Senate
4 August 1926

10^th Parliament · 1^st Session

QUESTION
- INDUSTRIAL COMMISSION TO AMERICA
QUESTION
- APPOINTMENT OF COMMISSIONERS
PUBLIC WORKS COMMITTEE
- Garden Island Wharf
QUESTION
- BOARDS AND COMMISSIONS
QUESTION
- KYOGLE-SOUTH BRISBANE RAILWAY
QUESTION
- CANBERRA HOUSING SCHEME
FEDERAL CAPITAL
- Sale of Business Sites
PAPERS
QUESTION
- IMPERIAL CONFERENCE
QUESTION
- BUDGET-PAPERS 1926-27
QUESTION
- FEDERAL CAPITAL
ASSENT TO BILLS
JUDICIARY BILL
STATES LOAN BILL
SHALE OIL BOUNTY BILL
COMMERCE (TRADE DESCRIPTIONS) BILL
CUSTOMS TARIFF (NEW ZEALAND PREFERENCE) BILL
ESTIMATES AND BUDGET PAPERS, 1926-27

BOARDS AND COMMISSIONS

Senator NEEDHAM:

– Is the Leader of the Senate yet furnished with answers to the questions which I asked in the dim and distant past as to the number and cost of existing boards and commissions that have been appointed by this Government ? If not, can he say when the information will be available?

Senator PEARCE:
NAT

– The answer to that part of the honorable senator’s question relating to the number of boards appointed has been available for some time, but replies as to their cost involves ari exhaustive examination in every department. That is the reason for the delay.

Senator Needham:

– Will the information be supplied before the end of the session?

Senator PEARCE:

– I hope so.

page 4816

QUESTION

KYOGLE-SOUTH BRISBANE RAILWAY

Single of Double Link Tunnels

Senator GRANT:
NEW SOUTH WALES

– Has the Minister representing the Minister for Works and Railways received a reply to my question relating to the estimated cost of single and double line tunnels on the KyogleBrisbane railway? If not, when does he expect to have the information?

SenatorCRAWFORD. - I regret that the information is not yet available, and also that I am unable to say when the replies to the honorable senator’s question will be ready.

page 4816

QUESTION

CANBERRA HOUSING SCHEME

Resignation of Assistant Architect

Senator PEARCE:
NAT

– On the 22nd July, Senator Elliott asked the following question . -

Is it a fact that the architect who designed the homes for civilservants shown in the pamphlet recently circulated by the Federal Capital Commission has resigned his position ?

I now desire to state; for the information of the honorable senator, that I have been advised by the Federal Capital Commission that the homes for public servants, shown in the pamphlet recently circulated, were designed by the architect’s department of the commission, and not by any one officer. The architect in charge has not resigned, but his senior assistant recently submitted his resignation, which has been accepted.

page 4816

FEDERAL CAPITAL

Sale of Business Sites

Senator PEARCE:
NAT

– On the 22nd July,

Senator Elliott asked the following questions :

Is it a fact that, although there are hundreds of acres unoccupied in the Federal Capita] site, the commission will not at the present time sell a business site in or near the civic centre to a bona fide applicant?
If such is the case, what is the reason for this policy.? 3.Is it a fact that, although the Commission allege that there is no demand for further land, purchasers at previous sales who have only paid one year’s rent, and have not done anything to the land, are demanding a premium of from ?1,500 down to ?200 cash on their bargains ?
If so, do the Government or the commission propose tostop this profiteering at the expense of the bona fide Bettlers by making further lands available in the near future?
Is it a fact that the Commonwealth Bank has declined to accept a site offered to it, owing to the onerous building conditions attached, and, rather than accept such ‘conditions, has purchased a site at auction at a high figure?

I am now able to supply the following answers to the honorable senator’s questions: - 1 and 2. Forty-six business sites near the civic centre have already been made available by the Federal Capital Commission. The commission considers that these, in addition to the business sites in other subdivisions, adequately meet the present business requirements of the Capital. The commission proposes to submit additional business sites for sale at an early date. It is considered that the sale of isolated business sites would be inadvisable from an architectural point of view.

Neither the Government nor the Commission is in a position to answer this question.
See reply to questions 1 and 2.
No site has been offered to, or declined by, the Commonwealth Bank. The bank purchased a site in open competition at the recent sale under building conditions common to all.

page 4817

PAPERS

The following papers were presented : -

War Service Homes Commission - Report for the year 1925-26.

Ordered to be printed.

Arbitration (Public Service) Act - Determination . by the Arbitrator, &c. - No. 23 of 1926 - Commonwealth Medical Officers’ Association.

Canned Fruit Bounty Act - Return for 1925-26.

Defence Act - Regulations’ amended - Statutory Rules 1926, No. 98.

Defence - Munitions Supply Board - Annual Report for the period 1st July, 1924, to 30th June, 1925, together with Annual Report of the Commonwealth Government Clothing Factory.

Dried Fruits. Export Control Act - Statement, dated 2nd August, 1926, by the Minister for Markets and Migration, regarding the operation of the Act, together with a copy of the Second Annual Report of the Dried Fruits Control Board.

Estimates of Receipts and Expenditure, Estimates of Expenditure for Additions, NewWorks, Buildings, &c, and Estimates of Expenditure from Loan Fund, for the year ending 30th June, 1927. (In substitution for Estimates presented to the Senate on 8th July, 1926.)

Iron and Steel Products Bounty Act - Return for 1925-26.

League of Nations - Conference for the Supervision of the International Trade in Arms and Ammunition and in Implements of War - Convention, &c., signed at Geneva, 17th June, 1925.

Northern Territory - Ordinance No. 17 of 1926 - Lunacy (No. 2).

Public Service Act - Appointments–

Department of Health - F. J. Dempster.

Department of Works and Railways - F. G. Connor.

Regulations amended - Statutory Rules 1926, Nos. 94 and 100.

Territory for the Seat of Government - Ordinances of 1926 -

No. 7 - Provisional Government.

No. 8 - Real Property.

No. 9 - City Area Leases (No. 2).

No. 10- Meat.

The Budget 1926-27 - Papers presented toy the Honorable Earle Page, MP., on the occasion of the Budget of 1926-27. (In substitution for Papers presented on the occasion of opening the Budget on 8th July, 1926.)

Shale Oil Bounty Act - Return for 1925-26.

Sulphur Bounty Act - Return for 1925-26. Wine Export Bounty Act - Return for 1925-26.

page 4817

QUESTION

IMPERIAL CONFERENCE

Senator PEARCE:
Western AustraliaVicePresident of the Executive. Council · NAT

.- I lay upon the table of the Senate the agenda paper of the Imperial Conference, and move -

That the paper be printed.

I do not propose to speak upon the subjects listed for discussion at the forthcoming Imperial Conference, but I direct honorable senators’ attention to the fact that a full statement of the Government’s attitude towards the questions to be considered has been made by the Prime Minister (Mr. Bruce). My object in submitting this motion is to give honorable senators who so desire an opportunity to address themselves at some suitable stage to the subjects to be discussed. If the adjournment of the debate is moved that can be done.

Debate (on motion by Senator Needham) adjourned.

page 4817

QUESTION

BUDGET-PAPERS 1926-27

Senator PEARCE:
NAT

– No. The budgetpapers previously presented contain only the totals of the expenditure for last year, whereas those now presented give the expenditure in detail.

page 4817

QUESTION

FEDERAL CAPITAL

Parliament House - Building Costs

Senator KINGSMILL:
WESTERN AUSTRALIA

asked the Minister for Home and Territories, upon notice -

Is it a fact, as stated in the Age newspaper of 5th July instant, that “ the main entrance door of Parliament House (Canberra) is a fine piece of painted oregon “ ?
If so, why was not unpainted Australian timber used for the construction of the door in question ?
What are the proportions of Australian and imported timbers, respectively, used in the construction of the above building?

Senator PEARCE:
NAT

– The Minister for Home and Territories has supplied the following answers to the honorable senator’s questions: -

No. The main entrance door is of blackwood, faced on the outside with copper.
See reply to question No. 1.
The information asked for is being obtained, and will be supplied as soon as possible.

Senator ELLIOTT:
through Senator Foll

asked the Minister for Home and territories, upon notice -

What is the estimated cost of erecting a building at Canberra on subdivision No. 1 in the civic centre, of the type required by the commission in that area on an allotment of 20 feet frontage?
Is the commission prepared to erect such a building for a purchaser at the estimated cost?
What is the estimated average income to be expected from a building of the type referred to, erected on the site mentioned, over the next ten years?
Upon what system of’ valuation is the upset price of allotments in the Capital Territory, and particularly in the civic centre, arrived at?

Senator PEARCE:

-The Minister for Home and Territories has supplied the following answers to the honorable senator’s questions: -

The commission has not made an estimate of the cost of the buildings to be erected by private enterprise on the No. 1 subdivision at civic centre.
No.
It is not practicable, at this stage, to formulate a reliable estimate in this regard.
The upset prices put on the allotments in the 1926 sales were arrived at by expert valuators, after consideration of the results of the 1924 sales and other factors which affect land values.

page 4818

ASSENT TO BILLS

Assent to the following bills reported : -

Petroleum Prospecting Bill.

