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[start page 95]

TUESDAY, 7 SEPTEMBER, 1897.

Commonwealth of Australia Bill-Leave of Absence.

The PRESIDENT took the chair at 10.30 a.m.

COMMONWEALTH OF AUSTRALIA BILL.

In Committee (consideration resumed from 6th September, vide page 94):

Clause 88. Uniform duties of customs shall be imposed within two years after the establishment of the commonwealth.

Amendment suggested by the Legislative Assembly of South Australia:

In line 1, after "customs," to insert "and excise."

Question-That the words "and excise" be inserted-proposed.

Mr. LYNE (New South Wales)[10.34]: At the present time, it seems to me that no lengthy speeches need be made upon the question before the Convention. As I stated when the committee was appointed, I disagreed entirely with the action then taken, namely-to appoint the committee and debate the financial question in the Convention, subsequently allowing the question to go to the committee, and then having another debate after it makes its report. It certainly seems to me that by doing that we shall have two debates when one would have answered all purposes. For that reason, I do not intend to take up any length of time on this matter; but I cannot allow the occasion to pass without referring to some of the very able speeches made yesterday. I think the tone and the matter of the speeches delivered yesterday was of the highest character; and although I do not agree in many respects with the sentiments uttered by some of those who made them, still I must of necessity admit that they were very able. I notice that an able writer in the press this morning states, after giving the figures in reference to customs and excise as between the different colonies, that nothing more can be said, and the matter must be dropped from that standpoint. I should not refer to this matter, but the writer in question, Mr. Nash, of the Daily Telegraph, is one of the ablest financial writers we have in this colony, and I notice that he says that:

If New South Wales required even one-half of that extra million to be made good to her, the customs and excise taxation would still exceed £7,500,000. We regard the deadlock disclosed by these figures as complete and irremovable.

If we have come to that stage of the question, I should like to know what is the next course to pursue I do not, however, agree with that writer, able as he is. I certainly think that the first proposal which emanated from the Finance Committee in South Australia was the best which has been made up to the present time. True, the Convention did not approve of what was done, and referred the matter to another committee of Treasurers. I heard Mr. Holder-the South Australian Treasurer-in the able speech he delivered yesterday, say that if the sliding scale, which was brought up by the Treasurers, had been taken hold of by the present Premier of New South Wales, and had been spoken to in the manner in which that right hon. gentleman can speak in regard to figures, an entirely different complexion would have been placed upon it from the complexion which has been placed upon it by those who have had to learn it for themselves, and by the press. I certainly think the sliding

scale, as submitted by the Treasurers, would never suit New South Wales. We should lose under that proposal, gloss it as we will, and we should contribute to the other colonies something like £800,000 or £900,000 a year. Surely New South Wales is not quite so blind to her own interests as to submit a proposal of that kind.

The Hon. Sir P.O. FYSH: The hon. member forgets how much New South

[start page 96] Wales would gain by the distribution of her expenditure. She would gain half as much as she would lose by that course only!

Mr. LYNE: I must differ from the hon. member, because in that respect I think we should lose also. The hon. member may think otherwise, but I must be allowed to differ from his ideas. I think that under that proposal New South Wales would in every way lose considerably. Therefore, its far its that proposal is concerned, I admit, with the writer of this article, that it must be placed absolutely and for all time on one side. With regard to the proposal made by the Finance Committee, after a very great deal of discussion, and after the insertion of the word to which Mr. McMillan referred yesterday-the word "aggregate" its far as the estimate and the distribution of the customs and excise were concerned -I understood that that word had a great deal fuller meaning than it seemed to me Mr. McMillan gave to it yesterday. I should like to state what I conceive to be the meaning of that word; and I think it was I who had the privilege of moving its insertion. Before that word was inserted, the proposal was open to much the same objection as was the sliding scale of the Treasurers. But the word "aggregate" was intended for this purpose: that we should take the aggregate returns from all the colonies and pool them, and divide the total sum by the population.

Mr. WALKER: Including direct taxation!

Mr. LYNE: No; but the customs and excise. Divide that by the total population, and on that get an aggregate amount of customs and excise for each individual throughout the whole commonwealth.

Mr. MCMILLAN: I said nothing about that!

Mr. LYNE: I said it at the time, and I understood from the chairman of the Finance Committee when the word "aggregate" was inserted, that that was to be the effect of it, because we had some difficulty in inserting two or three words to make my intention clear. If that were done, the effect would be this: Supposing that there is a total collection of £6,000,000 per annum from all the colonies, and supposing that the population is 4,000,000, it would leave the sum of 30s. per head, applicable to each unit of the population. That would be the minimum that should be returned of the excess obtained by the federal treasurer from the various states.

Mr. MCMILLAN: But that per capita distribution would exactly bring about the same thing!

Mr. LYNE: I do not think it would. I may say that, as far as I am personally concerned, I altogether object to the system of book-keeping which was proposed, and which was strongly supported by the hon. member, Sir Philip Fysh, and by other hon. gentlemen. I regard the position we are in in this way: If we are to have federation, let us have it-let us have intercolonial free-trade-but, if you keep up a system of book-keeping on your borders for five years or,-as was suggested by the Premier of New South Wales in the Finance Committee-for ten years, you might very nearly as well keep up your customs duties, for all the trouble and irritation that would take place. We must, if it is possible to do so, arrive at some-it may not be accurate distribution, but at some reasonable distribution, of the surplus that is likely to be obtained from the various colonies by the treasurer of the commonwealth, and I take it that the first idea-which, I think, emanated from the hon. member, Mr. McMillan-that you must, by some rough and ready method, fix some hard and fast sum-it may not be exactly accurate-to be returned to each state-had a great deal in it to commend itself to hon. members of the Convention; but I think the idea of the Finance Committee in South Australia was the

better one- [start page 97] that is, as I have said, to fix a certain sum per head of the population to be returned. I heard hon. gentlemen yesterday state-in opposition very largely to what I heard them state on a previous occasion-that they were almost prepared to leave everything in connection with finance to the federal parliament. If hon. members are prepared to leave everything to the federal parliament, surely they might leave everything beyond a minimum of, say, 30s., or whatever it comes to, per head of the population, to be distributed as nearly approximately as they can possibly find out to the amount raised in each colony. It will have to be raised through the various customs entries, not intercolonial, but on the seaboard. I think that if something of that kind could be arrived at, and if we were to allow some power, borne privilege, and some determination to the federal parliament as regards the balance of the surplus to be returned, we might come to some conclusion; but I do not think that it would be wise to leave absolutely the whole arrangement of this scheme to the federal parliament after the matter has gone away from this Convention. Are we to declare that we ourselves are impotent to come to any conclusion on this question? I take it that in the federal parliament there will not be abler men than are to be found here-abler financiers, and gentlemen competent to final with matters of this kind.

Mr. SOLOMON: They will have a very much freer hand!

Mr. LYNE: They would have a very much freer hand, I grant; they would have a much freer hand to do injustice as well as justice.

An HON. MEMBER: And a knowledge of the circumstances of the hour, which we have not!

Mr. LYNE: They would have that also, if you gave them the power of distributing beyond a certain minimum; but I take it that every colony, and probably most of all New South Wales, must see to it that there is some return from the federal treasury to the various state treasuries.

An Hon. MEMBER: If we trust them for £1 we can trust them for £2!

Mr. LYNE: I think that the state treasurers would be in a much safer position if they knew that they were to receive a certain sum back from the federal government. I cannot close my eyes to the fact that the whole, or nearly the whole, of the trouble on this question is caused by the present fiscal policy of New South Wales. I do not wish to drag into this debate any fiscal issue; but I say that, with our fiscal policy of the years 1893, 1894, and 1895-even with a 10 or 15 per cent. tariff-we could come much nearer to this question in a much shorter time than we can on the, present occasion. If hon. gentlemen will look at the figures that have been submitted by our Statistician, and by his assistant since he has been away, they will see that the whole trouble is based on the absence of any reliable or approximate information in regard to importations into New South Wales, to be brought here under a uniform tariff of customs duties. I, therefore, think that our trouble at the present moment is attributable to a large extent-almost wholly-to the fact that we have not such a fiscal policy, to some extent, as they have in the other colonies, How are we going to get over that difficulty? We proposed at the Adelaide Convention to go back to the years 1893, 1894, and 1895. We took those years to get over the difficulty to which I am referring. In those years we had a low tariff in the shape of 10 or l5 per cent., but under that tariff we had a certain customs revenue, which brought us a little nearer to the position the other colonies are in at the present time, and therefore at Adelaide we at once took those particular years to try and assimilate the returns that had to be made and the amounts that would be [start page 98] collected from the various states. I altogether cast on one side the idea-so assiduously put forward by our Statistician, and I think also by the Premier of New South Wales-that if you take as the basis all the importations into this colony under our free-trade tariff, and put on the top of that basis the tariff of Victoria, or of any of the other colonies, you will get a certain result. That, it must be patent to every hon. gentleman, is an absurdity. As the hon. member, Mr. Deakin, very rightly said yesterday, as in Victoria, with the increase of duties and with the decrease of duties, the rise and the fall of the importations was marked, so it would be in New South Wales. With an increase of duties under a uniform tariff, we would have a decrease of importations, and probably an increase of the local manufactures in our colony, which was also referred to by the hon. member, Mr. Deakin,

yesterday, when he pointed out that the consumption of the people was perhaps not less in Victoria than in New South Wales, but that the result of a protective tariff decreased the importations, and increased the local manufactures, which fact was not taken into account at all. Under those circumstances, with an alteration in our tariff, we would necessarily have such a result, and, instead of getting over £3,000,000 return in this colony, as suggested by some of the figures that I have seen-£1,000,000, or £1,500,000, or £1,250,000 more than any other colony-that would probably be brought down to the sum which we in New South Wales received in 1893, when, I think, we obtained about £2,500,000 or £2,600,000 through the customs. That was before the effect of the 10 per cent. duty was felt in this colony. Our importations during 1894 and 1895 decreased to about £2,100,000, mainly because of the manufacturing which was induced in our own colony. With the application of a reasonable tariff-and I do not wish it to be imagined that the tariff under the federal union would be a prohibitive one-our imports would decrease, and probably, with our present population, we should obtain somewhere about £2,500,000 a year through the customs. On these figures we must base our calculations if we are going to come nearer to federation at the present time. I say that there is no insurmountable difficulty to be got over in meeting the other colonies. For these reasons, I think that the statement made in the paper to which I have referred, is absolutely erroneous. I go further than that, and I say that I do not think this colony will allow this important question, which so vitally affects the financial interests of the community, to be left entirely to the federal parliament. I am satisfied that this colony, if it accepts any constitution bill at all, will require the laying down of some definite lines, at any rate so far as the minimum return to be obtained. I was pleased to hear the statement made by my hon. friend, Mr. McMillan, on this question yesterday. We all know that he is a freetrader, just as everyone in this colony knows that I am a protectionist. But Mr. McMillan recognises that there will be, and can be, no union without a uniform customs tariff-I believe a very strongly protectionist tariff. He stated yesterday that that tariff must be fair, and that this colony, together with the other colonies, must accept it. So far as that goes, I think that the people of this colony would be quite prepared to take such a tariff, whatever it might be, and to leave it to the federal parliament to deal with finally. Some of the extreme free-traders do not, and would not, agree to anything of the kind; but that such a thing must come there can be no doubt. If anything so absurd should take place that it did not come, what would be the result? The result must be that, without your customs tariff, the whole of your [start page 99] revenue, or nearly the whole of it, must be raised by direct taxation. The states would have the power to raise revenue in that way, and the commonwealth finances would at any rate have to be supplemented by direct taxation. But I ask any hon. gentleman if in his sane senses be believes that the people of these communities would agree to wipe away all customs duties except such as are in force in New South Wales at the present time, and to apply direct taxation in two or three different forms I one reason why I feel that we should come to some decision upon the minimum to be returned is that if the states do not get a return from the federal treasurer, each state will be crippled to a very large extent in carrying out its local work. I may be permitted to say to the hon. member, Mr. Deakin, that one part of his speech was not quite so strong as the rest of it, and that was where he said, "Let the federal parliament deal directly with the expenditure of the surplus." He instanced Dubbo and Goulburn as two places where the federal parliament might expend money directly without allowing It to filter through the bands of the state. I interjected at the time that that was approaching unification, and I think it would be, because if you are going to destroy your states by taking away the money they should receive, and put them in such a position that they cannot raise revenue, except by direct taxation of a very heavy character, you must bring them so low that we might as well have unification, everything being managed directly by the commonwealth government and the system of shires and boroughs being extended all over the continent. I think that the proposition of the hon. member, Mr. Deakin, to expend money upon ordinary work in the shape of roads and bridges -

The Hon. A, DEAKIN: I did not mean that. I did not suppose that the federal parliament would spend money upon objects outside its powers under the Commonwealth Bill. The federal parliament takes over certain departments, and must expend money upon them. It might build a post-office at Dubbo or at Goulburn.

Mr. LYNE: Yes; but the hon. member cannot think that all the surplus revenue of the commonwealth would be absorbed in the building of post-offices.

The Hon. A. DEAKIN: Of course not!

Mr. LYNE: That only brings me down to the bed-rock of the argument which I was using, that the surplus should be returned to the states, and that the distribution of the money coming originally from customs duties should be made by the Treasurers of the various states. What I say is that a minimum of something like 30s. per head should be fixed. I do not fear the trouble which is anticipated an to what will take place in the immediate future.

The Hon. A. DEAKIN: It is the Canadian practice to return so much a head!

Mr. LYNE: Yes; but even with the Canadian practice, as was stated by the hon. member yesterday, there is trouble, because the Treasurers want more than the minimum. How much more would that trouble arise if the commonwealth treasurer was not called upon to return anything at all? I can only offer the suggestion that a minimum of something like 30s. a head should be fixed. That would not take a high tariff to raise.

The Right Hon. Sir G. TURNER: Suppose a minimum is fixed according to the customs receipts instead of at so much a head!

Mr. LYNE: I have not analysed that idea; but the moment you perfect your commonwealth arrangements you lose all your intercolanial trade. We may obtain a great deal from Victoria during the first few years after the establishment of the commonwealth. At the present time, nearly, the whole of the machinery which [start page 100] is used in our southern and south-western districts comes from Victoria. I was at Wagga Wagga the other day, and one of the leading agents there told me that, with the exception of one plough which had been obtained from Hudson Brothers, nearly the whole of the machinery obtained this season in the south-western district had been manufactured in Victoria. The south-western portion of this colony is deluged with Victorian manufactures not only with Victorian machinery, but with other manufactures as well. I cannot see how you could arrange matters if you simply kept a record of the imports from outside. Otherwise the idea of the right hon. member might very reasonably be carried out. I think that it will be patent to him that there would be trouble in that respect. The trouble would be in the same direction as has been anticipated for the system returning so much per head. The probability is that New South Wales would import, it great deal more during the first five or ten years than any of the other colonies, and that we should not get a full return from that. I do not wish to reason in this particular direction; but I hope that the Finance Committee will take the matter into consideration, and that they will not leave the provisions in the bill in the state in which they are at the present moment. There is one matter to which I desire to refer, and that is a statement which fell from the lips of the hon. member, Mr. Holder, yesterday. He stated yesterday that be would be prepared to leave this whole question to the federal parliament if he knew how the commonwealth was going to be constituted; in other words, if he knew whether we were going to have equal state rights. That is what he must have had in his mind at the time. He regretted that the discussion upon state rights had not taken place before this discussion took place. The hon. gentleman said still further as a reason for that, that he knew that the Victorian finances were much in the same straits as were those of the smaller colonies, and that, therefore, those colonies could depend upon Victoria's assistance in seeing justice done. Now, I took particular notice of the statement made by the hon. member, which means that it does not matter about New South Wales, so long as the other southern colonies get Victoria to help them in the matter of equal state rights. A number of hon. gentlemen stated at a previous meeting of this Convention that there was nothing in equal state rights; but surely there is something in it when we find such a statement as that to which I have referred emanating from such a high authority as is the hon. member. I regret that the clauses dealing with equal state rights were not considered before these clauses were considered, because New South Wales would then have known what she was to expect if that question were to be dealt with as it is dealt with by the bill at the present time. I cannot indorse the idea that it would be a wise thing to

leave this matter entirely to be dealt with by the federal government. I am of an entirely different opinion. This colony has more to lose than have all the other Australian colonies put together upon this and upon every other question. I have always been in favour of dealing with the question of state representation upon a population basis; and before there is any commonwealth it will have to be dealt with on that basis.

The CHAIRMAN: I think the hon. member is wandering away from the financial clauses.

Mr. LYNE: The hon. member, Mr. Holder, was permitted to refer to the same question yesterday!

The CHAIRMAN: The hon. member referred to it, but he did not discuss it.

Mr. LYNE: I do not desire to discuss the matter. I simply quote the reference [start page 101] made to it by the hon. member, and I may perhaps be permitted still further to refer to that portion of the hon. member, Mr. Holder's, speech regarding the inter-state commission, and the powers of that commission, especially with regard to the waters of the Murray and the Darling and their tributaries. The hon. member spoke on behalf of South Australia when he said be did not wish New South Wales to have the power to divert water from the heads of these streams so that they in South Australia would have the bottle without the liquid. Now, there is no desire on the part of New South Wales to deprive these rivers of any water which would prevent the Murray in South Australia from being navigable. At the same time New South Wales must stand by her own interests. The question is intimately bound up with the development of this country. With the hot dry tract of country which we have in the western plains New South Wales can never agree to allow any authority whatever to deprive her of the right to use the waters of the Darling for irrigation and other kindred purposes. The hon. member should just as readily trust New South Wales with the head waters of the Murray as he could trust Victoria in dealing with this financial question.

The Hon. F.W. HOLDER: I would trust the federation!

Mr. LYNE: The hon. member is prepared to trust all the other colonies but this one colony, because be knows that it is this colony which, on account of her large population, has such a great deal to lose.

The hon. Sir. GRAHAM BERRY: Will the hon. member point out what New South Wales really would lose?

Mr. LYNE: What does she gain? I have not heard it stated what she will gain. The only thing I have heard stated is that in the future she will be one of a united band of Australian colonies.

The Hon. A. DEAKIN: With her immense resources she has more to gain than, perhaps, any other colony!

Mr. LYNE: It is true that we have immense resources in coal and iron. We have the key of the position, and before we give up the key we must see that we are not put into an unfair position.

The Hon. A. DEAKIN: The key is of no use without the lock!

Mr. LYNE: If the hon. member means by the lock a market for our coal, it will not be any greater under federation than it is at the present time. But I do not want to be drawn into these side discussions. I cannot see where in the first few years we shall gain at all. As to our having a larger area, I think the other colonies will have a larger area when they get hold of New South Wales instead of New South Wales having expansion in the other colonies. We know that a great deal of produce comes from the south into New South Wales. If that be so at the present time, it will continue to be so under a federation. There is a great market in New South Wales for South Australia and also for Western Australia-if she has anything to produce apart from gold-and also for Tasmania. At present

we have nothing to send to any one of these colonies, and I want to know, therefore, where the great advantage to New South Wales will come in under a federation?

An HON. MEMBER: What about coal?

Mr. LYNE: We send that at the present time. Victoria does not impose a duty upon coal.

An HON. MEMBER: But Tasmania does!

Mr. LYNE: Tasmania has her own coal, and plenty of it, too. If I were a resident of Tasmania at the present time, I should be against federation altogether, as is the hon. member, Mr. Douglas. I do not see what Tasmania will gain by federation. She has the Sydney market at the present time, and she will have it in the future.

[start page 102] The Hon. A. DEAKIN: Does the hon. member say that she will always have the Sydney market?

Mr. LYNE: I hope not. Make no mistake about it, if we had even the duties which we had a few years back, Victoria and the other colonies would be far more anxious for federation than they are at the present time, whether they obtained equal state rights or not.

The CHAIRMAN: Is the hon. member of opinion that a discussion upon the policy of protection is in order upon this clause?

Mr. LYNE: I think it is intimately related to the financial question generally; but I admit that I was drawn off the trend of my observations by the interjections of hon. members opposite. I did not desire to go into this question as deeply as I have done, although I admit that as far as this colony and the commonwealth is concerned the whole trouble in arriving at a basis is brought about by the fact that we are a free-trade colony, whereas all the other colonies are protectionist. A few words and I will not detain the Committee long -as to the proposed inter-state commission. I listened carefully to what was said by the hon. member, Mr. McMillan, and I think he did not quite strike the mark when he said that differential rates must remain while preferential rates were taken away. I agree that it is very difficult to distinguish which is a preferential and which is a differential railway rate. If there is to be an inter-state commission the logical result must be to take a point in Victoria, and to have a long-distance rate charged on the railways from that point right into New South Wales; and in the same way you could take a point in New South Wales, and make those long-distance rates apply to the railways running, say, to Hay, Bourke, or any other part of the colony. If you are going to make the alteration at all, you cannot have an arrangement by which there can be a low rate from the Victorian border to Melbourne and a high rate from the Victorian border to Hay, whilst from Sydney you have a low rate all the way through. If you have anything of that kind, the inter-state commission and its powers must fall short of what is intended. So far as I am concerned, at the present I am not in favour of any inter-state commission. I am only stating what will be the result of such a commission. It must be to give as much latitude to merchants in Melbourne to send goods into New South Wales and to take New South Wales produce to Melbourne as is given in the case of Sydney merchants. If you, by calling one rate a preferential rate, and another a differential rate, try to break up and interfere with the arrangement, you will burst up the idea of an inter-state commission. I take it that at the present time the colonies are not prepared to band over their railways to a federal parliament. Although the hon. member, Mr. Walker, and the hon. member, Mr. Wise, and one or two others are in favour of that proposal, I take it that the Convention as a whole is not in favour of it, and I do not think the interstate commission will be agreed to, because you might as well hand over your railways to the federal government as appoint an inter-state commission as far as the interests of this or any other colony are concerned. The inter-state commission, I take it, is for the purpose of seeing that there is no rate of any kind imposed that will interfere with the ordinary ebb and flow of trade from one port to another, or from one colony to another. Therefore, you might just as well hand over your railways to the commonwealth as to an inter-state commission.

