of other States to consider this question, on broad national grounds. We did not federate on hard-and-fast figure lines. It is all very well to say, “ Because you only contribute so much per head of population, we will not grant you what you ask for;” but there ought to be something higher and nobler than that in this great Federation. The representatives of all the States ought to be permeated by the feeling that we are building up a great nation, and we should determine to make our people satisfied that Federation is a good thing for every part of Australia. In particular, the Senate, which has been called the State House, and which has been established by the Constitution to act as the guardian of the rights and privileges of the States, should be prepared to consider this question on broad lines, rather than in the light of bare cold figures supplied by Government officials. I am not speaking as a State Righter, but as a Federalist. During my former term in this Senate I never spoke as a State Righter. I have always been a firm Federalist. Even if the figures seem to be against us, I maintain that the proposal which we bring forward ought to be considered on broad Federal grounds. We ought to remember that Federation was accomplished for better purposes than making such calculations as have been brought forward on this question. We ought to make ours a real Federation, satisfactory to the people of all the States.
– Some years ago, the people of this country were asked to “ think in continents.” We are now being asked to think in millions.- One may infer, from the doleful tale told by the representatives of Tasmania, that things are in a very low condition in that State. It appears to me that there is no possible salvation for Tasmania unless she goes in for a process of unification, and adopts the principle of manufacturing for use instead of for profit - that is unless she becomes a Socialistic State. Otherwise, her position seems to be hopeless from a financial stand-point. I expected that the Government would oppose this idea of a special grant. But I also thought that they would oppose the amendment previously carried in favour of making a special grant to Western Australia. Had the Government determined to oppose all amendments to the Bill, I could have understood their attitude. But I am surprised that they should have readily adopted one amendment while setting their face against another. Of course, they may be entitled to do so on the merits of the questions raised. The appointment by the.
House of Representatives of a Select Committee to inquire into the position of Tasmania might well have been announced to us before this debate was initiated.
– That inquiry relates only to the past.
– It is being made with the object of securing some readjustment.
– Of obtaining restitution.
– Ministers must have thought that a prima facie case had been made out to justify the appointment of a Committee. These all-round requests for special assistance may reduce our financial arrangements to a farce. We cannot, in a Federation, treat every State differently. To my mind, whatever may be Tasmania’s claims, her representatives ask for too much. If we could have the proposal of Senator Gould before us, we should have a choice as to the amount to be voted, but, as it is, we must vote either for or against the proposal of Senator Keating.
– Senator Ready spoke of the direct taxation which has been imposed in Tasmania, referring, no doubt, to the charity tax on contributions to Tattersalls. The .representatives of Tasmania would have put their case more fairly had they acknowledged the advantage which .the State gets from the enormous contributions of the other States to that lottery. I have sent money to Tasmania for investment.
– I am surprised at the admission.
– I see nothing to be ashamed of in it. Probably 90 per cent, of the inhabitants of the mainland try to circumvent the Postmaster-General by sending money to Tasmania to be invested in sweep tickets. Personally, I was opposed to the granting of 25s. per capita to the States for a term of ten years, but, as that has been agreed to, I am willing to support the small grant to Tasmania suggested by Senator Gould.