Seat of Government (Administration) Bill.

Loan Bill (No. 1).

Debate resumed from 23rd July (vide page 4561), ou motion by Senator Pearce -

That the papers be printed.

Senator Sir HENRY BARWELL (South Australia) [3.23]. - Having given much thought and consideration to the budget for 1926-27, I regret to say that I am quite unable to congratulate the Government upon it. I am genuinely sorry to have to make such a statement. It is much, more pleasant for me to uphold than to condemn the actions of the Government; but -in this case I find myself in the predicament of having either to remain silent or to say that which is unpleasant. To say nothing at all upon such an important matter, when one feels as strongly as I do, would amount to a shirking of one’s responsibility as a member of this Parliament, and that I have no intention of doing. My disagreement with the budget has been applauded by one or two of my friends opposite. I trust that they do not think that I wish to infer that the position would have been any better had Labour been in power. I am satisfied that it would have been infinitely worse.

Senator .Sir HENRY BARWELL.The honorable senator can take it for granted that I mean it from the bottom of my heart. My first comment upon the budget is that the taxpayers of Australia had every right to expect a reduction in taxation.

Senator Sir HENRY BARWELL.I have expressed my opinion as to what the position would have been had Labour been in power.

Senator Sir HENRY BARWELL.Yes; and heavens knows when it will present its report. It will be at least twelve months, at any rate, before a scheme can be approved . by Parliament in connexion with that subject, and, on the other hand, no scheme may ever materialize. ITo wonder comment is heard outside regarding the overflowing coffers of the Treasury. It was certainly contemplated by the framers of the Constitution, and it was provided in the Constitution itself, that surplus revenue should be paid by the Commonwealth to the States. During the last few years the accumulated surpluses would amount to close upon £15,000,000, not a penny of which has been returned to the States. I know, of course,, the legal position as determined by the High Court; the Government has power to pay the money into trust funds. I am merely directing attention to the way in which the position has been strained. In order to absorb a portion of the surplus revenue the Government has resorted to a payment to a trust fund for a scheme such as national insurance, which, as I have said, may never materialize. At last it has given up the cry that the Customs and excise duties are bound to fall off; we are now told that the estimated revenue for the current financial year from that source is £40,500,000. That is a staggering sum. The population of this country is only 6,500,000 - men, women and children. It is an appalling figure, considering the extent to which we are dependent on primary industries, the comparative smallness of our secondary industries, and the fact that the possible expansion of those industries is limited to all intents and purposes to the requirements of Australia, since we are unable to export our surplus manufactures, the position is serious.

The first of the other subjects upon which I wish to touch is that of the financial relations of the Commonwealth and the States. The proposals of the Government for the re-adjustment of those relations is causing great concern to the States, and the matter should be scrutinized carefully by this Parliament. The purpose of the proposed readjustment, we are informed, is the severance of the Commonwealth and State finances. Theoretically that object is sound; but I think that in this case it is neither wise nor safe to proceed upon pure theory. I admit candidly that I was strongly inclined at first blush to support the proposals of the Government, provided that due notice was given to the States so that they would have sufficient time to bring about a proper re-adjustment of their finances. During the last week or two, however, I have taken the trouble to make a careful study of the origin and history of those financial relations. I have read every word upon the subject in the debates at the conventions of 1897 and 1898, and I have also read everything said in the debates that took place when the Surplus Revenue Bill was under consideration by Parliament in 1910. In 1897 and 1898 it was stated emphatically by the representatives of the smaller States - South Australia, Western Australia, and Tasmania - that those States would never- accept federation without a provision for repayment to the States of a proportion of the Customs and excise revenue. Their intention was that there should be a permanent provision for such repayments. The members of the convention as a whole realized that that provision would of necessity have to be made - that federation could never be brought about unless it was provided in the Constitution that a certain proportion of that revenue, which the Treasurer calls “easy money,” should be returned to the States. The Constitution, as adopted finally by the convention held in Melbourne in 1S9S, embodied the Braddon clause. That clause - not the Braddon clause as now embodied in the Constitution, but the Braddon clause as it appeared in the final draft of the Constitution as it left the convention on the 10th March, 1898. - provided -

Of the net revenue of the Commonwealth from duties of Customs and of excise not more than one-fourth shall be applied annually by the Commonwealth towards its expenditure. The balance shall in accordance with this Constitution, be paid to the several States or applied toward the payment of interest on the debts of the several States taken over by the Commonwealth .

I want, honor able senators to notice that that provision was of a permanent nature. There was no limitation as to time. It was to operate for all time, subject, of course, to the right of the people to amend the Constitution as provided by the Constitution itself. It was the Constitution with the Braddon clause in that form that was first submitted to the people a* the time of the first referendum.

Senator Sir HENRY BARWELL.No. That referendum was submitted only to the electors of New South Wales, Victoria, South Australiaand Tasmania, the electors .of Queensland and Western Australia not voting. In Victoria, South Australia, and Tasmania the proposal was carried. In New South Wales it was approved by a majority of 70,000 of the electors who voted ; but between the time of the finalizing of the draft Constitution by the convention and the. submission of that Constitution to the people at the first referendum, the New South Wales Parliament passed legislation providing that the majority necessary to approve of the Constitution should be 80,000, whereas previously it was 60,000. The majority being only 70,000, the result was that, technically, the Constitution was not agreed to. Subsequently, the Constitution was reviewed at a conference of Premiers held in January and February, 1899, when the Braddon clause was al tered. When the draft Constitution, asaltered by that Premiers’ Conference was5submitted to the people on the occasion’ of the second referendum, it was agreed’ to. The only difference between the Braddon clause, as it appeared in the final draft of the 1898 convention, and the Braddon clause as finally agreed to at the Premiers’ Conference in 1899, was that it was prefaced with the words “ During a period of ten years after the establishment of the Commonwealth, and thereafter until the Parliament otherwise provides.” That limitation was placed upon it by the Premiers’ Conference of 1899. The position then was that, although a large majority of the people of Australia voted for the adoption of

The Constitution as finalized at the convention of 1898, it was found necessary, in order to placate a minority, and to get federation consummated, to alter the Braddon clause. The matter came up again for review in 1910, when the Surplus Revenue Bill was before Parliament. I need not relate the circumstances, except to say that at that time there was another referendum.

Senator Sir HENRY BARWELL.Undoubtedly. In opposition to my first ideas, I have been forced to tha conclusion that the contention of the States, that they have a moral claim to a share of the Customs and excise revenue, is right. Undoubtedly, one of the factors which induced the smaller States to agree to federation was the provision for a refund of a portion of the revenue derived from Customs and excise duties.

Senator Sir HENRY BARWELL.That is perfectly true; but Customs and excise revenue was practically the only revenue of the Commonwealth at that time, although, just previously, land taxation had been imposed.

Senator Sir HENRY BARWELL.The act did not provide for that; but the money could come from no other source.

Senator Sir HENRY BARWELL.Yes, and the Labour government that was then in power, realizing that something had to be done, introduced and passed the Surplus Revenue Act of that year. The debate on that measure clearly indicated that it was never contemplated that the Federal Government should deprive the States of all share in the Customs and excise revenue. Although it was not specially mentioned, it was taken for granted that the per capita payment of 25s. per head was to come out of the Customs and excise revenue. The smaller States were assured of a return of some portion of that revenue. It was not anticipated that they would be deprived of it at the expiration of the ten-year period ; and though it was contemplated that there might be some further revision of the provision, they were prepared to trust the Parliament. It was, however, suggested that in the event of war breaking out, involving the Commonwealth in huge expenditure, the Commonwealth might resort to direct taxation without interfering with the proportion of revenue that was being returned to the States. The more I have studied the subject, the more convinced am I that this sharing of Customs and excise revenue by the Commonwealth and the States was one of the fundamental principles of the federation. Another consideration which influences me is the wording of the Braddon clause and the wording of section 4 of the Surplus Revenue .Act of 1910, I refer to the alternative provision in both of them for the application of the money to be refunded by the Commonwealth to the

States. Section 4 of that act provides that all surplus moneys shall be paid over to the States or applied towards the payment of interest on debts taken over by the Commonwealth from the States. It was clearly intended that the debts of the States should be taken over! Until that was done, the proportion of Customs and excise revenue repayable to each State could be applied to the payment of interest on those debts. Section 105 of the Constitution puts the position very clearly. It reads -

The Parliament may take over from the States their public debts as existing at the establishment of the Commonwealth, or a proportion thereof according to the respective numbers of their people as shown by the latest statistics of the Commonwealth, and may convert, renew, or consolidate such debts, or any part thereof; and the States shall indemnify the Commonwealth in respect of the debts taken over, and thereafter the interest payable in respect of the debts shall be deducted and retained from the portions of the surplus revenue of the Commonwealth payable to the several States, of if such surplus is insufficient, or if there is no surplus, then the deficiency or the whole amount shall be paid by the several States.