Mr. SYMON: Will the hon. member hand over the New South Wales railways!

Mr. LYNE: I am opposed to it. I am simply pointing out what the effect of the appointment of such a commission must [start page 103] be, not as the hon. member, Mr. McMillan, said, to still allow a differential, but not a preferential rate. The effect of an interstate commission must be to give the same privilege to any importer in Melbourne as is given to any importer in Sydney. You might just as well hand over your railways to the commonwealth to be dealt with as it chooses, with rates assimilated all over the colonies, as to hand them over to an inter-state commission.

Mr. SYMON: We will accept that alternative!

Mr. LYNE: I dare say the hon. member will, but I am not prepared to yield it.

The Hon. A. DEAKIN: It is only for the federal parliament to deal with them!

Mr. LYNE: I know that it is only for the federal parliament; but we want to know what the federal parliament is likely to be, what its powers are to be, what are to be the mode of election and the powers of the senate. I agree very much with the hon. member, Mr. Holder, and I should like to know how the senate is to be elected before I can speak with freedom as to what I will hand over to the federal parliament. I am almost inclined to think that if the senate were constituted as I desire it to be, I might even be prepared to hand over the railways and perhaps the debts as well to the commonwealth. But that will not be the case if the senate is to be constituted as is desired by the hon. member, Mr. Holder, and his colleagues, also by the members from Tasmania, and perhaps Victoria. I am not quite sure about Victoria.

The Hon. A. DEAKIN: Does the hon. member know what the next New South Wales Parliament will be like?

Mr. LYNE: I have an idea and a hope as to what it will be; but, of course, I can, not speak with any degree of certainty. No doubt the hon. member can speak with is great degree of certainty as to what the coming parliament will be like in Victoria. No doubt he and his friends now behind him will be returned.

The Hon. A. DEAKIN: The parliament will be just what the electors make it!

Mr. LYNE: That is what I want the senate of the federal parliament to be.

The Hon. A. DEAKIN: But the hon. member will not leave anything to parliament to do!

Mr. LYNE: That is not the case. If I knew that the senate would be composed in the manner I desire, I am almost inclined to say that I would hand over a great many additional powers to the federal parliament besides those I am prepared to hand over at present. It is not seriously, proposed to hand over the debts or the railways to the federal parliament; but what we do want is some reasonable scheme-I do not say a scientific scheme but one that will meet with a response from all the colonies, so that the Treasurers will be able, in the various state parliaments, to know each year what they are likely to obtain, and how far their treasuries are likely to be augmented by the return they are to get from the federal government, so that they will not be left on a sandbank, so that they will not be left high and dry by the federal government saying, "We will only raise so much from customs and excise," or nothing at all. The state parliaments would then be driven into such a position that their principal method of raising revenue having been taken from them, they would have to depend upon direct taxation from one end of a state to the other. At the present time the people of this country will not stand anything of the kind. If I can form any idea of the feeling of the people of the other, colonies, and, I believe, of New South Wales at the present time, it is that there should be a reasonable uniform tariff imposed by the commonwealth parliament, from which, to a large extent, must be [start

page 104] obtained money to carry on public works and pay interest on the debts. That directs my attention to a proposal made by the Right Hon. Sir George Turner. He desired, and rightly so, that the commonwealth should be called upon to pay nearly the whole, if not the whole, of the interest on the debts. What was the object of that? It was to ensure the commonwealth raising a certain sum of money through the customs, or in some other way which would relieve the various state parliaments, and leave them their railway revenue or whatever other revenue they raised to meet the expense of the ordinary administration of the states governments. That proposal was only another way of getting at what I am attempting to suggest should be done now, that is, getting a certain sum of money that must be returned to each of the state parliaments for the purpose of enabling them to carry on their administration. The hon. member put it in this way: that the payment of the interest on the debts, but not the debts themselves, should be taken over by the commonwealth and paid out of the commonwealth revenue. I am quite in favour of that proposal. That is a very reasonable way of meeting the difficulty. I unhesitatingly say that before we arrive at any recommendation at all, we must arrive at the conclusion that there shall be a minimum returned, not only to the New South Wales Government, but to all the states of the commonwealth.

The Hon. Sir J.W. DOWNER (South Australia)[11.18]: I think hon. members will agree that the desire of the hon. member, Mr. Lyne, to have the surplus returned to the states, on a scientific principle, is impossible.

Mr. LYNE: I do not say that we should have a scientific principle!

The Hon. Sir J.W. DOWNER: We have had various very able persons who have devoted themselves to the consideration of the proposals made, who have all satisfied themselves as to the conclusions they have arrived at, and they all disagree with each other. I think it is only fair to them to say that most of us disagree with all of them. So that after a very careful consideration of the scientific principles out of which this financial problem is to be evolved, I think we have come to the conclusion that the true note was sounded by the hon. member, Mr. McMillan, yesterday, when he said we have to trust the new parliament. We can establish no scientific basis. We are giving life and death powers of infinite importance to this body we are constituting; a body, as he says, consisting of ourselves, not consisting of strangers, who will work together in love and amity, and not as the colonies have from time to time worked-against each other rather than on friendly terms. They have got to be trusted some day, and cannot we trust them at once? The discussion which has taken place since the meeting of the Federal Convention has brought me to identically the same conclusion as was expressed by my hon. friends, Mr. McMillan and Mr. Holder. I think in substance we have to trust the federal parliament. There maybe, as was suggested by the last speaker, an interval during which there should be a minimum guarantee. I do not know that that would be difficult. It would be consoling to the public, and consoling to any treasurers, and there is this to be said in favour of it, that we do not know exactly how this will work out. The new parliament and the executive that controls the federation will have to find out how the thing works, and what is best to do. They will all need experience, and they themselves will, of course, need education to some extent, and it might be well, therefore, from that point of view, that there should be a guarantee of a minimum referring to some special year, which I would not object to being com- [start page 105] puted on a per capita basis in the way which was suggested by my hon. friend, Mr. Lyne. I do not think it will make much difference. I think, if anything of the kind were in the constitution, the results would be identical; but it certainly would be a recommendation of the measure to the people, and would give them encouragement to support it, which they very much need at the present time. Now, as to the fears of the disregard of the views of New South Wales, which the hon. gentlemen referred to, I am sure there is not one who disregards the views of any others. There is no colony that is not regardful of the views of every other colony. We have to consider how this federation will work out. Supposing the government of the commonwealth were handed over to the gentlemen who are here now, would we immediately set about to try to do each other injustice? Would the friendly feeling existing between us be destroyed in a moment? Would every principle of right and justice which we pride ourselves on possessing be suddenly dispersed, because we have a duty to the whole of Australia instead of a duty to particular states? I am sure that these things have only to be thought of by reasonable decent men to be repudiated at once as

childish and absurd. The longer I dwell on this clause, and think of it, the more I feel inclined to give the most perfect trust to the gentlemen who will have to conduct the business of this commonwealth. As to taking over the railways and debts I do not think it is necessary to say anything about that at the present time. The whole difficulty at present is this question of the surplus. But it will not be a surplus for any time. One of the provisions in the bill enables parliament to take over debts. It is manifestly inexpedient to endeavour to make the dealing of the debts a condition of the constitution. It would increase the difficulty of the executive of the commonwealth in making terms in respect of long loans which will not expire for some time, and the same arguments which were used by my hon. friend, Mr. Holder, with reference to the railways will apply with equal force to this question of the debts, the same arguments by which he showed conclusively that it would be inexpedient to provide that this matter must be left to the commonwealth and not made a condition of the constitution will apply with equal force to the debts. But still it is not contemplated that this surplus will continue. It is not expected that the parliament of the commonwealth will not relieve the states of some of their burdens so as to prevent this difficulty as to a surplus. The surplus I look upon as a mere bogy. It is a matter which will disappear very soon after the parliament is established; it will disappear by being applied to the wants of the people by whom it was created.

An HON. MEMBER:-

The Hon. Sir J.W. DOWNER: By the federal parliament. Taking over the debts, for instance, which was the precise point I was suggesting.

An HON. MEMBER: While the debts diminish the income will increase!

The Hon. Sir J.W. DOWNER: So it will. I look upon it that it would be a wise thing to have, I do not say a permanent guarantee, like my hon. friend, Mr. Deakin, suggested, but an interim guarantee for five or ten years-I should think five years would be enough-based on the customs revenue at the time of the commonwealth, or at some other time which may be agreed upon. There would be no danger in the guarantee-there would be great confidence to the general public if that were given. Now as to the basis on which the return shall be made I feel very much with my right hon. friend, Sir John Forrest, the difficulties in the way of Western Australia joining the federation if the scheme adopted at the last meeting of the Convention were [start page 106] carried out. Perhaps they would have disappeared to a large extent, but at all events it was clear that Western Australia, I will not my in its abnormal state, in its state of extraordinary prosperity, would suffer to a very much larger extent, than would the other colonies, and possibly suffer so much that it would be impossible that she should join. Supposing the provision in the bill of 1891 were carried out, I should think that there would be no difficulty at all with Western Australia. Supposing the return were according to contribution, Western Australia, I imagine, would find no difficulty at all in joining the federation; and abstractedly that is the fair principle too go on, no doubt.

Mr. SOLOMON: There is no difficulty in doing that with regard to Western Australia, for there is no border!

The Hon. Sir J.W. D0WNER: There are difficulties in doing any of those things; but returning according to contribution would be, after all, as easy a method as any. I believe that after a while returning according to population would bring about the same results. But if we returned according to contribution we would be doing something which is abstractedly the fairest, and we should ensure Western Australia joining the federation. I do not think that this is the time to make long speeches, and, therefore, I am not going to say more now. I think the tone in which this discussion was started by the representative of New South Wales, Mr. McMillan, and which has been followed by all the other speakers-the speech of my hon. friend, Mr. Lyne, was, after all, very much in the same direction, although with some divergences-I think that good note which was sounded will run through this Convention, and that this financial difficulty, which seemed to be the stumbling block in our way, may be said almost to be removed, because we are all beginning more and more to understand that to

trust the commonwealth when established is the only possible method which can be adopted, and that there can be no scientific basis on which the contribution can be established and continued.

The Right Hon. Sir JOHN FORREST (Western Australia)[11.30]: We have all listened with pleasure to the speeches which have been delivered in regard to this very important matter, and I think we must all have come to the conclusion that the question we have to deal with is one so difficult that it is almost, if not altogether, impossible for us to place in thin bill in precise words a scheme which will be equitable and fair to all the colonies. From what I have heard, there seems to be a greater inclination at the present time to place reliance upon the parliament of the commonwealth than was felt by any of us-at any rate I speak for myself-at the former meeting of the Convention. The reason of that no doubt is that we feel that the parliament of the commonwealth would be in a far better position than we are, would have more information, more facts at its disposal than we have at the present time. The colony I have the honor to represent is, unfortunately, in a peculiar position in regard to, this matter, and I am prepared to admit at once that the colony of New South Wales is also in a peculiar position. Our circumstances are not the same as those of the other colonies. In New South Wales there is a free-trade policy at the present time which, as Mr. Lyne has told us, makes it more difficult in preparing any scheme to bring that colony into line with the other colonies. In our own case, the great prosperity, as Sir John Downer has put it, of Western Australia during the last two years has given to us a very much larger revenue per head from customs than that received in the other colonies. On behalf of Western Australia, I must acknowledge the very friendly spirit in [start page 107] which this matter has been approached, as it affects us. There seems to be a disposition all round to mete out what is equitable and fair to us and to every other colony. We are in a peculiar position in other ways. We are isolated. We have no means of communication except by sea. We are a long way off. As I have often said before, we might as well be an island in the Indian Ocean as regards intercourse with these colonies, because something like 1,000 miles of unoccupied country separates us from the rest of Australia. We have few products, I am sorry to say, to export to these colonies at the present time. Therefore, the advantage to us of a free-trade policy would not be so great as it would be to these colonies, who now have to pay duty on the goods they send to us. In our case, we have at present little to send to the other colonies. Owing to the large introduction of population into the colony and the development of our mining industry, we do not at present, and are not likely for some time to come to be able to, produce sufficient for our own people. We have, however, one product in regard to which we would gain an advantage, which we should be able to export to these colonies, and which we are not able to send at the present time owing to the protective tariff. I refer to timber. Western Australia is noted for its timber; and we should, no doubt, be able to avail ourselves of the markets of these colonies to a far larger extent than we do at present. Then, again, we contribute about £7 per head of the population on account of customs-at any rate we did for the last financial year ending 30th June; whereas, I think, in these colonies the average does not exceed £2 per head. Therefore, Western Australia contributes through the customs £5 per head more than any of the other colonies. Then, again, the total imports of that colony last year were valued at £6,500,000. Of those imports about £3,000,000 came from these colonies, and if we estimate the quantity dutiable at £2,000,000-because we have a large free list-hon. members will at once see that £2,000,000 worth of products would be admitted without duty into Western Australia which now have to pay duty. That is a very important matter to us, because it would probably reduce our customs revenue by a half at one fell swoop.

An HON. MEMBER: It would help to bring you into line with the other colonies!

The Right Hon. Sir JOHN FORREST: It would no doubt, but we should lose the money.

An HON. MEMBER: Put the duties on something else!

The Right Hon. Sir JOHN FORREST: The hon. gentleman says we can put it on something else. I know that is often said; but, perhaps, when the hon. member speaks he will tell us what we can put it on. I am well aware, as has been stated by other hon. members, that if a community does not pay the duty they have the money in their pockets. The only way-as was suggested when I made an interjection to that effect during the debate- is by direct taxation. Well, in Western Australia we have

no direct taxation at the present time, and I do not think I should like to go before my people and tell them that we were going to give away our customs duties for the purposes of the commonwealth; that they would be largely reduced-reduced by one-half, at any rate-and the difference would be made up by direct taxation. We know what direct taxation means. It means taxing one portion of the community and letting the other portion go free. I have not yet heard of any system of taxation in these colonies which is applicable to every person in the colony other than that which is usual by duties through the customs. So that hon. members will see that we are in a difficulty [start page 108] in that respect too. I have not had time to give that amount of attention to these financial clauses that some hon. members have done. I freely admit that. But from the little attention I have been able to bestow upon the subject I have come to the conclusion that the proposals of 1891, with a little modification which I will point out to hon. members shortly, are far more equitable and far more simple than the proposals made in Adelaide. I am somewhat at a loss to know what objection can be raised to the proposals made in the draft bill of 1891. They seem to me, with a few alterations, to be altogether equitable, and, from my point of view, satisfactory not only to Western Australia, but to every other colony in the group. What we desire to aim at, I think-at any rate, that is my idea, and I think it ought to be the idea of everyone else-is to give back to every state the money it contributes, less the cost of collecting the duties and its share of the expenditure of the commonwealth on a per capita basis.

The Hon. F.W. HOLDER: How are you going to find out where the duties arise?

The Right Hon. Sir JOHN FORREST: What does the hon. gentleman mean by arise"?

The Hon. F.W. HOLDER: The duty arises where the goods are consumed!

The Right Hon. Sir JOHN FORREST: There may be a difficulty in that respect, but that is what we want to do. I am sure no colony wants to receive more than it is entitled to receive or wants to get any advantage out of this transaction. All we desire is that we shall get our own money back. If that money does not come back to us in the form of a contribution, it should come back to us in other ways-by, I hope, our obligations, or the whole or some portion of our public debt, being removed. I take it that the bill of 1891 does this. I am aware it has been criticised by some persons, and that it has been proved that losses will occur in some cases, and gains in others. I take it, however, that a little alteration in the wording of the clause will altogether prevent that. Mr. Lyne seemed to think that we are in as good a position now to deal with this question as the parliament of the commonwealth will be. I do not think that we are. In the first place, the parliament of the commonwealth would have some years' experience. Book-keeping, I think, would have to take place for some time, at any rate-whether short or long-and they would have that experience to guide them; and they will be nearer to the time when a decision is required than we are. We have to decide upon facts as they are now. We have to decide what will be equitable and right some years hence, whereas the parliament of the commonwealth will be able to decide, with the facts before them, close up to the time when the decision has to be made. In regard to the proposal that a certain sum per head should be guaranteed by the several states -

Mr. LYNE: That would be a minimum!

The Right Hon. Sir JOHN FORREST: Yes, a minimum. It seems to me that that is scarcely necessary. It might be very well for some of the colonies; but so far as the colony I represent is concerned I would not urge it, nor do I think I would support it.

Mr. LYNE: I think every one is agreed that Western Australia must be dealt with differently!

The Right Hon. Sir JOHN FORREST: It means that New South Wales, Victoria, Tasmania, and South Australia would be guaranteed-if the amount claimed by Mr. Lyne were fixed in the bill -almost the amount of their present contributions, whereas Western Australia would be left in the cold.

[start page 109] Mr. LYNE: I think we are all agree that Western Australia must be dealt with differently!

An HON. MEMBER: There might be a minimum in each colony!

The Right Hon. Sir JOHN FORREST: Of 30s. per head was what was stated. South Australia would be guaranteed the whole of her customs revenue at any rate, and Victoria would also be practically guaranteed the whole. The figures I have show that the contribution per head is-I am referring to a year or two ago-Victoria, £1 13s.; New South Wales, £2; Tasmania, £2; South Australia, 30s.; and Western Australia, for last year, £7 15s. Thus it seems to me that whilst it would be very satisfactory that all the colonies should be guaranteed an amount practically equal to their contributions, if any suggestion of the kind is to find a place in the bill, the more equitable plan would be to guarantee to each of the colonies a sum equal to the amount received the year before the establishment of uniform duties. That would be absolutely fair to everyone.

Mr. LYNE: The right hon. gentleman is fighting very hard for Western Australia!

An HON. MEMBER: Let each colony take a year which suits it best!

The Right Hon. Sir JOHN FORREST: Hon. members may laugh; but it seems to me that there is nothing whatever to laugh at. We may take one year or three years -an average of two or three years and guarantee each colony an amount equal to that average. I do not suppose that any one does not believe that the average would not be exceeded as time goes on. As these colonies progress the amount would be a mere bagatelle; but if we wish to give securities to the Treasurers of the various colonies-and it is an important matter, and deserves serious consideration, seeing that they have large obligations which have to be met-I think the proposal made by the Legislative Assembly and Legislative Council of Western Australia, that there be a guarantee for the various colonies of an amount based upon the average of the preceding two or three years prior to the establishment of uniform duties, a very reasonable one. It seems to me to be a far more equitable plan than the one proposed by Mr. Lyne.

Mr. LYNE: That was not the proposal I made!

The Right Hon. Sir JOHN FORREST: I understood that it was a fixed amount, applicable to every colony.

Mr. LYNE: No, excepting Western Australia, as a minimum only, and to extend over a series of years!

The Right Hon. Sir JOHN FORREST: Instead of fixing a minimum we might fix the actual figures.

Mr. LYNE: But that would involve book-keeping for a number of years!

The Right Hon. Sir JOHN FORREST: I do not think so. There would be the past as well as the future to consider. should like to say one word with regard to public debts. There can be no doubt that it will be a serious matter for all the states if the customs revenue is taken away from them for the purposes of the commonwealth, and the only real means of obtaining funds is removed from them. It will be a serious matter if the debts are still to remain in the hands of the states governments, and the states remain altogether responsible for them. It seems to me we shall find ourselves in a difficulty if we let go the revenue from the customs and the power of raising money from customs, and still have to find large amounts of interest which we have to pay year by year. I was certainly in favour when I came to the Convention of the parliament taking over the whole, or a certain portion, of the public debts. I should like that to be done now. I must say I have been largely influenced by the remarks of Mr. Holder yesterday. If what [start page 110] he states could be assured-that we would have

additional security given to our stock by having the federal commonwealth behind it-I think it is a matter in regard to which we must pause before we provide in a bill that a debt should be taken over at once. I am not so certain myself that what he believes will take place will occur. I believe that the security offered by the Australian governments at the present time is considered by those who lend us money to be excellent; and if that is so, any additional security will not increase the price. I speak from memory-I may be corrected if I am wrong-but I believe the value of inscribed stock in Western Australia at the present time is as good as the inscribed stock of Canada. Mr. Holder, perhaps, will tell me whether I am right.

The hon. F.W. HOLDER: The 3 percent. stock?