– As an Australian first, and, secondly, as a Victorian, I feel bound to consider the financial position of Tasmania under Federation. It must be acknowledged that Victoria has received greater benefits from the Union than any of the other States, while the position of Tas mania has been difficult, and is not likely to improve, because the competition of the mainland will make her industrial position worse. The business people of Tasmania are becoming largely agents for the manufacturers and importers on the mainland. I know of travellers for Victorian firms who practically live in Tasmania, and do all their business there. Such things as” bicycles and parts, and motors and parts, are imported into Victoria, and assembled here, and when they are bought by Tasmanians their State gets no credit for the duty which has been paid on them. So it is with many other lines. The smallness of the State, and the limited market which her manufacturers have, make it difficult for them to compete successfully with those on the mainland. With anything like a reasonable season in Victoria, it is impossible for Tasmanian flour to compete with the product of this State; and most of the Tasmanian business people sell retail, and are practically agents for the wholesale manufacturers on the mainland. Considering that Australia as a whole, and Victoria in particular, have gained considerably, the latter certainly to the extent of £60,000 or .£70,000 a year, by trade with Tasmania, it would be ungenerous on my part not to recognise the difficulties of ‘the* latter State. It may be that it is going -too far to attribute the. whole of the trouble to the uniform Tariff, and the question may be asked whether Tasmania, under that Tariff, has not had her market correspondingly increased. While it is theoretically true that Tasmania has been given an extended market, we know that small manufacturing firms there, employing, perhaps, from six to a dozen hands, cannot, under present economic conditions, compete with Victorian firms employing from 100 to 400 hands; and Tasmania seems to be doomed for a considerable number of years to suffer from this cause. Of course, we may permit Tasmania to become so crushed as fo be compelled to cease to be a self-governing State, and to accept some form of unification; but I do not think that that is desired by the citizens of either the mainland or the island State; and we ought to be just, if not generous, and extend some assistance. I am not prepared to support the proposal of Senator Keating, who, I think, is asking more than Tasmania is entitled to.
– Why not wait until the Select Committee has ascertained .what Tasmania is entitled to?
– Has this Bill to be held up in the meantime?
– The position of Tasmania is to be inquired into by. the Committee.
– Only in relation to the past.
– This Bill will then be gone from us for ever.
– But another Bill could be introduced.
– When we are dealing with the position of the States, I do not see why an exception should be made of Tasmania.
– How do we know how much Tasmania is entitled to?
– I do not know j and I do not believe that any Select Committee is capable of ascertaining the true figures - of learning what articles are purchased on the mainland, or what each retail firm imports. This is more than a mere Customs matter ; and we ought not to drive Tasmania into a position that Australia does not desire that she should occupy. If Senator Keating will reduce the sum to £[50,000, diminishing by ,£2,500 per annum, I shall be glad to support him, because, as an Australian and a Victorian, I desire to see this tardy act of justice done to Tasmania.
– No doubt a case has been made out for extending consideration to Tasmania. We have been told that the retrogression of the industries of the State under present circumstances is such that some recognition1 of the position is demanded at the hands of the Commonwealth; but I am afraid that, if we pursue the course that has been proposed, it may result in continual appeals for assistance, thus dulling the spirit of enterprise and tending to prevent Tasmania from attaining the strong industrial position that it is desirable she should occupy. The question arises, therefore, whether we are dealing with Tasmania on the right lines. Would it not be wiser to await the results of inquiry by the Select Committee, so that a proper basis may be found for an adjustment as between the Commonwealth and the State? Surely a Select Committee is more competent to arrive at the facts than we are?
– The Prime Minister was most emphatic in his statement that the Select Committee could only inquire into past affairs.
– I point out that the Senate could be represented on the Select Committee. Surely the Government of the day would not refuse to listen to a suggestion to that effect? I do not think that honorable senators can accuse the Government of any desire to be unjust to Tasmania.
– The Prime Minister made it perfectly clear that the Select Committee’s investigation must be retrospective only.
– Surely there is no reason why we should distrust the assurances given to-night that Tasmania in this connexion will receive fair treatment from the Government? If it is to be assumed that a matter of this kind will not be dealt with honestly and decently, we had better all scramble for all we can get. I support the attitude taken ,by the Government in this matter, and believe that it should be investigated by the Select Committee. I cannot support the amendment.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [1.47 a.m.].I am sure there is every intention on the part of honorable senators to do justice to Tasmania. As there seems to be some misapprehension with regard to what was done in another place, it might be as well to quote the following from the Votes and Proceedings of the House of Representatives of the nth August -
The Order of the Day having been read for the resumption of the. debate on the following motion of Mr. Jensen - That in the opinion of this House it is desirable that the State of Tasmania be granted a sum of Twenty-five thousand pounds yearly by the Commonwealth for a period of nine years to recoup the said State for the loss sustained in Customs leakage since the advent of Federation.