We have the same references to the surplus revenues of the Commonwealth being paid by the Commonwealth to the States in other sections.

The Government’s present proposals are ill-advised. I cannot help saying that its action savours of sledgehammer tactics, which are inexcusable in the circumstances, since they are likely to create a feeling of hostility between the Governments of the States on the one hand, and the Government of the Commonwealth on the other. Since the people who constitute the population of the Commonwealth are the same people that constitute the population of the States, it should be possible for the Federal and State governing authorities to work together in harmony. Various recent actions of the Government, including this one, have created the utmost bitterness between the Governments of the States and the Government, of the Commonwealth, and I tell the Government that the people of Australia will be far more likely to stand by the Governments of the States than by the Government of the Commonwealth. Any one who has been in State politics knows how much closer are the relations of the pepole with their State Governments than are their relations with the Commonwealth Government. Therefore, I think that the Government would be wise to proceed about this business in a different way. The readjustment of the financial relationships of the Commonwealth and the States is not urgent. Certainly it should not be bludgeoned through this Parliament. There is no necessity to bring it forward at the present time. As things Are going it looks as if it will be possible for the Commonwealth Government, within a few years, to evacuate the field of direct taxation, without interfering with the States’ share of the Customs and excise revenue, assuming, of course, that theper capita payments are regarded as portion of Customs and excise revenue, and undoubtedly that was the original intention. Year after year the Commonwealth has had large surplus revenues, whilst the States are experiencing the utmost difficulty in balancing their ledgers.

I now wish to deal with the roads policy of the Common wealth. We are asked to accent the Government’s proposals for the adjustment nf the financial relations between the Commonwealth and the

States because, as a Minister in another place said -

They are based on the sound principle that a Government should be responsible for raising the money which it spends, and the States should be made as independent of the Commonwealth as possible.

We are asked to accept the financial proposals of the Commonwealth because of the “ sound principle “ that a Government should be responsible for raising the money which it spends, and the States should be made as independent of the Commonwealth as possible. But nothing has been said concerning this “ sound principle “ in connexion with the Commonwealth’s roads construction policy, because that policy is in direct conflict with that principle. The . Government’s proposal in this instance is that the Commonwealth should raise the money to be expended by the States, which is a direct negation of the “ sound principles” we axe asked to adopt in regard to the proposed financial adjustments between the Commonwealth and the States. There are many persons throughout Australia, including a large number of supporters of the Government, who view with grave concern the encroachments of the Commonwealth upon State rights. The Government proposals in connexion with road construction, housing, health, wire netting, and prospecting for minerals, plus those for an adjustment of the financial relations between the Commonwealth and the States, are tending towards unification. If adopted, they will make unification inevitable.

Senator Sir HENRY BARWELL.As a matter of’ fact, the present Government in South Australia introduced a petrol tax proposal which undoubtedly was an excise tax. As Leader of the Opposition in the South Australian Parliament at the time, I went fully into the matter, andlater,when the position was pointed out, the Government realized that, as it really was an excise duty, it was unconstitutional. It then considered whether it was possible to. impose a constitutional petrol tax, and that now imposed by the South Australian Government - I think a similar tax is in force in Western Australia- is being collected on the consumption of petrol, which counsel advises is legal. The tax is upon roadusers only; petrol consumers who do not use the roads are allowed a draw-back. The users of all brands of petrol, including the Commonwealth Oil Refineries’ petrol, have to bear the impost.

Senator Sir HENRY BARWELL.I am not going into the question of single tax at this juncture. The roads policy of the South Australian Government is on a scientific basis. Good roads are a national asset, and the whole population benefits by cheap, efficient and rapid transport. Although it was decided that a large portion of the cost of roadconstruction and maintenance should be borne by the general taxpayer, it was also recognized that the road-users should pay a special tax over and above that which the general taxpayers had to bear. A tax was also imposed upon the users of steam, electrically-propelled, and horsedrawn vehicles, which is just and equitable. As such a tax differs largely from the proposals of the Commonwealth Government - which are slip-shod, loose and unscientific - it is only to be expected that there should be dissatisfaction. I say emphatically that a proposal of this nature will not have my support. Why should this tax be imposed upon motorists who are now contributing £3,500,000 through the Customs, in addition to which they have to pay a special registration fee upon motors, according to their weight and horse-power, which yields over £2,000,000? As a result of these imposts, motor-owners pay on an average. £18 a vehicle. Although motor transport is so essential to Australian development,, the Government is submitting proposals which, if adopted, will tend to stifle rather than encourage it. Many business firms in South Australia and in other States are already reverting to horsedrawn vehicles, because of the high cost’ of motor transport.

SenatorFoll. - And there are hundreds who are substituting motors for horse-drawn vehicles.

Senator Sir HENRY BARWELL.I am referring to large firms which do extensive haulage work.

SenatorFoll. - I do not think there are many large firms reverting to horsedrawn vehicles.

Senator Sir HENRY BARWELL.There are many firms which find it cheaper to use horses.

Senator Sir HENRY BARWELL.No. I am merely directing attention to. the heavy imposts which motorists already have to bear. A petrol tax is a class tax.

Senator Sir HENRY BARWELL.No; hut the proposal is to add the duty to the price of petrol.

Senator Sir HENRY BARWELL:That may be so in certain cases. Efficiency has to be considered, and a firm would not revert to horse-drawn vehicles regardless of efficiency. This proposal is. ill-considered and unfair. A tax will be imposed on millions of gallons of petrol not used in road transport. For instance, petrol is used by pastoralists on stations . where there are practically no roads, and by farmers in traction and stationary engines, in chaff-cutting and milking machines. It is used for lighting apparatus, aeroplanes, motor boats, for solvent purposes in rubber manufactures, for dry cleaning, for extraction purposes in the manufacture of linseed oil, and also in the manufacture of paints and varnishes. The tax, however, will not be paid by the users of the Commonwealth Oil Refineries’ spirit, which is surely the height of absurdity. Why should the users of the Commonwealth Oil Refineries’ petrol escape the payment of a petrol tax which is to be raised for providing revenue for road construction?

The Minister shall refer to the board, for inquiry and report the following matters : -

The necessity for new, increased, or reduced duties.

Later it says that the Minister shall not take any action in respect of these matters until he has received the report of the board.

There has been no reference to the board, nor any report by it, in regard to these proposed duties. On that ground they are illegal. They are also unconstitutional. In support of that, I quote theopinion of the present Attorney-General (Mr. Latham). I am unable to see in what way he can distinguish between the proposals of this year and those of last year. Speaking on the Main Roads Development Bill last year, he said : -

I am sorry that I am unable to join in the general chorus in praise of this bill. Of course, everybody agrees as to the necessity and desirability of making good roads in Australia. We want more roads and better roads. The question is, Who should make them? Should it be the Commonwealth Government or the State Governments? In proposing, year by year, legislation of this character the Commonwealth Parliament is placing itself in a difficult position. It is merely granting financial subventions instead of devoting its revenue to the work which should properly concern it. Although the Commonwealth Parliament has no power to legislate for main roads as such, we are discussing a bill the object of which, as we all know perfectly well, is to make possible the construction of main roads, without considering at all whether this admittedly desirable object is one of the objects with which the Commonwealth legislature ought to concern itself. I venture to assert, although I know it will be unpopular to do so, that in passing legislation of this description we are not acting constitutionally. This Parliament has no power to legislate for main roads. It has power, of course, to grant financial assistance to States which need it. The Commonwealth Government has no power to raise a finger to construct main roads; but it seeks by this method to assist the States to do so….. There is no certainty that these subventions will continue. It is only because the Federal Government has more money than it knows how to spend that these grants have been made.

Later he said -

The making of roads is a State function. The Commonwealth is collecting too much money from the people, and is expending upon a State basis money which has been collected upon a Federal basis, and that without the matter having first been submitted to the judgment of the people.

He concluded by saying -

I admit that developmental road-making in theback country is one of the most important matters affecting the future welfare of Australia, but I point out that in using what is really surplus Federal revenue to discharge a State function, this Parliament is laying up trouble for itself ‘ in the future, when the Commonwealth revenue may not be so buoyant as it has been in the past.

The DEPUTY PRESIDENT (Senator Plain). - Order! The honorable senator has exhausted his time. [Extension of time granted.].

During a period of ten years after the establishment of the Commonwealth, and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit.

Senator Sir HENRY BARWELL.Admittedly it is; but what does it contemplate ? Surely it contemplates a State in financial necessity approaching the Commonwealth, cap in hand, for assistance !

Senator Sir HENRY BARWELL.The position of each State has to be considered on its merits.

Senator Sir HENRY BARWELL.It might, if a State were in financial necessity and approached the Commonwealth Government for assistance. It is absurd to contend otherwise. A King’s Counsel has given it as his opinion that that is the position; and there can be no question that it is.