The Right Hon. Sir JOHN FORREST: Yes; the 3 per cent. stock of Western Australia is as good to-day, or was a short time ago-and it ought to be better today, inasmuch as things have improved as the inscribed stock of Canada. A few months ago the Western Australian Government placed a loan on the British market of something like £1,000,000 at 3 per cent. It was the first 3 per cent. loan we had ever placed there, and it realised £100 16s. 10d. That was by far the best price that any Australian loan has ever realised. Has Canada, with its four or five millions of people, its immense territory, and its federal government, been able to obtain money at a better price than Western Australia, with a small population, but with a large area, certainly, has been able to obtain it? If it has, then there is something in the argument of my hon. friend, Mr. Holder. Of course, our ideas tend in the same direction as the hon. member's. We all think that, with the dominion behind us, our credit should be better than it is under existing circumstances; but the fact remains that at the present time the credit of Canada is not very much better than that of Western Australia.

The Hon. E. BARTON: It is much better in Canada now than it was in the provinces before they federated!

The Right Hon. Sir JOHN FORREST: That is not the point, I think. I can say a good deal in favour of the great colony of New South Wales; but even with its population of more than 1,000,000, and with its great resources, I take it that, as a borrower, its credit has not been better than that of the colony I represent. I do not think that New South Wales has ever floated a 3 per cent. loan for £100 16s. 10d. per cent.; but, if it has, my argument is that the security of all these colonies being considered good, it cannot be very much better; that those who lend us money are satisfied that the security is good, and that we shall be able to pay the interest as it becomes due, and be able to repay the principal when it becomes due; and, if it is, I do not think that any little additional security on a good document will increase the price. If that is the case-and hon. members will think that out for themselves -then I say that it is our bounden duty at the present time to take over

The Hon. S. FRASER: But increase of competition for the stock would raise the price!

The Right Hon. Sir JOHN FORREST: Has it done so?

An HON. MEMBER: Not if the security is as good already as anybody could desire!

The Right Hon. Sir JOHN FORREST: Then I say that it is our bounden duty to provide in this bill that the surplus, instead of being returned, shall be applied to the payment of the interest on the public debt, and that a proportion of the public debt of Australia shall be taken over on some equitable basis. Then I think that [start page 111] the number of adult males of the colony would be a fair basis. I think that we should not hesitate to place in the bill a provision that the commonwealth should be bound to take over a, proportion of the public debt of each state-of course each state being responsible to the commonwealth for the interest or the sinking fund, as the case might be-for all expenses in connection with it. The conclusion I have arrived at on this matter is that the proposals of 1891, with some modifications before I sit down I will read the modifications I propose-should be the basis upon which we should deal with the financial portions of this bill. It may be necessary-I only throw this out as a suggestion; but it has occurred to me that until parliament should otherwise prescribe there should

be a statutory commission of two or three persons appointed to deal with the finances, and to approve of the distribution. There will be difficulties in the way, no doubt. Those difficulties must be overcome. I do not suppose that you would be able to get the exact figures-it is not likely that, with a system of inter-colonial free-trade, it would be possible to got the exact figures, and that the amount of duty that belonged to each state could be ascertained. We know very well it could not be; but, still, we will have to make an approximation, and do the best we can, and I think that, if we provide that there shall be a Statutory commission until parliament otherwise prescribed, it might be the means of giving satisfaction to the different colonies, and make them more willing to go into the federal commonwealth. It has been suggested by several hon. members that Western Australia should have some special terms. I do not know that we want any special terms. I think that, if the plan I have suggested were carried out, it would be equitable and fair to all-that is, that we should be guaranteed a certain amount, based upon the revenue that we-were producing from customs prior to the establishment of uniform duties.

An HON. MEMBER: Will not that be reduced in your colony in a few years' time?

The Right Hon. Sir JOHN FORREST: I do not think it will. I think that as the trade of the colony expands the amount will be very much larger. If we were to stand still and do nothing, and not go beyond our present development, the amount might perhaps decrease; but increase of trade must result in an increased amount being received from customs.

Mr. LYNE: But would not the amount per head decrease?

The Right Hon. Sir JOHN FORREST: I do not know. The same argument that applies to others will apply to us, I suppose.

Mr. LYNE: We are on the increase!

The Right Hon. Sir JOHN FORREST: I can deal only with the facts and figures before me. I do not know that we shall increase ten times.

The Right Hon. G.H. REID: Not in drinking power, surely!

The Hon. S. FRASER: It was the same in Victoria in the gold-digging days, and it will disappear in Western Australia as it did there!

The Right Hon. Sir JOHN FORREST: I am not here to foretell what will take place. I am certainly not here to foretell that we shall be less prosperous than we are at the present time.

An HON. MEMBER: You might be in a great deal better position, and still your revenue from customs might become less!

The Right Hon. Sir JOHN FORREST: If it is fair to all the other colonies, why should it be unfair to us?

An HON. MEMBER: Because your conditions are abnormal!

The Right Hon. Sir JOHN FORREST: The revenue has been increasing for many years. I do not know what the hon. [start page 112] member calls abnormal. I have been over six years in office, and every year there has been an increase, and I do not think that we shall go down all at once. At any rate, I see no reason why it should be so. It will be difficult for hon. members to convince me or the people of Western Australia that we should be treated in a different way from any other colony. We do not-want any special terms. We only wish to be treated in the same way; and if the proposal that has been made by the hon. member, Mr. Lyne-that we should be assured of the customs we are receiving or have received the last two or three years or the last year, for some years ahead, say ten,

and all the other colonies should be assured in the same way-is agreed to, I think we will go a long way towards meeting on an equitable basis. The alterations in the clause of the 1891 bill which I would suggest are very few. The first would read as follows:-

The contribution of revenue by each state to the commonwealth shall be applied in the first instance in the payment of the actual costs, charges, and expenses incidental to the collection of such revenue, and next in payment of the expenditure of the commonwealth, which shall be charged to the several states in the proportion which the numbers of their people bear to the total population of the commonwealth, and the surplus shall, until uniform duties of customs have been imposed, and for five years afterwards, be returned to each of the several states or parts of the commonwealth.

I then insert sub-clauses I, II, and III of clause 9.

The Hon. Sir P.O. FYSH: In what proportion would the return be made?

The Right Hon. Sir JOHN FORREST: The amount of the surplus contributed by each state would be returned to that state.

Mr. TRENWITH: The right hon. member says, "shall be charged according to population." Suppose the expenditure for services in one colony is very much higher than the expenditure in the other colonies?

The Right Hon. Sir JOHN FORREST: We say

shall be charged to the several states in the proportion the number of their people bear to the total population of the commonwealth, and the surplus shall, until uniform duties of customs have been imposed, and for five years afterwards, be returned to each of the several states or parts of the commonwealth.

We then propose to insert sub-clauses I, II, and III of clause 9 of the bill of 1891, and to add these words:

After the first five years after uniform duties of customs have been imposed, unless parliament otherwise provides, such surplus shall continue to be returned to the several states or parts of the commonwealth in the same manner as near as can be ascertained, and such returns shall, as far as possible, be made monthly.

The Hon. Sir P.O. FYSH: That is as nearly as possible the 1891 arrangement!

The Right Hon. Sir JOHN FORREST: Yes.

The Right Hon. Sir G. TURNER: What is the difference between it and the 1891 arrangement?

The Right Hon. Sir JOHN FORREST: In the 1891 bill the contributions from the various states were all lumped together. We propose that the contributions of each state shall be kept separate.

An HON. MEMBER: How are we going to find out what it is?

The Right Hon. Sir JOHN FORREST: It will be very easy to do that, if we have uniform duties of customs. The colonies must do the best they can until parliament otherwise provides.

The Hon. R.E. O'CONNOR (New South Wales)[12.2]: I take it that the object of this discussion is, not to force us to any definite conclusions, but to enable those who form the committee to gauge in some way the trend of the opinions of the Convention, and to become acquainted with the development of political thought upon this question during the interval of our adjournment. I think we

may all congratulate ourselves that we have arrived much [start page 113] nearer to a solution of the problem in this respect, that we are becoming more and more convinced that we must trust the great parliament which we are to create, and are coming more and more to recognise the distinction between the principles which a constitution should contain and the functions which should be handed over to the legislature which has to carry out those principles. I think we are coming to recognise that there are many questions in regard to which an attempt was made at first to deal definitely which would be much better left to a parliament which will have more material, and will have circumstances more clearly before it than we have at the present time, I do not propose to say anything with regard to the financial proposals beyond this, that I cordially agree with the view expressed by the hon. member, Mr. McMillan. I also think that some proposal such as that suggested by my hon. friend, Mr. Lyne, might very reasonably be accepted to. My object in addressing the Committee was to make some observations which may, possibly, be of some use to those who have to consider this matter, in regard to the aspects of the railway question and the inter-state commission. I think it will be recognised that during the Adelaide sittings we did not come to a clear understanding of each others' views on that particular question. I think there was a tendency at the time to rather minimise differences with a view to getting to some kind of conclusion. We cannot postpone coming to a conclusion on this question now. It is one of the most important questions with which we have to deal, and not only affects the form of the constitution, but it is at the very basis of the agreement upon which the several colonies are willing to enter into the union. The first thing to be clear about is the idea we leave in our own minds as to what we want to do. When we have the idea of what we want clear in our own minds, it will be much easier to express it in the constitution. Above all things we must be careful to express what we wish in clear language, and with no unnecessary verbiage. The experience of all constitutions of this kind is that there gradually grows round them a great mass of decisions. The courts interpret them continually, and a body of law gradually grows up which is almost as important and as bulky as the constitution itself. We must be careful that we use only such words as carry out our meaning, and that no loose general expressions are used which may enable interpretations to be put upon the constitution which it was not our intention should be put upon it. I would like in this place to make as clear as I can the view I take with regard to the railway question. It appears to me that there is no half-way house in this matter. Either you must hand the railways over absolutely, federate them, and vest them in the federal government, which would give you the advantages of one railway system throughout the commonwealth, or, if you do not do that, if for reasons which appear to me, and I think will appear to most hon. members, to be good and sufficient, you do not wish to hand over tire railways, then you must accept the position with all its consequences. It appears to be thought by some hon. members-the hon. member, Mr. Deakin, seems to be of this opinion that under the provisions of an inter-state commission it would be possible for the commission to fix upon some central point in the railway systems of the colonies, say Cootamundra, and to arrange for long distance rates running to the New South Wales and to the Victorian seaports upon equal terms. I think that the hon. member, and those who take that view, have rather mistaken the position in assuming that any such thing can be done. The position which it appears to me New South Wales must take up under the circumstances is this: We agree that these [start page 114] warring tariffs which have been causing so much loss to the railway systems of both colonies for some time past, must come to an end. Whether you call them preferential or differential rates, I do not think matters much for the purposes of my argument. We are all agreed that you may just as well obstruct freedom of trade by placing prohibitory rates upon your railways as by imposing prohibitory duties through the Customs-house. Therefore we must arrive at some method by which this can be obviated.

An HON. MEMBER: Would not the federation of the railways have the very opposite effect?

The Hon. R.E. O'CONNOR: I am coming to that. I am pointing out what a very strong, and it may be dangerous, weapon you place in the hands of any state if you give it the power of absolutely regulating its own rates as it thinks fit. You may put it in any form you think fit. Suppose there is a certain product coming into New South Wales from Victoria which we wish to keep out. If we have the right to impose railway rates in any form we think fit, there is no reason why a rate of a prohibitive character should not be imposed to prevent this article from coining into New South

Wales. So Victoria in her turn might impose a similar rate. Take the case of stock. Supposing under free-trade all duties upon stock disappeared, it would be quite within the range of possibility for Victoria to impose such rates upon stock coming from New South Wales by railway as would practically have the effect of a stock-tax, or, vice versa, the process might be applied by New South Wales. I only point this out to show what a dangerous weapon would be left in the hands of the state, and I agree with the hon. member who interjected that the operation of it would have quite the opposite effect. In all countries where there are government railways or where the railways are in the hands of private companies in which you have two railways competing in any one district the effect has been to lower the rates of carriage to the persons living in that district. The general system of the railway suffers, but the effect no, doubt upon the producers, the persons interested in the carriage of goods to a given district, is to lower the rates to them. In that case you shift the incidence of injury from the producers in a particular neighbourhood to the whole country which has to pay. I therefore assume that it would be taken for granted on all hands that we must have some system by which the possibility of imposing differential rates against each other's products would be removed. Now it is said that that can be done by handing over the power to a commission to fix some general rates upon the whole of the railways running through the different colonies. But that cannot be done consistently with maintaining the control of our railways, and for this reason: Each colony has its own railway carriage on its own system, and with a view to benefit particular localities As a general rule the railways are worked directly for the benefit of the state's own Crown lands, and those lands have been sold with the knowledge that railways will be made as roads are made by the Government to render them accessible. I look forward to the day in New South Wales when, preserving the system in the prosperous condition in which it has been preserved, we shall make use of the profits, not by putting them into the Treasury, but by reducing the rates; and it is in that respect that the state railway system in these colonies differs in a very important particular from-the ordinary business concern of a carrying company. Our railways are not only managed with a view to make a profit out of the carriage of goods and passengers, but also with a view to the development of the country; and it is just as much for the benefit of the state that people should be settled on the land, and [start page 115] that greater facilities should be given for the opening up of the country, greater facilities to bring produce to the seaboard for export, as that increased revenue should be derived from an increase in the carrying business of the lines.

The Right hon. Sir G. TURNER: Would not the hon. gentleman allow the reduced rates to apply to two ports and not to Sydney alone, giving the benefit of the reduction of rates to producers, not only in one direction, but in the other?

The Hon. R.E. O'CONNOR: As long as you keep the railway systems separate, each colony will have the advantage of such cheap rates as can be given by its railway system to its own producers. I say, in the first place, that the plan of each colony keeping its own railways is advisable from the point of view that its own people will derive all the advantages that can be derived from their economical and proper management, among those advantages being the special one of a reduction of rates in any way, or in any direction which may be thought desirable. What I was about to point out was that if all the lines are handed over, if you have a system under which the rates are fixed by some authority in the commonwealth, altogether apart from whether it is or is not in violation of the constitution, what follows is this: Take, for instance, New South Wales. Instead of her having the benefit of the successful administration of the railways in the form of reduced rates to her own customers, she would be obliged to wait until the whole railway system of the federation was in a position to give that benefit. Now, I say that if you are to have a system in which you hold your own railways and bear the burden, you ought to have the whole of the advantage.

The Right Hon. Sir G. TURNER: The experience of other countries is that amalgamation enables the rates to be reduced!

The Hon. R.E. O'CONNOR: The hon. member will know that amalgamation takes place only upon a business basis, and I hope that it may take place by-and-by in our case. No doubt it will under the permissive powers given by this constitution to the commonwealth. While I think that each colony

should retain the control of its own railway system, I say at once that that railway system should be worked in such a way as not to be used unfairly against the railway system of another state. For instance, take the case of Victoria and New South Wales in Riverina. I say at once that provision should be made in this constitution by which the cutting rates of the New South Wales railways coming Sydneywards, and on the Victorian railways, going to Melbourne, taking away traffic in either case from the other colony, should be done away with.

An HON. MEMBER: Would the hon. member have a uniform mileage rate?

The Hon. R.E. O'CONNOR: I say that it is not necessary. As far as that is concerned every state ought to have the control of its own rates within its own borders. The only restriction which should be put upon the perfect liberty of the state to fix its rates is this: that it should charge in all respects the same rates to the producers of other colonies as it does to its own. Take a concrete instance - the railway running from Hay to Sydney. I do not think any produce run on that line should be carried at a lower rate than would obtain upon the same distance anywhere else in New South Wales in order to attract traffic to our railways.

The Right Hon. Sir G. TURNER: The hon. member wants to take away our only weapon for the Riverina trade, and to keep all the weapons which his own colony has!

The Hon. R.E. O'CONNOR: I do not see how that could possibly be.

[start page 116] The Right Hon. Sir G. TURNER: By not agreeing to a uniform mileage rate

The Hon. R.E. O'CONNOR: The right hon. gentleman will see what a uniform mileage rate involves. I maintain that the country which has built the railways, which maintains them, and which has to hear the whole responsibility of their being worked at a loss, ought to have the benefit of any gain which may be made from them. I say it is impossible, as long as you keep the system upon that footing, to allow any other state to come in and fix a rate for you which may involve a loss to you. All we can expect is this: that, inasmuch as the railways of New South Wales adjoin the railways of Victoria, both being worked independently, that Now South Wales shall not impose rates which will unfairly draw traffic from the Victorian lines, and, in the same way, that Victoria shall not impose rates on her railways which will unfairly attract traffic from the railways of New South Wales.

An HON. MEMBER:-

The Hon. R.E. O'CONNOR: If you wish the advantages of geographical position, the only way in which you can obtain them fairly is to hand over the railways. In other words, the question must be treated in exactly the same way as if the railways were private railways owned by private companies.

The Right Hon. Sir G. TURNER: If the railways were in the hands of private companies there would be a through rate!

The Hon. R.E. O'CONNOR: That is a matter of arrangement; and there is no reason why such a thing should not be arranged. The only way in which you can deal with the railways is to treat them exactly as if they were owned by private companies, always with this proviso: that they must be worked in such a way as not to give unfair advantages to the people of one state as compared with the people of another territory.

The Right Hon. Sir G. TURNER:-

The Hon. R.E. O'CONNOR: In no country in the world are competing railways run on the lines suggested by the hon. member.

The Right Hon. Sir G. TURNER: I would put the railways in exactly the same position as the American and English railways are put. You cannot fairly ask for anything better than that.

The Hon. S. FRASER: Is any complaint ever made in America that railway companies charge too little?

The Hon. R.E. O'CONNOR: No. It is not my complaint; it is the hon. member's complaint!

The Hon. S. FRASER: You say that we charge New South Wales less than we charge Victoria!

The HON. R.E. O'CONNOR: Whoever makes the complaint, it is not that Victoria charges less, but that she charges New South Wales traffic less than she charges her own traffic, for the purpose of attracting that traffic to the Victorian railways. That is to say, Victoria charges preferential rates. I say that should not be allowed.

The Hon. S. FRASER: New South Wales does the same at Bourke!

The Hon. R.E. O'CONNOR: Why? Because it is a necessity of the position that these things should be done. I say that that kind of cutthroat competition should disappear under a system of the kind we propose. Afterall, this is not a matter to be settled on any abstract principle as to what is right or wrong, or what is just or unjust. It is only a question of what we can best do under the circumstances. Speaking for myself, although I am perfectly willing to make any provision in this constitution to ensure that these unfair differential rates shall disappear, I shall be no party to any arrangement that will give a right to any authority outside of New South Wales to fix the rates to be levied on the New South Wales railways. The next question is-how have we attempted to carry this [start page 117] out in the constitution? I was one of those who strongly favoured the appointment of an inter-state commission; but reflection has satisfied me that, with the bill in its present form, it would be a very unwise and cumbersome way of dealing with the question. The inter-state commission provided for by the bill originally had its constitution fixed-that is to say, it was to be a commission appointed with a tenure of office as independent as that of a supreme court judge. That has been struck out. As it is now, it is simply to be appointed as any other officers are appointed by a colony.

An HON. MEMBER: The tenure of office can be regulated by the federal parliament!

The Hon. R.E. O'CONNOR: I know that; but in the constitution originally submitted there was a guarantee of the independence of these officers; there was also a provision, which was struck out, restricting the operation of the commission to the particular preferential rates which I have pointed out should be swept away. That has been struck out. Clause 97, as it now stands, says:

The commission shall have such powers of adjudication and administration as may be necessary for its purposes, and as the parliament may from time to time determine.

Originally there was this proviso added

But shall have no powers in reference to the rates or regulations of any railway in any state except in cases of rates or regulations preferential in effect and made and used for the purpose of drawing traffic to that railway from the railway of a neighbouring state.

The Right Hon. Sir G. TURNER: The New South Wales representatives told us that those words were put in for the benefit of Victoria, and I objected!

The Hon. R.E. O'CONNOR: The hon. member is mistaken in thinking that that was the case. The hon. member, Mr. Wise, said it made no difference, and I think it was the hon. member, Mr. Barton, who said that this proviso was put in for the purpose of pointing plainly to the extent to which

the interference with the local rates-the rates on the different railway systems-should be allowed. There is no mystery about it; the words are plain enough in their meaning. I call attention to them now, because they emphasise the view I held, that the only interference that could be allowed is where railways are being run unfairly to the railways of other colonies.

Mr. MCMILLAN: It is to define their duties!

The Hon. R.E. O'CONNOR: Yes; and to point beyond all question to the fact that there was no power given in the constitution to this commission except for the purpose of seeing that the railways were fairly run, and the rates fairly made in the various colonies.

An HON. MEMBER:-

The Hon. R.E. O'CONNOR: Without that clause to point out the object and the duties of the commission, and without any guarantee as to its constitution, I should be opposed to the appointment of any interstate commission. Let me point out why. This inter-state commission would necessarily consist of men of some expert knowledge of railway matters. That, probably, would be a necessity. Now the duties which they have to perform are to execute and maintain upon railways within the commonwealth and upon rivers flowing through, in, or between two or more states the provisions of this constitution relating to trade and commerce. These powers are very vague and very general. It would be impossible to hand over with any reasonable anticipation of satisfactory work the duty of construing this constitution to a commission of this kind.

