Senate
16 March 1927
10th Parliament · 1st Session
- PAPERS
- QUESTION
- QUESTION
- QUESTION
- IMPORTATION OF MUNITIONS
- QUESTION
- QUESTION
- PUBLIC SERVICE: CHILD ENDOWMENT
- STATES GRANTS BILL
TheDeputy President (Senator Plain) took the chair at 3 p.m., and read prayers.
page 450
PAPERS
The following papers were presented : -
Audit Act - Transfers of amounts approved bythe Governor-General in Council - Financial Year 1926-27- Dated 9th March, 1927.
Northern Australia Act - Regulations - Statetory Rules 1927, No. 12.
page 451
QUESTION
FEDERAL CAPITAL
Housingaccomodation
Senator DUNCAN:
NEW SOUTH WALES
asked the Minister for Home and Territories, upon notice -
-
Willhe furnish, forthe information of the Senate, a list of the officers of the Federal CapitalCommission for whom houses have been provided at Acton, giving in each case -
- total cost of house and all improvements Oil the land;
- floor area of house;
- rental of house;
- area, value, and rental of land on which house is erected, and manner in which, and authority by which, such value has been determined?
- Whether a meter for registration of electric current is installed in each house? 3.Whether arrangements have been made, or promises given, under which any public servants not employed by the Federal Capital Commission are to have residences in the neighbourhood of Acton ; and, if so, who are those public servants, and whyhas an exception been made in their case?
- Whether any or all of the houses, if any, mentioned in the previous paragraphs of this question are built on land shown on the approved plan of the city as being part of the University site?
Senator Sir WILLIAM GLASGOW:
– The information desired by the honorable senator is being obtained, and will be made available as soon as possible.
page 451
QUESTION
MAGILL OLD FOLKS’ HOME
Senator McHUGH:
SOUTH AUSTRALIA
asked the Minister representing the Treasurer, upon notice -
- What is the amount paid per week to the South Australian Government for the upkeep of each inmate of the Old Folks’Home, Magill, South Australia?
- How much per week is paid to each inmate ?
- If the above amounts do not aggregate £1, will the Government, in future, bring the amount up to that sum by further allowance, either to the institution or to the inmates?
Senator PEARCE:
Vice-President of the Executive Council · WESTERN AUSTRALIA · NAT
– The honorable the Treasurer supplies the following answers to the honorable senator’s questions : -
- The Commonwealth pays 103. fid. per week for the maintenance of every inmate of the homewho was a pensioner or claimant for pension at the date of his admission to the home.
- Every inmate of the home who would be eligible for pension if resident outside the institution receives a pension of 4s. per week.
- These payments areex gratia on the part of the Commonwealth, and to the extent of the payments, are subsidies to purely State institutions, and the Commonwealth Governmentdoes not consider any further assistance on its part justifiable.
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QUESTION
AMALGAMATED WIRELESS LIMITED
SenatorNEEDHAM asked the Minister representing the Prime Minister, upon notice -
Have all the terms of the agreement entered into by the Amalgamated Wireless (Australasia) Limited withthe Commonwealth Government been fulfilled?
If not, what specific items of such agreement have not been carried out by the Wireless Company, and why?
Senator PEARCE:
NAT
– The right honorable the Prime Minister supplies the following answers to the honorable senator’s questions : - 1 and 2. With the exception of the erection of the feeder stations for communication between the capital cities and the main station (clause 5 (6)), and of the completion of the beam station for communication with Canada, the terms of the agreement generally have been complied with. Testing of thebeam station for communication with Canada is awaiting completion of the corresponding station in Canada.
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IMPORTATION OF MUNITIONS
SenatorNEEDHAM asked the Minister representing the Minister for Defence, upon notice -
Isit a fact that wo are importing munitions from overseas?
If so, from whom?
What is the nature of such munitions?
What was the value of the importation of such munitions for the last five financial years?
Senator Sir WILLI AM GLASGOW.The honorable the Minister for Defence supplies the following answers to the honorable senator’s questions: -
Yes.
The Imperial Government or contractors to the Imperial Government.
Armament and ammunition which cannot yet he made in Australia.
This information is being obtained, and will be supplied in due course.
page 451
QUESTION
AUSTRALIAN COMMONWEALTH SHIPPING LINE
SenatorNEEDHAM asked the Minister representing the Prime Minister, upon notice -
What was the price received in connexion with the sale of the ships Carina and Bulla?
Who were the purchasers?
Senator PEARCE:
NAT
– The right honorable the Prime Minister supplies the following answers to the honorable senator’s questions: -
- Carina, price £26,000; Bulla, price £13,000.
- Carina, purchaser G. Vergottis, London; Bulla, purchaser Shipping Development Company, London.
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QUESTION
AUSTRALIAN PORTS
Sir George Buchanan’s Report
Senator THOMPSON:
QUEENSLAND
asked the Minister representing the Prime Minister, upon notice -
When the second report (Volume II.) of Sir George Buchanan will be available to the Senate,
Senator PEARCE:
NAT
– The right honorable the Prime Minister supplies the following answer to the honorable senator’s question : -
It is expected that Volume II. (Engineering) of Sir George Buchanan’s report, which is now in the hands of the printer, willbe available to members in about ten days.
page 452
PUBLIC SERVICE: CHILD ENDOWMENT
Public Service Arbitrator’s Determinations
Senator PEARCE:
President of the Executive Council - Western Australia · Vice · NAT
– I move -
That the Senate disapprove the Determinations Nos. 47 and 48 of 1920, made by the Public Service Arbitrator in the matter of the Commonwealth Public Service Clerical Association, claimant, land the Commonwealth Public Service Board of Commissioners and others, respondents, and in the matter of the Commonwealth Public Service Clerical Association, claimant, and the Commonwealth Bailways Commissioner, respondent, which Determinations, accompanied by a statement of the Public Service Arbitrator as to the laws or regulations of the Commonwealth with which, in his opinion, the Determinations were not, or might not be, in accord were laid before the Senate on the second day of March, 1927, and before the House of Representatives on the third day of March, 1927.
Ishould like at the outset to inform honorable senators of the facts leading up to the submission of this motion in the Senate. On the 19th of December, 1926, the Public Service Arbitrator made determinations, numbered respectively 47 and 48 of 1926, providing for the payment of child endowment to officers whose salaries did not exceed £600 per annum. Previously the maximum salary which qualified for the receipt of child endowment was £500. The determinations relate to clerical officers in the Commonwealth Public Service and the Commonwealth Railways Service respectively. The Arbitration (Public Service) Act 1920, section 21, provides that every determination made under the act shall come into operation not earlier than after the expiration of 30 days after it has been laid before both Houses of the Parliament. The following clause, which has been adopted by the Arbitrator in a number of cases, provides that -
Unless disapproved by the Parliament, this Determination shall come into operation at the expiration of 30 days after it has been laid before both Houses of the Parliament, and shall take effect on and from the 2nd day of January, 1927.
The determinations in question were tabled in the Senate on Wednesday, the 2nd of March, 1927, and in the House of Representatives on Thursday, the 3rd of March. I should like to direct particular attention to the provision I have just mentioned, because, whilst the law provides that the determinations have to be laid upon the table of both Houses to give the Parliament an opportunity to disallow them, if they are not disallowed the Arbitrator dates the award back to the 2nd of January. In this case, the determinations were not laid before Parliament before March of this year, and, if no action is taken, the determinations will date as from the 2nd of January, which, to say the least of it, is a rather peculiar procedure. Following the provisions of section 22 (2) of the Arbitration (Public Service) Act, the Arbitrator has forwarded a statement of the laws or the regulations of the Commonwealth with which, in his opinion, the determinations are not, or may not be, in accord. Section 22 (5) of the act provides, inter alia, that if, in the case of a determination accompanied by such a statement of the Arbitrator, either House of the Parliament, within 30 days after the determination with the statement has been laid before both Houses, passes a resolution disapproving the determination, the determination shall not come into operation. On 16th December the Public Service Board notified departments of the making of determination No. 47, relating to the Public Service.
Clerical Association: and intimated that it was intended to amend the Public Service Regulations in order that the award might apply, not merely to officers of the Clerical Association, but also to all public servants with salaries between £500 and £60f» ,per annum. The amended regulation was contained in Statutory Rules 1926, No. 212, which were made on the 21st December, 1926, and approved in Executive Council on 22nd December, to come into operation as from 30th December, 1926. Regulation 86 of these regulations provided, in effect, that, in addition to the rates of salary fixed by the Public Service Regulations, or under any determination made by the Public Service Arbitrator, there should be payable to all officers in receipt of a salary of less than £600 per annum child endowment at the rate of £13 per annum in respect of each dependent child; provided that the total sum per annum paid to any officer by way of salary and child endowment should not exceed £600. The regulation has been legally operative since 30th December, 1926, although, ae I have pointed out, the determinations will not operate until they have been before both Houses of the Parliament for a period of 30 days. If, within those 30 days, either House disapproves of the determinations, they will not come into force. I wish to refer briefly to tha history of this matter, so that honorable senators may be made acquainted with the motive of the Government in asking the Senate to take this action. The matter of child endowment involves, to a certain extent, a consideration of the basic wage that is payable to the Commonwealth Public Service. By the Public Service Act of 1902, a minimum wage of £110 was fixed. In 1911, that was raised by regulation to £.126. In 1915, the Arbitration Court, in. the Letter Carriers’ case, fixed a minimum wage of £132, and that figure was adopted by regulation. In 1916, the Arbitration Court made a distinction between the salaries of married and single officers, and as from 1st July, 1916, fixed the minimum wage at £150 for married officers, and £126 for single officers. That £126 applied to clerical officers only, general division officers still continuing to receive a minimum of £132 per annum. During the war, various costofliving allowances were granted. In 1920, Mr. Justice Starke, as Deputy President of the Arbitration Court, swept all allowances away and fixed instead an allowance of £50 for married officers, with £30 for single officers. He, however, fixed £196, not £200, as the minimum wage for married officers, and £162 as the minimum wage for single officers. In 1920, the Basic “Wage Royal Commission, appointed by the Commonwealth, recommended a basic wage of £5 16s. The then Prime Minister (Mr. Hughes) in tabling the report in Parliament, tabled, also, an additional memorandum which he had received from Mr. Piddington, who had been chairman of the commission, as to the effect on industry of the provision of a minimum wage of £5 16s. Mr. Piddington dealt also with the basis of the minimum wage as providing for a wife and three children, and pointed out that under this calculation, allowance was made for 450,000 nonexistent wives and 2,100,000 non-existent children. He considered, therefore, that it would be better to pay a basic wage of £4 to each workman, and then pay 10s. 9d. into a pool, so that a payment of 12s. per week might be made to employees in respect of each child. The then Prime Minister stated to the Parliament that the Commonwealth Government had decided generally to adopt these principles, and apply them to the Public Service. Accordingly, as a result of a deliberate act of public policy by the Government, by Statutory Rules 1920, Nos. 263 and 266, there was provided a basic wage allowance to bring the salary of married men to £208, and that of single men to £174 - an increase of £12 on the rates fixed by Mr. Justice Starke - and child endowment of £13 for the children of officers receiving less than £500 per annum. This was the first occasion on which child endowment, as such, was paid by the Commonwealth. It was done as an act of policy by the Government of the day, and announced to Parliament. In June, 1921, the combined Public Service associations applied to the arbitrator for a basic wag« of £5 16s., in accordance with the recommendations of the Basic “Wage Commission, but this was refused by the arbitrator. In 1923, the Public Service Arbitrator consolidated salaries and allowances, and abolished differential rates for married and single men. He found that the basic wage should be fixed at £205 8s., but that, whereas the outside basic wage was based on the normal requirements of a man, his wife, and three children, the average number of children of adult public servants was .84 of a child per adult officer. Reckoning .84 of £13 at £10 8s., he subtracted that sum from £205 8s., and, therefore, decided that the remainder, namely, £195, was the basic wage of the service. In consequence of this decision, the Public Service Board repealed the regulation providing for the basic wage allowance. In 1924j the Public Service Arbitrator increased the basic wage to £215, but deducted .S6 of £13 for child endowment, the average number of children per adult officer having increased from .84 of a child to .86, leaving the balance £204. The Public Service Board, however, still adhered to £19S, but it has. I understand, recently adopted the arbitrator’s view of £204. On 5th October, the present Prime Minister delivered his policy speech at Dandenong, and announced that it was proposed to refer the- question of child endowment to the Commonwealth and State arbitration judges, with a view to their recommendations being considered at a conference between the Commonwealth and the States. This course having been found impracticable, owing to the congestion of work in the Arbitration Court, the Prime Minister has now invited the Governments of the States to meet the Commonwealth Government in conference on the whole question of child endowment generally. A bill providing for the payment of child endowment has recently been introduced into the Parliament of one of the States - New South Wales - though it has not yet passed into law. The arbitrator has now, by determinations Nos. 47 and 48 of 1926, varied the conditions under which child endowment is paid in the Commonwealth Service, so as to extend its provisions to officers receiving less than £600. Previously it applied only to officers receiving less than £500. The Government takes the view that, at the present time, there should be no alteration on such an important question of policy, until Parliament has had an opportunity of expressing its view on the matter. Obviously, the fixing of the salary limits within which child endowment shall operate is a vital point of policy. The discussions that have taken place in the New Sauth Wales Parliament clearly indicate that it is If no action is taken by the Government or Parliament then, under the procedure I have indicated, its inaction is regarded as an endorsement of the determination of the Public Service Arbitrator. The Government is not asking the Senate to fix the limit of salary at which child endowment should operate, but it asks that it should not say, by its inaction, that £600 should be the limit. The Commonwealth Public Service Clerical Association has sent to honorable senators a circular in which there are two points to which I wish to draw attention. Paragraph 1 c, referring to child endowment, says -
It formed a part of the basie wage as fixed in the last two basic, wage declarations of the Arbitrator. The basic wage is now £204, plus child endowment. If child endowment were not paid, it would bc £215 per annum.
If the motion I now submit is carried, and this determination by the Arbitrator is disallowed, his previous determination, fixing £500 as the limit of salary under which child endowment is to be paid, will still stand, so that a man receiving a salary of £204 will not be affected, and will still be paid the child endowment. The other point in the circular is paragraph 1 (d), which reads as follows: -
The raising of the maximum amount of child endowment eligibility from £500 to £000 was expressly due to considerations of salary relativity. Officers in receipt of salaries exceeding £500 wore actually financially prejudiced by the bar at £500.
But if my motion is not carried, and the limit of £600 remains, will not an officer in receipt of a salary exceeding £600 be actually financially prejudiced by the bar being fixed at £600 1
Senator GREENE:
NEW SOUTH WALES · NAT
– Whatever limit is fixed, some one will be financially prejudiced.
Senator PEARCE:
– That is true, and consequently this paragraph in the circular issued by the association contains no substantial argument in opposition to my motion. It is obvious that the relationship of any child endowment to the basic wage is a vital matter of policy, and clearly the authorities to undertake the task of dealing with the matter in both the Federal and State spheres should be the legislature itself, and not some subsidiary authority appointed by it. It is for the legislature, therefore, to say that it is in favour of the payment of child endowment, and to fix the limit of salary at which such endowment should operate. At this juncture the Commonwealth Government, beyond contending that it is a matter of policy, expresses no opinion as to whether the limit should be £500 or £600. But, in view of the fact that a conference will deal comprehensively with the question as it affects the whole of Australia, in view of the vital consequence any decision in this regard may have on the industries of our country, and in view of the effect the amount paid as child endowment must have onthe basic wage, we contend that this Parliament should not, by its inaction, be taken as having endorsed the determination of the Public Service Arbitrator increasing the limit at which child endowment ceases to operate from £500 to £600.
Senator Kingsmill:
– Have the words, “child endowment,” any legal meaning in this connexion?
Senator PEARCE:
-I think so.
Senator Kingsmill:
-Is there any child endowment in existence, and, if so, is it known as child endowment?
Senator PEARCE:
– The awards of the Public Service Arbitrator make provision for a payment for each child, and this is spoken of as “child endowment.” The Government asks the Senate to carry this motion pending the consideration of the matter by the Commonwealth and State Governments.
Senator Ogden:
– The Government is asking Parliament to become a wagefixing body.
Senator PEARCE:
– No, we are not doing that; we are merely saying that the payment of child endowment originated as an act of policy, and that Parliament ought to be consulted before the basis of the payment is altered by the Public Service Arbitrator. It is his duty to fix wages and salaries, hut not,we contend, to alter the basis laid down upon which these salaries and wages are paid. Provision is made in the Public Service Regulations for the payment of a minimum wage.
Senator Ogden:
– I suppose that the Public Service Arbitrator had authority for the action taken by him?
Senator PEARCE:
– I suppose that he must have had authority, otherwise he would have not done what he did, but wecontend that it is for Parliament to decide a vital matter of this nature. We are now asking the Senate to disallow this determination by the arbitrator in order to maintain the status quo, and enable the whole question to be explored without being prejudiced by the apparently tacit consent on the part of the Commonwealth Parliament to the fixing of the limit of £600. Various limits have been suggested in New South Wales. I believe that one is £300, and that another is £400. But if we allow this determination to lie on the table without taking action to disapprove it, the argument can be advanced that we have fixed the limit at £600, which would be most undesirable when the matter has still to be fully explored in co-operation with the States.
Senator Sir Henry Barwell:
– This determination would not operate until 30 days had elapsed from the date on which it was laid on the table.
