18 March 1927

10th Parliament · 1st Session

The Deputy President (Senator Plain) took the chair at 11 a.m., und read prayers.

page 643



Murder of White Prospectors

Senator GRANT:

– Can the Minister for Home and Territories say if the person or persons responsible for the murder of the white prospectors at Nakanai, New Britain, have yet been captured?

Senator Sir WILLIAM GLASGOW.No. Following upon a report of trouble at Nakanai a party of native polite in charge of an officer of the Administration established an advance post, and is continuing the inquiries as to the reason for the outrage, and will also endeavourto arrest the culprits.

page 643


Taxation Increases: Party Meeting

Senator GREENE:

(By leave)- I desire to make a personal explanation about two matters which arose in the course of the debate yesterday. When the Honorary Minister (Senator McLachlan) was speaking in support of the second reading of the States Grants Bill, he referred to a statement which I had made the previous evening to the effect that since this Government had been in office the taxation per head of population had increased by 12s. Id. The Honorary Minister endeavoured -to show that I had taken my figures from a speech delivered in another place by the right honorable member for North Sydney (Mr. Hughes), and that, consequently, I had fallen into his error. Unfortunately, I destroyed the notes from which I was speaking, but I have the rough notes from which I made my computation. The figures which I propose to give the Senate can be checked by any honorable senator, as they were taken from th« published records, and I venture to say bear out fully the statement which I made. My conclusions as to the taxation burden in 1922-23 were based on figures taken from the budget-papers of that year, which showed that the total collections from indirect taxation amounted to £49,885,017, made up of receipts from Customs, land, income, entertainment tax, war-time profits tax, and estate duties. The population of the Commonwealth at that time was 5,749,807. If honorable senators will divide the total of revenue received in that year by the population, they will find that the taxation per head works out at £8 13s. 4d. My calculations with regard to the taxation burden at the present time were based on the estimated figures for this year, and were taken partly from the budget papers and partly from the published records. I may add that the receipts of revenue up to the present show a surplus over that estimate. Roughly, the total was £56,900,000, and as the population was stated in the same budget-papers to have increased to 6,122,700, the per capita revenue from direct and indirect taxation amounted to £9 5s. 5d. and a decimal fraction. If we subtract £8 13s. 4d., the taxation per head of population in 1922-23, from the later figure, the increase in taxation is shown to bo 12s.1d. That is how I made my computation. The figures which I have given may be verified by any honorable senator who takes the trouble to do so. I do not say that my calculation is absolutely correct, but those are the figures.

The other matter to which I should like to refer is a statement made by Senator Cox during the same debate in reward to a. party meeting. I find somedifficulty in restraining myself from saying what I think about a man who can go to a party meeting of that nature and then mention individual names in this chamber. The honorable senator said that I was present at that particular meeting of the party. I was not. I received no notice to attend it, because I was not a senator at the time, for the simple reason that, owing to the peculiarity of the law, though I had been elected to the Senate and was a member ofthis chamber, I was not a senator. That is all I have to say.

page 644



Senator NEEDHAM:

asked the Minister representing the Prime Minister, upon notice -

  1. Is it a fact that the Prime Minister, in a letter to the Premier of New South Wales, staled that by an arrangement with Italy only 100 migrants a month were sent from that country ?
  2. If so, has the agreement been kept; and if not, why?
  3. What is the number of Italian immigrants that have come into Australia during the years 1923-24, 1924-25, and 1925-26?
Senator PEARCE:
Vice-President of the Executive Council · WESTERN AUSTRALIA · NAT

– The following reply has been supplied by the right honorable thePrime Minister : -

  1. No.
  2. See answer to 1.
  3. The following figures show the total arrivals of Italians during the years mentioned, also the departures and excess arrivals: -

page 644



Transfer of Public Service Board

Senator NEEDHAM:

asked the Minister representing the Prime Minister, upon notice -

  1. In view of the fact that a large number of civil servants will bo transferred to Canberra by September next, willthe Government arrange for the Public Service Board tobe transferred to Canberra by that date, so that they will be in a better position to deal with the administrative affairs of the Service?
  2. If not, why?
Senator PEARCE:

– The right honorable the Prime Minister has supplied the following answer : -

  1. The Public Service Board will establish at Canberra a section of its office when the first transfers arc made to the capital. This will enable it to deal with matters affecting that part of the central stalls of Commonwealth Departments which will first be removed to Canberra. The duties of the board and the factor of accommodation render it inadvisable at this stage for the entire board to be transferred this year.
  2. See answer to 1.

page 645



Senator GRAHAM:

asked the Minister representing the Minister for Works and Railways, upon notice -

  1. Has a start yet been made in connexion with the construction of a railway between Port Augusta andRed Hill?
  2. If not, when is it proposed to make a start?
  3. Will the line be completed within the time stipulated in the agreement?
Honorary Minister · QUEENSLAND · NAT

– The honorable the Minister for Works andRailways supplies the following reply: -

  1. No.
  2. The work cannot be commenced until the construction of the railway is authorized by Parliament.
  3. No definite time for the completion of this railway has been specified in the agreement.

page 645



Senator GUTHRIE:
through Senator Elliott

asked the Minister representing the Minister for Trade and Customs, upon notice -

  1. Have any alterations been recently made in the arrangements for the licensing of foreign aniline dyes for entry into Australia?
  2. If so, what are the altered arrangements and when did they come into force?
  3. Have the commercial agents of the various anilinedye manufacturing concerns represented in Australia been advised of such altered arrangements, if any?
  4. If the granting of licences hasbeen transferred to London, has the Minister for Trade and Customs arranged, or will he arrange, that the experts in control in London forward to the Customs Department in Australia samples of all aniline dyes licensed for Australia?
  5. Has the Minister arranged, or will he arrange, that samples of all aniline dyes licensed shall be tested against the samples upon which licence was granted in London?
  6. What quantities and values of Britishmade and German-made dyestuff’s respectively have been entered into Melbourne and Sydney respectively during the last seven months?
  7. What samples of foreign aniline dyes entered into Melbourne and Sydney during the past seven months have been examined to ascertain whether or not the dyes entered conformed with the licence granted?
  8. Have there been any rejections on the ground of nonconformity?

– The information is being obtained.

page 645


Second Reading

Debate resumed from the 17th March (vide page 594), on motion by Senator Pearce -

That the bill be now read a second time.

Senator ABBOTT:
New South Wales

– That this bill is of the utmost importance has been proved by the standard of the debate in the Senate, and the fact that it has been the means of concentrating the thoughts of the people and the press of this country upon the subject with which it deals. In another place it has been threshed out from every angle. It is admitted by all to be of such national importance that it ought to be considered along non-party lines, particularly by the members of this august chamber. It is unfortunate that so much heat has been engendered in the debate. I believe in freedom of speech and action, but at the same time I wain those who throw stones that they must be prepared for the rebound. I am a member of the Country party. In New South Wales I am called araraavis - whatever that may mean. - inasmuch as I was the first representative of the Country party to be returned to the Senate by New South Wales. My duty in this chamber is to support generally the lines of policy laid down by the composite Government, which has a mandate from the electors. When one considers that more than half the people of Australia have their habitation in country districts, and are bearing the brunt of the pioneering work that is necessary to advance the welfare of this Commonwealth., one must admit the claim of those districts to the consideration of the National Government. There are good men and true in this Parliament representing those interests, and they have representation also in the Government which is led by Mr. Bruce, than whom Australia has never had a better Prime Minister. He is ably assisted by Dr. Earle Page, who on two occasions has discharged the responsible duties of Acting Prime Minister. There is a feeling on the part of some parliamentarians that the Country party is more than fairly represented in the Government, and that a different allocation of portfolios ought to be made. There are only four representatives of the Country party in the Senate. They do not speak often; but when they do they always defer to the Chair, and do not descend to personalities.

Criticism having been levelled at the composite Government, we are entitled to study the achievements of that Government since it has been in office. It cannot be denied that, notwithstanding the ever-increasing expenditure of the Commonwealth, a number of economies ha vo been effected. This Parliament authorized the Government to enter into an agreement with the States for the joint collection of State and Federal income tax, by which the country has been saved £200,000 a year. It was also responsible for the initiation of the federal aid roads grant which is much appreciated by the country districts.

Senator Hoare:

– “We do not want the roads grant in South Australia.

Senator ABBOTT:

– The honorable senator belongs to the class of plutocrats who use aeroplanes. He should not represent the proletariat in this Chamber. I have no wish to mention the whole of the achievements of the composite Government; but I do say that, during its tenure of office, it has passed legislation which has received the approval of a majority of the people. Yet we are asked not to trust it ! Its behaviour during the last few years has proved that it can be trusted. It has done, is doing, and will continue to do, very good work. It increased the old-age pension payment from 15s. To £1 per week, and created a separate department for the organization of the export and marketing of butter, dried fruits, and other primary products. It initiated a beneficent policy of bounties to prevent the extermination of struggling industries.

Senator Findley:

– I rise to order. Have the past actions of the Government anything to do with the Bill?

The DE PUTY PRESIDENT (Senator Plain). - The honorable senator is quite in order; I take it that he is leading up to the point that he wishes to make.

Senator Findley:

– I want to know what. that point is.

Senator Givens:

– I rise to order. The point of order raised by Senator Findley having been decided, no further discussion upon it is permissible.

Senator ABBOTT:

– I am endeavouring to prove that we can trust the Government; that it is not a body of bushrangers, filibusters, or mountebanks. The action taken by the Government in establishing a sinking fund will automatically lead to the extinction of our war debt of £400,000,000 within the next fifty years. Surely that places the hall-mark of statesmanship upon it ! It has shown itself mindful of the interests of the country by extending telegraph, telephone, and postal facilities. Yet, notwithstanding the high character and the achievements of the Government, the opponents of this measure tell us that we ought not to trust it! .

Senator GREENE:

– That is not what I. said. My argument was that we should not be asked to trust it.

Senator ABBOTT:

– The conditions under which we live to-day are very different from those that existed when the Braddon clause, which provided for a refund to the States of three-fourths of of the Customs and excise receipts, was inserted in the Constitution on the establishment of federation, 26 years ago. That was a temporary provision, and was intended to last only until the federation got on its feet. In 1910 an alteration was found to be necessary, and it was provided that the States should receive a payment of 25s. for each head of the population. For the time, being it worked fairly well, but following the trend of the debates from that time we find that practically all the leaders of political thought in Australia have recognized that such a system is unjust and inequitable.

It is not necessary to dig into the archives to ascertain that statements made by certain leaders of political thought during the course of this debate are quite at variance with their previous utterances. On many public occasions and at various conferences opponents of this bill have previously advocated the abolition of the per capita payments to the States. The right honorable ~W. M. Hughes has said harsh things about those who are now endeavouring to deprive the States of these payments, but his attitude when he was Prime Minister was quite different. “We are asked to believe that

Codlin’s our friend, not Short. At the 1920 conference with the State Premiers Mr. Fihelly represented Queensland, and when the payments to the States were under discussion he asked Mr. Hughes whether he had any sense of equity? He said -

Either it is a fair thing to continue the subsidy to the States or it is a fair thing to take it away from them.

Mr. Hughes said ;

Do you want equity, or do you want the per capita grant?

Mr. Fihelly replied ;

We want equity, which means the per capita grant.

Mr. Hughes spoke in the same strain in 1920 - I am not going over the whole of the ground - and we know that a few years ago Mr. Watt, who was an acting Prime Minister, advocated the gradual reduction of the per capita grant by 2s. 6d. a year until it would be reduced to a minimum of 10s. per head.

Senator Pearce:

– And he offered the States no recompense.