The Hon. J.H. GORDON: The President of the Inter-state Commission in America is generally a lawyer!

The Hon. R.E. O'CONNOR: I would point out the difference between America [start page 118] and the state of things here. Even if you have a mixed commission, the duty of interpreting this constitution should be placed upon the highest judicial authority in the commonwealth, and it should not be handed over to such a commission as we have here. Therefore I have come to the conclusion, although I think an inter-state commission ought to be appointed, that such a commission should be appointed by the parliament under a statute passed by the parliament of the federation. Then you would be in the position of being able to lay down lines upon which this inter-state commission should proceed. You would be able to lay down certain principles and definite limitations within which they should do their work; you would be able to guarantee that they would have a certain status, with a certain tenure dependent only on good conduct, and in that way you constitute a commission which may have any powers you choose to give them, but which would exercise those powers on certain definite lines. Any inter-state commission, however constituted, in which you place the duty of interpreting this constitution, would certainly be a failure, and give no satisfaction to any of the parties concerned.

An HON. MEMBER: Is not that exactly what is done now in clause 97?

The Hon. R.E. O'CONNOR: No; clause 97 says:

The commission shall have such powers of adjudication and administration as may be necessary for its purposes, and as the parliament may from time to time determine.

The hon. member, if he reads that clause will see that the inter-state commission might be constituted at once by appointment, without an act of parliament.

An HON. MEMBER: It must be by law!

The Hon. I.A. ISAACS: If the hon. member looks at clause 96, he will see that the parliament may make laws constituting an inter-state commission.

The Hon. R.E. O'CONNOR: Exactly.

The Hon. I.A. ISAACS: It would have to be appointed by the parliament!

The Hon. R.E. O'CONNOR: No doubt the parliament would have to pass some legislation constituting an inter-state commission. The act might simply be to constitute an inter-state commission without limitations of any kind.

An HON. MEMBER: So it might be in the other case the hon. member has put. You might leave the whole thing to parliament, unless you propose to abridge their jurisdiction!

The Hon. R.E. O'CONNOR: Undoubtedly. I propose to leave their jurisdiction to be defined by the federal parliament within such limits as may be found to be necessary. I wish to point out that this interstate commission, as constituted in this way, is not really a necessity for the purposes of carrying out the objects which we have in view. Clause 52 of the constitution gives a power to regulate trade and commerce with other countries, and clause 95 is as follows:-

Preference shall not be given by any law or regulation of commerce or revenue to the ports of one state over the ports of another state, and any law or regulation made by the commonwealth, or by any state, or by any authority constituted by the commonwealth, or by any state, having the effect of derogating from freedom of trade or commerce between the different parts of the commonwealth, shall be null and void.

There may be a good deal of vagueness about these expressions; they may have to be amended in some way; but, taking the thing generally, I hold that, under the power to regulate trade and commerce, and under the provisions of that clause which prohibit preference to the ports of one colony over the ports of another, and prohibit any rates which have the effect of restricting trade or commerce, you have quite sufficient power to carry out all the objects we have in view in regard to the doing away with these preferential rates. Under an almost exactly similar expression in the

[start page 119] Constitution of the United States even larger powers than this have been assumed by the commonwealth, and decided by the great jurists of the United States to be within the powers of the Constitution.

An HON. MEMBER: Quite a different thing!

Another HON. MEMBER: The very opposite, the hon. member will find!

The Hon. R.E. O'CONNOR: I know, and I think you will hear me out in this, that the words on which the interstate commission have been appointed are the simple words at the beginning of clause 52 of this bill-"The regulation of trade and commerce." It is on these words only that, the United States have founded their right to pass the Inter-state Commerce Act. Perhaps I may remind hon. members of what the position of things is in America. The provisions in the United States Constitution are the power to regulate trade and commerce, and the provision, which is very much like clause 95 of our bill, that no preference shall be given by any regulation of commerce or revenue to the ports of one state over those of another, and so on. These are the only two sections in the constitution which in any way deal with the matter, and under the provisions of that power to regulate trade and commerce the Supreme Court of the United States decided in 1886 the case between the Wabash, St. Louis Pacific Railway Company and the State of Illinois, and it was upon that decision that the Interstate Commerce Act was founded. This act deals specifically with the duty of the Inter-state Commission, and lays down certain rules which shall be observed in the carrying out of inter-state commerce, and it is all founded upon the power which is held to be contained in the constitution. If hon. members will read the provisions of this Inter-state Commerce Act they will find that they

contain everything which can possibly be desired for the purpose of the fair running of these railways within the four corners of the act itself. All that power flows from the right which is given to regulate trade and commerce. Before I read the decision in that case I think I may have the assent of the Committee to this statement, that the interpretation of our constitution will be most probably upon the same lines as the interpretation of the United States Constitution. In both cases the law administered is the common law of England derived in this colony and America from exactly the same sources, and administered on exactly the same principles. I think we may take it that the decisions which have established certain positions in America in the construction of their constitution will most probably be followed here. The case of the Wabash, St. Louis, and Pacific Railway Company is reported in 118 United States Reports. The court said:

It cannot be too strongly insisted upon that the right of continuous transportation from one end of the country to the other is essential in modern times to that freedom of commerce from the restraints which the state might choose to impose upon it that the commerce clause was intended to secure. This clause giving to Congress the power to regulate commerce among the states and with foreign nations, as this court has mid before, was among the most important of the subjects which prompted the formation of the constitution. And it would be a very feeble and almost useless provision, but poorly adapted to secure the entire freedom of commerce among the states which was deemed essential to a more perfect union by the framers of the constitution if at every stage of the transportation of goods and chattels through the country the state, within whose limits a part of this transportation must be done, could impose regulations concerning the price, compensation, or taxation, or any other restrictive regulation interfering with and seriously embarrassing this commerce. . . . As restricted to a transportation which begins and ends within the limits of the state, it (the law of Illinois) may be very just and equitable, and it certainly is the province of the state legislature to determine that question. But when it is attempted to apply to transportation through an entire series of states a principle of this kind, and each one of the states [start page 120] shall attempt to establish its own rates of transportation, its own methods to prevent discrimination in rates or to permit it, the deleterious influence upon the freedom of commerce among the states upon the transit of goods through those states cannot be over estimated. That this species of regulation is one which must be, if established at all, of a general and national character, and cannot be safely and wisely remitted to local rules and local regulations, we think is clear, from what has already been said. And if it be a regulation of commerce, as we think we have demonstrated it is, and as the Illinois Court concedes it to be, it must be of that national character, and the regulation can only appropriately exist by general rules and principles, which demand that it should be done by the Congress of the United States under the commerce clause of the constitution.

The Hon. I.A. ISAACS: The hon. member sees the distinction there!

The Hon. R.E. O'CONNOR: The distinction is, and it brings out the whole position, that the power to regulate commerce gives a right to interfere in regard to any contract of railway carriage, where goods pass from one state into another state or through another state.

Mr. HIGGINS: And river navigation The Hon. R.E. O'CONNOR: And river navigation as well. But where the carriage is entirely within the state the constitution gives no right whatever to the federal authority to interfere.

The Hon. J.H. GORDON: The preferential rates are all within the state-or nearly all!

The Hon. R.E. O'CONNOR: The preferential rates are within the state, but the preferential rates within the state will be met by clause 95.

An HON. MEMBER: The hon. gentleman forgets that there were no railways in America when the constitution was framed?

The Hon. R.E. O'CONNOR: That does not affect the question. We are dealing now with the constitution as it is. In answer to Mr. Gordon, clause 95 is exactly intended to meet the case he puts.

The Hon. J.H. GORDON: Very eminent authorities say it will not!

The Hon. R.E. O'CONNOR: The clause says:

Reference shall not be given by any law or regulation of commerce or revenue to the ports of one state over the ports of another state.

The Hon. J.H. GORDON: Does the hon. member say absolutely that that meets the case-as a lawyer?

The Hon. R.E. O'CONNOR: I say, as a lawyer, that that absolutely meets the case of the whole of the differential rates we know of, or have experience of, up to the present time. I say it absolutely meets the case, for instance, of the differential rates on the railways from Swan Hill to Albury in Riverina, and it absolutely meets the case of any rates of ours calculated with the view of attracting that traffic to Sydney; because, in the case of the railways which tap the river Murray within the lines I have indicated, those rates are all made for the purpose of giving preference to the ports of one state over the ports of another state.

The Hon. I.A. ISAACS: The hon. member loses sight of the fact that the provision as to preference to the ports of one state over the ports of another, as cited in the case of the United States, does not apply to state laws; but the commonwealth must not give preference to the ports of one state over the ports of another.

The Hon. R.E. O'CONNOR: By the constitution it is expressly provided that any law or regulation made by the commonwealth, or by any state, or by any authority constituted by the commonwealth-

An HON. MEMBER: What law?

The Hon. R.E. O'CONNOR: Any law or regulation. I am not discussing a constitution that we have rigidly agreed to, But I am willing, if any amendment is necessary, that those words should be amended so as to make it perfectly clear that there is embedded in this constitution a prohibition against any rate which will give an undue preference to the ports of one state [start page 121] over the ports of another state. What more can be asked than that? If that is done, if you prevent that preference being given by some words-let them be as large, as strong, and as clear as you like-that altogether meets the difficulty which is put by the hon. member, Mr. Gordon, and the other hon. gentlemen who have interjected.

An HON. MEMBER:-

The Hon. R.E. O'CONNOR: You would, no doubt, have to legislate in this matter. You would have to appoint an inter-state commission which would have the power of dealing with questions of this kind exactly the same way as is done in America.

An HON. MEMBER: They fine and imprison a man in America!

The Hon. R.E. O'CONNOR: That is a detail; it does not matter very much what you do with him. You will have the sanction of an act of parliament. To bring my comments on this clause to a point, it not only prohibits the rates I speak of, but it makes them void; so that any rate of the kind made in violation of this clause is a void rate, and cannot be collected. The position, therefore, that I take in regard to the matter is this: I say that as far as the preferential rates are concerned, which puts the railway system of one state in an unfair position in regard to the railway system of another state, that

can be met by the provision of clause 95, or some such provision. And I say in regard to the carriage of goods from one port to another, or through the different states, that that comes absolutely within the power of the commonwealth to control. Take, for instance, the main trunk line from Melbourne to Sydney. It would be within the power of the commonwealth to absolutely control the making of those rates to the extent that they were in any way interfering in the treatment of any person who had a right to use the railways. As a measure of what can be done, the Inter-state Commerce Act of America itself provides, for instance, that the rates shall be reasonable over the whole of the journey, that the rates shall not be unjustly discriminative. It also provides for what is called the prohibition of charging a less sum for a long haul than for a short haul, and in a number of ways it supplies all the guarantees which could be fairly asked for in regard to any inter-state traffic. As regards traffic which does not pass continuously from one state to another, I say that clause 95 is quite a sufficient answer. I should like to call the attention of the hon. member, Mr. Gordon, who has taken so much interest in the river question, to this point: that exactly the same principles which have enabled the United States to take the control of carriage by railway would enable the commonwealth to take the control of navigation and of waterways from one state to another, and, therefore, whatever the provisions of this constitution may be, so long as they are not contradictory of that, the constitution gives power to the commonwealth to make laws regulating carriage upon the rivers as well as upon the railways.

The Hon. J.H. GORDON: And the use of the water?

The Hon. R.E. O'CONNOR: The use of the water as far as navigation is concerned.

The Hon. J.H. GORDON: That is only going half the distance!

The Hon. R.E. O'CONNOR: The hon. member, I know, wants the whole of the water, but the Convention was against him at Adelaide, and I do not think they will be more favourable here. I have placed these views before the Committee, because it appeared to me that at this stage, though we need not come to any definite conclusion, it is just as well that we should under. stand each other. It is just as well that some statement should be made definitely, as far as New South Wales is concerned, of what we require in the treatment of this question; and I should like to assure [start page 122] hon. members that, within the lines I have pointed out, I am quite willing to make any amendment which would be necessary to carry out these purposes. As far as the inter-state commission is concerned, I do not think it would be wise to encumber the constitution by such provisions. I think it would be very much better to give the power to make this kind of legislation to the federal parliament. If we trust it with many other things we may trust it with that. Then the power may be given in such a way that it may be exercised by the kind of body which is likely to be appointed.

The Hon. I.A. ISAACS: You give no weight to geographical position!

The Hon. R.E. O'CONNOR: Certainly not, and we had better understand one another.

The Hon. I.A. ISAACS: You make the political boundary the test!

The Hon. A. DEAKIN: The federation must either take the railways or leave them!

The Hon. R.E. O'CONNOR: Undoubtedly. There is no half way about the matter. Hon. members want all the advantages of taking over the railways, and want to leave New South Wales the disadvantages. We cannot consent to any such proposal. If the railways are to be treated as if each colony retained its own, then they must be dealt with exactly on the same principles as if the railways in each state were conducted by private companies. I am quite willing that that should be done; but there should be no general handing over to any authority power to fix the rates in such a way as would eliminate all geographical boundaries, and put the other colonies in exactly the same position as if they had to bear the burden and responsibility of the railways of New South Wales.

The Hon. A. DEAKIN: In other words, the hon, gentleman declines to take over the railways altogether, or to leave them precisely as they are!

The Hon. R.E. O'CONNOR: No, I do not say that. You must either take over the railways or leave them as they are, with, this exception: that you may very reasonably make provisions which will insure that the preferential rates which have been causing so much loss on our railway borders shall no longer continue. I have made these observations, which have been drawn out to a greater length than I intended, in order that we may understand exactly what we are about before we come to a decision.

[The Chairman left the chair at 12.58 p.m. The Committee resumed at 2 p.m.]

Mr. HIGGINS (Victoria)[2].[Committee counted]: I should not have risen to claim the attention of the Committee at this time but for the lucid and admirable speech which has been delivered by Mr. O'Connor, who has given me the cue for the few remarks I feel bound to make. Before I deal with Mr. O'Connor's speech, I should like to wedge in such remarks as I may have to make upon the general financial question, and then deal with that of the railways, I may state that at Adelaide, as well as here, I carefully abstained from speaking much on financial matters, simply because I feel that upon financial matters, more than upon any other, there is need of modification of opinions to suit the views of others. I feel that upon financial matters, more than upon any other, there is need of give and take; and I have found it rather a fault in my own mind-and I suppose other members find it also-that if you have once expressed your opinion on a particular point, especially in public, you are apt to adhere to that opinion more obstinately than you would have-adhered to it if you had not expressed it. But I have also felt that, upon financial matters, official experience tells more than any other thing. A man of official experience, especially as a Treasurer, can speak with more weight; and we who have no official experience-we who [start page 123] have not had anything to do with the Treasury or its difficulties-ought not to dispose of the finances upon mere grounds of theory without hearing exactly how the financial proposals will affect the treasuries of the different colonies. I have felt from the first that the financial question must be settled eventually by some rough-and-ready adjustment-that it cannot be settled upon any pure principle of theory, and cannot be settled upon terms of absolute justice to every one. I have been anxious, as far as I can, to leave my mind open upon the financial matter to the very end of the debate; but I have been invited-and I accept the invitation-to express how the position strikes us unofficial members, so that-the Finance Committee may be able to go to its room, and to frame a scheme which they see some reasonable prospect of carrying through-a scheme which hon. members will afterwards be able to recommend to those whom they represent. I also feel that, although the financial question presents great difficulties, and is of great importance, it is put altogether out of its true perspective in the columns of the press and in the debates in Parliament. I say with all respect that it has, the least important bearing of all the problems of federation upon the ultimate welfare of the people of Australia. I say that, in the main, the financial difficulty is a problem of the transition period, and, being a problem of the transition period, it necessarily must be transitory; that whatever solution may be effected will be transitory in its effects, and that, even supposing any great loss occurs to any state of Australia by any financial proposals-losses spread over some years to come-the resources and the capabilities of the different states are such that, eventually, they will be able to overcome the injury which may be occasioned.

The Right Hon. Sir G. TURNER: They will have to find the money in the meantime!

Mr. HIGGINS: Just so. It is just because we shall have to find the money in the meantime that the financial problem has become of such importance. It is exactly as the author of the "Autocrat of the Breakfast Table" says, "To-morrow morning's breakfast subtends a larger angle in a man's mind than the welfare of the nation for future years." And it must be so. The difficulties of the Treasurers of the different colonies are before their minds, and they must see that they have enough with which to carry on the government of the states. We must bear in mind that the loss in the adjustment of the financial problem will be no more than the low inflicted by an invading army. It will be a great loss no doubt, but still time will cure any ill effects which may arise from the temporary injustice. To go back to

problems which hon. members faced in the first instance, it appears to me that there are two causes of our difficulty with regard to the financial problem. The two causes, I think, are the New South Wales tariff and the Western Australian tariff and conditions. I speak of the Western Australian tariff, inasmuch as it taxes more articles than any other colony.

The Right Hon. Sir JOHN FORREST: Not at all!

Mr. HIGGINS: I know I speak under correction. But if the right hon. gentleman will look, as I have looked, at the comparative table of tariffs which has been published-

The Right Hon. Sir JOHN FORREST: It is two or three years old!

Mr. HIGGINS: I do not wish to persevere in that statement if I am wrong. But if there has been an alteration within the last two or three years which reduces the number of taxable articles, then I have no doubt I must correct my statement. Two years ago the Western Australian tariff taxed more articles, and of course by that means taxed a number of articles from [start page 124] other colonies which the other colonies did not tax. To go back to my main point, I say that the New South Wales tariff and the Western Australian conditions are the two causes of our difficulty. I feel that in dealing with this matter we must try to adopt that system which will be suitable to the conditions of the majority of the colonies, and that, we must make special arrangements for the special conditions of the minority of the colonies. By the minority of the colonies I mean New South Wales and Western Australia. I think that the opinion is hardening all round this House, and throughout this country, that special arrangements must be made, at all events in regard to Western Australia, and I think also that special provision must be made in the Commonwealth Bill to obviate the fears of hon. members for New South Wales, and gentlemen who have written in the press and otherwise in New South Wales, so as to show the people of New South Wales that no glaring injustice at all events will be done to them in the course of the federation. I may say in passing that I am quite sure that there is no desire on the part of Victorians, or on the part of the people of the other colonies, to take any advantage of New South Wales. There is no desire-there is no cunningly-laid trap as I have seen stated in one of the articles-on the part of the people in the other colonies to take one penny more from New South Wales than they are entitled to take for the federation. I might say also in this connection that if I were to think that certain articles and speeches which I have read within the last few months, written and delivered in New South Wales, in regard to the grasping intentions of the other colonies, as against New South Wales, could be taken as representing the deliberate views of the majority of the people of New South Wales, I should say that we Victorians and the representatives of the other colonies could not in self-respect do anything more than simply to retire and say, "Gentlemen, you are treating us as robbers; we shall have nothing more to do with this matter." But I feel that the heart of the people of New South Wales is in favour of federation, and that they will trust the representatives of the other colonies to be as just to New South Wales as they expect the representatives of New South Wales to be just to the other colonies.

The Hon. E. BARTON: They will have their share in determining what is just!

Mr. HIGGINS: They will, most decidedly. With regard to the New South Wales difficulty, I agree with the hon. member, Mr. Lyne, that, without going into the merits of free-trade or protection, it is an absolute truth-no one can deny it-that the tariff of New South Wales, as it exists at present, is it difficulty with regard to New South Wales in this federation.

An HON. MEMBER: And the land revenue!

Mr. HIGGINS: At all events, in consequence of the peculiarity of the New South Wales tariff, it has been put forth that New South Wales will pay far more under a uniform tariff towards the expenses of the commonwealth than the other colonies will pay. Of course, I need not go into that reasoning again; but the idea has been strongly urged, and it has been spread by the press with much diligence. It takes a good deal to kill an error; but if anything could have killed an error, I do not think

that that error should still be living, having regard to the speeches and the letters of a member of the Upper House of New South Wales-the Hon. Mr. Pulsford-whose speeches and letters I have read with the most intense interest.

The Right Hon. G.H. REID: He is becoming quite a favourite authority with Victoria now!

Mr. HIGGINS: There is no doubt that we are willing to take light from any quarter.

[start page 125] The Hon. E. BARTON: Does not the right hon. member, Mr. Reid, think that he might as well lend Mr. Pulsford to the protectionists for a time?

The Right Hon. G.H. REID; I quite agree to that!

Mr. HIGGINS: We shall be very happy to take Mr. Pulsford to Victoria, and to give him as much information from our point of view as be will be able to give us from his point of view. I have no doubt we shall learn mutual lessons; but I say that if the error could have been killed-the error which has been based on a false reading of Mr. Coglilan's tables-it would have been killed by the speech of Mr. Pulsford. I hold in my hand a speech which he delivered in the Upper House of this colony, and I quote it because he has given the exact words used by Mr. Coghlan, which show that Mr. Coghlan has been most guarded and careful in his statements; and I think that a great deal of injustice is likely to be done to the Government Statistician of New South Wales, who merely based his figures on the only facts which lie had before him, and who set out the figures correctly, and, in my opinion, in most guarded language.

The Hon. E. BARTON: He has done the sums properly!