Senator Sir HENRY BARWELL.What happens if a State does not consent ? That was the position which South Australia occupied in connexion with the wire netting grant. What did it say ? It said to the Commonwealth Government : “ We do not want the grant. “We have our own Wire-netting Advances Act, which is being admirably and generously administered. That act lays down the conditions underwhich money shall be advanced to our farmers for the purchase of wire netting. You say to us ‘ Here is money which you can advance for the purchase of wire netting on terms and conditions that we lay down.’ You are only causing trouble and friction, because we should have to advance your money upon terms and conditions different from those that relate to advances under our act. Why interfere with us ?” The State refused to accept that grant, and has maintained that attitude up to the present time, yei it is placed in the iniquitous position of having to contribute towards the money that is advanced to other States. The same principle applies in relation to roads. The South Australian Government says: “We do not want your money. We have our own scheme for raising money for the construction and maintenance of our roads, and we cannot accept an advance from you which must be expended on terms and conditions that you lay down.”

Senator Sir HENRY BARWELL.That is a totally different matter.

Counsel in South Australia has given an opinion that is on all-fours with that which’ was given by the present AttorneyGeneral last year, when he said that the application of surplus revenue to purposes of this kind was unconstitutional. In essence, there is nodifference . between these proposals and those of last year. South Australia,therefore, says: “We do not want your money. We have our own methods of raising funds, and we want to expend those funds according to what we know to be the requirements of the State,notaccording to the requirements y.ou lay down as applicable to all of the States, but which may, not apply tous.” Therefore, I say that the Commonwealth Government has no right to intrude in this way upon the prerogatives, of the States. This proposal is not only unconstitutional and illegal; it is also unwarranted and unnecessary. It is not based upon sound principles, because it lays down conditions that are to be applicable to all the States, whereas they may be at variance with the requirements of one or more of those States. A State may not get the full benefit of the money that is raised within its own borders. The Commonwealth Government surely must see the difficulties into which it is landing itself. Why can it not confine itself to its own sphere of activities, as laid down by the. Constitution?. If it does not, it will meet with trouble all along the line. It is doing so now. In addition, it is causing ill will and friction between itself and the Governments of the States. That is inexcusable in any Government. Both institutions are agencies of and representthe samepeople. A similar objection canbe taken to the housing proposals of the Government. That being a State matter, why should the Commonwealth introduce duplication? The only result will bc an increase in cost. South Australia is carrying out a housing scheme far better than it could be carried out by the Commonwealth Government. References have been made in the Senate to the difference in the cost of houses in South Australia and at Canberra. South Australia does not want Commonwealth money for housing purposes any more than for roads. It says to the Commonwealth Government, “Do not raise more money than you require for your own legitimate purposes. Leave to us the opportunity of raising what is necessary and desirable for our particular purposes. Although we do not participate in these grants, we have to submit to the iniquitous policy of contributing towards the cost of advances that are made to the other States.

Senator Sir HENRY BARWELL.The Commonwealth Government has no right to engage in any sphere of activity that is not open to it under the Constitution, unless a State is in a position of necessity, and approaches it with the request, “ In order to properly administer the affairs of our State, we must have financial assistance.” The Commonwealth Government is given power under section 96 of the Constitution to make advances for that particular purpose.

Senator Sir . HENRY BARWELL Under the Constitution, it falls within the sphere of the. States. I admit that I cannot, in that case, make as strong representations as I can in regard to other matters. The intrusion of the Commonwealth in the matters of roads, housing, and wire netting, is not only unwarranted, but also absolutely unwarrantable. It can find plenty to do within its own sphere.

I am sorry that I have been unable to do other than pick holes in the budget. Feeling as strongly as I do, I could not conscientiously speak other than as I have. I conclude as I began, by saying that the budget is not one with regard to which the Government has reason to be proud.

Senator MILLEN:
Tasmania

– Generally speaking, I: agree with a great deal of what Senator Barwell has said. The majority of the people of Australia anticipated that the budget would announce substantial reductions in ‘their income tax. One form it might have taken, was. a return to the taxpayers of the surplus piled up in the fiscal year ended the 30th June, 1926. The people had frequently read in the newspapers statements to the effect that the Customs and excise revenue was largely exceeding’ the expectations of the Treasurer (Dr. Earle Page), and the Minister for Trade and Customs (Mr. Pratten) ; and when the budget was presented they were sorely disappointed by the discovery that notwithstanding’ these bounding revenues, no proposal was made to reduce the income tax. There was an accumulated surplus at the 30th June, 1925, of £3,108,529., and the surplus at .the 30th June,’ 1926, is shown as amounting to £286,-944’.- The majority of the taxpayers feel that something should be done in the direction of reducing taxation. They naturally inquire whether the cost of government has increased to> such a material extent as to reduce the accumulated surplus from the previous year, which was over £3,000,000, to the comparatively small sum of £286,944 at the end of June, 1926. They ask where the money has gone. After perusing the budget carefully it is found that nearly £5,000,000 was transferred ‘ to trust funds from the actual surplus of 1924- 25, and from the anticipated surplus for 1925-26. The amounts transferred from the surplus for 1924- 25 were: - For naval construction, £1,500,000; main roads development, £750,000; scientific and industrial research, £100,000; and prospecting £100,000, making a total of £2,450,000. It appears that the Treasurer, seeing that there was a. prospect of an overflowing Treasury, determined that further sums should be allocated to trusts funds in anticipation of a surplus for the year 1925- 26. The following further .sums’ were therefore transferred: - For naval construction, £1,000,000; scientific and industrial research, £250,000; air services, £250,000; and for debt redemption, £1,000,000, making a total of £2,500,000. The grand total of the sums transferred to trust funds in 1924-25 and 1925-2&, is £4,950,000. Turning to the expenditure, as set out in the budget, we find that it includes £52,384,247 for the ordinary operations and routine services of the Government; £8,704,252 for payments to States; £387,096 to. cover deficits from the operation of business activities; and £343,251 for deficits on Commonwealth Territories, making a total expenditure of £61,818,846. The revenue account is £58,996,261, leaving a deficit as shown by .the Treasury, of £2,822,585. But it will be noticed that no credit has been given for any of -the transfers to trust funds. The actual, surplus for the year, allowing for the amounts credited to trust funds, is found to be £2,127,415, and the accumulated surplus brought forward is £659,529, making a total of £2,786,944. . If we deduct from . that total the amount of £2,500,000 which ‘ was transferred, to trust funds from the surplus for the year 1925-26 we arrive at the Treasurer’s balance of £286,944. .

It is interesting to make a comparison of the Federal taxation raised, in the last two years with that proposed to be levied in the current year. The figures are as follow : -

– Quite so. Tasmania, having handed over her Customs revenue and placed an over-lord, in the shape of the Commonwealth Government, over her, is now told that she can raise her revenue by imposing direct taxation. Is that fair? When the Federal convention was held in 1897-98 -

I refer particularly to the sittings of the convention at which the question of finance was dealt with, the whole Federal scheme was very nearly wrecked, because the representatives of the States could not come to a definite understanding as to what was to be returned to the States.

Senator Sir HENRY Barwell:

– The Braddon clause saved the situation.

Senator MILLEN:

– Yes.

Senator Guthrie:

– The Braddon “ blot.”

Senator MILLEN:

– It was so described at the time; but no one could suggest a substitute for it. What is the position that now confronts Tasmania? It is contended by some that there is no moral obligation on the part of the Commonwealth to return to the States any part of its Customs. Lean only say that had there not been an understanding on the part of Tasmania that she would be refunded a portion of the revenue received from Customs and excise duties, she would not have joined the Federation. An express provision for the return to the States of a portion of the Customs and excise revenue for all time was not inserted in the Constitution, for the reason that while several of the States imposed protective duties, New South Wales was a freetrade State. I appreciate the difficulties which confronted the framers of the Constitution in forecasting the probable position in subsequent years. To have made the Constitution rigid, in this respect might have presented great difficulties. But I remind the Senate that when Mr. Deakin was dealing with the per capita payments in 1909 he felt, as did others, that the spirit underlying the financial bargain made in establishing the Federation was that a considerable amount of the Customs and excise revenue should be returned to the States. He then said -

There is no power on the States’ part to raise Customs and excise revenue, but a right to share in such revenue, originally for all time, and under the Constitution finally passed, for ten years.

The States are now being told that they can raise money by imposing further direct taxation.

Senator McLachlan:

– At that time, the Commonwealth had not entered the field of direct taxation to any great extent.

Senator MILLEN:

– That is so, and that is the reason why nearly every honorable senator who has spoken has stated that the per capita payments were to be made from revenue derived from Customs and exicse duties. At that time there was no Federal income taxation, and only a small amount was received from land taxation. Were the proposal of the Commonwealth Government to vacate the field of direct taxation altogether, the position would certainly be improved; but it is proposed that the Commonwealth shall vacate that field to the extent of only 40 per cent. Forty per cent, of the income tax payable by individuals resident in Tasmania would, according to the Treasurer’s figures, be £80,629. A number of Tasmanian members of Parliament, being seriously concerned about the position, approached the commissioner of taxation for Tasmania, who informed them that that amount could not be obtained from a 40 per cent, tax on the incomes of persons resident in Tasmania. It would be insufficient to make a bald statement of that nature without figures to substantiate it. I have the figures. I asked the following question of the Minister representing the Treasurer on the 30th June last - ‘

What were the total taxable assessments of income within the State of Tasmania, exclusive of central office figures, for each year from 1920-21 until 1924-25, inclusive?
What were the total taxable assessments of income for the State of Tasmania by the central office for- those years?