Senator PEARCE:
– It would not, in the ordinary course, but the trouble is that the Public Service Board, auticipating that the normal procedure would be followed, ‘and that no action would be taken to disapprove the determination, has already passed a regulation covering it, and child endowment is being paid, not under the determination itself, but under a public service regulation.
Senator Duncan:
– Was that regulation passed by the ExecutiveCouncil?
Senator PEARCE:
– Yes, through inadvertence. At the close of the year a whole sheaf of consolidated regulations was submitted, and no attention was drawn to the fact that this vital amendment had been made. As a matter of fact, no attention was drawn to any amendment, and those payments have been made since the 2nd January last. In the circumstances, I have outlined, I think, the Senate will be justified in passing this motion. In doing so, it will not be deciding what the limit should be: it will leave the matter in abeyance until Parliament has had an opportunity to go into the whole question.
Senator NEEDHAM:
Western Australia
– I question the statement of the right honorable the Leader of the Senate (Senator Pearce) that if the Senate takes no action in this matter the award of the Public Service Arbitrator will stand fixing £600 as the limit at which child endowment will be paid. The Public Service Arbitration Act gives power to the Public Service Arbitrator to determine, from time to time, the salaries payable in the Public Service, and the conditions under which our public servants work; and he has fixed this limit of £600 for the time being. According to the right honorable the Leader of the Senate, that salary is not one at which, and on which, child endowment should operate. I question the accuracy of the Minister’s statement, which is a very important one.
Senator Pearce:
– Does the honorable senator suggest that the Public Service Arbitrator did not fix £600?
Senator NEEDHAM:
– I am not disputing that; but am saying that that is not a final determination. The Minister endeavoured to convince the Senate that the Public Service Arbitrator had fixed £600 as the salary at which the payment of child endowment should cease; but, in the event of an appeal, there is nothing to prevent the Arbitrator varying or reviewing his decision. He has the same power in that regard as the judges of the Commonwealth Arbitration Court. The Minister also said that unless Parliament disallowed the regulation within 30 days action could not be taken. This is, I think, the first instance since the Arbitration (Public Service) Act was passed in which an attempt has been made by the Senate to deprive the Commonwealth Public Service of some of the benefits derived under that act. There are numerous instances in which the Public Service Arbitrator has given awards under which the salaries of public servants have been increased ; but those awards cannot come into operation until they have been laid upon the table of both branches of the legislature for 30 days. There have been occasions when this Parliament has not been in session for from five to seven months, and consequently the benefits obtained were not available until 30 days after Parliament had assembled, thus shortening the period in which the award was opera tive. In this instance, when the public servants are likely to receive some benefit in the matter of child endowment, the Government has raised this objection. For many years the Minister has been an avowed supporter of arbitration. I have before me a statement in which the Prime Minister (Mr. Bruce) said, “ We believe that compulsory arbitration will be shown to be the only effective means to promote industrial peace.” I am in agreement with the right honorable gentleman in that regard. Parliament also has agreed that arbitration is the most effective method of preserving the industrial peace of the Commonwealth. What is to become of our arbitration system if the decisions of the Arbitrators are not adhered to ? How often have honorable senators on this side of the chamber been told that, after the Arbitration Court has given a decision, the employees have ceased work because the award has not been in their favour ? To such statements we have repeatedly replied that there have been many instances in -which the employers did not go on strike, but locked out their employees because the award was not in their favour. These facts are on record. The Government is not locking out its employees, but if this motion is carried it will, in effect, be refusing to accept the decision of the Arbitrator. The right honorable gentleman and seme of his supporters have frequently said that Parliament is not an industrial tribunal. Senator Ogden interjected a moment ago that if we interfere with the decision of the Arbitrator we are at once constituting ourselves an Arbitration Court.
Senator Ogden:
– Of course, we are ; that is the trouble.
Senator NEEDHAM:
– Yes. If we are to constitute ourselves an Arbitration Court in this instance, why should not we deal with the wages and conditions of all Commonwealth employees? If the motion is agreed to we shall be reviewing a decision of the Commonwealth Public Service Arbitrator. The members of the Commonwealth Public Service, whom this motion affects, had an opportunity to place their case before the Public Service Arbitrator, and a Government representative was also present to counter their statements, but they cannot come before Parliament. The Minister is now saying that we should discard all the evidence tendered before the Arbitrator, and that Parliament should be constituted a court, not of appeal, but of review and summary jurisdiction. Trade unionists can approach the Arbitration Court, the award of which has to be observed by both parties until the court reviews or cancels it. Parliament is not a Commonwealth Arbitration Court. We have a Commonwealth Arbitration Court, and if either party is dissatisfied with its decision the court can interpret, review, or cancel the award; but. before such action is taken, evidence is heard from both parties. If the employer refuses to abide by the award he is brought before the court and fined. In this instance the Minister is representing the employer -the Commonwealth. Senator Pearce cannot be haled before the Public Service Arbitration Court; he cannot be questioned or fined; but any outside employer who did that which he is now attempting to do would be brought before the court and questioned, and, if found guilty, punished according to the law. In accordance with an act passed by this Parliament, the Government appointed a Public Service Arbitrator. Why should it now disagree with that Arbitrator’s finding? If the man appointed is not satisfactory, the Government has its remedy : it may remove him. But why penalize the employees? Senator Pearce said that the Government’s policy includes child endowment. It is true that the Prime Minister’s policy speech contained a reference to child endowment ; but, so far, no evidence of the Government’s intention to legislate in that direction has been forthcoming. In one State an effort is being made to grapple with this important matter; but honorable senators will agree that child endowment is not a question for any State Parliament, but for the Commonwealth Parliament, to determine. The child endowment scheme is an integral part of the wages system of the Commonwealth Government. A basic wage was arrived at on the basis of the famous Harvester judgment of 1907. In 1923 the Commonwealth Public Service Arbitrator arrived at a basic wage for public servants by deducting from the Harvester judgment equivalent the average amount of child endowment.
Senator PEARCE:
– From what source is the honorable senator quoting?
Senator NEEDHAM:
– I am quoting facts. The Harvester judgment was the basis of the present child endowment system of the Commonwealth Public Service. I do not say that the basis underlying that judgment was correct; on the contrary, for a long time it has been known that it was not. The basic wage of public servants was reduced to pay for child endowment, because £11 was deducted from the Harvester equivalent of £215 per annum, which was the basic wage in 1924. According to statistics, there are .86 children to every male adult in Australia. The child endowment is £13 per annum in respect of each child, or an average of £11 to each adult male. Every public servant whose salary does not exceed £500 per annum receives that amount in respect of each child under 16 years of age. Seeing that the allowance of £11 per annum was taken into consideration when the salaries of public servants were fixed, it is evident that the officers of the Public Service pay for their own child endowment. The present child endowment scheme does not cost the Commonwealth Government one penny. The difference between the scheme now in operation and a national scheme of child endowment is that, under a national scheme, contributions would be made by both the public servants and the Government, whereas the existing scheme requires no contribution by the Government, the whole amount being contributed by the public servants themselves. As the Public Service Board has agreed to abide by the decisions of the Public Service Arbitrator, all public servants under its aegis who receive not more than £600 per annum will now, unless this motion is agreed to, receive a child endowment. That point was not mentioned by Senator Pearce. The Senate should know that this motion, if agreed to, will affect those employees of the Government who are not protected by the Public Service Act. The result will be that the more highly-paid officers will benefit by the Public Service Arbitrator’s award, whereas those on lower salaries will not.
Senator H Hays:
– Has the honorable senator interpreted the award aright?
Senator NEEDHAM:
– Does Senator Hays question my veracity ?
Senator H Hays:
– No; but the honorable senator’s interpretation of the award may not be correct.
Senator NEEDHAM:
– I am stating a fact when I say that the Commonwealth Public Service Board is obeying the award of the Public Service Arbitrator, but that the Government is not willing to do
Senator H Hays:
– Will the honorable senator continue from there ? He said that the- more highly-paid officers would benefit, whereas other officers would not.
Senator NEEDHAM:
– The ramifications of the Commonwealth Public Service Board extend . throughout Australia, and every public servant under its aegis, whose salary does not exceed £600 per annum, will benefit under this award. I remind Senator Hays that there are other employees of the Government than those who come within the provisions of the Commonwealth Public Service Act. That is an important point. The majority of the employees will benefit, whereas the minority will not.
Senator Pearce:
– The honorable senator has not correctly stated the position. Under the determination, only two classes of employees will receive the benefit of the award, whereas under the Public Service regulations it would apply to the whole Public Service.
Senator NEEDHAM:
– Why has the Public Service Board accepted the award of the arbitrator and why does the Government cavil at it? Is it not because a question of policy is involved? The whole burden of the remarks made by Senator Pearce was to the effect that this touched. Government policy. But why should the Government single out one section of the Public Service in this manner? The award- of the arbitrator covered only the clerical officers, but the Public Service Board, taking advantage of the regulation, applied it to the whole of the Public Service.
Senator Pearce:
– That is what I said.
Senator NEEDHAM:
– The increases have actually been paid, as the award has been in operation since the beginning of this year ; consequently, those who have been enjoying the extra amount, will find it difficult if, as the result of the carrying of this motion, they are obliged to revise their financial arrangements. I admit that the award affects only a limited number of officers, but I am more concerned with the principle that is in volved, namely, that Parliament should set itself up as a court of industrial review. I expect Senator Givens and Senator Lynch to say something on this phase of the subject, and I shall welcome their contribution to the debate. I hope that the Senate will not carry the motion, for the reasons already given. The Government has declared that it stands for a policy of child endowment, but it has not attempted to put it into operation. This national Parliament cannot be constituted as a court of industrial review, because persons affected by determinations cannot come here to give evidence in support of their claims. If the right honorable the Leader of the Senate had declared that the Government wished to refer the matter back to the Public Service Arbitrator, there would have been some justification for, and equity in, the motion, because then the public servants concerned could, through their organizations, tender further evidence in support of their claims and the Public Service Arbitrator would be in much the same position as the Chief Judge or any judge of the Federal Arbitration Court - he would be called upon to review or cancel his award. But the Government proposes, summarily, and without any further evidence, to decline to honour the determinations. And this from a Ministry that has declared itself to be a staunch supporter of the principle of arbitration for the preservation of industrial peace! I leave the matter there, and will conclude by expressing the hope that the Senate will reject the motion.
Senator OGDEN:
Tasmania
.- I am not so much concerned about whether the salary of the public servant, who is to enjoy the benefit of the child endowment policy, shall be £500 or £600 a* I am with what appears to be the reintroduction of political influence in the Public Service. I have always been opposed to interference by Parliament- in matters of this kind. What attitude would the Minister (Senator Pearce) take up if another member of this chamber submitted a motion to disallow an award of the Public Service Arbitrator because, the amount fixed was, in his opinion,, insufficient ? Obviously, he would at once charge the mover of. the motion with an attempt to break down the principle of arbitration. Is not the attitude of the Government to-day contrary to its attitude a few months ago, when it asked the people to endorse the principle of an allpowerful and dominant arbitration court, which should be above Parliament?
Senator Findley:
– That was yesterday. The honorable senator forgets that we are now in the day after yesterday.
Senator OGDEN:
– To-day, the Government is, in effect, asking Parliament to fix wages. The Ministry should be consistent. Under the law, the Arbitration Court has authority to determine the wages for the -State instrumentalities; and it expects the State departments to obey the law. Yet, by this motion, the Government, so it appears to me at all events, ia attempting to repudiate an award of an authority constituted by this Parliament. I object to that. I do not wish to see the vicious principle of political influence re-introduced into the Public Service. I have always deprecated it and I hope that we shall have no further evidence of it in this chamber. For these reasons, I intend to vote against the motion. Parliament should .not become a wage fixing authority.
Senator Pearce:
– The honorable senabor is in error in thinking that the Arbitrator fixed £500 as the maximum salary at which public servants should receive the child endowment. That was done by Public Service regulation to give effect to the Government policy.
Senator Findley:
– He had authority to do that.
Senator Pearce:
– But he did not do it. It was brought in by the Government as an act of policy.
Senator OGDEN:
– The Arbitrator had authority to raise it to £600. If the Parliament gave him that authority it is not right for us to interfere with him.
Senator Pearce:
– Child endowment was first paid, not under the determination of the arbitrator, but under a Public Service Regulation. This determination has to be laid on the table for 30 days. If Parliament takes no action to disapprove, then it stands.
Senator OGDEN:
– But it is operating now.
Senator Givens:
– Parliament reserves the right to disapprove any determination of the court.
Senator OGDEN:
– That, I think, is a wrong principle.
Senator Sir Henry Barwell:
– That is the position with regard to all regulations.
Senator OGDEN:
– Yes, but the motion now before the Senate deals with a wage fixing regulation, and it seems to me that the Government intention is to ask Parliament to fix the wages of the Public Service. I do not think we should interfere. If we do we should do away altogether with the arbitrator. In my opinion, the motion means the reintroduction of the very dangerous principle of political influence, and for that reason I shall vote against the motion.
Senator FINDLEY:
Victoria
.- Whatever time may be devoted to the consideration of the motion submitted by the Leader of the Senate (Senator Pearce) will he time well spent. It gives honorable senators an opportunity to examine the policy which the Government says it has from time to time presented to the people, and which it declares the people have endorsed. Can any honorable senator say that this Government has had a definite policy with regard to any subject of moment to the people? One never knows what is going to happen next. The Ministry has acclaimed its desire to bring about peace and harmony between employer and employee, to establish peace on earth, goodwill toward men. But so far from doing that, it has, by its actions, done a great deal to disturb the peaceful and harmonious relationships between the different sections of the community. Let us review the position. Some years ago we had a Public Service Commissioner whose duty it was to classify members of the Public Service. According to those who were in a position to express an opinion worth having he did his work, if not to the entire satisfaction of the public service, at all events efficiently and apparently to the satisfaction of successive Governments. When this Government came into power it appointed a Public Service Board of three to classify the whole of the Service, and fix the hours of work, salaries, and conditions generally. But, before that task was completed, the Government appointed a Public Service Arbitrator to hear appeals from public servants against the classification of the Board. The Arbitrator is vested with authority to vary the conditions laid down by the Board. He adopts the same procedure as a judge, taking evidence regarding claims, and making known his decisions. The Public Service Clerical Association desired that all officers should be eligible for the supplementary payments in the way of child endowment which was limited by the salary bar of £500, and a conference was convened as prescribed in the Act on 30th September last. I want honorable senators to realize that that was not a “ hole-and-corner “ conference. On the contrary, it was thoroughly representative of all the parties. There appeared before the Public Service Arbitrator representatives of the Public Service Clerical Association, the Public Service Board, and the Commonwealth Railways Commissioner. The Public Service Arbitrator went into the matter exhaustively, and, despite the opposition of the representatives of the departments - who, no doubt, voiced the opinions of the Government - recommended that all officers whose salaries did not exceed £600 should be entitled to receive child endowment. Now the Senate is being asked to disallow that determination. If such a procedure is to be generally adopted in relation to the working conditions and allowances in the Public Service a great deal of tlie time of Parliament will be occupied in the consideration of matters that ought not to be brought before it. Parliament should devote its attention to matters of far greater importance to the Commonwealth and its people. I think that all members of the Commonwealth Parliament, no matter to what party they belong, believe that institutions other than Parliament should deal with industrial matters. The Government itself proposes to remove from Parliament the question of child endowment, although Parliament will have the opportunity to dismiss any proposals that are brought forward. The Public Service Arbitrator went into this matter with an open mind. He had a much better opportunity than any member of the Government to consider the merits and demerits of the application that was made by the Public Service Clerical Association. The dis- allowance of this determination will be tantamount to a vote of no confidence in that officer. In effect, we shall be saying that he does not understand his business and that he was not justified in recommending the removal of the £500 bar. I agree that a. question of policy is involved. It was a question of policy that led to the appointment of the Public Service Arbitrator. If his determinations are to be disallowed from time to time he will occupy a most unenviable position. When recommendations are made after serious and thoughtful consideration of the evidence for and against, it is most dispiriting to a responsible ‘official to be told by Parliament that his work is unsatisfactory and that his recommendations cannot be allowed. A much better way would be to tell the gentleman that he is a superfluous officer. Parliaments should not be asked to either approve or disapprove of awards that are made from time to time by the Public Service Arbitrator. That procedure is not followed in connexion with awards that are made by other authorities. Why is a distinction drawn between members of the Public Service and other employees? The answer of the Government may be, “ We should always have control of our Public Service, and be in a position to say what hours they shall work, what .wages they shall receive, and to what privileges they shall be entilled.” The determination of the Arbitrator does not, as Senator Pearce said, definitely fix £600 as the maximum amount that an officer shall receive to be entitled to child endowment. For the time being, that is the maximum. No obstacle is placed in the way of the furtherance of the policy to which the Government says it is committed. According to the statement of the Arbitrator, the anomalies which now exist in the Service will be removed by the raising of the limit to £600. That will obviate the discontent and friction that is now manifest, and give satisfaction to the members of the association. They will approach the Arbitrator with confidence in the future. If the regulation is disallowed, greater dissatisfaction will be caused. For the reason principally that the Public Service Arbitrator is better qualified than the- Government, and particularly the average member of Parliament, to express an opinion upon this matter, I trust that the motion will not be agreed to and that the determinations will not be disallowed.
Question - That the motion be agreed to - put. The Senate divided.
