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Thursday, 3 March 1932

Mr BRUCE (FLINDERS, VICTORIA) (Assistant Treasurer) . - This clause has been substantially amended by the Government in an endeavour to meet the points that have been brought out during the discussion of the bill, to safeguard as far as possible the right of the Commonwealth to recover money due to it from the States, and also to protect tho States against unfair or unwarranted action on the part of the Commonwealth. The Leader of the Opposition (Mr. Scullin) was not in the chamber when I quoted from Sir Edward Mitchell's book a sentence which the right honor able member had omitted to quote. The right honorable gentleman has suggested that it is quite wrong to contemplate that a State Government might not obey an order of the court, and my quotation was intended to show that even Sir Edward Mitchell had contemplated the possibility of a State Premier making a martyr of himself by standing rigidly by his principles in defiance of the, judicial authority. The suggestion that the head of a State, or a State Minister, might decline to obey the law is, therefore, not so outrageous a thing as the right honorable the Leader of the Opposition would have the committee believe it to be.

I disagree with the right honorable member that the parties to the Financial Agreement would not have signed it if they had had such provisions as these before them. I have not the slightest hesitation in saying that they would not have attached the slightest significance to them. It did not occur to any of the representatives of the governments which made the Financial Agreement that the Commonwealth or a State would do other than stand honorably by its obligations. Any suggestion to the contrary would have been scouted, and, consequently, no one at that time contemplated or foresaw the need for such provisions as these.

It has been suggested that this clause in some way flouts the judiciary, and is an assumption of judicial power. Whatever may have been said when it was optional for the Commonwealth only to go to the court, there can be no possible ground for that objection now that a State can approach the court the very day after resolutions have been passed in this Parliament. The eventual judicial determination of the issue is thus provided for.

Another objection urged strongly by some honorable members is that the Commonwealth proposes to collect a debt before the court has decided that it is owing; that there is no precedent for such a course. That is utterly ridiculous. The bill only provides for something which is taking place every day in this country. Have honorable members forgotten the power that this Parliament gives with regard to the collection of taxation? The Government makes a demand upon the citizen for the payment of income tax. If the individual declines to pay, he has recourse to the courts, but that does not prevent the Government from taking action against him to recover the money which Parliament says is owing. That is an exact analogy of what is provided for in this bill. This Parliament declares by this bill that certain money is owing to the Commonwealth. Under its provisions officers authorized by this Parliament will demand payment of that money. If the debtor declares that he does not owe die money, and appeals to the law to protect his rights, this Parliament is not debarred from authorizing its officers to take the money from him before the court has given a decision upon the issue. That is exactly what will happen under this bill. The final determination, of course, will be with the judiciary. If the court finds that no money is owing to the Commonwealth, the Commonwealth Government has immediately to refund what it has taken. The Commonwealth, however, is entitled, as it is under ordinary taxation laws, first to recover the money from the State. If, eventually, the judiciary determines the issue, and finds that the money is not owing, the Commonwealth must refund it, just as it is obliged to do in the case of the ordinary taxpayer. This principle is necessary for sound government. It is followed in the United States of America. In the American Constitution there are the same divisions as we have iii our Constitution - the Executive, the legislature and the judiciary. The position in the United States of America is stronger against anything of this character than it is here, because embodied in the Constitution of that country is a provision that no money shall be taken except in due process of law. Yet again and again the courts of that country have re-affirmed the right of the State - and by the State I mean the Government, whether of the Federation or a State - to recover taxation by distraint, or other means, before a court has given any decision, and before, it can bo said that action is being taken in due process of law. The reason is that administration becomes impossible if the recovery of moneys by a government can be delayed until there has been a judicial determination of the amount that is due and owing. It has been suggested that this clause disregards a principle. It does nothing of the sort; it merely give3 the Commonwealth power to recover, with expedition, moneys due to it. I refuse to accept the argument that was advanced by the Leader of the Opposition (Mr. Scullin) as to the character of this legislation. It is for this Parliament to determine whether it is necessary for. the Commonwealth to have the power to take definite action against any State that defaults. If that is determined by Parliament there is no flouting of the judiciary nor any disregard of any established principle.

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