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Wednesday, 27 May 1942


Mr SCULLIN - Could they not challenge the measure without first imposing their- own taxation?


Mr BLACKBURN - I doubt it.


Mr Spender - Why not? The legislation is either good or bad on its face.

Sitting suspended from 6.15 to 8 p.m.


Mr BLACKBURN - I am not, and cannot be dogmatic upon this matter, but my answer to the question which the right honorable member for Yarra asked me before the dinner suspension is that this is a carefully conceived series of bills, each of which, with one exception, taken by itself, in detachment from the others, appears unexceptionable. It is very difficult to see where any one of them, with the exception of the Income Tax Assessment Bill, taken by itself, could be made the subject of an attack in the High Court. However, the Income Tax Assessment Bill provides that no person should pay income tax to a State until he has paid every penny of federal income tax. It appeal's' to me that if a State, not having enacted income tax of its own, challenged this legislation and asked the High Court for a declaratory judgment, the answer would be "Whether or not we give a declaratory judgment, is a matter for our own discretion. You have not shown that you have been injured, or will be -injured. This act, the validity of which you challenge, does not affect you, as you have not enacted income tax legislation ". Therefore, it seems to me that a State could not feel confident that it would have the matter disposed of by the High Court, unless it had enacted income tax legislation. However, I am not attempting to approach, this subject from the legal standpoint. Every honorable member of this House, whether lawyer or layman, has a duty to reject legislation which, in his opinion, violates the Commonwealth Constitution. The Commonwealth Constitution is contained in an act of the British Parliament, but it has behind it the will of the Australian people. In other words, the Australian people willed that there shall be a central organ of Government called the Commonwealth, and local organs. The central organ, being entirely new, was given powers that are embodied in the Constitution, and are exercisable, subject to the Constitution. Most of them are contained in Section 51. With respect to the States, it was unnecessary to improvise machinery, because the old colonial organization was already in existence. Section 107 provided that subject to the Constitution, the States should retain their legislative powers. So in respect of taxation, there were two powers, namely, the Commonwealth power which was granted by Section 51 (ii), and the power which was preserved to each State by Section 107. Never at any time has there been doubt that the Constitution set up the Commonwealth and the States as co-ordinate bodies, neither subordinate to the other, each of them within its own sphere independent. That statement is substantiated not only by early decisions of the High Court, but also by the more recent decision in James v. Commonwealth and even later, the very strong remarks of the present Attorney-General (Dr. Evatt) and Justice Sir Owen Dixon. There is no doubt that the people of Australia intended to set up this body of two coordinate organs, each within its own sphere independent of the other, and indestructible by the other, and the Constitution has been consistently so interpreted, up to the present time.

Now, the question has arisen as to what was meant by " taxation " in Section 51 (ii), and the interpretation given is "federal taxation for federal purposes ". So far as I am aware, that phrase was first used in The Coming Commonwealth written by Sir Robert Garran in 1897. The judgment of Sir Samuel Griffith in Sydney v. the Commonwealth, in 1904, also makes his views clear that the taxation power conferred upon the Commonwealth by Section 51 (ii) was one of federal taxation for federal purposes. The Government has admitted that this measure is not one of federal taxation for federal purposes only, because it is proposed in the Treasurer's words, to raise revenue for the requirements of' both the Commonwealth and the States. A part of the scheme is that the States shall be coaxed or kicked out of the field of income taxation. If this can be done in relation to income taxation, it can be done in relation to any form of taxation. The States will then become dependent on the bounty of the Commonwealth and may have their internal policies dictated by the almsgiver. When that happens the nature of the Constitution that the people of Australia willed will be destroyed. I do not desire the continuance of the federal system, because I believe in the unitary system of Government. I hope for a constitution which the people of Australia can understand, and the meaning of which does not change every time the composition of the High Court is altered. That is the only reason why I favour the unitary system of government. But the paramount consideration with me is that the people of Australia made the Constitution and they are entitled to have it until they are prepared to change it. If the House desires that the Constitution shall he altered, that desire should be expressed by the Senate and the House of Representatives passing legislation to enable the people of Australia to express their opinion upon the matter. There has never been the slightest doubt as to the co-ordinate spheres of the Commonwealth and the States in respect of direct taxation. Most of what has been said is a repetition or summary of what was written a century and a half ago in the United States of America in Hamilton's famous letters in the Federalist, Nos. 31, 32, 33 and 34. I quote from Australian Constitutional Law, by one of the draftsmen of, our Constitution, Mr. Justice Inglis Clark, page 89 -