Several amendments of that motion were proposed, but it was finally resolved -
That a Select Committee be appointed with power to send for persons and papers and to inquire into and report upon the alleged Customs leakage of Tasmania and any losses the State has suffered since the advent of Federation, such Committee to consist of Mr. Bamford, Sir John Forrest, Mr. Jensen, Sir William Lyne, Mr. Roberts, and Mr. Wynne. Three to be a quorum.
It would appear from this that it was decided in another place to consider the loss which Tasmania had sustained in Customs leakage.
– As a guide to what we should do in the future.
– What is proposed here is that we should insert in this Bill a provision to grant to the State of Tasmania a certain sum annually for the next ten. years.
– Before we know what sum, if any, she is entitled to receive.
– In order to bring the debate to a close I move -
That the proposed new clause be amended by leaving out the words “ Seventy-five,” with a view to insert in lieu thereof the word “ Fifty.”
– How do we know that £50,000 would be a fair or a just sum to grant ?
– I think we can assume it would be from the statements we have heard as to the population and revenue of the State. If the amendment I have moved be carried I shall be prepared later to move that the amount should be diminished annually by £5,000.
– I again appeal to the Committee to reject the proposed new clause. The fact that Senator Gould has now moved an amendment upon it should be sufficient to show honorable senators that we have not the information at our disposal which would enable us to say what would be a just or adequate sum to grant. We do not know whether Tasmania is entitled to £50,000 a year or to any sum. Statements have been made as to the losses which Tasmania has suffered in the past, and a Select Committee which is empowered to call for persons and papers and thoroughly sift the matter has been appointed by the House of Represenatives. Was this action taken in another place merely to demonstrate Tasmania’s position? Honorable senators must know that if the Select Committee obtain evidence to prove that Tasmania’ has suffered in the past, some means will be suggested by which she may be recompensed in the future. Is it wise or fair to ask us now to pass judgment on the matter by compelling us to reject or accept the amendment? Senator Keating should in justice to his own cause withdraw the proposed new clause.
– I have listened to the pleading of the Minister of Defence, and attach to it the importance it deserves. I may also say that I noticed at an earlier stage of our proceedings the ill-concealed alacrity with -which he welcomed an amendment which would give his own State a definite provision beyond what is provided for in the Bill.
– That is an ungenerous and unjust remark.
– Adopting the words of the honorable senator who has interjected, I may say that I never heard the Minister of Defence so ungenerous and illogical as he was in his last utterance. I see no lack of generosity in the statement’ that the honorable senator accepted a previous amendment with ill-concealed alacrity.
– The honorable senator suggested that he did so because it would benefit his own State.
– It happened to be a fact that it would, but that may be merely a coincidence. How does the honorable senator square the position he has taken up with regard to Tasmania with the attitude he has adopted with regard to Western Australia? No one has ever sought the appointment of a Select Committee to inquire what particular amount should be granted to Western Australia. No investigation has been made into the peculiar circumstances of that State, and no calculations or estimates have been supplied.
– The Customs figures indicate the justice of the provision affecting Western Australia.’
– Do the figures which 1 have quoted not show equally as well the justice of our claim?
– They do not show that Tasmania has any claim.
– They show more strongly the claim of Tasmania to special recognition than do the figures with regard to Western Australia.
– They show that Tasmanian taxpayers are not paying as much Customs taxation as are the people of the other States.
– No. They show that Tasmanians are using Australian products more freely than the Western Australians are doing.
– I presume it pays them to do so.
– It may be, but the revenue is none the less depleted because of that fact. The Tasmanian taxpayers, because they consume mainland manufactures are called upon to pay more direct taxation than are the people of any other State. As to the suggestion made by Senator Pearce, I am really surprised that he should have advanced it. This proposed new clause has been printed, and in circulation for the last two or three weeks or more. A similar proposition was made in the last Parliament, and honorable senators must have realized long before this that it was necessary, desirable, just, and straightforward to give some special consideration to Tasmania in the allocation of the Customs and Excise revenue. This is the first opportunity we have had of exercising our responsibility in regard to the allocation of the revenue from Customs and Excise as between the Commonwealth and the States. Western Australia’s special circumstances have demanded, and have received, special consideration, and we have not questioned the exactitude of that special consideration.