Mr. HIGGINS: He has done the sums properly; but, at the same time, it must be admitted that it was his duty to do the sums. He had to do the sums on some basis, and he has taken the only basis open to him. Mr. Coghlan has stated this:

In order to show what might have been the result had the tariff of one of the other states been adopted in the years under review, instead of the tariff actually in force in each state, the schedule of customs duties of the federating colonies has been applied to the imports of each of the other states in turn, on the assumption that the goods would have been imported to the same extent, no matter what tariff might be in operation.

Mr. TRENWITH: An erroneous assumption!

Mr. HIGGINS: I would not say that Mr. Coghlan made an error.

Mr. TRENWITH: Oh, no!

Mr. HIGGINS: Because he simply said, "I have nothing else to go upon, and, therefore, I take the tariff for 1893, 1894, and 1895, and I say that if New South Wales were to import the same quantity of commodities under a uniform tariff as she imports now, then she would pay so much customs duties." No doubt, as a matter of arithmetic it turns out that New South Wales would, on that basis, pay far more. But Mr. Coghlan is still more guarded when he follows on his remarks. He says:

For example, the first series is headed, "New South Wales tariff," and shows the value of goods imported into each colony for home consumption, the value of narcotics and stimulants, the value of goods which would have been subject to duty under the New South Wales tariff, and the value of goods that would have been admitted free. The second series gives like information on the assumption that the Victorian tariff was in force in the other colonies as well as in Victoria during 1893, 1894, and 1895; and so on with the tariffs of South Australia, Western Australia, and Tasmania.

What is the result? In the first place, observe that Mr. Coghlan is going purely on an assumption, and has explicitly said that be is going on an assumption. A number of persons, in their reasoning, have said: "Look at these figures for New South Wales."

The Hon. J.H. HOWE: He adopted that method to get at a certain result!

The Hon. E. BARTON: Dr. MacLaurin, in the Legislative Council, said that those were the figures of the Convention themselves!

Mr. HIGGINS: I think that Dr. MacLaurin was right in this respect. It will be remembered that, in the speeches at the Convention upon the finances, there were some members who put them forth as figures which represented actual facts.

Mr. MCMILLAN: No; as only approximate, I think!

[start page 126] Mr. HIGGINS: I think that the hon. member was more guarded; but if the hon. member said that they were approximate, I think even there he was incorrect.

Mr. MCMILLAN: Well, they were a guide!

Mr. HIGGINS: They were a guide if a certain assumption were correct. The whole thing depends upon the word "if."

Mr. MCMILLAN: A matter of degree. No doubt, the extreme degree was in the absolute statement!

Mr. HIGGINS: At all events, what I submit is, that not even approximately are these figures to be taken as correct, and they were never meant to be taken as correct. Mr. Pulsford, in the very short speech to which I have referred, goes on to say that in addition to the fundamental error with regard to New South Wales, the years 1893, 1894, and 1895 are absolutely the most unfair years which you could take in regard to the other colonies, and notably in regard to Victoria.

The Right Hon. G.H. REID: They are unfair years for us, too!

Mr. HIGGINS: I understand that the right hon. gentleman was in office during those years?

The Right Hon. G.H. REID: No!

Mr. HIGGINS: I believe the right hon. gentleman was in office during the years 1894 and 1895, and I am not aware that any year could be a bad year under his regime.

The Right Hon. G.H. REID: It was better than it otherwise would have been, no doubt!

Mr. HIGGINS: Mr. Pulsford also shows that the Victorian tariff which is referred to as Mr. Coghlan's basis for his reckoning, is the tariff of 1896, whereas the figures given are for the years 1893, 1894, and 1895. The Victorian tariff, in consequence of changes made in 1895 was lower in 1896 than in the three years I have mentioned, and, being lower, produced more revenue. So that this was not fair to Victoria.

The Right Hon. G.H. REID: Mr. Coghlan did not favour New South Wales. He took the later tariff here. He took my lower tariff. The same tariff was used in both cases.

Mr. HIGGINS: I understand that there was an alteration in the New South Wales tariff during the year 1895, but I think that with regard to Victoria the comparison was hardly fair. Mr. Pulsford gives an instance of its unfairness. In Victoria, because of the protective tariff there, the importation of a number of articles is absolutely, or almost absolutely, excluded; but these articles come into New South Wales. This does not mean that the consuming power of the Victorian people in regard to such articles is less than the consuming power of the people of New South Wales; it simply means that they consume home-made goods. Mr. Pulsford instances the facts in regard to the importation of soda crystals. He says that in Victoria there is a duty of £2 per ton upon soda crystals:

That is an absolutely prohibitive rate. Last year some portion of a ton got into Victoria, and £1 4s. 8d. was collected on it. There was no duty in New South Wales on soda crystals, and last year 700 tons were imported. It is very easy to see that 700 tons at £2 amounts to £1,400. That is the system adopted in these tables. But is the assumption correct? Already in this colony we make a certain proportion of our soda crystals without any duty. Put on a duty, similar to that in Victoria, and what becomes of our exports?

This, no doubt, should be imports.

They disappear just the same as the imports of soda crystals have disappeared in Victoria, and in their disappearance disappears also the revenue assumed as possible of collection, and so much of the difference disappears. I have taken the trouble to calculate what this difference is as a matter of percentage, and those gentlemen who want to give the country a start and frighten it very much about the cost of federation, may possibly take advantage of it, The [start page 127] difference between £1 4s. 8d. in Victoria and £1,400 in New South Wales is actually no less than-

Let the Treasurer and Premier of New South Wales mark this-

110,000 per cent.

Every hon. member will see the absurdity of the calculation. Therefore the difficulties which perplexed the Finance Committee in Adelaide, and the financiers of the various colonies who have discussed the matter since, and which have led to the principal bone of contention in this and in the other colonies, are owing to a mistake in taking as facts what are mere assumptions. I have listened to the debate during yesterday and to-day with a great deal of interest, and I was sorry to hear that the Treasurers of South Australia and Tasmania still laid emphasis upon these figures. At all events, the Treasurer of South Australia went so far as to say that there was no doubt whatever that a uniform tariff would inflict great injustice upon New South Wales. He did not support his contention with any figures, so far as I could see, unless we are to understand that he assumed that Mr. Coghlan's figures represented facts.

The Hon. F.W. HOLDER: I did not base my statement upon Mr. Coghlan's figures. I thought it was self-evident!

Mr. HIGGINS: Of course I speak upon this subject with nothing like the weight which attaches to my hon. friend's utterances; but I should like to be convinced that there is a real and serious danger of large injustice being done to New South Wales by the imposition of a uniform tariff.

The Hon. F.W. HOLDER: Would not New South Wales have to pay a tax to Victorian manufacturers for a time?

Mr. HIGGINS: I do not think so. The hon. member is entering into a very large question, which opens up the incidence of the tariff.

Mr. GLYNN:-

Mr. HIGGINS: There is no doubt that if you have a uniform tariff with a protective tendency throughout Australia it will, to a certain extent, develop the manufactures of New South Wales. Of course the Premier of New South Wales will say that the development would be at the expense of more productive industries. Still, such a tariff would protect the manufactures of New South Wales, and would encourage the production of articles for home consumption. In the meantime, before New South Wales has her manufactures established, she will be able to import from Victoria, and from other colonies, articles which are manufactured there. It is certainly clear that whatever may be the incidence of a protective tariff, there is no increase of price proportionate to the amount of the duty. What I regret is that the hon. member, Sir Philip Fysh, and the hon. member, Mr. Holder, seem to have taken the view that a uniform tariff would injure New South Wales, without giving us the reason for that contention. The hon. member, Sir Philip Fysh, referred to some tables prepared by the Government Statistician of Tasmania, who takes certain articles such as tea, coffee, sugar, narcotics, and stimulants, and says, "If you take these articles by themselves, looking at what has been consumed in the past, in the future the consumption of New South Wales will be greater than the consumption of Victoria." For the purpose of this calculation, Mr. Johnston took the year 1895. I do not think, however, that statistics as to the consumption of articles during one year are of much use. I think you must take the statistics of a series of years, or else you cannot got any definite knowledge as to the trend of trade or the bulk consumed.

The Right Hon. G.H. REID: That is why Mr. Coghlan took a period of three years! [start page 128] Mr. HIGGINS: Well, I am speaking now of the figures of the hon. member, Sir Philip Fysh. I want to confine my remarks to one thing at a time. I am glad to see that the members of the Convention who have spoken are coming round to the conclusion that in regard to the distribution or adjustment of the surplus, the more you leave to the federal parliament the better. That is a view which I am strongly in favour of. If you leave it to the federal parliament-and if New South Wales has sufficient confidence in the constitution of the federal parliament that its great population will be sufficiently represented in both houses, I think you may leave it to the federal parliament-it will see that New South Wales does not suffer injustice. In fact I should go so far as this, if it were needed: I should allow the sliding scale of the hon. member, Mr. Holder, to apply, so as to avoid injustice being done to New South Wales, or I should allow the federal parliament to vote subsidies to those colonies which, by any means of investigation, might be found to be injured by virtue of the uniform tariff coming into force. With regard to the suggestion of the hon. member, Mr. Deakin, to have an unlimited guarantee for all time, I could not fall in with that, I call understand a guarantee for, say, five years. I think all you want is to have a guarantee for a time that is reasonably within your ken. If we limit the guarantee for five years, the period of transition, and make the Treasurers feel that they would not have a big deficit to face, that they could look well about them and see what arrangement could be made to meet the expenditure, that is all that is required. There is a danger in guaranteeing a fixed sum for ever. No one can foresee the position of these colonies. It might be a great injustice to some colony. Then as to Western Australia, there is no doubt that the present scheme will not do for that colony. Both Sir John Forrest and Sir James Lee-Steere have placed it beyond all doubt that as things stand at present it will be utterly impracticable for their colony to enter into this arrangement. But, unfortunately for the Convention, these gentlemen have not quite intimated to us what they would propose as a workable alternative. I understand that Sir John Forrest wants to go back to the 1891 scheme; but his good sense will at once tell him that that would not be fair to the other colonies.

The Right Hon. Sir JOHN FORREST: Why not?

Mr. HIGGINS: It would not be fair to make the distribution in proportion to the amount collected.

The Right Hon. Sir JOHN FORREST: Why not?

Mr. HIGGINS: The figures were worked out by Sir Samuel Griffith in an article which the hon. member must have read.

The Right Hon. Sir JOHN FORREST:-

Mr. HIGGINS: It really comes to the same thing. I imagine that we shall be able to meet one another eventually by leaving as much as we can to the federal parliament. I do not see why Western Australia should not come in under a federal arrangement under which there would be a guarantee to all the states of a certain percentage of the amount of their customs and excise duties. Say, for instance, there were a guarantee to Western Australia, Victoria, and other colonies of 70 per cent. of the amount which has been collected in a certain year. It would be a matter of detail to arrange afterwards which year should be selected. I think, however, that there was a great deal of force in the argument of the hon. member Mr. Walker, that the first year after the operation of a uniform tariff would not be a good year to select. It might be [start page 129] fairer to take the second year when things would be more settled under the new conditions.

The Right Hon. Sir JOHN FORREST:-Mr. HIGGINS: Of course it would mean that we should have to keep up the book-keeping for the second year; but it might be better to do that than to have a scheme in your bill which would not be workable for so many years as the constitution was in existence. We want a scheme to bridge over the five or six years of transition, and I would rather have book-keeping-although I admit that it is open to objection-for two years of the uniform tariff than I would adopt a scheme which was unworkable. I think opinion is drifting in favour of a per capita distribution combined with a guarantee to the treasuries of a certain percentage, and combined also with a special provision to meet the difficulties of New South Wales and Western Australia. I think opinion is going in a direction which would leave the matter to the federal parliament; but upon the assumption that there will be a per capita distribution, except so far as it may be necessary to make exceptions. I do not think that anyone who is acquainted with these colonies and with other parts of the world can say that there are any communities on the face of the globe which are so similar in their habits of life, in their clothing, their food-I will not say in climate-as are these communities of Australia, New Zealand, and Tasmania. I have never been in Queensland, and I know very little of Western Australia; but I have been in the colonies of South Australia, Tasmania, Victoria, New South Wales, and New Zealand. You find similar food consumed and similar clothes worn in all these colonies, and, taking things all round, there is the same average degree of wealth. I say, therefore, that taking the matter in its broad aspect, a comparative distribution in proportion to population of any surplus which may be found to exist after the necessary federal expenditure is the best course to adopt. Now, with regard to having a distribution at all, I am strongly of opinion that there need be no actual distribution. I hold strongly the view that it would be possible to have matters so arranged that in place of actually paying back to the government of each state its per capita share of the surplus, it should be applied, to a certain extent, in payment of the interest on the public debt. It will come to the same thing, whether we hand the surplus to the state treasuries, or whether we apply it to a reduction of the interest on the public debt. I think the idea of paying the interest on the public debt of the states in proportion to the lowest scale of borrowing is about the best course. Supposing one colony had borrowed £67 per head, and another colony only £40 per head, all you would have to do at the most would be to insist that the surplus should be applied in paying the interest on the lowest scale of borrowing. In that regard I think the bill might be amended. We say here that the commonwealth may take over the state debts, or any proportion of those debts. It was at my instance, in the last session of the Convention, that the words referring to the proportion of the debts wore inserted. I think some distinction should be made between the principal and interest of the debts. Take, for instance, an amount of £10,000,000. At 4 per cent., the interest would be £400,000; at 3 per cent., it would be £300,000. You might, for the same amount of principal debt be paying in one colony £1,350,000, and in another colony only £1,000,000. Conversion, I think, must be put off until we can so convert as to give the benefit of the premium to ourselves, and not to speculators in London; but until the federal authority guarantee the public debt, it will be possible, I think, for the commonwealth [start page 130] to distribute the surplus in paying the interest in ratable proportions. I shall now proceed to refer to railway matters with which the hon. member, Mr. O'Connor, dealt. I think the members of this Convention are indebted to that gentleman for having put before us the view which he holds, and which I understand most of the representatives of New South Wales hold in regard to interference with the rates of the railways. It seems to me that in regard to the other financial questions we ought

not to separate without settling them in some way. It would be an eternal scandal if we should have to separate without settling a problem which is merely a problem of transition, and which, at the most, means a possible temporary loss to some state or states. We should, as regards the main question about the surplus, be able to settle something, and we shall settle something. But, with regard to the railways, if the hon. member, Mr. O'Connor, and those who think with him persist in their endeavour there will be very grave danger, indeed, of a deadlock in our scheme. I say it with profound regret. I can look at the question from the point of view of the hon. member and his friends, and I see exactly how it strikes them. I will ask the hon. member to try to look at it for a few minutes from the point of view of Victoria. The hon. member wants to be fair, and the only question is: What is fair? The problem is this: You must in some way let the federation have control, or the right to interfere with the rates on the railways, otherwise the provision for intercolonial free-trade is nugatory. Having once done that, the question is: how far you will interfere? The hon. member's suggestion is this: He says, in effect, "Interfere with and prohibit preferential rates, the only means by which Victoria has a chance of securing the Riverina trade or any part of it, but allow New South Wales to be at liberty to impose differential rates, even to that point at which they become, in effect, preferential.

The Hon. S. FRASER: Differential rates would not give them the traffic!

Mr. HIGGINS: The hon. member speaks with experience as a Riverina station-holder, who gets an advantage from these cutting rates. I am sure his experience will hear me out that it is a great advantage to a producer in Riverina and all round that district to have two railway systems fighting for his business.

The Right Hon. G.H. REID: A man gets free-trade in New South Wales and freer trade in Victoria!

Mr. HIGGINS: I hope New South Wales members will understand that I think this system of competition between the two railway systems is to be deplored. It means eventually a loss to the states, to the people, and it means extra taxation and burdens. There is no doubt whatever that it inflicts a loss upon the Victorian railways to take wool from Echuca at 2s. 1d. when sent by New South Wales producers, while they charge about 6s. to the Victorian producers. That, no doubt, is a loss to the Victorian railways, and I want to stop that.

The Hon. E. BARTON: There is no federal aspect in that!

Mr. HIGGINS: No; neither is there a federal aspect in that system by which you charge less for the carriage of goods for 200 miles in New South Wales than for 400 miles, or convey the goods 200 miles for practically nothing. All I urge is that we must either have in play the principle of competition between these rival railway systems-

Mr. WISE: Even if we federate, there must be low rates for long distances!

Mr. HIGGINS: No doubt that is the case. I feel that you must either let the principle of competition operate fully or not at all. If you are going to have the [start page 131] purely commercial competitive principle, you must leave Victoria free to charge what preferential rates she likes. On the other hand, if you want the thing to be federal, we are with you. If you want the railways worked in the interests of the producers without regard to the interests of the individual ports we are absolutely with you. The only point is this: I do not see how Victoria can be asked to give up the only weapon with which she endeavours or can endeavour to secure any of the Riverina trade unless New South Wales consents to give up her weapon also. The hon. member, Mr. R.E. O'Connor, is one of the fairest members of the Convention, and I appeal to him to say how be can expect us to go back to our constituents and ask the people of Melbourne to practically destroy their profitable trade with Riverina, because it not only means the carriage of goods on the railways to Melbourne, but also a considerable back trade in the shape of the supply of stores, &c. How can he expect us to give up the

only weapon with which we can keep the trade which would be ours naturally, and which has been ours for many years?

The Hon. S. FRASER: It has always been our trade!

Mr. HIGGINS: Yes, but you will find that there is more and more a tendency for goods to be supplied to Riverina from Sydney, because of the differential rates being worked on so low a scale for long distances. May I say is this: "Gentlemen, we are with you, as far as I am concerned-and I am only speaking on my own responsibility-if you will make the railways absolutely federal property."

The Hon. R.E. O'CONNOR: That is to allow you to fix the rates to please you!

Mr. HIGGINS: Nothing of the sort. say we are with you if you will make the railways absolutely federal property to be worked in the interests of Australia as a whole. Even if we cannot get that, if that is too much to expect at this time if Australia is not ripe for such a thing, we are with you in having an inter-state commission, or in remitting the question to the federal parliament to make arrangements so that the railways shall be worked in the interests of the producers, add of Australia as a whole, without regard to the port at which the goods are to be delivered. But if you come to us, and say, "You give up this preferential rates system, but we will keep our differential rates system which will force goods to go over 400 miles more cheaply than they go to you over 180 miles," I am afraid it will be impossible to persuade the people of Victoria to agree to such a proposal. I have not the least right to speak for any one except myself, but I am giving my own well thought-out opinion that it is impossible to ask Victoria to do that. I say either abolish the competitive system altogether, or else let competition have free play. We cannot occupy any middle position. If you have competition, competition is a war, and we shall use all our guns. The only guns which Victoria has to secure the Riverina trade are the preferential rates.

The Hon. R.E. O'CONNOR: Then you must regulate and control trade and commerce!

Mr. HIGGINS: Among the returns given to the Adelaide Convention there was an act from Queensland which cast a very important side-light on this question. In the act they did not distinguish very clearly between preferential and differential rates, but it is perfectly clear that they mean preferential rates. It would appear that New South Wales is doing to Queensland exactly what Victoria is doing to New South Wales. And Victoria is doing to South Australia exactly what New South Wales is doing to Victoria. It is a lamentable state of things. There is no doubt that we impose differ- [start page 132] ential rates in Victoria for the purpose of drawing trade away from Adelaide to Melbourne. There is no doubt also that New South Wales is doing the same thing with regard to Melbourne. The question is, shall or shall not all this attempt to drag trade from its natural channel be put out of the power of the states? If you want to put it out of the power of the states to have the railways worked on any but one Australian system in any reasonable fashion, we are with you. But we cannot persuade the people of Victoria to give up this system of preferential rates unless you give up your differential rates. It does not mean an additional burden to the producers, because we are quite of the view that there must be differential rates for the back country. A uniform mileage rate is impossible owing to the circumstances of Australia. You must give the producers the advantage; but the producers would get more advantage under what I propose, because, in place of their having low differential rates to one port, they will have low differential rates to two or more ports. They will have the choice of Melbourne or Sydney. And, supposing we had a zone system of 100 miles, it must be a through system with the political lines of separation between the colonies obliterated. The recital in the Queensland Border Tax Act of 1893 is:

Whereas large sums of money have been expended by the Government in extending and maintaining railway communication with the southern and western districts of the colony, for the purpose of promoting agricultural and pastoral settlement in these districts: And whereas large sums of money have at various times been expended by the Government in harbour and river improvements for the purpose of increasing the shipping facilities of the colony: And whereas a large sum of money

has been, and is being, annually paid by the Government in subsidising direct steam communication with Europe, primarily with the object of facilitating the speedy and direct shipment of goods and produce therefrom and thereto: And whereas it has been ascertained that differential rates on the railway lines of the neighbouring colonies have been promulgated and otherwise arranged for, which have had, and are continuing to have, the effect of diverting the traffic which ought legitimately to be conveyed over the railway lines of this colony, thereby entailing a considerable loss in railway revenue: And whereas it is considered desirable to prevent, as far as practicable, this diversion of traffic: Be it enacted-

And the enactment is that every bale of wool or every dray with goods that passes over the Queensland border into New South Wales has to pay a certain export tax.

The Hon. S. FRASER: That does not affect goods. It affects only wool!

Mr. HIGGINS: I think the hon. member will find that it does.