In regard to trie matter of taxation, the legislative power of the Parliament of the Commonwealth is subject to the restriction that there shall not be any discrimination between States or parts of States in the exercise of it. With this exception, the jurisdiction of the Parliament of the Commonwealth with, respect to taxation is unlimited. But the States arc precluded from obtaining revenue by duties of customs and excise, and they cannot impose any other kind of taxation which interferes with the freedom of trade and commerce with other countries, or among the States. Hence the jurisdiction of the parliaments of the States in respect of taxation is not equal in extent to the jurisdiction of the Parliament of the Commonwealth; but, so far as it extends, it is concurrent with and independent of the jurisdiction of the Parliament of the Commonwealth. The free exercise of whatever power of taxation is reserved to the States by the Constitution is absolutely necessary for the free exercise of all the other legislative powers possessed by them, and may, therefore, be properly regarded as necessary to their separate political existence.

The actual phrase " concurrent "with and independent of " was that which the draftsman of the report of the Royal Commission on the Commonwealth Constitution used, in reference to the power of taxation by the Commonwealth for federal purposes and the power of taxation by a State for State purposes. The only limitation upon the State's power discovered by the commission was that 1 the Commonwealth might exhaust the whole field, leaving nothing for the State. That passage in the report of the royal commission is really a summary of the evidence which was given by Sir Robert Garran. To me, it seems indisputable that the framers of the Constitution did not mean to give this Parliament power to drive the States out of the field of taxation that was reserved to them by the Constitution. The manner in which this legislation is framed is an indication that the Commonwealth does not consider that it possesses the power, by direct legislation, to exclude the States. The Commonwealth has declared, in effect, "We shall not say that the States cannot enter the field of income taxation, but we shall do everything in our power to make it impossible for them to enter it". That is only doing indirectly, by a circuitous method, what the Government believes that it cannot do directly.

Of course, no one can foretell what view the High Court will take of this legislation, and I am not concerned with that point, except to hope that the legislation will be declared invalid. What I am concerned with is my position as a mem-

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ber of this House, and the position of this Parliament. We are not justified in voting for legislation which deprives the people of their right to amend the Constitution if they so desire. The people of Australia are those who have the right to say whether State parliaments shall be abolished. Until they have expressed themselves in favour of that constitutional change, the federal Constitution should remain, with all its faults. A unitary system such as that which is contemplated by some honorable members would not be more democratic than the present federal system because it would not express the will of the people. The House would do .well to bear that matter in mind. We have been elected on the basis of the Commonwealth Constitution, one provision of which declares that an alteration may be made only by the affirmative vote of the people. This legislation represents an attempt to circumvent that provision, and to change the whole nature of the Constitution. As I stated earlier, the bill is related not to the_war powers of the Government, but to the war emergency. If it be found that this exercise of power by the Commonwealth is valid, it will be continued after the conclusion of the war, because the same unfriendliness between the Commonwealth and the States will continue. It reminds me of the biological phenomenon called symbiosis, which is "the living together in more or less intimate association, or even close union, of two dissimilar organizations ". Sometimes these are friendly hut, I regret to say, there is very often what is called antipathetic or antagonistic symbiosis. That unhappy condition has developed in the Australian political structure and will continue to afflict us even after the war. I cannot conceive that the Commonwealth Parliament, having established this year or next year that this legislation is valid, will refrain from using the same principle after the war. For those reasons, I cannot support this legislation. In my opinion these bills will have serious repercussions in Victoria, which unfortunately has the bad habit of thinking that the salaries of its employees, are a source of revenue that can be tapped whenever trouble arises. In a financial crisis it proceeds to tax heavily the earnings of railway employees, civil servants, teachers and the like. I am sure that if Victoria finds itself in financial difficulties, it will proceed either to retrench or to deny to public servants the improvements of pay and conditions for which they may legitimately hope. But my main reason for opposing the legislation is that it tends to alter the substance and nature of the Commonwealth Constitution without the consent of the Australian people who created it.







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