Senator ABBOTT:

– On that occasion no quid pro quo was to be given to the States. If a few years ago Mr. Watt thought it advisable to make these reductions, it is clear that he could not have been in favour of the per capita payments. Does Senator Sir Henry Barwell, who has spoken so strongly against this bill, remember that when he was Premier of South Australia in 1923 he attended a Premiers’ conference at which the following resolution, in which he acquiesced, was adopted.

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

The proposal at that time was not merely to surrender all claim to the Customs revenue of the Commonwealth, but also to make certain payments to the Commonwealth if the latter evacuated the field of income taxation. That was Sir Henry Harwell’s attitude only a few years ago. Is Senator Greene, who is also opposed to the bill, mindful of the fact that in 1920-21 he was a member of the Hughes Ministry which advocated the withdrawal of the per capita grant? When the proposals were put forward, did he retire from the Ministry and ask Dr. Earle Page to take his place ? No. He remained silent. He did not raise his voice in opposition to them. Yet the other night we heard him trying to pose as the saviour of his country. I congratulate him on the very able manner in which he put up a very bad case; but did he say, “Yes, I was a member of the Ministry in 1920-21 when it was resolved to withd raw the per capita payments, but I omitted to tell my Leader or my electors in the north of New South Wales, that I objected to the proposal.” As a member of the Government of the day, he must be supposed to have held the opinion that it was necessary to withdraw the per capita payments.

Senator GREENE:

– I can give the honorable senator an explanation. The suggestion for the gradual withdrawal of the payments was not accepted, and I subsequently introduced a tariff which made the withdrawal unnecessary.

Senator ABBOTT:

– The honorable member, by the amendment of the tariff in 1921, imposed additional Customs duties on the people of Australia which dragged another ?1,000,000 from them, and the burden of them is largely borne by the country people. It would have been better for the Ministry to go on with its original proposal. I object to being -called a party hack. Senator Barwell, whose ability I admire, and for whose record I have the greatest respect, has referred to the supporters of the bill as partv hacks. It ha”s also been claimed by members of the National party who are in opposition to the measure that the whip of the Country party has cracked, and that members of that party have to vote for the composite Government. Senator Barwell has had the boldness to say that the knife of the assassin is being put under the fifth rib of the people of Australia, and Senator Greene has said that the Government armed with a gun in one hand and a revolver in the other, is bludgeoning the States. When honorable senators who are Nationalists make use of such expressions, they must not object if they get the retort courteous.

Senator Greene concluded his speech by taking honorable senators into his confidence, and saying, “Ha, ha! Now 1 can tell brother senators why the Government has brought in this bill. It is because there is a man in New South Wales called Bruxner who has said that the Country party forced Dr. Earle Page to introduce the bill.” Colonel Bruxner is a former Leader of the Country party in the New South Wales Legislature. Senator Greene would have us believe that the Government has brought down this bill because Colonel Bruxner and the Country party has forced it- to do so. As a matter of fact, he asserted that Colonel Bruxner had admitted as much, but I shall show what he did say. The report of his utterances on the 11th March appeared in several publications, and it is as follows: -

The late Leader of the Country party (Mr. Bruxner), commenting to-day on the per capita debate in the Federal Parliament, said, “New South Wales Country party members and their supporters are keenly interested in the debate in the Commonwealth Parliament on the States Rights Bill. They realize that opposition to the measure is not coming from the sincere wish to defeat it, but is being engineered by disgruntled place-getters to help to create a breach between the Prime Minister and Dr. Earle Page, and end in the Country party being pushed out of the Federal Ministry and so make way for some ambitious Nationalists.

State Country party members will await the result in order to see how the Nationalists may fare, because, if they fail in the Federal arena, it will materially influence the relationship between the two parties in the States.”

There is nothing in that report, nor has anything been published, to my knowledge, to indicate that either Colonel Bruxner, or the Country party, has brought pressure to bear on the composite Government to remove the incubus of the per capita payments. Senator Greene may have more information than I have, but it seems to me that the newspaper report which I have just read is a direct reply to his statement that the Government has brought this bill before Parliament at the instance of the Country party. As a matter of fact, the bill has been under consideration for quite a time, and it has been discussed at numerous Nationalist conferences. It is certainly’ not a newly hatched chicken. In view of the statements of Senator Greene and Senator Barwell, it is interesting to note that, in another place, eight Nationalists representing Queensland, sixteen out of seventeen representing New South Wales, and seven out of eleven representing Victoria supported the second reading of the bill. Of the 52 Government supporters in another place, only eleven, three of whom were independents, opposed it, so that only eight anti-Labour members voted against the second reading. Surely Senator Greene, Senator Lynch, and Senator Barwell will admit that the 41 members who supported the measure possess some intelligence, and should be able to determine whether the proposed arrangement is in the interests of the Commonwealth, and also of the States. An indication of the vote that will be recorded in this chamber on the second reading of the bill was given in the division on the amendment moved by Senator Lynch. It is unreasonable to assume that the majority in another place, and the majority which, I am sure, will vote in favour of the bill in the Senate, are not acting in the best interests of Australia. The few dissentients in this chamber have freely criticized the action of the Government, but have not submitted an alternative.

Senator Grant:

– I did.

Senator ABBOTT:

– The honorable senator referred only to single taxation, which is his pet subject.

Senator Duncan:

– The amendment to be moved by Senator Kingsmill embodies an alternative proposal.

Senator ABBOTT:

– But that is not yet before the Senate. It does not make the slightest difference to the taxpayer, if, instead of paying 10s. to the Commonwealth, and 10s. to a State, he pays £1 to a State authority. Under the present system, the Commonwealth Parliament passes legislation under which taxation is collected by the States, handed back to the Commonwealth, and then returned to the States. It is farcical to perpetuate such a system. When the per capita payment is withdrawn, it is proposed to give the States a quid pro quo, and, according to the figures, which are based on the Commonwealth vacating the field of income taxation to the extent of 40 per cent., land and entertainments tax, and estate duties, the Government will be allowing the States to collect the following amounts: - New South Wales, £3,300,000; Victoria, £2,700,000; Queens- land, £’850,000; South Australia, £730,000; Western Australia, £375,000; and Tasmania, £190,000. The States will be able to collect £7,787,000, and will receive £1,500,000 more than they are obtaining under the present per capita system, in addition to subsidies to Western Australia, Tasmania and South Australia. It must also be remembered that the direct taxation which the States will be empowered to collect is an increasing quantity. As the population of the Commonwealth becomes larger and the wealth of the community increases the amount collected by the States will be correspondingly higher.

We have been informed by Senator Greene that the Government intends to thrust a dagger under the fifth rib of the States, but we should not overlook the fact that, under this proposal, the States will not be embarrassed, and will have ample time in which to adjust their finances. There have been numerous conferences between Commonwealth and State Ministers, but up to the present a working basis acceptable to both has not been reached. The Prime Minister has during the past year or so invited the States to a conference to discuss the financial position, but the States have refused and still refuse the invitation. It is now proposed that the per capita. payment shall be withdrawn, not with the intention of embarrassing the States, but »o that there shall be a statute under which an adjustment can be reached. The Prime Minister, whom I am sure we all can trust, has given us a definite assurance that the States will have every opportunity to put their case before the Commonwealth, and that the decisions reached will not be adopted until Parliament has been consulted. Surely it is unlikely that we, as custodians of the welfare of the people of Australia, will do anything detrimental to the States. If they were strangulated, as some suggest, it would not be long before determined action would be taken to bring about unification, to which I am opposed. If the per capita payment is not withdrawn, and the Labour party should in years to come be in control of the treasury bench - which I do not think is at all likely - it might decide to withdraw the payment without giving the States a quid

Senator Sir Henry Barwell:

– What is the quid pro quo now proposed?

Senator ABBOTT:

– The States are to have the right to operate in certain field9 of taxation which are to be vacated by the Commonwealth.

Senator Kingsmill:

– -Who said so?

Senator ABBOTT:

– The Prime Minister, the Treasurer, and the Leader of the Government in the Senate have given us a definite assurance, which I am prepared to accept. Are we not entitled to show that we trust the Government that lias served this country so well by allowing it to withdraw the per capita payment, particularly as it is proposed to compensate the States?

Senator Sir Henry Barwell:

– The Government says that it will compensate the States, but in what way, and when?

Senator Pearce:

– That is what is intended.

Senator ABBOTT:

Senator Barwell did not submit any alternative proposal

Senator Sir Henry Barwell:

– The Government has not told us how it will compensate the States.

Senator Pearce:

Senator Barwell’s statement is absolutely incorrect; the Government is proposing to vacate certain fields of direct taxation in favour of the States.

Senator ABBOTT:

– Yes; and, as I have already mentioned the States will receive £1,500,000 more than they are obtaining under the present scheme We are giving them a quid pro quo. But if the per capita payments remained and the Labour party ever gained the treasury bench it could withdraw those payments and give the States nothing in their place. In that event the Labour Government would be in an Elysium, for with the financial strangulation of the States the whole power would be in its hands, and unification within sight. Is it not better that the present Government, whose word can be taken, should abolish the per capita payments, give the States something in return, and make the arrangement secure for a certain number of years ? I hope that the committee will decide upon a definite period during which any arrangement arrived at shall remain in force. That would enable, the States to know their position exactly.

Senator Lynch:

– In a business deal between two men. would the honorable senator advise his client to accept the verbal assurance of the other party to the contract (

Senator ABBOTT:

– I do not know what is done in Western Australia, but that is how business is often done in New South Wales. In such matters it all depends on the man. The States have had the opportunity to present their case at a friendly round table conference, but, like a child who, when asked for an explanation of his conduct, repeats “ I won’t,” they have done nothing except raise the plea of moral right. Hie present inequitable state of affairs should no longer be allowed to continue. That the States will be forced to meet the Commonwealth in conference, instead of doing so willingly, is their own fault. I am confident that when the conference does take place, in spite of the fact that the Commonwealth will be armed with an act of Parliament which abolishes the per capita payments, the States may rest assured of a fair deal. ]3ut, supposing that the assurances of the Government are worth nothing - supposing, as has been argued, that the Commonwealth Government does place a dagger beneath the ribs of the States - it could not long continue in office. The electors would give short shrift to any Government which failed to keep its promise to preserve the rights of the States.

Senator Sir Henry Barwell:

– Should not the passage of this bill be postponed and the whole matter be left open to discussion ?

Senator ABBOTT:

– The States have twice been invited to meet and confer with the Commonwealth, and they have’ refused on each occasion. Senator Barwell, when Premier of South Australia in 1923, attended a conference of State Premiers, at which he advocated the withdrawal of the per capita payments.

Senator Sir Henry Barwell:

– I still believe that the system should be altered, but I consider that the field should be left clear until the conference takes place.

Senator ABBOTT:

– The honorable senator did not say that at the conference in 1923. Instead, he subscribed his signature to the three resolutions- carried by the conference, in which no mention is made of any review of the whole financial question.

Senator Sir Henry Barwell:

– One of the arrangements then was that the

Federal Government should vacate the field of direct taxation.

Senator ABBOTT:

– The people of New South Wales are not agitated about thi? matter ; the agitation all comes from politicians.

Senator Needham:

– If the matter were submitted to a referendum the honorable senator would realize how great is the opposition of the people to the withdrawal of the per capita payments.

Senator ABBOTT:

– I repeat that the opposition to this measure comes only from the politicians and the press.

Senator Sir Henry Barwell:

– The agitation against the bill comes from the people, through their political organizations, regardless of party.

