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Wednesday, 27 May 1942

Dr PRICE (BOOTHBY, SOUTH AUSTRALIA) .- On the surface this bill has something to commend it. It preaches patriotism; it predicts slightly simpler taxation; it promises economies. It is only when one delves beneath the surface; when one examines the composition of the recommending committee, the policy of the Labour party and the history of Australian and other federations, that one sees that it is a clever device, unconstitutional, unnecessary, unjust, and designed to further the policy of centralization by destroying those guarantees which made this Commonwealth a federation rather than a unified State. The bill is particularly cunning in that it plans to gain its real objective, not by compulsion - this Government works by pseudo-freedom - but by enforcing quasivoluntary suicide on the States. The bill, as drafted, shrewdly compels the States to accept the Commonwealth proposals, and in so doing to draw the dagger of hari-kiri through those emaciated financial rights which Australian centralizers have so far failed to get. Fortunately, this pseudo - voluntary arrangement may defeat its own subtle ends, for it involves a possibly unconstitutional discrimination between those States which refuse, and those which accept.

The necessities of war would justify this measure if the proposals were really temporary, and if they would create a greater war effort. I realize that the bill is legally limited to the war period, but I also realize that there will always be sufficient conscripted centralizers in caucus, and possibly sufficient shortsighted centralizers on this side of the House from the thriftless States, to maintain these centralized powers once they are established. Of course, the States may secure protection from the courts. It will be very sad if the Government bludgeons them into such an action, but, when they realize what is behind this measure, the States will he justified in taking this course. It is encouraging to know that in the opinion of several leading King's Counsels, the States will gain protection from the courts. But 1 hope that the Government will remember that action in the courts may cause delay. If the matter goes to the Privy Council the delay may be very long and the result ultimately financial chaos.

Nor is one in any way certain that this bludgeoning of the States will lead to the economies of man-power and money which the Government alleges it expects. The whole history of our federal administration is the building up of expensive centralized departments, sometimes less efficient departments than those of the States. I need only take the colossally expensive failures of the Commonwealth in the Northern Territory as compared with the "progress in northern Queensland and north-western Australia to prove this. As yet we do not know how far this uniform taxation is to he centralized, but I have already received strong protests from taxpayers, who know from practical experience the difficulty of dealing with the central taxation department in Melbourne, as compared with the local branches in their own States.

Then I am not at all convinced that this legislation is either necessary or just. As regards its necessity, I am not convinced that any real effort has been made to meet the States in a temporary arrangement which would leave them their constitutional powers, or to explore the system of per capita payments, or, if the Commonwealth seizes the whole field of income tax, to restore that part of the customs revenue, of which they were legally robbed, to the States. As regards the justice of the legislation, it is obviously far less fair than the Fadden proposals, which did achieve a uniform levy, but which took from the citizens of the thrifty States by temporary loan, and not by confiscatory tax. How these proposals discriminate against Victoria is shown by official calculations that they will cost Victorian taxpayers an additional £4,000,000, an average of £10 10s. each.

Secondly, will this bill really increase our war effort? I doubt it. The central Government is hardly likely to improve our war effort by returning evil for good to certain State governments, which in very many ways - for example, in munitions, in railway services, and in gladly loaning the Commonwealth many of their best administrative officers - have been rendering invaluable help. Nor will this dictatorial legislation act as. a spur to the citizens of the less bountiful, or more thrifty, areas of Australia, when they realize that, contrary to all the canons of justice, there is to be equality in contribution to a common pool and gross inequality in the rake-off.

Then again the proposals of the Government are contrary to the established principles of federal practice. In the United States of America, Canada and Australia, it has been recognized from the outset that a price of federation is for the financially strong areas to contribute to the development of the weak. That policy is applied in the United States of America and Canada. Now we find this extraordinary legislation completely departing from the established federal practice. New South "Wales is to receive £5 10s. a head from the rakeoff, but poor little Tasmania is to receive only £3 8s. a head. The Tasmanian birds have flown up and eaten the poisoned wheat at Canberra and the provision for that State has been raised by 6s. a head. Still, it stands that. Tasmanians are to have only £3 14s. and the people of New South "Wales £5 10s. a head.

The first of the true financial objectives of these proposals, as the honorable member for Bourke (Mr. Blackburn) admitted, is to strangle the .States. I shall refer to that later. The second is to secure all the benefits from an inflated national income, and, in so doing, to rob the States not only of similar advantages, but also of essential requirements. The proposals peg the States' share of the pool to the average receipts based on incomes for the years 1938-39 and 1939-40, years when the national income and costs were comparatively low. The States will now be expected to carry on at a time when the federal inflationary financial policy of raising wages and so forth is pushing costs to the skies. The result will be crippling economies in essential State services, dismissal of State employees, and a repetition of the chaos that followed the federal freezing of capital, or the rationing of clothing. The Government's third financial object is to give remission of war taxation to the lower incomes, which command the greater part of the national spending power. Here again the Government will not face, as the British, Canadians and New Zealanders have faced, the real costs of the war. Instead they are persisting with a policy of price-fixing and rationing to remove spending power, and they are spreading ever-increasing confusion. The people are beginning to realize the truth of what I said months ago, that " Fadden's fair finance " would prove preferable to " Curtin's coupon queues". The tragedy about this legislation is that it bribes the public with a promise covering a few months, and blinds them to what will inevitably follow when an extravagant Commonwealth has unfettered powers to rage like a bull in the china shop of income tax.

So far I have been dealing with the obvious features of the bill, but I shall now examine what lies behind it. First, let us look at the committee which produced the plan. " No committee ", says' the Treasurer, " possessed of greater breadth of view for the task confronting them could be found in the whole of Australia ". Not for one moment would I reflect on the integrity of the member? of the committee. I believe that they reported according to their experience and environment. But, human ideas are moulded by experience and environment, and what was the experience and environment of these members? This small committee of three was drawn entirely from the two chief States, and we have yet to learn that the committee sat, or took evidence, in any of the smaller States. Two of the three members came from New South "Wales, where the history of the State Parliament, the proximity of Canberra, and the weight of New South Wales representation at Canberra have made many people unificationist. I wonder what the people of Canada would say if such a committee were drawn wholly from Ontario and Quebec, or what the people of the United States of America would say if it were drawn wholly from New York and Connecticut.

Equally remarkable is the fact that d majority of the committee had already prejudged the case. In November last the honorable member for Robertson (Mr. Spooner) stated in this House that the Commonwealth should use its war-time powers to enforce uniform taxation, and that he anticipated that the change would be permanent.

Mr Spooner - I said that months before then.

Dr PRICE (BOOTHBY, SOUTH AUSTRALIA) - The honorable member admits that months before then he was a uniform taxer.

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