The Hon. S. FRASER: That has never been put into force!

Mr. HIGGINS: I see that it applies to station produce, wool, sheepskins, and hides.

The Hon. S. FRASER: To wool and sheepskins, but not to goods!

Mr. HIGGINS: What you in New South Wales complain of Victoria doing you do yourselves against Queensland, and you are willing to give that up; but at the same time you are not willing to give up differential rates within New South Wales. The hon. and learned member, Mr. O'Connor, said very fairly that in the United States there is nothing to prevent differential rates even if they have the effect of attracting traffic to a port of that state; that the provision of the constitution only affected the inter-state traffic rates, from one state to the other. But look at the difference between the conditions of the United States and the conditions of these colonies. Every capital here is at the seaboard; every capital is a port; whereas in the United States you have only a comparatively few states on the seaboard, and a great mass of states-forty-three or forty-four in all-behind. Only a small number of these states are affected, and, more than that, you have there no, states of the huge size which are proposed [start page 133] here. In talking of the states in Australia you ought really to talk of slices of a continent. You have Western Australia which would swallow up France, Austria, and Germany, and something else without those countries hardly being missed. You have also South Australia and Queensland. You cannot say that the same principle ought to apply to a place like Australia as applies to the United States. When the Constitution of the United States was framed they had no railways. With us railways are a vital part of our existence; they are the great civilisers, they are the arteries by which the trade is conveyed from one part of the continent to the other. This provision, if railways had had to be dealt with by those who framed that constitution, would have been framed on a more liberal basis than that which is proposed. Now, clause 95, about equality of trade, has to be read with the first part of clause 52. Clause 95 is divided into two parts. It first states that preference is not to be given by any law or regulation to one port over another. That has been held in America to mean that preference is not to be given by any law of the commonwealth. It still leaves the power for any state to put on a preferential rate. The 2nd part of clause 95 says that no law or regulation made by the commonwealth, or by any state, shall have the effect of derogating from freedom of trade. A preferential rate would not have the effect of derogating from freedom of trade. Freedom of trade means that you must allow the products of other countries to come into your country free. But here a preferential rate has the effect of drawing the products of other countries into yours for a less sum than they would pay if drawn in your country. So that that clause does not at all affect preferential rates so far as regards states. Clause 96 says the parliament may create an inter-state commission -for what purpose-to maintain on the railways and the rivers the provisions of this constitution relating to trade and commerce. Now, these provisions are contained chiefly in clause 95. That does not hinder a preferential rate; but then, if the hon. and learned member looks back at clause 52 he will see that the very first subclause says that parliament may make laws for the regulation of trade and commerce

with other countries and other states. It is under a similar provision that the Federal Parliament in the United States has the power to make laws which forbid preferential rates. Looking at clause 96, I think, if you want to avoid preferential rates, you, will have to add some words indicating that the inter-state commission is to regulate and maintain, not only the provisions of the constitution, but also the provisions of any federal laws made under the constitution. I shall now refer to clause 52. It is under the first sub-section of that clause that all these extraordinary powers to appoint an inter-state commission have been conferred:

The regulation of trade and commerce with other countries and among the several states-

It is under that, and under that alone, that we can stop the system of preferential rates. I cannot think of the railways except in connection with the rivers. It is under that same clause that the United States Congress has kept open the rivers of the United States. I voted at the Adelaide Convention in favour of a federal control of all the rivers-and I hope to have the opportunity of voting for it again -so far as they are navigable, and to keep them navigable. I think we could not consistently be in favour of federalising the railways unless we were in favour of federalising the rivers, as far as they are navigable.

The Right Hon. G.H. REID: Does that include the Yarra?

Mr. HIGGINS: There are plenty of rivers in Victoria which run into the Murray. We have the Goulburn, the [start page 134] Campaspie, and a number of others that are affected. So far as rivers are navigable they ought to be under the control of the federal parliament, and the federal parliament ought to be able to keep them navigable.

The Right Hon. G.H. REID: And pay for them?

Mr. HIGGINS: Yes, pay for them; that in quite another point. I admit that the rivers of Australia are quite different from the rivers of America, because in Australia we require the waters for irrigation. If you leave it to the federal parliament, to control the rivers, you should provide that that control of the rivers should not make it impossible for the waters to be diverted within reasonable limits for the purposes of irrigation.

The Hon. F.W. HOLDER: so long as the navigation is conserved!

Mr. HIGGINS: so long as navigation is conserved in a substantial form in the other colonies.

The Hon. R.E. O'CONNOR: We do not want to provide that. It is the law now!

Mr. HIGGINS: A mistake was made in sub-clause 31:

The control and navigation of the river Murray, and the use of the waters thereof from where it first forms the boundary between Victoria and New South Wales, to the sea.

The Right Hon. G.H. REID: It was not considered a mistake!

Mr. HIGGINS: I want to be perfectly, frank, and to say that since the meeting of the Convention in Adelaide I have looked into the matter carefully, and I find that if that sub-clause were struck out it would be better for those who want to federalise the rivers than if it were left in the bill as it stands.

The Hon. R.E. O'CONNOR: As far as navigation is concerned you get navigation, and the use for irrigation purposes of a certain portion of the river, and you give up control for navigation purposes of the whole of the river.

Mr. HIGGINS: My view is this: that we should strike out that sub-clause 31, so far as federalising the rivers is concerned, and insert a special provision to suit the circumstances of Australia, so that, while you allow the federal parliament to control the navigation, you also provide that they shall have power to give to any state a reasonable use of the waters of all rivers and tributaries for the purposes of irrigation. I think it is possible to arrange that there shall be irrigation of adjoining land without any serious interference with navigation; but a number of precautions will have to be taken to prevent interference with navigation. I feel that I have taken up as much time as I am entitled to take; but, as this is the only opportunity I shall have of placing my views before the Finance Committee, I should like to refer to one or two other matters. First, in regard to clause 88, which provides that "uniform duties of customs shall be imposed within two years after the establishment of the commonwealth," I would suggest that the word "excise" be inserted after the word "customs." Obviously, that is, necessary.

The Hon. E. BARTON: It might not be necessary, at that stage, to impose excise duties. That is why "excise" was left out!

Mr. HIGGINS: It is practically certain that we shall have excise duties as well.

The Hon. R.E. O'CONNOR: That is, assuming that we want that limitation at all!

Mr. HIGGINS: If you say uniform duties of customs, you must also include excise; otherwise a state, by imposing excise duties, could avail itself of a system of protection by catering its excise duties to a serious extent.

The Hon. E. BARTON: it is provided that on the imposition of the uniform tariff, duties of customs and excise in the colonies shall [start page 135] cease; so that on the passage of a customs law, excise duties in all the colonies would cease!

Mr. HIGGINS: It is provided that the exclusive power to impose customs duties is not to come into force until uniform duties have been imposed by the parliament of the commonwealth. That is to say, in the meantime the state shall be at liberty to alter or impose duties. I think that is dangerous, for this reason: You are giving over all the revenues by customs and excise to the commonwealth, and the states will no longer receive these revenues. But a state, seeing that it does not receive duties of customs and excise, but that these all go to the commonwealth, may reduce the revenue-producing duties within its boundaries during the two years prescribed in the clause, so as to lighten the burden upon its people at the expense of the commonwealth.

The Hon. R.E. O'CONNOR: Will not that induce the commonwealth parliament to pass the uniform tariff as soon as possible?

Mr. HIGGINS: Still you cannot tell how long the making of a uniform tariff may take. It would be as well to provide that there should be no tinkering with the state tariffs until a uniform tariff had been made. It is only a short time at the most.

An HON. MEMBER: They might want to put on a primage duty or something like that!

Mr. HIGGINS: There might be a provision that no state should alter its duties without the consent of the Governor-General-in-Council, in order that there should be no interference with the amount of the customs revenue.

The Right Hon. Sir G. TURNER: You might say, not to reduce the amount!

Mr. HIGGINS: There is another matter. In clause 89 it is provided:

So soon as uniform duties of customs have been imposed trade and intercourse throughout the commonwealth, whether by means of internal carriage or ocean navigation shall he absolutely free.

Apart from the verbiage of the clause, I may say, speaking frankly, that one of the serious obstacles to the acceptance of the constitution in Victoria is any sudden convulsion in regard to the border duties. There is at present a stock-tax on the Murray. Personally I am strongly against the tax. At the same time I want to carry out the view so ably put by Mr. Holder that the great thing to be achieved in making a constitution is that there shall be no sudden, violent convulsions. Nothing causes so much injury as sudden convulsions. I should like to warn hon. members of this: that the stock-tax has been in operation for a few years, and under it our small farmers are in the habit of breeding calves; it pays them to do so. The men who have big runs find that it pays better to introduce store cattle from New South Wales and to fatten them. A number of our farmers are seriously afraid of having the breeding of their calves suddenly stopped; they are afraid of having their living taken from them. One of the members of the ministry has announced that he will stump the country against the Federal Bill, and he has more influence with the farming community than any other person in Victoria.

The Right Hon. Sir G. TURNER: Of course it is not a ministerial question!

Mr. HIGGINS: I admit that. But the point is this: The minister, who has adopted this attitude, has based his argument upon reasoning with which I cannot concur in the slightest. All he has suggested is that the duty shall be taken off in stages; that there shall be a sliding scale-that it shall slide over five years.

The Hon. E. BARTON: Would the hon. member have the customs tariff of the federation increased by means of a sliding scale?

[start page 136] Mr. HIGGINS: There is a good deal to be said not only for taking off duties gradually, but for their gradual imposition as long as we enact in the bill what the stages shall be. There must be a provision in the bill for a graduated scale.

The Hon. R.E. O'CONNOR: It is like pulling a tooth out by stages. Why not pull it out at once?

Mr. HIGGINS: But it is not a tooth in this case. All I suggest is suggested not from the point of view of a protectionist or free-trader, but from an independent point of view-from the point of view of one who wants the bill to be carried. I hope a clause will be inserted allowing the federal parliament, at all events, to alter the duties by steady gradations and not all at once. I think we might produce too violent convulsions and interference with trade if we tried to do it in one year. I am frequently called, in Victoria, a radical; but I can see that I am the most conservative man here. I do not want violent changes. I do not think there is anything which does a country so much harm as violent changes. I have taken up more time than I intended, and it is only the importance of the subject and my anxiety to make the bill as acceptable as possible to a large class of the community that I have been induced to make my remarks so long.

The Right Hon. G.H. REID (New South Wales)[3.15]: I have listened very attentively to the able speech of my friend, Mr. Higgins, and I do not think we should criticise too severely the concluding remarks of the hon. gentleman, in view of the fact that a general election is about to take place in the neighbouring colony.

Mr. HIGGINS: There are no farmers in the electorate I represent!

The Right Hon. G.H. REID: I know. My hon. friend, with his usual disinterestedness, is not speaking for himself, but for a number of friends who are members, and who wish to remain members. In fact nothing but the most ingenuous generosity of the hon. member towards the

gentlemen to whom I refer would have prompted him to make such an extraordinary statement as that with reference to such an obnoxious bar to intercolonial free-trade as the stock-tax of Victoria. He would actually, as to that particular form of obstacle between the colonies, bring about freedom of Australian intercourse by safe and mild doses. It seems to me that if any such plan is put forward, we have a very strong claim on the part of this colony, in view of the circumstance that there is so strong a representation here and in the other colonies of opposite views in fiscal matters. I think we might very fairly come forward with a request that there should be some sort of a provision drafted which, if it happened that we were eventually to be exposed to a tariff of 20 or 30 per cent. would enable us to gradually get accustomed to it. I do not ask for any such stipulation. I feel that it would be trifling with this great question of federation if the people of these colonies were not prepared absolutely, and at once, to surrender every shred of advantage which they get by putting up barriers against their Australian fellow-countrymen. If we are not prepared for that, we are simply wasting time in endeavouring to bring about this federal union. I am sufficiently in earnest about it to be prepared to risk every fiscal principle in which I believe, and for which I have fought for so many years. I am prepared to risk my fiscal principles in view of the commanding national destiny which we are called upon to realise, feeling at the same time sufficient confidence in my principles to believe that, just as we have been able to win here, we shall be able to win in the federal parliament, if not at once, at no distant date. I am prepared, at any rate, to take the risk [start page 137] of all these things, and every federalist must do so. We cannot make reservations about rival matters.

Mr. HIGGINS: Not even about railways!

The Right Hon. G.H. REID: I think we will all admit that the freedom of all the Australian colonies from customs duties set up by one colony against another is the most vital point of federal union, because the fact that the railways are in the hands of the state is simply an accident. In some countries of the world they are not in the hands of the state, and they are worked upon widely different lines. Observations have been made by a number of hon. members, in reference to railways and rivers, which I think are somewhat out of place now, although very valuable, for I think the Finance Committee, in asking for an early, consideration of these clauses, desired rather assistance as to the very difficult problem of dealing with the question of federal finance.

The Hon. E. BARTON: It will all be useful!

The Right Hon. G.H. REID: As the hon. and learned member says, it is all valuable, and it will probably save discussion at a later stage. I do not intend now to enter on any discussion of the matter affecting the railways and the rivers, except to make one or two observations. In the first place, I quite agree with an exclamation made by the hon. member, Mr. Deakin, this morning: We must either take or leave the railways; and the reason is obvious. If we take the railways into the federation, we take with them all the financial responsibilities; and then, having taken the financial responsibilities, we can administer all the railways in the general interest. But if we, as the federal power, endeavour to interfere with railways the responsibilities for which and the management of which are entirely vested in individual states, we get into a very dangerous position at once, because the notion of any power being able to control the management of railways, which has no responsibility financially in respect to the management of those railways, is too absurd, I think, for any reasonable body to entertain. It has always seemed to me to be a question of handing over the railways and the liabilities, so that each and every Australian railway can be administered upon federal lines, or leaving them with those who are responsible for their maintenance, and for paying their expenses. If you leave them, then it seems to me that this attempt at having an inter-state commission is ill-advised, that the colonies must be left to make their own arrangements, and it ought to be possible that they should. We in New South Wales have, rightly or wrongly, built lines into the south-western parts of our own territory. If an inter-state commission, supposing it existed, interfered with the working of those railways interfered with our endeavour to get traffic for those long lines-would it be fair or right in a federal spirit, for instance, that the interstate commission should so arrange that those railways should become absolutely unprofitable, and should be thrown on the hands of New South Wales? I merely put that illustration as showing that, whilst the railways are running at the expense of New South Wales, New South Wales

must be left free to run them in such a way that they may pay. If some other body wishes to run them on some other principle, in order that some other lines shall pay better, or in order that some geographical facts and distances shall be respected, let them pay the expense, and then no one can complain. They can only pay the expense by taking over the responsibility, and, as far as I am concerned, when the federation is ready to take over those long railways which we have constructed far into the south-western parts of this colony, we will [start page 138] be quite in a humour to bargain with them for their sale. Therefore, I pass by the interstate commission as an endeavour to build a bridge which would not rest at either end on a solid basis.

The Hon. J.H. GORDON: But you leave an impassible river!

The Right Hon. G.H REID: My hon. friend has been for many years very keen on this matter of river navigation and railway rates, and an a South Australian patriot it is quite right that he should be. I am just giving him a little bit of New South Wales patriotism in return. As to rivers, the same principle applies. If the federal power is to take over all the rivers of Australia, whether they do or do not run through different states, I can quite understand that. Then they become responsible, not only for their navigation, but also for the maintenance of the navigation. But under clauses 95 and 96 it does seem to me that there are certain rights taken over, with respect to rivers in New South Wales, which are not accompanied by the necessary responsibilities. Therefore, whilst I think it will be found that this colony will always act as the proprietor of a water-course ought to act in reference to other proprietors having rights in a continuation of the same watercourse-whilst I hope that we will always do that, and even carry out any irrigation works at such time and in such a way as not to injure our natural waterways, such as we have in the Darling, the Murray, and the Murrumbidgee; whilst I hope that we will always act in that spirit-and hitherto we have done so, because we have cleared rivers for our cousins without charging them anything for it-whilst I hope that we will continue to show that free and delightful spirit, which is not always returned to us, I am not prepared to say that this country should give over rights with respect to rivers in New South Wales when other colonies do not give over their rights in regard to rivers in those colonies-I mean the navigable rivers, and I believe that the Yarra is a navigable river. Now, passing away from those two matters, I come to the difficulty we are in. We have always felt the gravity of this problem of finance in connection with federation, because we have always felt that the power of raising revenue by means of customs and excise must, in the nature of the case, be handed over to the federation, and that power being the source of nearly the whole of the Australian revenues, in handing it over we practically commit the financial interests of each colony to the supreme control of a federal power, which is a very serious thing to do. If we could by any method manage so that, instead of the commonwealth financing the states, the states should finance the commonwealth, the project would be infinitely simpler; but I feel that, in the nature of the case, that cannot be done, and therefore I have to face the difficulties to which that view leads me, and I confess that the more I look at all those difficulties the more serious they appear. Some tables have been referred to, and also some conclusions which have been drawn from those tables, and I am very glad that my hon. friend, Mr. Higgins, has most fairly pointed out that the criticism of these tables, so far as it reflected upon the person who constructed them, was entirely undeserved. It is the wrong use which has been made of those tables which might well be made the subject of criticism. As a matter of fact, they simply workout in simple figures on the basis of facts, and on an assumption which is quite open to argument and quite open to analysis, and which is indeed a matter of opinion. I agree with the hon. member, Mr. Holder-and as that hon. gentleman represents a colony whose financial interests in this matter are not very seriously at stake, because, as he says, his colony is about the middle line, I strongly [start page 139] point to his opinion as one which should impress itself upon the Convention. I believe, as he does, that it is self-evident putting figures and tables aside, that in the operation of any tariff applied to the different colonies which might compose this federation, for some time-the time doubtful, but the fact certain-for some time the distribution per capita-which would be a distribution we would all at once adopt if we could, because it is so simple-would be unfair. Now why should not the hon. member, Mr. Holder, say that that is self-evident? I should think the representatives from Victoria should be the first to say that it is self-evident.

The Right Hon. Sir G. TURNER: I admit it, and I have endeavoured to meet the right hon. gentleman's difficulty!

The Right Hon. G.H. REID: I am glad that my right hon. friend has made this admission. It is a fact that he has always admitted it, and he has always, in a manner which has excited my hearty recognition, endeavoured to meet the difficulty. But it seems that there are others who are not sufficiently clear upon this point. It should, however, be clear, especially to the representatives from Victoria, and indeed to every man who is a party to a high tariff, particularly if his object be what is called a protective policy. The object of high duties, and the boasts which we hear concerning them all point to the same effect; that is, they result in this marvellous change, that instead of goods coming from abroad they are made in the country which is protected. That process has been going on for twenty-five years in Victoria, and, differ as we may about this or that aspect of the protective policy, everybody must admit that with any policy of high duties you have that result from the very nature of the case. Whether the result be bought at too dear a price or not is a matter of opinion, and we do not want to discuss such matters here. We must all admit that a policy of this kind, as contrasted with a policy which does not interfere in such matters, and is therefore substantially open, would yield this state of things, speaking broadly: that given the number of persons in each of two communities, in the one community the custom house would not be prolific, while in the other community it would be prolific of revenue. These are self-evident facts.

An HON. MEMBER:-

The Right Hon. G.H. REID: The hon. member is quite right; we do.

An HON. MEMBER: I know it!

The Right Hon. G.H. REID: At the present time I am taking the view of my hon. friends. I am accepting the views of those who seem to believe that there is no difference.

The Hon. J. HENRY: Would not goods manufactured in Victoria be consumed by New South Wales after the establishment of a uniform tariff?

The Right Hon. G.H. REID: To a certain extent, no doubt; but to say that in a great business community such as this, accustomed for so many years to do its business in a certain way, all at once, as if by a stroke of magic, the conditions of trade will be reversed, is to speak of something which has never happened. These changes only work out gradually.

The Right Hon. Sir G. TURNER: Is that position disputed?

The Right Hon. G.H. REID: Well, if everybody thought as my right hon. friend does, I do not know that I should have said a word; but the observations I have heard during this debate have been quite opposed to his admissions. If it is admitted that there is a differences serious difference-I have nothing more to say. I quite admit that the difference would, gradually, and perhaps readily, disappear.

An Hon. MEMBER: The establishment of a sliding scale would bring that about!

[start page 140] The Right Hon. G.H. REID: I confess that in Adelaide I thought I was giving up a great deal too much; but the additional light I have obtained since has made me believe more in the scheme we arrived at in Adelaide. At the same time, I cannot be insensible to the fact that that scheme has created no sort of confidence, in this colony, at any rate; that, on the contrary, the clear-cut expression of the opinions of the two houses of our legislature is quite against it.

The Right Hon. Sir G. TURNER: No better scheme has been suggested!