Senator ABBOTT:

– I know that the people of New South Wales and Queensland are behind this measure. If the people were so certain that the Government’s proposals would result in the strangulation of the States they would turn the present Government out of office before that would be possible. Senator Pearce not only brought this proposal before the Senate in a statesmanlike way, but he has also been prepared to answer every question put to him regarding it. The Government has withheld nothing; the full light of day has been thrown upon the bill. -I am confident that when our deliberations have ended, and the vote on this bill is taken, the people will applaud our action, and that, so far as their representatives in this Senate are concerned, there will be ho back-wash which will tarnish their reputation as the champions of State rights. The passing of this measure will increase the people’s regard for the Senate, in that they will recognize in honorable senators men of long vision, who have been prepared to remove an excrescence from the statute-book and substitute something business-like for it. The passing of this legislation will benefit the whole of the people of Australia.

Western Australia

– The proceedings in connexion with this bill have been most interesting. Into the placid waters of this Senate, which some people insist on regarding as a by-wash of the main stream, there has been dropped, with a portentous splash, a. stone of vast size and horrid shape, that has caused tre-

I’ll tell in simple language what I know about the row

That broke up our society upon the Stanislow.

And I share his opinion -

  1. . that it is nota proper plan

For any scientific gent to whale his fellowman.

And if a member don’t agree with his peculiar whim.

To lay for that same member for to “put a head” on him.

They also remind me of the further lines -

Then Abner Dean of Angel’s raised a point of order - when

A chunk of old red sandstone took him in the abdomen,

And he smiled a kind of sickly smile, and curled up on the floor,

And the subsequent proceedings interested him no more.

Inmy opinion, too much mud has been stirred up by the agitated movement of these fishy prototypes in this pool. The subject before us is worthy of calmer and better treatment than the Senate has given it. It matters very little to us what various gentlemen said in 1910 - I think that is the earliest date to which reference has been made. Senator Needham quoted some remarks made by me in that year. If the honorable senator had de