– It could not be questioned.
– No one has attempted to question it, but it might be possible to raise as many objections to it as have been raised by the Minister _ to this proposal. I venture to believe that there is not . an honorable senator who does not think that Tasmania has special circumstances and conditions that also demand consideration, and I hope that honorable senators, realizing that she has, will make some special provision for her. I am prepared to accept the suggestion made by Senator Gould that we should test the opinion of the Committee as to the desirableness of making this special provision. As to the Select Committee, the Minister of Defence is drawing the proverbial red herring across the track. I do not say that he is doing so intentionally. He may not be aware that Senator Ready and you, Mr. Chairman, as ‘another representative .of Tasmania, in conjunction with other representatives of that State in both Houses, not long ago waited upon the Prime Minister, and that, in pursuance of a promise that he then made to us, arrangements were made for the appointment of a Select Committee of another place. But the Prime Minister was most emphatic in his statement to us that that Select Committee would have no functions to investigate any question as to the then future relations of Tasmania with the Commonwealth.
– Which defines the powers of the Select Committee? The statement made by the Prime Minister or the resolution of the House?
– The resolution of the House, and that resolution, as quoted by Senator Gould, has distinctly brought home to us the fact that the Select Committee relates, not to any prospective loss, but to the alleged leakage of Customs revenue during the past nine years of the operation of the Federal Tariff. On the other hand, we have in this Bill a distinct proposal for the next ten years to establish financial relations as between the Commonwealth and the States, and this proposed new clause, if adopted, will remain in force only during the operation of the Bill.
– Is the honorable senator afraid of the inquiry?
– Not a bit.
– Then why does the honorable senator wish to jump it? Why does he not wait until the Committee has reported ?
– Why did not the honorable senator wait for a special inquiry in regard to the position in Western Australia?
– Because the facts in that case are plain.
– They are far plainer in the case of Tasmania. The inquiry of the Select Committee will relate to the alleged leakage of Customs revenue during the last nine years, and as to the desirableness of recouping Tasmania. The honorable senator would not suggest that the word “ recoup “ applies to providing against a future possible contingent loss. This Bill is designed to settle the financial relations between the Commonwealth and the State for a certain period, and all I ask is that Tasmania’s special condition shall be taken into consideration, and special provision made for her. There are present to-night honorable senators who supported me on a previous occasion when I made a similar proposition, and I appeal to them to do justice to Tasmania and the Commonwealth, so far as the future is concerned, by making special provision apart altogether from what may have been lost in the past. I am willing to leave the amendment in the hands of the Committee, and I am satisfied that on due consideration honorable senators will do justice to Tasmania and to the Commonwealth, in the decisionthat is arrived at.
Question - That the word proposed to be left out be left out (Senator Gould’s amendment) - put. The Committee divided.
Majority … … 3
Question so resolved in the negative.
– Senator Pearce persists in harking back to the Committee of Inquiry which has been appointed ; but that has no relation to the future. The Prime Minister told the deputation of representatives from Tasmania, some time ago, that whatever the Committee did should have relation to the past only. This is the time and the opportunity for us as part of the Parliament to legislate as to the future. We are determining what are to be the financial relations between the Commonwealth and the States’ for the the period of time covered by the Bill. We have never before had it in our power to do so. The Braddon section will not expire until the end of this year; and is it to be said that this House, representing the whole of the States, while realizing the difficulties under which certain States are carrying on their functions - difficulties, to some extent, brought about by Federation - refuses to rise to a sense of its responsibilities in regard to them? We have done so in the case of Western Australia. The Constitution allows it, and this measure provides for it, as did the financial measure submitted to the people at the late referendum. Are we simply to sit by and wait, in the case of Tasmania, for the report of the inquiry by the Select Committee? That Committee is absolutely designed to con sider past obligations on the part, either of the whole Commonwealth, or of some of the States, to Tasmania. The new clause I have proposed is intended to meet the responsibilities of other States, or the rest of the Commonwealth, to Tasmania, for the period of the operation of this Bill. Surely that is not too much to ask. In the case of Tasmania, with a population of 182 , 000, all that I am moving for is £75,000 per annum, diminishing annually by £3,000, for a period of ten years ; whereas Western Australia, with a population of about 260,000, is to receive £250,000 per annum, diminishing annually by£10,000. There seems to be a lack of consideration, of generosity, and an absence of Federal spirit on the part of the representatives of some of the other States.