The Right Hon. G.H. REID: No, and the action of the Parliament of New South Wales is a practical admission of that. Our Parliament does not profess to supply a better scheme; it makes the suggestion that, in view of the fact that no solution has been discovered by the convention, or any other method proposed which can be adopted, it would be infinitely wiser to leave the whole matter to the federal parliament. That is the effect of the recommendations of our houses, and I must say that the necessity of bringing about a union of the Australian people being pressed upon me, I am there again prepared to trust the federal parliament. If we cannot see our way out of this trouble-and it is no reproach to us that we cannot, because there is nothing in the world more difficult than to appraise, with any degree of reasonable certainty, the possible effects of a tariff the constituent parts of which are all unknown-there is nothing more absurd than to attempt to do so. That being the case, the question of distribution, if we give up the theory of a per capita distribution, if we admit that it will not work fairly-and I think that that is pretty generally admitted, the extent of the unfairness being very much in dispute-we must admit that we have no solution which we can ask the people to adopt.

The Right Hon. Sir G. TURNER: It is not admitted that a per capita distribution would be unfair!

The Right Hon. G.H. REID: Not eventually; but we must see that, just as our friends the farmers, who, as the hon. member, Mr. Higgins, says, have become accustomed to bringing up calves, are seriously exercised about their own particular interests, so there are a number of people in all our colonies interested about many matters; and our failure to find a scheme which commands general approval being admitted, the effect of laying down a scheme which would not be accepted as satisfactory by the electors of Australia would, probably, be fatal to the whole project of union. Well, union being our main object, we must endeavour to bring the bill into such a shape that it will command the approval of the constituencies of Australia, that being the only road to union. I am prepared-and I really think we can all do so-to leave the whole financial question to the federal parliament. But I do not want this question left to the federal parliament in any such way that whilst all my views are risked and made uncertain, the views of others are made certain in advance. I do not call that fair compromise. I ask every hon. member, whatever his views, or interests, or policy, to follow my example, or rather I am prepared to follow the example of others, the example of all who are prepared to trust these financial matters to the federal parliament. I must confess my strong feeling of doubt as to whether the provision limiting the expenditure of the commonwealth for a short time was not a very good one. I attach a great deal more importance to it than most people do. Still, again, I am quite prepared to bring the bill into a shape which will command the general approval of the electors and the constituencies. So far as I can see, that project has not been re- [start page 141] ceived with favour. Whilst not yielding rashly or inconsiderately to what appears to be a well-expressed public opinion, I think that, under existing circumstances, we should ill-conceive our duty here if it were not our very great desire to give effect to public opinion in every possible way. Because our duty here is not to produce a constitution which will meet with our approval. We have been sent here to perform a different task, to produce a constitution which will meet with the approval of the electors of the various colonies. I am prepared, believing that it will be better for the project, to let all the fiscal problems go, and to adopt the spirit of the amendments suggested by the Legislative Council and the Legislative Assembly of this colony, simply conferring power on the commonwealth to raise revenue to pay its expenditure and to distribute the surplus.

The Hon. S. FRASER:-

The Right Hon. G.H. REID: There, again, our trust in the federal parliament comes in. The federal parliament takes away from each of the five colonies its almost sole source of revenue. This is all done in the interests of federal union. It is done because we cannot retain this source of taxation and have federal union. No stronger obligation under such circumstances could rest upon any body of hon. gentlemen, no matter what colony they represent, than that of not exposing the constituent parts of the federation to financial-

The Hon. H. FRASER: Insolvency!

The Right Hon. G.H. REID: Insolvency, for it would be nothing less than that, and at the very beginning-

Mr. WISE:-

The Right Hon. G.H. REID: Those persons who appear in the federal parliament will be there on the franchise which we provide and will be elected by the men whom we know in Australia, and with those persons, sitting in that parliament, and having the financial interests-indeed, as my hon. friend, Mr. Fraser, suggested, the solvency or insolvency-of the colonies in their hands, it is inconceivable that they would begin their existence as an Australian legislative body by a course of finance which would immediately throw all the colonies into difficulties. The situation, I think, is inconceivable. If we are not prepared to believe that the outcome of this movement will be a parliament which will protect the colonies from such obvious dangers, not to say disaster, then I say that we cannot believe in the thing itself.

The Right Hon. Sir G. TURNER: The trouble is that unless you come to some reasonable arrangement, a large number of persons will have a doubt in the matter and will vote against the bill.

The Right Hon. G.H. REID: Having perhaps an equal knowledge-I will not say a greater knowledge of the popular view with the right hon. member, knowing the views of Australians and the way in which Australians take things, I say, without hesitation, that I believe this project will come to Australian people with infinitely greater force if those who recommend it to them show by the constitution they frame that they, at any rate, have confidence in the machine they have constructed. People do not refine in this movement. Frame your constitution as you will, let it be the most perfect embodiment of human wisdom, there will be here and there a selfish element of opposition. You cannot escape it. It will inevitably face us in this great struggle for federal union, do what you will. But if I do not misapprehend the genius and the intelligence of the Australian people, if we show, in the construction of this charter, confidence in the future electorates of Australia it is not at all likely that the electors themselves will begin by mistrusting their own patriotism and integrity.

[start page 142] The Hon. S. FRASER: What is the objection to a minimum refund?

The Right Hon. G.H. REID: There, I say again, you would, by any such proposition, in view of the extremely divergent situation of the different colonies, nullify the advantages which a free hand would give to the federal parliament. We must begin by believing that that body, representing not this little clique, or that little clique, but representative of a great national constituency, coming for the first time into the home of Australian nationality-that these men maybe safely trusted to maintain the financial position of each of these colonies as one of the most sacred things committed to their charge. My fear would be-and I confess it-that in an anxiety to meet the varying circumstances of the different colonies, there might be, perhaps, too great a sum taken from the people in the shape of federal taxation. There are difficulties, look which way you will. There are uncertainties, look which way you will. But, looking at the fact that we are composed of gentlemen representative of so many widely divergent views as to what the policy of this future parliament should be, we ought, I think, to enter now into a tacit understanding that the spirit in which we will approach these difficulties is this: when we cannot feel sure that we are solving them properly in the interests of the constitution, we will hesitate to put there provisions which will be very difficult of alteration, and which may work, not for good, but for ill to the whole of the colonies.

The Right Hon. Sir G. TURNER: The federal parliament could not devise a satisfactory scheme until the uniform tariff had been in operation for several years, and what would be done in the meantime?

The Right Hon. G.H. REID: The difficulties disappear at once in the federal parliament. The federal treasurer knows exactly the amount which the Victorian Treasurer, for instance, has received during the previous year. He knows the facts of trade. Suppose the colonies had been united for twelve months, the federal treasurer would have twelve months facts of the united position before him. He would know the obligations of the Victorian Treasurer as well as did the Victorian Treasurer himself. I should not think the Victorian Treasurer would leave him in any state of uncertainty on that point any more than would the Treasurer of any other colony. So, with the latest facts before him, the construction of a tariff which would at once return a sufficient amount to, say, the Victorian Treasurer, or to any other Treasurer, would not be a difficult task. The amount might vary, as estimates; but it would be substantially near the mark-so near as to leave no colony exposed to any serious difficulty.

The Right Hon. Sir G. TURNER: It is the mode of distributing the surplus which is the difficulty!

The Right Hon. G. H. REID: There again the advantage of time, of union, of further experience, of reflection, will all be on the side of the federal parliament.

The Right Hon. Sir G. TURNER: What is to happen in the meantime?

The Right Hon. G.H. REID: In the meantime, until the uniform tariff comes into operation, the financial situation is free.

The Right Hon. Sir G. TURNER: But what is to happen after the uniform tariff has come into operation and while experience is being gained?

The Right Hon. G.H. REID: That is a point to which I have already referred to some extent. During that time the federal parliament must arrive at some mode of distribution which will be equitable.

Mr. WALKER: By book-keeping!

The Right Hon. G.H. REID: Now, my hon. friend, with the voice of the federal [start page 143] parliament in his throat, says book-keeping. I do not presume to know what the voice of the federal parliament will be. I say that that body of men, elected by the people of Australia under federal conditions, will be infinitely better qualified to bring about an equitable solution than we shall, because our solution, remember, is one which is stamped in letters of iron, whereas their solution would be capable of alteration. If the federal parliament, in working out the solution as it thinks equitably, finds from experience, which will be speedy, that the result is not equitable, it can amend what it has done without appeal to the arduous and very uncertain process of amending the constitution. I leave all these matters in that way. I confess I feel some anxiety about this federal tariff. I should have infinitely preferred that in this constitution there should have been a definite time stated within which that federal tariff should be in force.

An HON. MEMBER: What is the penalty?

The Right Hon. G.H. REID: The penalty is an obvious one, inasmuch as we in this constitution, a supreme court of the federation. If any tariff were passed violating the terms of the constitution, any importer, by taking proper proceedings, could recover what he had been called upon to pay under an invalid act. That is the simple and effective remedy. When we remember that we put a stipulation in the constitution that the federal tariff shall be settled in two years, when we know that the federal parliament will begin with the knowledge that, if the work is not done in two years the whole financial fabric will disappear-that their own salaries will not be payable-it is probable that the funds would be there when the due date arrived. My fear In this: We make all our sacrifices for federal union; after infinite struggle and vicissitude we see ourselves at last united. The federal tariff is a subject which

will excite intense interest. It will be a time of much popular agitation, huge personal and pecuniary interests will be sleepless and active, there will be, above all these mercenary and somewhat humiliating circumstances, in the hearts and minds of the people, a deep desire, a great anxiety, that they should return men whose policy would be for the good of the commonwealth. All these things when they come down to the form of a precise tariff may lead to keen disappointment in this colony or that. Some particular native industry, highly thought of there as a great national industry, might happen in their opinion to be ruthlessly disregarded. Other duties may seem, perhaps, in the estimation of the representatives of another part of Australia to be fraught with disaster to the whole commonwealth, embodying principles which they utterly abhor. All these grave influences, conscientious most of them, may lead to a state of difficulty in the federal legislature. If there was an escape from it something might be done. We might find ourselves with free-trade in New South Wales, across the border, and no where else for an indefinite time; but again, I will stand true to the position I have taken up in this matter. I say again it is inconceivable that this federation will shirk its obvious national duty in that way. The struggle may be a bitter one. There may be many disappointments, but I feel convinced the federal parliament would loyally and faithfully discharge its duty, not so soon as we might like, but, at any rate, without any great delay. I say in a word that many of our difficulties will disappear if we all agree to confide the different interests of our localities to the wisdom and justice of this great parliament representing the Australian people.

Mr. SYMON (South Australia)[3.54]: I think I may say that there is no member of this Convention who does not feel deeply impressed with the broad and encouraging speech which we have just [start page 144] listened to from the Premier of New South Wales. The purpose of this discussion has been in order that the committee on finance which has been appointed should be enabled to gather the sentiments of the Convention, with the view of being assisted in the performance of its duties. I am sure that if my hon. friend, Sir Philip Fysh, instead of having addressed the Committee yesterday, had addressed it to-day, he would not have expressed the opinion that this debate would be really a beating of the air. He would have come to the conclusion, which I maintain is foremost in the minds of all of us, that the results both as regards the assistance to the committee and as regards the advancement of the great purpose which we hare all at heart, that is, the union of Australia, must be immense. For my part, at the commencement of the discussion I did not feel particularly sanguine as to the possibility of time being saved. Now I have arrived at exactly the opposite conclusion. Although it may be that the Finance Committee in some respects will be placed in a position of difficulty because of no resolution being adopted by the Committee for their guidance, still they will feel that underlying every criticism and surrounding every remark in the debate has been the gradual accretion of the sentiment that the federal parliament which we are about to create under this great instrument of self-government will be the best for accomplishing the purpose we have in view, and of extricating us in a just and fair manner from all the difficulties that surround this financial problem. Under these circumstances, the remarks which I shall offer to the Committee will be very few. In the first place, I should like to say a word in regard to the question of the railways, I have always taken the view that if it were practicable to accomplish the purpose the railways ought to be federated. I should myself like to see the whole of the railways of the continent brought under the control of the central government. It always appeared to me to be one of those matters which came well within the category of federal control. The railways in these countries affect the entire body of the people certainly as much as do the posts and telegraphs. We have not hesitated to bring under the control of the federal parliament the posts and telegraphs, and, on substantially the same principle, if the conditions were practicable-I admit that there are some conditions which make it impracticable at the present time-the railways of the states, which will be the railways of the commonwealth, ought to be under federal control. At the same time, sir, I admit that at present it is vain to discuss the federalisation of the railways. There is a strong feeling in, perhaps, all of the colonies, more or less, that the railways are matters which concern more immediately the states. At any rate, I recognise this fact: that there is a duty, a responsibility on the government of a state, to develop its own distant country, and to provide facilities for the people located in its distant parts getting their produce to market in the quickest possible way. And I recognise the fact that with that state of things existing it will be difficult, perhaps, for any state to reconcile itself to handing over the control of the railways, constructed for the purpose of development in that, sense, entirely to the central authority. I do not

share the apprehension on that score, because I believe that the same principles to which my right hon. and learned friend, Mr. Reid, has referred in relation to the adjustment of the financial trouble, will equally apply to the control and management of the railways. I do not believe that the federal authority, for instance, in dealing with the railways in any particular state, would forget the principles which guided their construction. I do not believe for a moment that the [start page 145] federal authority would seek to so interfere with rates as to do an injustice to one colony and give a special advantage to another. But, at the same time, seeing that it would not be practicable to federate the railways at the present moment, the only question is what can be adopted as a middle course in order to prevent some of those mischiefs as I think them, to which my hon. friend, Mr. Higgins, in his exceedingly instructive speech called attention this afternoon. My hon. and learned friend, Mr. O'Connor, dealt at some length with this point as to the inter-state Commission. It seemed to me that his view was one of power to the federal parliament rather than one of substance affecting the principle of control which should be exercised over the railways. He seemed to me to say that he considered that clause 95, which provides that preference shall not be given by any law or regulation of commerce to the ports of one state over the ports of another state, sufficiently gave to the federal parliament power to impose regulations and to pass laws, and that, therefore, the provisions embodied in clauses 96 and 97 were, as I understood him, superfluous. If that is the only point of attack which he makes, to my mind it is not a very serious one, because he concedes, as I understood him, that it is essential that there should be a control over the railways of the commonwealth to prevent preferences being given so as to take the goods of one portion of the country to an outlet to which in the ordinary course of things they would not travel. That, I think I may say to my hon. and learned friend, is all we wish. It may be that if the existing state of things were permitted, what would be a differential rate in New South Wales would be construed into a preferential rate in Victoria. That would be, to my mind, exceedingly unjust. If the object is to have a series of rates which will not interfere with the natural outlet of the goods of any part of the commonwealth, then, so far as my judgment goes, it is impossible to take any exception to the method prescribed of establishing an inter-state commission with the view of bringing about that result. Either hand over the railways entirely to the commonwealth or establish an interstate commission with the view of regulating the railway tariffs so as to prevent what we all desire to prevent-an advantage being given to one port over another. Now, instances have been given of that, and I do not propose to go into detail except, to say this: My hon. friend points out that, of course, any particular state regulates its, rates, according to length of haulage, and from a variety of other circumstances incidental it may be, as I have said, to the development of a distant part of the country. All these things would be taken equally into consideration, I apprehend, by an interstate commission. Surely if you establish a tribunal of that kind you do not limit the functions it has to discharge, within the scope of the powers conferred upon it. You give that body the same judicial control as you would expect to be exercised by a corresponding power in the state, if the railways were left to the state. That, at any rate, is my conception of what this inter-state commission would be, and what it would do.

The Hon. C.H. GRANT: The federal management would do exactly the same!

Mr. SYMON: And the federal management would do exactly the same. The difficulty is that we are bound to recognise that there is a very strong feeling in some of the colonies against a transfer of the railways bodily to the federation. Recognising that fact, the point then is, how are we best to prevent what are described as cut-throat railway tariffs, not with the view of benefiting the producer employing the railways as his carriers, but with the view of injuring one state for the [start page 146] benefit of another. To my mind, if that state of things is to continue, federation, the blessings of union, the harmony which we expect to result, would largely disappear, and we should have each constituent part of the commonwealth watching every state in connection with the railway tariffs, and in a constant condition of irritation with regard to the progress of trade. It does seem to me, as my right hon. friend has just declared, that a dominating feature of this federation is freedom of trade, freedom of intercourse, but I disagree with him to this extent, that it appears to me that the barriers you erect in connection with your railway tariffs are now, and will in the future, be just as troublesome and just as detrimental to that perfect freedom of trade which you wish to secure as are your border custom-houses, and your border duties.

An HON. MEMBER: It will be a delusion altogether!

Mr. SYMON: Therefore, I hope that if we sweep out from the measure as drafted in Adelaide the interstate commission, we shall be able to introduce something instead that will be equally effectual for the purpose. Just one word as to the rivers. That is a matter which concerns the colony I have the honor to come from very intimately indeed. The same principles, perhaps with intensified force, that apply in regard to the railways apply also to the rivers. But I gathered to-day a considerable crumb of comfort from my hon. friend, Mr. Lyne, who told us that he-and, I understood him, the people of New South Wales-have no desire to so use the river Murray as to prevent its being navigable. Now that embodies the contention which I am disposed to fight for.

An HON. MEMBER: That is all we want!

Mr. SYMON: All we seek is that the great stream of the Murray, which is not only a channel of communication, but a vehicle of traffic, shall be open along the whole of its course, so far as it is now navigable, for all time. We do not wish that interfered with or lessened. I hope the people of New South Wales will believe that we have not the slightest desire to interfere with that great public object they have in view in the development of their country by means of irrigation. At least, personally, I have not. I agree that in a country like this it is impossible to treat waterways on the same footing as in other countries, where waterways and rivers are abundant, and we must all feel that to deprive New South Wales of the particular dealing with the affluents of the navigable river Murray for the purposes of irrigation would be to take away from them that control which in eastern countries was sought to be exercised over the wells of water about which there is so much dispute recorded in Holy Writ.

Mr. GLYNN: If you let them carry out their schemes you will have to navigate on dry land!

Mr. SYMON: I do not agree with my hon. friend as to that. My experience, which is not very extensive, but is useful as far as it goes, is that when you improve streams, in themselves originally small, for the purposes of irrigation, you develop very often, if not generally, the water supply. You may utilise streams in the way I have indicated and still preserve the navigability of the main river, where it is navigable now. At any rate, I believe that is the case, and I am not prepared to ask the people of New South Wales to yield up their control for the purposes of irrigation of the internal rivers of their present system. It may be that the federal parliament, under the powers embodied in clause 95, to which my hon. friend, Mr. O'Connor, referred, may be enabled to deal with this question should difficulties and trouble arise. But at present my view is that the arrangement made in the Convention at Adelaide will be ample for [start page 147] the purposes of South Australia-for the purposes of all Australia, because all Australia is interested in keeping the Murray navigable. I believe it will be sufficient for that purpose, and I hope that to that extent, at any rate, it will be preserved. I should like to say also in regard to the taking over of the debts of the various colonies, that I hope the provision in the bill will be allowed to remain as it is-in other words, that it will be permissive to the commonwealth to take over the debts. If I had entertained any doubt on that subject before, it would have been removed by the very excellent and convincing speech made yesterday afternoon by my hon. friend, Mr. Holder. That the debts ought to be taken over some time or other, and that they will be taken over, probably, goes without saying. But if we were to embody in this constitution an obligation on that part of the federal parliament to take over the debts, it would at once send our stock to a premium, and it would paralyse the hands of the federation in making terms for an advantageous conversion.

Mr. GLYNN:-

Mr. SYMON: We hope to convert before the stock expires, and I think we may be able to do it if-to use the word of Mr. Higgins in connection with another matter-we have a weapon in our hands, or it lever which we can use for that purpose.

The Hon. J. HENRY: How would the hon. gentleman set about it?

Mr. SYMON: I would set about it in the way my hon. friend, Mr. Holder, indicated yesterday. I think he put it this way: If you make it obligatory, your stock immediately increases in value, and you have nothing to offer to the stockholder in order to induce him to give up his stock and allow it to be converted.

The Right Hon. Sir G. TURNER: The moment it was known that the federal parliament intended to convert, up would go the stock!

The Hon. J. HENRY: Exactly!

Mr. SYMON: If my right hon. friend were treasurer of the federal government he would take care not to intimate the intention until he had first negotiated.

The Right Hon. Sir G. TURNER: The moment you started to negotiate the rise would take place!

Mr. SYMON: My hon. friend would, no doubt, be astute enough and careful enough in the interests of the federal government to make adequate arrangements in that respect, and I am satisfied that my hon. friend, Mr. Holder, would be perfectly able to devise some method of securing-I would not say all the benefit-but some of the benefit for the federal exchequer.

The Right Hon. Sir G. TURNER: He would not be astute enough for the English capitalists!