His reply was -

Excluding the lottery tax, the amounts are -

The assessments of income for the State of Tasmania by the central office are not available, as taxpayers who furnish their returns to the central office are not required to show separately the income for each State.

The best mathematician among us could not prove that 40 per cent, of £156,733 is £80,629; it is only £62,693. As a matter of fact, the Commissioner of Taxation in Tasmania says that the amount derivable from a tax on the incomes of persons resident in that State would not produce more than £105,000, in which- case 4.0 per cent, would only be about £42,000. Honorable senators will, therefore, see that if the Treasurer of Tasmania accepted the figures of the Commonwealth Treasurer, he would be in a serious position at the end of the year. Unless the State Treasurers are given a much longer period in which to make adjustments, they will be faced with serious difficulties in preparing their budgets. The Commonwealth Government proposes to allow a period of only one year. No State Treasurer can budget properly unless he knows some time beforehand what amount he is likely to obtain from the Commonwealth. He knows approximately what, his revenue from State

taxation will be, but when he has to depend upon the Commonwealth the proposition is very doubtful.

Senator Payne:

– If adjustments were made over a period of five years, would that meet the case?

Senator MILLEN:

– A period of five Tears would certainly be better than a period of only one year. It has been said that Tasmania would be very much better off under the Treasurer’s proposals than she would be if the per capita payments were continued. Let us, in this connexion, consider the decline in Tasmania’s production since 1901. The following table shows the amount of production per head of population in each State and in the Commonwealth, as a whole, for the years 1901, 1914, and 1923-24:-

The trouble with Tasmania to-day is that her production, per head, is not being maintained. It is only 73 per cent, of the production, per head, of the Commonwealth as a whole. As estimates of taxation are usually based on production, honorable senators will see from the figures I have submitted from the Treasurer, the reduction that has taken place in the assessments since 1920-21, and, therefore, how serious is the position of that State. In 1901, the gold produced in Australia was valued at £21,816,772 or nearly 20 per cent, of the total primary production of the Commonwealth. By 1923-24, that production had decreased to £3,143,824. or less than 1 per cent, of the total. Tasmania has been seriously affected bv that reduction.

I desire now to refer to the Government’s housing proposals. The Treasurer, in his budget, stated -

The question of the housing of the people affects the comfort and well-being of the individual, and the efficiency of the individual is necessary to the national welfare and progress.

That is true. History furnishes many examples of men who have impressed the world by their soundness of heart and moral worth - men who have improved the conditions of their fellows - who admitted that their influence for good was due to their early home training. The problem of dealing with slums and with the housing of the poorer sections of the community has always been a difficult one in Qld World countries. Between 1851 and 1914, many measures dealing with the housing of the people of Great Britain, were introduced into the British

House of Commons. Then came the great, war. A report issued by the International Labour section of the Geneva Convention shows that the housing problem has been acute throughout Europe since the war. It has been acute, too, in Australia, although, to some extent, the position has been alleviated by the work of the Repatriation Commission. The reason for the acuteness of the housing problem is that great numbers of persons who were on the land were attracted to the cities, which promised many inducements and high wages. Overcrowding iu cities was thus greatly intensified. Private enterprise could not meet the demand, and building costs to-day are practically double what they were in pre-war days. That means that rents are greatly increased. Honorable senators will readily understand that unless real wages also increased materially, the cost of housing was bound to become a serious problem in the lives of the people. The difficulty can be overcome only by means of a subsidy. The Government, like Dickens - that master painter of pen pictures, who was able to show how slum conditions affected the moral fibre of the people - feels that reform should first take place in the homes of the people. Mr. Fisher, late Minister for Education in Great Britain, said that bad housing and bad morals went together. With that statement I agree. I have here a table, which sets out the number of occupied private dwellings in Australia, New Zealand, the Union of South Africa and the United States of America -

The following is a comparison of the occupancy of private dwellings in the metropolitan areas with those outside those areas throughout Australia : -

It will be noticed that although the increase in the total number of dwellings during the period from 1911 to 1921 was . 24 per cent., yet the increase in the number occupied by owners and purchasers was 77 per cent., the increase in metropolitan areas being 83 per cent., and in extra-metropolitan areas 74 per cent. The following table shows the percentage of private dwellings in Australia occupied by owners who were employers or employees a* the time of the.. 1921 census ^

The percentage in the case of adult employees indicates what an opportunity there is for a workers’ home scheme. In addition, females in Australia occupied 73,734 dwellings as owners. Of these females, 8,157 were employers, and 4,500 were employees. I have also had prepared a table showing what the States are doing in this very important matter of housing the people. It sets out the particulars thus : -

I may add that State and Commonwealth schemes for building homes for returned soldiers have been excluded from the above conspectus.

Senator Thompson:

– The Queensland Government cannot cope with the number of applicants for homes in that State.

Senator MILLEN:

– I have nothing to say on that point. My purpose in having these particulars epitomized was to show what the States were doing. I am in favour of the Government’s housing scheme, but I do not believe in its method of financing it.

Senator Thompson:

– We have not yet had details of the Government’s scheme.

Senator MILLEN:

– No; but it was referred to in general terms in the budget, and I am now dealing with it only in general terms. The Treasurer proposes to obtain from the Commonwealth Bank money for the housing scheme. I think I can point to a better source. The Commonwealth Government is committed to a scheme of national insurance. Senator Barwell said just now that no report had yet been received from the National Insurance Commission. The honorable senator was in error. A report was handed in to the Government on the 3rd March, 1925, and the Ministry, therefore, has had ample time to consider it.

Any scheme of national insurance must necessarily involve millions of pounds. The figures relating to the receipts and expenditure of the National Health Insurance Scheme in England, which I propose to put before the Senate, will, I am sure, surprise honorable senators, and will give them some idea of the amount of money that will be available for housing purposes when the Commonwealth adopts a similar system. They are as follow : -

The following figures showing the investment of the funds of the scheme make very interesting reading: -

I now direct attention to figures calculated from the national insurance scheme for Australia, drawn up by the royal commission and placed before the Government eighteen months ago, and which I submit might very well go hand in hand with the Government’s housing scheme -

It willbe seen from these figures that a Commonwealth national insurance scheme would provide the Government with very considerable funds which could be used for its housing scheme. The figures used for administration costs were calculated on the same basis as in the British scheme.

I wish now to refer to the subject of Commonwealth standards, in connexion with which an association has been establishedby the Commonwealth Government for the purpose of bringing about economy in methods of manufacture. Great economic advantage can be obtained by standardization. Already about 20 different national standard associations have been established throughoutthe civilized world, andthese associations have done extraordinarily good work in bringing aboutreductions in the cost of manufacture. They can do even more than that. Employment can be stabilized, as the manufacturer in . periods of temporary trade depression can manufacture to stock’, knowing that future orders will be for a standard product. The Standards Association of Great Britain was established in 1901, and has been in active operation ever since. In 1918 the Commonwealth Institute of. Science and Industry, under the old regime, endeavoured to introduce a system ofstandards for Australia. It called a meeting of engineers, manufacturers, and producers, at which it was unanimously decided that something should be done. Nothing, however, was accomplished until 1922, when the Institute ofEngineers was invited to take the matter up. This it did inFebruary, 1922, and in October of the same year the Engineering Standards Association was gazetted.I propose to give a resume of the functions of the association.

The Australian Commonwealth Engineering StandardsAssociation was founded as I have said; in October, 1922, when the appointment of members of the main committee of the association was gazetted. The main committee is constituted of three representatives of the Commonwealth Government, one representative of each of the State Governments, six representatives of the Institute of Engineers, Australia, three representatives of the Australasian Institute of Mining and Metallurgy, three representatives of the Australian Chemical “Institute. Subsequently the Associated -Chambers of Manufactures of Australia and the Associated Chambers of Commerce of the Commonwealth of Australia were each invited to nominate a representative. The objects of the association include inter alia: - (a)To prepare and promote the general adoption of standards in connexion with engineering structures, materials, matters and things and from time to time to revise, alter and amend the same. (b) To co-ordinate the efforts of producers and users for the improvement of engineering materials, processes and methods.

The functions of the main committee, in which the control of the association is vested, are as follows : -

To decide what standardization work shall be undertaken.
To approve the appointment of members of sectional committees, subcommitteesand panel committees to whidh the work of preparing specifications is entrusted.
To arrange for the carrying out of research work on the recommendations of sectional committees.
To receive and deal with the reports and recommendations of sectional committees.
To arrange for the publication of the specifications through a standing committee.
To keep in touch with Engineering Standards organizations in other countries.
To control finance through a standing committee.
To control the staff of theassociation.