– In Victoria?
– Will the honorable senator name the State and the representatives ?
– I am not disposed to do so. Honorable senators can fit the cap as they find it.
– Does the honorable senator want to imply that unless we are generous we cannot be Federal ?
– No. The honorable senator has been here long enough to be aware that I, as a representative of Tasmania, have never hesitated to support a national project, whether it was a transcontinental railway, or the acquisition of the Northern Territory, or a sugar bounty, no matter how unpopular it was for the time being in my own State. I am now speaking not from a provincial, but from a national, point of view. Unless we respect our obligations as between State and State, and as between, the Commonwealth and State, we can never properly discharge our duty. . Perhaps I used the word “generosity” ill-advisedly. I spoke in the sense of reciprocity. No honorable senator, I feel sure, would, after careful thought, neglect his responsibilities to any State. He would feel that the representative of every other State was doing his duty by his own State, and he would respond to the same degree. It was in that sense that I used the word “ generosity.” I meant that honorable senators would be influenced by a sense and feeling of reciprocal and. mutual obligation and responsibility. I hope that even now the Committee will see its way to adopt my amendment.
Senator GIVENS (Queensland) [2.19 a.m.”). - I have listened very carefully to all the arguments advanced in favour of this proposal, but I can find no justification for it. It may be quite true that in the past Tasmania has suffered losses by leakage in its Customs revenue. But what Senator Keating proposes is not to make good losses which have occurred in the past, but to make a special grant to the State in the future. Whatever it may have had to complain of in the past, under this Bill it will have nothing to complain of in the future, because it will get the same per capita return as any other State, although it will have contributed less than any other State to provide that amount. The question of past losses is the subject of an inquiry by a Select Committee appointed by another place with, I understand, the concurrence of the Government. I am also given to understand that the Government are prepared to make good those losses, provided that good reason is shown as the result of the inquiry. I do not think that anybody need have any cause of complaint in that regard. There is another aspect of the question to be considered. The Commonwealth is asked to make a special grant to Tasmania, because the trade of that State has been disturbed and dislocated, and because large quantities of goods from the neighbouring States are consumed by its residents who visit those States. It is not alleged that those persons go over to South Australia, Western Australia, or Queensland, purchase the goods, and take them to Tasmania without Inter-State certificates. It is alleged that a large portion of the Customs leakage occurs through the trade of Tasmania with Melbourne primarily, and with Sydney secondarily. If such a loss has been suffered by Tasmania in that connexion, undoubtedly it has been to the advantage of Victoria in the first place, and of New South Wales in the second place, and if it is to be made good it should be made good by the two States which have reaped the profit. That is an equitable proposition.
– Why make Tasmania contribute towards a special payment to Western Australia?
– Because Western Australia is in a peculiar position. The honorable senator does not accuse me, I hope, of wanting to victimize Tasmania for the benefit of Western Australia.
– Why make Tasmania pay towards the sugar bounty?
– I have had it chucked at me scores of times by everybody. The sugar industry in Queensland and New South Wales does not get any more protection than does any other national industry ; and we do not get nearly as much protection for our sugar as Tasmania gets for its hops, jams, and canned fruits. We never chuck that at the representatives of Tasmania. I would remind Senator Keating that North Queensland is about the best customer which his State has for the products which it sends to other States. Queensland does not want a single thing for any industry which it is not prepared to concede to every other State.
– I did not speak in opposition to the things which the honorable senator has just mentioned.
