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Wednesday, 2 March 1932


Mr R GREEN (RICHMOND, NEW SOUTH WALES) .- To the best ofmy knowledge, this is the first occasion on which one government has been forced to legislate to enforce the honest performance of a contract by another government. To men of British descent and ideals, such a situation is abhorrent. Usually punitive legislation is directed against individual lawbreakers, but to-day we have the sorry spectacle of a State government acting like a dishonest person who is deliberately evading his just obligations. In addition to breaking a definite contract to which he was a signatory, Mr. Lang has repudiated his pledged word. Legislation of this character therefore becomes necessary, but I hope it will not have to be utilized more than once. The Prime Minister (Mr. Lyons) has announced that the operation of the bill will be limited to two years, but all honorable members will sincerely wish that long before that period expires the need for such extraordinary legislation will have disappeared. That such a measure should have to be placed on the statute-book is not a pleasant thought, although, as the honorable member for Martin (Mr. Holman) stated last week, this Parliament, having recently been given an additional grant of power by the people, should not hesitate to take the earliest opportunity to test its effectiveness.

Tlie bill raises three issues - first, the general principle underlying it ; secondly, the validity of this legislation; - and, thirdly, the means of effectively enforcing it. I do not think that the principle has been questioned. Moneys are owing to the Commonwealth by New South Wales; that is not in dispute, and the State Government having declared that it will not pay an admitted debt, this Parliament is surely justified in taking steps for the recovery of it. The Leader of the Opposition (Mr. Scullin) admitted that principle, and it has not been attacked even by the small but lond group led by the honorable member for West Sydney (Mr. Beasley). As to the validity of this legislation, laymen must be guided by the opinions of the Attorney-General (Mr. Latham), the honorable member for Darling Downs (Sir Littleton Groom), the honorable member for Martin (Mr. Holman), and other legal luminaries, who were consulted by the present Government and its immediate predecessor. In their opinion the proposals made by the Government are valid, but the Leader of the Country party (Dr. Earle Page) questioned the constitutional propriety of tacking other provisions to a measure which might be regarded by the High Court as imposing taxation. He therefore suggested the separation, from the enforcement provisions, of that part of the bill in which the Commonwealth rightly declares itself finally responsible for the debt and interest liabilities of Australian Governments. The Assistant Treasurer (Mr. Bruce) announced that the Government was prepared to consider favorably the suggestion of the right honorable member for Cowper, and I hope that the measure will be amended accordingly.

I come now to the provisions for the enforcement of payment by a defaulting State. The Leader of the Opposition stated that the Commonwealth was trying to coerce a sovereign .State. I interjected then that no State of the Commonwealth is sovereign. Even the Commonwealth itself is not sovereign, because its powers are limited by the Constitution. It has complete powers within certain limits, but the very fact that such limits have been imposed disposes of the contention that the Commonwealth Parliament is sovereign. So far as the States are concerned, even in the spheres reserved to them, their legislation, if inconsistent with that of this Parliament, is, to the extent of that inconsistency, null and void. To that extent the State Parliaments are subservient to the Commonwealth Parliament, and, therefore, their power is not sovereign. That being so, this Parliament cannot be said to be attempting to coerce a sovereign State. Leading counsel consulted by the Commonwealth Government seem to agree that this Parliament has power to legislate in the way proposed for the carrying out of agreements made with the State Governments. I might here reply to the suggestion that was made by the honorable member for Melbourne Ports (Mr. Holloway) to the effect that this legislation is undemocratic in principle. . I am unable to agree with the honorable member, for I fail to see anything undemocratic in enforcing the payment of a just debt. I know that if I am owed money, and I take the prescribed legal action to recover it, I do not consider my action undemocratic. It is the same in the larger sphere 'of national finance. If, on the other hand, we failed' to take this action, we should bc undemocratic to the three-fifths of the people of Australia who represent the population outside the State of New South Wales.

I shall not deal with the validity of the measure. Upon that aspect of the matter we have had adequate legal opinion.

I hope that the Government will reconsider clause 6, which deals with the application of the provisions of the measure in cases of emergency. As it takes only one month to have a case heard before the High Court, I see no reason why power should be given to the Commonwealth Government to take direct action without approaching the court. To my mind, clause 6 is unnecessary, and open to considerable criticism, apart from the aspect that was dealt with by the honorable member for Martin (Mr. Holman), and I hope that the Government will delete it.

I am also a good deal in doubt as to clause 14, which gives the Commonwealth power to retain certain moneys received on behalf of a State. For instance, authority is given to the Commonwealth Government to take any moneys allocated by the Loan Council to a State and apply them in discharge of any .liabilities of that State which have accrued under the Financial Agreement. With that I do not agree. I have in mind the case in which a State has practically completed a public work, and needs a further sum of money to convert it from a non-payable into a revenue-producing asset. If the Commonwealth appropriated the money that had been made available by the Loan Council for such a purpose, it would prevent the completion of the structure, which would remain a non-paying liability. I require to be convinced as to the necessity for the provision. I agree that the Commonwealth should have power to seize moneys from the consolidated revenue of the State.

I come now to the. enforcement of the measure, and here, I confess, I am in grave doubt. Admittedly, we have to deal with a Premier, of New South Wales, who is, without doubt, an obvious crook.


Mr Gander - You seem to know one another.


Mr R GREEN (RICHMOND, NEW SOUTH WALES) - Fortunately! we do not., for it is not my habit to deal with confidence men. Mr. Lang got into power through a confidence trick, by making promises which he had no intention of fulfilling. I am aware that, in the majority of cases, the revenue of a State1 is received in the form of cheques, bank drafts, or other bank instruments, and that it would be easy enough for the Commonwealth Government to obtain an injunction for the retention of those moneys by the financial institutions concerned. However, I see a loophole for Mr. Lang, who could legislate to provide that all payments to the State should be in currency, in which case there would be no necessity to use the banks as a medium. The right honorable member for Cowper (Dr. Earle Page) suggested that the revenue of the railways should be attached. I agree with that in principle, but a big proportion of railway revenues is received in cash, and if instructions were given that all payments to the railway department should be made in currency, that avenue would be closed to the Commonwealth. There are other ways of enforcing the collection of these moneys. For instance, the Commonwealth Government could put a receiver into the State treasury, but the State Government could send along members of its police force with instructions politely but firmly to throw that receiver on to the footpath. What would then be the action of the Commonwealth Government ?


Mr Gander - It would have to take action against the policeman.







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