*States Grants* [18March. 1927.] *Bill.* 651 mistake of the same magnitude, its majority may disappear altogether. I suggest that things more unlikely than that may happen. God forbid that it should be so, because I assure members of the Ministry that I have nothing but good wishes for them, and I believe other honorable senators on this side share that wish with me. I can see plainly enough that if in the twelve months' probationary period that is to elapse before the provisions of the bill become operative, the Government makes one or two more mistakes like the referendum and the introduction of this bill, it may lose the majority which it commands now. I am quite uncertain what the majority 'is, 'because every time one of these cataclysms occur we have rifts that are hard to heal, and there is personal ill-feeling that is hard to patch up again. One reason why, in my judgment, the Government should proceed on its way with the utmost discretion, is that there (will be another Government possible, and if such a state of affairs as I ' have suggested comes about that Government will make and conclude the arrangements with the States which this Ministry seeks to bring about. And really it does appear as if this Government, by its tactics, is trying to make it possible for another Administration to secure possession of the Treasury bench, for whilst we are heatedly debating this measure, and whilst some of us, at all events, are flying at one another's throats, and saying unpleasant things about one another, there are State flections pending in South Australia and Western Australia, which might very easily damage the influence of the Government's supporters. Whether or not the people are frantic about the provisions of this bill, its discussion at this stage may prove the turning point which will lose to the National party both of (hose elections. I regret that fact; but we have to consider the measure, and I wish to make my position clear. With the principle of the bill I agree. I do not believe that the *per capita* payments are in the best interests of the people, but my desire is to ensure that the Government should go to the conference with the States bearing in its right hand gentle peace, not a sword. {: .speaker-K3L} ##### Senator Sampson: -- Nor a doublebarrelled gun. {: .speaker-KPQ} ##### Senator KINGSMILL: -- Exactly. Other honorable senators, during this debate, have mentioned the armoury in the possession of the Government, and have referred to the surgical processes, totally unnecessary, most of them, which it is said this Ministry wishes to carry out on the bodies of the States. What I wish to convey is that, in my judgment, the Government will have a much greater chance of being successful at the proposed conference if there is a known alternative to the scheme which will be submitted to the conference; subject, of course, to the fact that any other agreement may be reached in the meantime. Some honorable senators have spoken about the refuge of the States behind their claim on moral grounds to the *per capita* grants. It appears to me to be extremely probable, more particularly because of the bias which has been given to the coming State elections by the presentation and discussion of this bill during the last few weeks, that the States, having once advanced as an excuse for avoiding a conference that they have a moral right to the payments which they are receiving at present, will continue to take that stand, and even go to the length of accepting a crown of martyrdom in twelve months' time by still holding fast to their moral rights. The bill, unaccompanied by such an alternative as I have suggested- {: .speaker-JXJ} ##### Senator Needham: -- The honorable senator has no guarantee that there will be an alternative. {: .speaker-KPQ} ##### Senator KINGSMILL: -- It is true I have no guarantee; life is so uncertain. {: .speaker-K2L} ##### Senator Reid: -- **Senator Needham** is very doleful. {: .speaker-KPQ} ##### Senator KINGSMILL: -- The honorable senator always makes me mournful. Usually I am of a bright disposition, but **Senator Needham** always has a. most depressing effect upon me - he is a sort of *memento* *mori;* he is too well nourished to be the skeleton at the feast ; but in any case this debate is not a feast. {: .speaker-JXJ} ##### Senator Needham: -- I want to find out how the honorable senator is going to vote, and what is his alternative to this proposal. {: .speaker-KPQ} ##### Senator KINGSMILL: -- The alternative is not yet provided. It" is my ambition, within the next day of two, to present it to the Government. If it is ac- cepted, I shall support the subsequent stages of the bill. As the measure is at present, I shall be obliged to vote against it on the motion for the third reading if, in committee, the friendly suggestions which I shall offer to make it more acceptable are not accepted. {: .speaker-JXJ} ##### Senator Needham: -- What about the second reading? {: .speaker-KPQ} ##### Senator KINGSMILL: -- If the honorable senator had been listening to my earlier remarks, he would know what I propose to do. {: .speaker-JXJ} ##### Senator Needham: -- I have not been able to find out. {: .speaker-KPQ} ##### Senator KINGSMILL: -- That, possibly, is not my fault. {: .speaker-JXJ} ##### Senator Needham: -- The honorable senator is balancing himself very cleverly. {: .speaker-KPQ} ##### Senator KINGSMILL: -- My position is clear. Any honorable senator who believes in the principle but not in all the details of a measure may vote for the second reading, so as to have an opportunity in committee to rectify it with regard to certain details. If he is unsuccessful, he then is at liberty to vote against the third reading. {: .speaker-JXJ} ##### Senator Needham: -- That is too thin. {: .speaker-KPQ} ##### Senator KINGSMILL: -It may be too thin for my honorable friend, but it is thick enough for me; it will bear my weight. And, after all, I should like to remind **Senator Needham** that anything I do is my funeral, not his. I know that he bears such goodwill towards me that he would prevent me from rushing to my fate, but unfortunately in this matter I cannot, accept his good offices, and in any case I doubt very much if any advice which he might give me would be good for my political health. If the bill is not altered in committee in regard to certain details - I understand this is not a party ques- tion - I shall exercise my prerogative 1o vote against the third reading. In the not remote possibility of the States refraining from attending the conference, I wish Parliament and the people to have an assurance that no injustice will be done to the States through their refusal to accept the invitation. I do not think that the Government would in any circumstances do the States an injustice; but, as I have already pointed out, this Government's tenure of office hangs by a slender thread sometimes. The next time that such a grave tactical mistake as those to which I have alluded is made, it is quite possible that the thread may snap. I do not suppose that even my own personal friends amongst honorable gentlemen opposite would expect me to carry my friendship for them so far as to believe in them politically when it comes to dealing with the States, because at present they are opposed to the bill. They say that they do not approve of the withdrawal of the *per capita* payments. Their attitude is, I think., due to the fact that in their present mood any stick, even a crooked stick, is good enough to beat a dog with, even if it means the discarding of some of the political views which have been advocated by them for many years past. They appear to hold the belief that the dog in this case is not in such robust health as it used to be, and that a little more beating is likely to have a fatal effect. I do not wish to say anything about the genesis of this measure. With other honorable senators I am puzzled at its presentation, but I recall that sometimes it is thought to be necessary, in order to get a bill through Parliament quickly, to bring it on when the Parliament has very little time. On other occasions I have observed that this method of presentation of measures has had quite a stimulating effect on the success or otherwise of the particular bill in question. However, I am willing to forgive all that, and, as I have said, to support the second reading of the bill, in the houe that in committee certain desired amendments will be inserted. In these matters one must exercise one's personal judgment. That is the only safeguard. If the alterations I have foreshadowed are not made in the bill, I shall inevitably vote against the third reading. {: #subdebate-6-0-s2 .speaker-KOZ} ##### Senator HOARE:
South Australia -- Listening to the debate, one cannot escape being impressed by the arguments that have been used for and against this all-important measure. I do not know what action **Senator Kingsmill** proposes to take. I understood that he was opposed to the bill; but he appears to have smothered his conscience, because he has signified his intention of voting only against the third reading. {: .speaker-KPQ} ##### Senator Kingsmill: -- Certainly, if I do not get what I want. {: .speaker-KOZ} ##### Senator HOARE: -- The honorable senator knows perfectly well that he will not get what he wants. {: .speaker-KPQ} ##### Senator Kingsmill: -- Then it is certain that my vote will be cast against the third reading of the bill. {: .speaker-KOZ} ##### Senator HOARE: -- The honorable senator has a greater knowledge than I possess of what is in the mind of the Government. But I am practically convinced that neither he nor any other honorable senator who opposes the bill will secure any variation of its provisions. {: .speaker-KPQ} ##### Senator Kingsmill: -- Nothing is so bad that it is not susceptible of improvement, not even the Labour party. {: .speaker-KOZ} ##### Senator HOARE: -- There has been only one perfect man in the world's history, and he was crucified, so what hope is there for the honorable senator 1 **Senator McLachlan,** arguing in favour of the bill, said that the Governments of the States ought not to be consulted; that it was the people of the nation whose interests had to be considered. If that is a correct presentation of the case, let the Government submit this proposal to a referendum of the people, and obtain its verdict upon it. **Senator Abbott** said that the general public were not in the slightest degree interested in the proposal of the Government to abolish the *-per capita* payment. That statement was made also by **Senator Grant.** Even though the honorable senator thought it, he ought not to have said so, sitting, as he does, on this side of the chamber, and being opposed to the measure. Has the public generally expressed the opinion that the proposal ought to be accepted. {: .speaker-K8P} ##### Senator Thompson: -- Yes. {: .speaker-KOZ} ##### Senator HOARE: -- **Senator Thompson,** I venture to think, has not heard a word said about it by any member of the general public. But it cannot be denied that the mighty press of Australia, which moulds public opinion, is strongly opposed to the Government on this matter. {: .speaker-K3L} ##### Senator Sampson: -- It certainly tries to mould public opinion. {: .speaker-KOZ} ##### Senator HOARE: -- That it does is indisputable. {: .speaker-K2L} ##### Senator Reid: -- The party to which the honorable senator belongs has grown in spite of the opposition of the public press of Australia. {: .speaker-KOZ} ##### Senator HOARE: -- The press will sway public opinion into opposing the Government. 1 {: .speaker-K0F} ##### Senator Pearce: -- The honorable senator ought to be pleased if that is to be the result. {: .speaker-KOZ} ##### Senator HOARE: -- The Government does not say what proposal it intends to submit to the representatives of the States. All that it claims is that its offer will be equivalent to the 25s. *per capita.* Who is to be the judge of what is that equivalent ? {: .speaker-K0F} ##### Senator Pearce: -- The people. {: .speaker-KOZ} ##### Senator HOARE: -- I agree with the ^Minister, and I ask him and the Government to submit this question to the people. The Government is not willing to do so. If the States say of the proposals that are submitted to them, " They are not equitable ; they are not a *quid pro quo,"* the Government will retort, " These are our proposals ; if you do not accept them we shall deal with you as we dealt with the people of South Australia on the question of the imposition of the petrol tax. Like a burglar in the night, we shall come upon you ; we shall rob you of your rights, and then issue a writ against you. We admit that you have asked us for bread and that w.e are giving you a stone." The argument of the opponents of the measure is that" the Commonwealth is too poor to continue the *per capita* payments. In 1909-10, when the payment of 25s. *per capita* was decided upon, the revenue which was obtained from the imposition of Customs and excise duties amounted to £11,500,000. In 191.8-19 that revenue had increased bv £6,000,000 to £17,500,000. Substantial as that increase was, it was insignificant compared with what took place in the ensuing eight years; because we find that in the present financial year, 1926-27, it is estimated that £44,500,000 will be received from that source. How can the Government plead poverty on those figures ? It has money to burn. A few months ago it was searching for avenues in which to dispose of its available surplus. It sought to gain the favour of the electors bv promising to make available a sura of £20,000,000 for the construction of roads, and an additional £20,000',000 for a housing scheme. It compelled the Governments of South Australia and Victoria to accept its road proposals, and it will adopt a similar attitude towards the States if they do not prove amenable to its wishes in this matter. It is acting upon the principle that " Might is right." {: .speaker-KMP} ##### Senator Grant: -- The States will have to impose higher taxation. {: .speaker-KOZ} ##### Senator HOARE: -- Taxation will inevitably increase.I am unable to see how the States can in any other way make good the deficiency that will be caused by the withdrawal of the *per capita* payments. They cannot tax land to the extent that is possible under the federal authority. {: .speaker-K8P} ##### Senator Thompson: -- That is not so. Queensland affords an example of the inaccuracy of the honorable senator's statement. {: .speaker-KOZ} ##### Senator HOARE: -- The States have not the power that is possessed by the Commonwealth Government. {: .speaker-K8P} ##### Senator Thompson: -- In Queensland the exemption is only £300. {: .speaker-KOZ} ##### Senator HOARE: -- The Governments of the States will have to rely upon direct taxation to a greater extent than they are now oompelled to do, whilst the Commonwealth Government will be free to adopt *a* benevolent role and rely solely upon indirect taxation. Indirectly it is possible to tax the coat off a man's back without raising a murmur from him; but once you begin to tax him directly he kicks up a terrible fuss. Thus the Governments of the States will become unpopular, and the Commonwealth Government will be given the credit of having lightened the load of taxation. Federation would not have been established but for the co-operation of the States. When they were casting a vote for federation a number of people thought that it would lead to the Abolition of State Governors and State Parliaments; they had no idea that two additional legislative bodies would be superimposed upon those that then existed. We owe a very great deal to the States. They have had a hard row to hoe. Their obligations have increased in a much greater ratio than have those of the Commonwealth, and they are entitled to every consideration. State debts to-day amount to approximately £600,000,000, and the revenue which they are obliged to raise has risen from £7,000,000 in 1915 to £23,000,000 at the present time. That is an indication of the effect which the war had upon them. Every effort should be made by all responsible bodies to bring about uniformity in taxation, but that object will not be achieved in the way that is proposed bv the Government. The States are not complaining of the inadequacy of the *per capita* payment; it is the Federal Government which is objecting to the continuance of the system, because the payment to the States is an ever -increasing one on acoount of the additions that are made from year to year to the ranks of their citizens. {: .speaker-JZW} ##### Senator Andrew: -- What about Tasmania ? {: .speaker-KOZ} ##### Senator HOARE: -- Both Tasmania and Western Australia have been bribed by the Commonwealth Government. {: .speaker-K09} ##### Senator Payne: -- That remark ought to be withdrawn. {: .speaker-KOZ} ##### Senator HOARE: -- I shall not withdraw it unless I am compelled to do so, because I believe it to be true. {: .speaker-K09} ##### Senator Payne: -- It is unworthy of the honorable senator. {: .speaker-KOZ} ##### Senator Hoare: -- I do not think that it is. The Government intends to take £7,000,000 from the States, and then hold conferences with them to arrive at some method of adjusting the financial relations between them and the Commonwealth. But why have we not had these conferences already to try to come to some common