The association does not undertake the preparation of standard specifications on its own initiative. When a recommendation is received from an interested party for the preparation of a specification for any particular product, material, or process, the project is referred to the association’s State committees by which an exhaustive investigation is made as to the need of the proposed specification. The reports of these investigations are considered by the main committee, and if such consideration is favorable, a sectional committee is established to undertake the particular work involved. Every possible care is exercised to ensure that all interests concerned in the work of such a sectional committee are adequately represented in the personnel of the committee as finally constituted. Provision is made, however, to ensure that consuming interests shall predominate. Sectional committees may appoint sub and panel committees to. consider . special, phases of the work under review, and in these instances the conservation of interests must be also provided for.

The reports of sectional committees in due. course are submitted to the main committee and if approved, are published as tentative standards. The main committee does not concern itself with the technical details of a standard, but considers the procedure followed in the. formulation thereof, the adequacy of the representation of interests concerned, and the action by which the standard was adopted by the sectional committee. Standards are published in “ tentative” form for a period of twelve months, to enable recommendations for their amendment resulting from their use during this period to be submitted for consideration when reviewing the specification with a view to its publication as an Australian standard.

These Australian standards have been very largely adopted by employers and employees, manufacturers, and producers, and are to-day being extensively embodied in various college text-books. The University authorities have also appreciated the work done by the standards committees, and have decided to include its standards in their text-books. Summarizing the position, it may be claimed that benefits accruing under standardization include the following : - From the point of view of the manufacturer, less capital is tied up in raw material, stock, jigs, and templates, storage space, repair parts, &c. More economical manufacture is assured through increased production, less idle equipment, reduced overhead charges, elimination of waste in experimentation and design, greater ease in securing raw materials, and so on; more efficient labour and better service to the trade in supplying better quality of product with more prompt delivery; more efficient sales force; increased rate of turnover; easier financing; and fewer stoppages of work. The retailer benefits by the increased rate of turnover, decreased capital investment in stock and storage space, reduced stock depreciation, decreased overhead charges, and better service at lower prices, with quicker and more reliable deliveries. The consumer gains in the opportunity to obtain a product of improved and guaranteed quality at a lower price, with better service in the way of prompt deliveries.

One of the most important functions that standardization can perform to-day is the building up, on a national interindustrial basis, of a consensus of expert opinion in regard to the inter-relations of industry and the relations of industry to the public. Standardization thus leads to the realization of economy in a very large measure. It constitutes an important economic factor for both producer and consumer, and, if it should result in increased efficiency in trade and industry, it is indeed a matter of moment to public economy.

Senator Thompson:

– Will standardization interfere with the production of articles of the best quality?

Senator MILLEN:

– No.

Senator Thompson:

– It may ensure efficiency; but is it not possible that it may interfere with the production of articles of the highest standard?

Senator MILLEN:

Senator H HAYS:

– It is generally agreed that each government should be responsible for raising the revenue that it expends.

Senator McLachlan:

– The closer to home the taxing authority is, the better.

Senator H HAYS:

– All governments waste money; but the States have to give much closer scrutiny to their expenditure than is the case with the Commonwealth. The expenditure of public money can as safely be entrusted to the States as to the Commonwealth.

– I am pointing out that, in order to avoid duplication and increased overhead expenses, which must necessarily affect the cost of houses, the work of providing homes for the people should be left to the States. There are many other matters calling for attention by the Commonwealth Government.

– The rates levied in the other States do not exceed those levied in Tasmania. Tasmania is not so much concerned with the making of new roads - in that respect she has been ahead of the other States - as with the necessity for maintaining in good condition roads already in existence.

The Treasurer’s speech contains a reference to prospecting for oil. I have no complaint to make regarding the money that has been expended in boring for oil in Australia. I think that every effort should be made to ascertain if there is flow oil in the Commonwealth. The results so far do not encourage the belief that there is; but our oil shale deposits are enormous and of immense (value to the Commonwealth. Hitherto they have not been successfully exploited because suitable retorts have not been employed; and I believe that I am correct in saying that no official in the employ of the Government has had any experience in retorting. It is of the utmost importance that this business should be developed on sound lines, because there are millions of tons of shale in both New South Wales and Tasmania rich in oil content, which, I am sure, will one day prove of great value.

Senator McLachlan:

– Does the honorable senator think that our shale oil propositions will be able to compete with flow oil?

Senator H HAYS:

During a period of ten years after the establishment of the Commonwealth, and thereafter until the Parliament otherwise provides, of the net revenue of the Commonwealth from duties of Customs and of excise, not more than one-fourth shall be applied annually by the Commonwealth towards its expenditure.

The first portion of that section, as was pointed out this afternoon, did not appear in the Constitution as originally drafted; it was inserted at a later period. It can be seen that the matter was to be left in the hands of the Federal Parliament after the lapse of tcn years. It was evidently intended that Commonwealth charges should be met first out of Customs and excise. That field of taxation was handed over to the Commonwealth exclusively. The framers of the Constitution were fearful lest it should be invaded. Senator Barwell stated that he had fully read the debates that took place at the conventions which were held prior to the establishment of federation. I have not had that opportunity, but I have perused some of the speeches which were delivered on this phase of the matter particularly. At the Federal Convention, which was held in Melbourne in 189S, Mr. (afterwards Sir George) Reid said -

I point out that this will make a peculiarity in the position of the Treasurer of the Commonwealth, which needs only to be stated to be seen at once. The Treasurer of the Commonwealth, when re is constructing his fabric of ways and means, will have the strongest possible temptation to look on Customs and’ excise as an unsatisfactory method of raising revenue, because he only gets 5s. out of every ?1 raised in that way, whereas, from other forms of taxation, he gets the full pound raised. Now, I must say, it is scarcely a scientific piece of legislation to put that temptation in the way of the Treasurer to make him discriminate as to methods of taxation.

Senator Sir Henry Barwell:

– That was the argument of the New South Wales members generally; but, subsequently, they “ caved in.”

Senator CHAPMAN:

– The report continues -

Mr. Barton. ; You may make him impose direct taxation.

Senator Sir Henry Barwell:

– Only on the condition that the Commonwealth withdrew from the field of income taxation.

Senator CHAPMAN:

– Yes. The following table indicates the amount of revenue that the direct taxes of the Commonwealth yielded in 1921-22: -

The cost of collecting those taxes amounted to over £600,000. Already one step has been taken towards the elimination of the duplication of the cost of collection, and surely, if it can be done, we are justified in saving the whole of that sum. The proposals submitted by the States were -

The Commonwealth to retire from the field of income taxation.
Contingent on thisbeing done, the States to relinquish claim to any share in Customs and excise revenue, and, if necessary, to recoup the Commonwealth on an equitable basis for loss of revenue to the Commonwealth under these proposals, the amount payable in each year by the several States to be determined in conference with the Prime Minister.
This arrangement to be embodied in a ten years’ agreement.

When Mr. McPherson was putting the case on behalf of the States, he said -

I think that, if we could accomplish something like that, we would really be getting back to first principles; because, while we realize that you have the power to collect direct and indirect taxation,when we federated it was” generally assumed that you were going to stand out ofthe field of direct taxation. Of course, the war came along, and you exercised your right, very properly, and came into the field of direct taxation. At a later date we hope that the Commonwealth will see its way to relinquish direct taxation altogether.

Senator Barwell represented South Australia on that occasion, and he said -

We want to get back to the principle that the Commonwealth should operate entirely and exclusively within a certain sphere, and that the States should operate entirely and exclusively within another sphere.

Senator Sir Henry Barwell:

– We still want to get back to that principle.

Senator CHAPMAN:

– We are now taking one step in that direction, leaving only a small amount to be adjusted. The honorable senator further stated -

The first principle is that the States should have control of direct taxation, and that the Commonwealth should rely upon Customs and excise revenue.

At that time nothing was said by the State Premiers regarding the so-called moral right of the States to the per capita payments. Great misconception exists in the public mind on that matter. Many people have told me that it is monstrous for the Commonwealth to withhold those payments and give nothing to the States in return. But, of course, honorable senators know that the Federal Government proposes torelinquish the land tax, the entertainments tax, the estate duty, and 40 per cent. of the income tax. I point out that the taxes to be relinquished will greatly exceed the amount at present paid to the States by way of capitation grants; the Commonwealth Government guarantees that after collecting those taxes for one year every State will be £50,000 better off than previously.

Senator Needham:

– Is that not a gamble ?

Senator CHAPMAN:

– I do not think so; but if any State loses over the transaction it should be recompensed.

Senator Needham:

– How could that be done?

Senator CHAPMAN:

– By means of a special grant, as in the case of South Australia. In that State the Federal taxes to be surrendered are as follow : -

According to that statement South Australia would be £28,117 better off than under the proposed arrangement. The adjustment grant amounts to £23,000, so that under the Federal proposals the taxpayers of South Australia will gain £51,117, if the Treasurer’s figures are realized. The Premier of South Australia, Mr. Gunn, recently stated -

The Commonwealth Government claimed that the income tax figures were based on the actual assessments for 1924-25, but mention was not made of the fact that during the year under review many assessments had been made which were not rightly attributable to the previous year. That position arose through the delay consequent upon the amalgamation of the Taxation Departments. Figures available in the Taxation Department of this State showed that tax totalling between £300,000 and £400,000, added to the tax for the year 1924-25, rightly belonged to the previous year, and represented a carry-over of tax assessed but not collected, and tax on assessments not made until after the close of the financial year to which they belonged, namely, 1923-24.