AYES: 21
NOES: 9
Majority . . . . 12
AYES
NOES
Question so resolved in the affirmative.
Motion agreed to.
page 461
STATES GRANTS BILL
Debate resumed from the 15th March (vide page 398), on motion by Senator Pearce -
That the bill be now read a second time.
Senator NEEDHAM:
Western Australia
– Senator Pearce, yesterday, in moving the second reading of this bill contended that the Government had a mandate from the people to abolish, in an arbitrary manner, the per capita payments to the States. I question that assertion, because during the whole course of the 1925 election campaign there was not on any platform, or in any newspaper in Australia, a declaration by a responsible person that it was the intention of the Government to abolish these payments. It is quite evident that because of their victory at that election Mr. Bruce and Dr. Earle Page considered that they were entitled to do anything that they chose. They gained their majority, not on the question of the financial relations of the Commonwealth and the States, but by raising the bogey that the Commonwealth was on theedge of a volcano, and that red revolution was stalking throughout the land. They said that if the Labour party gained power organized government in Australia would disappear. As a matter of fact, they maintained their hold on the Treasury bench by the blackest lie that has ever fouled the pages of a nation’s history. During the whole of the campaign there was not one word uttered about the intention to abolish the per capita payments. Senator Pearce questions the statement that public opinion is against the Government. I have just returned from Western Australia, and I say, advisedly, that I have never heard or known of a greater chorus of disapproval against any Government’s proposal than I have heard in the western State in reference to this bill. Nearly every organization supporting the Government has declared its opposition to the measure. I have heard of no organization supporting it. Senator Pearce went to the trouble of saying that in his policy speech Mr. Bruce announced that it was the intention of the Government to abolish these payments, but I have perused that policy speech, and find that it contains no reference whatever to the bill. There was, it is true, a vague reference in it to the financial relations of the Commonwealth and the States, but there was no word of a definite character declaring that if the Government succeeded in retaining the Treasury bench it would abolish the per capita payments. Yesterday, Senator Pearce quoted from the speech delivered by the Prime Minister at Dandenong, and from his own speech to the electors of Western Australia, when as the leader of the Government’s campaign in that State, he spoke in Perth. I have read both utterances, and I find in neither speech any definite statement in reference to the present proposals of the Government. The very words “ per capita “ are not mentioned in either.
Senator Pearce:
– If the honorable senator reads the report of my speech he will find that that statement is incorrect.
Senator NEEDHAM:
– In Perth, Senator Pearce did not say that it was the intention of the Government to abolish the per capita payments.
Senator Pearce:
– The honorable senator will find the words per capita in my speech.
Senator NEEDHAM:
– When the representative of the King opens our Parliament it is customary for him to declare the policy of the Government, but I have perused the speech delivered by His Excellency the Governor-General, at the opening of this Parliament, and I find it contains no reference to an indention on the part of the Government to abolish the per capita payments. I claim, therefore, that there has been no mandate from tike people authorizing this Parliament to put an end to the present system of making payments to the States.
Yesterday, I said that there was no urgency for this bill, and that there were many ‘ reasons for delaying it. The Government had already agreed to postpone the consideration of the measure for a year, and broke its promise by calling us together within a few weeks of our departure to another habitation to consider hurriedly a matter of such vital importance to every citizen of the Commonwealth. I agree with the suggestion that the measure should be postponed until after the next general election, and I urge Senator Pearce to withdraw it and allow the Ministry to make its proposals in this regard a vital part of its platform at that election, thus giving the people a chance to say whether or not the present system of payments to the States should be retained.
My right honorable friend said yesterday that the State Governments had frequently been invited to attend conferences to determine the financial relationship of the Commonwealth and the States, but he forgot to mention that on a recent occasion when the Premiers of the States were called into consultation no matter what proposition the States put forward neither the Prime Minister nor the Treasurer would entertain it.
Senator Pearce:
– Did the States pur, forward any proposition?
Senator NEEDHAM:
– I will not say that they put forward a definite proposal ; hut the right honorable gentleman did not tell the Senate yesterday that Mr. Bruce and Dr. Earle Page attended that conference with a prepared programme and a definite policy, and I venture the opinion that no matter what proposal had been put forward by a State Treasurer it would not have been enter tained. The dice were loaded against the States. Dr. Earle Page had made up his mind that he would have his way. In an historical review of the circumstances leading up to the present bill we next come to the proposal to appoint a royal commission to investigate certain matters allegedly appertaining to the bill now before us, but there was nothing in the proposed reference to a royal commission that really had any vital connexion with the principle at stake in this legislation. Here again the States were being treated to a kind of comedy, because while they were told that a commission was to be appointed, they were also informed that this hill was to be put through Parliament. The Government proposed to adopt the policy of “first behead the man and then diagnose his illness.” However, it receded from that attitude as the result of pressure from the States, and it has now come forward with another proposal to put the bill through and afterwards meet the Premiers in conference.
Senator Pearce quoted the financial arrangements that had been made in Canada, South Africa, and other dominions. Realizing that every honorable senator is familiar with the history of this question from the inception of the Commonwealth, I shall not repeat the review given by the right honorable senator, except to mention briefly a few of the steps that have been taken. New proposals were submitted to a second referendum of all the States, and passed. At a conference of Premiers, held in Melbourne in 1908, it was resolved that in view of the large and varied responsibilities of the States in connexion with land settlement, railway construction, education, irrigation, &c, no definite scheme could be agreed to by the States which did not provide for their receiving (a) a fixed annual sum, and (&) a proportion of the increase in revenue from Customs and excise. At a further conference, in March, 1909, at which Commonwealth and State Ministers were present, a resolution was passed to the effect that not less than three-fifths of the Customs and excise revenue should be annually returned to the States, without limit of duration. In August of the same year, an agreement was entered into between the
Premiers of the States and the then Prime Minister (Mr. Deakin), in which provision was made for a payment of 25s. per capita to the States. That agreement was submitted to a referendum of the people in 1910, but was defeated. As tho Minister said yesterday, the Fisher Government came into office in that year, and immediately brought down the Surplus Revenue Bill, providing for the payment to the States of 25s. per capita for ten years, and until Parliament otherwise provided. The measure, which Parliament passed in 1910, is still operative, and as Parliament has not deemed it wise to repeal or amend it, it should prove conclusively that the consensus of opinion is that the States are still entitled to a share in the Customs and excise revenue. Where did the Labour party stand on that occasion? In this connexion, I refer to a statement, made in another place, that the Labour party had fought to the death to put an end to the per capita payment; but the Surplus Revenue Act of 1910, which Avas passed by the Labour party when in power, gives the lie direct to such an utterance. If the Labour party at that time had been in favour of the abolition of a per capita payment, the Surplus Revenue Act would not now be on the statute-book.
Senator THOMAS:
NEW SOUTH WALES · NAT
– Who made that statement?
Senator NEEDHAM:
– It Avas made by an honorable member in another place, whose name I need not mention. For the information of the Senate, I now quote the opinion of Sir John Quick, who was then a member of another place. He said -
I welcome the bill, because I think it is the manifestation of a desire on the part of the Ministry and the Labour party to do some measure of justice to tho States in the distribution of surplus revenue.
An authority such as Sir John Quick,.
Whose ability and integrity we all recognize, is worth quoting. The platform of the Labour party to-day contains a plank against diminution of the per capita payment to the States, and any one who says that the members of our party have at any time fought to the death, for their abolition, is entirely wrong. Sir John Quick further said -
The attitude of the Labour party has shown clearly that they recognize the rights of the
States to participate in the Customs and. excise revenue.
It is true that in 1910 the Labour party was opposed to the financial agreement of that day being embodied in the Constitution, and in this regard the Minister yesterday regaled us Avith quotations from speeches of members of the Labour party at that time. He referred to my own utterances and Avas wondering, I suppose, how I would answer the charge of inconsistency which he levelled against me. Tho right honorable gentleman has traversed many tracks, and sometimes, in returning, has met his own ghost. A charge of inconsistency from such a source is remarkable. It is true, as I have said, that in 1910 Ave opposed the placing of the agreement arrived at between the State Premiers and the then Prime Minister (Mr. Deakin) in the Constitution; but Senator Pearce did not tell us, when he quoted the speeches of Senator Findley and myself, that he Avas then a member of our party, and that we favoured the payment of 25s. per capita. With his usual adroitness he avoided a vital point, and endeavoured to place Senator Findley and myself in a false position. When a member of our party, he also opposed the inclusion of the agreement in the Constitution, and in company with Senator Lynch, who was then a member of our party, and others, addressed the electors of Western Australia in opposition to the proposal. I remind Senator Pearce that at the time to which I am referring he advocated the continuation of the payment of 25s. per capita for a period of 25 years, and if he had had his way the present system would have, continued until 1935. Surely a charge of inconsistency can be laid at the door of the Leader of the Government in the Senate, who, at that time, Avas a strong advocate of the par capita payment being continued until the year I have mentioned. In a letter to the West Australian on 22nd February, 1910, he said-
T will stand by my original contention that the Labour party is in favour of paying 253. per head to the States, and a special grant to Western Australia, and, if the agreement is kept out of the Constitution, is pledged (o embody it in an act of Parliament for a fixed period of, say, 25 years.
That Avas the opinion of the Minister who nOW charges Senator Findley and myself with inconsistency. The right honorable gentleman is now a member of a Government in favour of reducing the period he then advocated by eight years. On the 11th “March, 1910, he is reported as having said -
Ho pledged the Labour party to give the same terms as those in the existing agreement in an act of Parliament for a term of years, and knew that an overwhelming majority .if the party was in favour of 25 years.
Senator Pearce has been a member of many Governments; but where is the pledge which he gave to the electors of Western Australia in 1910? From the information I have given it will be seen that in those days he recognized the rights of the States in this regard. Senator Kingsmill was also a strong supporter of the agreement which provided for 25s. per capita being inserted in the Constitution. Not only was Senator Kingsmill in favour ott” that proposition, but all members of the Liberal party at that time held a similar view. The late Lord Forrest, when speaking on the 15th July, 1910, said -
T make the statement in the full knowledge of its truth that the reason the States were willing to accept 25s. per head was that they were guaranteed that amount until Parliament otherwise directs, and that it did not depend upon a chance vote in Parliament.
That fairly shows that Lord Forrest, Senator Kingsmill, and other members of the Liberal party considered that, until the people decided, the per capita payment should not be abolished. In 1910 Senator Kingsmill, when speaking on the financial agreement, said that -
Throughout Australia the Liberal party was giving the agreement hearty support because they felt it was the best arrangement that could be arrived at.
In order that I shall not do the honorable senator an injustice, I shall quote his own words. Speaking in connexion with his candidature for ‘ Parliament in 1910, Senator Kingsmill on the 2nd March of that year said -
The Liberal party, which he was representing, claimed that in order to give the agreement sufficient permanence to make it worth while registering it, it should be placed in such a position that it could not be changed at the will, practically, of a Government which might be suffering from a temporary want of funds. It was thought that the State finances should not be subject to changes, which might be rabid and inconvenient, and which might hamper and restrict the progress of the State.
At that time Senator Kingsmill realized that care should be taken to protect the finances of the States.
Senator Kingsmill:
– How does the honorable senator know that I am not of the same opinion still ?
Senator NEEDHAM:
– I am not imputing motives ; I am merely quoting the honorable senator’s statements at a time when Western Australia and the other States were discussing the financial agreement with the Commonwealth. I have quoted his remarks to support my own arguments in favour of the rejection of this measure. I hope that Senator Kingsmill in 1927 will vote as he spoke in 1910, when he also said -
A State Treasurer was sufficiently harassed, oven when he knew what money he had, to make proper provision for the spending of that money; but his position would be very much worse if he did not know where he was to get the money to spend.
The position is the same to-day. If the per capita payment is withdrawn, the States will wonder from what source they will be able to obtain the revenue to meet their various commitments. The report of the honorable senator’s speech continues -
It was obvious that a state of financial uncertainty, such as would result from the re- jection of the financial agreement, would provide a check to the development of Western Australia which could only bo described as disastrous.
Those words are as true to-day as when they were uttered. If this bill becomes law, the effect on Western Australia will be exactly -what Senator Kingsmill predicted in 1910. Western Australia has reached that stage of development at which the withdrawal of the per capita payments would be disastrous. The payment of 25s. per head of population for which the Labour Government made provision has continued to the present time. I desire to make a further quotation from the honorable senator’s speech -
It was all-important that Western Australia should retain those rights which she now possessed under the Constitution. . . . Further, the Liberal party were fighting for the retention of State rights.
Senator McLachlan:
– Was Senator Kingsmill at that time opposed to the retention of those rights by the States ?
Senator NEEDHAM:
– No. I am hopeful that he will vote against this bill. The fallacy of the Treasurer’s argument, that those who spend money should raise it, has been exploded, because, even if this bill becomes law, the Commonwealth Government will still engage in its roads and housing schemes.
Senator THOMAS:
NEW SOUTH WALES · NAT
– And will continue its gifts to Western Australia.
Senator NEEDHAM:
– We shall still find one government raising money to be spent by another. If, when the conventions which resulted in federation were held, it had been thought that the action now proposed by the Government would be taken, the States would not have agreed to federate. The agreement was an honorable one. The State Governments at that time did not dream that the Commonwealth Government, after it had obtained control of the Customs and excise revenue, would retain the whole, making it necessary for the States to look elsewhere’ for their revenue. The Treasurer lias attempted to show that the States will benefit from this proposal. I intend to show the Senate how it will affect Western Australia. I do not propose to refer to the legal or moral rights of the States to the continuation of the per capita payments, but shall deal only with the question of equity. For 26 years successive Governments have recognized the right of the States to a portion of the revenue derived from Customs and excise. This Parliament should not discontinue those payments without the authority of the people. If the impossible happened, and the Government resigned, and made the continuation of the per capita payments an issue, it would not regain the Treasury bench, because public opinion is so strongly against any alteration of the existing arrangement. The State Governments are in a better position to judge how the Treasurer’s proposal would affect them than is the Treasurer himself. I propose to quote the remarks of one who took an active part in the conventions at which the Constitution was drafted, and afterwards in this Parliament. Referring to the relations between the States and the Commonwealth, Lord Forrest on the 15th July, 1910, said -
If honorable .members look at the Constitution, they will see there are practically no powers, or, at any rate, no vital powers, which interfere with the relations of the States and the Commonwealth left in the hand of this Parliament. The reason is that this Parliament is not a proper tribunal to judge ‘be tween the interests of the States and the Commonwealth, and so nearly all the important matters which affect the States are left to the will of the people.
The present Government evidently thinks otherwise, but, in my opinion, nothing could be fairer than to ask the people to decide vital matters such as this. Amongst those who in another place opposed this bill were men who had had considerable experience as State Ministers and knew how the proposal would affect the finances of the States. I am not surprised that Dr. Earle Page should desire to abolish the per capita payments, because he has been a somewhat erratic Treasurer.
Senator MCLACHLAN:
NAT
– There were others who. wanted to abolish them.
Senator NEEDHAM:
– Yes; but having a longer vision than that of Dr. Earle Page, they did not persist with their foolish ideas. Unlike the honorable senator and his leader, they realized that to persist with them would result in the downfall of their Government. In July, 1910, Sir John Quick said -
I think that the leaders of parties in the Federal Parliament should set a good example, aiia should not sanction anything like a war against the States, because the State Parliaments, as well as the Federal Parliament, are representatives of the Commonwealth.
I desire to emphasize the words “ a war against the States.” Despite the assurances of the Prime Minister and the Leader of the Government in this chamber, this bill is a war against the States. The various State Governments, and the people of all the States, regarding it as an aggresive act on the part of the Commonwealth, and are wholeheartedly against it. It would be useless for me to appeal to the Government to withdraw the measure.
Senator Ogden:
– I am afraid the Government has the numbers.
Senator NEEDHAM:
– I echo Senator Ogden’s fear. If honorable senators were true to their principles, the bill wOUld be defeated; but the party whip has been cracked and-
Senator Pearce:
– Has it not been cracked in the Labour party room ?
Senator NEEDHAM:
– No ; the Opposition is not in charge of this bill. I repeat that, if it were a question of principle and not of party, the bill would be defeated. It is unfortunate that honorable senators should be more concerned about party than about- principle. Perhaps Senator Chapman, who I notice is smiling, may succumb to the crack of the party whip.
Senator Pearce:
– There is wonderful unanimity among the members of the Opposition.
Senator McLachlan:
– Solidarity !
Senator Findley:
– And sacrifice.
Senator NEEDHAM:
– This bill, if passed, will result in increased Customs duties, to which Senator Chapman and his party are opposed.
Senator Ogden:
– The Country party has buried the tariff issue; Dr. Earle Page is now a high tariffist.
SenatorNEEDHAM. - Senator Pearce yesterday, when referring to resolutions passed by the National Federation, endeavoured to persuade the Senate that that body was in favour of the abolition of the per capita payments.
Senator Pearce:
– I said that the National Federation rejected a motion that the per capita payments should not be discontinued.
Senator NEEDHAM:
– The honorable senator’s speech to the National Federation was, like the Prime Minister’s policy speech, full of vague generalities.
Senator Pearce:
– How does the honorable senator know ? Was he under the table listening to me?
Senator NEEDHAM:
– I listened to the right honorable gentleman yesterday. I have been associated with him in gatherings in the Labour party room in earlier years, but should not like to be with him at any gatherings such as that to which I was referring. He has been trying to convince us that the National Federation, the organization behind his party, has endorsed the bill.