– If the honorable senator did not do that, he certainly spoke of the sugar bounty in a sneering fashion.
– No, I did not.
– I am entitled to resent it.
– The honorable sena tor is entirely mistaken, because I was simply asking him a question for the purpose of illustration. I do not think that I spoke in a sneering fashion, because T have always supported the sugar bounty.
– I do not feel much under an obligation for doing a certain thing if, immediately afterwards, he chucks it in my face. It has been stated by Senator Ready that Tasmanian trade has been dislocated owing to the manufactories of other States being better organized, and by the fact that they have a market at their doors. Are not the markets of the mainland as available to Tasmania as they are to any other State? The whole of the Commonwealth is at her doors. There is not a single capital or town of any consequence round the coast of Australia that is not as available to Tasmania as it is to any other portion of the Commonwealth. The ports of Launceston and Hobart are as near to Brisbane as Melbourne is, and the Tasmanian people can get their stuff carried as cheaply to North Queensland as can the manufacturers of Victoria. The Tasmanian people are not isolated in the slightest degree. They have the whole of the markets of the Commonwealth open at their doors.
– But we have not the local trade.
– Let me take one industry - the jam industry. Recently a Wages Board inquiry was held in Sydney with reference to the jam trade there. It was proved conclusively that if the Wages Board had fixed a living wage for the workers in that industry in Sydney, they would have inflicted an injustice on the industry, because of the inordinately low rates of wages “paid in Tasmania. So that the Tasmanian jam makers have the advantage of a labour supply, unaffected by any Wages Board, at ridiculously low rates, and they actually compel the manufacturers on the mainland to sweat their employes. A little while ago, a special Commission was appointed in Tasmania to inquire into the conditions of industry there. I have in my possession a copy of its report. A more disgraceful state of affairs in regard to the treatment and remuneration of employes was never revealed in any part of the Commonwealth. Will Senator Ready tell me that any Wages Board has ever been established in Tasmania to alter this discreditable state of things? I say, again, that Tasmania is as favorably situated as is any other part of the Commonwealth. I fail to see, therefore, where her disability lies. No matter what the leakage has been in the past, Tasmania cannot complain in the future, because, though she returns less from Customs and Excise revenue than any other State, she is to receive her full 25s. per capita.
– Why does she return less revenue?
– Simply because the Tasmanian people apparently do not consume the same quantity of dutiable goods as do the people of the other States.
– No, because they use Australian-made articles.
– I have yet to learn that they consume more Australian brandy, whisky, and beer than do the people of the other States. As a matter of fact, Australia uses a large quantity of Tasmanian beer. I have sampled it myself in my time, and can testify that it is first-rate beer. Tasmania has not been “ done out of “ her industries by the competition of the mainland, because I happen to know that large quantities of Tasmanian woollen goods are imported to the other States. There is scarcely a year since I have been a member of Parliament in which I have not purchased in Melbourne products of the Tasmanian woollen mills ; and excellent articles they are. I fail to see, therefore, how a claim can be made out that Tasmania has suffered any disadvantage; and if she has suffered in the past there is a Committee of another place investigating the matter, and I understand that the Government have decided to give favorable consideration to its recommendation. As to the future, Tasmania undoubtedly will have no cause of complaint, because she will have returned to her in’ full exactly the same amount per capita as will be returned to any other State, with the exception of Western Australia, which for a certain period is to receive a special grant.
. - I feel sure that the Minister of Defence, who has spoken for the Government, is anxious that Tasmania shall receive the justice that is undoubtedly her due. On the last occasion when this question was discussed in the Senate it was generally admitted that Tasmania had a good case.
– We are all agreed as to the principle.
– I think we are. I should have liked to find honorable senators on the present occasion prepared to reaffirm the principle, and vote for Senator Keating’s amendment. Senator Givens has evidently changed his opinion on the subject. I believe that he prides himself on being consistent, and it, therefore, gives me great pleasure to quote to him the remarks that he made in the Senate on the 26th November, 1909. Speaking to a proposal made in precisely the same terms as that which has been moved to-night, the honorable senator said -
If such a statement had been made by any other honorable senator I should have said that it was unworthy of him, but I say it is quite worthy of Senator Mulcahy. ‘Whether or not he is prepared to support the amendment is a matter for himself to determine. I intend to deal with the proposal on its merits. If there be any State of the group which is entitled tospecial consideration it is Tasmania.
