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Wednesday, 27 May 1942


Mr DUNCAN-HUGHES (Wakefield) . - I cannot approach this subject without remembering that I was a member of the Senate for six or seven years. A particular duty of the Senate is to safeguard State rights. In fact, that was one reason why the Senate was brought into existence. The Senate is composed of six representatives from each State, and that representation was provided in order to ensure that State rights would not be entirely overridden by the decisions of the House of Representatives, which is elected on a population basis. Having sat in the Senate for six or seven years, it is perhaps only natural that I should regard questions such as those now before us from the point of view of a State rather than that of a particular electoral division. AI30 I still retain the views concerning the conflict between Commonwealth and State authorities that I held when I first entered this Parliament. The three instigators of this bill - I was about to say sponsors, but the sponsor of the bill is really the Government - were Professor R. C. Mills, the right honorable member for Yarra (Mr. Scullin), and the honorable member for Robertson (Mr. Spooner) who were the members of the special committee on uniform taxation. The views of the two members of this Parliament whom I have mentioned are well known. I do not know whether the honorable member for Robertson is, or is not, a unificationist. Perhaps he will tell me.


Mr Spooner - I shall tell the honorable member when I speak to-morrow.


Mr DUNCAN-HUGHES - If the honorable member is not a unificationist, at least his policy is unification. To the best of my knowledge, the right honorable member for Yarra has always been a unificationist. Moreover, unification is the policy of his party. Therefore we could expect nothing else from him. The honorable member for Boothby (Dr. Price) dealt with this aspect of the subject this afternoon, but there was some doubt concerning the views of Professor Mills. Like most professors and other learned gentlemen he has published writings over his own name. I intend to quote from two articles by him which appeared in Studies in the Australian

Constitution,published . in 1933. The first of these was written in. 1928 and contained the following observations: -

Another sign of this maladjustment is that, whilst the Federal Treasurer has frequently in the past few years announced reductions in the rate of income tax, State Treasurers have been forced .to increase rates of taxation, and have even explored new and unconstitutional avenues, such as the petrol tax of South Australia and the newspaper tax of New South Wales. At first sight the solution of these two problems would appear to He in one of two alternatives. Either the Commonwealth should revert to the status quo antebellum, and so give the States move scope for revenue production, or the. States should hand over to the Commonwealth enough of their powers to adjust revenue and responsibility in each case- The former solution involves, inter alia, the retirement of the Commonwealth from income tax, and I have said enough earlier in this paper to show that this is most undesirable. Even to reduce the rates of Federal income tax, as has been done of late years, seems uneconomical, in view of our increasing public debt, for it is obviously much easier to continue a tax at a given rate than to increase it after a reduction. The latter solution takes us on to the thorny path of politics. For the States to hand over any_ powers to the Commonwealth means, or may be made to mean, the beginning of unification, which in the eyes of many is enough to condemn it.

Professor Mills went further in the next article from which I shall quote. I mention this because it is desirable that we should understand the method of approach of these three members of the impartial tribunal which has expressed an opinion on the subject before us.


Mr CALWELL - "Why emphasize " impartial"?


Mr DUNCAN-HUGHES - I did not unduly emphasize the word, but we are entitled to assume that a body of this kind would be impartial. Perhaps it is never possible to g_et true impartiality, but when a committee of three is appointed it is usually assumed that one member of it will hold views on one side of the question, and another will hold views on the other side of it, but that the chairman will be more or less impartial. Incidentally, the setting up of a tribunal of this kind occurred as far back as the time of Charles I. I do not say that that case had «.ny close analogy to this one, but a Commission of five was then appointed to consider a certain matter. Two of its members were openly for King Charles and two were openly for

Cromwell. The chairman was said to be in favour of himself. I do not suggest that the chairman of the committee on uniform taxation was in favour of doing anything which he did not believe to be in the interests of the country. However, Professor Mills in his second article, said -

In 1027 and again in 1928, during and after the financial agreement, I proposed two alternative methods of dealing with what I then called " certain maladjustment of financial means to political ends ". In my view it appeared that one of two things was necessary, either that while financial relations remained unchanged the States should transfer some of their powers to the Commonwealth, such as roads and railways which were n source of net expenditure and would therefore burden the Common weal th and -relieve the States; or that the Commonwealth should exclusively control the fields of income tax and inheritance tax on the understanding that revenue adjustment payments should be made to the States to compensate' for their lossOne advantage which I claimed for the latter system was its flexibility. Had such a flexible arrangement been made, whatever its demerits, it would have enabled the present situation to have been met simply by increased payments from the Commonwealth to the States, but none of these suggestions was adopted.

I think that I have said sufficient to make it clear that the three members of this committee held very definite and strong views in respect of the problem they had to meet, and that therefore they may be regarded as the real sponsors of this particular legislation.


Mr Spooner - There was never' any doubt about my views.


Mr DUNCAN-HUGHES - I believe that that applies to all three.







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