understanding? If the States will not attend, why have not definite proposals been submitted to them? Why has not the Government said, " This is what we intend to submit to Parliament, and you will know what to expect " ? Every one is in the dark as to what the Government proposes to do, and seemingly the Government itself does not know what scheme will supplant the present arrangement. There ought to be nothing to hide, and if anybody ought to know what is intended it is Parliament. Perhaps the Government, not satisfied with the scheme it has in view, is endeavouring to find another more advantageous to the Commonwealth. It has been suggested by **Senator Pearce** that the Commonwealth might take over the whole or a portion of the State debts ; but 1 can see in that proposal no advantage over the present scheme. It would simply mean depriving the States of one payment, and giving them another. If, for instance, in lieu of the *per capita* payments we had to provide interest and sinking fund on £100,000.000 of the States' indebtedness, it would still mean the annual payment by the Commonwealth of £7,000.000. " If the Government is willing to assist the States annually by the payment of £7.000.000, why does it object to the continuance of the *per capita* grant, which does not absorb more than £7,000,000 a year?It is the duty of this Parliament to see that the States are treated fairly and honorably. The people who look to the Senate to safeguard the rights of the States hope that, for the time being at any rate, we will reject the Government's proposal. I, for one, am not prepared to sign my name to a blank cheque, and hand it to the Commonwealth Government.We ought to know what that cheque contains. It is useless for **Senator McLachlan** to say that Parliament can stop the payment of the cheque, because when later on it is presented for payment, as undoubtedly it will be if we pass this bill, we shall have no idea of the amount that will be drawn from the exchequers of the States. Our position now is that we are merely living in anticipation of something being done, and we may be considerably disappointed. I am hoping that at even this late hour the Senate will reconsider its vote of last night, and declare that in the interests of the States the bill should not be passed. {: .speaker-KLS} ##### Senator Givens: -- The honorable senator means " in the interests of the State Premiers." {: .speaker-KOZ} ##### Senator HOARE: -- I am speaking of the interests of the people in the States and the Commonwealth. Yesterday the honorable senator interjected, " Surely the people of the States should be satisfied when we, as a Commonwealth, refuse to tax them." That may be true, but the actual position is that, while we tell the people of the States that we refuse to tax them, we also advise them that the State Governments must double-tax them in order to make good the shortage caused by the withdrawal of the *per capita* payment. I have not read in the policy speech of the Prime Minister any indication of an intention to abolish these payments ; and if, as **Senator Pearce** says, the Government had a mandate for the step it is now taking, it was a very secret one. At any rate, the public knew nothing about it. If the Government intended to submit a bill of this description to Parliament, it should have told the electors - that would have been an honest way of doing things - and the people would have known what they were voting on. But the Government kept its proposals secret. Apparently, it was afraid of the attitude the electors would take when they realized that it was proposed to abolish the *per capita* payments. The fairest course to follow now is to submit the whole question to the people, and let them say whether the *per capita* arrangement should or should not continue. Whether the voice of the people be for or against me, I accept it, but I am confident that if (his question were submitted to a referendum, therewould be an overwhelming majority for the continuance of the *per capita* payments or for the adoption of some other system of giving the States financial assistance equal to what they now receive. This Government neglected its opportunity as well as its duty at the last election, because had the matter been placed before the electors, then the verdict of the people would have been equal to a referendum.. **Senator Chapman** said that he remained true to the Government, but is he true to the party that sent him here. Has he consulted his electors? However, that is his own business; he must answer for his own actions. There have been two outstanding features of this debate - on the one hand the weak declaration of **Senator Pearce** that the Government could not tell us what it proposed to do, but simply asked Parliament to accept its word; on the other hand, the exceedingly strong point made by **Senator Greene** when he asked the Nationalists who are supporting the bill whether they were true to the party and the platform they signed on seeking election to this Parliament. {: #subdebate-6-0-s3 .speaker-K8P} ##### Senator THOMPSON:
Queensland -- As I have already on a previous occasion declared myself in favour of the abolition of the *per capita* payments, I need not speak at any length to-day. An honorable senator has made some reference to Bret Harte, but 1 think we should have had a more orderly debate than we have had if the Leader of the Senate had quoted those well-known lines from the *Gondoliers -* >In a contemplative fashion, > >And a tranquil frame of mind, > >Free from every kind of passion > >Some solution let us find. I proposed to object to the reference to party hacks, but as that point has already been dealt with, it is unnecessary for me to say anything further in regard to it. *Sitting suspended from 1 p.m. to 2 p.m.* {: .speaker-K8P} ##### Senator THOMPSON: -- Prior to the luncheon adjournment, I was referring to the accusations hurled against certain honorable senators on this side of the chamber who have been termed " party hacks " ; but as that matter has been so ably dealt with by an honorable senator who has preceded me, it is not my intention to mention it further. {: .speaker-K1P} ##### Senator Sir Henry Barwell: -- The honorable senator said that he was a free agent, so far as the tariff was concerned. {: .speaker-K8P} ##### Senator THOMPSON: -- I said that I was a free agent when discussing the tariff, which is a different matter. {: .speaker-K1P} ##### Senator Sir Henry Barwell: -- Is that not a suggestion that in this case the honorable senator is not a free agent ? {: .speaker-K8P} ##### Senator THOMPSON: -- No. The tariff contains many items on which duties are levied, and honorable senators are usually free to vote on them as they please. But this is totally different. Before this question was discussed by the Nationalist party or in Parliament, I attended a Chamber of Commerce conference in Sydney in March, 1926, when a representative of the Brisbane Chamber submitted a motion asking that body to affirm the desirability of the Government vacating the field of direct taxation and continuing the *per capita* payments to the States. I opposed that motion, and pointed out that it would be much more reasonable if the Government were asked to vacate the field of directtaxation and abolish the *per capita* payments to the States. I thought that was a reasonable proposition, and one which might possibly be carried. As the former was unreasonable, I suggested to the congress that it should be rejected. It was a close vote; the individual vote against the attitude I adopted disclosed a majority of only two. The vote on a State basis was 3 to 3, which practically nullified the previous individual vote. I mention this fact to show that in thi3 instance my vote has not been "whipped up." as has been stated by certain honorable senators, but that I took a definite line of action before this matter was even discussed in the party room, or brought before Parliament by the Treasurer. I strongly object to some remarks made by a certain gentleman in Victoria which were directed principally against Victorian senators, but inferentially against all honorable senators, to the effect, that in matters of this kind we are not free to express our opinions, and are at the beck and call of the Government. Wo are quite able to form our own opinions, regardless of that gentleman, who is a menace to Nationalism, and was largely responsible for the defeat of the last referendum. As **Senator Guthrie** dealt very ably with that point it is not my intention to comment further upon it at this juncture. My only object in rising is to offer a few remarks showing how L think the proposed arrangements would affect Queensland. It is necessary that the *per capita* payment to the States should be discontinued, because the States realizing that they can depend upon the Commonwealth for certain revenues, are consequently adopting an attitude of masterly inactivity. They arc waiting for the other fellow to move. By abolishing the *per capita* payment and giving the States a *quid pro quo* as the Government has promised, we can safely rely upon the States receiving a fair deal. So far as I can see, there are three methods. The first is that brought down in the bill submitted last session, that the Commonwealth Government should vacate certain fields of direct taxation in which the States should then be allowed to operate. As I pointed out at the time, that would be quite unsatisfactory to Queensland, as that State would be in a worse position than if it were resolving *per capita* payments. Queensland cannot afford to reduce its revenue, because the Government in that State for some years has been running riot with expenditure, and will certainly want all the money it can obtain to give effect to its present policy. The Treasurer indicated that the Government could make up the amount of the *per capita* payments for the first year, and give sympathetic consideration to the States for a further two years, but I suggested that there should be an agreement for at least three years. That method might disappear altogether, but if it did not I think we could rely upon the representatives of . .Queensland to see that it received a *quid pro quo* for at least three years. The second suggestion is that which emanated from **Mr. Warren** Kerr. It has been considered by Chambers of Commerce throughout Australia, and is probably being dealt with in Western Australia to-day. It is to the effect that the Commonwealth should vacate the field of direct taxation and establish a sinking fund to cover a certain proportion of State debts. Such a scheme would leave us cold in Queensland, because we would have to provide quite a large sum of money when the½ per cent. had been met. The third method which occurred to me, and one which would probably suit Queensland better than any other, is to take over an equivalent amount of interest on the State debts, and thus compensate them for what they are losing. To astute minds, there may be other proposals of a more suitable character; but so long as we can give the States an amount in cash which equals that which they are now losing, there should not be any complaint from the States. {: .speaker-K1P} ##### Senator Sir HENRY BARWELL:
SOUTH AUSTRALIA · NAT -- Is it the honorable senator's suggestion that a portion of the interest on State debts should be taken over on a *per capita* basis ? {: .speaker-K8P} ##### Senator THOMPSON: -- Equal to the amount the Commonwealth is at present paying. {: .speaker-K1P} ##### Senator Sir Henry Barwell: -- If the payment of the interest on State debts were on a *per capita* basis it would be the same thing. {: .speaker-K8P} ##### Senator THOMPSON: -- I am referring to the amount that is being paid to-day. {: .speaker-K1P} ##### Senator Sir Henry Barwell: -- It is the same thing. {: .speaker-K8P} ##### Senator THOMPSON: -- The *per capita* payments increase from time to time, whereas the other payment would remain stationary. The proposals of the Government will, I believe, lead to economy being practised both in the Commonwealth and the States sphere. If the States have to impose additional taxation they will be more directly in touch with the taxpayers in finding their revenue, and will have to be more careful than they have been, particularly in the case of Queensland. It has been said that certain taxation cannot be reimposed in the State owing to the possible action of the Legislative Councils, but as there is no second Chamber in Queensland that difficulty will not arise in thatState. The land tax in Queensland is much heavier than it is in any other State, and the mere addition of a small amount would not hurt the people.It has also been said that an aggregation of incomes is impossible, but as we have the assurance of the Treasury officials that the position can easily be handled, no difficulties should arise. Taxpayers should be convenienced by paying to one authority instead of two. {: .speaker-KMI} ##### Senator Graham: -- The honorable senator will be one of the first to squeak. {: .speaker-K8P} ##### Senator THOMPSON: -- The Queensland income tax is, in some cases,4¼ times greater than that imposed by the Commonwealth, and the State land tax, with an exemption of £300, is heavier than that in any other State. **Senator Barwell** stated that there was a unanimous objection to this proposal throughout the Commonwealth. {: .speaker-K1P} ##### Senator Sir Henry Barwell: -- No. A widespread objection. {: .speaker-K8P} ##### Senator THOMPSON: -- The honorable senator can speak perhaps concerning his own State, but he is not able to voice the opinions of the Queensland people. Some of the newspapers in that State are opposing the Government proposals, whilst others are supporting them, as is the case in Melbourne and in other capital cities. Some of the Chambers of Commerce are supporting the Government in this matter, whilst others are opposing it. In my own town of Rockhampton the proposals were received, but as they were not fully understood at the time, the meeting was adjourned for a fortnight, when they were further considered,and a resolution was passed ap-. proving them. It was also suggested that **Mr. Warren** Kerr's proposal should be given careful consideration. {: .speaker-K1P} ##### Senator Sir Henry Barwell: -- Who explained them? {: .speaker-K8P} ##### Senator THOMPSON: -- Those present were quite capable of explaining the position, and the president, a bank manager, said that he regarded the Government's proposals as an honest attempt to place the finances of the Commonwealth and the States on a proper basis. I regard them in the same light, and unhesitatingly support the bill. {: #subdebate-6-0-s4 .speaker-KMI} ##### Senator GRAHAM:
"Western Australia -- I have just had placed in my hands a copy of a speech delivered by the Attorney-General **(Mr. Latham)** in another place, which suggests that the Government believes that its case has not been put with sufficient force by its principal representative in this Chamber. This morning, while the bill was under discussion, this pamphlet was placed in the hands of the honorable senator. The hands of each honorable senator. The Government knows that it is doing wrong in withdrawing the *per capita* payments. Western Australia, like Tasmania, has to depend upon those payments to meet its financial obligations. As a Western Australian, **Senator Pearce** should never have introduced a bill to deprive his State of the *per capita* grant. If that grant is withdrawn from Western Australia, additional taxation will have to be imposed bythe State Government to enable it to pay its way. As the result of it, the efforts which are being made toinduce immigrants to settle in Western Australia and fill its empty spaces may be effected, and unemployment may be caused. During recent years, taxation has been reduced in Western Australia to the extent of 481/3 per cent., but now the Commonwealth Government desires to force that State Government to increase taxation, and thus make itself unpopular in the sight ofthe people. {: .speaker-K8P} ##### Senator Thompson: -- Why should taxation have been reduced at a time when Western Australia was seeking a dole? {: .speaker-KMI} ##### Senator GRAHAM: -- This money rightly belongs to the States. We are told by those who support the Government that we should be prepared to trust the Prime Minister and his Government to compensate the States for the loss of the *per capita* payment. I am not prepared to trust the Government; and I know that the people of Western Australia are far from satisfied with it. Nor are the people of Queensland behind the Government in this matter. {: .speaker-K8P} ##### Senator Thompson: -- They are. {: .speaker-KMI} ##### Senator GRAHAM: -- They are not. The commission appointed by the Government to inquire into the disabilities of Western Australia resulting from federation recommended that, for a period of 25 years, an annual grant of £450,000 should be made to Western Australia. In face of that report, the Commonwealth Government decided to make the grant for one year. Western Australia is to have her finances reviewed by outsiders. What do men in the eastern States, thousands of miles from Western Australia, know of the conditions in that State? Western Australia is to be left at the mercy of the Commonwealth Government. At a time when strenuous efforts are being made to. develop the State and to increase its production, the money necessary for that development is to be taken away. Allwe are given in exchange is the advice " Trust **Mr. Bruce."** I am not prepared to hand a blank cheque to the Government. Why does the Government not take the Senate into its confidence and say what it proposes to substitute for the *per capita* payments? In days that have passed, the mining industry did much to make Australia known. People flocked to themining centres from all parts of the world, with the result that Australia as a whole benefited considerably. Yet the Government has refused to grant any assistance to the mining industry, although it hasbeen lavish in its expenditure to assist other industries. Bounties and bonuses have been distributed freely in other directions; but the mining industry, which has done more than any of them for Australia, has been neglected. Not only so, but during the war period the Government robbed the mining industry in Western Australia to the extent of £3,000.000. That is admitted by the Treasurer **(Dr. Earle Page)** ; but when it was suggested that he should return that money, he asked what guarantee could be given that it would be spent in developmental work, and what portion of it would go to the miners, and how much to the London Jews who did not get their dividends from the mining industry during the war. The Government which waved the flag during the war not only robbed the mining industry of Western Australia to the extent mentioned, but it now wants to rob that State of a further £500,000 per annum. {: .speaker-KMP} ##### Senator Grant: -- Shame! {: .speaker-KMI} ##### Senator GRAHAM: -- The Government is beyond shame. **Senator Pearce** is supposed to represent Western Australia in this chamber; yet he is prepared to rob his State in the manner I have indicated. The vote on this bill will reveal the true friends of Western Australia. Are honorable senators content to accept t he word of the Ministry in this matter ? We are told that something will be done to compensate the States, but wo are not told what that compensation will be. A man who says that we must accept the Prime Minister's word in any case, and follow him wherever he leads, is indeed, as **Senator Sir Henry** Barwell said the other day, a " party hack." I imagine that the framers of the Constitution anticipated the way in which some States would be affected by federation. They therefore provided that the Commonwealth should return to the States a portion of the revenue derived from Customs and excise. That obligation should not be disregarded. Honorable members who are supporting the Government are fighting amongst themselves over this issue, but whenever it comes to a vote usually there are only two parties in this Parliament - the Labour party and the supporters of the composite Government. My own State, as has been shown already, will suffer seriously from the passage of this bill. It is the largest State in the Commonwealth, but it has (bo smallest population, so administrative services are extremely costly. And yet what do we find? Certain senators who were elected to safeguard the interests of the States intend to vote for this bill, and bring about the abolition of the *per capita* payments, which, in the case of Western Australia, will mean a loss of over £500,000. If thi? scheme were placed before the people by way of referendum, it would be emphatically rejected. The result of the last election shows that the people cannot be misled indefinitely. Whilst T am here I intend to do my best in the interests of those whom I represent. In one of his speeches recently the Prime Minister stressed the need for co-operation between the Commonwealth a.nd the States. Does the right honorable gentleman suggest that the Government's proposal to withdraw the *per capita* payments will lead to that co-operation, or that it will bring about that much-to-be-desired understanding and mutual sympathy? Why all this hypocrisy about the solution of this problem? Why not submit it to the people, and allow them to decide whether the payments shall cease? The Government dare not do that. The Prime Minister went on to say that there appeared to be an unfortunate tendency towards antagonism between the Commonwealth and the States. All I can say is that the right honorable gentleman himself ought to be a good judge of this because there is not the slightest doubt that this measure will antagonize the States. The Prime Minister went on to say that this spirit of antagonism, which ho so much deplored, was harmful to Australia and the future prosperity of its people, and said that he viewed with grave misgiving the en-, gendering of such a spirit, adding that if the leaders of the people only exhibited British common sense they should bc able to overcome all the difficulties and enable the Constitution to work for the benefit of the people as a whole. I say definitely that it was never intended that the *per capita* grants should be withdrawn from the smaller States. It is difficult to understand why **Senator Cox,** for one, is supporting the Government on this issue. I am .satisfied that the people who elected him had no idea that he would take this stand with regard to the withdrawal of the payments. The Government has overstepped the mark, but, knowing its calibre, I have no doubt that heads were counted carefully before the bill was presented in another place, although, as **Senator Cox** said last night, it is doubtful if it would have been presented if the Ministry had known how some of its supporters would take it. From what Ave have learned of the proceedings in caucus, it is safe to assume that the Ministerial supporters are not a happy family. This proposal to withdraw the payments and to cripple the finances of Western Australia, as one of the States of the federation, is a shame and a crime, and I am satisfied that if an election took place to-morrow on it many honorable senators now supporting this bill would not be returned. I am pleading for justice to my own State, and, indeed, for all the weaker State? in the federation. If the payments are withdrawn, the State Governments will be forced to levy increased taxation on their people. Their finances will be dislocated, and there will be considerable unemployment, because it will be impossible for the Governments to carry out their public works policy in their entirety. As a representative of Western Australia, I claim the vote of **Senator Pearce** against this attempt to work such a grave injustice upon it. **Senator J.** B. HAYES (Tasmania) 1 2.40]. - In addressing myself to this measure I intend to take the advice of its opponents and consider it from the point of view of the States. Whilst I concede to those honorable senators, who have so ably opposed the bill the credit of speaking and voting, according to their convictions, I claim for the supporters of the Government the same privilege and credit. Some honorable senators who are opposing the bill have said that they are not wedded to the system of *per capita* grants to adjust the financial relations between the Commonwealth and the States. We should bear in mind that if the payments are to be withdrawn, some other arrangement must be substituted. We have been told over and over again that no other proposal is in sight, but I remind honorable senators that this bill is only one-half of the agreement. The other half will come before Parliament after the proposed conference, and we have had the assurance of the Minister in charge of the measure **(Senator Pearce)** that we shall have an opportunity to consider it. The Government takes the view that a *per capita* distribution is not the best way to adjust the finances and in inviting the representatives of the State to attend a conference, it asks them to submit a more satisfactory scheme. I do not know how the vote is going on the bill; but *I* am convinced that in both houses there is a sweeping majority determined to see that the States get a fair deal. Therefore the representatives of the States will not, as has been said, go to the conference to meet the Prime Minister with a gun in his hand. On the contrary they can enter into the negotiations in the sure and certain knowledge that this Parliament will back up their efforts to get a fair deal for them. If it were not for the assurance that the other half of -the agreement will come before Parliament subsequently, I would not be found supporting the bill. Clearly we must look further than the payment of 25s. per head of population for the settlement of the present financial difficulty. No set of common payments can be fair to all the States. We have to bear in mind the national fiscal policy and its effect upon the several States. Those of us who took part in the last tariff debate and opposed the imposition of certain duties were forced to realize that protection is the settled policy of the Commonwealth and that, for some time at least, there is no chance of reducing the duties to any considerable extent. This policy has been responsible for unbounded prosperity in Melbourne and Sydney, the capital cities of the two principal States. Other States have not similarly benefited. Tasmania is losing its population to Victoria and New South Wales, and, consequently, is also losing 25s. a head under the *per capita* system, whereas the larger States, having an increasing population, are receiving larger sums under it. Tasmania cannot keep her population, and has to approach the Commonwealth Government for grants in aid to enable it to balance its ledger. The day when Tasmania and Western Australia approached the Commonwealth Parliament for such grants the *per capita* system can be said to have broken down. No doubt it filled the bill for soma years; but as the big cities grew, and their prosperity increased, a different method became essential. I do not say what that, method should be; I leave that to the Premiers and the Treasurers of the States, with the assurance that I shall go to any length to see that their just demands are acceded to. Some time ago I asked the Minister for Home and Territories to supply me with particulars of the payments that had been made to the States during the last seven years. The return showed that although Tasmania's population during that period had remained stationary, and its *per* *capita* receipts had not advanced, those of New South Wales had increased by nearly £400,000, and those of Victoria by approximately £200,000. The payments to the two principal States are continually increasing. {: .speaker-K1L} ##### Senator Barnes: -- The *per capita-* system failed in respect to Tasmania because that State was unable to prevent its citizens from leaving it and going to other States. {: #subdebate-6-0-s5 .speaker-KOF} ##### Senator J B HAYES:
TASMANIA -- That charge has been levelled against Tasmania for quite a long time. {: .speaker-K1L} ##### Senator Barnes: -- It is true. {: .speaker-KOF} ##### Senator J B HAYES: -- It is true for exactly the same reason that the country districts of New South Wales, Victoria, and the other States cannot keep their men. The Treasurer **(Dr. Earle Page)** the other day stated that to-day there were 7,000 or 8,000 fewer farmers, and 10,000 or 12,000 fewer farm employees in Australia than there were ten years ago. The magnet that is attracting the population from the country districts to the big cities is identical with that which is depleting Tasmania of her manhood. But for the apparent prosperity that is caused by what some regard as a not too sound policy of protection, the conditions in this country would be much worse than they are. The argument of Tasmania is not only -that it is adversely affected by the system of *per capita* pay.ments, but also that there are many other ways in which it loses money, and for which loss it ought to be recouped out of the national revenues. Take education, for example. In this and in every other mainland city I can find men holding high and responsible positions in commerce, trade, and the professions, who were reared, educated, and received their early training in Tasmania. Those men were a charge upon the State until they arrived at the most useful stage of their lives, when they left it, and other States have benefited from their endeavours. {: .speaker-K09} ##### Senator Payne: -- They have been the salvation of at least one State. {: .speaker-KOF} ##### Senator J B HAYES: -- They have made their mark in many of the States. Everybody knows that amongst the leaders in the Commonwealth Service arc men who at one time were a charge upon Tasmania. Some little time ago the Commonwealth Government sent to Tasmania a commissioner to inquire into the disabilities that had been caused to that State by federation. A great deal cf work and anxiety were involved in the preparation of the case that was placed before him. He went into it exhaustively, and after months had elasped a grant of £378,000 was made for a period of two years. The unsatisfactory nature of the method of finance adopted is illustrated by the fact that not one penny of that sum has yet been received, al though nearly a year has passed since the grant was made. By the time that the first payment is made a fresh case will have to be prepared. It is a perpetual worry and anxiety to Tasmania to be called upon to prepare a case for financial assistance from the Commonwealth, lt has no desire to seek charity, but it does want redress for what it has suffered because of the adoption of the national policy. That can be achieved only by a complete re-arrangement of the financial relations of the Commonwealth and the States, on the basis that those States which are most in need of assistance shall receive the largest amount. A re-examination of Tasmania's figures has been promised by the Government, and for that I commend it. One way by which it could assist that State would be by taking over the Tasmanian Government railways. They were built in good faith, to serve the people who are producing and to develop the country, and they have resulted in a loss. {: .speaker-K8P} ##### Senator Thompson: -- If that precedent is established, the Commonwealth will have to take over the Queensland railway system and shoulder a loss of nearly £2,000,000 a year. {: .speaker-KOF} ##### Senator J B HAYES: -- A precedent exists in the transcontinental and other railways, that are under the control of the Commonwealth Government. This matter was very pointedly referred to when the last examination was held into Tasmania's financial condition, and I submit it for the .consideration of the Government. I assure the Senate and the people that I represent that, although I shall vote for the withdrawal of the *per capita* payment, I am determined- to see that something as good, or even better, is substituted for it. {: .speaker-K09} ##### Senator Payne: -- And the honorable senator believes that that will be done ? {: .speaker-KOF} ##### Senator J B HAYES: -- I believe that the Government will treat the States generously. I also have the assurance that this Parliament will guard the interests of the States and see that they get an absolutely fair deal. I am not enamoured of the *per capita* system. A more equitable method is necessary. So far as we can judge, this matter will again come before Parliament in a few months, when, I am sure, a substantial majority of members will take every action that lies in their power to see that the States get a fair deal. {: #subdebate-6-0-s6 .speaker-K3X} ##### Senator CARROLL:
Western Australia -- I rise with mixed feelings to speak to the motion for the second reading of this measure. The one thing absolutely certain in my mind is that the present system is unjust and inequitable, particularly to Western Australia and to other States that have small populations. It is altogether too Scriptural; it follows the principle " Whosoever hath, to him shall be given, and he shall have more abundance." I do not want to say anything hurtful to the representatives of the more populous States; it is not the fault of those States that they are receiving the great bulk of the suras that are advanced by the Commonwealth Government under the existing system; it is the system that is at fault. The Government is to be commended for seeking to alter that system. We have been told that we should look at this matter entirely from the point of view of our own States; and that is what I am endeavouring to do. From the inception of the Commonwealth, Western Australia has occupied an unfortunate position. I pay tribute to the old Western Australians who foresaw, with a much- clearer vision than others who happened to be in, but not of, that State at the time, what would take place. The late Lord Forrest was one of those who look a part in the framing of the Federal Constitution at the three conventions which were held. He was perfectly satisfied that federation would be a bad thing for Western Australia. It is a matter of history that, even at the time of the taking of the second referendum in the eastern States, at the end of 1899, no bill was brought down in the Western Australian Parliament to enable the people to. say whether they would enter or remain out of the -federation. During the sittings of the royal commission which was appointed to inquire into the disabilities of Western Australia under federation, the fact was made public that in April, 1900, a cablegram was received by the Premier of Western Australia from the Secretary of State for the Colonies exerting pressure to have a referendum of the people taken, with the result that the referendum was taken in that State a year later than in the eastern States. What was foreseen at that time came to pass. Tt must be borne in mind that Western Australia was politically an infant, in that it had had responsible government for only ten years at the establishment of federation. There can be no doubt that it entered the federation at least 25 years too soon for its own good. I give the eastern States the credit of having recognized that Western Australia occupied a peculiar position from the commencement. For the first five years after the imposition of uniform duties of Customs, it was allowed to retain its interstate duties; but they were to disappear on a sliding scale at the rate of 20 per cent, per annum. When the Braddon provision of the Constitution expired, it was again recognized that, on account of that State's enormous contributions to Customs and excise revenue - which far exceeded the average of the Commonwealth - it should receive, not a dole, but a compensating grant of £250,000 per annum, which was to disappear at the rate of £10,000 a year, and I believe that if left to run its course it would finally disappear in 1935. But even that assistance has not been found sufficient for a State with such an enormous territory. Western Australia is a most expensive State to run, and even with the assistance it has received, it has been most difficult for the Government to carry on. I may be considered to be out of date and ignorant, but, although I am absolutely convinced that the *per capita,* system is unjust, and should be replaced by an arrangement more equitable from the point of view of the smaller States, I am still of opinion that the States have not only a moral but also a constitutional right to a share of the Commonwealth revenue. Under section 105 of the Constitution the Commonwealth is empowered to take over the State debts, or any portion of them that may be agreed upon, and to pay interest on those debts out of any surplus revenues clue and payable to the several States. I am well aware that this right is not of much value to the States, because of a decision of the High Court in 1908 that it is legal for the Commonwealth to appropriate money not actually spent within the year; but that judgment did not affect the constitutional position. The Commonwealth may leave no surplus revenue to be divided among the several States, yet those States still retain their constitutional right to any surplus money if it should be available. So long as the Commonwealth has power to take over the States debts the constitutional liability to pay interest is there also. To that extent, therefore, I differ from the present proposals of the Government. I can say without fear of contradiction, that so far as the smaller States are concerned, the present Government is the best we have had in the history of the Commonwealth. Its roads grant and its wire-netting grant are tangible instances of the assistance it has given, and it would be ungenerous on my part if I did not give it credit for its treatment of Western Australia. At present that State has an adverse trade balance with the Eastern States of over £7,000,000 per annum, and I propose to give a typical example of one of the disabilities it has suffered as a consequence of federation. Dixsons, of Sydney, who manufactured Yankee Doodle tobacco, had a small factory in Fremantle, employing about 40hands. We were all carried away with the glorious talk there was at that time about one people, one flag, one destiny, and so forth. But within two years after the consummation of federation that factory was closed. Those employees who were willing to be transferred were moved to Sydney; the others were pensioned off, and some of them are still living in Fremantle drawing wages in the form of pensions from the tobacco company. **Senator Greene** has attempted to place the blame for the present bill upon the Country party. {: .speaker-JYX} ##### Senator Findley: -- It is true. {: .speaker-K3X} ##### Senator CARROLL: -- Then honorable senators opposite must have a higher opinion of **Dr. Earle** Page than I have, and I have a very good opinion of him. They would exalt him and make of him a perfect colossus, dragging the Government behind him like a lot of toy soldiers on a string. The vote which was taken in another place ought to convince any one who looks at the matter fairly, and with an open mind, that there is no truth in the assertion, and when we see that every party with the exception of the Labour party has been divided on this issue, it is clear that there has been no dragooning of parties. There is, therefore, no substance in the charge that has been levelled against the Country party. I have a certain amount of sympathy with **Senator Greene,** but we all have some knowledge of the recent political history of Australia. *Japhet in Search of a Father* as a narrative leaves one coldafter learning of the diligent search which **Senator Greene** and **Senator Barwell** have made to ascertain whence this bombshell has dropped. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- I based my assertion on the published statement of a member of the Country party. {: .speaker-JLM} ##### Senator Abbott: -- But it was not said as it was put by the honorable senator. {: .speaker-K3X} ##### Senator CARROLL: -- The full statement to which **Senator Greene** referred has already been quoted, quite disproving the honorable senator's charge. His attitude reminds me of a passage from King Henry VIII. Wolsey having asked his servant Cromwell, " What news abroad?" Cromwell says - >Last, that the lady Anne, > >Whom the King hath in secrecy long married, > >This day was view'd in open, as his queen. Upon which Wolsey says - >There was the weight that pull'd me down. ; all my glories > >In that one woman I have lost for ever. If we substitute the word " party " for the word " woman," we can understand the honorable senator's feelings regarding the Country party ; but they do not worry us, and I am sure the honorable senator loses no sleep over them. I come now to another statement made by the honorable senator. I can quite appreciate that it was uttered in a facetious or Pickwickian sense, and I shall treat it as such. We were told byhim that honorable senators from Western Australia and Tasmania probably had a bunch of carrots dangled in front of them. It is unfortunate that we have to choose between carrots and greens, but it is possible that we may find more nutriment in the carrots. However, it was a delicate compliment the honorable senator passed. I was pleased to hear a man publicly stating a view privately held by a great number of people in Australia, that country people are a long-eared, patient lot of burden bearers. {: .speaker-JXJ} ##### Senator Needham: -- "Who are the long eared ? {: .speaker-K3X} ##### Senator CARROLL: -- Presumably the people who like carrots. {: .speaker-KNF} ##### Senator GREENE:
NEW SOUTH WALES · NAT -- I think the honorable senator will do me the justice of saying that I made no suggestion of that sort. {: .speaker-K3X} ##### Senator CARROLL: -- No. I took the honorable senator's remark to be but in a Pickwickian sense. I could only recall the old fable about the. carrots. They, however, are now boiled and done with. Despite the admiration I have for the Government, I want to say a word or two in regard to its action in providing in this bill for the special grant to Western Australia. I think it was altogether wrong to embody the payment of the special grants to the smaller States in a contentious measure of this sort. The payment of these grants was recommended by a Royal Commission appointed by the Government. I thank the Government for setting up that commission, because Western Australia has suffered for a long time, and it has been the first Government to take notice of our disabilities. I had the honour of giving evidence before the commission which, I should like to say, carried out its work in an able manner. Although it did not recommend all that the Western Australia people expected, its decision can be regarded as fair. As a matter of fact, two reports were issued. In the majority report it was recommended that for 25 years and thereafter until Parliament otherwise provided Western Australia should have control of its own Customs and, excise, and that until that right was secured we should receive an annual grant of £450,000 in addition to the present *per capita* payment. {: .speaker-JXJ} ##### Senator Needham: -- That was for 25 years. {: .speaker-K3X} ##### Senator CARROLL: -- There was no express limitation .but by implication having regard to the recommendations respecting Customs and excise duties it was limited to a term of 25 years. The minority report recommended that, for a period of 10 years Western Australia should receive an annual -grant of £300,000 conditional upon continuation of the payment of 25s. *per capita.* One can only infer that the commissioner who submitted the minority report would have recommended a larger sum, but that he had the *per capita* grant in his mind. It is true that owing to the election which was approaching, the Government had not time to go fully into the question, and, therefore^ agreed to pay for one year without prejudice £450,000. But it also went further and said that Western Australia could rest assured that when it was finally dealing with the matter it would not be less generously dealt with than the commission recommended. Instead of that we find that the bill provides for an annual grant of £300,000 and an offer to relieve the State of an annual burden of £150,000 by taking over the north-west portion of the State, a matter that was ' not recommended by the commission. Another point is that this bill only provides for a grant for five years, and I think I am right in saying that it also provides for the absorption of the unpaid balance of the present diminishing grant, which if left to expire by effluxion of time would do so in 1935. It therefore follows that if the special grant is made for five years only, and if it absorbs the old grant it also will expire at the same time. The result will be that we shall be losing £280,000 under that old grant, which in effect, will mean that the new special grant will be for four years only, and that is a proposal to which I am opposed. The provision for the payment of special grants to Western Australia and Tasmania should not have been embodied in this bill, since the representatives of those States are thus thrown open to the charge of supporting it solely because of the advantage which those States will derive under it. The States, as I have said, have a constitutional right to share in all Commonwealth revenue. Section 87 of the Constitution refers to Federal revenue generally, and not solely to that collected in the form of Customs and excise duties. In reading through the Constitution one cannot find a single reference to any other means of collecting revenue. {: .speaker-KMP} ##### Senator Grant: -- If the honorable senator will refer to section 39 he will find that the Government is given full power to raise revenue in every direction it considers necessary. {: .speaker-K3X} ##### Senator CARROLL: -- Be that as it may, it was generally supposed that- the Customs and excise revenue would be the only revenue which the Commonwealth would raise. I was elected to this House on a policy of tariff- reduction, and I cannot support the Government in any proposals under which it will have to depend solely upon the revenue from Customs and excise. Like many other honorable senators, I have no desire to pay taxation in any form, but it is a necessary evil which we cannot avoid. Of all forms of taxation, that collected through the Customs House is the most iniquitous. As I was returned by the electors of Western Australia to support a reduction in the tariff, I am opposed to the Government vacating the field of direct taxation. {: .speaker-JXJ} ##### Senator Needham: -- Was not **Senator Pearce** elected on the same platform? {: .speaker-K3X} ##### Senator CARROLL: -- The right honorable gentleman is here to answer for himself. It was said yesterday that, even if this bill is defeated, the special grants to Western Australia and Tasmania will be paid; but with all due respect to the learned gentleman who made that announcement, I doubt- its accuracy. If this measure is defeated, I do not think the grants will be paid, and before I record my vote on this measure I should like a clear and definite statement from the Minister. {: .speaker-KMP} ##### Senator Grant: -- Western Australian and Tasmanian senators have been bribed in this way to support the bill. {: .speaker-K3X} ##### Senator CARROLL: -- Approximately, £18,000,000 is being spent on the Murray waters scheme which will he of tremendous benefit to New South Wales and Victoria, but senators representing those States have never been accused of having been bribed. Neither was a similar charge laid when the iron and steel industry was assisted to the extent of £750,000 by means of a bounty in addition to the imposition of a heavy duty. In our case it is not bribery, but " conscience money " which is being paid to Western Australia in return for the assistance it has given to the eastern States since the inception of federation. If Western Australia had not entered the federation, it would have been much better off than it is to-day. I am clearly convinced that the present system is unsatisfactory to -Western Australia, and that it is the duty of the Commonwealth to assist the States by bring ing down proposals which are more just and equitable than those we are considering to-day. I shall want to know definitely what the Government propose before I support the bill. {: .speaker-JZR} ##### Senator Ogden: -- We do not know at present. {: .speaker-K3X} ##### Senator CARROLL: -- If, after this bill has passed, the Government introduces a proposal which is not in the interests of Western Australia, I shall do my best to defeat it. {: #subdebate-6-0-s7 .speaker-K09} ##### Senator PAYNE:
Tasmania .- I shall not speak at length, but I feel that it would be unwise to cast a silent vote on this measure, particularly as I assist to represent the smallest State in the federation. I agree that this is one of the most important subjects that this Senate has been called upon to decide. Some honorable senators have contended that the passing of this bill will result in the strangulation of the States. Indeed, some honorable senators have said that that is the reason for its introduction. That statement is absurd, because the people of the States are also the people of the Commonwealth; if the States are strangled, the Commonwealth also is strangled. Legislation which would injure the States cannot but injure the Commonwealth as a whole. I regret that in this Senate it should be suggested that the Government is actuated by the basest of motives iri introducing this bill. {: .speaker-KTH} ##### Senator McHugh: -- The honorable senator has often complained that Tasmania has not been treated fairly by the Commonwealth. {: .speaker-K09} ##### Senator PAYNE: -- My experience as a public man is that the Commonwealth, when approached for financial assistance, has never failed to recognize the needs of Tasmania. {: .speaker-JXJ} ##### Senator Needham: -- The honorable senator should read the *Hansard* reports of some of his earlier speeches. {: .speaker-K09} ##### Senator PAYNE: -- The Constitution provides that the Commonwealth may grant financial assistance to necessitous States. I arn no novice in regard to Tasmania's affairs. For seventeen years I was a member of the Tasmanian Parliament, and for two years I held ministerial office. Is it likely that if, in my opinion, Tasmania would suffer under these proposals I would fail to enter my protest? This proposal is not new. As far back as 1919 the State Parliaments were made aware that the *per capita* pay- ments might eventually cease. A few days ago a gentleman prominent in Federal politics strongly opposed this bill; but, when I read what he said in 1919, at a Premier's conference over which he presided, I am unable to understand his change of front. As Treasurer of the Commonwealth, **Mr. Watt** proposed that the *per capita* grant should be reduced by 2s. 6d. per annum until it had reached 10s. Moreover, his proposal contained no guarantee that that payment of 10s. would be continued. {: .speaker-JXJ} ##### Senator Needham: -- He has not departed from that attitude. {: .speaker-K09} ##### Senator PAYNE: -- Then why did he criticize the present Government which, while proposing the discontinuance of the *per capita* system, gives something of equal value to the States? {: .speaker-KTH} ##### Senator McHugh: -- What is this thing of equal value that is being offered to the States ? {: .speaker-K09} ##### Senator PAYNE: -- Surely the honorable senator has a memory. He should know that last year the Government showed its desire to give to the States something by way of compensation for the withdrawal of the *per capita* grant. {: .speaker-KOJ} ##### Senator H Hays: -- For only one year. {: .speaker-K09} ##### Senator PAYNE: -- That proposal having been abandoned, the Commonwealth Government now desires to meet the representatives of the States in conference, with a view to arriving at an arrangement which will be acceptable to all parties. I say, unhesitatingly, that my experience as a member of this Parliament justifies me in trusting the present Government to carry out its expressed intention to meet the States, not in a niggardly spirit, but generously. In any event, this Parliament is the final arbiter. I suggest that those honorable senators who support this bill - and I intend to support it - have as much right to their opinions as have the opponents of the measure. I impute no wrong motive ro those who differ from me, for I believe that each honorable senator desires to do what he believes to be best for the State ho represents. We may not all see eye to eye, but surely we should concede that each desires to do his best. I deprecate the references to the cracking of the party whip. At no time have I been approached on behalf of the Government to say in which way I intend to vote on this measure. I know that in supporting it many honorable senators, as well as myself, are doing so on their own initiative, in the belief that it is in the best interests of the States they represent. My sole reason for speaking is that the people of Tasmania may know that I do not support this measure merely because it provides for a grant to that State. I wish that that provision were not in the bill. {: .speaker-KMP} ##### Senator Grant: -- In committee, that provision will be excised. {: .speaker-K09} ##### Senator PAYNE: -- With all his faults, I have never found **Senator Grant** niggardly, or lacking in generosity towards the necessitous States. {: .speaker-KTH} ##### Senator McHugh: -- The grant to Tasmania should be dealt with in a separate bill. {: .speaker-K09} ##### Senator PAYNE: -- I agree with the honorable senator; but we must take the bill as we find it. {: .speaker-KTH} ##### Senator McHugh: -- Take anything the Government chooses to give ? {: .speaker-K09} ##### Senator PAYNE: -- No. I remind the honorable senator that the Senate is now dealing with the second reading of the bill, and not with its separate clauses. For the reasons which I have mentioned, I shall support the second reading. {: #subdebate-6-0-s8 .speaker-K1L} ##### Senator BARNES:
Victoria -- My remarks in relation to this bill will be brief. Other honorable senators have already given the history of the *per capita* system, but one phase of this question has not yet been dealt with. To that phase I shall address my remarks, because I am somewhat concerned about it. The framers of the Constitution appear to have foreseen that the time would come when it would be necessary to safeguard certain interests in this country. With the inauguration of federation, the central government was given control of the country's tariffs. That was right, because the Constitution imposed on the central government the responsibility of making Australia as self-contained as possible. I am reminded that several centuries ago Great Britain imposed tariffs with the object of developing her industries, with the result that she became the manufacturing centre of the world. The Federal Parliament should be in the same position. The government of Australia today is vastly different from what it was in the early years of federation. In five States Labour governments are in office, and have introduced many measures of an entirely different character from those brought forward by other governments. For instance, the legislative programme of the Labour party includes unemployment insurance, child endowment, and other things which its supporters believe are in the best interests of the country. It is true that the Prime Minister's policy speech included a reference to the desirability of a child endowment scheme being brought into operation, but, so far as I can gather, that scheme is still in the clouds, lt is like other promises made at the last election. Legislation dealing with it has not yet come to light. If this bill is carried the Government will be able to force the States to accept an arrangement that might be most distasteful to them. Pitt laid it down that it was possible fiar a government, by means of Customs and excise duties, to tax the shirt off a man's back without his knowledge ; but immediately direct taxation was levied he made an outcry. The Commonwealth Government having control of Customs and excise duties can go to almost any length to encourage the development of Australian industries, under conditions that will enable every man and woman to earn a living in reasonable comfort, and such a policy, irrespective of the party in power, would have the approval of the people. But the Commonwealth has no right to compel the several State Governments to obtain revenue for their essential services from other sources. Honorable senators cannot escape from the situation. Unquestionably the people of Australia will have something to say about this proposal when the opportunity is given to them. There is a nigger in the wood-pile somewhere, and so far as I am concerned, I am not going to take any risk. I do not suggest that the representatives of certain States would accept a bribe as the price for their support of the bill : but it is singular that under this bill two States will receive special grants of between £300,000 and £400,000 a year, so that they need not concern themselves very much about its effect upon their State finances. What is the purpose of the bill, and why has it been presented *1* Under the Constitution the Commonwealth Government is authorized to grant assistance to States that may be in need of it, but if this scheme is approved by Parliament, the States will be deprived of their *per capita* grants, but two will receive substantial assistance. Altogether the bill has a very sinister aspect to me. It looks as if the Government is endeavouring to "bag " the twelve Senate votes represented by the two States that are to receive such favorable treatment. {: .speaker-JZR} ##### Senator Ogden: -- It has not succeeded in its purpose, then. {: .speaker-K1L} ##### Senator BARNES: -- I understand that there is some opposition to the bill even from those States, so I hope that, when the vote is taken, the second reading of the bill will be defeated. The Government will then be obliged to bring forward another scheme which will not have the effect of endangering the legislative programmes of some of the State Governments. As we know, in certain of the States the Labour administrations are legislating for shorter hours of labour, unemployment insurance, childhood endowment, and similar proposals affecting so closely the well-being of their people. It appears that the Government realized that the presentation of this bill wa3 about the only chance it had to defeat the aspirations of certain State Governments, and it is now endeavouring to persuade this branch of the legislature to support its policy. {: .speaker-K2L} ##### Senator Reid: -- It is the duty of the Commonwealth to legislate for childhood endowment and national insurance. {: .speaker-K1L} ##### Senator BARNES: -- It is true that, in his policy speech, the Prime Minister indicated that the Government intended to introduce legislation to provide for childhood endowment and a number of other things; but this Government has been in office for nearly three years and nothing has yet been done in that direction. I am afraid that the Government's childhood endowment scheme is as the morning mist that disappears with the rising sun. Like other items of policy, it may be a good election placard ; but I remind the Government that the people do not live on election promises. They expect their representatives to honour their pledges. I look upon this bill with grave suspicion, because its special provisions suggest that the Government hopes, by means of them, to secure the support of twelve senators from two of the States. Possibly Ministers considered this when making their book, and thought it was a pretty safe bet. The passage of the bill will mean that there will be little chance of State Labour administrations carrying out their unemployment insurance, childhood endowment, or other social legislation for the benefit of the people, because they will be obliged to raise the necessary revenues by direct taxation. That is the story behind this bill. Therefore I urge representatives of Tasmania and Western Australia not to be taken by this bait ; to remember that they are Australians, and that no State should enjoy privileges which are not available to other States. I cannot imagine how the Government expected to carry the bill through this Chamber. When it was going through another place the prospect was more favorable, but the position in the Senate is altogether different. Members of another place represent constituencies; whereas members of the Senate represent the States, which are vitally concerned in this proposal, because it will cripple their finances and force them back into the position from which they have been endeavouring to escape. It is the duty of the Senate to guard the States from that. I listened to the eloquent speeches made by many honorable senators, and I have given careful consideration to the arguments put forward in favour of the bill; but still I am convinced that there is a " nigger in the wood-pile." I ask leave to continue my remarks at a later date. Leave granted; debate adjourned. {: .page-start } page 669 {:#debate-7} ### SPECIAL ADJOURNMENT Motion (by : **Senator Pearce)** agreed to- >That the Senate, at its rising, adjourn till 3 p.m. on Monday next. {: .page-start } page 669 {:#debate-8} ### PAPERS The following papers were presented : - >Tariff Board Act - Tariff Board Reports - Application for Increased Duty or Bounty on Rice; > >Continuance or otherwise of the Wine Export Bounty. {: .page-start } page 669 {:#debate-9} ### FRIDAY ADJOURNMENT The DEPUTY PRESIDENT- The time fixed under the sessional orders for the adjournment of the Senate having arrived, I must put the motion - That the Senate do now adjourn. Motion negatived. {: .page-start } page 669 {:#debate-10} ### ADJOURNMENT {:#subdebate-10-0} #### Timber Industry - Personal Explanation : Party Meeting {: #subdebate-10-0-s0 .speaker-KOJ} ##### Senator H HAYS:
Tasmania -- I ask the indulgence of honorable senators for a few minutes whilst I deal with a matter of great importance, not only to the State of which I am a representative, but also to the whole of Australia. I refer to the timber industry. I mention this matter now because Parliament will adjourn in the course of a few days, and it is important that action should at once be taken to make the position clear. It is known to those interested that the Tariff Board's report on the industry, if not in the hands of the Ministry now, will be to-day or tomorrow. If I understand the position aright, it is not the intention of the Government to deal with this matter until after Parliament has risen. Judging by the evidence that was given, and the manner in which it was received by the Tariff Board, the report will be favourable to the industry. All over Australia, but particularly in Tasmania, that industry has never been in a more languishing condition than it is at the present time, as a result of the heavy importations of timber. This question needs immediate attention if the industry is to be saved to Australia. Thousands of pounds have been invested, and thousands of men are employed, in it. The Minister **(Senator Pearce)** has said that it is now a Cabinet matter. I urge him and the Government to give it consideration within the next few days, so that a proposal for the further protection of the industry may be brought down and become operative before Parliament rises, as was done in the case of the steel industry last year. If action is not taken before Parliament adjourns, the mills will close down.If the Government is prepared to give to the industry the measure of protection it has afforded to other industries, employment will continue to be given to our own people and Australia's timber requirements will be met within its own borders. I ask the Minister to see that the report of the Tariff Board is considered, and, if favorable, be given effect to, so that the industry will benefit immediately. If action is delayed until Parliament meets at Canberra, possibly six or nine months hence, it will practically go out of existence. {: #subdebate-10-0-s1 .speaker-JRT} ##### Senator COX:
New South Wales -- Last night I stated that **Senator Greene** attended a combined meeting of the National and Country parties, at which the provisions of the States Grants Bill were explained. I regret that I was mistaken. I understand that he did not take his seat until June, 1926, although he was elected at the same time that I was. I have no desire to injure the honorable senator in any way, and I therefore make this correction. {: #subdebate-10-0-s2 .speaker-KOF} ##### Senator J B HAYES:
Tasmania -- I appeal to the Government to use every effort to have the report of the Tariff Board on the timber industry, which is said to be favourable to the application of the industry for protection, put into effect without delay. The position of the industry in Tasmania is absolutely desperate. Unemployment is as bad as it could possibly be. Winter is approaching, and if the industry is not assisted at once a number of men will be thrown out of work and will have no opportunity of obtaining employment *n* any other direction. {: #subdebate-10-0-s3 .speaker-K09} ##### Senator PAYNE:
Tasmania -- I endorse the remarks of Senators H. Hays and J. B. Hayes. Recently, on two occasions I had the opportunity of visiting the far north-west of Tasmania, in which portion of the State the timber industry is one of the most important. It was appalling to me to see the way in which the different timber mills in which so much capital has been, invested were lying idle because of the absence of such protection as would enable the product to be marketed on the mainland. Anything that the Government can do to have the report and recommendation of the Tariff Board considered, and a resolution passed by both Houses of' Parliament before the long adjournment, will be more than justified, because it will mean the salvation of the industry and, as **Senator J.** B. Hayes pointed out, prevent the accentuation of the problem of unemployment. {: #subdebate-10-0-s4 .speaker-KMP} ##### Senator GRANT:
New South Wales -- According to reports that have appeared in the daily press, there are 190 timber mills in Tasmania, of which at the present time 100 are idle. So far as I can judge, that has been the position over there for a considerable time. But Tasmania is not the only State that supplies timber for Australia's needs. {: .speaker-KOJ} ##### Senator H Hays: -- I appealed on behalf of the industry in every part of Australia. {: .speaker-KMP} ##### Senator GRANT: -- I know that the honorable senator did; but particular emphasis has been laid upon the condition of the industry in Tasmania. I should like the Minister to ascertain who are the owners of the land on which the timber grows. If additional protection is given I do not wish it to be absorbed by the few people who own the timber reserves of the Commonwealth. It is well known to quite a number of honorable senators that the timber areas are carefully monopolized by certain gentlemen. {: #subdebate-10-0-s5 .speaker-JRW} ##### Senator CRAWFORD:
Honorary Minister · Queensland · NAT -- 1 can assure those honorable senators who have referred to the position of the- timber industry that the delay which has occurred in the presentation of the report of the Tariff Board is not due in any way to lack of appreciation of the importance of the industry on the part of the Government, but chiefly to the great volume of evidence which was tendered on behalf of the industry. The transcript of that evidence runs into 1,000 pages. The Tariff Board is now considering its report, and it is not likely to complete that task for some little time. Honorable senators are aware that the report after its receipt will have to be considered by the officers of the department, then by the Minister for Trade and Customs, and, lastly, by the Cabinet 'as a whole. {: .speaker-K09} ##### Senator Payne: -- I understood that the Minister would have the report to-day. {: .speaker-JRW} ##### Senator CRAWFORD: -- I made a very close inquiry into the matter this morning, and that is not the information which was supplied to me. I give the assurance that no unnecessary delay has taken or will take place, but that on the contrary the matter will be considered so soon as the report is available. {: .speaker-KOJ} ##### Senator H Hays: -- Will the Minister endeavour to have it dealt with before the conclusion of this sitting of Parliament? {: .speaker-JRW} ##### Senator CRAWFORD: -- I cannot say other than that no undue delay will take place. The Minister for Trade and Customs is anxious to have the mutter dealt with as early as possible. Question resolved in the affirmative. Senate adjourned at 4.12 p.m.

Cite as: Australia, Senate, Debates, 18 March 1927, viewed 22 October 2017, <>.