– Which she is going to get if the Select Committee which has been appointed reports that her claim is justified. I said the same thing a few moments ago.
– It struck me that the honorable senator said something very different. He proceeded -
What are the facts ? Under the proposed! agreement a large subsidy is to be granted toWestern Australia over a term of twentyfiveyears - a subsidy beginning at ^250,000 per annum, and decreasing until it finally disappears. _ Senator Keating, in order to do justice to his own State, is endeavouring to securesimilar assistance for it. Undoubtedly there is more jutification for granting special treatmentto Tasmania than there is for granting it to- Western Australia.
I am sorry that Senator Givens’ views now do not coincide with the opinions which he expressed on 26th November last. This matter is a very serious one, so far as Tasmania is concerned, and a good deal was heard of it during the recent electoral campaign. The presence of three new senators is evidence that the people thought that their old representatives failed in their duty. I hope that the Government will support this proposal “on its merits,” as Senator Givens said. If honorable senators consider it fairly, we shall have their support.
– I am quite willing to let what I said on a previous occasion stand. The concluding sentences of the passage quoted by Senator Ready are these : -
Nobody has insisted, more than has Senator Mulcahy, that owing to her geographical position Tasmania is losing revenue every year. He has repeatedly affirmed that she is not being credited with the amount of Customs and Excise revenue with which she is entitled to be credited, owing to the impossibility of keeping trace of the goods consumed within her borders. i shall vote for the amendment, which i hope will be carried.
What was the position? Senator Keating was asking for special consideration for Tasmania in view of the loss- which she was suffering by reason of the leakage in her Customs revenue ; but there can be no such leakage in the future, every State being treated alike under the -per capita distribution. What “Senator Keating is now asking for is that special provision shall be made for Tasmania for the future.
– On a former occasion, I asked for special provision for the future. I wished to have it embodied in the Constitution.
– The honorable senator is not now asking us to make good losses which have been suffered in the past. In November last, 1 was prepared to give consideration to Tasmania for the losses which she has suffered, and I am still prepared to do so. But it must not be overlooked that a Committee has been appointed by the House of Representatives to ascertain the amount of those losses, and that the Government has promised that, when they are ascertained, action will be taken to make them good. Senator Keating and the other representatives of Tasmania are not asking for justice, but for charity ; and they can show no ground for any special grant.
– Why did the honorable senator support the similar provision previously ?
– I was prepared to make good the loss which Tasmania was alleged to have suffered in the past, but that is not what Senator Keating is asking for now.
– Had it not been for the fact that a Select Committee has been appointed, I should have voted for the proposed new clause, but now that the past i.5 to be investigated as a guide to a determination for the future, I think the honorable senator might well accept the suggestion to withdraw his proposal. I do not regard the question as one between Tasmania or Western Australia - as a question whether either or both are suffering an injustice - and I shall, for the reasons stated, vote against the proposed new clause.
– We have heard a great deal about the disadvantages of Tasmania under Federation, but 1 find from statistics that in proportion to population, Tasmania sends more goods to the other States than does any other State of the Union.
– Tasmania takes more goods than she did formerly.
– For the six months ending 10th June last, Tasmania received from the other States produce of the Commonwealth to the value of £[651,279, and produce of other countries to the value of £[543,114, or a total of £[1,194,393. Honorable senators will observe that the two classes of produce are almost equal in value. In the same period Western Australia imported £1,568,000 worth of goods produced in the Commonwealth, and only £[259,000 worth of goods from outside the Commonwealth. Tasmania in that period exported to other parts of the Commonwealth, £[1,548,000 worth of commodities, of which only £[58,000 worth were the products of other countries. South Australia has a population about double that of Tasmania, and yet during the same period the former sent to other portions of the Commonwealth only £[40,000 worth of produce in excess of the exports of Tasmania ; while Queensland, with three times the population, sent only two and a half times as much of similar produce.