Mr. SYMON: We can only face the difficulty when it arises. Without prognosticating on which side the advantage will be, of the two methods the better is that advocated by my hon. friend, Mr. Holder, to leave it permissive rather than to make it obligatory on the federal authority. In regard to the financial adjustment and the regulation of trade, undoubtedly that is the most important part of what may be described as the commercial bargain into which we are entering, and I would only say, after the view which has evidently been adopted by the Convention as to the desirability of leaving the question to be dealt with by the federal parliament, that the principle it seems to me is to give back to each state as nearly as possible what it contributes, less its proportion of the federal expenditure. That seems to me to be really the guiding principle of the whole subject. If each state contributed equally per head there would be no difficulty whatever; but that is not so, and I think we ought to bear in mind that it never will be so. I do not believe you will have an equal contribution per [start page 148] head from the states of the commonwealth any more than you will have it from towns, parishes, or other districts. A great deal of misapprehension has arisen, and a great deal of what I regard as very unjust criticism has been cast upon the labours of the Convention in Adelaide, because that fact has been forgotten. It is said that so much per head will be produced by New South Wales, so much by Victoria, and so much by South Australia. These inequalities must, more or less, always exist, and all we can hope to arrive at is a fair approximation. The object is really twofold. First, to get as near as you can, if you are to settle it in the constitution, or to leave it to the federal parliament with all the knowledge which will be at its disposal, with the data by which it may be guided in order to finally settle it. I have always been opposed to having it settled in the constitution, and for this reason: It seems to me that we are simply going blind. Whatever effort we may make to arrive at some approximation we are dealing with matters of prophecy, and not matters of fact. No human being-I do not believe even an archangel from heaven-could at this moment introduce into the constitution which it is our mission to frame a provision which would do justice all round upon the financial question.

The Hon. J. HENRY: Have archangels any speciality in regard to finance?

Mr. SYMON: I have no doubt my hon. friend is not merely a great authority in regard to finance, but he has great qualifications for being an archangel as well. Even a combination of the two would not produce in this constitution an arrangement in respect of finance which would give satisfaction to the people of the colonies. It would, at any rate, give, as it has given before, the greatest stimulus and

the widest scope for all kinds of criticism. But that is about all. If it is a matter of prophecy, then they tell you that it is like the Lamentations of Jeremiah, that it is all to the injury of some particular state or some particular set of taxpayers. Therefore, I am glad, as I think we must all be glad, that the feeling is crystallising in favour of what was really adopted by the bill of 1891-the ultimate disposal of this question by the federal parliament; and as the Premier of New South Wales has said, to what better authority can we possibly commit that task,-a body elected on the widest franchise available, a body which will be as patriotic as any states parliament will be, a body which will be certainly as competent as any other legislative assemblage can possibly be, and concerned not only for the interest of the entire commonwealth-the union of all the states-but concerned to see that in securing that general welfare the interests of no individual state are sacrificed? My belief is that we shall have in the federal parliament a legislative machine that will be actuated by the highest possible principles, and that it will not be open to the charge that it will be likely to view any particular section of the Commonwealth with more favour than another. I would remind hon. members that, in the bill of 1891, which was subjected to a great deal of criticism, and was condemned by its author-Sir Samuel Griffith-with very trenchant criticism, really the power of disposing of this matter was left in the hands of the federal parliament. We know the difficulties which have arisen. We know that the best minds and the best experience have been brought to bear upon this question. We know, as I have said, that in the bill of 1891 we had provisions that for the moment were considered admirable. They were condemned. We know that in Adelaide we had a Finance Committee which sat for a good while thoroughly investigating the subject, and the proposals they brought forward were allowed to slip under [start page 149] the table and were heard of no more. Then came a reference of the Treasurers, and we find that throughout the whole of Australia great denunciations were heard of these proposals, although I am bound to say that, looking at the sliding scale in the light which Mr. Holder has cast upon it in his pamphlet, and also in his speech yesterday, I am inclined to think that if we were to deal with the matter now, the sliding scale system is about as near an approximation to what is fair and just as we could possibly meet with.

Mr. WALKER: Extending over twenty years!

Mr. SYMON: I do not say anything about that. The extent of its duration is another matter. Whether it is five or ten years is a matter which I hope the experts on the Finance Committee will be able to settle. No doubt if it is adopted in the Constitution something of that kind will probably be secured. At the same time, we are not able to escape from the bookkeeping system which for some period or other must be adopted. But the vice of all these proposals and schemes is that it is not no much in the details of them as it is in the inherent impossibility of settling prophetically a practical question which depends on data not now available, and which afterwards will have to be obtained. Passing over a number of other matters with which it seems unnecessary to deal, I wish to say a word as to the suggestion of the hon. member, Mr. Deakin, as to the establishment and payment over of a minimum. I disapprove of that altogether. It we trust the federal parliament we should trust it all in all. If we are to endeavour to fix it minimum, we are met on the very threshold with the anomalous position of Western Australia. We all agree that Western Australia must receive some special treatment; but if we are to deal with that special treatment now, we shall be entangled in the very thing which we wish to avoid, namely, entering upon the details of a financial inquiry by the light of what a particular customs tariff may produce. I therefore think, with the Premier of New South Wales, that we should leave the matter to the federal parliament. A minimum would undoubtedly have the effect of being an encouragement. It might remove difficulties from the path of some who may feel some hesitation as to the state of the particular finances of their own colony; but if we have confidence-confidence in the machine as my right hon. friend put it-then I think we may fairly say to the people of the colonies from which we come, "We recommend you to trust the federal parliament throughout, not only to deal with particular items-maximums or minimums-but to deal with the whole question, so that each colony shall be fairly served, and that each colony's finances shall be fairly maintained." I do not propose to occupy one moment longer upon some other aspects of the matter which have presented themselves, and which are of considerable difficulty, because the main question is really whether we shall or shall not remit this adjustment of the finances to the federal parliament; and if we convey that intimation, as I think, it has been very generally conveyed, to the Finance

Committee, it will give them a basis upon which to work, and a beacon by which they may proceed. I will only say this further: It is a mistake to be always on the look out for a "lion in the path." We are very apt to imagine that we see a "lion in the path" when no lion exists. No one can tell what particular difficulties may crop up; and no one can deny that there are difficulties to be overcome-great difficulties; but, if any recommendation would be of influence, as I have no doubt it would be, what I would say to the Finance Committee is, if there is a difficulty-if there is a nettle, let them grasp it firmly-let them not be afraid to meet [start page 150] the difficulties that lie before them; and if they do grasp the nettle firmly, then, out of it, I am quite sure that we, in this Convention, with their help, will be able to pluck the flower of safety and success.

The, Hon. J.W. HACKETT (Western Australia)[4.32]: At this late hour of the Convention's proceedings to-day I do not propose to trouble hon. members with very many remarks; but, as the tone of the debate for the last two or three hours has largely occupied itself with local questions-by which I mean questions not peculiar to any one state, but which involve the interests, not of the whole commonwealth, but of two or three states perhaps you, sir, will allow me a few minutes to speak generally on the question, and afterwards to put a few aspects of the matter from the Western Australian point of view, which, if they have been alluded to, have only been alluded to in general terms, and not specifically. I think that, in the first instance, I may congratulate the Committee on the course taken in putting into the forefront this financial difficulty. The feeling that has been evinced, and the expressions which have been called forth in the course of the debate, must very materially shorten the work of the Convention in arriving at its desired conclusion. Had indeed this matter been as fully and freely debated in the Adelaide Convention, with the materials which this Committee possesses at present, I believe that our work at this adjourned Convention would have been so shortened, would have been so satisfactory in everyway, that we might have been prepared to take a poll of the people before many months are over. I take it that the main difficulty now in our path is this financial question. The arrangement of the relations between the states and the commonwealth has never seemed to me to be of such a formidable character as to threaten a suspension of the work required to bring the commonwealth into being. But I have all along felt-and any one familiar with the history of my own colony for the last few years must also have felt, especially if he bad been in my own position, labouring in a small minority on behalf of federation and against a great body of doubt and misgiving-that unless we could give a satisfactory reply with regard to the financial bearings between Western Australia and the commonwealth, we might as well spare ourselves the trouble of appealing to our people. Of course the main difficulty in the matter arises from the fact-and it cannot be divorced from it-that the one source of unencumbered revenue-by which I mean revenue, no part of which is applied in payment for services rendered-is the customs. The customs, by the terms and implication, must pass into the hands of the federal authority. It is its natural revenue. But it so happens that the transfer of that revenue to the federal authority is attended with three grave contingencies, every one of which represents a vast body of difficulties that would have to be surmounted before the commonwealth is brought into operation. The first is that the customs must inevitably bring in a revenue immensely greater than the commonwealth will require for its own purposes. That would have a natural tendency to create extravagance-to cause carelessness and indifference on the part of the financial authorities of the commonwealth -unless they were very closely looked after. The second point is that if it interferes in a fundamental degree-and we cannot close our eyes to the fact that it must interfere in a fundamental degree-with the fiscal policy of one of the largest states of the commonwealth, the probability-I hope not the certainty-is that it would lead more or less to the reversal of that policy. That is the second difficulty which is contingent on the appropriation of the customs by the federal power. The third [start page 151] is that it robs the states-or perhaps a milder phrase would be that it deprives the states-in all cases of their chief weapon for collecting money. It takes away from them that source to which they are all looking for development, and even for the payment of their way. In view of those three facts, it was inevitable that the question of seizing the customs should, the more it was looked into, constitute itself the main difficulty to be solved before we could see our way clear to establish this federation. We must remember further that it is also complicated by this consideration that we are not now engaged on the construction of a tariff; but this financial question is to be made part of our constitutional bonds. We are not looking so much for revenue as for conditions of union; in other words, finance is to be made a part of the constitution

of the commonwealth. There is yet an additional difficulty-that in, that there is practically no tax at the disposal of the commonwealth, so far as we can see, excepting the customs; for it so happens that in the forty years of nationhood among the various Australian colonies they have been exploring all the fields of taxation, and, so far as I know, have occupied them all-all that are known to us and our fellow citizens in the United Kingdom-with the exception of certain special taxes which are imposed on luxuries-on what are commonly called aristocratic luxuries. They have gone beyond that. Not only have they explored and occupied all the fields of taxation; but, because of various exigencies-usually depression at one time or another-they have loaded up all the colonies with as much taxation as they will bear. There is neither room for a new tax nor margin to increase the present taxes. Therefore we are driven back upon customs duties, and we have to face the difficulties as best we may. The spirit in which they have been faced to-day to my mind bodes better for the early inauguration of the commonwealth than anything I have come across either in my reading or experience during the last three months. If we settle this matter satisfactorily to the states, to our people, and to Australia as a whole, we need have no ground of alarm for the future of the commonwealth. For so far as we can see there is no question which will impose a greater strain upon the capacity, the good feeling, and the patriotism of the people of the commonwealth than the financial question. I have listened to nearly everything which has been said during this debater have not been absent many minutes at any time from the sittings of the Committee-with regard to the materials at our disposal for forming a judgment in regard to this question. I have heard statistics attacked; I have heard them defended; but the doubt has never left my mind that we have not sufficient figures in our hands to enable us to lay down hard and fast lines in regard to the future financial policy of the commonwealth. In other words, we have no materials so assured and so reliable that we could take it upon ourselves to crystallise them into a part of the constitution. The figures which we have tell us a great deal about the past, something about the present, and nothing at all about the future. We must remember that all the difficulty lies in the uncertainty of the future. We have nothing before us now which leads us to do anything that affords the smallest indication in our own fancies, the smallest conjectures as to what will happen when we have such new factors introduced into the situation as a wholly unknown tariff. So far we have been able to refer only to the tariffs now in existence. We do not know what would be the course of intercolonial commerce under a uniform tariff. We cannot forget that behind all these unknown factors there remains the constitution of the commonwealth, whose inevitable operation-I had almost said [start page 152] whose principal object and intention-is to change the whole course of the relations between the states in regard to trade, production, and expenditure. There is a general feeling growing up, and once it is started it seems to be almost inevitable that it should grow, that the conditions are too great for us to master with the materials at hand. There in a growing feeling that a federal parliament will be in a better position to deal with theme difficulties as they arise, and when they arise. In fact, the question is not now whether this and a number of other matters should be left to the federal parliament, but how much of this and other matters is to be left to the federal parliament. It seems to be perfectly inevitable that it should be so. Take one clause of the bill, for example; the final and completing clause of the financial system worked out by the Convention at Adelaide. After making an interim arrangement for seven years, it is there declared that

after the expiration of five years from the imposition of uniform duties of customs, each state shall be deemed to contribute to the revenue an equal sum per head of its population, and all surplus revenue over the expenditure of the commonwealth shall be distributed month by month among the several states in proportion to the numbers of their people as shown by the latest statistics of the commonwealth.

Probably by a slip more than anything else, or possibly with a view to placing it there for discussion, this clause was made a binding part of the constitution. If the constitution were accepted, this provision could only be altered by adopting the designedly protracted and cumbrous course of sending the proposed amendment to the federal parliament, and afterwards to the people of the states. Now it is quite obvious that if a provision of this kind is to be registered in the constitution, and is to be made part of the Commonwealth Bill, there are only two ways in which it can be done. One is to declare that the surplus shall be returned to the various states in proportion to the amounts collected from them, which again involves the perpetual maintenance of border custom houses, if the

arrangement is to be made effectual and satisfactory, and which stands condemned for that very reason. Consequently, the proposal made in the Adelaide Convention that the surpluses should be returned to the states, per capita, in proportion to population, was adopted in the bill. I would ask the attention of the Committee for one moment to the probable operation of such a clause in regard to the colony of Western Australia. It must be remembered that if Western Australia comes into the union, however late she may come in, she must come in under this clause, unless it be altered in the manner I have indicated, a most unlikely proceeding, because it is evident that a majority of the states could, if they pleased, block any attempt to alter the clause, even though a majority of the people of the commonwealth were determined to have it revised. The hon. member, Sir Philip Fysh, has calculated that, if the clause were in operation, Western Australia would lose £659,090 in the first few years, and that after the interim arrangement had expired we should lose £613,894 annually. I come now to a matter I understand better, the calculations made by our own Government Statist. He declares that during the year 1898-9 we should lose £386,360. That is a serious loss; but at the next year, 1899-1900, we should lose £411,847.

An Hon. MEMBER: That will be the first year of the operation of the uniform tariff!

The Hon. J.W. HACKETT: Yes. He arrives at these figures largely by deducting the loss of intercolonial customs. The chief loss would be due to the cessation of the collection of customs upon intercolonial imports. In the year 1900-1, the loss [start page 153] would amount to £433,975; in the year 1901-2, to £452,560; in the year 1902-3, to £466,978; in the year 1903-4, to £621,122; and in the year 1904-5, to £652,280.

The Hon. F.W. HOLDER: That is all upon the assumption that the present abnormal conditions continue!

The Hon. A. DEAKIN: The figures are only hypothetical!

The Hon. J.W. HACKETT: They are accurately hypothetical. It is simply out of the question that we could join under any system which involves a per capita return, excepting, of course, for a limited experimental period. But even these figures hardly represent the true position of Western Australia with regard to federation. Those that have been laid upon the table by the Government Statistician of New South Wales take some important matters into consideration. Now, the contribution for services of which we should be relieved, the payment for services rendered, is set down at £158,000 in the papers distributed among hon. members a couple of days ago -that is, about £1 per head. It is manifest that that is extravagant, and that later on it will have to be reduced. It is out of all proportion to the amounts contributed by the other colonies. Take, for example, Tasmania, which has about the same population that we have. The amount of expenditure in respect of the services of which she would be relieved would be £33,000, or about 4s. per head, as against £1 per head in Western Australia. In the case of South Australia, which has just about double our population, the amount of expenditure in respect of services of which who would be relieved would be £41,500, or about 2s per head, as against £1 in the case of Western Australia. Now, adjustments of that kind will have to be made all along the line, if a fair view is to be prevented of the position of Western Australia. It must not be forgotten either that we have no excise, and as our customs in most cases quadruple the normal customs rates of the rest of Australia, it is fair to take for our excise about double the average excise. That being about 2s. 6d., if we take it at 5s. a head, that will be a still further contribution to the federal treasury which will have to be returned; so that, the more you look at it, the more serious the prospect becomes, so far as Western Australia is concerned. Let us now take the other side. We have expended very little in defences. New South Wales and Victoria have expended money liberally in this direction. We have not had the means to expend, nor have we had the opportunity to expend them. No doubt, in time to come, we shall rival the other colonies in an extravagant expenditure in this respect; but, as matters stand at present, the defence bill in New South Wales and Victoria stands at about 4s. per head of the population, while our defence bill is only about 2s. per head. There is not the slightest doubt that something like an equality will have to be established in that direction if Western Australia is to be satisfied and is to be defended. In fact, it is more than likely that the expenditure per head for defences

will be larger than that per capita of the other colonies owing to the vast extent of territory to be defended. The coast-line virtually commands three seas, north, west, and south. There is another matter. Take the ocean lighthouses. New South Wales, with between 700 and 800 miles of coast-line, expends a sum of £16,000 a year on lighthouses. According to the latest particulars which I have been able to obtain, in our own colony of Western Australia the sum expended per annum is £3,000 upon a coast-line 3,000 miles in length. Now, these facts emphasise the importance of us from this western colony, not only looking closely into this financial question, [start page 154] but doing all that we can to impress upon the Convention the great inequalities of the position of that colony as compared with the rest of the colonies. In view of all these facts, I am afraid I cannot agree with my right hon. friend, Sir John Forrest, that Western Australia does not need exceptional treatment. It is unquestionably the case. Either we must compel the rest of Australia to accept the conditions applicable to us, and in the highest degree unjust and injurious to all or nearly all the other states, or we shall have to accept conditions which will be absolutely ruinous to ourselves. Indeed, it appears to me that if a common rule is to be laid down, we shall have to stand out of the commonwealth until we can make terms under that clause of the constitution which enables the commonwealth to bargain with a state in regard to the conditions of its admission. We are abnormal from first to last. The hon. member, Mr. Higgins, referred to our tariff. The hon. member did not pursue the argument; but, if he intended to show the abnormal conditions we stand in, I would take the opportunity of correcting him in regard to several points, especially as they concern the honor of those who are interested in the Government of the country, which has endeavoured to make the burden of taxation on the people as light as possible, insomuch that at the present time we stand in the position of the most lightly-taxed colony in the Australian group. We have no direct taxation whatever, excepting death duties on a limited scale. We have no property, income, or land tax; and, if you measure our tariff by the rest of the Australian tariffs in succession we come out at the bottom, New South Wales only excepted. With regard to the number of articles, the hon. member will find that we stand lower, with the single exception of New South Wales, than all the other colonies. The year before last we remitted taxation on twenty-one articles, and the year after on sixty-seven articles-altogether on nearly ninety articles.

Mr. HIGGINS: There has been a change within the last two years!

The Hon. J.W. HACKETT: Yes. Most of those articles are not single articles, but groups of commodities. In fact, as it stands now, out of a total import value of £6,500,000 at the very least £2,500,000 worth of goods come in free of duty.

An HON. MEMBER: How much of these imports come from the other parts of Australia?

The Hon. J.W. HACKETT: £3,000,000, and I would point out that that will be very largely diminished within a very short time, because it consists mostly of farm produce, and in three or four years we shall be able to produce all we want in that respect.

Mr. WALKER: Without protection?

The Hon. J.W. HACKETT: Yes; we have no protection, except small duties levied on food, and the Right Hon. Sir John Forrest will bear me out in saying that they are left as much for the purpose of revenue as for protection. It is true that our customs revenue now is £7 15s. per head. That is thoroughly anomalous, and a belief has been expressed all round the Committee that that amount will diminish to something approaching £2 per head, which is the average for the whole of Australia. But we have always been abnormal in that respect. What the reason is I cannot say. It maybe that in a thinly-peopled country, possessing large productive resources, there is a smaller number of unproductive inhabitants than in the more densely-populated colonies. Ever since I have known the colony, since 1886, the customs revenue per head has never fallen below £4, and it has exceeded £5 even in years when gold was never heard or dreamt of.

Mr. SOLOMON: Under a higher tariff!

[start page 155] The Hon. J.W. HACKETT: Under a higher tariff than we have now, but under a lower tariff than we have had.

Mr. SOLOMON: The male adults in Western Australia are seven-tenths of the population, and they earn £4 per week as against £2 per week in other colonies.

The Hon. J.W. HACKETT: That is the case.

An HON. MEMBER: But it will not last!

The Hon. J.W. HACKETT: It has lasted for ten years, but it will not last for ever. What is to be done under these circumstances? I entirely agree with the Right Hon. Sir John Forrest that we should revert to the provisions of the bill of 1891. In common with the great majority of the members of this Committee, I earnestly hope that the policy indicated of trusting an Australian parliament will be pursued. It seems to me that nothing is more cheering than the different spirit of this Convention now compared with its spirit when we mot a few months ago. This Convention has reverted to the spirit of the Convention of 1891, when we were all for trusting to the federal parliament. For some reason doubts seem to have come across the minds of many of the now members of the Convention, if I may say so without offence, and they are unwilling to accord those large powers to the federal parliament which the Convention of 1891 had most willingly and unreservedly given. In fact, we are now beginning to trust the federal parliament. At the same time there is a great deal of force in what the hon. member, Mr. Symon, has urged, that, after all, we are asked to go into this union blindfold. What I would ask the Convention and its Finance Committee to bear in mind is that if we do take this leap in the dark they will at all events let us know how far we shall have to fall, so that there may be some limitation to our descent. I shall not be behind any me in trusting a parliament of our fellow-citizens of Australia. I have the most implicit confidence that when the time comes, even if we stand out for a time, the terms that an Australian state will ask will be fair ones, and that the terms that an Australian parliament offers will not be less fair.

Progress reported.

LEAVE OF ABSENCE.

Motion (by Hon. E. BARTON) agreed to: That leave of absence for one week be granted to Mr. George Leake on account of urgent private affairs.

Convention adjourned at 5.9 p.m.