– There would be £2,000,000 in interest and sinking fund falling due annually towards the end of the ten-year period.

Senator PAYNE:

– I am sure that the proposal, upon examination, will be found to be perfectly sound. However, I shall conclude my references to- the roads scheme by saying that it is absolutely unfair to suggest that a small section of the people should be called upon to meet the financial obligations that will arise from this roads policy if it is put into operation. The liability should fall upon the whole of the people.

The Treasurer’s budget, speech makes special reference to the appointment of a commission to carry out the development and migration proposals of the Government. We all hope that very good results will be the outcome of the Government’s scheme. I wish to impress upon the Senate the urgent need for the introduction of a larger population at the earliest possible date to provide a larger home market for our primary producers. It has been suggested that the introduction of migrants in considerable numbers will seriously affect the Australian labour market, and accentuate our unemployed problem. I take the view that our object should be to place migrants on our undeveloped country areas rather than to add to the congested populations of our cities and larger towns. I have no desire to see adult Australians displaced in employment by migrants. I believe that, with- out interfering with our present labour conditions, employment can be found for all who may come to Australia. For the information of the Senate I should like to read a short extract from an article written by Mr. Curtis Lampson, and published in a recent issue , of John Bull on the growing need- in England for agrarian reform. The writer- states -

Certainly drastic steps ought to be taken, for we have approximately 11,000,000 acres of arable- land lying idle, and at the same time we import a great deal of agricultural produce and food which we ought to produce in this country. Last year Great Britain imported nearly £400,000,000 worth of meat, bacon, cheese, and butter. Certainly 90 per cent, of these imports could have been produced in this country. In the matter of enabling a small man to- own the plot of ground that he cultivates, we are much behind many other European nations. … The future, therefore, of agriculture in this country lies in live stock and dairy produce, the production of which can be organized on a thriving basis by subdividing the appropriated land into small holdings. The welfare of the nation and its people must be made the primary object in the governing of the country.

It is evident that there is a growing feeling amongst thinkers in the Mother Country along the lines indicated by the writer of that article. This kind of feeling has some significance for Australia, because Great Britain is our best customer. We have to rely to a great extent upon British markets for the absorp- tion of our surplus primary products.. The fact that there is a growing agitation in England for the fuller utilization of idle lands there indicates how necessary it is that we should do something quickly to secure a larger population in Australia for the consumption of our primary products.

For many years we have, been wasting our valuable timber resources. Unless we take steps to stop the drift, we shall be in serious difficulties. We have magnificent forest reserves, but unfortunately vast areas have been denuded for commercial purposes without steps being taken to replace the used timber. Afforestation in Australia is in its infancy, but it is reassuring to know that, a scheme has been outlined in Tasmania to repair some of the damage that has been done in the past. The proposal emanates from the head of the Afforestation Department in Tasmania. Briefly, the suggestion is that the Imperial Government should finance a scheme under which many thousands of British boys, who have to be cared for in State institutions and Dr. Barnardo’s Homes, would be transferred to Australia, and provided with useful employment in colonies under the direction of the Afforestation Department. The lads would receive a useful training in afforestation and in the growing of primary products. The money would be advanced by Great Britain for a term of 40 to 45 years. At the expiration of that term the forest plantations would be profit-earning, and then the whole of the liability would be liquidated in eleven years. It is suggested that the boys should be grouped in four colonies, each containing about 50 boys. They would be living under ideal conditions, and would receive very useful training. At the age of about eighteen years they would be able to leave the colonies and obtain work as farm assistants. It is expected that they would then have from £80 to £100 each. This scheme would not in any way interfere with the Australian labour market. It would ensure a steady inflow of very desirable immigrants, and at the same time it would be instrumental in building up the timber resources of the Commonwealth. I know that afforestation schemes are in operation in all of the States, but no scheme that I know of has underlying it the principle of migration.

Senator Grant:

– Great Britain already has 1,500,000 unemployed people, and yet the honorable senator proposes that we should lean further upon the Mother Country.

Senator PAYNE:

– The honorable senator has totally misunderstood the proposal. This scheme is to relieve Great Britain of some portion of her unemployed. Under whatever migration policy we adopt, every effort should be made to prevent increased unemployment in Australia, and the introduction of healthy boys will be of great advantage to Australia, because it will not be long before they become productive units.

– The honorable senator apparently ignores the fact that the payments to the States are made up from the whole of the revenue of the Commonwealth, including that received from Customs duties.

I wish to express my gratification at the magnificent record achieved during the last few years in reducing the war debt, in addition to meeting our ordinary liabilities, by £28,500,000. Out of a total war expenditure of £500,000,000 approximately £200,000,000 has been provided from revenue, thus leaving our war debt at, approximately, £300,000,000. It is a wonderful record, and one which I dc? not think can be equalled by any country, including Great Britain.

Senator GRANT:
New South Wales

– There are so many subjects mentioned in the budget that, in the limited time at my disposal, it would be impossible forme to discuss more than a few. I should, however, be lacking in my duty if, after all the statements we have heard concerning the best methods of raising revenue, I failed to place on record what I regard as the modern canons of taxation. It is positively humiliating and absurd to hear honorable senators expound their theories concerning the method of raising our national revenue.

Senator Thompson:

– Does the honorable senator propose to submit a new theory ?

Senator GRANT:

– No; it is my intention to extricate the honorable senator and some of those with whom he is associated from the morass which has engulfed them for so long. The honorable senator, I believe, understands the theory which I intend to elaborate, but for reasons best known to himself he carefully refrains from expressing his opinions on it. Some honorable senators recently elected to this Chamber should be supplied with the information I have to give, and if I place it at their disposal they will perhaps be. spared the necessity of giving utterance to the erroneous views expressed by many of those with whom they are now associated.

Senator THOMAS:
NEW SOUTH WALES · NAT

– What does the honorable senator suggest?

Senator GRANT:

– Senator Thomas and Senator Pearce could give an interesting discourse upon the same subject, but I believe Senator Pearce could handle the subject more effectively than Senator Thomas and I combined. Unfortunately, however, the Minister has for some years been associated with a number of gentlemen who have good intentions, but whose views on taxation are far from being up to date. The following canons of taxation are to be found at page 406, chapter 3, volume 2, of the memorial edition of the writings of Henry George: -

The best tax by which public revenues can be raised is evidently that which will closest conform to the following conditions : -

That it bear as lightly as possible upon production - so as lease to check the increase of the general fund from which taxes must be paid and the community maintained.

That it be easily and cheaply collected, and fall as directly as may be upon the ultimate payers - so as to take from the people as little as possible in addition to what it yields the government.

That it be certain - so as give the least opportunity for tyranny or corruption on the part of officials, and the least temptation to law breaking and evasion on the part of the taxpayers.

That it bear equally - so as to give nocitizen an advantage or put any at a disadvantage, as compared with others.

Senator Thompson:

– Those principles; have been exploded ages ago.

Senator GRANT:

– That is an erroneous idea. In Queensland local taxation is imposed and collected in strict accordance with the principles I have just enunciated, and Senator Thompson cannot deny that the system has worked satisfactorily. . No objection has been taken to that method of taxation in the local government of Queensland during the last 40 years. Instead of having been exploded, it is firmly entrenched in Queensland, and is working exceedingly well. The progress of Brisbane to-day is almost as great as that of Sydney, mainly on account of its system of taxation.

Senator Thompson:

– Oh, no!

Senator GRANT:

– Men who come from Queensland are not found suggesting that Great Britain should finance Australia, as Senator Payne has suggested she should. I cannot imagine any man in his normal senses making such a suggestion. This country is unequalled in many respects, and is surpassed in none.

– It was engrafted on the platform of the Labour party at the interstate triennial conference that was held in Brisbane in 1905 by gentlemen like Senator Lynch, Mr. W. A. Holman, Mr. J. C. Watson, and others, who for one reason or another are not now associated with the Labour party. In the language of Shakespeare, “ The evil that men do lives after them.” The evil which was done at that conference continues to live after those whose names I have mentioned have ceased to belong to the Labour party. Doubtless some fine day an alteration will be made. There is not a £5,000 exemption under the system which is adopted by Queensland and the Sydney municipalities.

We were told this evening that 11,000,000 acres of vacant land in England is suitable for cultivation, andyet the extraordinary statement was made by Senator Payne that the British Government, which is now paying about £60,000,000 per annum in unemployment doles, should be asked to finance a number of English boys to grow trees in Tasmania. I hope that the British authorities will not be beguiled by proposals of that nature. What is wrong with England that she does not settle her boys in their own country? Great Britain, for its size, is probably as wealthy as any part of the world.

Senator THOMAS:
NEW SOUTH WALES · NAT

– Would the honorable senator say that of a freetrade country?