– There is direct shipping abroad from Queensland and South
Australia, whereas a great many of the exports from Tasmania to the other States are for transhipment abroad.
– But there is direct shipment abroad from Hobart.
– There are not manyshipping companies trading from there, and the direct trade is confined to a part of the year.
– Tasmania sends nothing or very little to the Old Country, except apples.
-The greater part of the exports abroad consist of minerals, of which £2,000,000 in each year are exported, as against £500,000 worth of apples, and nearly all the minerals are transhipped from Melbourne.
– I am sorry that I have not now in my possession an article on thissubject which I saw some time ago, but the impression it conveyed to my mind was that no State of the Union has benefited so much from Federation as has Tasmania. Senator Keating may be correct in what he says, but I know that Tasmania contributes much less to the revenue than any otheT State, and she is going to be paid 25s. per head all the same. The expenditure in Tasmania will be per capita, and, with the exception of Western Australia, no State will be placed in so favorable a position.
Question - That the proposed new clause be inserted - put. The Committee divided.
Majority … … 2
Question so resolved in the negative.
Proposed new clause negatived.
Clauses 6 and 7, schedule and title, agreed to.
Bill reported with a request.
Suspension of Standing Orders.
– I have consulted Senator Gould, and if honorable senators have no objection, I should like to ask for the suspension of the Standing Orders in order that the report may be adopted forthwith. The Treasury officials are very anxious to have the GovernorGeneral’s assent to this Bill before Wednesday, as they wish to commence a new set of book’s under this measure. I move -
That so much of the Standing Orders be suspended as would prevent the report being considered forthwith.
Question resolved in the affirmative.
Motion (by Senator Pearce) agreed to -
That the report from the Committee of the whole on the Surplus Revenue Bill be adopted ; and that the Committee have leave to sit again on receipt of a message from the House of Representatives in reference to such Bill.
Motion (by Senator Pearce) proposed -
That the Senate do now adjourn.
– I wish, on this motion, to ask the Minister of Defence to bring under the notice of his colleagues the advisability of the Senate sitting on Tuesdays at a very early date.
– The honorable senator is anticipating a statement I intended to make to-morrow.
– I did not know that the Minister proposed to make a statement on this matter. The fact that even at this stage of the session we have already had two all-night sittings should induce the Government to take the suggestion I. have made into favorable consideration.
-Colonel Sir ALBERT GOULD (New South Wales) [3.3 a.m.].Before the Minister replies, I should like to suggest that if we are to have an additional sitting, we should arrange to continue the Friday sitting, so that honorable senators living in adjoining States may be able to catch the Saturday afternoon trains to reach their homes. This would be a great advantage to them, as they could roch their homes on the Sunday, might rest on that day, and be fresh for their ordinary avocations on the Monday and Tuesday. I hope that the advisability of making such an arrangement will be given full consideration.
– I think that it would be wrong to adopt Senator Gould’s suggestion. Personally, I should like to have the Saturday afternoon free. If we leave here on the Saturday afternoon, we shall arrive in Sydney too late for divine worship on Sunday morning. That would never do for me. I am afraid we should be breaking the Sabbath if such a suggestion were adopted.
– I had intended to-morrow to make a statement on this subject. Honorable senators coming from the adjoining States will know that I have been during to-day consulting them with a view to considering their convenience.
– I had no knowledge of that.
– Honorable senators may be assured that the Government are keeping an eye on this matter. We do not wish to ask for an additional sitting day and then find that it may be necessary to ask for an adjournment of the Senate a little later. Before we come to any decision on the matter, we shall do our best to meet the wishes of honorable senators, and suit the convenience of the majority.
Question resolved in the affirmative.
Senate adjourned at 3.6 a.m. (Friday).
Cite as: Australia, Senate, Debates, 25 August 1910, viewed 22 October 2017, <http://historichansard.net/senate/1910/19100825_SENATE_4_56/>.