Senator Pearce:
– No.
Senator NEEDHAM:
– It has not I saidthatI would endeavour, in the time at my disposal, to put the case for Western Australia, and I shall proceed to tlo so from information which has been furnished to me from an authoritative source. If the Government evacuates the field of income taxation to the extent of 40 per cent. of its present col lections, the amount of revenue released will not compensate the States to the extent that the Government believes it will.
Senator Pearce:
– Why did not the States put their case when they had the opportunity?
Senator NEEDHAM:
– The States did not have a chance to do that at the last conference.
Senator Pearce:
– They were specifically invited to do so time after time.
Senator NEEDHAM:
– I am inclined to think that the Commonwealth Treasurer was determined to have his way.
Let me now put the case for Western Australia, so far as the land tax is concerned. Dr. Earle Page has estimated that Western Australia would receive £80,588, but the authority to whom I have referred estimates the amount at £65,000.
Senator Pearce:
– Whose estimate is that?
Senator NEEDHAM:
– It has been furnished by a competent authority. It is very evident, according to this authority, that Dr. Earle Page has made his estimate on the maximum aggregate calculation, and 1 think I will be able to show that it is not possible for the State to calculate on that basis. Moreover, Dr. Earle Page has made no allowance for other factors which would reduce the amount collectable in Western Australia. Dr. Earle Page said that in the last year for which final figures were available, 1922-23. the actual assessments of Federal land tax for Western Australia totalled £81,823, and he therefore claimed that his estimate of £80,588, as the amount likely to be collected by Western Australia, was substantially correct. From the Federal point of view it may be; but from the State point of view it cannot be. He obtained his figures from a rate based on an aggregate assessment. In the event of his proposals being carried, however, that basis would not exist for the individual States. They would have to assess on land within the borders of the State only. If Western Australia had to impose her own land tax as a set-off against the abolition of the per capita payment, obviously the State Treasurer could only collect tax on land for which assessments were made within the State. The Federal Treasurer added head office assessments to ‘his figures, and I desire to show how unfairly his calculations applied to this State. First of all, if Western Australia had to operate on the Federal exemption basis, it would be necessary to maintain the existing exemption of £5,000, and land of any value up to that amount Would not be taxable. To-day, however, if a person residing in Western Australia owns land in this State, and land in another State also, and the aggregate value exceeds £5,000, he is liable to be taxed, and is taxed. We thus get this position : A person residing in “Western Australia who owns land ot an unimproved value of £5,000 or under is exempt, but if that person owns land of £5,000 value in Western Australia, and land in one or more of the other States of the Commonwealth, say, of an unimproved value of £20,000, he would be assessed for land tax, not on the value of the land owned in Western Australia, but on an assessment of £20,000 (that is £25,000 less the £5,000 exemption), and, what is important, at the rate of tax applicable to land valued at £20,000. The State Government, of course, could not do that. It could tax on any amount over £5,000, but not at a Tate applying to land worth £25,000, less the exemption. It could not invade any other State to innate the ratio of tax. Therefore, the rate of tax in Western Australia, in order to secure an equivalent of the amount now collected by the Federal authority and proposed to be surrendered to the State, would have to be increased.
For Federal taxation purposes, Federal valuers are engaged in each State of the Commonwealth valuing land, and where the taxpayer has land, or interest in land, in two or mora States, the values are forwarded to, and aggregated at, the head office, whence the assessments are subsequently issued at the aggregate rate o’f tax. But where the taxpayer owns land and has an interest in land in one State only, he is assessed in that State. The method is absolutely unjust and inequitable to Western Australia, because it has to be remembered that the unimproved value of city and suburban lands in this State is considerably less than the value of similar land in other States. It will thus be seen that, when Dr. Earle Page argues that Western Aus tralia would receive an amount approximating the value of total assessments issued, he is ignoring a vital factor which operates detrimentally to the interests of that State. I submit that £65,000 would be the maximum which Western Australia could expect to collect from the land tax. I have shown that the Federal Treasurer has made no allowance for a very important difference in the basis of calculations, and I wish further to show that he has made no allowance for other factors which would necessarily affect the amount of revenue likely to be collected by the State. Federal land tax, unlike the State land tax, is levied on the unimproved value of freehold and leasehold interest in land, interest in land under wills, trust deeds, agreements, See., and shareholders’ interest in lands owned by incorporated companies. Further, every increase in the unimproved value of land, or interest in land owned by any one State, has the effect of increasing the unimproved value and the rate of tax on the whole of the land owned by the taxpayer. Especially does this apply to Western Australia, because many of the large business houses of this State are owned by firms and companies domiciled in other States, where they have large interests in freehold and leasehold lands, the unimproved value of which is considerably in excess of the unimproved value of similar lands in Western Australia. Again, if Western Australia is to enter the field of land taxation now held by the Federal Government to make good the loss of revenue arising from the abolition of the per capita payments, it will be necessary to spend a considerable sum annually in the appointment of valuers and clerks to value annually the unimproved value of land and interest in land, and to collect the necessary data. ‘ All this increased expenditure would have to be set off against the amount of tax collected.
Senator McLachlan:
– Is there no State land tax in Western Australia?
Senator NEEDHAM:
– There is.
Senator Thompson:
– It is a very mild affair compared with the Queensland land tax.
Senator NEEDHAM:
– The Federal Treasurer has apparently taken the gross amount of tax assessment and has not apportioned any part of the cost of valuing, assessing, and collecting.
Let me come back to the Treasurer’s estimate of £80,588, which he says Western Australia would be able to collect. The Treasurer takes the assessment for one year only, 1922-23. I will deal with figures for that year and for the two previous years in order to obtain an average. In 1920-21 the value of Western Australian assessments, according to the ninth annual report of the Commissioner of Taxation referred to by Dr. Earle Page, totalled £47,757; in 1921-22 the value totalled £64,478; and in 1922-23, the year quoted by Dr. Earle Page, the value totalled £50,960. The value of the average total assessments issued in that State for those three years was £55,732. To the amounts quoted the Treasurer has added head office assessments on his aggregate basis - a basis which I claim is not permissible to individual States. Of course, allowance has to be made for land in Western Australia valued at over £5,000 not assessed there, but dealt wife in the aggregate at head office. I calculate that amount at approximately £10,000 per annum, a figure reached by taking the unimproved value in Western Australia and calculating the appropriate rate of tax on that value. I think I have shown that my basis of calculation is the right one, and, in fact, the only one that can be applied to the States if they are to take over the land taxation field proposed to be vacated by the Federal Government.
Senator Pearce:
– Does not the honorable senator see the flaw in the whole of that argument ? Fancy a man going back three years for an average and taking that as a basis of calculation in a rising State like Western Australia !
Senator NEEDHAM:
– That was the argument used by the honorable the Treasurer. I do not admit the correctness of the Minister’s reasoning. Dr. Earle Page, in order to appear in the role of a State benefactor, has had to bolster up his case at the expense of the States. His budget was a weird bit of juggling, and it did not relieve the taxpayers of Western Australia of one penny of their financial burden. Actually, he proposed to make it impossible for the State to avoid imposing further taxation. Therefore, whilst he sits grandly at the Customs House, scooping in money he does not want and ladling it out in doles, the States will be forced into the position of beggars waiting for his favours. [Extension of time granted.’] I have here tables showing the difference between the first proposal of the Government, which was embodied in the schedule to the bill as originally introduced, and the second proposal, which appears in the schedule to the bill as amended. The first of these deals with the comparative position of all the States, and shows the available margin : -
NEW SOUTH WALES · NAT -- I have listened to **Senator Needham** on many occasions, but I confess that I was unable to grasp a good deal of what he said this afternoon. With some of his remarks I agree, possibly to a greater extent than he imagines; but when he delved into a tangle of figures, I was quite unable to follow either the figures themselves or the purpose for which they were compiled. I do not propose to follow either him or the Leader of the Senate **(Senator** Pearce), in quoting long extracts from what people said in bygone days, because I do not consider that it matters one iota what was said 15 or 20 years ago. The tide of time has flowed on, and to-day we are living in a set of circumstances entirely different from those which existed at that time. Honorable senators may now take an altogether different view from that which they formerly held. Surely we are called upon, in the circumstances in which we find ourselves, to regard the whole of this matter in an entirely new orientation, and bring to its consideration the utmost wisdom of which we are capable. May, I, just for a moment, be permitted to strike a personal note? If I followed my inclinations and wishes at -the present juncture, I should probably support the Government, and allow this measure to pass with very little comment, even -though I did not altogether agree with it. But the issues which are raised are so important- that, in justice to myself and to the State whose representative I am, I feel it incumbent upon me to express in clear and candid terms my thoughts in relation to it. I have noticed 'that in one or .two quarters the statement has been made that the opposition to this measure comes from a few disgruntled gentlemen who seek office. I believe that **Senator Pearce,** at all events, will testify to the fact that, although I am opposed to what the Government intends to do, "with me it is not a question of sour grapes when I say that neither in this Parliament nor outside am I seeking any office. {: #debate-8-s3 .speaker-K0F} ##### Senator PEARCE:
NAT -- Hear, hear ! But it is also fair to say that those statements have not been made in this Chamber. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- Quite so. I make this personal explanation because, whatever my attitude may he in regard to this matter, I am actuated by a keen sense of duty. I deeply regret that I am unable to see eye to eye with the government of the day, although I may claim to be more definitely in line with the view taken by my party than is the Government itself. I may be opposed to the step which the Government is taking, but I remind Ministers that it is not I, but they, who are at variance with the party, because a plank in the platform of the National party declares definitely that the *per capita* pay ments should be retained. A little later on I shall have something to say about this departure by the Ministry from that which is laid down in black aud white as the policy upon which our party was elected. I would say, first of all, to my right honorable friend, **'Senator Pearce,** that I do not think the Government has ever been frank with the Parliament, with the party, or with the country, as to the 'true reasons for 'the introduction of this bill. I do not think that Ministers have ever stated what their reasons are. It is perfectly true that after they, inadvisedly as I think, made a very premature declaration of what they intended to do, they started out to find different reasons why they should do it ; but an examination of those reasons shows them to be excuses aud not real reasons at all for what the Government is now proposing to do. A little later on I shall deal with the history of this phase of the subject, but for the moment I say that the principal reason advanced by the Government for the bill is little more than a declaration of an academic principle of government - that the Government which spends the money should raise it. By and by, I propose to examine this principle in order to see if it has any real existence in fact. I shall show how far it has operated in various countries, and the extent to which it has been departed from. In the meantime, I ask the Government whether it is worth, while to arouse the bitter hostility and resentment of every State of the Commonwealth in order to establish such an academic principle ? That is exactly what is happening. After all, what is this entity which we represent? Is it something apart from the States or different from them ? As a matter of fact, the Commonwealth is the embodiment of a common policy of the States. The States created it. It is the creature of the States. And shall the Commonwealth become a sort of Frankenstein monster? Is it to -devour or demolish the people who created it? Was it for that purpose that the Commonwealth was brought into being? This Government is not only arousing the bitter hostility of the States, it is doing its utmost to smash the party to which it belongs. All of the organizations connected with the Nationalist party are, without a doubt, opposed to this move on the part of the Government. I ask again whether it is worth while doing this in order to give effect to what is little more than a mere academic principle of government? Does it lead us anywhere? Is it not manifest to each member of the Government that there can be no political gain in the step it is taking? The political back-wash of this step which the Government is taking, unless it modifies very materially the proposals with which it went to the last conference of State Premiers, will sweep it from power and put our friends opposite in office. {: .speaker-JYX} ##### Senator Findley: -- Hear, hear! We shall help the honorable senator to do that. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- I do not wonder at the attitude adopted by my honorable friends opposite, and at their absolute solidarity on this occasion. For them it is a gift from the gods, and they would be ten thousand times foolish if they did not embrace it with open arms. But am I, a private member of the Nationalist party, holding these opinions, to remain silent and see the party, with which I have been associated for so long, led, as I believe it will be, to political extinction? Am I not to raise my voice in protest? No; I shall not remain silent. I shall show that the political back-wash of this step must react more particularly against the Nationalist party than against any other party. I do not think that the effect on the Country party will be anything like as great as it will be on my party. Although tho Nationalist party and the Country party are, to some extent, associated, there is not that close cohesion between them which, in my judgment, warrants the Nationalist party in running any risk for anything the Country party may desire. Before I deal with the constitutional side of this question, I want to make one other point. I feel that the Ministry, in hanging on to this academic principle of government, has jeopardized its position very materially. Its adherence to it has compelled it to retain every atom of taxation it is raising at the present time, never for once relaxing the demands of the tax gatherer. During these last full and fat years, it should have been reducing taxation, instead of stacking away its surplus revenue into trust funds to be expended in future years. I should like to say, in passing, that this practice is being followed to an extent which is absolutely dangerous from the standpoint of the economic government of the country, and in a way which removes these vast trust funds from the control of Parliament. {: .speaker-K0F} ##### Senator Pearce: -- Is the honorable senator referring to the trust fund to provide for the cruisers? {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- I am referring to the huge trust funds that have been created. They have no right to be created in this way, and they should be brought to account in the annual payments of the year. **Senator Pearce** will remember that in 1910, when the agreement for the payment of a *-per capita* grant to the States went through, a trust fund was created, and the surplus revenue of that year was credited to that fund. {: .speaker-K0F} ##### Senator Pearce: -- Yes, for the payment of old-age pensions. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- And also to pay for the Navy. **Senator Pearce** will also remember that these things were all brought to account in the annual accounts, but if he turns to the budgets of to-day he will see that the true position has been practically hidden from the people. However, that is by the way. My point is that if the Government had done whan I believe it ought to have done in the years of plenty - when there was an overflowing treasury - it would have reduced taxation annually, as there was ample opportunity to do. I shall show a little later how I believe it ought to have been done, and why it was not done. I shall show also why relief should and could have been given all round. But had the Government taken that course it would not have been able to make this bargain with the States; the accounts would not have balanced in the way the Treasurer desires to balance them now by the surrender of so many fields of taxation, and the abolition of the *per capita* payment. Consequently, as a direct result of hanging on to this purely academic reason, which is not the real reason at all, the Government has been compelled to retain every scrap of taxation in order to put this proposal over the States. If, on the other hand, it had taken the other course there would have been a very considerable amount of political credit accruing to it for having reduced taxation. Since this Government was formed the annual collection of taxation per head has increased by 12s. Id. {: .speaker-K0F} ##### Senator Pearce: -- This Government, since it was formed, has made substantial reductions in income tax. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- I know it has, but I am endeavouring to show that if the Government had not clung to this principle it would have been able to make greater reductions not only in income but also in other taxation. The Minister knows very well that when we imposed this taxation we put it on more than the wealthy, and that there are people other than the wealthy who are entitled to relief. The Government, as I say, is adhering to this thing and has deliberately proposed on three occasions to pass over to the States a great mass of taxation. In doing so they say to the States, " You can now flounder in this morass. We are going to take these regular payments from you and you can get out of the morass as best you can." I have little doubt that the State Treasurers would get out of the morass, but I venture to say that in doing so they would sling a good deal of mud, and would take all sorts of good care that the mud stuck where it belonged. They would see that the electors were told in no uncertain voice that the change had been brought about in consequence of an act of the Commonwealth Government, and it is on that account that I am not out to make a Roman holiday for my honorable friends opposite. {: .speaker-JZR} ##### Senator Ogden: -- Even now they are storing this up as political pabulum for the. next elections. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- It is abundantly clear from the speech ot the Leader of the Opposition **(Senator Needham)** this afternoon what is to be the principal line of attack by his party at the next election. These honorable gentlemen will pose as friends of the States. They are going to put it to the people that the Nationalist party is the enemy of the States, and in doing so they will be helped by every State Treasurer in the land. Every State Treasurer will declare that the additional taxation he has imposed has been purely the result of what the Commonwealth has done. {: .speaker-JZD} ##### Senator Foll: -- They would be helped by the State Treasurers in any case, be cause five of them are members of the Labour party. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- Are we to give them additional assistance? {: .speaker-KPQ} ##### Senator Kingsmill: -- If this measure is passed they are likely to remain in office. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- That is what I am endeavouring to show. At the present time, with State elections in front of us, our friends outside are fighting the party opposite who are in power in five of the States, and this is the sort of assistance we are giving Labour to defeat the party to which we belong. If these are the lines of political wisdom then I have to learn my political economy over again. I do not propose to occupy much time in debating the constitutional position because I venture to say that honorable senators here are as conversant as I am, and some of them probably more so than I am with it. I desire, however, to direct particular attention to one constitutional aspect of this question. Section 87 of the Constitution, the instrument under which we carry on the government of the Commonwealth, follows immediately after the first mention of the question of duties of Customs. Section 86 reads - >On the establishment of the Commonwealth, the collection and control of duties of Customs and of excise, and the control of the payment of bounties, shall pass to the Executive Government of the Commonwealth. Section 87 to which I have just referred provides - >During *a* period of 10 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- I have seen it stated several times recently that originally section 87 of the Constitution guaranteed to the States the return of only three-fourths of the Customs and excise revenue. It did not do that. What it did provide was that the Commonwealth might not spend more than one-fourth; it might give more than three-fourths to the States. {: .speaker-KLS} ##### Senator Givens: -- And it did give more than three-fourths. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- Yes. The section continues - >The balance shall, in accordance with this Constitution, be paid to the several States, or applied towardsthe payment of interest on debts of the several States taken over by the Commonwealth. Section 88 reads - >Uniform duties of Customs shall bo imposed within two years after the establishment of the Commonwealth. Then follow a number of sections dealing with Customs and excise duties. The position given to section 87 in the Constitution is of itself convincing proof of the tremendous importance that the States of that day, who, I repeat, created the Commonwealth, believed to centre round this question of the Customs and excise duties. They interpolated this provision in the Constitution at that particular point, and, as every one knows, it was as the result of much discussion that they inserted it in its final form. They imposed on the Commonwealth a tremendous responsibility, trusting us always to do the fair thing by the States. We have had one revision of that provision in the Constitution. Did we proceed, in that revision, along the lines which the Government propose to proceed? I ask my friends in the Government to compare what took place before that first revision with what they have done, and, having done so, they con be their own judges as to whether the situation which confronts us to-day is not solely the result of what they themselves have done. Compare the careful manner in which this question was approached before the first revision with the brusque declaration of what the Government proposed to do, which was made in Western Australia by the Prime Minister and the Treasurer on the eve of the Premiers' conference, and there can be no reason to doubt any longer why we are confronted with the present situation. I do not for a moment question the legal power of this Parliament to amend, in any way it pleases, this provision as laid down in the Constitution. It has undoubted right to amend it. But again I repeat that the men who framed the Constitution, and who finally asked the people to permit section 87 to be included in it, trusted this Parliament. Why did they trust it? They knew how parliaments were constituted. They knew that parliaments came and went; but I venture to say that there was a very strong reason why they felt ultimately, despite much controversy, that they could put that provision in the Constitution and recommend it to the people for their acceptance with absolute confidence. It was that the men responsible for it were also responsible for the creation of this Chamber. It was because they felt that they could, with complete confidence, trust the men who would be sent to the Senate - a House of review, certainly, but also a special body chosen in a special way - a Chamber in which equal representation isgiven to every State of the Commonwealth. They felt they could trust the men sent here to represent the States to see that the Commonwealth did them no injustice. That is the only reason for the constitution of the Senate as we have it to-day. SenatorPearce. - Who is proposing to do an injustice to the States? {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- I am not saying that the Government does propose ultimately to do an injustice to theStates. I do not know what is proposed by them. One of my chief complaints in connexion with this bill is that I do not know what is intended. {: .speaker-JZR} ##### Senator Ogden: -- It is a blank cheque. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- Yes. The Government come to me with a blank cheque and ask me to sign it. I shall not do so. {: .speaker-KTR} ##### Senator McLachlan: -- The honorable senator can stop payment later on if he so desires. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- No. On a matter of such vital importance I refuse absolutely to give a blank cheque to any Government. If the Government were composed of angels from Heaven, I would not do so. {: .speaker-K2L} ##### Senator Reid: -- We might have a worse Government. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- We might. With this great responsibility resting upon the shoulders of this branch of the Commonwealth legislature, I am not prepared to sign any blank cheque in connexion with this matter. {: .speaker-K0F} ##### Senator Pearce: -- No one is asking the honorable senator to do that. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- Let the Government bring down a definite concrete proposal. I shall then know to what I am asked to commit myself, and will be prepared to record my vote one way or the other. I am not prepared to vote until I know to what the Government is going to commit me. {: .speaker-K0F} ##### Senator Pearce: -- The honorable senator is not asked to do so. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- I am. I am asked in a very definite way to commit myself to this Government on the abolition of the *per capita* payments which are made to the States out of Customs and excise revenue. I will not do that. This House is not beholden to this or any Government in a matter of this sort. Governments are not made or unmade in the Senate. I admit that, owing to the clash of parties in .regard to the general legislation ou which we are engaged, this chamber, which is a house of review, is generally divided on party lines. But here is a piece of legislation, on which no party question should arise. I regret that honorable senators opposite have made it a party question, and I regret still more that the Government with which I am associated has also done so. It knows - and I am only stating what is common knowledge - that if this had not been made a party issue in another place we should not be discussing the bill to-day. {: .speaker-K8L} ##### Senator THOMAS:
NEW SOUTH WALES · NAT -- Who says so? {: .speaker-K0F} ##### Senator Pearce: -- The division list shows otherwise. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- Everybody knows it: the dogs are barking it in the streets. I could tell **Senator Thomas** the names of half a dozen of his colleagues from New South Wales who, had they been free, would have voted against the bill. {: .speaker-K8L} ##### Senator THOMAS:
NEW SOUTH WALES · NAT -- Every one who voted for it did so because he believed in it. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- The Senate has but one duty in this matter - to conserve the interests of the States which they represent. {: .speaker-K8P} ##### Senator Thompson: -- Does the honorable senator mean the interests of the State Governments? {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- No. Had **Senator Thompson** been listening to mo--- {: .speaker-K8P} ##### Senator Thompson: -- Unfortunately I was not in 'the Chamber. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- Our duty as senators is not to the Government, or even to the party to which we belong, but to the States which we represent. Why is this matter of such pre-eminent importance? I believe the reason is that the stability of the Commonwealth is depen dent on the existence of strong, virile, active States. The duties with which the States are charged are infinitely greater than those vested in the Commonwealth. They deal with the social services of a continent, and the welfare of its people. If the Commonwealth takes any action which robs the States of the sinews of war, or leaves them scraping for a financial existence, by depriving them of certain sources of revenue on which they should he able to rely- {: .speaker-KLS} ##### Senator Givens: -- And which they have full power to collect for themselves. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- I shall deal with that later. Unless that can he guaranteed to them, their activities must suffer, and, as a consequence, the Commonwealth itself must suffer. {: .speaker-KMP} ##### Senator Grant: -- That would mean larger quantities of foreign goods coming here, and increased Customs revenue. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- I feel, strongly, that so long as the relative constitutional obligations of the Commonwealth and the States remain materially the same as they were at the inauguration of federation, we should not depart from those fundamental principles of finance which were embodied in the Constitution. {: .speaker-K0F} ##### Senator Pearce: -- Is there anything embodied in the Constitution requiring the Commonwealth to impose direct taxation for the benefit of the States? {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- There is. The only substantial ground for altering the basis underlying the financial relations of the Commonwealth and the States would he great constitutional changes in their obligations. Until we reach that stage, a radical alteration of the existing financial basis should not be attempted. Personally, I am of the opinion that material changes in the Constitution affecting the relations of the Commonwealth and the States are desirable. Honorable senators generally are of the same opinion. For those changes I have striven. I fought for them so far as my health would allow at the recent referendum, although I did not agree with . all the Government's actions in connexion with it. But, until such time as those changes have been obtained by constitutional methods, I am not prepared to scrap the financial provisions of the Constitution upon which the federation rests. {: .speaker-K0F} ##### Senator Pearce: -- What are those financial provisions in the Constitution to which the honorable senator alludes? {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- If the Minister does not know what they are, I do not propose to enlighten him at this stage. I deprecate his action in addressing questions to me with the object of diverting me from the object I have in view. I shall, therefore, not follow the Minister. This Parliament has no right to attempt to force a constitutional change by crippling the States financially. I am not at all sure that that is not one of the objects in the minds of some of the progenitors of this measure. **Senator Thomas** looks astounded at that statement; but I could tell him of members of this Parliament who have told me, in the most succinct and definite terms, that that is their reason for voting for this measure. In it they see the beginning of the end of the States. {: .speaker-K8L} ##### Senator THOMAS:
NEW SOUTH WALES · NAT -- They must have been supporters of the Labour party. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- It is immaterial to which party they belong. In my judgment, this measure is an attempt to cripple the States financially. Its enactment will weaken them to such an extent that before long a situation which will make unification necessary will arise. {: .speaker-K0F} ##### Senator Pearce: -- Is that why the Labour party is opposing the bill ? {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- Within the four walls of this chamber the infant Commonwealth - the ripe fruit of the womb of a dawning national sentiment - first saw the light. Within the same four walls that infant became a living sentiment and coherent entity. It would be a pity if, after little more than a quarter of a century had elapsed, one of the last acts of this Senate, within the same four walls, should be to pass the first of a series of measures practically to seal the doom of the Commonwealth as originally constituted. If the Senate consents to this measure, the rights of the States to participate in the revenues derived from Customs and excise will pass forever. {: .speaker-K0F} ##### Senator Pearce: -- That right went with the war. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- I shall deal with the war presently, and shall show that, had **Senator Pearce** remained where he was during the war, this measure would never have been introduced. I now come to the bill itself. Its short title is, " The States Grants Bill." I do not know whether the Treasurer conspired with the Prince of Satire before he decided on that title : it certainly is a misnomer. It is true that to two of the States the bill proposes to make grants, although the reason for that is somewhat vague. Had the *per capita* question been brought forward in a decently honest manner - Iuse the term in a relative sense, without any personal bias or animus against any one - we should have had two separate measures to attain two such differing objects. Perhaps it was hoped that, because of the provision in the bill affecting those two States, their representatives would vote for it, notwithstanding that it robbed four other States of their rights. {: .speaker-K1P} ##### Senator Sir Henry Barwell: -- They are made dependent, one on the other, as it is. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- That is so. Honorable senators from those two States are placed in an invidious position, in that, if they vote against the bill, there is a danger of their action being interpreted to mean that they are opposed to- grants being made to the States which they represent. The Treasurer must have thought long and bard before deciding on such a title to the bill. Perhaps he has graduated in a course of nursery rhymes, a.? I did in days that have passed. I remember well the story of the spider and the fly. I do not know whether the Treasurer, after having spun his web, was prepared to sing the song of the spider in the hope that the States would become enmeshed in the silky folds of his web. It may be that the Treasurer thoughthard and long about the persuasive influence of a bunch of carrots. {: .speaker-JZR} ##### Senator Ogden: -- It was most unfair to insert in the bill provisions relating to payments to certain of the States. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- I agree with the honorable senator. I am simply endeavouring to show that the Treasurer, in framing his bill was not acting fairly to the representatives of those States. {: .speaker-JZR} ##### Senator Ogden: -- He was most unfair. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- It was distinctly unfair to say, in effect, to the representatives of those States:: " Come along and vote for the bill and deprive the other States of their rights." That is a condition of affairs which, sooner or later, most react upon the Government. It is unreasonable to expect the larger States, which ave to be deprived of all those sources of revenue which they have enjoyed hitherto, to vote large sums of money from the Consolidated Revenue for the benefit of the smaller States. It is unthinkable that such a state of affairs can go on for ever. I admit frankly that at times the smaller States may find it necessary to seek assistance from the Commonwealth. {: .speaker-JXZ} ##### Senator Duncan: -- There is no guaratee in this bill that they will get anything. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- The only lasting guarantee which I can see in it is that all of the States will, for all time, be precluded from revenues, which they have enjoyed under the Constitution up to the present. It is true that for two years Tasmania, and for five years "Western Australia, will get something; but that will be the end. I say to my friends and colleagues from those States, which with perfect justice might find it necessary to ask the Commonwealth for contributions from time to time, that I can quite realize.that the time may come when the larger States will say - "No; you raise from your own resources what revenue you require. "We are not going to find money for you." One other thought which occurs to me in connexion with this matter is that the bill has been brought forward by the gentleman who, I believe, has been most active in the movement for the creation of new States. How is it possible for New South Wales or any other large State, if it is to get nothing as the result of the passage of this bill, to contemplate a large slice of its territory being torn from it, and then to be expected through the Commonwealth Parliament, to grant financial assistance to the smaller States. In such an event, the larger States would be robbed both ways. It is extraordinary that the people who have preached this new States doctrine should primarly be responsible for the presentation of this bill. {: .speaker-K8P} ##### Senator Thompson: -- How will it affect the new States. They will get a *quid pro quo.* {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- Will they? I am afraid that if my honorable friend votes for this measure he will have to explain away a good deal when he comes to talk about the creation of new States. It is obvious, that he has not fully appreciated the- significance of this move in relation to the possible creation of new States in the future. {: .speaker-K8P} ##### Senator Thompson: -- I shall be able to explain my position quite satisfactorily. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- I come now to an examination of the circumstances that have led up to this financial situation. What is the real cause of the position in which we find ourselves to-day *1* Why has the problem of the financial relations of the Commonwealth and the States arisen ? We all know, of course, that it is owing to the fact that there was a war in which Australia participated. Had there not been a war what would have been the attitude of the Seriate if, with a Customs and excise revenue of £44,000,000, this bill had been brought before it? {: .speaker-K8L} ##### Senator THOMAS:
NEW SOUTH WALES · NAT -- But there has been a war. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- Exactly. {: .speaker-K8L} ##### Senator THOMAS:
NEW SOUTH WALES · NAT -- And it makes all the difference. {: .speaker-K8P} ##### Senator Thompson: -- And we have had direct taxation, too; the honorable senator seems to forget that. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- I propose now to put a question or two to **Senator Thomas,** who has been interjecting so volubly. I ask the honorable senator - Was the war a State or a national obligation ? {: .speaker-K8L} ##### Senator THOMAS:
NEW SOUTH WALES · NAT -- National, of course. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- So I think; and so we all thought during the war. {: .speaker-K0F} ##### Senator PEARCE: -- I say that the war was both a State and a national obligation. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- During the war we all thought it was a national obligation. **Senator Pearce** is beginning to see where this argument is going to lead him. *[Extension of time granted."]* I thank honorable senators for their courtesy, and if allowed to pursue the even tenor of my way will quickly conclude. To proceed, I say that the war was a national obligation. Let me now ask **Senator Thomas** another question. Supposing that during the war the Government with which he was associated had come down to this chamber and said, " We are going to throw the whole cost of the war on to the shoulders of the poor of this community through the Customs House, and we are going to ask, the States to collect the rest of the revenue they want." Would he have supported such a proposition ? {: .speaker-K8L} ##### Senator THOMAS:
NEW SOUTH WALES · NAT -- I do not support Customs duties at all. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- Quite so; the honorable senator is beginning to realize what he is up against. I say deliberately that had any Government proposed, during the war, to do what this Government is now doing, it would have been hounded from office with the scorn and obloquy of poor and wealthy alike from one end of Australia to the other. That is the position. During the war we realized that it was a national duty to tax the wealthy people of the Commonwealth for war purposes. The Government in power, knowing full well that it was impossible to meet the obligations of the Commonwealth without resorting to direct taxation, put these taxes on. **Senator Pearce** was a member of the first Government that was responsible for that policy. Why was it done? {: .speaker-K0F} ##### Senator Pearce: -- Because the Customs and excise revenue was insufficient. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- Yes; the Government of the day placed the burden on the shoulders of the wealthy. It did not say to the States, " We are going to monopolize all the Customs and excise revenue, so you must adjust your taxation schemes to provide for your own requirements." No government at that time would have dared to say that. *Sitting suspended from 6.30 to8 p.m.* {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- During the war the Government of the day imposed taxation along two lines. It increased the duties on quite a number of articles that are used by the whole of the people, including beer, wine, spirits, tobacco, motor cars, and silks. A duty which was imposed upon me, as Minister for Trade and Customs, in the 1920-21 tariff, was to add still further to the burdens due to indirect taxation, because the Government of the day recognized that itwas absolutely essential that the *per capita* payment to the States should continue. I contend that time has not altered the obligation which lay definitely on the shoulders of the Commonwealth during the war, but that, on the contrary, it has equal force to-day. It is perfectly clear to me that as the obligations which arose out of the war begin to diminish - as they undoubtedly will before very long - the Par liament which imposed taxation to meet those obligations must shoulder the duty of gradually relinquishing it. It was our obligation to put it on, and it will be our obligation to take it off. It certainly is not within our province to push on to the States the obligations that we assumed during the war, and to adopt the proposal of the Government to finance the whole of our war obligations out of Customs and excise revenue. {: .speaker-K0F} ##### Senator Pearce: -- What Government has proposed that? {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- If that was not the original proposal of this Government I do not know what was. The idea, to me, appears to be to lift practically the whole of the direct taxation from the shoulders of those who are bearing it, and to place upon the States the obligation of reimposing it. The Government has retreated from the position that it originally took up, and is now suggesting a compromise with the States. A little while ago it was opposed to the idea of seeking a compromise. If the Government will say definitely that it is prepared to abandon the scheme for shifting its obligation on to the shoulders of the States, and will inform the States that it is willing to pay the same amount as is now paid, but under a different method, I shall offer no objection. I have already told the Prime Minister that I am perfectly willing to support a definite, concrete Proposal in relation to State debts. But I am not, as I have previously stated, prepared to "buy a pig in a poke," or to sign a blank cheque. In a matter of this kind I want to know exactly where I stand. {: .speaker-K0F} ##### Senator Pearce: -- The honorable senator will know that at a later stage. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- The Senate is entitled to know where it stands before it agrees to sign the death warrant of the States. When this Parliament last proposed to alter the payments that were made to the States, it was in the Constitutional position that it did not first abolish the payments and then effect a compromise ; it made the compromise first. The Government now says " W e shall not adopt that course; we shall first cut off the payments, then confer with the States, and ultimately place a new proposal before Parliament." That is putting the cart before the horse. It is a wrong way in which to ask this Parliament to act. I say to the Government, " Go to the States; make your compromise, and then come back to this Parliament and ask it to endorse it." {: .speaker-K0F} ##### Senator Pearce: -- That method has been tried, and the States refused to meet us. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- It has bean tried, but in what way? The Government has 5a t at tho conference- table with a gun in each hand,, and has said to the States " With one gun we shall first incapacitate you, and with the other we shall then murder you." That is the attitude which the Government has adopted, at both the conferences that it has held with the States. I am not prepared to trust it with a gun in future, because it places it in an advantageous position and one that is absolutely unfair to the States. {: .speaker-JZR} ##### Senator Ogden: -- What does the Government propose to substitute for the existing system ? {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- That is what I want to know. If the Government would say definitely, "We have abandoned our original proposals, and are prepared to do something else," and will tell us what that something else is, I should he with it. {: .speaker-K0F} ##### Senator Pearce: -- We are prepared to do what the honorable senator suggests, if the States will agree to it. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- Why not do it first? {: .speaker-K0F} ##### Senator Pearce: -- Because the States have shown that they will not meet us. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- I presume that the Government is satisfied that it has a sufficient number of honorable senators behind it to ensure the passage of the bill. I do not know whether it has or has not, and I have not taken the trouble to inquire. If it will accept an amendment along the lines of that which has been prepared by **Senator Kingsmill,** I shall vote for the bill, because my wants will be satisfied. The States will be definitely secured for the future, and the Commonwealth will be precluded from doing what was originally proposed. There are quite a number of other reasons that I should like to advance, but time will not permit of my doing so. I shall just hint broadly at what they are. The proposal to alter the venue of taxation is based on the assumption that once the Commonwealth retires from the field all that the States have to do is to re-impose what has been lifted. An examination of the taxation systems of the different States will disclose a material variation between each. Not one. State system agrees with the others, and that of the Commonwealth differs from .all, sowidely that it would be utterly impossible for the States to continue the burden on the shoulders of those who are now bearing it - which is essential - unless they were willing to tear up their ex] string systems and start afresh from the base. In business, taxation after a space of time becomes capitalized ; values of all kinds adjust themselves in relation to the taxation that is imposed. I can conceive of no- more disturbing element in the majority of the businesses of this country than for every State to have thrust upon them concurrently -the obligation of tearing up their systems of taxation and of establishing a new system which would cover an area that is outside the present systems. It is impossible to increase the taxation that is at present being imposed by the States in such a way that the burden will fall upon the shoulders of those who are bearing it to-day. That is another reason why I say that under no circumstances should this Senate consent to take the course which the Government originally suggested. There is a further, reason. Some persons assume that once the Commonwealth Parliament surrenders to the States this field of taxation it will be powerless to re-enter it. Every honorable senator knows that that is not so. Let us consider the land tax. I have a pretty shrewd idea that there are in Australia some Parliaments that would not pass it. I can imagine my friends who went to the country in' 1910 with the flaming inscription, "Land tax" emblazoned on their banner, once more adopting that attitude and re-imposing land taxation. I do not think that 1 could find it in my heart to blame them if they did so. I ask the Government what urgency there is for passing this legislation ? Who is pushing it ? Where is the demand for it? I say deliberately that the Government has no mandate from either its organizations or the country to take this step. This is a deliberate violation of the platform of the National Federation, upon which the majority of the members of the Government were elected. It has been stated that the Government claims to have been given a mandate because of the very vague reference which appeared in the Prime Minister's policy speech to a possible re-adjustment of the financial relationships of the States and the Commonwealth. I am astonished that such a claim should be made by experienced politicians. I can conceive of its being made in some up-country electorates in which the people are not conversant to any reasonable extent with constitutional government. I wish to remind **Senator Pearce** and the Government of a little of the history that surrounds this matter. Unless the question was referred to in explicit terms in the policy speech of the Prime Minister, the Government had no constitutional right to make it an act of first political importance and to place it in the forefront of its programme immediately Parliament assembled. Everybody knows that that is the constitutional position. Furthermore, I declare that **Mr. Bruce** was elected in 1922 on an absolutely different basis. **Senator Pearce** knows perfectly well that when at Brisbane in 1922 **Mr. Bruce,** then Treasurer in the Hughes National Government, enunciated the policy of that Government on this particular matter, it was no chance utterance, but the considered policy of the Government at that time, and upon it he was elected. Yet immediately after that election wo found a most extraordinary situation. Practically the first act of the Composite Government after it was formed, and after Parliament had risen, was to go to Western Australia, and there make its first announcement of a change of policy in this connexion which was contrary to the deliberate statement of the Government under whose auspices the present PrimeMinister sought election. I recognize that that is a very serious declaration to make, and I want to ask what force was at work to compel **Mr. Bruce** to go back on the promise he made to the electors of Australia before the election and adopt a policy which was its direct antithesis. Every one knows that the Composite Government put forward its new policy at a Premier's conference, and likewise every one knows the result. But the Government declared that it would not take the slightest ' notice of what 'the Premiers said, and said that it would go ahead with its policy. Next it brought it3 proposals before the National party's conference, and it is no secret that at that conference they were incontinently and utterly rejected. Afterwards the Ministry did not say a word about them, but dropped them like a hot potato, and soon afterwards went to the country. During the course of the campaign that followed I was twice asked what my attitude was towards payments to the States by the Commonwealth, and I said, "I am perfectly prepared to see a readjustment, but I think it can be taken for granted that the original proposals of the Government will never again see the light of day." I am quite prepared now to see a readjustment brought about. I think I had every justification for assuming that the proposals had been dropped, because not a single word was said about them from the beginning to the end of the campaign ; yet immediately afterwards they were resurrected. Evidently some one had been pushing. them. I had my own ideas about the matter, but I did not find out what had happened until last Thursday when, in the press, I saw a statement by **Mr.** Bruxner, erstwhile Leader of the Country party in New South Wales, to the effect that it was the Country party that was pushing the proposals. I know that there are quite a number of members of the Country party who do not believe in these proposals. It appears, however, some one has been responsible for this change of front on the part of the Prime Minister, elected as he was in 1922, oft the definite promise that no change would be made unless constitutional changes in Australia warranted it. That is an attitude I am prepared to adopt. Yet, although the right honorable gentleman went to the country on that definite promise, immediately after the Composite Government was formed the statement to which I have already referred was made in Western Australia, and now we have **Mr. Bruxner** saying that the Country party was pushing the Government's proposals. {: .speaker-JZD} ##### Senator Foll: -- **Mr. Bruxner** also gave reasons why certain people were opposing them. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- He did, and as I have already said, and as **Senator Pearce** generously intimated, the reasons he gave do not apply to me. The fact is that **Mr. Bruxner** has put the show away. It is a very serious thing for a party such as ours, with a leader such as we have, for whom I have the greatest personal respect, to be forced into the position of going deliberately contrary to a definite plank in its platform and against the election pledges of its leader. I venture to say that he would be the first man to try to get out of that position if it were possible for him to do so. In the few minutes left to me, I wish to say a few words on the principle said to be involved in these proposals - that the Government which spends the money should be the Government that is responsible for raising it. If it were not a recognized principle throughout the world that superior Governments freely subsidize subsidiary Governments, as they may be termed, there might be something to say in favour of a Government giving its adherence to this principle ; but I defy any one, to show me any federation that does not/subsidize its State Governments. {: .speaker-K0F} ##### Senator Pearce: -- The United States of America does not subsidize State Governments on a *per capita* basis. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- I am not talking about a *per capita* payment. This Government proposes to sweep away all subsidies on the principle that the spending of the money should be done by the Government that raises it. I say nothing about the method of subsidizing a subsidiary authority, but I hold that the principle upon which the Government, relies does not apply to the federations of the world. Every one knows that State Governments subsidize subsidiary local governments. The British Government gives various bodies powers of local taxation, but it also subsidizes them. Therefore, when we come to examine the principle upon which the Government has laid so much stress, we find that it is really not a principle at all, although, in following it, Ministers are doing something which, in my judgment, means political suicide. {: .speaker-KN7} ##### Senator Guthrie: -- But it is honest. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- I am not saying a word against Ministers' honesty, but I say that we should hesitate before we follow a Government, however honest it may be, which is committing an act of political suicide. {: .speaker-KN7} ##### Senator Guthrie: -- The honorable senator would not have a Goverment hanging on to office by any means and bowing to public clamour. If Ministers think that what they are doing is right, are they not justified in going on with it? {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- Yes, but I do not say that their supporters should immediately follow them into the abyss. I have seen a lot of men prepared to step over precipices, but I have always hesitated to follow them. {: .speaker-KN7} ##### Senator Guthrie: -- If an honorable senator places his seat in Parliament before his principles, he will be very careful; but, if he thinks that the Government is doing the right thing, is he not honest in. following it? {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- I cannot follow the honorable senator through the whole of his speech, but I say that, if the Government be honest, I am equally honest in the view I take. From the stand-point of constitutional development the proposals of the Government are devoid of every scintilla of statesmanship. As a contribution to politics they are a tragedy. Charged as it is with the definite responsibility of holding the balance between the States and the Commonwealth, I can conceive of no action the Senate could take that would sooner bring it into scorn and derision, and, ultimately, cause the people of Australia to throw it away as useless, than for it to pass the measure which the Government is now submitting for its approval. **Senator Sir** HENRY BARWELL (South Australia) [8.26]. - My first words to night are words of congratulation to **Senator Greene** for his very able speech upon this bill. His speech was brimful of argument against the measure - arguments which must make honorable senators hesitate before they record a vote in favour of it, unless their minds be warped by purely party considerations. Unfortunately, some honorable senators do vote on purely party lines. It is something that should not be done in the Senate. Last year, when I was speaking on the budget, I expressed my opposition to the proposals of the Government which' have been embodied in this bill, and, since then, I have given the matter further considera- tion. I have tried to find some virtue in the proposals, but the closer and the more prolonged my study has been, the more I have become convinced that they are unsound, and that the action of the Government in bringing them forward is illadvised. It is perfectly true, as **Senator Pearce** said, that four or five years ago, at a Premiers' conference, I stated that the first principle of the policy embodied in this legislation appealed to me. In theory it .seemed to me to be right that each Government should raise its own revenue, and that no Government should be dependent on another for the money it has to expend. That opinion was expressed not only by myself, but also by others "who were at the conference at which that principle was propounded. Further consideration has shown that we cannot depend merely on theory. My practical experience as a State Premier, and that of others here who have been State Ministers, show that this is one of the cases where it is not safe to trust to mere theory. As has already been pointed out, no part of the Federal Constitution received more thorough or careful consideration than the provisions relating to the financial position of the Commonwealth and the States. Over and over again during the convention debates it looked as if federation would not be consummated, because of the difficulty of arriving at some satisfactory arrangement for the division of the Commonwealth and State finances. But federation was consummated, as we know, on the basis of a financial partnership between the national Government and the Governments of the various States. {: .speaker-JZR} ##### Senator Ogden: -- After the first bill had been amended. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- Yes, but I want to come to that point, because it is the pivot of my remarks, There was a financial partnership between the Commonwealth and the States without which federation would not have been consummated when it was,, and probably would not have been afterwards. It is true, as the Minister stated, that the arrangement which was finally agreed to at the Premiers' Conference in 1S99, whereby the Commonwealth was to retain for its own use not more than one-fourth of the Customs and excise revenue, and the balance was to be paid to the States, was limited to a period of ten years, and thereafter until Parliament otherwise provided. But that limitation on the Braddon clause was imposed merely to placate a minority of the electors. A majority of the electors who voted on the referendum taken prior to the Premiers' Conference in 1898 were in favour of the Braddon clause as originally drafted. {: .speaker-JZR} ##### Senator Ogden: -- Without any limitation? **Senator Sir HENRY** BARWELL.That is so. {: .speaker-K0F} ##### Senator Pearce: -- But the bill was not accepted. **Senator Sir HENRY** BARWELL.A majority were in favour of the Braddon clause without limitation being embodied in the Constitution. I admit that that bill was not passed; but I am stating that a majority of the electors who voted were in favour of the Braddon clause as originally drafted, which provided that the Commonwealth should have not more than one-fourth of the Customs and excise revenue, and that the balance should be paid to the States for all time. It was only because of the action of New South Wales that the bill was lost. It stipulated that the bill should not be carried in that State unless a majority of 80,000 voted in favour of it. There was a majority of 70,000 in favour of the bill as it was originally drafted. However, so anxious were the States and people generally that federation should be consummated, that they finally agreed to tha alteration adopted at the Premiers' Conference in 1899', limiting the operation of the Braddon clause to ten years, and thereafter until Parliament otherwise provided. It was to be a probationary period during which this arrangement could be tested. An opportunity was provided to make an alteration in the terms of the financial partnership, which was the basis of federation, if in the light of experience it was shown that an alteration was necessary. As we know, an alteration was made in 1910, but again, I point out, only in the terms of the financial partnership existing between the Commonwealth and the States. There was no annulment of the partnership; that was never contemplated by the framers of the Constitution. A limitation was imposed, but only so that the terms of the partnership might be adjusted from time to time to meet the requirements which experience showed to be necessary. There was a limitation also in 1910, when the Surplus Revenue Acb was passed, which provided that the Commonwealth should pay to the States 25s. *per capita,* or a part of the interest on State debts. Again there was a limitation of ten years, which was only a probationary period. Once again the opportunity was given to alter the terms of the partnership existing between the Commonwealth and the States, and upon which federation, as I have said, was based. It was never stated, suggested, or even contemplated, that there would be an annulment of the partnership to which I have referred ; if it had . been suggested, federation would not have been consummated when it was. This financial partnership was undoubtedly the main basis upon which federation rested, and without which we would not have had a federation of States. I do not think any one can gainsay that fact. That brings us up to the present time when the whole position has again to be reviewed. What is the proposal? Not to make some re-adjustment of the terms of the financial partnership, but to dispense with it altogether. {: .speaker-JZR} ##### Senator Ogden: -- And not to substitute anvthing in its place. **Senator Sir HENRY** BARWELL.The Minister says that the Government has some proposals in view, which at some future date it will bring forward. {: .speaker-KN7} ##### Senator Guthrie: -- Has it not suggested that it intends to vacate certain fields of taxation in which the States will be allowed to operate? **Senator Sir HENRY** BARWELL.That is in connexion with the present proposal, with which I shall deal in a moment. We are asked, as **Senator Greene** said, to sign a blank cheque. The idea is to remove the main foundation upon which federation rests. With what result? Undoubtedly, the weakening of the whole structure, thus undermining federation. I agree again with the point so forcibly put by **Senator Greene,** that it will be only the beginning of the end of federation, as we know it, if the Senate agrees to this bill. It will mean the financial strangulation of the States. The Commonwealth does not know what to do with its surplus revenue. Its only difficulty is to keep its expenditure up to its receipts, while the States are at their wits' ends to find oven sufficient money to carry on most urgent public works. {: .speaker-JRW} ##### Senator Crawford: -- That cannot he said of Queensland. That State is throwing money away in every possible direction. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- Queensland may be spending money freely, but there are many directions in which it could be more wisely expended. {: .speaker-JRW} ##### Senator Crawford: -- It certainlyis not wise expenditure. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- The same could be said of New South Wales, where public money is being wasted in various directions. But supposing those States were proceeding, as other States are, and legitimately spending money, there -would not be sufficient to carry out themost, urgent public works with the funds at their disposal, even with the assistance they are receiving from the Commonwealth. The Senate has to face the position. There is no doubt that the people of Australia are looking to the Senate - the chamber specially constituted to safeguard the interests of the States - to see that their rights are not in any way infringed. I ask honorable senators to follow mewhile I put before them certain aspects, which they should consider in deciding the path of duty which they, as members of this Senate, should tread. In the first place, there is the fact I have already stated, that there is, and has been ever since federation, a financial partnership between the Commonwealth and the States. The first question I am going to ask honorable senators to consider is this : Is there any necessity why this financial partnership should be annulled? Let us consider it first from the view-point of the Commonwealth. There is certainly no reason why there should be any annulment of the present partnership. {: .speaker-K8P} ##### Senator Thompson: -- It is an adjustment, not an annulment. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- It is nothing of the kind. If it were an adjustment, I should be adopting a totally different attitude. How can the honorable senator say it is an adjustment? We are being asked to sign a blank cheque. {: .speaker-K8P} ##### Senator Thompson: -- It rests with the States. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- It is simply an annulment of the partnership. If we pass the bill the arrangement existing between the Commonwealth and States will be terminated. {: .speaker-K8P} ##### Senator Thompson: -- It rests with the States, to confer with the Commonwealth Government in making an adjustment. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- Not at all. The Commonwealth are saying of this scheme, " Take it, or leave it." Why should the States be placed in that position? {: .speaker-JRW} ##### Senator Crawford: -- No adjustment could be made without parliamentary authority. **Senator Sir HENRY** BARWELL.If, as the Minister says, the Commonwealth is anxious to do justice to the States, and is prepared to substitute some other proposals, it ought to withdraw the bill for the time being, bring forward its proposals, and let us at least know what they are. It is useless for it to say, " We cannot come to an arrangement with the States." It is not a question between the Commonwealth. Government and the State Premiers at the present time, but one which this Parliament should decide. If the Government cannot get the States to agree it should at least come forward and say to Parliament, " Here are our counter-proposals which we intend to substitute for the financial payments we are at present making." lt docs not do anything of the kind. {: .speaker-K0F} ##### Senator Pearce: -- We have already done that and have been met with the reply that the States will not consent to the withdrawal of the *per capita* payments. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- I have heard that before. We have now passed that stage and the question is one between the Government and Parliament. Let the Government submit definite proposals. It could' make its proposals now, not to the Premiers of the States, but to the Parliament, which is the proper authority. {: .speaker-K0F} ##### Senator Pearce: -- That is what we intend doing. {: .speaker-JXZ} ##### Senator Duncan: -- The debate should be adjourned until we have that in formation. **Senator Sir HENRY** BARWELL.Yes, the bill should be withdrawnuntil we know what is proposed. We have nothing definite before us. Honorable senators must admit that under this bill the States will be financially embarrassed. We have been told that certain proposals are to be submitted, but we have not the slightest indication of what they are. {: .speaker-K0F} ##### Senator Pearce: -- Because we wish to give the States an opportunity to express an opinion. **Senator Sir HENRY** BARWELL.The Government should withdraw the bill. {: .speaker-K0F} ##### Senator Pearce: -- The States will not meet us. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- We should have the opportunity of saying whether, inour opinion, to proposals of the Government are fair. {: .speaker-K0F} ##### Senator Pearce: -- The States would still have to be consulted. **Senator Sir HENRY** BARWELL.The matter is in the hands of the Government, which can forceits will upon the States. It should submit its proposals, so that we can see if the States can reasonably accept them {: .speaker-K0F} ##### Senator Pearce: -- Weshall do that. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- The bill should be withdrawn until that has been done.we would then know where we were. We do not know at presentwhere we stand; we are asked to vote in the dark. No annulment is necessary from the point of view of the financial requirements of the Commonwealth, because the Commonwealth treasury is overflowing beyond the most sanguine expectations of the Treasurer. {: .speaker-JZR} ##### Senator Ogden: -- Yet the States must " toe the line." {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- The annual surplus of the Commonwealth is so great that it is almost a reflection upon the budgeting methods of the Treasurer. Seeing that annulment is not necessary from the point of view of the financial requirements of the Commonwealth let us consider whether it is necessary, from the point of view of the States. The unanimous opposition of the States to the proposal is sufficient evidence that annulment is not necessary from their point of view. There remains yet a third question : Do the people want it?. . With that aspect of the question **Senator Greene** dealt effectively this afternoon,, After all, "he electors of Australia ought to be the masters of the situation. From them alone the Commonwealth derives its power to administer the affairs of the country and to dispose of its revenue. Members of Parliament are only the representatives of the people who send them here. As members of this Parliament, it is our duty to carry out the will of the people. Although frequently Ministers of the Crown act as though they were the masters of the people, they are, in reality, only the people's servants. It is their duty to carry out the wishes of the people. The Leader of the Senate said that the Government had received a mandate from the people for this proposal. I shall not traverse that argument, because it has been ably dealt with this afternoon by **Senator Greene.** Because some passing reference to the financial relations of the Commonwealth and the States was contained in the policy speech of the Prime Minister - the flimsiest of generalities - the Minister now says that the Government has received a mandate to introduce this measure. Any one who has had ministerial experience knows that, if a government is seeking a mandate from electors upon a matter of importance - and surely this is a matter of importance, seeing that it goes to the basis of the federation - it must be clear in the exposition of its policy. But, apart from that aspect of the question, there is abundant evidence that the Government's proposal is contrary to the will of the people. The Government may succeed in forcing this measure through Parliament, but it will eventually find that the will of the people cannot be thwarted with impunity : the people will assert their authority when given the opportunity. For any government to adopt the high-handed procedure which has been indulged in by the present Ministry in this matter is to commit political suicide. Speaking at a recent meeting of the Australian Women's National League, the Prime Minister said - >The very disastrous and undesirable feeling existing between the Commonwealth and the States will be overcome, and they will come together again and work in a spirit of cordial and mutual understanding for the benefit of all the people of Australia. How little the Prime Minister knows the feelings of the people of Australia, if he thinks that they will come together again without first seeing this wrong righted and the perpetrators punished. Undoubtedly the people will assert their authority. It is evident from the remarks of the Prime Minister at that meeting, that he is not acting blindly ; but that he knows that he is flouting the will of the people. In effect, he says, " Never mind ; they will get over it." There is no possibility of their getting over it. If this were a matter upon which public feeling was fairly evenly divided, or if there were only a small majority opposed to it, there might be some hope of its being forgotten; but where the feeling against the bill is almost unanimous - it certainly is overwhelming {: .speaker-K3L} ##### Senator Sampson: -- How does the honorable senator know that? **Senator Sir HENRY** BARWELL.Does **Senator Sampson** not know it? {: .speaker-K3L} ##### Senator Sampson: -- I do not. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -Perhaps I can enlighten the honorable senator. First, practically the whole of the press of Australia is against the withdrawal of the *per capita* payments. In the face of such unanimity, can we doubt that they represent public opinion ? {: .speaker-KPQ} ##### Senator Kingsmill: -- The opposition comes from those newspapers which lead as well as from those which follow public opinion. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -Exactly. When the press of Australia is almost unanimous on any subject its views can safely be regarded as a reflex of public opinion. Then there is the significant fact that the various political organizations throughout the country arc against this measure. While numerous organizations have passed resolutions against it, not one organization has passed a resolution in its favour. The Minister the other day said that the National Federation in Victoria did not endorse a resolution from a country branch in opposition to this measure. {: .speaker-K0F} ##### Senator Pearce: -- The resolution was rejected. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -That does not necessarily mean that the federation favoured the' Government'3 proposal. Does not the Minister think that if the meeting had been in favour of the action of the Government it would have passed a resolution to that effect? {: .speaker-K0F} ##### Senator Pearce: -- It was not asked to do so. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- The whole matter was before the meeting, which could have passed any resolution, cither for or against the Government's proposal. It refrained from endorsing a resolution condemning the Government. {: .speaker-K0F} ##### Senator Pearce: -- That was not the motion. **Senator Sir HENRY** BARWELL.The resolution was not endorsed by the meeting because those present desired to save the face of the Government. {: .speaker-K0F} ##### Senator Pearce: -- A resolution that the *per capita* payments should not he discontinued was rejected. **Senator Sir HENRY** BARWELL.The fact remains that although the meeting may not have endorsed that resolution from a country branch, it refrained from passing a resolution in favour of the Government's proposal. It is clear that throughout Australia even that organization, which usually stands behind the Government, is not supporting it on this occasion. I have in my pocket a telegram which I received to-day from an organization in South Australia which usually stands behind the Government, asking me to use all my influence to defeat this proposal and to endeavour to persuade others to do the same. Should the evidence that I have given that the press of Australia and the various political organizations are opposed to this measure not be sufficient to convince honorable senators, I ask them to consider the attitude of the Governments and the Parliaments of the various States. They are unanimous in their opposition to this proposal. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- The opposition comes from all parties. **Senator Sir HENRY** BARWELL.Yes; and the fact should make the Government pause. Surely such united and determined opposition should cause this Senate, which has been specially constituted to safeguard the interests of the States, to hesitate before recording a vote in favour of this bill. If in a matter of such vital importance to the States the Senate fails to fulfil the purpose for which it was constituted, the last argument in favour of the retention of the Senate as a part oF the legislative system of Australia falls to the ground. In this proposal there is a clear-cut issue between the Commonwealth and States. In such circumstances it surely is our duty to stand by the States, and to see that their interests are not infringed. The will of the people of Australia has been clearly expressed. Will honorable senators say that the States do not know what their own interests are ? Will they say that that which the Commonwealth Government seeks is in the interests of the States, notwithstanding their united and determined opposition to it ? There can be no question that public opinion throughout Australia is behind the States, and opposed to the Commonwealth Government in this matter. What is this public, whose opinion is against this proposal ? {: .speaker-JRW} ##### Senator Crawford: -- It is a very silent public. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- It is not. Surely its voice has been made known in every part of Australia. We must not lose sight of the fact that the same public which elects members of the Federal Parliament has its representatives also in the State Parliaments. {: .speaker-JRT} ##### Senator Cox: -- What did the *Age* say to-day ? **Senator Sir HENRY** BARWELL.Senator Cox has just awakened. I dealt a quarter of an hour ago with the attitude of the press towards this question. I shall not be drawn off the track by the honorable, senator, whom I advise to go to sleep again. Our duty as representatives of the States is to carry out the will of the people. There cannot be two public opinions in this matter, because there is only one public. {: .speaker-K8L} ##### Senator THOMAS:
NEW SOUTH WALES · NAT -- Will the honorable senator read what- the Sydney *Daily Telegraph* says? {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- I shall not comply with the honorable senators request to read a column and a half from that newspaper at the present moment, but shall pass on to the Prime Minister's statement, that the States have no moral claim to any payment by the Commonwealth. {: .speaker-K0F} ##### Senator Pearce: -- To any share in the Customs revenue. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- **Senator Pearce** knows well that the *per capita* payments are not made to the States as a share of the Customs revenue. If he attempts to hedge in that way, I shall not attempt to follow him. {: .speaker-K0F} ##### Senator Pearce: -- That was the claim put forward by the States at the conference. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- That has nothing to do with the Prime Minister's argument that the States have no moral claim to any payment by the Commonwealth. The moneys paid to the States by the Commonwealth are not derived solely from Customs taxation. {: .speaker-K0F} ##### Senator Pearce: -- The claim made by the representatives of the States at the last conference was that they had a moral right to a share of the Customs and excise revenue. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- Yes; but the right honorable gentleman said that they had no moral claim to a share of Commonwealth revenue. {: .speaker-K0F} ##### Senator Pearce: -- I did not say that. **Senator Sir HENRY** BARWELL.I am sure that every honorable senator who listened to the Minister took his remarks to mean that. {: .speaker-K1L} ##### Senator Barnes: -- Unmistakably. **Senator Sir HENRY** BARWELL.For once, at all events, I have a strong follower in my honorable friend opposite. The right honorable the Minister knows that any claim by the States to a share in the Customs and excise revenue ended in 1910, but he goes further, and says that the States have no moral claim to what the Commonwealth is now seeking to take from them. Usually I do not care to quote, but since the Minister made several quotations, I should like to place on record the opinions, not of men who do not count for much in the scheme of things, but of men who may be regarded as the founders of the federation. Let me read first of all the opinion of the late **Sir George** Reid, conveyed in a letter to the Hon. John Murray, Premier of Victoria, who presided at the 1909 Interstate Conference - >I am more responsible than any man for the termination of the Braddon clause. But I never wished to allow the States less than a fair share of Customs and excise revenue, which is the only way in which the States can receive revenue from the masses of their inhabitan's. The object of this letter is to make that sure for all time. > >Idonot wish to introduce any views of my own, except to state that there are one or two main points in which I think the States should be considered, viz: - > >They should have a fair share of the Commonwealth revenue. > >That share should be on a *per* capita basis. > >lt should increase automatically with the growth of the revenue and population, or at least with the population growth. > >There should be no other point of contact in matters of revenue between the Commonwealth and the States. I come now to the view expressed by the Hon. C. G. Wade, K.C., Premier of New South Wales, at the Interstate Conference in Melbourne in 1908 - >The idea dominant in the minds of the Federal Convention all through was that there must be some guarantee of a definite, clear, and precise character as to the solvency of the various States. . . . When the Braddon clause was introduced the views of prominent members of the Convention were in entire accord with it, and when it was modified a concurrent clause was introduced allowing the States to have financial assistance from the Commonwealth.It was put in as a further inducement to the States to vote for the scheme, the understanding being that their solvency should be protected. The late **Sir William** Lyne, speaking at the 1897 Federal Convention in Sydney, expressed his views in these words - >If you are going to destroy your States by taking away the money they should receive, and put them in such a position that they cannot raise revenue, except by direct taxation of a very heavy character, you must bring them so low that you might as well have unification everything being managed directly by the Commonwealth Government and the system of shires and boroughs being extended all over the continent. That is what is happening. It is clear that what the States are getting at present by way of *per capita* payments comes from the general revenue which, in its turn, comes largely from the Customs and excise duties. That source of revenue which, when federation was inaugurated was taken from the States, had permitted them to tax practically the whole of their people indirectly; but under the existing financial arrangement they have been getting some portion of it back. If this bill is agreed to, the States will lose practically the only means bv which the whole of their people can be taxed. With what result? The States will be forced to increase their direct taxation, and in all probability will seek to make up the loss of revenue by a heavier income tax, which comes from a very small section of the people in each State. For example, in South Australia, which has a population of over 600,000, there are only about 48,000 payers of income tax. What is now happening was forecast by **Sir William** Lyne. I come now to the view expressed by the Hon. Bruce Smith, K.C., as reported in *Hansard* in 1910- >The Premiers recognized that 25s. per head, which, roughly speaking, represents about onehalf of the present Customs revenue, was a fair amount. ... I then considered, and now consider, that 50 ner cent. of the Customs and excise revenue is a fair allocation. Some honorable members have talked of a payment for ten years as if it were to be the final provision of the Commonwealth. It is nothing of the kind. Those remarks, I remind honorable senators, were made in 1910. Here we have one of the leading public men of the Commonwealth putting it on record that because the financial arrangement with regard to *per capita* payments was to be limited to a period of ten years it must not be assumed for one moment that it was to be a final provision of the Commonwealth. I quote now the opinion of the late **Mr. Alfred** Deakin, who took part in the debate at the 1897 Federal Convention - >Federal government might be, and, in my opinion, ought to be, introduced with a guarantee to each Colony of the return to it of the sums it at present receives from the sources which the Federal Government takes over; of course, deducting the cost of the departments which the provincial Governments at present pay in order to obtain the revenue; and I would make that guarantee obtain, not for five or 20 years, but for all time. At the third session of the Federal Convention, held in Melbourne in 1898, **Mr. Deakin** expressed his views in these words - >As I understand the position, we all admit that, in federating the services, the States must not bo deprived of that gain which they have been deriving from them in the past- upon which their past budgets have been built, and on which their future budgets must also be built - unless their whole financial systems are to bc dislocated. . . . These States must necessarily grow, and as they grow the Commonwealth revenue necessarily increases; and as the Commonwealth increases possiblythe State requirements from the Commonwealth may increase also. **Sir George** Turner, in presenting his first Federal Budget, as Treasurer of the Commonwealth, said - >Another grave responsibility resting upon us iswith regard to the way in which we frame our tariff. We are bound to, as far as practicable, give back to each State about as much as it would have received if federation had not taken place, and, in addition, there is a responsibility to provide for the expenditure of the Commonwealth. Whatever tariff we, in our wisdom may pass may not realize our expectations, and, therefore, whatever, views we may hold we must be extremely cautious not to do anything to endanger the solvency of the States. In the Customs duties we have taken from the States their most elastic and most important source of revenue, and it is our bounden duty to do everything we can to preserve their solvency, and prevent them from being placed in a dangerous position. {: .speaker-KN7} ##### Senator Guthrie: -- Is it not true that the financial obligations of the Commonwealth and State Governments have been interfered with owing to the fact that the Commonwealth Government is now carrying a war debt of over £400,000,000? {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- I do not dispute that for one moment. I realize that the obligations of the Commonwealth have to be met. But that does not touch the problem arising out of the financial partnership between the Commonwealth and the States, and the right of the States to a share of what we may call the "easy money" which comes byway of Customs and excise duties from the great multitude of the people. I now quote the opinion expressed by the Honorable I. A. (now **Mr. Justice)** Isaacs, who was a member of the Federal Convention in Melbourne in 1898 - >I think we have made a mistake in not properly guaranteeing the States against the loss that may accrue from the giving up of the Customs revenue. I strenuously hold to the opinion that the States ought to be guaranteed against that loss. But when you go beyond that, and introduce a provision allowing any State to come forward and ask, not for rights, but for favours, I say that such a provision is foreign to the Constitution. If we look at what has been done in America, we shall see the abuses to which a course of this kind may lead. . . . Nobody ventures to assert that the States are insolvent, but if you take away their revenue, and leave them their liabilities, they stand an extremely good chance of becoming insolvent. The late Lord Forrest, speaking at the Melbourne convention, said - >All we desire to say is that three-fourths of the Customs revenue shall be returned to the States. Unless the States have some security of this kind the people cannot bo expected to accept the bill. . . . It is like beating the air to tell us that we are to give up our great revenue producer - the Customs - and that we are to have no guarantee whatever that any part of that money will bc returned to us, although we shall each have to provide for the payment of interest on our public debts. The late Honorable John Henry, of Tasmania, speaking at the Federal Convention in Adelaide in 1897, expressed his views thus - >Without throwing on the Federal Government a specific and definite obligation, no matter what their revenue may be and how they resist it, of providing a sum of money sufficient for the requirements of the States, it will be unsafe for the States financially to enter into the federation. The Honorable J. W. Evans, the then Premier of Tasmania, at the second Federal Convention, said - > **Sir Edward** Braddon, when he brought forward that historic clause. intended that it should be passed in perpetuity, in order to give the States sufficient revenue from the transferred revenue-producing sources to enable them to maintain their financial equilibrium. I have made these quotations because they represent the opinions of men who played an important part in the political history of the Commonwealth, and because their views are worth recalling. Clearly, the people have always wished that the finances of the Commonwealth should be distributed in a fair and reasonable way. They are not satisfied to see the Commonwealth' coffers overflowing, as at present, whilst the State Treasuries are starved. **Senator Greene,** ' this evening, compared the respective functions of the Commonwealth and State Governments. I freely concede that the Commonwealth Government discharges very important national functions, but many people hold that, particularly in times of peace, they are less important than the functions of the State Governments. Actually, the functions of the Commonwealth and the States are complementary; they should dovetail in one -with the other. There should be no administrative overlapping and no friction between administrative authorities in the discharge of their respective obligations. As one who has had considerable State administrative experience, I say without hesitation, that the Commonwealth Government does not understand the difficulties of the States, and it is evident that the Ministry is determined to have its own way in this matter, regardless of the effect which its policy may have upon the finances of the States. Recently the South Australian Government appointed a royal commission to inquire into and report upon the disabilities of that State arising out of federation. Expert evidence was given to the effect that, if these proposals of the Federal Government are agreed to, they will not only result in considerable loss to South Australia, but also inevitably lead to very serious financial embarrassment. {: .speaker-JRW} ##### Senator Crawford: -- A great deal of evidence was given against the *per capita* payment. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- I do not believe in the *per capita* payment; I do not think that it is an ideal system. I quite agree that there should be an alteration, and that the financial relations of the Commonwealth and the States should be placed upon some other basis ; but I want to know what is to be substituted for the existing system. {: .speaker-KN7} ##### Senator Guthrie: -- I am glad to hear the honorable senator say that he does not approve of the *per capita* payment. **Senator Sir HENRY** BARWELL.What I have said is that it is not an ideal system. If it were, States like Tasmania and Western Australia would not need to have special grants made to them by the Commonwealth Government. {: .speaker-KOJ} ##### Senator H Hays: -- Grants to the State3 would still have to be made under section 96 of the Constitution. **Senator Sir HENRY** BARWELL.That is true, as the Constitution stands. Consideration of that matter might lead to an alteration of the Constitution, under which payments by the Commonwealth to the States might be based on the disabilities that are suffered by the States under federation. Those disabilities differ considerably in the case of each State. In a primary producing State like South Australia they are very much greater than in Victoria and New South Wales. {: .speaker-KN7} ##### Senator Guthrie: -- Under the system of *per capita* payments the wealthier States receive the largest amounts. **Senator Sir HENRY** BARWELL.That is perfectly true. I am not arguing in favour of a permanent retention of the *per capita* payments, but against the annulment of the financial partnership between the Commonwealth and tho States, under which at the present time those payments are made. All that I say is that the financial partnership should be continued, but that the payments might be made upon some other basis. The Government has no right to ask us to annul the financial partnership -without telling us what it proposes to substitute for the existing system. I was dealing with the royal commission which was appointed in South Australia to inquire into the disabilities to that State arising out of federation. The Public Actuary of South Australia, a very able man, said in evidence - >The abolition of the *per capita* payments, and the withdrawal of the Commonwealth from the field of direct taxation, will seriously aggravate the disabilities of South Australia under federation. He summarized his evidence in a few words, and gave his deductions thereon. That summary and those deductions are as follow: - {: type="1" start="1"} 0. A high tariff increases prices, cost of living, and wages. 1. A high tariff results in a bounding revenue to the Commonwealth Government, and increases expenditure by the State Governments, at the same time depreciating the purchasing power of the *per capita* grant. 2. The decrease in the purchasing power of the pound has almost halved the purchasing power of the *per capita* grant. Deduction. - The *per capita* grant should be increased so as to bear an equitable relation to the Customs revenue. {: type="1" start="4"} 0. The principal effect of the tariff upon Australian industries has been to penalize primary industries for the benefit of secondary industries; 1. A tariff penalizes most those States which are dependent upon primary industries; 2. A tariff extracts the highest *per capita* levy from those States which arc least self-contained and have the largest imports per inhabitant; 3. Federation has penalized those States with less than the average wealth per head. The wealth per head of South Australia is less than in any State except Tasmania; 4. The tariff has benefited most of the States of Victoria and New South Wales, whilst penalizing most the States of South Australia, Western Australia, and Tasmania. Deduction. - While the principle of payments to the States from the Commonwealth should be retained, the payments should not be upon a *per capita* basis, but adjusted so as to remove the disabilities of certain States. {: type="1" start="9"} 0. The combination of per capita payments with federal direct taxation has, to some extent, ameliorated the inequities of federation. Deduction. - The abolition of *per capita* payments, and the proposed withdrawal of the Commonwealth from the field of direct taxation. will aggravate the disabilities of South Australia. I stated just now that the *per capita* system is not just and equitable, and that there should he some alteration. I also pointed out that the fact that Tasmania and Western Australia are dependent upon the Commonwealth Government for special grants to enable them to carry on their activities, proves that the system is not ideal. What will be the position of those two States when the *per capita* payment is withdrawn? {: .speaker-JZR} ##### Senator Ogden: -- They will have to impose a greater amount of direct taxation. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- Exactly. That extra taxation will fall on the people upon whom the States are dependent for the continuance of their industries. Industry will be paralyzed if a greater amount of direct taxation is imposed upon those particular people. It is all very well for the Commonwealth Government to say that the States can reimpose the taxation which the Commonwealth forgoes . If Commonwealth Ministers had had a week's experience of the administration of a State, they would know better than that. The matter cannot he settled in such a simple way. The disabilities of South Australia, Western Australia, and Tasmania will be enormous if these proposals are agreed to. The evidence of the Public Actuary that I have read was supported by that of other expert witnesses, one of the most prominent of whom was **Mr. Alexander** Leslie Mackay, lecturer in economics, economic history, public administration, and finance at the Adelaide University. He expressed the opinion that very serious financial embarrassment would be caused to South Australia by these proposals. Such evidence proves that it is nothing but mad folly for the Commonwealth Government to continue along these lines. It is pure humbug for the Prime Minister, or any other Minister, to say that the Government has no desire to cause serious embarrassment to the States. Serious embarrassment will be caused to some, if not to all, of the States. Possibly when the Government launched these proposals it was entirely ignorant of the mischief that would result. It may have been misinformed or illadvised. But when it has the evidence of financial and administrative experts of the highest calibre in Australia, tothe effect that these proposals will result in serious embarrassment to the States, it is wicked for the Government to persist with them. However much it may desire to possess itself of the easy money that is obtained from Customs and excise duties, it must admit that there is not an urgent necessity for the passage of tha bill at the present time. There is any amount of time *to* probe the opinions that have been, and are still being, expressed regarding the financial embarrassment that will result.[ *Extension of lime granted.]* The Government does not allege that there is an urgent necessity for this proposal, because it is unable to do so. The whole of its case appeal's to revolve round what is called the inherent viciousness of theper *capita* system, because it involves the raising of money by the Commonwealth Government for expenditure by the States. The absurdity of that contention is illustrated by the fact that the existing system has been the practice since federation was inaugurated 27 years ago, and has worked without difficulty c r serious objection on the part of any Government except that which is now in power. {: .speaker-KPQ} ##### Senator Kingsmill: -- Yet this Government initiated the Federal Aid Roads Grant! {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- I intended to mention that. As **Senator Greene** stated during his speech, no federation in any part of the world can be mentioned in which there is not a division of finance between the federation and the States. {: .speaker-JRW} ##### Senator Crawford: -- The honorable senator cannot point to a federation in which there are sovereign states in the sense that we have them. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- That does not touch the question in any. shape or form. What does it matter whether such states are sovereign or not? As **Senator Kingsmill** stated just now by interjection it is an absurd anomaly to have this contention of inherent vicious ness advanced by a Government that is foisting upon the States, against the will of some, money to be expended upon roads within the States. I am sure that the Government cannot be serious in its argument that the system is inherently vicious. There is another point that has not been mentioned, but to which I should like to direct the attention of honorable senators generally, and thu Leader of the Senate in particular. I am not at all sure if the Commonwealth went right out of the field of direct taxation and became entirely dependent for its revenue on Customs and excise duty that it would be an ideal system. The bait the Commonwealth is holding out to the States is that if they will agree to the abolition of the *per capita* payments the Commonwealth will get right out of land tax, estate duties, and entertainment tax, and will forgo 40 per cent. of the income tax with the idea ultimately of going right out of the income tax arena, and so right out of the field of direct taxation. But supposing that all comes about - I do not think it will - the Commonwealth will be dependent solely for its revenue upon indirect taxation through Customs and excise duties, and that I say is anything but an ideal system. It is the duty of a government to budget neither for a deficit nor for a surplus, but simply for the money needed to carry on operations for the financial year. To do this a government must have an elastic system of taxation which can be increased or decreased according to the financial re- quirements of the year. Is a Customs tariff an elastic system of that kind? {: .speaker-K0F} ##### Senator Pearce: -- Yes, it is, in regard to liquors and tobaccos. **Senator Sir HENRY** BARWELL.The Government has told us over and over again that its tariff , is merely for the protection of industry. It is, therefore, not an elastic system of taxation that can be increased or decreased. It is not an ordinary revenue-producing instrument. {: .speaker-K0F} ##### Senator Pearce: -- But it contains revenue duties. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- That contention is somewhat different from the usual contention of Ministers that the tariff is merely protective in its incidence. If it is, it is not an ideal system of taxation on which to rely. As a matter of fact, no single system of taxation is an ideal one, not even if it is the single tax so frequently praised by **Senator Grant.** Looking at these proposals from every angle. I fail to see one sound or plausible argument in favour of them and when we find, as we do in this case, an almost unanimous public opinion against them, we can be pretty certain that they are faulty. I think it was Bancroft who truly said, " The public are wiser than the wisest critic." No government can be blind to a widelyexpressed public opinion. Our Government is simply stubborn on this matter, and stubbornness, as a rule, is a sign of weakness and not of strength. It was Bishop Whately who said, " If men were stubborn just in proportion as they are right, then stubbornness would take its place among the virtues, hut men are generally stubborn just in proportion as they are ignorant and wrong." Speaking somewhere last week the Prime Minister said : - > The Federal Ministry wished to prove that they are anxious to bring about harmony and to disprove the charge that they are seeking to dictate to the States. " Words sweet as honey," if I may quote Homer, "from his lips distill'd;" but words, mere words, words without deeds, and therefore words that are nothing worth! If one did not know the Prime Minister one would be inclined to say that these words were pure hypocrisy. {: #debate-8-s4 .speaker-KN7} ##### Senator GUTHRIE: -Bill knowing him as we do we know that they are honest. **Senator Sir HENRY** BARWELL Exactly. I say that if one did not know the Prime Minister or if almost any one else had uttered them, one might say that this statement was pure hypocrisy. It might he said of any one acting in the "way the Prime Minister is acting and at the same time using the expression that he is anxious to bring about harmony, and has no desire to dictate to the States. Just a word or two now in regard to the offer of the Government to hold a conference with the States. When? After the bill is passed; that is to say, after the Surplus Revenue Act has been repealed, and the States' share of the Commonwealth revenue is taken from them? Such an offer to the States is an insult. Surely no self-respecting State Govern, ment would dream of accepting it. While the financial partnership exists between the Commonwealth and the States, if any proposal is brought forward by either partner to make a re-adjustment of the terms of the partnership, a conference between the parties would be the correct procedure. But for one partner to deliberately terminate the partnership, and then say to the other, " I will have a conference with you as to how you should conduct your own affairs," is surely pure impudence. That is the position at the present time. If there is one atom of sincerity in the expressed desire of the Government to promote harmony between the Commonwealth and the States, if there is no desire to do injustice to the States, or, to use the words of the Prime Minister, to dictate to them, then let the Government withdraw the bill and continue the *per capita* payments, pending the holding of a conference, or a special constitutional session such as we have heard of from time to time, at which the whole question of the financial relationship of the Commonwealth and the States can be considered. If the Government will do this, I will be prepared to believe in its protestations of goodwill to the States, but if it is not prepared to do so, then I say that no rightthinking man or woman, no one who is not a mere political hack or is not blinded by pure party prejudice, could possibly .believe in the protestations that are made. The matter is now in the hands of the Senate, which exists for the very purpose of safeguarding and conserving the interests of the States. With what little power I possess, but with all the seriousness and earnestness that come from a full realization of the far-reaching importance of the provisions which are before us, I appeal to honorable senators to bring to bear on this matter some independence of thought. {: #debate-8-s5 .speaker-JZD} ##### Senator FOLL: -- Does the honorable senator think it is right to describe every man who thinks differently from him as a party hack? {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- I used the expression "party hack," but not in that connexion. {: .speaker-K8P} ##### Senator Thompson: -- The honorable senator should withdraw it. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL: -- I shall do nothing of the kind. I said that, in face of all the evidence that exists, in face of the opinions of experts throughout the length and breadth of Australia as to the ills that will fall upon the States, and as to the financial embarrassment that will come upon them if this bill is passed, I could not conceive of any rightthinking man, unless he was a party hack or blinded by party prejudice, supporting the bill. This matter ought to be considered altogether . apart from party considerations and party interests. As one who has had long experience in the administration of tha affairs of a State, I know that the provisions of this bill, if put into operation, will have a far-reaching effect upon the transactions of all the States, and a seriously disastrous effect upon the financial position of the smaller States in particular, and therefore, I strongly oppose the second reading. {: #debate-8-s6 .speaker-KMP} ##### Senator GRANT:
New South Wales -- I do not suppose that any question has come before the Commonwealth Parliament for many a long year, that has aroused keener discussion, not only in the Federal Parliament, but also in State Parliaments, and at conferences innumerable, than the division of spoils collected sit the Customs House. The whole of this trouble arises from the fact that Australia imports a large volume of goods made in low-wage foreign protectionist countries, and in coming through the Customs House those goods have to pay tax. It, is estimated that no less than £44,500,000 will be collected by the Commonwealth this year through Customs and excise duties, and it is no wonder that the various State Treasurers and some other people are most anxious to get their hands upon such a tidy *sum* of money. What a glorious position various State Treasurers would be in if the Braddon section still remained in force ! Instead of getting a miserable 25s. per head, which amounts to less than £8,000,000 per year, the States would get three-fourths of the total revenue - about £33,000,000- now collected by the Commonwealth out of Customs and excise duties. But I think the time must come - I do not say it ought to come now - when there should be a complete separation of the finances of the Commonwealth from those of the States. I have often wondered what is meant by " State rights." I now realize that the States are like hungry dingoes around a bone, the largest end of which is held by the Commonwealth, and that if the Commonwealth retains its hold the States will have to look for some other means of sustenance. I was glad to hear **Senator Greene,** a staunch protectionist, say that the Customs House was used principally to tax the poorer section of the community. Ostensibly, the Government believes in encouraging Australian industries; but the only industry which it is protecting is that of land-owning. It is determined to obtain all the revenue it can from the Customs in order to avoid the necessity of imposing direct land value taxation. **Senator Greene** appeared to be concerned with the position in which the States will be placed if this bill is passed, but they are not likely to be embarrassed. They will merely be compelled to obtain sustenance elsewhere. The total amount of the subsidies paid to the States for the year 1924-25 from the spoils collected at the Customs House, was, according to the latest *Commonwealth Year-Boole,* £7,472,779. Does any one with a knowledge of economics seriously suggest that the withdrawal of such a sum would ruin the States? I do not know why the Government has decided to bring forward this proposal with which is associated one to repeal certain forms of direct taxation, including the land value tax, which in many respects is imperfect. I would welcome the repeal of the Federal income tax, because I cannot conceive of anything more stupid than to impose a tax on incomes. A man should be entitled to retain what he earns for his own use. The Commonwealth Government and the States, true to the idea of taxing industry and penalizing those who produce wealth, have determined to continue to tax incomes. I should welcome the Commonwealth withdrawing from the field of income taxation and leaving that, field to the States if there were not other factors to be considered. An income tax is bad; but an entertainment tax is even worse. Why should a person who wishes to attend the theatre or a picture show be compelled to pay a tax? The Government also proposes to leave the collection of the estate duties to the States. I do not know how any self-respecting man can collect estate duties. If the bread-winner of a family dies and leaves his estate to his widow, a representative of the State Treasury insists upon her contributing estate duty ranging from 1 per cent. to 15 per cent. according to the value of the estate. When the unfortunate widow has complied with his demand she is immediately pounced upon by the Federal Taxation Commissioner, to whom she is compelled to make a further contribution. It is difficult to get a self-respecting citizen to act as hangman ; but there are many who are willing to act as taxation commissioners and compel a woman to part with the hardearned cash of her deceased husband. I am entirely opposed to the Government vacating the field of land value taxation, as that is a field in which it can legitimately operate. A return published in 1915 showed the value of the estates in the Commonwealth to be approximately £455,000,000; but it is more than double that to-day, and I suppose £1,000,000,000 would be a fair valuation. Notwithstanding that the owners of this enormous wealth pay to the Commonwealth revenue a nominal sum of only £2,000,000, the Government proposes to retire from the field of land taxation. {: .speaker-K8P} ##### Senator Thompson: -- The honorable senator is overlooking the land taxation levied by the States. {: .speaker-KMP} ##### Senator GRANT: -- The States at present have sovereign powers to tax land which some of them are exercising, but, generally speaking, only to a very limited extent. If one were to suggest to some of the State Treasurers that they should collect further money in the form of land taxation, they would be staggered. They are most anxious, however, to receive their share of revenue collected at the Customs house, because, as **Senator Greene** suggested, the bulk of it is paid by the poorer section of the community. The figures given on page 369 of the *Commonwealth Year-Book* show that the States would not be placed in a parlous, chaotic, or insolvent position, if the *per capita* payments were withdrawn. The land tax collected in the various States for the year 1924-25 was -
Cite as: Australia, Senate, Debates, 16 March 1927, viewed 22 October 2017, <http://historichansard.net/senate/1927/19270316_senate_10_115/>.