Senator GRANT:

– Great Britain never was and never will be a freetrade country. A revenue tariff is collected on tea, sugar, tobacco, and practically everything that is good to eat or drink. I have endeavoured to ascertain from various sources how much rent is paid per annum by the people of Great Britain to the blueblooded landlords for the right to live in the country which they call their own. Some time ago I addressed a letter upon this subject to a gentleman residing in London, who is adjudged to be well informed on the matter, and I received the following reply - 43 Barton Court,

Chelsea, 8.W. 3, 1st July, 1926.

Senator J. Grant,

The Senate, Melbourne, Australia.

Dear Sir, -

Thank you for your letter of the 21st May, which has been sent on to rae. Unfortunately, however, there are no available statistics as to the rents paid in Great Britain in respect of capital land value, as distinguished from improvements. So far as I am aware, the latest information bearing on the subject is that collected and set outin Note Q, “ Probable Land Value of Great Britain,” in my book “ Land Value Policy” (1924), of which note I have pleasure in enclosing a copy. I am also sending for your acceptance, under another cover, a copy of a new book of mine just published, “ Our Land and How to Make it So.”

I am, yours faithfully, (Sgd.)J. Dundas Whits.

It would appear, from the book referred to that the total unimproved value of the land in Great Britain is approximately £3,000,000,000, but the owners of that wealth contributed to the national revenue last year only about £2,000,000, as against £900,000,000 collected from the people by means of Customs taxation, income tax, and other taxes on industry. Yet honorable senators like Senator Thomas coll England a freetrade country! We are frequently assured that Australia has adopted a protectionist policy; but I again remind honorable senators that the real object of our fiscal system is to produce revenue. According to the Estimates for next year the Treasurer expects to raise by means of our so-called protectionist policy the sum of £40,500,000. Does not that convince every honest protectionist that, so long as that enormous revenue is received, the hated foreign goods manufactured in low-wage countries will still ‘be allowed to enter Australia ? The Government expects to derive from the land tax £200,000; from the income tax, £6,450,000; from estate duties, £50,000; and from the entertainments tax, £50,000; a total, with the Customs revenue, of £47,250,000. A number of other items of revenue bring the grand total to £51,382,000. Nobody would resent a protective tariff that would exclude foreign goods more than the present Minister for Trade and Customs (Mr. Pratten).

I have taken a keen interest in the establishment of the Seat of Government at Canberra, and for a number of years I have seized every opportunity to encourage those who desire to make their homes or engage in business there. The Government did not make building allotments available at Canberra until public opinion in favour of the adoption of that course could no longer be resisted. Then a few allotments were offered to the public on the leasehold system to the highest bidder, with re-appraisements at the end of the first 20 years, and every 10 years thereafter. That system leads to speculation in land,which was never contemplated in . connexion with Canberra. I have it, on unimpeachable authority, that land which, in 1924, was obtained for a few pounds by persons who had no intention of building on it, has since been disposed of at a premium of £1,100. In some cases, I understand that a premium of £1,500 has been asked to secure blocks. The demand for land at Canberra is so keen that persons who desire to build there are willing to pay enormous sums to obtain it. Itis my intention to move for the appointment of a select committee to inquire into, and report on, this matter. The regulations ought to be altered to allow for more frequent re-appraisements. So long as the present regulations remain in operation, speculation in land at Canberra will continue. In fairness to the progress of Canberra, the existing state of things should not longer be allowed. The commissioners, no doubt acting under instructions from the Government, refuso to make other blocks available, so that persons who desire to build at Canberra are compelled to pay large sums if they wish to secure land there. The commissioners and all concerned, should be placed beyond’ suspicion. The commissioners should be instructed to make land available wherever required, provided that the lessees pay at auction the annual upset rental. By adhering to its policy of having re-appraisements made every 20 years, the Government has made land speculation at Canberra possible. The only way to prevent further land speculation there, is by having more frequent re-appraisements. The profits would then go to the commission. Wo are told that Canberra is now asink into which millions of money has been, and will still be, poured. That could be stopped if land were made available for persons who desire to build there.

I desire to refer to the infamous proposal of the Government to impose a tax on petrol. In this connexion, I am ata loss to find language in which to express myself adequately. It is characteristic of this Government that on every possible occasion it penalizes industry. If a man earns a fair income, the Government pounces upon it in the form of an income tax; if he dies and leaves a widow, his estate is taxed. This petrol tax is a new abomination. At one time in New South Wales, drivers of vehicles had to pay a toll for the privilege of travelling along the roads.

Senator Foll:

– That is the position now, at the Spit, Sydney.

Senator GRANT:

– Unfortunately, that is so. The result is that the land-owners at Manly have had the value of their property increased by £1 a foot. The toll imposed on motorists who cross the bridge at the Spit is an unfair tax upon them. I am glad that the same system is not to be adopted in connexion with the Sydney Harbour bridge. I cannot imagine how any Government can have the effrontery to impose a tax upon petrol. Already the motorists of Australia are being penalized in many ways. It would appear that everything possible is being done to prevent the use of motor vehicles in this country. I have no objection to a. nominal licence-fee being charged to ensure that drivers of motor vehicles shall be competent, or to a small registration fee being imposed on motor cars; but I do object to motorists being called upon to pay a tax in proportion to the number of miles travelled. I ask leave to continue my remarks at a later date.

Leave granted ; debate adjourned.

Senate adjourned at 10.13 p.m.

Cite as: Australia, Senate, Debates, 4 August 1926, viewed 22 October 2017, <http://historichansard.net/senate/1926/19260804_senate_10_114/>.

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Senate 4 August 1926

QUESTION

INDUSTRIAL COMMISSION TO AMERICA

Senator NEEDHAM:WESTERN AUSTRALIA

Senator PEARCE:Vice-President of the Executive Council · WESTERN AUSTRALIA · NAT

QUESTION

APPOINTMENT OF COMMISSIONERS

Senator THOMAS:NEW SOUTH WALES · NAT

Senator PEARCE:NAT

PUBLIC WORKS COMMITTEE

Garden Island Wharf

QUESTION

BOARDS AND COMMISSIONS

Senator NEEDHAM:

Senator PEARCE:NAT

Senator Needham:

Senator PEARCE:

QUESTION

KYOGLE-SOUTH BRISBANE RAILWAY

Senator GRANT:NEW SOUTH WALES

QUESTION

CANBERRA HOUSING SCHEME

Senator PEARCE:NAT

FEDERAL CAPITAL

Sale of Business Sites

Senator PEARCE:NAT

PAPERS

QUESTION

IMPERIAL CONFERENCE

Senator PEARCE:Western AustraliaVicePresident of the Executive. Council · NAT

QUESTION

BUDGET-PAPERS 1926-27

Senator PEARCE:NAT

QUESTION

FEDERAL CAPITAL

Senator KINGSMILL:WESTERN AUSTRALIA

Senator PEARCE:NAT

Senator ELLIOTT:through Senator Foll

Senator PEARCE:

ASSENT TO BILLS

JUDICIARY BILL

STATES LOAN BILL

SHALE OIL BOUNTY BILL

COMMERCE (TRADE DESCRIPTIONS) BILL

CUSTOMS TARIFF (NEW ZEALAND PREFERENCE) BILL

ESTIMATES AND BUDGET PAPERS, 1926-27

Senator MILLEN:Tasmania

Senator Pearce:

Senator MILLEN:

Senator Thompson:

Senator MILLEN:

Senator Thompson:

Senator MILLEN:

Senator Sir Henry Barwell:

Senator MILLEN:

Senator Sir HENRY Barwell:

Senator MILLEN:

Senator Guthrie:

Senator MILLEN:

Senator McLachlan:

Senator MILLEN:

Senator Payne:

Senator MILLEN:

Senator Thompson:

Senator MILLEN:

Senator Thompson:

Senator MILLEN:

Senator Thompson:

Senator MILLEN:

Senator Thompson:

Senator MILLEN:

Senator H HAYS:Tasmania

Senator McLachlan:

Senator H HAYS:

Senator McLachlan:

Senator H HAYS:

Senator Thompson:

Senator H HAYS:

Senator Thompson:

Senator H HAYS:

Senate
4 August 1926

Senator NEEDHAM:
WESTERN AUSTRALIA

Senator PEARCE:
Vice-President of the Executive Council · WESTERN AUSTRALIA · NAT

Senator THOMAS:
NEW SOUTH WALES · NAT

Senator PEARCE:
NAT

Senator PEARCE:
NAT

Senator GRANT:
NEW SOUTH WALES

Senator PEARCE:
NAT

Senator PEARCE:
NAT

Senator PEARCE:
Western AustraliaVicePresident of the Executive. Council · NAT

Senator PEARCE:
NAT

Senator KINGSMILL:
WESTERN AUSTRALIA

Senator PEARCE:
NAT

Senator ELLIOTT:
through Senator Foll

Senator MILLEN:
Tasmania

Senator H HAYS:
Tasmania

Senator CHAPMAN:
South Australia

Mr REID:
QUEENSLAND